Frequently Asked Questions about Business and Commercial Law
Q: What body of law governs a contract for the sale of goods?
A: A contract for the sale of goods is governed mainly by state law. Most states have adopted Article 2 of the Uniform Commercial Code (UCC) which provides rules for all phases of a sales contract including formation, modification, performance, and available remedies in the case of a breach.
Q: What body of law governs a lease of goods?
A: A contract for the lease of goods is also primarily regulated by state law. Most states have adopted Article 2A of the Uniform Commercial Code (UCC) which pertains to leases of goods.
Q: What is a secured transaction?
A: Many lenders require a security interest before they will extend a loan. A secured transaction occurs when the borrower conveys a collateral property interest to secure a loan. Should the borrower default on the loan, the lender may take possession of the specified property.
Q: What is a negotiable instrument?
A: A negotiable instrument is an unconditioned, signed writing that represents money that is to be transferred to another. Checks, certificates of deposit and promissory notes are examples of negotiable instruments.
Q: What can a creditor do to collect a debt?
A: A creditor may commence a lawsuit and obtain a judgment against a debtor. In addition, a creditor may repossess any collateral used as security for the debt and/or garnish the debtor’s wages.
Q: What actions and disclosures must a collection agency provide to a debtor when commencing a collection?
A: A third-party collection agency must comply with the federal Fair Debt Collection Practices Act (FDCPA). Pursuant to the FDCPA collection agencies must provide the following information to the debtor either in the initial communication or in writing within 5 days thereafter: (1) the amount of debt, (2) the name of the current creditor, (3) notice about the 30-day period in which the debtor may dispute the debt, (4) notice about the obligation of the collection agency to send the debtor verification of the debt if the debt is disputed, and (5) notice that if the consumer requests it within 30 days, the debt collector will provide the name and address of the original creditor, if different from the current one.
Q: What is bankruptcy?
A: Bankruptcy is a legal way to seek relief from creditors. A debtor often files for bankruptcy protection when he or she owes creditors more than he or she has the ability to pay. Very broadly, under federal bankruptcy law, debtors’ assets are used to pay off debt or payment plans are set up.
Q: What are the major business organization forms, and how do I choose one that is right for my business?
A: The four major business organization forms are: (1) the partnership, (2) the limited liability company, (3) the corporation, and (4) the sole proprietorship. Each has advantages and disadvantages, but when choosing the correct form for your business the core focus should typically be on personal liability and tax implications.
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