LEGS 3010- Final Exam Prep

How is the number of corporate directors determined?

According to the corporate articles or bylaws. The corporate articles or bylaws specify the number of corporate directors.

ERISA (Employee Retirement Income Security Act of 1974)

Act that allows employers to set up insurance plans. Also allows funding for Medicaid

(FLSA) Fair Labor Standards Act of 1938

Established minimum living standards for workers engaged in interstate commerce, including provision of a federal minimum wage

Agent and Third Party Relationship

generally an agent is not a party in a contract unless the identity of the principal is not disclosed

Ultra Vires act

an act by a corporation that is beyond its express or implied powers

Periodically, Congress raises _______ to compensate for increases in the cost of living caused by inflation.

federal minimum wage requirements FLSA requires that a minimum wage of a specified amount be paid to all employees in covered industries. The specified amount is periodically raised by Congress to compensate for increases in the cost of living caused by inflation. The most recent increase took effect on July 24, 2009. The federal minimum wage increased from $6.55 to $7.25.

Formation of Corporation

- Select state to incorporate in - Approve corporate name - Draft articles of incorporation to file with State and pay filing fee - Hold organizational meeting, adopt bylaws

Which of the following is involved when an agency is referred to as a "captured" agency?

-A belief that agency officials are unduly influenced by past ties to the industry regulated by the agency. -A belief that agency officials are unduly influenced by their political party. -A belief that agency officials are unduly influenced by politicians in the state in which the agency is located. -A belief that agency officials are unduly influenced by politicians in states most affected by the regulations issued by the agency. -A belief that agency officials are unduly influenced by the desires of Congress. While some argue that agency employees who have been deeply engaged in an industry know it best, others refer to an agency in this situation as a "captured" agency.

Which of the following is false regarding revocation of the authority of an agent and renunciation by an agent?

-At any time a principal can revoke an agent's authority. -A principal's revocation of an agent's authority may result in a breach of contract entitling the agent to damages. -An agent can terminate the agency relationship by renouncing the authority given to the agent. -An agent's wrongful ending of the agency relationship may be a breach of contract entitling the principal to damages. -If an agent has breached a fiduciary duty to the principal, the principal can revoke the agent's authority; but the agent may be entitled to damages.

Liability of Directors and Officers

-Can be held personally liable for their own torts and crimes -Can be held personally liable for torts and crimes of other employees they supervise -Can be held liable for wrongful transactions involving company stock -Cannot be held liable for decisions that harm company if they were acting in good faith at time of decision

Which of the following is false under federal law regarding employer monitoring of employee telephone calls?

-Employers cannot listen to the private telephone conversations of employees. -Employers may be subjected to fines of up to $10,000 for violations. -Employers may ban personal calls during working time. -To check for compliance, employers may monitor calls so long as they discontinue listening to any conversation once they determine it is personal. -Employers must give employees access to a telephone and the ability to make personal phone calls at some point during the work day. Employers may ban personal calls and monitor for compliance, as long as they discontinue listening to any conversation once they determine it is personal; and they may be subjected to fines of up to $10,000 for violations.

Under the Fair Labor Standards Act, which of the following are not a category of employees exempt from overtime rules?

-Executives -Administrative employees -Professional employees -Outside salespersons -Shift workers

FMLA (Family and Medical Leave Act)

-Grants 12 weeks unpaid job protected leave to men or women after birth of child, adoption, or illness in immediate family -Only affects businesses with 50+ employees

Independent contractor vs Employee

-Independent contractor is one hired to accomplish a task or result but who is not subject to right of control by employer: <> IC tend to have specialized skills or knowledge <> Tend to work for many employers -Principal generally liable for acts of employee within line and scope of duties. Principal generally not liable for acts of independent contractor -Who controls the workers is the distinguishing factor in determining the difference between an independent contractor and an employee.

As set forth in the text, which of the following is false regarding agency law in relation to sports agents?

-Over half of the states have enacted statutes governing the behavior of sports agents. -Efforts are underway to develop a uniform act addressing regulation of sports agents because none exists at the present time. -Players associations' model contracts describe the nature of the services agents can perform on behalf of their principals and the duties the parties owe to one another. -Some states have established criminal penalties for athletes who violate the state law addressing regulation of sports agents, but most states focus on criminalizing the activity of sports agents. -The Major League Baseball Players Association's Regulations Governing Player Agents expressly state that agents act in a fiduciary capacity vis-à-vis their athlete clients.

Under ERISA, employers are required to provide to plan participants all of the following except:

-Plan information (i.e., features and funding). -A grievance and appeals process for participants to get benefits from their plans. -The right to sue for benefits and breaches of fiduciary duty. -A yearly outline of anticipated investments. Correct -Assurances that those in charge of managing plan assets have fiduciary responsibility.

Which of the following is not a basic limit on agency power?

-Political -Statutory -Informational -Approved -Judicial There are four basic limits on agency power: political, statutory, judicial, and informational.

Which of the following is not a reason for which leave may be requested under the Family and Medical Leave Act?

-The care of a seriously ill parent. -The birth of a child. -The adoption of a child. -The need for fertility treatments in order to conceive. -The placement of a foster child in the employee's care.

Which of the following is true regarding the rights of an employer who is held liable and pays a third party, not because of the employer's negligence, but under the doctrine of respondeat superior based upon negligence of an employee?

-The employer has no right to receive any reimbursement from the negligent employee. -The employer has a right to recover only 50% of any amounts paid from a negligent employee. The employer has a right to recover all amounts paid from the negligent employee. -The employer can recover all amounts paid from a negligent employee but only if it can be shown that the employee's negligence was based upon the violation of a statute. -The employer can recover 50% of any amounts paid from a negligent employee but only if it can be shown that the employee's negligence was based upon the violation of a statute.

According to the Revised Uniform Limited Partnership Act, which of the following is not a reason for which a limited partnership can be dissolved?

-The expiration of the term established in the certificate of limited partnership. -The completion of the objective established in the certificate. Incorrect -The withdrawal of the general partner (unless the certificate establishes that other general partners will continue). - An act of the court. - The written consent of a majority of all partners (limited and general).

Specialized Forms of Business Organizations

-cooperative -joint stock company -business trust -syndicate -joint venture -franchise

Examples of independent agencies include all but which of the following _______.

-the Federal Trade Commission -the Federal Aviation Agency -Securities and Exchange Commission -Federal Communications Commission -there are no independent agencies, only executive agencies Examples of independent agencies include the Federal Trade Commission (FTC), the Securities and Exchange Commission (SEC), and the Federal Communications Commission (FCC).

Under ERISA, employers must provide participants with all the following:

1. Plan information (features and funding). 2. Assurances that those in charge of managing plan assets have fiduciary responsibility. 3. A grievance and appeals process for participants to get benefits from their plans. 4. The right to sue for benefits and breaches of fiduciary duty.

According to the RULPA, a limited partnership can be dissolved for any of the following reasons:

1. The expiration of the term established in the certificate of limited partnership. 2. The completion of the objective established in the certificate. 3. The unanimous written consent of all partners (limited and general). 4. The withdrawal of the general partner (unless the certificate establishes that other general partners will continue). 5. An act of the court.

FMLA covers all employers with how many employees?

50 or more FMLA covers all public employers, as well as private employers with 50 or more employees.

Willamett has left her employment. She knows that she has the right under the Consolidated Omnibus Budget Reconciliation Act to pay for health coverage as she finds another job. When does Willamett have to decide whether or not to keep her health insurance?

60 days after her employment ended Under the Consolidated Omnibus Budget Reconciliation Act, an employee has 60 days after coverage for health benefits would ordinarily terminate to decide whether to maintain it.

Three types of Agency Relationships

<>principal-agent <>employer-employee <>employer-independent contractor

The requirement that a minimum number of directors be present at a meeting for decisions made at the meeting to be valid is which of the following?

A Quorum A minimum number of directors, or a quorum, must be present at each directors' meeting for decisions to be valid.

Corporate Opportunity Doctrine

A business proposition or investment opportunity that a corporation would have an interest in pursuing; precludes directors from taking a profit opportunity when the corporation would have an interest. fiduciary responsibility of directors with respect to investments

Fiduciary

A fiduciary is a person who has a duty to act primarily for another person's benefit.

Under which of the following does a principal give an agent broad authority to sign legal documents on behalf of the principal?

A general power of attorney

Revocation of Authority

A principal may revoke an agent's authority at any time by giving the agent notification of revocation. But if such revocation constitutes a breach of contract by the principal, the agent may recover damages from the principal If the agent has somehow breached the fiduciary duty to the principal, the principal can revoke the agent's authority without liability.

Substantive Rule

A rule issued by an administrative agency that has the force of law and to which covered persons and businesses must adhere.

Business Judgement Rule

A rule that immunizes corporate management from liability for actions that result in corporate losses or damages if the actions are undertaken in good faith and are within both the power of the corporation and the authority of management to make.

________ is an order issued by an agency to appear at a particular time and place and provide testimony.

A subpoena A subpoena is an order to appear at a particular time and place and provide testimony.

Procedural Rule

A type of administrative agency rule that prescribes procedures for agency operations, legislative rulemaking, and adjudication proceedings

Taft-Hartley Act (Labor Management Relations Act)

Act that provides balance of power between union and management by designating certain union activities as unfair labor practices; also known as Labor-Management Relations Act (LMRA)

Independent Agencies

Agencies in the executive branch of the federal government formed by Congress to help enforce laws and regulations not covered by the executive departments

Agency by Implied Authority

Agency formed by implication, through conduct of parties

Expressed Agency

Agency formed by making written/oral agreement

Agency by Estoppel (Apparent Agency)

Agency formed when principal leads third party to believe that another individual serves as his/her agent (although principal had actually made no agreement with purported agent)

Apparent Agency

Agency that arises when a principal creates the appearance of an agency that in actuality does not exist. Suppose a principal falsely leads a third party to believe another individual serves as his or her agent. By his or her conduct, the principal has created apparent agency.

Agency by Ratification

Agency that exists when individual misrepresents himself/herself as agent for another party, and principal accepts/ratifies unauthorized act

NLRB (National Labor Relations Board)

An agency created by the Wagner Act to prevent unfair labor practices and to mediate disputes between workers and management. -Interpret and enforce the National Labor Relations Act (NLRA) and provide judicial review in the court of appeals.

When determining whether or not a person is an employee or an independent contractor for purposes of agency law, what is the most important factor?

An employee is subject to the control of the employer.

_______ occurs when a principal allows a third party to believe another individual serves as his or her agent, but the principal has actually not granted that party any authority. What type of authority has the principal created?

Apparent agency

_______ is the document filed with the state that explains a corporations organization.

Articles of incorporation The articles of incorporation is the document a corporation files with the state explaining its organization.

Quenten and Pauline have decided to create a partnership for their new tutoring business. What type of written agreement creates a partnership?

Articles of partnership A written agreement that creates a partnership is called the articles of partnership.

In a partnership, the partners own partnership property as tenants in property, which means they own it _______

As a group. Partners own the partnership property as tenants in property, which means they own it as a group.

debt securities (bonds)

Bonds, or evidence of a debt, which the corporation promises to pay to the bondholder. Bondholders are creditors and not owners.

Contractual Liability of the Principal and Agent

Classification of the principal: The principal must be classified as disclosed, partially disclosed, or undisclosed. Authorized Acts: These are acts within the scope of the agent's authority. Unauthorized Acts: These are acts that go beyond the scope of the agent's authority.

Parties in a dispute before an administrative law judge may reach a settlement via a[n] _______.

Consent order The ALJ will try to convince the parties to reach a settlement via a consent order.

Creation of Administrative Agencies

Created to establish expertise and exercise supervision over certain problems about which congress is concerned, congress delegates power to the agency (the "delegation doctrine") through an enabling statute which specifies the name, comp., purpose, function, and power of the agency

Corporate Financing

Debt securities (bonds). Equity securities (preferred stock and common stock).

Durable Power

Designates a person to make healthcare decisions on behalf of the patient in the event the patient becomes incapacitated

Duties of Directors, Officers, and Shareholders

Directors and Officers: -Duty of Care -Duty of Loyalty -Duty to disclose conflicts of interest Majority Shareholder -Duty of care and loyalty when selling shares

Roles of Directors, Officers, and Shareholders

Directors: -A minimum number must attend aboard of director meetings -Legally responsible of day-to-day managements -Run day-to-day business of organization Act as agent of the corporation Officers: -Run day-to-day business of organization -Act as agent of the corporation Shareholders: -Approve major corporate decisions -Elect and remove members of the board of directors

_______ are what corporations declare in order to distribute their income to shareholders.

Dividends Corporations can distribute income to shareholders in the form of dividends.

Employer-Employee Relationship

Employees are agents of an employer. Employer hires employee to perform certain tasks Employer has right to control conduct of employees.

Principal-Agent relationship

Employer hires employee to enter into contracts on behalf of employer Parties have agreed that agent will have power to bind principal in contract.

_______ are what Congress uses to create administrative agencies.

Enabling statutes Administrative agencies are created by Congress through passage of enabling legislation, which is a statute that specifies the name, functions, and specific powers of the new agency.

Authority of the Agent

Express Authority: The principal has explicitly instructed the agent to do something. Implied Authority: The relationship is inferred from the conduct of the parties. Apparent Authority and estoppel: Apparent agency exists when a third party reasonably believes on the basis of a principal's actions that an agency relationship exists between the principal and another individual.

Wage and Hour Laws

Fair Labor Standards Act of 1938 -Minimum wage -Overtime requirements -California Wage Orders -Meal periods and rest breaks

Executive Agencies

Federal agencies that are part of the executive branch but outside the structure of cabinet departments. Their heads typically serve at the pleasure of the president and can be removed at the president's discretion.

_______ have a duty to act primarily for another person's benefit.

Fiduciaries

Agency

Fiduciary relationship (relationship of trust) in which agent acts on behalf of principal There are four basic limits on agency power: political, statutory, judicial, and informational.

Administrative Agencies

Governmental bodies formed to carry out particular laws by the legislative branch. Exist at both Federal and State Levels

The right to recover damages, the right of indemnification, for an employer who is held liable and pays a third party

If the third party is able to establish employee negligence such that the employer is liable, the employer has the right to recover from the employee any damages he paid the third party as a result of the employee's negligence. The right to recover damages is referred to as the right of indemnification.

Unemployment Compensation Law

Law providing funds for workers which are unemployed due to layoffs; allows time for workers to find another job; established by the federal Social Security Act in 1935; funded by taxpayers

Employer-Independent Contractor Relationship

Independent contractors cannot enter into contracts on behalf of the principal unless the contractor possesses authority from the principal. Employer hires persons (other than employee) to conduct some sort of task; Employer has no control over details of conduct of independent contractor

Which agency was the first administrative agency created by Congress in the U.S. designed to help combat the anti-competitive nature of the railroads?

Interstate Commerce Commission. The first federal administrative agency, the Interstate Commerce Commission (ICC), was created by Congress near the end of the 19th century as a means to better control the anticompetitive conduct of railroads.

Carlos wants to purchase a lot, owned by Sarah, that is next door to Sarah's home. Carlos knows Sarah will not sell the lot to him because of his barking dogs that she dislikes. Carlos agrees with Jasmine that Jasmine will purchase the lot from Sarah for him. Jasmine and Sarah reach an agreement and enter into a contract whereby Sarah is to sell the lot to Jasmine for a price within the scope of Jasmine's authority. Jasmine tells Sarah nothing about her plan to later transfer the lot to Carlos. Before title to the lot is transferred to Jasmine, Carlos tells Jasmine that he no longer wants the lot. Jasmine tells Sarah about Carlos. Sarah tells Jasmine that as far as she is concerned, Jasmine has bought the lot. Sarah says that she plans to move anyway and really does not care whether Jasmine or Carlos ends up with the lot. She just wants her money and is unconcerned about barking dogs, which will be the next owner's problem. Which of the following is true regarding whether Jasmine is personally bound on the contract with Sarah?

Jasmine is personally bound. When the agent acts within her authority on behalf of an undisclosed principal, the law will likely hold her liable for the agreement. In the eyes of the third party, the agent is the only person who could be liable.

COBRA (Consolidated Omnibus Budget Reconciliation Act)

Law to provide terminated employees or those who lose insurance coverage because of reduced work to be able to buy group insurance for themselves and their families for a limited amount of time.

_______ rules of an agency are policy expressions that have the effect of law.

Legislative Legislative rules are policy expressions that have the effect of law.

Three Types of Powers of Agencies

Legislative Judicial Executive

In a _______ the general partners assume unlimited personal liability for the partnership debts, however, the limited partners assume no liability beyond the capital they invested and have no part in the management.

Limited partnership In a limited partnership, the general partners assume unlimited personal liability for the partnership's debts, but the limited partners assume no liability beyond the capital they have invested in it and no part in its management.

Corporate Powers

List of activities enumerated by a state in which a corporation can engage Corporations have both express and implied powers.

UAAA- Uniform Athlete Agents Act

Model act adopted by numerous states in order to regulate sports agent conduct in relation to student athletes The specific legislation that regulates the conduct of athlete agents in these 40 states is the Uniform Athlete Agents Act (UAAA).

Striking union members of Company A decide that picketing Company A is not accomplishing the desired results and decide to further their efforts. Natasha, the union president, suggests that they picket Company X, a supplier to A, to pressure X into not doing business with A. Which of the following is true regarding Natasha's plan?

Natasha's plan is illegal because of the prohibition against secondary boycotts occurring during a labor dispute. Secondary boycotts are illegal. These occur when employees have a labor dispute with their employer and boycott another company to force it to cease doing business with the employer.

Employee Privacy Rights

Omnibus Crime Control and Safe Streets Act: -Employers cannot listen to the private telephone conversations of employees, or disclose the content. -May ban personal calls and monitor for compliance, but must stop listening when determined private. Electronic Communications Privacy Act: Extended privacy rights to electronic communication: email and cell phones.

Administrative Law Judge

One who presides over an administrative agency hearing and has the power to administer oaths, take testimony, rule on questions of evidence, and make determinations of fact. Has the power to issue a binding decision.

Limitations of Powers of Administrative Agencies

Political Statutory Judicial Informational

Tort Liability and the Agency Relationship

Principal's tortious conduct: 1.) Principal directs agent to commit a tortious act or 2.) Principal fails to provide proper instruments and tools or adequate instructions. Agent misrepresentations: Agent misrepresents himself to a third party, principal may be tortuously liable for the agent's misrepresentation. Respondeat superior: Principal/employer is liable not because he was personally at fault but because of negligently hiring the agent. Principal's liability and the independent contractor: An individual who hires an IC cannot be held liable for the IC tortious actions under the doctrine of respondeat superior unless the contractor engages in hazardous activities.

Rights and Remedies of Agents and Principals

Principal: -Constructive Trust -Avoidance -Indemnification Agent: -Tort and contract remedies -Demand for an accounting -Specific performance

Which of the following types of rules are rules regarding the internal operations of an agency?

Procedural Procedural rules govern the internal operations of the agency.

Wagner act

Protected the rights of most workers in the private sector to organize labor unions, to engage in collective bargaining, and to take part in strikes and other forms of concerted activity in support of their demands. -collective bargaining: negotiation of wages and other conditions of employment by an organized body of employees. -Formed the National Labor Relations Board: an independent agency of the United States government charged with mediating disputes between management and labor unions

Classification of Corporations

Public corporation, private corporation, quasi-public corporation, domestic corporation, foreign corporation, Special Service Corporation, Close corporation

Rule-Making Functions of Administrative Agencies

Rule Making --Agency initiates informal rule making by publishing a proposed rule in federal register Formal Rule Making --requires a hearing; most enabling statutes do not require formal rule making/hearing Hybrid rule making --written comments+informal publics hearing

equity securities (stocks)

Securities issued by corporations as a form of ownership in the business.

Liability of Shareholders

Shareholders liable (to extent of their investment) for debts of corporation Shareholders personally liable for receiving illegal dividends

When a person decides to go into business on his or her own without further formality, what do they form?

Sole proprietorship If you decide to go into business on your own, you are creating a sole proprietorship.

Major Forms of Business Organizations

Sole proprietorship: Owner has total control and unlimited personal liability, and profits are taxes directly as income to the owner. General Partnership: The partnership is not a legal entity, and each partner has equal control and unlimited liability, with profits that are taxed as income for partners. Limited Partnership: Limited partnerships are similar to general partnerships, except liability is limited to the extent of their capital contributions. Corporation: Separate legal entity wherein the owners' liability is limited to the amount of their contributions, and the profits are taxed as income to the operation. Limited Liability Company: A LLC combines best tax and liability features of partnerships and corporations. LLC, all members may participate in management of the business while enjoying a shield of limited liability for their assets.

Landrum-Griffin Act

Specially tailored to make labor officials responsible for the union's financial affairs, to prevent bully-boy tactics, ensure democratic voting practices within unions, outlaw secondary boycotts, and restrict picketing. -Required Financial Disclosures and established criminal penalties for abuses by union officials. -Contained the "Labor Bill of Rights" which protects the employees from their own unions.

Workers' Compensation Laws

State statutes establishing an administrative procedure for compensating workers for injuries that arise out of—or in the course of—their employment, regardless of fault.

Termination of Agency Relationship

Termination by acts of parties: -Lapse of time -Fulfillment of purpose -Occurrence of a specific event -Mutual Agreement by the parties -Revocation of Authority -Renunciation by the agent Termination by operation of law: -Death, Insanity, Bankruptcy, Changed Circumstances, Change in law, Impossibility, or Disloyalty of the agent.

Which of the following primarily governs the internal operations of labor unions?

The Landrum-Griffin Act The Landrum-Griffin Act primarily governs the internal operations of labor unions.

Administrative Law

The body of law created by administrative agencies (in the form of rules, regulations, orders, and decisions) in order to carry out their duties and responsibilities.

Principal's Duties to Agent

The principal owes specific duties to the agent. Failure to fulfill these duties provides the basis for a tort or contract action against the principal. 1. Compensation 2. Reimbursement and indemnification 3. Cooperation 4. Safe working conditions

Under the Family and Medical Leave Act, who is considered an eligible employee?

Those who have worked at least 25 hours a week for each of 12 months prior to the leave. Eligible employees are those who have worked at least 25 hours a week for each of 12 months before the leave.

Strikes, Pickets, Boycotts

Tools that the union uses against the management of a company. During strikes, workers refuse to work. In pickets, people use signs to publicize the strike and to stop strike breakers. In a boycott, the union asks the public not to buy the company's products

Unfair labor practice (ULP)

Violation of employee rights; act prohibited under labor relations statutes.

Three Primary Labor Relations Laws

Wagner act of 1935 Taft-Hartley Act of 1947 Landrum-Griffin Act of 1959

Agent's Duties to the Principal

When an agent fails to fulfill his duties to the principal, that failure provides the basis for a contract or tort action against the agent. 1. Duty of Performance 2. Duty of Obedience 3. Duty of Accounting 4. Loyalty 5. Notification

public corporation

a corporation whose stock anyone may buy, sell, or trade

Power of Attorney

a legal document authorizing someone to act on your behalf

general power of attorney

a power of attorney where a principal confers broad powers on the agent to act in any matters on the principal's behalf A general power of attorney grants broad authority.

closely held corporation

a type of corporation that issues stock to only a few people, who are often family members

Pelley gives Jorge a durable power of attorney, this gives Pelley what?

authority to continue beyond a principal's incapacitation

The term _______ is associated with the change in the relationship of the partners caused by any partner's ceasing to be associated with the carrying on of the business.

dissolution Section 29 of UPA defines dissolution as "the change in the relation of the partners caused by any partner's ceasing to be associated with the carrying on, as distinguished from the winding up"—the activity of completing unfinished partnership business, collecting and paying debts, collecting partnership assets, and taking inventory—"of the business."

OSHA (Occupational Safety and Health Act)

is a federal law that establishes and promotes workplace safety standards for businesses.

The Latin phrase _______ means to "let the superior speak."

respondeat superior The term "respondeat superior" is a Latin phrase meaning "let the superior speak."

Characteristics of a Corporation

separate legal existence, limited liability of stockholders, transferable ownership rights, ability to acquire capital, continuous life, corporation management, government regulations, additional taxes

Varon was ordered by an administrative agency to appear before them and bring with him all of the documents associated the with the case before them. This order is known as a(n)

subpoena duces tecum A subpoena duces tecum is an order to appear and bring specified documents.

Four categories of employees are excluded from overtime pay rules:

• Executives • Administrative employees • Professional employees • Outside salespersons.

The Family and Medical Leave Act applies for any of the following family related occurrences:

• The birth of a child. • The adoption of a child. • The placement of a foster child in the employee's care. • The care of a seriously ill spouse, parent, or child. • A serious health condition that renders the employee unable to perform any of the essential functions of his or her job