Hey, gans555, I haven't taken the test so can't speak to how important it is to know, but below is some stuff that may help.
CPAExcel made a really good distinction. It is critical to know whether you're under Common Law or UCC. Common Law (Contracts section) applies to services & sales of real estate. UCC (Sales section) applies to sales of goods.
Common Law vs UCC has some important distinctions when analyzing problems:
1) In CL if anything is added/changed during contract negotiations it represents counteroffer. Under UCC as long as it's minor/not conditional the original contract is still valid.
2) CL doesn't allow any modifications to a contract unless additional consideration is provided by both parties (not so w/ UCC).
3) CL requires price, terms, quantity, etc. being specified in the offer/contract (not so w/ UCC).
Both CL and UCC have pretty much the same “mailbox” rules re: when an offer is accepted:
1) if form not specified, it is valid when sent
2) if form specified & sender uses appropriate method, it is valid when sent
3) if form specified & sender doesn't use approp method, it is valid when received (if after specified date, this results in counteroffer).
Negotiable Instruments/Commercial Paper
Definitely know the conditions that make an instrument negotiable (aka valid/usable). The conditions that allow someone to be an HDC (versus just a holder) are important too. Basically being an HDC means if there is any problem between prior holders, the HDC can still demand payment. There are only a few times this doesn't apply (forgery/alteration, bankruptcy of debtor, etc.) Being an HDC vs a “holder” doesn't affect negotiability, but does it make a lot easier for HDC to collect if there is dispute.
This is my basic understanding of this stuff. I use the Wiley books (not testbank) & yes they seem to test you on every scenario! Good luck (to us both).
B - 8/30/12, 91
A - 5/25/12, 87
R - 7/28/12, 82
F - 4/18/12, 84
.