Blaw WSU exam 2

privity of contract

The relationship that exists between the promisor and the promisee of a contract. not required in in product liability law

anti-discrimination laws of U.S. workers working abroad

Title VII of the Civil Rights Act - applies extraterritoriality to all the U.S employees working for U.S. employers abroad these include Americans with Disabilities Act and Age Discrimination Employment Act.

dissociation and dissolution of LLC

a member of an LLC has the power to dissociate at anytime but may not have the right just like a partnership. usually dissociation of a member has no right to force LLC to dissolve

venture capital

capital provided professional outside investors to new business ventures

market-share liability

courts can hold each manufacturer responsible for the percentage of its market share. Helpful when courts struggle to prove which of the many distributors of a harmful product supplied product that caused injuries

when corporation is created the express and implied powers necessary to achieve its purpose

express powers of corporation are found in incorporation 1) U.S. Constitution 2) state constitution 3)state statues 4) the articles of incorporatoin 5)bylaws 6) resolutions of he board of directors

Negligence in product liability

failure to take the degree of care that a reasonable person would in. plaintiff must show the defendant was negligent by showing the "cause in fact" of an injury 1) designing the product 2) selecting the materials 3) using the appropriate production 4) assembling and testing product 5) placing warnings 6) testing components used in product

Family Limited Liability Partnerships (FLLP)

limited liability partnerships which partners are related to each other

Defenses to product liability

1) preemption - if product is subject to comprehensive federal safety regulations 2) assumption of risk -consumer knows risks and voluntarily uses product 3) product misuse - misuse of product in unforeseeable way 4) comparative negligence -consumer also negligent. Reduces total amount of damages awarded to plaintiff 5) commonly known dangers - product commonly known to be dangerous 6) knowledgeable user - particular danger is commonly known by particular users of product 7) statutory time periods - if statute of limitations period has expired

import controls

1) prohibitions 2) quotas and tariffs (taxes on imports) 3) antidumping duties - dumping- sale of imported goods at "less than fair value" - to prevent this an extra tariff known as an antidumping duty may be assessed on imports.

requirements for strict product liability

1) the product must be in defective condition when the defendant sells it 2) the defendant must normally be engaged in the business of selling that product 3) the product must be unreasonably dangerous to consumer because of its defective condition 4) plaintiff must incur physical harm to self or property by using product 5) defective condition ust be the proximate cause of injury 6) goods must not have been substanially changed from the time the product was sold to the time the injury was sustained

C corp vs. S corp

C corporations are subject to double taxation; that is, one tax at the corporate level on the corporation's net income, and another tax to the shareholders when the profits are distributed. S corporations have only one level of taxation. All of their income is allocated to the shareholders.

World Trade Organization (WTO)

International organization that regulates international trade. To minimize the trade barriers. each member needs to be granted normal trade relations (NTR) status - treat other members as the country that recieves its most favorable treatment in imports and exports

strict product liability

Legal responsibility for harm or injury caused by a product regardless of fault. public policy: 1) consumers should be protected against unsafe products 2) manufacturers and distributors should not escape liability for faulty products simply because there is not privity of contract 3) manufactors and distributors can better bear costs of injuries by passing on costs by raising prices

In a product liability situation, who can be liable in the chain of distribution?

Manufacturers: design defects; warnings and labeling; fraud; duty to check out component parts made by other sub-contractors/manufacturers; duties to inspect and test products

incorporation

The act of being legally formed into a corporation.

Franchises

Types of Franchises: 1) Distributorship -franchisor license franchisee to sell its product (automobile dealership or beer company) 2) Chain-style business operation -franchise operates under franchisor's trade name and is identified as a member of select group (McDonalds) 3) Manufactoring agreement -processing plant, franchisor transmits essential ingredients to make a particular product (Coca Cola) governed by contractual law. Federal Trade Commission regulate franchises

licensing

U.S. firm may license a foreign manufactoring company to use its copyrighted, patented, or trade-marked intellectual property. allows foreign firm to use an established brand for a fee

Joint venture

U.S.firm can exapn into foreign market by owning only part of the operation in a foreign country

New York Convention

Widely accepted treaty on the court enforcement of arbitral awards for the parties to artbriate their dispute if it all of the following are true: 1) there is a written agreement to the arbitrate matter 2) the agreement provides for arbitration in a conventional signatory nation 3) agreement arises out of a commerical legal relationship 4) one party to the agreement is not a U.S. citizen. In other words both parties cannot be a U.S. citizen

Partnership

agreement between 2 or more ppl to carry on a biz. 1) share profits and losses 2) joint ownership of the business 3) equal right to be involved in management of business pass-through entity - business entity that has no tax liability; entity's income is passed through to the owners who pay income taxes on it so partnership itself pays no taxes but it responsible only for filing an information return with the Internal Revenue Service Fiduciary duties: -partner owes to the partnership is duty of care and loyality, partners cannot make secret profits or put self-interest before his duty Liability: -both partners are personally liable through joint liability Dissociation: - partner ceases to be associated with the partnership - partner has the power to dissociate from the partnership at anytime but may not have the right - after dissociation partner must buyout partner's interest. termination = dissolution - commencement of winding up process - collecting, liquidating and distributing partner assets

S corporaions

close corp can operate as an S corp avoids income taxes at corporate level keeping corporate limited liability 1) company must be domestic 2) not a member of affiliated group of corporations 3) shareholders must be individuals, estates 4) corp must have no more than 100 shareholders 5) corp must only have one calss of stock 6) no shareholder of the corp may be a nonreisent alien

Limited Partnerships

consists of at least one general parnter and onmore limited partners general partner -management responsibility for the partnership and has full responsibility for patnerhsip and its debts limited partner -contributes cash or other property and owns an interest in the firm but is not involved in management responsibilities. So they are not personally liable for partnership debts UNLESS THEY TAKE PART IN MANAGEMENT OF THE BUSINESS

crowdfunding

cooperative activity in which people network and pool funds and other resources via the internet

implied powers

corp gains implied powers when it is created. barring express constitutional, statutory or other prohibitioins

potential problem fro close corps

corporate assets to be used for personal benefit

de jure corporations

corporation has substantially complied with all conditions precedent to incorporation rightful and lawful existence

estoppel

court prevents the principal from denying that agency, agency by estoppel

Sole proprietorship

doing business without creating a separate business organization pros: owner owns whole business and recieves all profits and easier and less costly to start. No documents need to be filed w govt. Only pays personal income taxes. More flexibility than partnerships cons: the risk is all on that one person, personal assets at risk and lack of continuity

wholly owned subsidiary

establish a wholly owned subisidiary in a foreign country. societe anoyme (S.A) - similar to US corportation - parent company stays in U.S. and maintains complete ownership of all the facilities in foreign country

customs

evidence of a general practice accepted as law

doctrine of sovereign immunity

exempts foreign nations from the jurisdiction of the U.S. courts. shields foreign nations from jurisdiction of U.S. courts foreign states will not be immune: 1) when the foreign state has waived it immunity explicitly or by implication 2) when state has engaged in commercial activity with the in or outside U.S. with a "direct effect in the United States" 3) when the foreign state committed tort in U.S or violated international laws 4) when a foreign state is designated as a sponsor of terrorism

international law

formed as a result of interntaional customs, treaties, organizations between nations

export controls

govt cannot impose export taxes but can restrict or encourage exports: 1) export quotas (limits) 2) testrictions on technology exports 3) incentives and subsidies to aid domestic businesses

Confiscation

govt seizes private property for illegal purpose and without just compensation

act of state doctrine

judicial brach of one country will not examine the validity of public acts committed by a recognized foreign government within that government's own territory

national law

law of a particular country

corporation

legal entity created and recognized by state law. Has one or more owners called shareowners. Individuals and other businesses can both be shareowners. A corporation is recognized as a legal person opposed to a natural person. Limtied Liability of itspwmders, shareholders are not reliable for a corporation beyond their investments

principle of comity

legal reciprocity. Nations will defer to and give effect to the laws and judicial decrees of other nations when those laws are consistent with their own. Ex. people who get married in Australia are married in the U.S.

Limited Liability Limited Partnerships (LLLP)

liability of all parenters is limited to the amount of their investments in the firm. General partners have same liability of limited partners

Limited Liability Company (LLC)

limited liability aspects of corporation and tax advantages of partnership. Owners called members: -shielded from personal liability -unless courts pierce corporate veil As a legal person, the LLC can sue or be sued similar to corporation articles of organization must be filed with central state agency pros: limited liability LLC w two or ppl can choose to be taxes as a partnership or corporation; however if there is only one member it cannot be taxed as a partnership flexibility in allowing foreign investors to become LLC members cons: -state LLC statutes are not uniform

management of an LLC

member managed -all memberrs vot on decisions manager managed -members designate a person or group to manage LLC which may include nonmembers as well as owe their members fiduciary duties operating agreement 1) selection of managers 2) how profits will be divided 3) how members interests will be divided 4) whether dissociation of a member will trigger dissolution 5) whether formal member meetings will be held 6) how voting rights will be covered

Expropriation

occurs when govt seizes a privately owed business or privately owned goods for a proper public purpose and awards just compensation

board of directors

overall management and responsibility elected by shareholders they make policy decisions and hire corporate officers

holding company

parent company - business activity consists of holding shares in another company

Limited liability partnership

pass-throguh entity for tax purposes with limited liability of partners; used for professsional service firms and family business. must be formed in compliance with the state statutes; Uniform Partnership Act (UPA) LLP must file form w central state agency just like LLC and needs to file an annual report with state to remained qualified as LLP. allows professionals such as attorneys, accountants to avoid personal liability for malpractice of other partners

strict liability

person who engages in certain activities can be held responsible for any harm to others even if that person uses the utmost care

Abnormally Dangerous Activities

prime example of strict liability. ppl who own wild animals are strictly liable for them

private equity capital

private equity firms obtain their capital from wealthy investors in private markets

product liability

product defects cause injury or property damage to customers does not require privity of contract

manufacturing defects

product departs from intended design even though all possible care was exercised in prep and marketing of product ex. too thin of glass in water bottle

design defects

product is defective in deisgn because design itself is faulty. To successfully assert a design defect, the plaintiff must show that 1) a reasonable alternative design was available 2) as a result of the defendant's failure to adopt the alt design the product was not reasonably safe.

formation of LP

public and formal process: -must have 1 GP and 1 LPartner sign a certificate of limited partnership and must be filed w designated state offical under RULPa open to public inspection

public corporation vs publicily held corporation

public corp - formed by govt to meet govt purpose publicly held corp - any corp whose shares are publicily traded (NY stock exchange)

shareholders agreement

shareholder agreement can also provide for proportional conrol when the original share holder dies

close corporations

shares held by relatively few people, etc. family. management represents a sole propreitorship or a partnership

U.S. antitrust laws

they subject firms in foreign nations to their provisions, as well as protect foreign consumers and competitors from violations committed by U.S. citizens. price fixing - agreement w competitors to fix prices

franchise

well-known form of licensing. The franchisor licenses another to use mark

ultra vires doctrine

where a corporation is acting outside its stated purpose