Business Law SBI

Anticompetitive Agreements

(price-fixing, monopolies) although between private parties, have such a negative impact on society that they are deemed illegal (usually also violate antitrust statue) A. Covenants not to Compete: Contracts that restrict outgoing business owners or employees from engaging in similar business 1. Court will look at restriction in terms of time, geography and scope of activity 2. Must protect legitimate business purpose (preventing competition is not a legitimate business purpose) B. Exculpatory clauses: provisions releasing a party from liability regardless of fault 1.Unenforceable if parties have unequal bargaining power (one party has a business necessary for society or is dominant over the other- ex: employer) 2.Enforcebale if between parties with equal bargaining power (signing a contract saying you won't sue if you go ice skating- something you choose to do, you don't have to go ice skating)

Definiteness of Terms of Offer

- Common law: contract must contain 1. Who- identify parties 2.What- subject matter of contract 3. How many- quantity 4. How much- price/consideration 5. When- time of performance -UCC: much less specificity; in general only requires a definite quantity term

Federal courts

-Federal question jurisdiction: deferral courts can hear any case about federal laws -Diversity jurisdiction: ederal court can hear a case about a state law if 1. $75,000 or more AND 2. Parties are from different states -Exclusive jurisdiction: patents, bankruptcy, federal crimes

Breach of duty of care: Unreasonable behavior

1. "Reasonable person" standard 2. Willful and Wanton negligence- intentionally being careless, becomes puntitive

Genuineness of Assent

1. Bilateral Mistake: a contract can be rescinded (is voidable by either party) if both parties are mutually mistaken about a material fact 2. Fraudulent Misrepresentation (prove 5 elements) 3. Undue Influence: Where, because of a relationship, one party can manipulate the other so that he/she is not exercising free will. Contract is voidable by the one being manipulated 4. Duress: Forcing someone to enter contract through fear created by threat to do something wrongful or illegal. Court can order remission (ex:gun to the head)

Causation

1. Cause in fact 2. Proximate cause: only liable for foreseeable risk of harm-reasonable to expect could be harmed (without outside intervention)

Boards of Directors

1. Composition: a. Inside directors: are also employees ex: CEO b. Outside directors: do not work with company but could have relationship with the company ex: CEO of a company they work with, or a shareholder c. Independent directors: no connection to company d. Lead director: an independent director, cannot be an executive, will sometimes work with the chairman (often the CEO) 2. Board's duties: fiduciary duty -> trusted to look out for someone else's interests (shareholders) - business judgment rule: as long as board members are doing their best, its ok if things go wrong, won't be held legally liable 3. Impact of Sarbanes- Oxley: passed after failure of Enron and the 1st time Congress got involved in corporates; requires the audit committee has to be all independent directors and 1 financial advisor

Defenses to Intentional Torts

1. Consent: plaintiff gave permission 2. Mistake: defendant acted under the mistaken belief his conduct was justified 3. Necessity: in emergency situations 4. Self-defense

Some common attributes of CSR actions

1. Corporations are run for profit - debate as to financial value of CSR 2. All firms must comply with multiple laws 3. Duty to cure problems caused 4. Responsibility varies by firm 5. Duties to multiple stakeholders 6. Transparency and accountability a. Global Reporting Initiative b. Triple Bottom Line: Financial, social, and environmental performance c. Sustainability: meeting the needs of the present without compromising the future

When choosing a type of organization what are the factors to consider?

1. Costs of creation 2. Continuity/ dissolution 3. Managerial control (is the owner or manager running the business?) 4. Liability 5. Taxation

Partnerships

1. Creation: agreement or contract by 2 or more to enter jointly into business and share profits and losses - can be informal - articles of partnership : constitution for a partnership (how to split equity, etc.) - name ("assumed name"): have to have names of the partners; if another name is used than it has to be registered with that state 2. Continuity: - Dissociation: when a partner leaves the others have to decide if they want to keep partnership - Dissolution: if partnership is ended - Buy and sell agreements: if a partner wants to sell their share they have to sell it back to partnership 3. Managerial control: each partner gets an equal vote (default) 4. Liability: unlimited personal liability (like sole proprietorship) -joint and several liability: creditor can go after an individual (ex: if they have the most $) or all partners 5. Taxation: pass-through (b/c it doesn't exist according to law)

Limited Liability Company

1. Creation; expensive, apply to state, created by members 2. Continuity: like a partnership 3. Managerial Control: members have equal say, can contact around it - members -managers 4. Liability: limited personal liability 5. Taxation: default= pass through but can choose to be taxed as a corporation

Plaintiff must prove...

1. Disparate treatment (intentional discrimination) - Plaintiff is a member of a protected group -Qualified for position - Subject to adverse employment action (demotion, not being hired) -Treated less favorably than non-protected employee ex: white senior air traffic controller who was demoted and replaced by African-American 2. Disparate impact (unintentional) -Employer's practices/policies have a disparate impact on protected group -Defense: practice/policy is job related and based on business necessity -Plaintiff can rebut defense by showing another practice would serve same purpose without discrimination 3. Plaintiffs can only get up to $300,000 in compensatory (including pain/suffering) and punitive damages (plus pay back)

Agent's duties to the principal

1. Duty of loyalty: put principals interests first 2. Duty of obedience: obey instructions 3. Duty of reasonable care

Termination of the offer

1. Expiration 2. Destruction of the subject matter 3. Revocation by the offeror: can revoke at any time before offer accepts, even if offeror promises to keep offer open - revocation of offer to the public must be communicated the same way as the offer 4. Irrevocable offers: -Option contract: offeror promises to hold offer open for a specified period in exchange for consideration ex: stock options -Detrimental reliance: (promissory estoppel) required elements: 1. Defendant made a promise 2. Plaintiff relied on the promise to his harm 3. In fairness the defendant is estopped from breaking the promise

CSR Critics

1. Greenwashing (misinformation to make it seem you are more environmentally friendly) 2. Profit maximization: total social welfare is optimized if everyone works toward own selfish goals, so businesses should seek to maximize their long-term profits (legally)

Duty of Care

1. If acting, have duty to act carefully 2. If not acting, no duty to warn or act unless have a relationship with person in harm's way (like a business relationship)

Invasion of Privacy

1. Intrusion: a physical, electronic, or mechanical intrusion into someone's private space (ex: opening someone else's mail, taking photos through windows of people inside) 2. False Light: publication of false, highly offensive (but not necessarily defamatory) info abut a person ex: teacher taken out by security (they don't say anything) 3.Appropriation: of a person's name or likeness 4. Fraud: name all elements

Defect

1. Manufacturing defect 2. Design defects: a.Risk-utility test: negligently designed if risks outweigh benefits AND no safer alternative existed b. Consumer expectations test: design must be safe for intended and any reasonably forseeable users 3. Inadequate warning: lacks warnings that would reduce or avoid foreseeable risks so that the product is not safe -don't have to warn of obvious dangers 4.Failure to inspect: sellers that prepare, install or repair the goods they sell have a duty to inspect those goods -not liable for hidden defects, just obvious ones

Requirements of Negotiability

1. Must be evidenced by a record (written or electronic) 2. Must be singed/ authenticated by the maker or drawer (or agent: someone who acts on behalf of a person) 3. Must contain an unconditional promise or order to pay 4. Must pay a sum certain 5. Must be payable in money 6. Must be payable on demand or at a definite time 7. Must be payable to order or bearer (have these words on it)

Words of negotiability

1. Order paper: pay as the person indicated orders. Must use the word "order" (pay to the order of...) 2. Bearer paper: pay whoever presets the paper (or if made out to "CASH") (pay to whoever has the check) 3. Endorsing order paper without any special instructions= blank endorsement:changes back to bearer paper

What is NOT a consideration

1. 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 consideration exceptions: a. Unforeseen Difficulties: exception to preexisting duty rule when contract duties change because of unforeseeable problems b UCC Exception: under the UCC, contract modification made in good faith do NOT need an exchange of consideration to be binding

Two types of commercial paper and negotiable instruments

1. Promises to pay a. Promissory notes: made by a maker to a payee ex: taking a loan -> promise to pay back bank b. Certificate of deposit: bank will pay you plus interest in the future 2. Orders to pay a. Drafts: order by one party (drawer) to a second party (drawee) to pay a sum of money to a third party (payee) b. Checks: a draft where a deposited (drawer) with a bank (drawee) orders payment to a third party (payee)

Intention

1. Reasonable observer standard 2. What are NOT offers: -Preliminary negotiations: are you interested in selling your pen? -Preliminary agreements: if parties leave terms open for later negotiation, then not a contract -Advertisements, Catalogues, Price Lists, and Circulars: Generally are considered invitations to negotiate, not offers

According to the Civil Rights Act of 1964, Title VII, discrimination is prohibited in

1. Recruiting/hiring - employers can affirmatively hire on discriminatory basis on corrections 2. Compensation 3. Terms, conditions or privileges of employment (promotion) - ex: Better bonuses for whites, allowing racial insults, etc. - constructive discharge: when discriminatory conditions force employee to quit 4. Discharge 5. Retaliation also prohibited in response to complaints under the Act

Religious discrimination

1. Religious organizations can discriminate based on religion but not on other bases 2. Non-religious employers cannot use religion as BFOQ and must make reasonable accommodations unless would cause undue hardship

Shareholders

1. Rights: voting (largely swayed by management), meeting (annual shareholder meeting), preemptive rights (dibs to buy new stock), dividends, inspection 2. Resolutions/proposals: hard to govern through votes and resolutions 3. Derivative suits: shareholder can step in company shoes and bring lawsuit forward on behalf of the company

Structure of corporate management (historical perspective)

1. Shareholders/ owners 2. Managers/ Executives - might look out more for themselves rather than shareholders, which is why there is a board of directors 3. Boards of directors 4. Articles of Incorporation/ corporate charter

What are the types of organizations?

1. Sole proprietorships 2. Partnerships 3. Corporations 4. S. Corporations 5. Limited Partnerships 6. Limited Liability Company

Intentional Infliction of Emotional Distress

1. The defendant must act intentionally or recklessly 2. The defendant's conduct must be extreme and outrageous; and 3. the conduct must be the cause 4. of sever emotional distress (may need to show physical symptoms)

Proponents of CSR

1. With great power comes great responsibility 2. Practical benefits 3. Market and legal regulations fall short

Defenses to Negligence

1.Comparative Negligence: (most states) the plaintiff's recovery is reduced by the percentage that the plaintiff was at fault a. If plaintiff's fault > 50%, no recovery 2. Contributory Negligence: (few states) if the plaintiff is at all at fault, plaintiff cannot recover anything from the defendant 3. Assumption of Risk: if plaintiff (1) knows of a risk and (2) voluntarily assumes that risk (proceeds), then plaintiff is barred from recovering from any injuries resulting from the risk

Sex discrimination

1.Gender could be BFOQ, but must have factual basis; narrowly interpreted ex: telephone company could not prove that most women could not safely perform heavy lifting required for position

Categories of torts

1.Intentional: voluntary act to harm (act is intentional, might not have meant to harm person) 2. Negligent: failure to exercise due care; carelessness 3. Strict Liability: liable regardless of fault

5 advantages to ADR

1.Saves time and money 2.Less adversarial- don't necessarily have to have a winner and loser 3.Flexibility 4. Privacy (courts are public) 5. Expert decision maker

Primary sources of law

1.Statutory: Role of legislature (makes laws), executive (enforces law), judiciary (interprets and applies laws) 2.Common law: Judiciary's own set of laws (not really a law but everyone obeys it) -Ex: negligence -State decisis: precedent- once a decision is made, its the precedent- has a binding effect on lower courts 3. Interaction of common and statutory: in conflict, statutory will win, but common law can usually enhance it 4. Uniform laws: suggestions/models for state laws- not actual laws -Uniform Commercial Code (UCC)

Defense to defamation

1.Truth: a true statement cannot be defamation 2. Absolute/qualified privilege: statement in court under oath; parties having a conversation about you with your permission (ex: old boss giving a reccomendation)

Commercial Paper/Negotiable Instruments definition

A record of a signed promise or order to pay a specified amount of money

Contract

A set of promises that the law will enforce - largely the product of common law -statutory law mostly just codifies common law (including the UCC, which apples to sales of goods)

Sole Proprietorships

A single owner 1. Creation: just start engaging, no real process to create (law doesn't see the business as existing because it is not a separate entity from owner) 2. Continuity: fragile (what happens to owner, happens to business) 3. Managerial Control: owner has sole control 4. Liability: owner has to pay "unlimited personal liability" -> if business can't pay loan, bank can go after owners personal assets 5. Taxation: pass-through -> owner pays taxes

Contractual liability

A. Agent's ability to bind the principal to a contract depends on whether the principal authorized the agent's actions B. Actual/Express authority: expression permission to act on principal's behalf, whether oral or written 1. Based on agent's reasonable belief 2. Can be mistakenly granted - ex: Bob wrote a note stating "please buy me a new computer" for Ed but left it on Al's desk by accident C. Implied/Incidental authority: authority agent reasonably believes is implied along with expressed permission D. Apparent authority: no express authority but authority is reasonably assumed by third parties because of principal's conduct 1. May be based on position or past actual authority 2. Principal must give notice to terminate apparent authority 3. Action against agent

Elements of a contract

A. Agreement (offer and acceptance) B. Consideration (something being exchanged)

Intentional Torts against Persons

A. Battery: intentionally touching another in a harmful/offensive way -Reasonable person standard -Touching can be by something set in motion by defendant -Physical injury not required B.Assault: intentionally causing another to believe he is going to be the victim of a battery ex: raising a gun is assault, shooting is battery C. False Imprisonment: intentionally confining another against his/her will -restraint by force or threats

Types of Contracts (bilateral v. unilateral)

A. Bilateral: both parties promise to perform later B. Unilateral: the offer is accepted only when the offer completes an act ex: O'Malley tells Parker that if Parker carries a package over he Brooklyn Bridge, O'Malley will pay $10

Sarbanes-Oxley Act of 2002

A. Corporate Governance: 1. Board audit committees must be comprised solely of independent directors 2. At least one member of audit committee must be a financial expert 3. Audit partner must rotate off the client every 5 years B. Financial Statements and Controls 1. CFO's and CEOs must certify the accuracy of quarterly and annual financial statements filed with SEC C. Securities Fraud 1. Imposes heavy criminal penalties for securities fraud: up to 25 years of prison and/or $25 million penalties

The Family and Medical Leave Act

A. Employees may take up to 12 weeks unpaid leave during any 12 month period for: 1. Birth and care of employee's child 2. Employee adopts or fosters a child 3. Employee cares for an immediate family member (spouse, minor child, parent) with a serious health condition - In-laws and adult children capable of caring for themselves are excluded 4. Employee's own serious health condition 5. For "any qualifying exigency" arising out of the fact that a family member is on/has been notified of active military duty B. Employer must keep the job open for when the leave is up or offer comparable job 1. Employee should not be disadvantaged by taking leave

Types of Contracts (express v. implied)

A. Express: terms are stated (verbally/written) B. Implied (Implied in Fact): terms are made clear by the parties' behavior ex: Ed buys a candy bar every day, when Al is busy he waves at Al implying he will pay the next day

Court System

A. Federal Courts Lowest: U.S. District Courts (courts of origin jurisdiction): where a case originates, jury listens to decide with the facts are and judge then applies law to the facts; doesn't set precedent for any courts; several in each state Middle: U.S. Circuit Courts (13): can appeal to circuit court if you lose in district court; each circuit has several states- states are only binded to decision made in its circuit; no jury; circuit court has to take appeal and determine if district court judge got it right or wrong Highest: U.S. Supreme Court (appeal not automatic): all circuit courts and district courts have to follow Supreme Court decisions; Supreme Court decides which cases they hear- usually about constitutional or federal law B. State Courts

Acceptance

A. Generally silence does not constitute acceptance B. When Acceptance is Effective: 1. Mailbox rule: acceptance is effective when sent, regardless if ever received -exception: if offer specifies acceptance has to be received

Two components of consideration

A. Legal sufficiency: the consideration must be either a legal detriment to the promise OR a legal benefit to the promisor 1. Legal Benefit: receiving something one did not have a legal right to receive or (ex:getting a donut) 2. Legal Detriment: giving something one had no obligation to give or not doing something one had a legal right to do (ex: giving up a $ for a donut) B Bargained-for exchange: two requirements: 1. The promisee's legal detriment or the promisor's legal benefit must have induced the promisor to make his promise; AND 2. The promisor's promise must have induced the promisee's legal detriment or induced the legal benefit given to the promisor

Agency Relationships

A. Principal: person being represented B. Agent: acts on behalf of principal 1. Employee 2. Independent Contractor: not typically an agent - Control: supervison, tools, term, pay

Area Discrimination in Employment Act (ADEA)

A. Prohibits employment discrimination against employees 40 and older 1. Prohibits mandatory retirement except for high-level executives over 65 B. Must prove either disparate treatment or disparate impact 1. Employer can defend by arguing BFOQ (e:disney princess) 2. Employer does not need to show business necessity for policy with disparate impact, only that there was a "reasonable factor other than age"

Americans with Disabilities Act (ADA)

A. Prohibits employment discrimination against employees or applicants based on: 1.Having a disability 2. Having had a disability in the past 3. Being regarded as having a disability 4. Being associated with someone with a disability (ex:child) B. Disability:"any physical or mental impairment that substantially limits one or more of an individual's major life activities" 1. Determination is made without regard to mitigating measures (ex: artificial limbs) 2. Excludes impairments that last 6 months or less, but episodic or impairments in remission are covered C. Prohibits discrimination against the qualified disabled 1. Qualified disabled: can perform job function with or without reasonable accommodations (ex: blind person can't be a truck driver) 2. Employee must file with EEOC before suing (like Title VII) D. Reasonable accommodations 1. Employer must make job/work environment fit the employee's needs (ex: make physical facility accessible, modify equipment, etc.) 2. Employer can claim accommodation is not reasonable or would cause undue hardship (require significant difficulty or expense)

Worker Compensation

A. State statues which provides compensation for deaths, injuries or illnesses arising during course of employment B. Statues specify specific amounts for various injuries 1. Loss of income usually calculated as percentage of employee's wages 2. Exclusive remedy rule: traditionally employees could ONLY receive workers compensation for accidental job-related injuries; today courts are more lenient C. Employers either buy insurance, self-insure, or pay into state fund administered by state agency

Incidental Damages

Actual expenses directly caused by the breach, including cost of getting replacement performance (ex: advertising costs, costs for a lawyer)

Trade Secrets

Any information that (1) a company takes reasonable precautions to keep secret and (2) gets its economic value from being kept secret -Must take reasonable precautions to keep information secret (ex: use an intranet, lock and secure items, use non-disclosure agreements, etc.) -Economic value can be proven by showing information is of value to competitors

Damages

Automatic general damages for libel- worse than slander; libel is recorded (audio or written) Must prove special damages for slander- prove harm to reputation Slander per se: don't have to prove special damages for certain statements

In personam (personal jurisdiction)

COurt's authority over the people involved in the case 1.Focus on defendant 2. Look for minimum contacts ex: not fair for defendant to come to a PA Court from Alaska (if she has no contact with PA), plaintiff should sue in Alaska - where incident happened

Minors

Children are minors.infants until they turn 18, marry or become emancipated 1.Most contracts entered into by minors are voidable by the minor, so the minor can disaffirm the contract 2. To disaffirm, minor must return goods or other consideration for full refund -in most states, minor can get full refund even if has damaged or lost the goods - other states require restitution: restoring other party to position he/she was in before entered contract

What are trade secrets protected by?

Common law; also Uniform Trade Secrets Act (where adopted by state) - One can be subject to tort liability for using or disclosing a trade secret if: 1. obtained the secret improperly or 2. use/disclosure is a breach of confidence - In a civil case, owner an get an injection and/ or damages. Can also face contractual liability if signed a nondisclosure agreement

What is Intellectual Property and why is it important?

Congress shall have the Power to promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries ex: Trademarks (service marks), copyrights, patents, trade secrets value depends on exclusivity of use - infringement= unauthorized use - license= contract with owner of property permitting limited use of the property. Breach can result in infringement

Licensing Statues

Contract validity with an unlicensed party depends on type of license A. Void if license is to ensure proper skills or character (ex: if an electrician is not licensed and they work on your house, you do not have to pay them) B. Valid and Enforceable if purple of license is to raise revenue for state/locality (ex: liquor license)

Mental Incompetence

Contracts entered into by the mentally disabled are: void, voidable, or valid 1. Contract is voidable if the person lacks the mental capacity to understand that he/she is signing a contract 2. If person is not legally incompetent and has either a lucid period or sufficient mental capacity to understand, the contract is valid

Legality

Contracts to do something prohibited by law or against public policy are VOID

Unconscionable Contracts/Clauses

Contracts/terms that are so grossly unfair as to "shock the conscience" of the court A. Procedural unconscionability: drafter makes it difficult for other party to know terms, whether due to language, form or lack of opportunity for review B. Substantive unconscionabiity: harsh contract terms, often if deprive one party of remedy if other party breaches

Subject Matter Jurisdiction

Court's authority to decide type of law at issue in case asking are we filing in state or federal court?

Jurisdiction

Court's authority to hear case. Need either personal OR in rem AND subject matter

Consequential Damages

Damages beyond loss of contract performance caused by consequences of the breach that the defendant knows about (mostly lost profits)

Trademarks

Def: a distinctive mark, motto, or device that a manufacturer puts on its products; goal is to identify who makes the product trademark: goods Service mark: services Trade dress: the image and overall appearance of a product ex: roof on pizza hut, tic tac box, includes packaging design and color Trade names: indicates part or all of a business' name (versus product or service) 1. Not protected under the federal Lanham Act, but protected under Common Law if distinctive (ex: Minella's) 2. A trade name can be a trademark if same as the product's name ex: coca-cola

Federal Lanham Trade-Mark Act of 1946

Exclusivity of trademarks is protected by the common law and state statues -Under the common law, trademarks are created simply by being used. The holder can sue anyone who infringes his mark - To qualify for federal protection, the trademark must be registered with the U.S. Patent and Trademark Office (PTO) 1. For state protection, may need to register with state government 2. Registration can be renewed after 5-6 years and then every 10 years (20 if registered before 1990) - Distinctiveness of Mark: Lanham Act only protects marks that are "sufficiently distinctive" from all competing marks 1. Strong marks: Fanciful, arbitrary, or suggestive marks are the most distinctive because not otherwise associated with the product ex: Xerox, Kodak a. Fanciful: includes invented words b. Arbitrary: words that have no literal relation to product ex: Arm & Hammer c. Suggestive: suggest something about the product without directly describing the product ex: Mr. Clean 2. Secondary Meaning: words with an accepted meaning (names, place names, descriptive terms) don't get protection unless they acquire a second meaning associated with a specific product ex: Tommy Hilfiger, Disney Generic Terms: never receive trademark protection, even if acquire a secondary meaning a. Big problem arises when trademarked term becomes generic b. Ex: aspirin, thermos, raisin bran, corn flakes, scotch tape defenses: 1. Mark is not distinctive or has become generic 2. Public is unlikely to be confused as to origin of goods/ services Fair Use Doctrine: discussion, criticism, or parody of mark, product or owner, including in comparative advertising

Deceptive Advertising

Is consumer likely to be misled by the advertising claim? 1. Lesser standard than intentional fraud 2. All claims must be substantiated 3. If using a celebrity endorsement, the celebrity must actually use the product 4. Does not apply to puffery: vague generalities and obvious exaggeration: "The World's Finest Berries" (obvious exaggeration so can't be sued)

Corporations

Law does recognize it as existing as a separate entity -> will be more expensive (pay state, lawyer) 1. Creation a. Corporate charter:create articles of corporations, state will review and send back as a corporate charter which becomes the foundational document b. name: use expressions such as co., inc. 2. Continuity: independent of owners, owners can come and go without it affecting the business 3.. Managerial Control: a. Publicly held: sell stock and trade it, executives run the business b. Closely held: small group of share-holders who make decisions 4. Liability: debts are its own a. Limited personal liability: if a corporation is in debt, the most a shareholder can lose is what they put into the corporation unless they don't treat the corporation as a separate entity b. Piercing the corporate veil: a veil separates an owner from the business, if the owner doesn't treat the veil as there and treats it as an extension of themselves the court will then view it as that and go after the owner (known as piercing the corporate veil) - alter-ego theory: extension of owners own stuff (use company for themselves such as cars on family vacation) 5. Taxation: corporation pays its own taxes - advantages: a. corporate tax rate is lower b. avoids liquidity problem (owners won't lose money) - disadvantages: double tax problem Examples in book

Compensatory Damages

Money to compensate for harm directly caused by breach (loss of the bargain itself)

Standing

Plaintiffs interest in the controversy must be direct and substantial; plaintiff must personally suffer (in past or future)

Federal Unemployment Tax Act (FUTA)

employers must pay unemployment taxes used to fund qualified unemployed workers

Infringement

The unauthorized use of mark on competing or related goods/services if likely to confuse consumers as to their origin

Agreement

To create "agreement" or mutual assent, you must have an offer and acceptance of that offer

Intentional tort against property: Trespass

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: something that attracts people to your property ex: swimming pool attracts kids, owner held liable if kid drowns and they didn't put a fence up or something -Can't use life threatening force to defend trespassing

Types of Contracts (Valid, Void, Voidable, Unenforceable)

Valid: legally enforceable, has all elements Void: no contract exists (either lacks on element or illegal) Voidable: valid but one/both parties can cancel (avoid/rescind) due to a defense Unenforceable: valid contract that cannot be enforced due to a defense ex: if contract must be written under Statue of Frauds

Third Party Beneficiary

a 3rd party whom the contracting parties intend the contract to directly benefit can enforce the contract against the party whose performance will benefit 3rd party A. Only intended beneficiaries have a right to enforce the contract (creditor or donee)

Discrimination based on religion, sex, or national origin (not race or color) is permitted if

a bona fide occupational qualification (BFOQ) ex: Position at a Catholic Church as a youth minister needs a person who is Catholic

Performance and Discharge

a party fulfills (discharges) its duties by performing as required by the contract

Anatomy of an offer

a promise to do or not do a specific act in the future 3 requirements 1.Offeror must seriously intend offer 2. The terms of the offer must be reasonably certain or definite 3. The offer must be communicated to the offeree

Affordable Care Act

employers of more than 50 must offer health insurance

Liquidated Damages

amount stated in contract to be paid in case of a future breach. Enforceable if reasonable

Security Definition

an investment of money in a common enterprise with profits to come solely from the efforts of others *case problem in book (Howey in the Hills) *

Intentional tort against privacy: Conversion

any unauthorized act that deprives an owner of his/her personal property without his/her consent

Federal Trade Commission Act

authorizes the Federal Trade Commission to prevent unfair and deceptive trade practices

Copyright Protection

available for the following, if "fixed in a durable medium" and can be perceived , reproduced, or communicated, and is original: - literary works (includes computer programs) - musical works - dramatic works - Pantomimes and choreographic works - Pictorial, graphic, and sculptural works - Films and other audiovisual works - Sound recordings - Architectural works

Tort definition

breach of a duty owed to another but not arising from contract; a civil wrong

Product Liability:

buyers, users or bystanders can recover from 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

Intoxication

contracts are either valid or voidable depending if his/her judgment was so impaired that couldn't understand legal consequences *Valid id you understand what you are doing

The one-year rule

contracts must be in writing if it cannot be performed in 1 year from formation -focus on whether performing contract within 1 year is possible (not just likely) *look at case problems exception: Partial performance (customized goods)

Quasi Contract

court allows parties to recover in contract (when there is none) to prevent unjust enrichment *box on pg.48

Specific Performance

court compels parties to perform contract A.Not available unless money damages are inadequate- when subject matter is unique B. Specific performance is not available for personal services contracts

Rescission

court ends contract and returns parties to position they were in before they entered the contract

Copyrights

def: a property right owned by authors/artists in literary or artistic works

Patent

def: the exclusive right to make, use and sell an invention must file to get protection 1. 20 years of protection for inventions (utility patents), 17 years for last patents, and 14 years for designs (no renewal process) 2. Begins when file, not when issued 3. Upon expiration, is in the public domain

Corporate Social Responsibility (CSR) definition

duty to create wealth in ways that protect, enhance or not harm societal assets

Civil Rights Act of 1964, Title VII

eliminates job discrimination based on race, color, religion, sex, or national origin -individuals must first file charges with EEOC within 180 days after notice of the unlawful practice (or with state agency and then EEOC)

Consolidated Omnibus Budget Reconciliation Act (COBRA)

employees can still purchase health insurance after employment terminates for additional 18 months

The Worker Adjustment and Retraining Notification Act (WARN Act)

employers must give 60 days notice of plant closings and mass lay-offs

Civil Rights Act of 1866, Section 1981

everyone has same right to make and enforce contracts, regardless of race (applied broadly, ex: Jewish race) A. Individuals can sue without first filing with EEOC (no 180 day time limit) B. Allows for unlimited damages (no caps on compensatory or punitive damages)

Rejection

expressly or impliedly communicating intent not to accept 1. Once an offer is rejected, it cannot be accepted 2. Any subsequent attempt to accept is deemed a new offer

Negligence and its elements

failure to exercise reasonable care 1.Duty of due care: don't have the obligation to care for anyone, but if you do you have to act with care; if you know a person in trouble, you have to care for/rescue them 2.Breach of that duty: Not acting like a reasonable person existing sue care 3.Causation:defendant's breach was the actual proximate 4. Injury: often must prove physical injury

Medicare

federal government health insurance program for people over 65 and the disabled -again employer must be withhold contribution from wage and match it, but without a maximum limit

Deceptive Marketing

federal statues regulate telephone solicitations and fraudulent telemarketing

Intentional tort against privacy: Injurious falsehood

form of defamation but about someone's property

Child Labor Standards

generally cannot work until 14; only limited hours until 16

Venue

geographic location of court can change venue ex: witness are in Alaska, need to find an impartial jury

Limited Partnerships

hybrid of partnership and cooperation - have at least 1 general partner and limited partner (corporate shareholder) 1. Creation: state law - name: cannot contain names of limited partners 2. Continuity: if limited partners come and go its fine if general partners remaining partners have to decide if they want to keep going 3. Managerial Control: only general partners can manage - Limited partners: lose limited status if they get involved 4. Liability -Limited partners: gave limited personal liability (like corporate shareholder) General partners: have unlimited personal liability 5. Taxation: pass through

Parol Evidence Rule

if the contract language is unambiguous, extrinsic/parol evidence is not admitted *case problem

In rem

jurisdiction over a thing - about property, not a person

Minimum wage

last set at $7.25/hr in 2009 1. States also have own minimum wage laws; employer pay whichever is higher - employees earning tips must repaid $2.13/hr plus extra if tips do not equal minimum hourly wage

Defenses to Enforcing a Contract: Contractual Capacity

legal ability to enter into contractual relationship A. No competence: adjudged mentally incompetent by court - Contract is VOID B. Limited Competence: minor/intoxicated/ mentally disabled -contract is VOIDABLE by that party

Overtime

mandates time-and-a-half after 40 hours per week -Administrative, executive and professional employee not eligible

Affirmative Action

meant to correct historical imbalances but can lead to reverse discrimination claims 1.To be constitutional, affirmative action plans cannot have set quotas, but only reasonable, temporary target goals to correct historic imbalances 2. Plans are subject to strict scrutiny and be required by a compelling interest

Appearance Requirements

mixed rulings from courts 1.Height and weight requirements must be related to job performance 2. Could be related to related to religious discrimination or disability

Executor promise to personally pay debts of an estate

must be in writing (administrator of state)

Collateral (secondary) promises

must be in writing 1.A guarantor promises to pay another's debt if the other person doesn't pay

Pregnancy Discrimination Act

no discriminating against women who become pregnant or give birth -employer cannot force pregnant woman to stop working before birth or keep her from returning to work

The invention, discovery, proves or design of patent must be...

novel, useful, and not obvious in light of current technology 1. Novel: new and different from prior art 2. Useful: must do something (have utility) 3. Not obvious: to someone with an ordinary understanding in the field

First Sale Doctrine

once you buy a copyrighted work, you can distribute it without permission

Fair Use Doctrine

one may copy copyrighted materials without penalty if intend to use materials for "criticism, comment, news reporting, teaching, scholarship or research" -In applying doctrine, courts look at: - Purpose of use, whether for commercial or nonprofit educational use (transformative) - Nature of the copyrighted work - Amount and importance of the portion copied in relation to the entire work -Effect of the use on the value of the work *look at case problem with 2 live crew*

Intentional tort against privacy: Nuisance

owner's ability to enjoy his land is impaired because of interference (light, noise, smell, vibration, etc.) caused by another ex: lights on football field prevent neighbors from sleeping

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

Conditions

performance is required if condition is triggered; otherwise duty to perform is discharged A. Condition Precedent: must be fulfilled before a party can be required to perform B. Condition Subsequent: after a party has begun to perform, a condition that must be met before the party must continue

Patentable subject matter

processes, machines, compositions of matter, improvements to any of the above, nonfunctional designs of a manufactured article and certain plants

Federal Copyright Act

protection under this is automatic without registration of the life of the author plus 70 years (75 for corporations 1. Gives holder the right to control the reproduction, display, distribution, and performance of work 2. Must register with the US Copyright Office to get full remedies (including damages) under federal law 3. Do not have to use the symbol, but should to be eligible for federal remedies Protection is not available for ideas (procedures, process, system, method of operation or discovery) "regardless of the form in which it is described, explained, illustrated or embodied" 1. Infringement occurs whenever the form or expression of an idea is copied, regardless if it is copied entirely to exactly

Social Security Act

provides for retirement, survivors', and disability insurance -Employer withholds employee's contribution from wage and matches it up to a maximum amount

Employee Retirement Income Security Act (ERISA)

provides requirements for employers offering voluntary pension plans

Sexual harassment

quid pro quo actions (benefits/threats for sexual favors) and hostile work environment create discriminatory condition of employment -Hostile work environment includes pervasive offensive comments, touching, visual displays, etc. if reasonably perceived as hostile and abusive

Unfair Sales Methods:

regulated by state and federal law A. "Cooling Off" period for door-to-door sales; regulates shipping and refunds (can cancel transaction within 3 days)

Securities Act of 1933

regulates initial sales of securities to the public -"illegal to use the mails or any other means of interstate communication to transportation to sell securities without disclosing certain financial information to potential investors" - required disclosures: securities must be registered and prospectus must be given 1. Registration statement: filed with SEC, contains detailed financial information about the issuer and controlling individuals a. Prefiling period: issuer can have preliminary negotiations and contracts with underwriters; no offers to buy, sell or actual sales of the security b. Waiting period: after issuer files registration, 20 day period during which SEC investigates accuracy of registration statement; still cannot sell, but can solicit or receive offers, publish tombstone ads or preliminary prospectus c. Posteffective period: once waiting period is over (20 days or when SEC says so), can buy and sell freely 2. Prospectus: (section 12) given to any interested investor , contains detailed facts about the issuer and its financial statements (same information as the registration statement) - Liability for false material of facts, omissions or half truths on the registration statement or prospectus: - to prove fraud: 1.Misrepresentation (false statement) 2. of a material fact 3. made with the intent to deceive (presumed) 4. on which plaintiff relied (presumed) 5. causing plaintiff harm - Plaintiff doesn't have to prove he/she relied on the statement in order to get refund - Plaintiff doesn't have to prove defendant knew of the falsity - Liability for offering. selling securities without registering with SEC, regardless of intent or for selling during prefilng or waiting periods -Defenses: 1. Purchaser knew of falsity 2.Materiality: information in question would not have impacted purchaser's decision to invest (if correctly stated, wouldn't have deterred the average prudent investor) 3. Defendant relied on the expert 4. Due diligence: experts must prove they conducted a reasonable investigation of financial statements 5. Statue of Limitations: must file claims within 1 year after discovery of false information or omission (or when reasonably should have known); or within 3 years after sale

Fair Labor Standards Act (FSLA)

regulates minimum wage, overtime, record-keeping requirements and child labor standards

Securities Exchange Act of 1934

regulates transfers of securities that are publicly held - Illegal to sell any security n a national exchange unless registered 1. Issuers of registered securities must file periodic reports, must only report significant developments that could affect a security's value (ex: impending litigation) - Section 10(b) (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 (6th element of proving fraud along with the 5 in 1933 Act- but no presumption in 1934 Act) 1. Material misrepresentation: same standard as under 1933 Act -determined using objective person standard on case-by-case basis (would it be material to average investor) 2. Must prove scienter: intent to deceive or reckless disregard for the truth -Negligence (plain carelessness) is not enough to establish liability 3. Must prove causation: that fraud causes loss of value (injury) - Insider Transactions (Section 16): 1. Insiders are: - anyone who owns more than 10% of any security or - Is a director or officer of th issuer of the security (ex: executive officers, chief financial officers, controllers, accountants, and attorneys) 2. Insiders must file a 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 3. All short-swing profits from insider transactions in stocks, options, or warrants are presumed illegal; absolute liability - Short-swing: any profit from 2 or more transactions made within a 6 month period (whether buy then sell or sell then buy) - profits legally belong to the company 4. Tippee: person who learns nonpublic information from insider: temporary insider a. Tippee is not liable if tipper does not owe any fiduciary duty to the involved parties (shareholders)

Executives/Managers

run day to day operations, have the most say in how the company is run 1. Compensation goals: way of motivating executives to act in shareholders interest a. Base salary: most cap it at $1 million b. Annual cash incentives: a bonus c. Long-term stock incentives: - stock options: right to buy stock in the future (tries to get executives interests in line with firms interests) - performance shares: given if goals are met - restricted stock: restrictions are removed when goals are met (person has stock from the beginning, but can't do anything with it)

At-will doctrine

serve at will of employer - is not absolute - employee handbooks can constitute as contracts - can turn an at-will employee to a contract employee

Counteroffer

simultaneous rejection and new offer 1. Mirror Image Rule (Common Law): the acceptance's terms must exactly match the offer's terms, or else the acceptance is deemed a counteroffer 2. UCC: the acceptance may include minor modifications to the offer as long as it definitely accepts the offer (got rid of mirror image rule) *Case problems book

Defamation

slander (spoken) or libel (all other communication) 1. A (negligent) false statement of fact 2. Causing harm to the victim's reputation 3. Through publication of that statement - someone else has to have heard it 4. public figures must also prove malice-knowledge of falsehood or reckless disregard for the truth

S. Corporations

smaller corporations that has option of pass-through or corporation tax IF 1. (Basic) Limitations: - cannot have > 100 shareholders - shareholders must be human

State Courts

state and federal issues exclusive jurisdiction over family issues- adoption cases, divorce most criminal cases

The Statue of Frauds

statues requiring certain contracts to be in writing to be enforceable M-marriage Y-year L-land E-executor G- guaranty S- sales of goods over $500

Mitigation of Damages

the non-breaching party has a duty to reduce/lessen his inquires, if can do so reasonably

Consideration

the value (such as money, goods, a promise, or action) given in return for a promise

Tort damages: Compensatory damges:

to make plaintiff whole again (financially) 1. Specific: past and future medical expenses, past and future economic losses 2. General (often capped): non financial harm, past and future pain and suffering, other (loss of limb, loss of consortium)

Punitive (exemplary) damges

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

Remedies: damages

to put plaintiff in position he/she would have been in if contract had been fully performed ("loss of bargain")

Tort liability: vicarious liability

tort liability= a civil wrong vicarious liability: owner held liable for something an employee did on company behalf A. Scope of employment 1. Respondeat superior: "let the master respond" 2. "Frolic and detour": employee doing something not on companys behalf, so owners don't have to pay -def: employer is not liable if employee was acting outside the scope of his employment

Alternative Dispute Resolution

trying to keep cases out of the court 1.Negotiation- 2 sides negotiate settlement 2.Mediation- 3rd party needs to help resolve conflict 3. Arbitration- informal hearing inferno of 1 or more experts, hand picked, decision is binding

Equal Pay Act

under both EPA and Title VII, employers cannot discriminate on basis of sex in dying wages for equal (not identical) work - work is equal is performed under similar conditions and requires similar skill, effort and responsibility -Discrimination based on non-gender reasons is okay (ex: seniority)

Intentional tort against privacy: 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 A. Complete Performance: when a party performs exactly as agreed B. Substantial Performance: when a party in good faith substantially performs the terms of the contract. Failure to fully perform results in a minor (nonmaterial breach) c. Material breach: a substantial failure to perform as promised, such that the other party is not getting the consideration he/she bargained for -non-breacher is excused from performing D. Anticipatory repudiation is the refusal of one party to perform before performance is required (says they will breach in advance) -non-breaching party can treat repudiation immediately as a material breach and is excused from performing

3 types of patents

utility, design, and plants (can overlap)

Delegation of Duties

when one party delegates his duties under the contract to a 3rd party ex: Kim gets a student loan for $30,000 from First Bank. Kim delegates her duty to pay the $30,000 to Han -Kim delegates her duty to repay First Bank to ha, making Kim the delegator -Han now has toe obligation to pay First Bank; he is the delegatee A. A delegation does not extinguish all of the delegator's obligations under the contract; if the delegatee does not perform; the delegator is still liable B. Most contractual duties can be delegated, except when performance by delegatee will vary materially from that expected by the obligee

Intentional tort against privacy: Intentional Interference with Contractual Relations

when one party intentionally causes another to breach his/her contract with a 3rd party

Third party rights: Assignment

when one party transfers her rights under the contract to a 3rd party Ex: kim gets a loan for $30,000 from First Bank. First Bank assigns its rights to collect from Kim to Second Bank -Kim, has the duty to obligation to pay back the loan; she is the obligor -First Bank assigns its right to collect the money; it is the assignor - Second Bank relieves First Bank's right to the money; it is the assignee A. The assignee "steps into the shoes" of the assignor; the assignor can no longer enforce the obligation B. Any contract right is assignable except: 1. If assignment materially increases or alters the risk or duties of the obligor 2.If the contract says you can't, but you still CAN assign the right to receive money or an interest in real estate C. Obligor doesn't have to know about assignment

Discharge by Law

where the law excuses the parties from performing A. Impossibility: when it is objectively impossible for anyone to perform duty B. Commercial Impracticability: when performance gets extremely difficult or expensive for an unforeseen reason (excused from preforming)

Occupational Safety and Health Act (OSHA)

workplace must be free of recognized hazards A. Employers must notify OSHA immediately of serious accidents/injuries B. Employees can request an OSHA inspection of alleged unsafe conditions (no employee lawsuits)