BLAW Final
Adverse Possession (Real & Personal Property)
***To qualify for possession - Exclusive - Open - Continuous - Hostile to others
Types of Corporations under Wisconsin Law (Corporations Law)
**Business Corporation o General-purpose entity which management is exercised by a board of directors elected by shareholders o **Like all Corporations under Federal law except - Benefit corporations - Professional corporations - Nonprofit corporation Nonstock corporation Service corporation Statutory close corporation Unincorporated cooperative association
**Sherman Act (Antitrust Law and Promoting Competition)
- An Act to Protect Trade and Commerce against Unlawful - Restraints and Monopolies - Applies only to restrains on interstate commerce - Federal courts have exclusive jurisdiction, both civil and criminal apply Section 1; requires two or more persons Section 2; can apply either to one person (or to two or more persons)
**FTC Orders and Remedies (Consumer Protection)
- Cease-and-desist order - Counteradvertising - new advertise correcting old add - Multiple product order- stop all false advertising not just on one that FTC cited
Enforcement by Federal Agencies (Antitrust Law and Promoting Competition)
- Department of Justice (DOJ) prosecutes violations of the Sherman Act - Clayton Act violations are not crimes, but the act can be enforced by either the DOJ or the Federal Trade Commission (FTC) through civil proceedings
**Federal trade Commission (Consumer Protection)
- FTC overseas Consumer Protection Law, Which is manages by the Bureau of Consumer Protection - Key agency overseeing consumer laws
***Freedom of Information Act (Administrative Law)
- Federal Law - The basic function is to ensure informed citizens, vital to the functioning of a democratic society - Permits access by the general public to data held by national governments and where applicable the state - Purpose is to promote openness
Definition of Business Structures (Business Organizations)
- Importance of Choosing the Right Business Structure - Form over Substance is standard - Organized under State law in most instances !!
Common Law Actions (Environmental Law)
- Nuisance o Person liable if they use property in a manner that unreasonably interferes with others' rights to use or enjoy their own property
Corporations (Corporations Law)
A legal entity that is separate and distinct from its owners characterized by shareholders as owners with limited liability - Led by Board of Directors and Corporate Personnel o Handles the overall management of the firm Owners=shareholders
***Registration of Securities is Required under 1933 Act (Investor Protection, Insider Trading and Corporate Governance)
All must be registered BEFORE being sold to public UNLESS if they are exempt Process of Registration o Prospectus - Selling tool for the issuing corporation o Registration Statement- which contains - Securities being offered for sale, including their relationship to issuer's other securities - Corporation's properties and business - Management of the corporation **Exempt Securities o Low risk investments or are regulated by other statutes - Government issues securities - Bank and financial institution securities - Short-term notes and drafts - Securities of nonprofit, educational and charitable organizations Regulation D Offerings o Small $ amount transactions - Rule 504 = noninvestment company offerings exempt up to $5m over 12 month period - Rule 506 = private noninvestment company offerings exempt in unlimited $ not advertised or solicited § Unlimited accredited investors § Up to 35 unaccredited investors
*****Price Fixing (Antitrust Law and Promoting Competition)
An agreement among competitors to fix the price of products and services at a certain level
State Securities Laws (Investor Protection, Insider Trading and Corporate Governance)
Blue sky laws - state securities laws apply mainly to intrastate transactions.
South Carolina (SC) resident Bud severely injured his thumb at The Boscolo hotel in Milan, Italy. Bud then filed a negligence lawsuit in federal district court in SC against Marriot International, Inc., a Delaware corporation that was affiliated with The Boscolo. The District Court found that Marriot did not own any properties in SC, but did have 90 franchisees and a license in SC. Additionally, Marriott's booking website was available to SC residents. As a Foreign Corporation, Marriott has the requisite certificate of authority to do business in SC.
DC ruled = for Marriot Court of appeals = affirmed Reasoning = Marriott's contacts with SC did not rise to jurisdiction levels to permit a lawsuit in SC due to lack of "sufficient activities" in SC
***Limited Liability Company (LLC) (Business Organizations)
Definition and Characteristics: o Hybrid form of business enterprise that offers the limited liability of the corporation and the tax advantages of a partnership - **Most common form of entities - **Desirable has combines tax advantages of partnership with limited liability or corporation o **Owner of LLC is called a member - Chief Manager= CEO
**Duties of Directors and Officers (Corporations Law)
Duty of Care o Duty to make informed and reasonable decisions o Duty to exercise reasonable supervision o The Business Judgement Rule - **A corporate director or officer is not liable to the corporation or to its shareholders for honest mistakes of judgment o When the rule applies - The director or officer took reasonable steps to become informed about the matter - He or she had a rational basis for his or her decision - He or she did not have a conflict of interest between his or her personal interest and that of the corporation - The rule provides broad protections - Most courts will apply the rules unless there is evidence of bad faith, fraud, or a clear breach of fiduciary duties Disclosure of Conflicts of Interest o A director's fiduciary duty requires him or her to make a full disclosure of any potential conflicts of interest that might arise in any corporate transaction o Liability of Directors and Officers - Directors and officers are liable for their own crimes and torts - They may also be held liable for the crimes and torts committed by corporate employees under their supervision. !!
Sole Proprietorship !! (Business Organizations)
Easiest and least costly form of organization - Few legal formalities are involved - Flexibility - Disadvantages o Unlimited personal liability - Alone bears burdens losses or liabilities - Creditors can go after personal assets o Difficult to raise capital
***Securities Act of 1933 (Investor Protection, Insider Trading and Corporate Governance)
Enacted to o Govern initial sales of stocks o Prohibits various forms of fraud o Stabilize industry by providing information o To provide disclosure **Types of Security o Preferred and common stocks, treasury stocks, bonds, debentures and stock warrants o Stock options, puts, calls, or other types of privilege on a security on a national security exchange **The Howey Test o Established in 1946 from US Supreme Court case SEC V. WH Howey Co. o Defined what an investment contract is through interpretation of the Securities Act of 1933 o Investment contract is any transaction in which a person invests in a common enterprise, reasonably expected profits derived primarily from other managerial or entrepreneurial efforts. o Determines what types of contracts can be considered securities
***Ownership and Other Interests in Real Property (Real & Personal Property)
Estates in land= ownership in real property o Three types of ownership - Fee simple absolute - Leasehold - Concurrent o Exemplified by synonymous with owning a bundle of rights o Fee Simple Absolute - Owning the full Bundle of Rights - One owns the entire real property and maybe able to use the property for whatever purpose you want Exceptions o Taking ownership of real property subject to an encumbrance - Encumbrance is a blemish on good title meaning that a lien exists against the property o Zoning, condition and covenants - HOA ownership is a condition and covenant which limits what you can and cannot do
Jane enters into a 1-year lease for an apartment from Joe. The lease begins on January 1st and ends on December 31st.
Fixed termed tendency for 1 year, 60 days to evict tenant
Express Powers (Corporations Law)
Found in its articles of incorporation, in the law of the state of incorporation in the state and federal constitutions and corporations by laws
Partnership (Business Organizations)
Governed by common and statutory law o *Uniform Partnership Act (UPA) !! - Governs partnerships if no operating agreement exists o Three essential elements - Sharing of profits and losses - Joint ownership of business - Equal right to management of business
Same as above. But Jane continues to reside in the unit the following January and February. Joe gives Jane notice on February 28th that she needs to vacate on March 31st. · What was a fixed term tenancy becoming a periodic tenancy as Jane was a holdover tenant.
If you have a fixed term tenancy, if they decide to stay longer it's periodic, or holdovers. Now they have to take action and instead of 60 days' notice, it's now a 30-day notice. You can have both a fixed term and periodic if a fixed-term tenant stays longer.
Franchises (Business Organizations)
Laws Governing Franchises: o K law and UCC if includes sales of goods/products o Federal Regulation of Franchising - Federal Trade Commission (FTC) Franchisor = owner who is selling or franchising operations Franchisee = party who is buying or investing in franchise operations o The Franchise Rule - Franchisors required to disclose materials to franchisees to make informed decisions in investing in franchise · Violators subject to civil penalties and FTC penalties
When things go wrong (Corporations Law)
Personal and corporate interests are commingled (no longer having separate identities) such that the corporation has no separate identity
**Easement (Real & Personal Property)
Right established by express or implied agreement to make limited use of another's property without removing anything from the property
Certificate requirement (Investor Protection, Insider Trading and Corporate Governance)
Section 906 = CEO and CFO must certify that financial statements fully comply with SEC and "fairly represents in all material respects, the financial conditions and results of operations of the issuer." o Penalties - unintentional = up to $1m and/or 10 years in prison - Intentional = up to $5m and/or 20 years in prison
**Tax Considerations (Corporations Law)
Terms of "C-corp" and "S-corp" refer to tax classifications that are available to both corporations Corporations are taxed as C-corps by default, but some corporations can elect S0corp taxation instead Taxes Gains - C-Corp= Double taxation:corporate and personal - S-Corp= no double taxation Taxes Losses - C-Corp= Cannot be written off personal tax returns - S-Corp= Yes on personal tax returns, some limits Tax Filing - C-Corp=Quarterly - S-Corp= Annually Number of Shareholders - C-Corp= unlimited - S-Corp= Maximum of 100 **De Jure Corporations - Lacking piece of critical information to make it a legal entity De Facto Corporations - State statute exists under which corporation can be validly incorporated Corporation by Estoppel
Corporate Financing (Corporations Law)
Venture Capital o Financing provided by professional, outside investors (venture capitalists) to new business ventures Private Equity Capital o Funds invested by private equity firm in an existing corporation, usually to purchase and reorganize it
**Deeds (Real & Personal Property)
Warranty- greatest level of protection for the grantee o Grantor promises; - Have title to property - There are no encumbrances on property - Grantee can enjoy quiet enjoyment of property o Special Warranty- mid level protection - Warrants only that grantor held good title - Does not warrant against defects o ***Quitclaim (passing a house down in a family or passing a company down) - Conveys to grantee whatever interest Grantor has in property - Used for situations like *Grantor is uncertain what interest they own in property *Grantor knows interest is clear of encumbrances (house is paid off) *Grantor is releasing interests as division of real property
***Credit Protection (Consumer Protection)
o **Truth and Lending Act o Disclosure Requirements **Regulation Z - A set of rules issued by Federal Reserve Board of Governors to implement TILA - Transactions subject to this o Any contract with 4 or more installment payments o Car loans o Home improvement loans o Real Estate loans under $58,300
False advertising under Lanham Act (Consumer Protection)
o A party who successfully sues for false advertising may be entitled to either damages or injunctive relief. o To bring a claim for false advertising, the plaintiff must show: - The defendant made false or misleading statements as to their own products (or another's); - Actual deception occurred, or at least a tendency to deceive a substantial portion of the intended audience; - The deception is material in that it is likely to influence purchasing decisions; - The advertised goods travel in interstate commerce; and - There was a likelihood of injury to the plaintiff.
The Shareholder's Derivative Suit (Corporations Law)
o A suit brought by a shareholder to enforce a corporate cause of action against a third person. o Written demand required o Damages recovered go into corporate funds
Types of Corporations under Federal Law (Corporations Law)
o C Corporation - Most common form of corporate entity o Domestic corporation - Formed in and doing business in same state o Foreign Corporations - Formed in one state but operating in another
**The Clayton Act (Antitrust Law and Promoting Competition)
o Civil actions, not criminal - Sherman Act is both civil and criminal
Rule 16(b) - recapture for Insider Trading !! (Investor Protection, Insider Trading and Corporate Governance)
o Corporations can recapture all profits realized by an insider on a purchase and sale or sale (long) and purchase (short) with any 6 month period o Insiders = officers, directors, shareholders owning at least 10% of shares o Applies to stock, stock warrants, options, convertible debt Long = owning a stock hoping it increases in value Short = selling a stock hoping it decreases in value
**Limited Liability Partnership (LLP) (Business Organizations)
o Definition and Characteristics **Hybrid form of business most commonly used by professionals, such as lawyers and accountants **Family Limited Liability Partnership (FLLP) Limited partnership's goal is to limit your liabilities o Advantages - Limited liability for all partners o Allows professionals to avoid personal liability for malpractice - Flexibility in management
S Corporations (Corporations Law)
o Domestic Corporation electing under IRS to be treated as an S corporation o Requirements - Domestic corporation - Not a member of affiliated group of corporations - Shareholders must be individuals - No more than 100 shareholders - Only one class of stock -No shareholder may be a nonresident alien o Taxed like partnerships
**Fixtures (Real & Personal Property)
o Items of personal property that has become so closely associated with real property that it is legally regarded as part of the real property o Classification often depends on type of real property - Residential property assumes that everything goes compared to a building
**Zoning (Real & Personal Property)
o Laws that divide a municipal into zones and prescribe certain uses of real property in each zone o Types - Residential - Commercial - Industrial - Conservation districts - Mixed
***Insider Trading (Investor Protection, Insider Trading and Corporate Governance)
o Major enforcement goal under section 10(b) and SEC Rule 10b-5 o The purchase or sale of securities on the basis of information that has not been made available to the public o SEC defines illegal insider trading as - **The buying or selling a security in breach of a fiduciary duty or other relationship of trust and confidence, on the basis of material, non-public information about the security - **Corporate officers, directors, and employees who traded the corporation's securities after learning of significant confidential corporate developments - **Friends, Business associates, family members and other tippees of such officers, directors and employees, who traded the securities after receiving such information
Rights of Partners- Operating Agreement (Business Organizations)
o Management Rights o Interest in the Partnership o Compensation o Inspection of Books o Accounting of Partnership Assets or Profits !! o Property Rights
*Laws that Govern (Corporations Law)
o Organized under State law o Guided by Federal law Model Business Corporation Act (MBCA) **Provides a modern body of statutory corporate law that is regularly updated by the Committee based on judicial decisions, recent legislative enactments and other legal and technological developments - Wisconsin has adopted MBCA
**Leasehold (Real & Personal Property)
o Own less than the full Bundle of Rights o Owner of the full Bundle of Rights rents or leases a portion for the rights to another o Creates a Leasehold Estate by Lessee in Real Property o Fixed Term Tenancy o Tenancy for years created only through express writing - Statute of Frauds
Federal Law- Public and Private Corporations (Corporations Law)
o Public corporation= one formed by the government to meet some political or governmental purpose o Publicly held corporation= any corporation whose shares are publicly traded in securities markets o Private corporation= corporation whose shares are not publicly traded in securities markets
Violations of 1934 Act !! (Investor Protection, Insider Trading and Corporate Governance)
o Scienter must be present o Intent to defraud or knowingly engaging in misconduct o Proved through making false or reckless statements o Excludes 16(b) insider trades o Criminal penalties; - Individual = up to $5m and/or imprisoned up to 20 year - Partnership or corporation - up to $25m and/or up to 25 years imprisonment under SOX o Civil penalties: - Monetary fines plus Treble damages - Whistleblower provisions apply
**Concurrent Ownership (Real & Personal Property)
o Tenancy in Common o Joint Tenancy - Each person owns an undivided interest in real property and upon death passes to surviving joint tenant - Most common form for married persons - Right of survivorship is key difference between JTROS and TIC!! o Tenancy by Entirety - Ownership between husband and wife where property cannot be transferred without consent of other - Community Property exception
Periodic Tenancy (Real & Personal Property)
o Tenancy without a specific period of time - Aka month to month lease - Or when a fixed term tenancy ends - Also called holdover tenancy o Lessor must provide one period of notice before ending lease o Often leases have strict guidelines on holdover status and may require higher rent or costs for tenants who do this
Rights of Shareholders (Corporations Law)
o Vote shares or Stock Certificates - A certificate issued by a corporation evidencing the ownership of a specified number of shares in the corporation o Exercise Preemptive Rights - The right of a shareholder in a corporation to have the first opportunity to purchase a new issue of that corporation's stock in proportion to the amount of stock already owned by the shareholder o The Shareholder's Derivative Suit - A suit brought by a shareholder to enforce a corporate cause of action against a third person - Written demand required - Damages recovered go into corporate funds
Limited Partnership (LP) (Business Organizations)
· Definition and Characteristics o General Partner and Limited Partner o Favored avenue for companies in funding stages where limited partners can contribute money, be limited in exposure, but enjoy increases in value/profits · Formation o Revised Uniform Limited Partnership Act (RULPA) This act covers partnerships !!
Joe and Jane enter into a partnership agreement creating JJ Partnership. The required capital contributions of $60,000 for Jane and $40,000 for Joe. But it is silent as to how the profits and losses are allocated. JJ posts a loss of $50,000 in year 1 and $100,000 profit in year 2. (Business Organizations)
· How are profit and losses allocated? 50/50 for everything since they are silent about how profits and losses are allocated · Why? Silence means profits and losses are allocated evenly between the two partners. Same example, but the partnership agreement states that profits and losses are shared 80/20 Joe/Jane. · How is year 1 allocated? 50,000 loss * 80%= $40000 · How is year 2 allocated? 100,000 income * 80%= $80000
Jane owns 500 acres of land in Wisconsin. It is in prime hunting area. Jane licenses land to Joe to hunt. Licensor = Jane Licensee = Joe Same example as above, but Joe rather than hunt only Joe decides to bring is UTVs and drive all over Jane's land destroying her Christmas tree crops.
· Jane has a tort action against Joe because Joe exceeded his license rights. Trespassing.