CRR Final
Nestle Social Responsibility
"Shared value program": NEVER ignoring needs of shareholders, meant to benefit both shareholders and stakeholders, very targeted specifically to their supply chain (their factories, farms)
name of partnership
"assumed name:" if names other than the partner names are used, must register with the state as a partnership
respondeat superior
"let the master respond"; agent is only in the situation/place/time because of principal
adhesion contract
"take it or leave it" no choice in terms of contract/no negotiation
Immanuel Kant
"we are all equal"; respect for individual rights (deontology)
contributory negligence
(few states) if the plaintiff is at all at fault, plaintiff cannot recover anything from defendant
comparative negligence
(most states) plaintiff's recovery is reduced by the percentage that the plaintiff was at fault (if >50%, no recovery)
age discrimination in employment act (ADEA)
(much more employer-friendly than title 7) prohibits employment discrimination against employees 40 or older; prohibits mandatory retirement except for high-level execs aged >=65 who will receive >= $44,000 a year; applies to employers with >= 20 employees
buy/sell agreement
(partnership) control always stays with remaining partners
intentional infliction of emotional distress
1. defendant must act intentionally or recklessly 2. defendant's conduct must be extreme and outrageous 3. conduct must be the cause 4. of severe emotional distress (may need to show physical symptoms)
common attributes of CSR actions
1. if you don't money, you can't help anyone 2. municipal, state, federal, international legal compliance 3. avoid claims of greenwashing by curing problems caused 4. CSR strategy has to be unique to each company 5. stakeholder theory
components of progressive business model
1. mandated actions (what is the least you have to do?) 2. market actions (what does the market demand of you?) 3. voluntary actions (truly sophisticated initiative must have this)
Nestle
1/3 of national market for infant formula in 3rd world countries; if mothers used formula immediately, leads to captive market; instructions were printed in French (not native language), had to be mixed with (dirty) water, expensive which led to diluting and malnourished babies; their response is hidden deeper and deeper in website
US Circuit Courts
13 in the country; HAVE to take your appeal; decisions have no impact on district courts in other circuits
must prove scienter
1934 Act; negligence (plain carelessness) is not the same as reckless disregard and is not enough to establish liability
criminal penalties
2 million dollar fines for corporations, thousands of dollars and imprisonment for individuals, aso civil actions possible
bargained for exchange
2 requirements: the promisee's legal detriment or the promisor's legal benefit must have induced the promisor to make his promise AND the promisor's promise must have induced the promisee's legal detriment or induced the promisor's legal benefit (PAST CONSIDERATION IS NO CONSIDERATION)
civil penalty for using nonpublic information
3x profits gained (punitive damages); controlling person who fails to prevent employees' illegal use of nonpublic information pays $1 million or 3x damages (aka boss will also get fined for not properly monitoring)
Bruesewitz v. Wyeth
6 month old daughter took Wyeth vaccine, got seizures within 6 months; parents sued, but court said manufacturer was not liable; mandated insurance program deals with this, court ruled this program would take care of the case
seller's damages (1934)
= fmv of what should have received - fmv of what did get
petition for certiorari
A petition asking the Supreme Court to hear a case
Summary Judgement
A ruling by the court that no trial is necessary because some essential facts are not in dispute; not ADR, part of the process of litigation
corporations
ARE recognized as separate legal entities
Dees v. United Rentals North America
African American male replaced by white male, sues for discrimination on race and loses; brought a disparate treatment case, proved prima facie, defendant proved he was putting company at risk
Al-Dabagh vs. Case Western Reserve University
Al-Dabagh broke Case Western's rules; takeaway is having an ethical component and impact on stakeholders; precedent for behaving poorly, recruiters choose not to hire students, future customers and alumni affected
Ballard v. Chicago Park District
Ballard worked for Park District, planned trip for sick mother to Las Vegas, not granted medical leave absence, fired upon return; rule is family and medical leave act; she would have been covered if in Chicago, not up to employer to decide WHERE she can take care of terminally ill mother; in favor of Ballard
incidental beneficiaries
CANNOT enforce a contract even if they obtain some unintentional benefit from it
Financial Statements and Controls (SOX 2002)
CFOs/CEOs must certify the accuracy of quarterly and annual financial statements filed with SEC and the existence of internal financial controls (which have to be independently audited); whenever financial statements have to be restated/corrected, execs must return any bonuses paid as result of incorrect statements; corps cannot make personal loans to execs
Coca-Cola v. Koke Co. of America
Coca-Cola sought to prevent other companies from using from using "Coke"; sue Koke for infringement, say that Koke implies there is cocaine in their product (DONT want trademarks to describe what it is); main idea: freeloading off Coca Cola
defendant relied on expert
DOES NOT APPLY TO ISSUER because the accountants got their numbers FROM issuer; if this applied to issuer, they could purposely hire bad accountants/lawyers; applies to underwriter/seller
losses (tax benefit)
FOR TAX PURPOSES ONLY, losses are good; pass through can deduct business loss from personal income for less taxable income and possibly lower bracket (TVM: pass through has more income sources to counter loss so that loss is realized immediately); corp pays no taxes in year of loss, loss can be carried forward indefinitely (loss not immediately realized and if corp needs to keep carrying losses, clearly not doing well)
blake vs. Giustibelli
Giustibelli was Blake's divorce attorney; relationship went south and Blake posted defamatory reviews online about Giustibelli, Giustibelli sued for libel defamation; issue of if the comments were libel defamation or protected by first amendment; statements were lies about fact, plead for libel affirmed, could have avoided defamation suit if comments were an opinion
Moseley vs. Pepco Energy Services
Herzog improperly used company assets to hire friends and family; rule: conscientious employee protection act; Herzog was not doing anything illegal, was reported through deontology (company needs oversight policy/ structure to prevent retaliation, need management to enforce clear/unified signal) Emphasis on ATTITUDE OF TOP MANAGEMENT
process of legal reasoning
IRAC: issue, rule, application, conclusion
Lhotka v. Geographic Expeditions
Issue: is arbitration clause grossly unfair or unconscionable; Takeaway: provision may be unconscionable and therefore unenforceable if it has both procedural and substantive element
specific jurisdiction
Jurisdiction that stems from the defendant's having certain minimum contacts with the forum state; specific case
liability of corporation
LIMITED personal liability; most liable for amount invested in the company (corporation is separate entity therefore responsible for its own debt)
dilution of mark
Lanham Act prohibits this: unauthorized use of a famous mark that reduces the mark's distinctiveness by diluting its significance, reputation, or goodwill; dilution illegal even if does not create potential for competition or likelihood of confusion; mark must be famous to establish dilution
Section 18
Liability for making/causing to be made any false/misleading statements of material fact in ANY document filed under the act; must prove all elements of fraud, including scienter and reliance (catch-all for ANY false/misleading statements filed)
Viox
Merck's cholesterol controlling drug; aggressively marketed it even though they noticed correlation with heart disease; reported to FDA, but still pushed it; thousands of lawsuits, settled them allduty to create wealth in ways that protect, enha
elements to prove for fraudulent misrepresentation
Misrepresentation of fact, that is Material, made with the Intent to deceive (or with reckless disregard for truth), on which another justifiably Relies, resulting in damages/Harm to that person; for fraud/contract claim, prove 1-4; for tort claim, must prove 1-5 and measure harm
exclusive federal jurisdiction
NO OPTION to bring these into state courts; patents, bankruptcy, federal crimes, etc
double tax
NUMBER ONE disadvantage of corporation paying its own taxes; corp gets taxed 21% on business income, then individuals get taxed on personal income while pass throughs get taxed once, possibly with 20% deduction
intended beneficiaries
ONLY third parties that have a right a right to enforce the contract; include creditor and donee beneficiaries
Procedural Unconscionability
Oppression and surprise may create an unconscionable bargain; plaintiffs lack bargaining power
managerial control of sole proprietorship
SOLE control
Schwarck v. Arctic Cat Inc.
Schwarck tried to do k turn on edge of cliff, didn't know she was in reverse; filed for negligent design; issue is RISK-UTILITY; trial court in favor of Arctic Cat, appeal court says issue of material fact (if "beep" noise was defective); product liability breach of implied warranty
uniform laws
Suggested laws created by the NCCUSL to achieve consistency between state laws; only take effect when state follows the code; example are contract laws
statutory law
The body of law enacted by legislative bodies; role of legislature, executive, and judiciary (as opposed to constitutional law, administrative law, or case law)
continuity of sole proprietorship
VERY fragile; since not separate entity, if owner dies, business dies; cannot sell company, can only sell equipment, name, customer list, etc.
affirmative action
VERY strict rules; federal government started requiring contractors to agree to actively recruit minorities who are underrepresented in the workforce; can give rise to reverse discrimination claims
positivist school
VERY strict with law as it is written
contracts to commit crimes/torts
VOID BITCH
New England LLC v. Jones
Wilson real estate broker agreed to be agent for Jones (exclusive), he is also working with other exclusive agent; buys house and tells Wilson nevermind; two contracts of exclusive right, rule is duty of cooperation; he argued price too high, court doesn't look at value of consideration; New England wins
Winstead v. Jackson
Winstead said Jackson infringed on his book in his song; argued that the specifics of his story should be protected; says plotlines are similar, court says only themes are similar; not all copying is copyright infringement; cannot copyright/exclusively control an idea
independent directors
ZERO relationship to company outside of board; subset of outside directors; CANNOT own stock in company
bilateral mistake
a contract can be rescinded (is voidable by either party) if both parties are MUTUALLY mistaken about MATERIAL fact
performance and discharges
a party fulfills/discharges its duties by performing as required by the contract
tendered performance
a party has this when he/she is ready, willing, and able to perform as promised; have met obligation if you were there and ready to perform
agent
a person who acts or does business for another
preexisting duty
a promise to do or the performance of something that a party already had to do (either by law or by contract) is NOT usually consideration; exception of unforeseen difficulties and not applicable under UCC
third party beneficiary
a third party whom the contracting parties intend the contract to directly benefit can enforce the contract against the party whose performance will benefit the third party
IMPLIED 6th factor to consider when choosing type of organization
ability to raise capital
higher individual tax rate
above a certain point, especially $207,500, pass through pays higher tax percentage and may lose 20% deduction, thus paying more than a corporation would at 21%
mailbox rule
acceptance is effective when sent, regardless if ever received; offeror can call at any moment to revoke, gives offeree more security (once it's dropped in the mailbox, it is effective)
Civil disobedience
acting ethically but against the law
incidental damages
actual expenses directly caused by the breach, including cost of getting replacement performance (ex. advertising costs)
remedies for copyright infringement
actual/statutory damages, legal fees, illegal profits, and destruction of illegal copies (also criminal penalties); protection NOT available for ; infringement occurs whenever the form or expression of an idea is copied (regardless if it is copied entirely or exactly)
elements of crime
actus reus, mens rea
no competence
adjudged mentally incompetent by court; contract is VOID
Securities and Exchange Commission
administrative agency responsible for administering federal securities laws; appointed by president, with quasi-legislative and quasi-judicial powers (have hearings, catch insider trading)
Executor (SOF)
administrator of an estate; promise to personally pay debts of the estate MUST be in writing (specific type of guaranty promise/agreement)
exceptions to parol evidence rule
admissible if to: 1. clarify ambiguous terms 2. show a subsequent modification (written or verbal) 3. show contract is void/voidable because of a defense 4. show prior dealing, course of performance, or trade usage (UCC concept, applied outside of UCC)
board of directors duties
advise management, oversee compliance/ethics, select/remove CEO, help audit committee, CSR, nominating committee, strategic plans; FIDUCIARY DUTY (business judgement rule)
condition subsequent
after a party has begun to perform, a condition that must be met before the party must continue (ex. passing an exam after getting hired in order to keep working)
at what point in time does the court examine materiality in SEC v. Texas Gulf Sulphur
after establishing misrepresentation of fact/elements of fraud
waiting period
after issuer files registration, 20 day period during which SEC investigates accuracy of registration statement; still cannot sell, CAN solicit/receive offers, publish tombstone ads (basic info)/preliminary prospectus to start getting words out
posteffective period
after waiting period (can be different than 20 days if SEC says so), can buy and sell freely
emergency powers
agent enters into contract in an emergency and does not have time to alert principal
agent's duty of obedience
agent has to follow all REASONABLE instructions
contractual liability
agent's ability to bind the principal to a contract depends on whether the principal authorized the agent's actions
employee
agents of their employers
elements of a contract
agreement (offer and acceptance), consideration
partnership
agreement by two or more people to enter JOINTLY into business and share profits/losses
historical school
aka strict constructionist; not as literal as positivist, not as expansive as natural law judge
purpose for exec compensation
aligning exec interest with shareholder interest, reward individual and firm performance, competitive compensation package to attract best talent
general partner
all attributes of a partner in regular partnership (pass through, unlimited personal liability)
limited partner
all attributes of corporate shareholder (corporate tax, limited personal liability, not involved in operations of company)
Madrid Protocol (2003)
allows trademark owners to file single application for registration in all member countries
anticompetitive agreements
although between private parties, have such a negative impact on society they are deemed illegal (usually also violate antitrust statute)
liquidated damages
amount stated in contract to be paid in case of a future breach; enforceable if damages resulting from breach appeared difficult to estimate when parties made the contract AND liquidated damages amount is a reasonable estimate of actual damages
security
an investment of money in a common enterprise with profits to come solely from the efforts of others; comes from Supreme Court (common law supplementing statutory law); much broader than stocks/bonds
conclusion
answer to the question
contracts against public policy
anticompetitive agreements, covenants not to compete, exculpatory clauses
strict liability under product liability
any commercial seller who sells a product which is defective AND unreasonably dangerous is liable for all personal or property damage caused by the product regardless of seller's fault; applies to anyone involved in the preparation and distribution of a defective product, injured bystanders as well as consumers can sue; some states limit damages to personal injury, not property damages
trade secrets
any information that a company takes reasonable precautions to keep secret and gets its economic value from being kept secret (customer/supplier lists, plans, marketing techniques, production methods, R&D, pricing, formulas); must take reasonable precautions to keep information secret; economic value can be proven by showing information is of value to competitors
disability
any physical or mental impairment that substantially limits one or more of an individual's major life activities; determination is made without regard to mitigating measures (ex. artificial limbs); impairments that last 6 months or less are not covered (episodic or impairments in remission are covered); disorders resulting from current substance abuse are not covered (recovered addicts are protected)
conversion
any unauthorized act that deprives an owner of his/her personal property without his/her consent
insiders
anyone who owns more than 10% of any security OR is a director/officer of the issuer of the security (exec officers, CEOs, controllers, accountants, attorneys)
intellectual property
anything you create
agency relationship
anytime someone acts on someone else's behalf
injunction
applied to anything; to force someone to start/stop doing something
Anti-Counterfeiting Trade Agreement
applies to tangible and electronic counterfeiting
creation of corporation
articles of incorporation, corporate charter; domestic/foreign/alien; name
types of organizations
as business changes, this can change; sole proprietorship, partnership, corporation, S corporation, limited partnership, LLC
business judgement rule
as long as a reasonable business person would reasonably make decision, board is not liable for violating fiduciary duty
scope of employment
as long as agent is WITHIN scope of employment, principal held liable for his torts
progressive tax system
as you make more money, tax rate increases
general rules for assignments
assignor can no longer enforce obligation (assignee "steps into the shoes" of the assignor); assignment can be verbal or written; any contract right is assignable (with EXCEPTIONS)
defenses for product liability
assumption of risk (commonly known danger, knowledgeable user), product misuse, alteration of the product (no longer in the same shape it was when it left the manufacturer), comparative (NOT contributory) negligence
limited partnerships
at least one general partner and one limited partner
long-term stock incentives
attempt to align exec interest with shareholders
protection under federal Copyright Act
automatic without registration for the life of the author plus 70 years (75 for corporations); gives holder the right to control the reproduction, display, distribution, and performance of work; must register with US Copyright Office to get full remedies (including damages) under federal law; d not have to use the C symbol, but should be eligible for federal remedies
penalty for non compliance with WARN act
back pay required for 60 day period and/or $500/day failed to notify local government
backdating
backing the date of stock option to lower priced date; not illegal if shareholders/company/board is notified
objective person standard
based on what a "reasonable" investor would use to make a decision
intentional torts against people
battery, assault, false imprisonment, intentional infliction of emotional distress, defamation, invasion of privacy
undue influence
because of a relationship, one party manipulates the other so that they are not exercising free will
lower individual tax rate
better for pass throughs; individual tax rate for pass through may be lower for same amount of income as corporation paying 21%, with 20% deduction and no double tax; DO NOT APPLY INDIVIDUAL TAX RATES AT FLAT RATE IN REAL WORLD
corporate charter
birth certificate (easiest to incorporate in Delaware)
Sarbanes-Oxley Act
board audit committee has to be made up of independent directors only, with at least one being a financial expert
corporate governance under SOX 2002
board audit committees must be comprised solely of independent directors; at least one member of audit committee must be a financial expert; audit partner must rotate off the client every 5 years (to avoid audit/client biases/relationships); auditors must report to the audit committee and CANNOt have close working relationship with CFO, accounting staff, or other exec
performance shares
bonus paid in stock rather than cash if goals were met (given after goals are met)
bilateral contract
both parties promise to perform later; acceptance is in the PROMISE to perform
tort
breach of civil duties/duty owed to another not arising from a contract; crime is more about punishment, tort is more about compensation
derivative suits
brought by shareholders on behalf of the company for harm to the company; right to sue comes from corporation's right to sue (as a rep); when a shareholder sues company, court can decide to make the company share cost of litigation
two factors court examines to decide if duty of loyalty was breached
business opportunity has to be related to field of company, exec only has to tell about opportunity if it is a realistic opportunity
damages (under 1934 act)
buyer's/seller's damages, consequential damages, NO punitive damages, defendant CAN seek contribution from all other parties who have joint responsibility for the violations (accountants/attorneys)
product liability
buyers, users or bystanders can recover for injuries caused by defective products through negligence, fraud, strict liability, or breach of warranty claims; balance cost for manufacturers with need to compensate victims and improve products/prevent injury (want to protect consumers BUT don't want to push manufacturers out of industry)
termination of agency relationship
by the parties, expiration/accomplishment, operation at law
diversity jurisdiction
can bring a state case into federal court IF $75,000 and parties are from different states
fair use doctrine for copyrights
can copy copyrighted materials without penalty if intended use is for "criticism, comment, news reporting, teaching, scholarship, or research"
qualified disabled under ADA
can perform job function with or without reasonable accommodations; employee must file with EEOC before suing (like title 7)
well known seasoned issuers
can sell security right away; must have issued at least $1 billion in securities in last 3 years or at least $700 million of outstanding stock; they have been through this process a lot and recently, meaning their info has already been vetted and is accurate
revocation of offer by offeror
can take back offer EVEN IF promised to keep it open (up until offeree accepts); can be expressed or implied; effective when it is RECEIVED; revocation to the public must be communicated the same way as the offer
equal pay act
can't discriminate based on sex in paying wages for equal work; work is equal if performed under similar conditions and requires similar skill/effort/responsibility; discrimination based on non-gender reasons is okay(seniority); even if work isn't equal, unequal pay may create claim under Title 7; Lily Ledbetter
basic limitations of s corp
cannot have more than 100 shareholders, shareholders must be human
causation
cause in fact, proximate cause
advantages to alternative dispute resolution (ADR)
cheaper/faster, private, advantage in picking decision makers (experts), less adversarial (everyone can walk away with something), flexibility
contractual capacity for minors
children are minors/infants until they turn 18, marry, or become emancipated; 1. minors can enter into any contract as long as not illegal 2. most contracts entered into by minors are VOIDABLE by the minor 3. minor can disaffirm while a minor or during a short period after 18 4. must disaffirm entire contract (or nothing) 5. to disaffirm, minor must return goods/consideration for full refund
who has liability under 1933 act
civil liability for signers, directors, partners (current or future), underwriters/professionals who helped prepare statement
tort
civil wrong (civil not criminal law)
tort
civil wrong; anytime someone lies to you and that lie causes harm, you can sue for fraud
Lily Ledbetter Fair Pay Act
claims for back pay are timely if filed within 180 days of any discriminatory paycheck
top management
code of conduct MUST be endorsed by top management
statutory law for contracts
codifies common law (UCC- sale of goods)
dram shop statutes
commercial alcohol vendors are strictly liable for injuries caused by drunken patrons
mirror image rule
common law; the acceptance's terms must exactly match the offer's terms, or else the acceptance is deemed a counteroffer (ex. buying a house)
defenses to negligence
comparative negligence, contributory negligence, assumption of risk, good samaritan statutes
conscientious employee protection act
compensation for whistleblowers who are retaliated against; criteria: 1. reasonably believe conduct is illegal 2. reported conduct 3. causal effect of your action and retaliation for reporting conduct
principal's duties
compensation, reimbursement, indemnification; cooperation
executed contract
complete, fully performed
Lehman brothers case takeaway
concern of powerful execs
condition precedent
condition must be fulfilled before a party can be required to perform (ex. buying a house: if I can sell my house, then contract is binding)
article I of constitution (why intellectual property is important)
congress has the power to promote the progress of science and useful arts by securing limites times to authors/inventors the exclusive right to their respective writings/discoveries
common defenses for intentional torts
consent (plaintiff gave permission), mistake (defendant acted under mistaken belief his conduct was justified), necessity (emergency situations), self-defense
discussion (decision making model)
consider available alternatives; 1. consider impact of your decision on other stakeholders (beneficial/harmful consequences on others/environment, rules/duties/rights/principles "should everyone do what I am doing?") deontological view: want to set a precedent in company/industry? 2. implications for personal integrity "do i want to tell my family/boss/media?"
legal sufficiency
consideration must be either a legal detriment to the promisee or a legal benefit to promisor
common law definiteness of terms of offer
contract must contain: who, what, how many, how much, when (identify parties, subject matter, quantity, price/consideration, time of performance)
specific performance
contract remedy only; the court forces the parties to go through with the contract
license
contract with owner of property permitting limited use of the property; breach can still be infringement (breach is easier to prove than infringement)
mistake of value
contracts are not voidable due to mistakes of value, whether bilateral or unilateral; DIFFERENT THAN MISTAKE OF FACT
intoxication (contractual capacity)
contracts entered into by intoxicated people are either VOID or VOIDABLE if the person's judgement was so impaired that he couldn't understand the legal consequences of his actions (NOT LIBERAL with this); voidable contracts (including necessaries) can be disaffirmed after full restitution; intoxicated person may express/impliedly (doing nothing) ratify voidable contract within reasonable time after sobering
mental incompetence (contractual capacity)
contracts entered into by the mentally disabled are VOID, VOIDABLE, or VALID; 1. if person has been legally declared incompetent, contract is VOID 2. even if not legally incompetent, if the person doesn't have mental capacity to understand he/she is signing a contract/the consequences, he contract is VOIDABLE; contract can be disaffirmed or ratified and incompetent person is liable for reasonable value of goods received 3. if person is not legally incompetent and has lucid period or sufficient mental capacity to understand, contract is VALID
covenants not to compete
contracts that restrict outgoing business owner or employee from engaging in similar business; must protect legitimate business purpose (goodwill, trade secret- not just competition); court will look at restriction in terms of time, geography, and scope of activity (worried about stronger party imposing unfair terms on weaker party)
One-Year Rule
contracts that their own terms cannot be performed in one year must be in writing; contract performance must end one year from the date the contract is made; focus on whether performing contract within one year is POSSIBLE (not just likely)
legality of contracts
contracts to do something prohibited by law or against public policy are VOID
seller
contracts with purchasers or provides motivating influence to buy (ex. local seller)
unconscionable contracts/clauses
contracts/terms that are so grossly unfair as to "shock the conscience" of the court; unconscionability comes from UCC and applied at discretion of courts
defenses to the validity of a contract
contractual capacity, legality, genuineness of assent, form (statute of frauds)
controlling person
controls/influences the issuer (can be director, senior exec, major stockholder, or "mother in law": person who is not officially part of management but still has influence)
alien corporation
corp from out of the country
taxation of corporation
corp pays its own taxes; USED to follow progressive tax system, now follow new fed tax law of flat corp tax (21%)
stakeholder theory
corporate code of conduct must keep stakeholders' interest at heart
continuity of corporation
corporation continues if owner dies
Factors in choosing type of organization
costs of creation, continuity/dissolution, managerial control, liability, taxation
partial performance
could be detrimental performance
specific performance
court compels parties to perform contract; not available unless money damages are inadequate, subject matter must be UNIQUE; not available for personal services contracts (forced servitude)
bankruptcy
court distributes all of the bankrupt person's assets equitably among the person's creditors, then discharge the remainder of the person's debts ("kills" the debt); even partial payment after discharge in bankruptcy will not revive the debt
rescission
court ends contract and returns parties to the position they were in before they entered into the contract
injunction
court orders a party to do or not to do a specified act
subject matter jurisdiction
court's authority to decide type of law at issue in the case (federal vs. state court); court needs one type of jurisdiction in addition with subject matter; diversity jurisdiction is a TYPE of this
jurisdiction
court's authority to hear a case; need either person OR in rem jurisdiction AND subject matter jurisdiction
implied-in-law condition
court-imposed condition to ensure fairness (not express or implied from facts) (ex. engagement ring)
legislature
create laws
accounting reforms under SOX 2002
created Public Company Accounting Oversight Board (PCAOB); requires separation of auditing and consulting divisions (auditors cannot receive consulting fees- company may drop consultants if they are too harsh at auditing); restricts auditing firms from non-auditing services; reports to SEC
liability for willful violations of securities act of 1933
criminal: fine and jail, civil: refunding buyers
consequential damages
damages beyond loss of contract performance caused by consequences of the breach that the defendant knows about (mostly lost profits)
remedies for trademark infringement
damages, injunctions, destruction of infringing items
statute of limitations
deadline on how long a plaintiff has to file a lawsuit; must file claims within 1 year after discovery of false info/omission (or when reasonable should have known); or within 3 years after sale
arm's length deal
dealing with client same way you would deal with a stranger
Lucy v. Zehmar
deals with definition of intent (Lucy filed against Zehmar to transfer title of farm to Lucy's but wouldn't sell farm for 50K --> drunk wrote and signed bill to sell farm); evidence regarding Zehmar's intent was that he wrote TWO drafts of contract, had wife sign it, and remembered 40 min convo so clearly wasn't that drunk
injurious falsehood/disparagement of property
defamation about property
taxation of LLC
default is pass through but can choose to be taxed as corporation
general jurisdiction
defendant has general contact with the state (purposeful)
long arm statute
defendant must have at least minimal contact with the jurisdiction
elements of quasi contract
defendant received benefit (not through own mistake or misconduct); plaintiff reasonably expected to be paid for the benefit; defendant would be unjustly enriched if it kept benefit without paying plaintiff
Insider Transactions (sec exchange act of 1934: Section 16)
defines insiders, what insiders must file, when insiders must notify SEC of insider transactions, short-swing profits, defines tippees, civil penalties/consequences for controlling person
Omnicare v. Laborers District Council Construction Ind. Pension Fund
definition of material fact (statement of opinion v. fact) and motion to dismiss (for failure to state a complaint; must be early on in process); did omnicare commit fraud/lie about company compliance?; statement of opinion can create misrepresentation of fact if opinion is stated in a way that makes misleading impression of underlying facts (then plaintiff can still sue for fraud); Supreme court couldn't decide so they sent it back down to lower courts for more info
SEC v. Texas Gulf Sulphur Co
definition of materiality (when test found opportunity for rich source of mineral, didn't disclose this on financial statements, company did well, employees bought shares--> SEC claims fraud based on omission/insider trading); because people/employees bought stock based on information, it was material, therefore can be sued for fraud
delegator
delegates their duty (to delegatee)
general rules of delegation
delegation does NOT extinguish all of the delegator's obligations; if delegatee does not perform, delegator is still liable (makes sure promise is protected); most contractual duties can be delegated, except when performance by delegatee will vary materially from that expected by obligee
value of intellectual property
depends on exclusivity of use; infringement and license impact this
inquiry (decision making model)
determine the facts impartially; identify the ethical and legal issues, identify stakeholders
common law for contracts
dictates real estate, services, and intangibles; contract law is largely a product of common law
specifications for registration under securities exchange act of 1934
different (broader) registration requirements than under 1922 (may be exempt under 1933, not 1934); brokers and dealers must be registered as well to be able to sell securities; issuers of registered securities must file periodic reports, must also report significant developments that could affect a security's value (ie. impending litigation)(issuer provides an entire market with information through these reports)
inside directors
directors who are also employees of the company (execs); understand day-to-day activities
outside directors
directors who do not work for the company; can still be bias/partial
fair use doctrine
discussion, criticism/parody of mark, product or owner, including in comparative advertising
trademarks
distinctive mark, motto, or device that a manufacturer puts on its products
articles of incorporation
document to get permission from state to exist (constitution that sets up corporation)
UCC exception of preexisting duty rule
does NOT use preexisting duty rule; implied duty of good faith (ethics in contracts law); contract modifications do NOT need an exchange of consideration to be binding
slander per se
don't have to prove special damages for certain statements
tax benefits for pass throughs
double tax, lower individual rate, losses
procedural unconscionability
drafter makes it difficult for other party to know terms, due to language, form, or lack of opportunity to review
decision & justification (decision making model)
due diligence/good faith defense (shae decision-making process with other people)
asphalt and concrete services
dump truck hit Perry, he sued Asphalt for negligence; if Johnson employee of ACS or independent contractor; ACS gave him strict supervision, can dock his wages, pay him directly, treating him as employee; ACS is liable because Johnson is an "employee"
4 elements of negligence
duty (promise), breach (broken promise), causation, harm
agent's duty to principal
duty of loyalty, obedience, reasonable care
fiduciary duty
duty to act for someone else's benefit, while subordinating one's personal interests to that of the other person; incorporates duties of good faith, loyalty, and faith
CSR
duty to create wealth in ways that protect, enhance, or not harm societal assets
agent's duty of loyalty
duty to keep principal informed, to account for monies handled
Rules/duties under deontology
duty to treat all equally, not to use people as a means to an end (since all of the people in the situation are equally important), to provide information, to not intentionally cause harm to others, to compensate where conduct causes harm, of honesty
managerial control of partnership
each partner gets equal vote unless otherwise in contract
concurrent conditions
each party's duty to perform is conditioned on the other party's SIMULTANEOUS performance
intent to deceive/scienter
either know statement is false or don't know and make no effort to find out (reckless disregard)
buyer's damages (1934)
either out-of-pocket losses OR = amount paid - value received (or amount paid - value represented to be worth) (aka contract value - fair market value)
civil rights act of 1964, TITLE 7
eliminates job discrimination based on race, color, religion, sex, national origin
consolidated omnibus budget reconciliation act (COBRA)
employees can continue to purchase health insurance after employment terminates for additional 18 months
OSHA rules for employees
employees can request an OSHA inspection of alleged unsafe conditions; employee subject to retaliation can file complaint, no private right of action by employees
family and medical leave act
employees may take up to 12 week (not always consecutive) unpaid leave during year; 1. birth/care of employee's child 2. employee adopts/fosters a child 3. employee cares for immediate family member (not including adult children) 4. employee's own serious health condition 5. "any qualifying exigency" from family member on/notified of active military duty (26 weeks for family member with serious injury from military duty)
open communication
employees must feel comfortable
electronic communications privacy act
employer can only intercept employee's personal communication if made on a device/system supplied by employer
frolic and detour
employer is not liable for employee's tort if employee was acting outside the scope of his employment
reasonable accommodations under ADA
employer must make job/work environment fit the the employee's needs (ex. modify equipment); employer can claim accommodation is not reasonable or would cause undue hardship (would require significant difficulty/expense); businesses offering services/facilities to the public must also accommodate disabled customers/members of the public; similar remedies to title 7
elements of disparate impact case
employer's practices/policies have disparate impact on protected group; defense: practice/policy is job related and based on business necessity; plaintiff can rebut defence by showing another practice that should serve same purpose without discrimination
genetic information nondiscrimination act (GINA)
employers cannot discriminate against applicants/employees based on their genetic information (own and family's); applies to all employers subject to title 7; restricted from requesting, requiring, purchasing employee's genetic information; has implications for health and insurance benefits
worker adjustment and retraining notification act (WARN act)
employers must give 60 days written notice of plant closings and lay-offs; applies to employers with >= 100 employees; virtually all employees are entitled to notice (houly, salary, managerial); must notify employees or union, state's dislocated worker unit, and head of local government
federal unemployment tax act (FUTA)
employers must pay unemployment taxes which fund qualified unemployed workers; not eligible if employee was fired for misconduct or quit; must be actively seeking employment
employers medical leave act applies to
employers with >= 50 employees; employees must have worked for employer for at least 12 months; employers must keep employee's job available for when the leave is up/provide comparable job; employee is not supposed to be disadvantages by taking leave (ie. seniority system)
executive
enforce laws
Equal Employment Opportunity Commission (EEOC)
enforces title 7; can file civil suit on behalf of employee claiming violation; must exhaust efforts to settle claim first; remedies include reinstatement with back pay and injunctions; does not preempt state fair employment laws- EEOC must wait 60 days after state has started investigating in proceeding
greenwashing
engaging in socially responsible issues just to look good rather than actually fix the issues
TRIPS Agreement (1994)
establishes standards for international protection for all IP; all member countries must provide both protection and effective remedies; must give IP owners from member countries same protection as domestic IP owners
agency by estoppel
estopped from denying someone is acting as your agent
utilitarianism
ethical action is the choice that best serves the common good (greatest utility); uses consequentialism; NO absolutes
civil rights act of 1866 section 1981
everyone has same right to make and enforce contracts, regardless of race; allows individuals to file lawsuits without first filing with the EEOC (no 180 day time limit); allows for unlimited damages (no caps on compensatory or punitive damages); applies only to race, but concept of race can be broad; applies generally to same discriminatory acts as title 7 (hiring/firing, hostile work environment/retaliation)
civil law
everything that is NOT criminal; torts, contracts, intellectual property, etc.
mens rea
evil intent/state of mind
unforeseen difficulties
exception to preexisting duty rule when contract duties change because of unforeseeable problems
debate over exec pay
excessive for some (unfair), compensation not aligned with FIRM performance, poorly designed plans by friendly boards, manipulative execs (backdating)
patent
exclusive right to make, use and sell and invention (or new design)
due diligence
experts must prove they conducted a reasonable investigation of financial statements; if this is done, they will not be held liable; not valid for issuer, only underwriter/subsequent seller
termination of offer
expiration, destruction of subject matter (if contract is to sell pen but pen is broken), revocation by the offeror
disparate treatment
explicit, intentional discrimination
ratification
express or implied; principal approves of an action taken by the agent without authority
actual/express authority to agent
express permission to act on principal's behalf, whether oral or written; from agent's POV/reasonable belief since principal has incentive to lie; can be mistakenly granted
formation
express/implied agreement, by estoppel, by ratification, by operation of law
misrepresentation of material fact
express/implied(misrepresentation by conduct); NOT statements regarding future facts/opinions
ratification (of Former Minor's Voidable Contract)
express/implied; (affirming a contract) can ratify a contract made as a minor upon reaching majority or shortly thereafter
rejection of offer
expressly or impliedly communicating intent not to accept
civil liability under Securities Exchange Act of 1934 (10b)
face fines and individuals can be prohibited from serving as officer/director; Section 18
negligent tort
failure to exercise due care
negligence/elements of negligence
failure to exercise reasonable care; elements are 1. duty of due care 2. breach of that duty (not acting like a reasonable person exercising due care) 3. causation (defendant's breach was the actual or proximate cause of harm) 3. injury (often must prove physical injury)
strong marks
fanciful, arbitrary, or suggestive marks are the most distinctive because not otherwise associated with the product; fanciful- includes invented words, arbitrary- words that have no literal relation to product, suggestive- suggest something about the product without directly describing the product
court system is made up of...
federal and state courts
medicare
federal health insurance program for people over 65 and disabled; employer must withhold contribution from wage and match it, without max limit
Economic Espionage Act
federal law criminalizes stealing trade secrets
deceptive marketing
federal statutes regulate telephone solicitations and fraudulent telemarketing
consumer protection
federal trade commission act authorizes the federal trade commission to prevent unfair and deceptive trade practices
creation of LLC
file with the state to exist (expensive); articles of organization, file with states/states of business, use LLC as name (difference requirements between states)
registration statement
filed with SEC, contains financial info about ISSUER and CONTROLLING INDIVIDUALS
main record-keeping requirements of FCPA
financial records must accurately reflect transactions (you get in trouble when you pay bribes but don't record them); must have internal accounting controls to ensure transactions are authorized
triple bottom line
financial, social, environmental performance
prima facie case (title 7)
first glance; plaintiff must prove that he is a member of protected group, qualified for position, subject to adverse employment action, and treated differently than those not in protected group
case of first impression
first lawsuit/time of doctrine, court case is used
new federal tax law
flat corp tax of 21%; pass throughs can deduct 20% of Qualified Business Income to reduce tax rate (because they are paying 21%, when they would be paying higher than a corp due to individual progressive system); deduction excludes service businesses and wealthy (>207,500 TOTAL) taxpayers
workers' privacy
focus is whether employee has a reasonable expectation of privacy; answer is no if employer gave notice it would be monitoring
virtue ethics
focuses on moral character of actor/own conscience; an ethical action is one a virtuous person would carry out under the circumstances (What would Jesus do?); between utilitarianism and deontology (case by case)
tort claim
for fraudulent misrepresentation, innocent party enforces the contract and seeks damages for injuries resulting the the fraud
contract claim
for fraudulent misrepresentation, innocent party rescinds the contract and is restored to his/her original position
punitives for discrimination
for malice or with reckless/callous indifference to the federally protected rights of others; only for INTENTIONAL discrimination
duress
forcing someone to enter contract through fear created by threats, court can order rescission; the threatened act must be wrongful/illegal or economic duress
implied/incidental authority
from agent's POV; authority agent reasonably believes is implied along with express permission
child labor standards
generally cannot work until 14, only limited hours until 16
acceptance
generally silence does not constitute acceptance; can accept by conduct (clicking I Agree, nodding or opening package/software and keeping/using contents); need SOME indication of offeree's intent
rule
generic statement of law we will apply
venue
geographic location of court; change of venue for criminal cases and convenience
prospectus
given to any interested investor; facts about the issuer and its financial statements (same info as registration statement)
legal detriment
giving something one was under no prior legal obligation to give or not doing something one had a legal right to do; may not find benefit, will ALWAYS find detriment (if legal sufficiency exists)
creation of limited partnership
go through process to be recognized by state (similar to corporation); name: limited partner CANNOT be in the name; must end in LP
compensation for executives/managers
goal-based; base salary (often capped at $1 million), annual cash incentives (bonuses), long-term stock incentives, retirement plans, perquisites
bona fide occupational qualification (BFOQ)
good faith based; discrimination based on religion, sex, or national origin (NEVER race or color) is permitted with this
Young v. UPS
got pregnant and can't lift >20 pounds, UPS policy: must lift up to 70 pounds, other accommodations for non-pregnant workers (injured on job); initially dismissed on summary judgement; supreme court sent it to jury- didn't win yet didn't lose
Dodd-Frank Act
governing corporate governance; stockholders vote on exec pay/bonuses (non-binding; can result in relationship issue if not listened to), compensation committee must be independent, relationship between pay and performance must be disclosed (must tell shareholders about performance compensation for execs), restatements mean repayment (to the extent that exec compensation was tied to financial statements)
Critics of social responsibility
greenwashing, profit maximization
Merck river blindness
had a potential cure for this but those who need it can't afford it; "medicine is for people, not profits"; cost 3.9 billion to test, FDA approve, and get to market (no real return but virtually cured river blindness)
substantive unconscionability
harsh contract terms, often inf deprive one party of remedy if other party breaches
tipper
has fiduciary duty to shareholders; insider trading breaches this
Bauer v. Lynch
he can't pass push up requirement to become FBI agent, says this is sexual discrimination; court says how to quantify fitness in men and women is different and proven by science
elements of fraud that are presumed (plaintiff doesn't have to prove) under securities act of 1933
he/she relied on the statement (assumed by virtue of the fact that plaintiff purchased the security), defendant knew of the falsity; defendant must disprove presumptions in order to win
continuity
how durable is business entity
damages
how much and for what?
disadvantages to deontology
how we THINK of ethics, but difficult to apply to real life; so rigid, doesn't take CONSEQUENCES into account; how to define "rights"/how to resolve when rights conflict
counterfeit goods
huge problem in which goods with fake trademarks are sold as originals; affects economy, provides funding for illegal operations; existing laws rarely enforced
consequences of acting unethically
hurt other people, guilt, jail time, damaged reputation, affects future prospects/jobs
continuity of limited partnership
hybrid: limited partners can come and go, general partners can dissociate and other general partners can either continue or dissolve
implied contract
ie. implied in fact; terms are made clear by parties' behavior (buying a shirt)
quasi contract
ie. implied in law; equitable REMEDY (about fairness- when there is no legal remedy); NOT actually a contract; when there is no contract between parties, court makes quasi contract
when copyright protection is available
if "fixed in a durable medium" and can be perceived, reproduced or communicated, and is ORIGINAL: literary, musical, dramatic, choreographic, pictorial/sculptural, film, sound, architectural works
duty of due care
if acting, have duty to act carefully; if not acting, no duty to war or act unless a relationship with person in harm's way (ex. business relationship)
exception to Ads not being offers
if ad limits the class of people who can accept and/or the ad/s terms appear definite and binding
exceptions to mailbox rule
if offer specifies acceptance has to be received by a certain time; if offeree sends a rejection then sends an acceptance, whichever arrives first is effective (if rejection received first, when acceptance is then received--> new offer; gives offeror security)
presumption of undue influence
if parties are in confidential/fiduciary relationship and contract unjustly enriches dominant party, court will PRESUME undue influence (presumption shifts burden of proof to defendant); can rebut presumption by showing arm's length deal, had independent advice
liquidity (tax benefit)
if pass through reinvests profits, taxes must be paid from personal assets; at least in a corporation, owners do not lose personal money when paying taxes
assumption of risk
if plaintiff knows of risk and voluntarily assumes the risk/proceeds, then plaintiff is barred from recovering from any injuries resulting from the risk
genuineness of assent
if someone lied when getting into consent
alter-ego theory
if something is done to show someone is not treating corporation as a separate entity (using corp's assets/funds for personal use, using corporate shell to defraud people), court will "pierce the corporate veil"
why does it matter whether relevant statement was an opinion?
if stated as a fact but not true, it is fraud; if opinion, can be untrue without being fraud
reliance on misrepresentation
if statement is obviously false or if other party knows/could reasonably discover truth, reliance is NOT justified
parol evidence rule
if the contract language in unambiguous, extrinsic/parol (third party) evidence is NOT admitted
how to accept
if the offer specifies how the offeree should accept, then the offeree must accept in that specific manner; otherwise the offeree can accept by any reasonable method
trademark infringement statute
if they infringed in BAD FAITH, defendant pays plaintiff's attorney fees
effect of illegality
illegal contracts generally cannot be enforced by either party; no contract or quasi-contract recovery for unjust enrichment UNLESS one party ignorant to illegality or forced into contract by fraud/duress/undue influence; if contract is divisible, court will enforce the rest of the contract without illegal terms
elements of securities exchange act of 1934
illegal to sell any security on a national exchange unless registered; section 10b; insider transactions; civil liability
key elements of securities act of 1933
illegal to sell securities without disclosing certain financial information to potential investors (only promises good information on which to decide to buy, not good purchase); who must comply; required disclosures; liability for false materials; defenses; section 17
trade dress
image and overall appearance of a product (ex. roof on Pizza Hut)
securities fraud (SOX 2002)
imposes heavy criminal penalties for securities fraud; creates crime of conspiracy to commit securities fraud; requires audit committees to adopt procedures to act on reports by and to protect whistleblowers; whistleblowers can recover civil damages and be reinstated if terminated improperly
6th part of fraud for security fraud
in connection to purchase/sale of security (under 1934 act)
majority rule
in most states, minor can get full refund even if goods are damaged or lost
**NOTE: in context of FIDUCIARY DUTY...
in order to act legally you MUST act ethically
personal jurisdiction
in personam; court's authority over the PEOPLE involved in the case; can be general or specific
in specie
in real, precise, or actual form specified
domestic corporation
in the state in which it is incorporated
hostile work environment
includes PERVASIVE offensive comments, touching, visual displays, etc. if reasonably perceived as hostile and abusive, regardless of injury
how SOX 2002 increases authority of SEC
increased SEC's budget (increased staff, more active agency), increases SEC's power over corporate governance
Sarbanes-Oxley Act of 2002
increases authority of SEC, accounting reforms, corporate governance, financial statements and controls, securities fraud
trade names
indicates part or all of a business' name (versus product or service); NOT protected under the federal Lanham Act, but protected under common law if distinctive (ex. Minella's); trade name can be a trademark if same as the product's name (Coca Cola)
penalties for securities fraud under SOX 2002
individual filing false or misleading documents: fine and jail time; organization filing false/misleading documents: fine; individual committing securities fraud: 25 years jail time
title 7 private actions
individuals must first file charges with EEOC within 180 days after notice of the unlawful practice (or with state agency then EEOC); plaintiff must prove disparate treatment or disparate impact
arbitration
informal trial; parties pick their own decision makers who then pick unbiased third party decision maker, present their arguments/witnesses/evidence; arbitral decision is FINAL
materiality
information in question would not have impacted purchaser's decision to invest (if correctly stated, wouldn't have deterred the average prudent investor)
remedies for patent infringement
injunctions, damages, triple damages for intentional infringement, and destruction of infringing items; injunctions now harder to get because law doesn't want to stifle innovation (infringing items could be producing a product that could benefit society)
consequences of fraudulent misrepresenation
innocent party can either claim a contract or tort claim
decision making model
inquiry, discussion, decision/justification, evaluation
donee beneficiary
intent of contract is to give a third party a gift (third party can enforce)
scienter
intent to deceive or reckless disregard for the truth
trespass
intentional entry onto land without owner's consent; owner can be liable for harm to trespasser if didn't exercise reasonable care; attractive nuisance
categories of tort
intentional, negligent, strict liability
assault
intentionally causing another to believe he is going to the victim of battery
false imprisonment
intentionally confining another against his/her will; restraint by force or threats
battery
intentionally touching another person in a harmful/offensive way; reasonable person standard; touching can be by something set in motion by defendant and doesn't have to touch defendant's body; physical injury not required
international protection of intellectual property
international law consists of many contracts
judiciary
interpret and apply the law
invasion of privacy
intrusion, false light, public disclosure of private facts, appropriation, fraud
quasi contract
invoked when parties do not have a legal remedy; defendant received a benefit from plaintiff, plaintiff reasonably expected to be paid for benefit, defendant would be unjustly enriched if he kept benefit without paying
deceptive advertising
is consumer likely to be misled by advertising claim?; 1. lesser standard than intentional fraud 2. all claims must be substantiated (research must back it up) 3. if using a celebrity endorsement, celebrity must actually use product 4. does not apply to puffering
Lance Armstrong Case Problem
issue of intensely benefitting one group vs. slightly harming many people
NY State Society of CPAs v. Eric Louis Assoc
issue: did he infringe in bad faith?
Schwarzeneggar v. Fred Martin Motor
issue: does California hold personal jurisdiction over Ford Martin Motor?; long arm statute; schwarzenegger trying to run up their bill so it is cheaper to settle (LAW IS TACTICAL); appeal was denied and case was taken to Ohio
prefiling period
issuer can have preliminary negotiations and contracts with underwriters; NO offers to buy/sell/actual sales
who must comply to securities act of 1933
issuer, underwriter, controlling person, seller
consequentalism
judge an action by its consequences; easier for businesses bc similar to cost vs. benefit
common law
judge made law; negligence is an example; overruled by statutory law, but can enhance statutory law
in rem jurisdiction
jurisdiction over a thing (who owns something)
problems with workers' compensation
lack of uniformity among states; many groups not covered (ex. agricultural jobs); fraud (increase in mental stress claims); some payment are inadequate
inadequate warnings
lacks warnings that would reduce or avoid foreseeable risks so that the product is not safe
Hinkal v. Pardoe
lady in the gym got hurt and wants to sue but Gold's Gym said she signed waiver even though she didn't read it; did she accept offer?; indication of intent to accept; she is responsible for reading the contract because if they allowed people to sue because offeree didn't read a contract, no one would read contracts/would say they didn't read it to get out of unfavorable contracts
guth v. loft
landmark case; fiduciary duty of loyalty from execs to company
distinctiveness of mark
lanham act only protects marks that are "sufficiently distinctive" from all competing marks (strong marks/secondary meaning)
law vs. ethics
law creates a moral minimum; law has advantage of applying to EVERYONE while ethics vary; tobacco companies advertised to the youth (legal but unethical); Rosa Parks and "civil disobedience"
agency by operation of law
law decides that agency exists (marriage)
good samaritan statutes
laws protect those who voluntarily help those in need
US v. O'Hagan
lawyer who heard about merger in confidence and trades on this; takeaway: misappropriation theory; owed fiduciary duty to client but instead used confidential information for personal gain
contractual capacity
legal ability to enter into contractual relationship; no competence, limited competence, minors, intoxication, mental incompetence
types of judicial relief
legal remedies (damages/money) or equitable remedies
valid contract
legally enforceable, has all elements
what defendant must prove after Title 7 prima facie case
legitimate non-discriminatory reason; plaintiff can try to prove if this is a pretext/only one of the reasons for adverse employment action
practical benefits of registering a mark
lets everyone know it's YOUR trademark
liabilities under 1933 act
liability for offering/selling securities without registering, selling during prefiling/waiting periods (required disclosures), liability for false/omitted facts/half truths on registration statement or prospectus
pass through liability
liability for tax passes through the business to the owner
strict liability tort
liable regardless of fault
Varity Corp v. Howe
lied to employees to alleviate pension plan debt; takeway: fiduciary duty; varity says they have obligations to the people who benefit from their company even though they have to hurt a small group to do so --> THE END DOES NOT JUSTIFY THE MEANS (they still have a duty to their employees)
liability of limited partnership
limited partners: limited personal liability; general: unlimited personal liability
liability of LLC
limited personal liability; can still pierce the corporate veil
tax benefits for corporations
liquidity, higher individual bracket, deductions
continuity of LLC
little better than partnership; members can dissociate, remaining members can vote to continue or dissolve; CAN continue with one person
egoism
look at what's best for me/the people I know/my business; "heros" are the best at AVOIDING egoism
worker's compensation statutes amounts for injuries
loss of income usually calculated as percentage of employee's wages; exclusive remedy rule; no exclusive remedy rule for INTENTIONAL injuries
when acceptance is effective
mailbox rule and exceptions
EKG Engineering Role Play
make an essential component of MRIs, but current production releases harmful gases into atmosphere; what should they do?
power of attorney
making someone an attorney/agent for you
resolutions/proposals of shareholders
management approves vs. management opposes ; shareholders more likely to vote for what management approves
overtime
mandates time and a half after 40 hours per week; administrative, executive, and professional employees not included
product liability
manufacturers liable to any person injured by defective product
types of defects
manufacturing defects, design defects, inadequate warnings
defenses for trademark infringement
mark is not distinctive or has become generic, public is unlikely to be confused as to origin of goods/services, fair use doctrine
Kohel v. Bergen Auto Enter.
material vs. non-material breach.
injury to innocent party (tort claim)
may also collect punitive damages to punish defendant and deter others from acting similarly; ONLY IN TORT CLAIM must prove damages; punishment determined by wealth of defendant
trademarks with state protection
may need to register with state government, registration can be renewed after 5-6 years and then every 10 years (20 if registered before 1990)
purchaser knew of fraud defense
means the purchaser didn't rely on the information if they knew it was false
punitive damages
meant to punish defendant and deter others from similar bad conduct; NEVER available for pure breach of contract
punitive damages
meant to punish the defendants; related to wealth of the defendant; NO punitive damages for securities fraud (1934 act) because the court doesn't want to give lawyers any more financial incentive to file securities lawsuits
intention of offer
measured by reasonable observer standard; offers made in obvious anger/jest/undue excitement are not made with serious intention
mediation
mediator figures out what both parties want
sustainability
meeting the needs of the present without compromising the future
profit maximization critic of CSR
melton freedman: social welfare will be optimized if everyone works toward their own selfish long term goals
berne convention
member nations must respect copyrights granted by other member countries; World Intellectual Property Organization Copyright Treaty (1996) strengthens Berne's application to Internet; Digital Millennium Copyright Act (1998)- US' implementation of WIPO treaty (exempts Internet Service Providers from liability if remove infringing material at owners' request)
managers of LLC
members or non members who run the business
negotiation
mini-trials for when businesses have small disagreements; leads to agreement that if broken, then goes to court
limited competence
minor/intoxicated/drugged/mentally disabled; contract is VOIDABLE by that party
exception to minor's right to disaffirm
minors can't disaffirm certain contracts because of public policy (contract to enlist in military, student loans, insurance), some states prohibit minors from disaffirming contracts in which the minor has MISrepresented age, minors can disaffirm contracts for necessaries BUT have to pay restitution even in majority rule states if goods are damaged/lost
elements of fraud (ANY fraudulent action)
misrepresentation of fact, that is material (important), made with the intention to deceive, on which plaintiff relied, causing harm (misrepresentation, material, intention, relied, harm= MMIRH)
appearance requirements
mixed rulings; height and weight requirements must be related to job performance; limited protection for the obese if disability, less for overweight; could be related to religious discrimination
compensatory damages
money to compensate for harm directly caused by breach (loss of bargain itself); = difference between market value and contract price (UCC equation used throughout common law)
natural law
moral code
deontology
morality of action is based on adherence to rules designed to respect individual rights; system of absolutes
consumer expectations test
more consumer friendly; defective if doesn't perform as reasonably expected by a consumer
risk-utility test
more manufacturer friendly; defectively designed if risks outweigh benefits
state court jurisdiction
most state/federal issues, most criminal cases, EXCLUSIVE jurisdiction over divorce and adoption cases
employee polygraph protection act
mostly forbids employers from using lie detector tests while screening applicants; can use when searching for something illegal
UCC definiteness of terms of offer
much less specificity than common law (because it is focused on commerce); ONLY SALE OF GOODS; in general only requires definite QUANTITY term (court will substitute for missing term if parties clearly intended to form contract)
disadvantages to utilitarianism
must be able to IDENTIFY and COMPARE consequences (how? consequences have consequences); common good is hard to define and often leads people into the trap of egoism; sole focus on consequences ignores PRINCIPLE of action
lead director
must be independent director; runs board with the chair person
requirements for an invention/discovery/process/design to be patented
must be novel, useful, and not obvious in light of current technology; novel- new and different from prior art, useful- must do something/have utility, not obvious- to someone with an ordinary understanding in the field
Mandatory insider interactions with SEC
must file statement of their holdings with SEC (at time of registration or within 10 days of becoming an insider); must file MONTHLY updates indicating any changes in holdings (if trading company's stock); must notify SEC within 2 days of any insider transactions (backdating)
how to get a patent
must file with USPTI to get protection (now 1st to file); 20 years protection for inventions (utility patents) and plant patents, and 15 years for design; begins when file, not issued; upon expiration, is in the public domain
to bring a case under age discrimination in employment act (ADEA)
must prove either disparate treatment or disparate impact; age discrimination must be sole basis for employment action; 1. employer can defend by arguing BFOQ 2. employer does not need to show business necessity for policy with disparate impact, only that there is a reasonable factor other than age
schools of law
natural law, positivist, historical, legal realism
types of alternative dispute resolution
negotiation, mediation, arbitration
generic terms
never receive trademark protection, even if acquire a secondary meaning; big problem arises when trademarked term becomes generic
novation
new party takes the place of one of the original parties (all must agree); original party that was replaced CANNOT still be sued
deductions tax benefit
new tax law eliminated some deductions for individuals but not for corporations, so some corporations could use deductions to have less taxable income than a pass through that made the same income
does the Court give clear guidance on when an opinion is misleading due to omitted facts?
no
void contract
no contract exists (either lacks an element or illegal)
pregnancy discrimination act
no discriminating against women who become pregnant or give birth; health plan must cover pregnancy like other conditions; employer cannot force pregnant woman to stop working before birth or keep her from returning afterward (if capable of working); cannot discriminate against women or men (must give pregnancy benefits to male employee's wives)
apparent authority
no express authority but authority is reasonably assumed by 3rd parties because of principal's conduct; may be based on position/past actual authority; principal must give notice to terminate apparent authority; action against agent
agent's contractual liability
no liability if principal is disclosed; usually liable if principal is partially disclosed (knows agent is an agent, doesn't know who principal is); if principal is undisclosed, third party can hold either agent or principal liable and principal must indemnify agent
notice of assignment
no one has to tell the obligor of the assignment, but if the obligor doesn't know about it, he can discharge his obligation by fulfilling his promise to the assignor; if the obligor knows about the assignment ONLY fulfilling his promise to the assignee will discharge obligation !!
misrepresentation of law
no relief UNLESS: if the speaker is in a profession that should know more about the law than a layperson; this encourages legal advice from legal expert and then if they mistake the law, can sue
unilateral mistake of fact
no relief if only one part is mistaken; EXCEPTION: if one person knows or should have known that the other made a mistake, contract is unenforceable
minor breach
non-breaching party can seek damages but is not excused from performance
mitigation of damages
non-breaching party has a duty to reasonably reduce/lessen his injuries; failure to mitigate will result in reduction of damages
patent trolls
non-inventor owners; business who buy patent and sue anyone infringing on patent; not helping society, concern about this
federal law regulating drug testing
none; 4th amendment prohibits unreasonable searches- protects PUBLIC employees depending on what's "reasonable" (can result in lack of bargaining power); private employers-depends on the state
misrepresentation by silence
normally neither party has duty to disclose information the other party does not know EXCEPT: seller may disclose info about series of defects/potential problems if buyer could not reasonably find out, fiduciaries must reveal material facts to beneficiaries
Ricci v. DeStefano
not a lot of African Americans passed test, city threw out results to avoid disparate impact; Ricci sued for disparate treatment (city won't promote people who passed based on color of their skin); when is it ok to engage in disparate treatment to avoid disparate impact? City can only throw out results if they have STRONG evidence they will lose lawsuit
exceptions to assignable contract rights
not assignable if: prohibited by statute (worker's comp), assignment materially increases/alters obligor's risk or duties; EVEN if contract says "rights cannot be assigned," you can ALWAYS assign right to receive money or interest in real estate (would be in breach but assignment would still be valid)
sexual orientation discrimination
not prohibited by title 7; legislation is pending to amend Title 7 to include sexual orientation; prohibited by numerous state and municipal laws
bad faith
not simply bad judgement or negligence, but the conscious doing of a wrong or a dishonest purpose or with ill will; consciously acting unethically; law=ethics, punished if unethical
delegatee
now has the obligation to perform duty (from delegator)
one can be subject to tort liability for using or disclosing a trade secret if
obtained secret improperly or use/disclosure is breach of confidence; in civil case, owner can get an injunction and/or damages (can also face contractual liability if signed a nondisclosure agreement)
appropriation
of a person's name or likeness (ex. Schwarzenegger vs. Fred Martin Motor Co)
elements of an agreement
offer (anatomy of offer: intention, definiteness of terms of offer, communication of offer), acceptance or termination of offer
illegality of proposed contract
offer automatically terminated if subject matter becomes illegal
unilateral contract
offer is accepted only when the offeree completes an act; acceptance is in actual performance (if/then; promise is unenforceable until other promise is COMPLETELY performed)
communication of offer
offeree cannot accept an offer he/she doesn't know about
option contract
offeror promises to hold offer open for a specified period in exchange for consideration; stock options are an example of this
articles of partnership
official partnership agreement
seniority systems
okay if a good-faith system, even if unintentionally adversely affects minorities; if employer offers this, they must always follow it
continuity of partnership
old method: if one partner is leaves, other partners re-form new partnership; new method: if one partner leaves, other partners can vote to stay in business or dissolve; if only one partner is left, partnership must dissolve by definition of partnership
conditions for rejection
once an offer is rejected, it CANNOT be accepted; any subsequent attempt to accept is deemed a new offer, inquiring about the offer is not rejecting it (will you take less?)
first sale doctrine
once you buy a copyrighted work, you can distribute it without the copyright owner's permission
categorical imperative
one should follow a rule of behavior only if he/she would universalize that rule for everyone to follow, WITHOUT exceptions (deontology)
assignor
one who assigns its right to third party (assignee)
obligee
one who receives benefit (from obligor)
assignee
one who receives the right (from the assignor)
obligor
one with the obligation to perform
managerial control of limited partnership
only general partners play role in business/run business; limited partners CANNOT control (if limited partners act like a general partner, law will treat them as such and they will lose limited liability)
proximate cause
only liable for FORESEEABLE risk of harm; reasonable to expect could be harmed (without outside intervention) (at some point, if chain of events is too long, it's unreasonable to hold reckless person liable)
what does NOT qualify as an offer
opinions (Hawkins v. McGee: patient's hand didn't heal within opinion of 3 days); preliminary negotiations ("would you consider...?"); preliminary agreements (if parties leave terms open for later negotiation, not a contract); Ads/catalogues/price lists/circulars GENERALLY invitations to negotiation, not offers
irrevocable offers
option contract, detrimental reliance (promissory estoppel)
restitution
other states require restoring other party to position they were in before entered contract
boards of directors
oversee executives and ensure fiduciary duty
nuisance
owner's ability to enjoy his land is impaired because of interference (light, noise, smell, vibration, etc) caused by another
members of LLC
owners
exceptions to statute of frauds
partial performance
usury
parties cannot contract to make loans charging interest above lawful max rate
discharge by agreement
parties enter into a new agreement which discharges their obligations under the old agreement
accord and satisfaction
parties make a new agreement (accord) that a new act (satisfaction) will discharge an existing contract duty
Meinhard vs. Salmon
partners are fiduciaries of each other; Salmon did not inform meinhard of business opportunity
limited liability company
partnerships with better liability (hybrid of partnership and corporation); use LLP (limited liability partnership) for professionals (doctors, lawyers, architects, etc.)
commercial impracticability
party might be excuse if performance gets extremely difficult or expensive due to UNFORESEEABLE reasons
taxation of partnership
pass through
taxation of sole proprietorship
pass through
taxation of limited partnership
pass through (great investment vehicle for limited partners)
specific (compensatory tort) damages
past and future medical expenses, past and future economic loss
general (compensatory tort) damages
past and future pain and suffering, other (loss of limb, loss of consortium)
quantum meruit
paying reasonable value for services rendered
No Electronic Theft Act (NET)
penalizes the exchange of pirated copies of copyrighted works even if not for profit, or copying works for personal use
basic rule of quasi contracts
people do not have to pay for benefits that are forced upon them! (or else people will force even unwanted benefits on others to make money)
third party beneficiaries
people whom the parties intend to benefit
conditions of performance
performance is required if condition is triggered; otherwise duty to perform is discharged
statute of limitations
periods for how long you have to file a lawsuit; does not technically discharge the duty to perform, but prevents obligee from enforcing contract; duty to perform can be revived if obligor promises to perform after statute has run (put a debt/obligation to "sleep")
1988 amendments to FCPA
permit payments that are permissible under laws of foreign nation or if cover "bona fide" (good faith) expenses (ie. all-expense paid trip for product demo) related to completion of a contract
principal
person being acted for
issuer
person or entity offering security for sale
tippee
person who learns nonpublic information from insider; TEMPORARY insider; liable for using nonpublic information like insider; not liable if tipper does not owe fiduciary duty to involved parties; no liability on EITHER tipper or tippee if tip not given for personal gain
intrusion
physical, electronic, or mechanical intrusion into someone's private space (ex. opening someone else's mail, or take photos through windows of people inside)
other title 7 claims
plaintiff can claim retaliation, showing a statistically imbalanced workforce is not enough to establish discrimination; plaintiffs can get up to $300,000 in compensatory (including pain/suffering) and punitive damages (plus back pay)
nominal damages
plaintiff receives token award if no actual harm
standing
plaintiff's interest in the controversy MUST BE direct and substantial; plaintiff must personally suffer (in past or future)
private securities litigation reform act of 1995
plaintiffs must allege scienter "with specificity"; companies are immune from fraud claims if cautionary statements with predictions are included; only SEC (NOT private individuals) can pursue claims against 3rd parties not directly responsible for securities law violations; limits damages private plaintiffs can recover/restricts attorneys fees
City of Livonia Employees' Retirement v. Boeing Company
plane was failing test, told the public it would be able to fly, postponed flying date, breached contracts; definition of INTENT; duty of honesty, not of candor (investors don't need to know EVERYTHING, only important/relevant info); execs thought they could fix issue and run plane on time, so did not intend to deceive (no scienter)
what must affirmative action do to be constitutional
plans cannot have set quotas, but only reasonable, temporary target goals to correct historic imbalances; plans are subject to strict scrutiny and must be supported by a compelling interest (ex. Lehigh)
WARN act triggers
plant closing , mass layoff
independent contractor
possible for someone to work for someone else without being their agent; responsible for employers not independent contractors; must look at supervision, tools, term, pay
possible outcomes of offer revocation
power to revoke is suspended once performance begins (substantially performs), quasi contract, promissory estoppel
proponents of social responsibility
power=responsibility, practical benefits, necessary to fill regulation gap (ie. walmart)
Stare Decisis
precedent in common law; "let the decision stand"
factors NOT considered consideration
preexisting duty, illusory promises
worker's compensation
primarily made for accidents; state statutes which replace the tort system in the workplace; provides compensation for deaths, injuries, or illnesses arising during course of employment; strict liability for employers (even if employee is at fault for their injury); employers either buy insurance, self-insure, or pay into fund administered by state
intentional torts
principal can be liable for agent's intentional torts if within the scope of employment; if principal instructs agent to commit a tort, both can be held liable, EVEN IF agent did not know the act was wrong
termination of agency by operation of law
principal or agent dies, goes bankrupt, becomes incapacitated, impossibility
manufacturing defects
problem with how the product was assembled/made
patentable subject matter
processes, machines, compositions of matter, nonfunctional designs of a manufactured article and certain plants
design defects
product is defective as designed and there is a safer reasonable alternative; to determine this, must use risk-utility test and consumer expectations test
exceptions to privity of contract
product liability, assignment of rights/delegation of duties, third party beneficiaries
Foreign Corrupt Practices Act
prohibits US firms from bribing foreign (non-clerical) officials to obtain business; CAN bribe for other purposes; also prohibits bribes paid through intermediaries; put US firms at competitive disadvantage in countries where bribery is accepted, faced backlash
americans with disabilities act (ADA)
prohibits employment discrimination against employees or applicants based on 1. having a disability 2. having had a disability 3. being regarded as having a disability 4. being associated with someone with a disability (ex. child); prohibits discrimination against the qualified disabled in hiring, promotion, discharge, pay, training, etc.
marriage
promise in consideration for promise of marriage must be written to be enforceable; prenup/postnups must also be in writing to be effective (avoiding jilted bride cases)
anatomy of an offer
promise to do/not to do specific act in the future; offeror must seriously INTEND offer, terms of offer must be reasonably CERTAIN/DEFINITE, offer must be COMMUNICATED to offeree
Guarantor (SOF)
promises to pay another's debt if the other person doesn't pay; collateral (secondary) promises by guarantor must be in writing
Detrimental Reliance/Promissory Estoppel
promissory estoppel is an EQUITABLE REMEDY; if Person A reasonably relies on person B's promise in a way that causes Person A harm, then Person B is estopped from not fulfilling the promise (Person B has to keep the promise) (reliance--> harm--> estopped); a promise not supported by consideration may still be enforceable if the other party relied to his detriment
copyrights
property right owned by authors/artists in literary or artistic works
protection for trade secrets
protected by common law; also Uniform Trade Secrets Act (where adopted by state)
employee retirement income security act (ERISA)
protects employees with employers who offer voluntary pension plans; makes employer a fiduciary
social security act
provides for retirement, survivors' and disability insurance (FICA); employer withholds employee's contribution from wage and matches it up to a max amount; employee gets money back after retires
exculpatory clauses
provisions releasing a party from liability regardless of fault; ENFORCEABLE if party who benefits has business necessary for society (banks, public transportation) OR equal bargaining power (recreational activity); UNENFORCEABLE if violates public policy (one party is dependent on other, resulting in unequal bargaining power)
malice
public figures must also prove malice for defamation claims; knowledge of falsehood or reckless disregard for the truth (scienter/intent)
false light
publication of false, highly offensive (not necessarily defamatory) information about a person
public disclosure of private facts
publication of non-newsworthy, private facts about an individual that would be highly offensive to a reasonable person (true defamation); facts must be so intimate that publication outrages the public's sense of decency; hard to invoke because defenses are easy to prove
managerial control of corporation
publicly held: many shareholders, managers and not owners have control (fiduciary duty to shareholders); closely held: few shareholders/ownership, lots of control
defenses for fraud
purchaser knew of falsity; materiality; defendant (not issuer) relied on expert; due diligence; statute of limitations
what courts look at when applying copyright fair use doctrine
purpose of use (commercial/educational/transformative); nature of the copyrighted work (more protection for artistic works); amount and importance of portion copied (in relation to the entire work); effect of use on value of work (most important factor?- narrow lense lessens impact of ths factor)
sexual harassment
quid pro quo actions (benefits/threats for sexual favors) and hostile work environment create discriminatory condition of employment; defense: employer showed reasonable care to prevent and promptly correct harassing behavior, plaintiff did not take advantage of corrective plan
land (statute of frauds)
real property and all physical objects permanently attached to soil; contracts with interest in land (selling, leasing, mortgage)
legal benefit
receiving something one did not have a legal right to receive or having someone refrain from doing something he had a legal right to do (having a legal right to a thing does NOT mean you actually have it)
discrimination prohibited in
recruiting/hiring, compensation, terms/conditions/privileges of employment(promotion), discharge, retaliation(in response to complaints made under the act)
Anticipatory repudiation
refusal of one party to perform before performance is required; express/implied treating as breach; non-breaching party can treat the repudiation immediately as a material breach and is excused from performing; repudiation can be retracted unless it has already been treated as a breach
cybersquatting
registering another's mark as a domain name and offering to sell it back violates federal law; use of trademarks as meta tags (keywords for which search engines look)
unfair sales methods
regulated by state AND federal law; "cooling off" period for door-to-door sales; regulates shipping and refunds
securities act of 1933
regulates INITIAL sales of securities to the public; until this, states regulated securities so this gave fed govt constitutional authority to regulate securities; many securities/transactions (small, private) are exempt
securities exchange act of 1934
regulates TRANSFERS of securities that are publicly held; not just IPO (1933); regulates exchanges, brokers, dealers, national securities associations; for companies with assets greater than $10 million and with over 500 shareholders
fair labor standards act (FLSA)
regulates minimum wage, overtime, record-keeping requirements and child labor standards; states may have minimum wage laws, employer must pay whichever is higher
remedies for age discrimination in employment act (ADEA)
reinstatement, lost wages; sometimes emotional distress; 1. willful violations result in double damages 2. cannot sue a state entity
privity of contract
relationship created between people who are parties to the same contract; normally only parties to contract have rights/duties under contract
religious discrimination
religious organizations can discriminate based on religion but not other bases; non-religious employers CANNOT and must make reasonable accommodations unless it would cause undue hardship
Occupational Safety and Health Act
requires employers to furnish a workplace free from recognized hazards; employers must keep safety records and notify OSHA immediately of serious accidents/injuries
US Supreme Court
requires petition for certiorari; DO NOT have to accept appeals; cases of constitution and split decisions between circuit courts (discrimination, sexual orientation, etc.)
economic duress
requiring a party to pay a high price for something that party needs
equitable remedies
rescission, restitution, specific performance, reformation, quasi contract, injunction
law as a source of ethical value
respect for others' liberty, rights' duty to act in good faith and with due care; conflict of interest
restricted stock
restrictions removed when goals are met (given before goals are met, restrictions lifted afterwards)
agency by ratification
retroactively going back and endorsing agency
restitution
returning to each party any property, goods, or money previously given to the other party; if the actual item is available, it must be returned (restored in specie); if not, must pay equivalent amount of money; restitution is not only available with rescission
stock option
right to buy stock in the future (only valuable if stock price rises); if the stock price rises, presumably the exec is running the business well
assignment of all rights
rights are assigned, duties are delegated BUT an assignment of all rights/assignment of the contract is BOTH an assignment and a delegation; effect is to end all of the assignor's rights under the contract, but assignor is still liable is assignee doesn't perform all of the assignor's duties
why is law needed
safety, order, stability, values (tension among these)
UCC SOF
sales of goods for $500 or more must be in writing to be enforceable
fraudulent misrepresentation
same elements of fraud; misrepresentation of material fact, misrepresentation by silence, misrepresentation of law
material misrepresentation under 1934
same standard as under 1933 act; includes omissions/half truths; determined using OBJECTIVE PERSON STANDARD on case-by-case basis
required disclosures of securities
securities must be registered and prospectus must be given (registration statement, prospectus, liability for offering/selling securities without registering OR selling during prefiling/waiting periods ); liability for offering/selling securities without registering or for selling during prefiling/waiting periods
corporate codes of conduct
self-regulate because you know your industry better, you can control your obligations, quicker as the industry changes, and allows for more privacy; need top management, open communication, and stakeholder theory
underwriter
sells securities for the issuer/guarantees their sale
contract
set of promises the law will enforce
law
set of rules a society must follow
components of corporate management
shareholders/owners, managers/executives (whos individual rights/duties are spelled out in corporate charter), boards of directors, articles of incorporation/corporate charter
short-swing profits
short swing profits from insider transactions in stocks stocks, options, or warrants are presumed illegal; absolute liability (assume such quick transactions are based on insider trading); any profit from 2 or more transactions made within 6 month period (buy then sell, vice versa); profits legally belong to the company (incentive for companies to monitor insiders); enforced by CIVIL ACTIONS not SEC (by corporation/shareholders)
creation of sole proprietorship
simply start doing business; not recognized as separate entity from owner
counteroffer
simultaneous rejection and new offer
sole proprietorship
single owner
defamation
slander (spoken) or libel (all other communication); a (negligent) false statement of fact, causing harm to the victim's reputation, through publication of statement; automatic general damages for libel; must prove special damages for slander
jurisdiction in cyberspace
sliding scale (court by court basis); passively, no jurisdiction but actively, yes (passively posting is NOT enough to create jurisdiction)
substantive unconscionability
sliding scale; whether a contractual provision reallocates the risk in an objectively unreasonable or unexpected manor; one-sided advantage to one party
pension and health care laws
social security act, medicare, ERISA, FUTA, COBRA, Affordable Care Act, Workers' Privacy, Electronic Communications Privacy Act, Employee Polygraph Protection Act
professional codes
some professions may hold employees to a higher standard to than the law requires; ie. have to present client zealously
ultrahazardous activities
some states impose strict liability for injuries resulting from extremely dangerous activities (versus products) (ex. transporting explosives, storing molasses)
joint and several liability
someone can sue all partners jointly, or each one individually
contractual capacity
someone is (mentally) unable to know what they are getting into (kid, on drugs, mental illness, etc.)
misappropriation theory
someone takes information for personal gain in violation of fiduciary duty owed to source of information
fiduciary
someone who has a duty to act primarily for another's benefit
consideration
something of value being exchanged for promise
types of equitable remedies
specific performance, injunction
federal court chain
start with US district court --> circuit courts --> Supreme Court
express condition
stated verbally or in writing in the agreement
sex discrimination
statutes passed to "protect" women are illegal' gender could be BFOQ but must have factual basis; narrowly interpreted
statute of frauds
statutes requiring certain contracts to be in writing to be enforceable; MYLEGS- marriage, year, land, executor, guaranty, sales of goods over $500
primary sources of law
statutory, common law, uniform laws
cease and desist
stop or we will sue you
material breach
substantial failure to perform as promised, such that the other party is not getting the consideration he/she bargained for; non-breaching party is excused from performance and can sue for damages caused by material breach
ethics
system of moral values; not uniform; how SHOULD I live my life?
implied-in-fact condition
tacitly understood to be part of the agreement (ex. builder will fix items in a new house, but homeowner must notify him of the problem)
application
taking the rule and applying it to the facts
taylor v. baseball club of seattle
taylor went to baseball game, seats on foul line; got hit in the face with a ball and sued Mariners, mariners said she had seen baseball before and had understanding of risk; reasonable person standard/assumption of risk case
express contract
terms are explicit/stated (verbally/written)
DeWine v. Valley View
tests liability of general partner (Mr. Ferrara was a general partner of LP and shareholder of corp, he is liable if the LP is liable)
UCC on acceptance modification
the acceptance may include minor modifications to the offer as long as it definitely accepts the offer; made so that parties cannot easily get out of contracts they don't like anymore; can accept or ignore new terms
cause in fact
the actual cause of an event (instrument that is responsible for the occurrence of a certain event)
illusory promises
the terms of a contract are so uncertain that promisor really hasn't promised to do anything at all (I will if I want to- no consideration)
consideration
the value (money, goods, promise, action) given in return for a promise; 2 components of legal sufficiency/value and bargained-for-exchange (in exchange for promise); courts will NOT look at adequacy of consideration UNLESS they have reason to believe fraud, duress, undue influence, or limited capacity is involved
agreement
to create "agreement" or mutual assent, must have an offer and acceptance
goal of contracts
to enforce intention of contract
compensatory tort damages
to make plaintiff whole again (financially), includes specific and general damages
negligent representation
to prevent carelessness, still liable if only negligent as to truth of statement; negligence=no damages, fraud=can get damages (intentional tort)
punitive (exemplary) tort damages
to punish and deter intentional misconduct or gross negligence; 1. based on company's financial status and maliciousness of act, not plaintiff's need 2. impact more on investors than management 3. effectiveness reduced if insured 4. limited or banned in some states
purpose of damages
to put plaintiff in position he/she would have been in if contract had been fully performed ("loss of the bargain")
indemnify
to reimburse for legal liability
strict liability
tort liability for employer is strict; can get reimbursement from employee
types of trademarks
trademark (goods), service mark (services- ex. bus company)
trademarks under federal protection (Lanham Trade-Mark Act of 1946)
trademark must be registered with the US Patent and Trademark Office (PTO); may use R symbol to show registration (registered trademark)
trademarks under common law
trademarks are created by simply being used; holder can sue anyone who infringes his mark
traditional vs. progressive business models
traditional: sole focus on profit maximization, progressive: have both social and financial strategy
exclusive remedy rule
traditionally employees could ONLY receive workers compensation for accidental job-related injuries; today courts are more lenient
S corporation
treated as a corporation, can be taxed as a pass through (vote every year whether to be taxes as pass through or corporation)
intentional torts against property
trespass, conversion, injurious falsehood/disparagement of property, nuisance, intentional interference with Contractual Relations, Wrongful Interference with a Business Relationship
US District Courts
trial courts; ALL federal cases must start here; no precedential power (even over other district courts)
defenses for defamation claims
truth, absolute/qualified privilege (cannot sue for defamation at all, ex. when two people are having a conversation about you at your request- can't sue unless malice)
infringement
unauthorized use
trademark infringement
unauthorized use of mark on competing or related goods/services if likely to confuse consumers as to their origin
legality
unconscionability, etc.
must prove causation
under 1934 act: that fraud caused loss of value (injury)
Section 17
under Securities Act of 1933; fraudulent transactions: cannot use interstate communications ... to defraud, obtain money/property by misleading/false statement, engage in transaction or practice that defrauds/deceives a purchaser; **CATCH-ALL provision if info outside of registration statement/prospectus was fraudulent, issuer can still be sued
defenses that can render a contract void/voidable
undue influence, duress, bilateral mistake, unconscionability, fraudulent misrepresentation, capacity
termination of agency by parties
unilateral; may be wrongful if violates agreement
disparate impact
unintentional discrimination
section 10b (act) and rule 10b-5 (regulations)
unlawful to use mails/interstate commerce to defraud any person in connection with the purchase/sale of any security; includes material misrepresentation, must prove scienter, must prove causation, and how to measure damages
liability of sole proprietorship
unlimited personal liability
liability of partnership
unlimited personal liability, joint and several liability
excuses for unethical behavior
unrealistic business performance expectations, incentives, gree, impersonalization (business, not me), ego, cutting corners, cheaper, control of resources by non-owners
breach of duty of care
unreasonable behavior (we don't punish ordinary carelessness); 1. reasonable person standard 2. willful and wanton (intentional and reckless) negligence
Nichols v. Niesen
use of common law power in case of first impression; are the Niesens responsible for negligence?
wrongful interference with a business relationship
using predatory practices to interfere with a competitor's customers
performance
usually the duty to perform under a contract is ABSOLUTE
ethical theories
utilitarianism, deontolgy, virtue ethics
types of patents
utility, design, and plants (can overlap)
puffering
vague generalities and obvious exaggeration; "The World's Finest Berries"
voidable contract
valid but one/both parties can cancel due to a defense; NOT synonymous with unenforceable
unenforceable contract
valid contract that cannot be enforced due to a defense (statute of frauds, statute of limitations)
licensing statute
validity depends on type of license at usse; VOID is license is to ensure proper skills/character and party is unlicensed (ie. docs, lawyers, accountants); ENFORCEABLE if contracts with unlicensed party are for the purpose of raising revenue for state/locality
evaluation (decision making model)
value in failure
state courts
vary, all have at least one of each type of federal court
promissory estoppel
verbal promise can be enforceable (despite SOF) if person relied on the promise to his harm
managerial control of LLC
very flexible; all members have equal vote unless contracted otherwise
principal/agent tort liability
vicarious liability; employer/principal held liable for any tort agent gets into; based on scope of employment
Aaron Feurestein
virtue ethics!!; Malden Mills company will pay full salary of workers while factory was rebuilt
intentional tort
voluntary act to harm
shareholder rights
voting, meeting, preemptive rights, dividends, inspection (most shareholders don't fully utilize voting rights); fairly difficult for a shareholder to influence business activity unless they are large shareholder (ie. Vanguard); more stocks means more votes means more influence
Raffles v. Wilchelhaus
wanted to buy cotton, agreed on ship from India to London; mutual mistake about which ship
trade usage exception
what does this term mean in industry involved; exception to parol evidence rule
consequential damages (1934)
what else to reimburse (besides buyer's/seller's damages); include lost dividends, brokerage fees, taxes, interest
issue
what is the issue/topic? ALWAYS A QUESTION; usually several of them
creditor beneficiary
when Party A promises Party B to pay a debt Party B owes a third party (third party can enforce contract)
substantial performance
when a party in GOOD FAITH substantially performs the terms of the contract; failure to fully perform results in minor breach
complete performance
when a party performs exactly as agreed
foreign corporation
when corp wants to operate in a different state; to do this, you MUST have a rep in the state you are operating in
reformation
when court rewrites contract to more accurately reflect the parties' intentions (ie. overly-broad non-compete)
constructive discharge
when discriminatory conditions force employee to quit
objective impossibility
when it is impossible for anyone to perform as required (not just impossible for obligor), duty to perform is discharged; when a change in law makes performance illegalq
delegation of duties
when one party delegates his duties under the contract to a third party
intentional interference with contractual relations
when one party intentionally causes another to breach his/her contract with a third party
assignment
when one party transfers their rights under contract to third party; requires obligor, obligee, assignor, assignee
discharge by law
where the law automatically discharges the parties; objective impossibility, commercial impracticability, statute of limitations, bankruptcy, discharge by agreement
minor vs. material breach
whether performance is substantial depends on the specific facts; did the other party get the "important and essential benefits of the contract?"
statute of frauds
which contracts have to be written to be enforced
taxation
who will pay business income tax
liability
who will pay business's debts
managerial control
who will run it
City of Livonia/Boeing: what the court is concerned will happen if mispredictions are treated as fraudulent statements
will discourage companies from making predictions that help stockholders/investors out of fear of being wrong
secondary meaning
words with an accepted meaning don't get protection unless they acquire a second meaning associated with specific product (ex. Disney, Patagonia)
creation of partnership
written contract not required but recommended; articles of partnership, name; business not separate from owners
actus reus
wrongful act or omission
crimes/criminal law
wrongs against SOCIETY
executory contract
yet to be completed
at-will doctrine
you work at the will of employer; no job security; doctrine is not absolute (several laws/court precedents limit when employers can fire employees); implied duty of good faith; employee handbooks can constitute contracts