CLFP EXAM - Leasing Law 2024 Questions & Answers
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What is Statutory Law? - Includes law enacted by legislative bodies such as state legislatures and US
Congress. The Uniform Commercial Code or "UCC" is a body of the state statutory law.
What is Regulatory Law? - Consist...
What is Statutory Law? - ✔✔Includes law enacted by legislative bodies such as state legislatures and US
Congress. The Uniform Commercial Code or "UCC" is a body of the state statutory law.
What is Regulatory Law? - ✔✔Consists of regulations adopted by public bodies. Examples of regulatory
law are regulations issued by the Internal Revenue Service (IRS) or the Securities Exchange Commission
(SEC). Generally regulatory laws are not binding up the courts in the manner or statutory laws, but may
be subject to broader interpretation
What is Federal Law? - ✔✔Encompasses laws adopted by the US Congress such as the IRS and
Bankruptcy Code. Although federal case precedent may be important in interpreting these and other
statutory laws, federal common law generally has little application to equipment leasing and finance
transactions
What is State Law? - ✔✔General more relevant to the day to day leasing operations. State law include
the UCC and cases interpreting it. Particular sate statutory tax laws are also important in leasing
consideration
What is Conflicts of Law? - ✔✔Refers to inconsistencies in laws from state to state. Because state laws
are not uniform, the concept of "conflict of laws" often comes into play. This is the concept under which
a court chooses to apply the law of one state over another. For example,, the usury law of a given sate
my hold a lease unenforceable, while the law of another state will allow it to be enforced as written
What is "choice of law" provision? - ✔✔language added to lease documents in which the lease states
that the law of a particular state will be applied in any dispute regarding the lease. Generally speaking
the courts uphold the choice of law if the overall transaction bear some "reasonable" relation" to the
states law is chosen
What is Contract Law? - ✔✔Generally a matter of state law. Although certain statues are important to
contract enforcement, case law plays a major role in each state.
, Requirements for a "valid enforceable contract" include "an offer and acceptance evidencing a mutual
agreement on principal terms and consideration, or something of value, given or promised by each
party."
What is Capacity? - ✔✔Each party must be legally able to enter into a contract.
What is Legality? - ✔✔A requirement often used to prohibit enforcements of secured financings that
exceed the legal usury limit, but also available to prohibit leases of equipment used in illegal activity,
such as gambling where it is not permitted by applicable law
What is Statute of Frauds? - ✔✔Provides that certain types of contracts are not enforceable unless in
writing. Example under UCC, a lease contract with payments in excess of $1,000 are not enforceable
unless written.
What is Bundle of Rights Concept? - ✔✔the parties have identified specific rights listed in the contract
each of which is legally enforceable. It is not uncommon for each party's rights to conflict in some
respect with others - thus legal analysis/litigation results
Where is the legal definition of a lease found? - ✔✔UCC Article 1-201. Article 2A for true lease. Article 9
for secured loan
When is the first a transaction create a security interest? - ✔✔If the consideration the lessee is to pay
the lessor for the right to possession and use of the goods is an obligation for the term of the lease not
subject to termination by the lessee
1.) the term of the lease is equal to or greater than the remaining economic life of the goods
2) the lessee is bound to renew for economic life or own the property
3.) the lessee has the option to renew the lease for no or nominal consideration upon compliance with
the lease
4.) the lessee has the option to own the goods for no or nominal consideration upon compliance of the
lease
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