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