Greg Told Rick That He Would Be Willing to Pay

question 62

Multiple Choice

Greg told Rick that he would be willing to pay a high rate of interest for a two-month loan of $2,000. Rick agreed to lend Greg this amount at an annual rate of 20%, repayable March 1, 2011. Greg agreed to these terms. Greg did not pay on March 1. Rick learned that Greg had recently completed some work for Martinson for which Greg was owed $2,000. Now that Greg is in default, which of the following is false?

• A) Rick could not place Greg into bankruptcy unless Greg had committed an "act of bankruptcy."
• B) Rick could sue Greg for breach of contract.
• C) Once he has obtained judgment, Rick can garnishee the money owed to Greg by Martinson.
• D) Rick could execute against Greg even if Rick had not obtained judgment against him.
• E) If Rick obtained a judgment against Greg, he could compel him to be examined about his income, property, and debts.

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Definitions:

Limited Liability

A legal structure that protects individual investors or business owners from being personally responsible for the debts and liabilities of the business beyond their investment.

Partnership Form

A legitimate business structure where two or more partners collaborate in managing the firm and splitting the profits.

Equity Capital

The amount of money that is invested in a company by its owners, as opposed to borrowed funds or debt.

Tax-Deductible

A portion of expenses that can be subtracted from gross income to reduce taxable income.