Mortuary Science Professional Review Business Law Study Guide

For a person to recover damages due to a negligence tort, what 4 things must be proven?

1. A duty of a tortfeasor. 2. Breach of that duty. 3. The breach was the actual and proximate cause of the injury. 4. Injury or damage.

For a person to recover damages due to an intentional tort, what 3 things must be proven?

1. An act by the defendant. 2. An intention to cause the consequences of the act. 3. Causation - the injury was caused by the defendant's act or something set in motion by the act.

What are some common ways to manage the risk associated with a funeral home?

1. Eliminate Risk. 2. Minimize Risk. 3. Shift the Risk. 4. Absorb the Risk.

List the 5 types of Life insurance as listed in the textbook.

1. Endowment Life Insurance. 2. Whole Life Insurance. 3. Term Life Insurance. 4. Universal Life Insurance. 5. Key-Person Insurance.

Name the 5 requirements of a valid contract.

1. It must be based on a mutual agreement by the parties to do or not to do a specific thing. 2. It must be made by parties who are competent to enter into a contract that will be enforceable against both parties. 3. The promise or obligation of each party must be supported by consideration given by each party to the contract. 4. It must be for a lawful purpose. 5. In some cases, the contract must meet certain formal requirements, such as being in writing.

What are 3 invalid reasons for consideration of a contract? Need more information***

1. Performing or promising to perform what one is already obligated to

What are the three requirements of a valid offer?

1. The offer must be definite. 2. The offer must appear to be seriously intended. 3. the offer must be communicated to the offeree.

Differentiate between common and private carriers.

A common carrier is one that undertakes to transport without discrimination all who apply for service. While a private carrier transports under special arrangements for a fee.

Define a valid contract.

A contract enforceable by law.

What is an usury contract?

A contract to loan money at a higher rate of interest than the law allows.

Define precedent.

A court decision that determines the decision in a subsequent, similar case.

What is a negotiable instrument?

A document of payment, such as a check.

What is the difference between a law and a rule?

A law is enacted by a legislative body such as congress. A rule is enacted by a governing body such as the State Board of Funeral Directors and Embalmers.

Define a sole proprietorship.

A legal form of organization whereby the business is owned and operated by one person.

Define Undue Influence.

A person in special relationship causing another's action contrary to free will.

Define a legal offer.

A proposal to make a contract.

Differentiate between a restraining order and an injunction.

A restraining order is a temporary order preventing an action. An injunction is a permanent order preventing an action.

Define Damages

A sum of money a wrongdoer must pay to an injured party.

Differentiate between a void and a voidable contract.

A void contract is of no legal effect, which means it cannot be enforced by either party. A voidable contract is legal, but may be set aside by one or both parties.

Define a deed.

A writing conveying title to real property.

Define the following terms relating to negotiable instruments: acceptor, maker, bearer and holder.

Acceptor - person who agrees to pay a draft. Maker - person who executes a note. Bearer - payee of instrument made payable to whomever is in possession. Holder - person in possession of instrument payable to bearer or that person.

Insurance against loss through accident or sickness.

Accident and Health Insurance.

Any person appointed to contract on behalf of another is called a (n).

Agent.

What is meant by self insurance?

All of us practice a form of self insurance if we have a savings account for a rainy day. Self-insurance means putting some funds aside to be used if needed during an emergency.

Differentiate between an assignor and an assignee.

An assignor is the person making an assignment. An assignee is the person receiving an assignment.

Differentiate between an Executed and an Executory contract.

An executed contract has been fully completed. An executory contract has not been fully completed.

How does an unenforceable contract differ from a void agreement?

An unenforceable contract can be made enforceable by changing some aspects of it, such as putting it in writing. A void agreement is an agreement of no legal effect, meaning it can in no way be made a valid contract.

A written document that states explicitly the rights and duties of partners in a partnership.

Articles of Partnership.

Insurance covering motor vehicles.

Automobile insurance.

An insurance that protects companies during the period necessary to restore property damaged by an insured peril. Coverage pays for lost income and other expenses related to recovery.

Business Interruption Insurance.

Insurance on an owner of a business that will supply enough money for a partner to buy his share of the business on death.

Buy-Sell Insurance.

How are negotiable instruments transferred?

By signing it and giving it to another person.

Insurance that provides monetary benefits to a business that has experienced an unforeseen peril such as flood, fire, etc.

Casualty Insurance.

A clause in an insurance policy under which the insured agrees to maintain insurance equal to some specified percentage of the property value or otherwise to assume a portion of any loss.

Coinsurance clause.

List the advantages of a partnership.

Combined management, talent, and capital. Easy to form. Efficiency of labor. Possibility of employees to buy into the business. Possibility of raising more capital than proprietorship. Each partner contributes good will in the business.

List the duties owed by a principal to an agent.

Compensation. Reimbursement. Indemnification. Abidance by the terms of the contract.

List the advantages of a corporation.

Continuity in existence. Ease of ownership. Limited liability. Large financial capability. Specialized management - since large companies can hire people to handle specific areas of management. Legal entity - the company is considered separately from the personal assets of the owners.

Define Assignment.

Conveyance of rights in a contract to a person not a party to the contract.

The written application for permission to incorporate that is approved by a state official .

Corporate Charter.

A legal form of organization whereby a legal entity is authorized by a state to operate.

Corporation.

Insurance that protects non-retailing businesses from abnormal bad-debt losses.

Credit Insurance.

Insurance policy provision that makes the insurer liable only for losses in excess of the stated deductible.

Deductible clause.

List the advantages of a sole proprietorship.

Ease of Starting. Low cost of organization. Freedom to manage. Profits. Promptness of action - with only 1 person in charge, once decisions are made they can quickly be carried out. Secrecy - no one but you will know what you are doing in your business. Owner knows all employees and most customers. Unique credit standing - the company can use personal assets.

Life insurance that allows the insured, rather than the beneficiary, to collect the face value of the policy upon maturity or to collect that value in annual payments.

Endowment Insurance.

Define Negligence

Failure to exercise reasonable care.

A person in a relationship of trust and confidence.

Fiduciary.

Insurance covering business liability to customers who might be injured on or off premises or from the product sold to them.

General Liability Insurance.

List the 2 types of Liability insurance covered in the textbook.

General Liability covering services and premises. Product Liability covering the use of an item sold to the user.

A partner in a limited partnership who has unlimited personal liability.

General Partner.

A partner of a partnership who is personally liable for the debts of the business.

General Partner.

Define fungible goods.

Goods of a homogeneous nature sold by weight or measure.

What type of warranty is imposed by law?

Implied Warranty.

List the different types of Torts.

Intentional, Negligence, and Business

When may an offer be revoked?

It may be revoked at any time prior to acceptance of the offer.

Life insurance that protects a firm against losses due to the death of a key employee.

Key-Person Insurance.

List the disadvantages of a partnership.

Lack of continuity. Decisions are binding on both parties. Frozen investments. Collateral is used for the business debt that may be taken if one partner makes a bad decision. Unlimited liability of general partners. Possibility of unsatisfactory division of profits. Possibility of managerial difficulties - if there is divided control, employees will not know which of the partners to listen to if the partners disagree.

A business organization that is recognized by the law as having a separate legal existence.

Legal Entity.

List the disadvantages of a corporation.

Legal restrictions on activities. Separation of ownership and control. Lack of personal interest. Double taxation of earnings. Lack of privacy - since company documents are open for inspection by governmental authorities. Difficult to create - articles of incorporation must be drawn up.

Define Caveat Emptor.

Let the buyer beware.

Insurance that covers business liability to customers of others who might be injured from the product sold to them.

Liability insurance.

Insurance that provides death benefits to the survivors of the insured

Life insurance.

A partner in a limited partnership who is not active in its management and has limited personal liability.

Limited Partner.

List the duties owed by an agent to a principal.

Loyalty and good faith. Obedience. Reasonable skill and diligence. Accounting Information.

Define personal property.

Movable property, that is everything owned by a person except.

The process of terminating a contract and substituting a new one with the same terms but a new party.

Novation.

Define Duress.

Obtaining consent by means of a threat.

Define an independent contractor.

One who contracts to do jobs and is controlled only by contract as to how performed.

A form of legal organization in which a business association made up of two or more persons is formed for the purposes of carrying on as co-owner.

Partnership.

Define the following terms related to negotiable instruments: payee, drawer, and drawee.

Payee - party to whom instrument is payable. Drawer - person who executes a draft. Drawee - person ordered to pay draft.

Describe the following federal act: Sherman Antitrust Act

Prevents businesses from committing acts that restrain trade and/or form monopolies.

Describe the following federal act: Clayton Act

Prevents businesses from committing acts that tend to form a monopoly or substantially lessening competition.

Describe the following federal act: Robinson-Patman Act

Prevents businesses from price discrimination and prevents the unreasonably low prices for the purpose of eliminating competition.

Are funeral coaches used for transportation of casketed remains to a cemetery a common or private carrier?

Private carrier.

Insurance that protects a firm against claims that its product caused bodily injury or property damage to the user.

Product Liability Insurance.

What is a Bill of Lading?

Receipt and contract between consignor and carrier.

Is a removal service an agent of a funeral home if contracted to make removals? If so, what type of agent is the removal service?

Special Agent.

The Latin term for the principle that a court decision controls the decision of a similar future case

Stare Decisis.

A document specifying the number of shares owned by a stockholder.

Stock or Stock Certificate.

Life insurance that has no cash value whenever the policy expires.

Term life insurance.

Differentiate between a bailor and a bailee.

The person who gives up possession of bailed property is a bailor. The person in possession of bailed property.

A private wrong for which damages may be recovered.

Tort.

Define Bailment.

Transfer of possession of personal property on condition property will be returned.

A combination of whole life insurance and term life insurance in that you pay for a specified period of time but receive the death benefit at the time of death no matter if you are still paying off the policy or if it has reached maturity.

Universal Life Insurance.

List the disadvantages of a sole proprietorship.

Unlimited financial risk. Limited size. Limited life. Limited management ability. Limited opportunities for employees - they may seek to go elsewhere for promotion. Difficulty in raising capital - once you reach your personal credit limit and the value of the assets you may not have another source of capital.

If an adult makes a contract with a minor for necessaries, what is the status of the contract? (executed, executable, void, voidable, valid)

Voidable, meaning that the minor can cancel it.

Life insurance that gives lifetime protection to the insured person, but which must be continually paid throughout the lifetime of the insured.

Whole life insurance.