1/13/16 The Basics of the Legal System – Chapters 1 & 4
Sources of Law in the U.S
1. The Constitution * The U.S. Constitution is the supreme law of the land * The U.S Constitution establishes the federal government and enumerates its powers * The body of the constitution * Creates the three branches of government and grants certain powers to each branch * The amendments to the constitution * Protect individual rights by putting limitations on the governments ability to act in certain ways * Amendments protect the government, not private individuals
The Legislative Branch * Created by Article 1 of the Constitution * House of Representative * Senate * Responsible for the creation of new laws * Congress is generally responsible for where the money comes from and where the money is spent * All statutes start as BILLS * Bills must be passed by both the House and the Senate * Bills that pass both houses must be signed into law by the president or.. * The president can VETO the bill * If signed by the president the Bill becomes a STATUTE
2. Statues, Codes and Ordinances
* Statutes are enacted by Congress and state legislatures * Ordinances are enacted by municipalities and local government agencies * Code = Codified Law = Statute
The Executive Branch * Created by Article 2 of the Constitution * President * Vice President * Cabinet Members
* Responsible for enforcing the laws passed by congress * The president, with the advice and consent of the Senate, may enter into Treaties with foreign governments * Executive Orders are issued by the President to help direct the operation of the departments and agencies of the executive branch.
3. Administrative Laws and regulations
Administrative Agencies * Often referred to as the 4th Branch of Government * Created by the legislative and executive branches of government and given the power to enforce the law by adopting administrative regulations. * Think of this as Congress and the President delegating some of their power to help administer the day to day running of the government
*Department Agencies (directly controlled by president) * Answer to the Executive Branch * Normally headed by a cabinet secretary who answers to the President * IRS * ICE * FDA * CDC * PTO * OSHA * FBI * DEA
*Independent Agencies (do not answer directly to anyone) * Do not answer directly to the Executive Branch * Most are headed by commissions or boards rather than one person * CIA * EPA * FTC * FCC * SEC * SSA
The Judicial Branch * *The Justices of the Supreme Court * Democratic * Justice Ginsberg * Justice Breyer * Justice Kagan * Justice Sotomayor * Republican * Chief Justice Roberts * Justice Scalia * Justice Thomas * Justice Alito * Justice Kennedy * The swing vote; probably most important justices * Appointed by president * Confirmed by senate
4.Common Law
-Judges create common law
-cases decided by judges
* Federal and state courts decide controversies over the laws that are passed * In doing so, they issue decisions that state the holding of each case and the reasoning used by the court in reaching its decision * These decisions carry the weight of law. * Law developed by judges who issue their written opinions when deciding a case * The principles announced in these cases become precedent
Precedent * Lower courts must follow the rules created by superior/higher courts * Cases that are factually similar must be decided similarly * WHY? * Provides for greater consistence in the law
The Doctrine of Stare Decisis * All federal and state courts in the U.S must follow the precedents established by U.S supreme Court decisions
History of Common Law * When the American colonies were first settled, the English System of Law was generally adopted as the system of jurisprudence * This is still true today but for one state, Louisiana * Louisiana still retains a “civil law” basis for tis judicial system
Brown v. Board of Education (1954) * Supreme court reversed proor precedent of Plessy v. Ferguson (1896) * Court held that the separate but equal doctrine violated the equal protection clause of the fourteenth amendment to the constitution * This case was precedent for all cases that followed * The case also demonstrates that one supreme court can overrule prior supreme court cases to promote justice
Miranda v. Arizona (1966) * Established that police must advise an arrestee of certain rights prior to interrogating them
Roe v. Wade (1973) * Established that women have a right to privacy under the due process clause of the 14th amendment * Balance the rights of the mother vs. the rights of the fetus * Interests of the fetus )and therefore the state) become more compelling as the pregnancy progresses
Checks and Balances * The idea that no one branch of the government can become too powerful and that each branch has some control over the other branches
Powers of the Government * Enumerated Powers- those powers expressly allocated to the federal government in the body of the constitution * Federalism- those powers NOT expressly allocated to the federal government are left to the individual states
Priority of Law in the United States * The U.S constitution and treaties take precedence over all other laws * Federal statues take precedence over federal regulations * Valid federal law takes precedence over conflicting state or local law * State constitutions rank as the highest state law * State statues take precedence over state regulations**
The Commerce Clause** * Clause of the constitution that gives congress “the power to regulate commerce with foreign nations, and among the several states and with Indian tribes.” * Interstate commerce – business affecting more than one state * Intrastate commerce – business affecting only one state * Arguably, the commerce clause is the most important clause in the entire U.S constitution
*Amendments to the Constitution * The Amendments protect INDIVIDUAL LIBERTIES from government intrusion
The First Amendment * Freedom of speech * Fully protected speech * Political * Oral * Written * Symbolic * Limited protected speech * Offensive speech * Commercial speech * Both can be limited by time, manner and place restrictions * Commercial Speech * Unprotected Speech * Dangerous speech * Fighting words * Defamation * Some types of pornography and obscenity
* Freedom of religion * The U.S constitution requires federal, state, and local governments to be neutral toward religion: * The Establishment Clause- prohibits the government from either establishing a state religion or promoting one religion over another * The free exercise clause- * The Second Amendment * Right to keep and bear arms * The third Amendment * No soldier shall, in time of peace quartered in any house, without the consent of the owner, nor in time of war, but in a manner to be prescribed by law * The fourth amendment * Protects against unreasonable searches and seizures * The fifth amendment * The due process clause * Government cannot deprive citizens of life, liberty or property without notice and a fair and formal hearing * The takings clause * Government can take property throughout concept of Eminent Domain * In order to do this, the constitution requires the government to pay compensation * Requires indictments for crimes to be considered by a grand jury * Double jeopardy prohibition * Right against self incrimination * Right to remain silent * The sixth amendment * Speedy trial * Jury trial * Right to confront witnesses * Right to an attorney * The seventh amendment * Right to a trial by jury in a CIVIAL trial * The eighth amendment * No excessive bail * Prohibition against cruel and unusual punishment * Tenth amendment * Creates the idea of a “Federalist” government by reserving to the states any powers that are not expressly given to the federal government * The Thirteenth Amendment * Prohibits slavery and indentured servitude * The fourteenth amendment * Two clauses have important implications for business * Equal Protection Program * Provides that a state cannot “deny to any person within its jurisdiction the equal protection of the laws.” * Race * Gender * State of residence * Due Process Clause 4,5, 6, 14 * Fourteenth amendment made the bill of rights applicable to the states. * Fifth amendment clause – applies to federal government action * Fourteenth Amendment Clause – applies to state and local government action * The eighteenth Amendment * Banned the manufacturing, sale and transport of ALCOHOL * The nineteenth Amendment * Gives women the right to vote * Twenty first amendment * Repeals the 18th amendment- alcohol is legal again * The 26th amendment * Lowers the voting age from 21 to 18
1/20/16 The Structure of The Legal System Ch. 4
Two Types of Law (Generally)
* Civil Cases (liable) * Generally involve disputes among private parties * Seeks to compensate and injured or aggrieved party * Plaintiff must prove the case by “A Preponerance of the Evidence” 51% * Criminal Cases (guilty) * Generally involve disputes that involve society as a whole * Seeks to punish and rehabilitate the offender. * Government must prove the case “Beyond A Reasonable Doubt” <100% * “Common Wealth vs,, State vs, U.S vs,”
What does the plaintiff have to prove to win the case?
What’s the Difference Between Criminal and Civil Cases?
* Criminal Law
* Felonies * Punishable by more than one year in prison * Misdemeanors * Punishable by up to one year in prison * Status Offenses * Normally only punishable with a fine
* Remedies in Criminal Cases * Jail or Prison * Fines * Probation-criminal offenders remain out of jail, supervised by probation officer * Death in some states * Texas=1 * Virginia=2 * Civil Law * Contracts * Torts * Personal injury action ex: hitting something with a car, punching someone in the face, smashing windows of a car * Employment Law * Property Law * Remedies in a Civil Case * Damages=Money * Four main types * Compensatory * Consequential * Punitive * Liquidated * Equitable Remedies – Court orders someone to either do something or not do something * Court Orders * Injunctions
* Compensatory Damages * Money given to compensate for injuries (both physical and financial) * Awarded in both Contract and Tort cases * Includes out-of-pocket expenses * Medical bills * Lost wages * Pain and suffering and mental anguish * Loss of enjoyment of life
* Consequential Damages * Awarded for injuries that were FORSEABLE to the parties * Normally only awarded in Contract cases * Example: restaurant Profits
* Punitive Damages * Used to PUNISH for willful, fraudulent or grossly negligent behavior * Meant to act as a deterrent to the defendant as well as others * Money goes to the injured party * Liquidated Damages * Damages that are unique to contract law. * The parties agree in advance and in the contract to limit the damages to a certain amount. * Even if there is a breach of contract with results in one party having damages in excess of the amount agreed to in the contact, they cannot collect more than what was agreed to. * Equitable Remedies * Involves the court ordering someone to do something or to refrain from doing something * Divorce decrees * Restraining orders * Specific performance of a contract * Contempt
Two Court Systems in the United States * The Federal Courts * The courts of the 50 states and the District of Colombia * Each of these systems has jurisdiction to hear different types of lawsuits
Types of Courts * Trial Courts * Trials take place * Evidence is taken * Witnesses are called * Appellate Courts * No new witnesses or evidence * Rely on the trial record, written briefs and oral argument from the attorneys * Looking for mistakes made by the trial court for Constitutional or procedural defects
Remember!!!!
* State courts are not subservient to the Federal Courts however… * The Supremacy Clause of the Constitution does mean that the valid ruling of a federal court is normally precedent for all lower courts
Jurisdiction * Not every court has the authority to hear all types of cases * The court must have jurisdiction to hear the case * Three types * Personal Jurisdiction * Jurisdiction over a person * While filing a lawsuit gives the court jurisdiction over the plaintiff, the court must also have jurisdiction over the Defendant * Defendant is a resident of the state * Defendant files an answer or response to the complaint * Long Arm Statue – allows a court to maintain jurisdiction over people or businesses located in other states for.. * Torts commuted within the state * Contracts entered into or partially performed within the state * Transaction of business within the state * Subject Matter Jurisdiction * Authority of a particular court to hear a particular type of case
* In the rem Jurisdiction * Courts control over property * If an item or parcel of property is located within the courts geographic jurisdiction, the court has “in rem” jurisdiction over that property regardless of where the involved parties are from
Federal Jurisdiction * Federal Question- claim based on the U.S Constitution, a federal statue or treaty * Or * Diversity Jurisdiction * Plaintiff and Defendant are from different states AND * Amount in controversy is greater than $75,000
Key terms:
* Plaintiff - Party filing the lawsuit * Defendant – party against whom the lawsuit is filed * Claim – a demand for a remedy, usually money, to compensate for a perceived wrong * Class Action Lawsuit – A suit filed by Multiple plaintiffs who have related claims * Summons – The document ordering the defendant to appear and defend the allegations made against him or her * Service of Process – Delivery of the summons and complain to the defendant * Default Judgment – Plaintiff automatically wins if the service of process has been obtained properly and the defendant does not respond within the time permitted
Filing the lawsuit * Complaint - Document filed by the Plaintiff initialing a lawsuit which contains unproven allegations * Must contain: * Allegation of jurisdiction * Details about why the plaintiff thinks they have been harmed * Claim for relief (money or equitable remedies)
Statute of Limitations * Plaintiff’s do not have an unlimited amount of time to file their lawsuit * The time within which the Plaintiff must file his/her lawsuit is called the.. * Statute of Limitations * Oral contract – 3 years * Written contract – 5 years * Most Torts – 2 years * Specific to each state!!!
Responsive Pleadings * Motion for extension * Demurrer – a response alleging that there is a fatal defect in the complain (LOJ) * Answer – formal response to the complain * Admits or denies the allegation of the complain * Sets forth any defenses to the complain * May state a counterclaim against the Plaintiff
Discovery * Process by which each side obtains the evidence known to the to her side * Cuts down on surprises and delays at trial * Often forces settlement between the parties
Types of Discovery * Interrogatories – written questions which must be answered under oath * Depositions – pre-trial question and answer session under oath * Request for Production of documents/evidence – inspection of documents or physical evidence that may be relevant * Request for mental or physical evaluations
Summary Judgment * Asks the judge to decide case in favor of moving party without a trial * Only permitted if (i) there are no issues of fact that would require a trail and (ii) one party is entitled to judgment as a matter of law * Either party may make a motion for a summary judgment
If there is no pre-trail resolution… * Trial * 7th amendment guarantees either party a trial by jury if they want it in a civil matter * Bench Trial – case is decided by the judge if both parties waive a trial by jury.
Do I want a jury trial? * Factors to be considered when deciding whether to choose a jury trial: * Will I be presenting technical evidence? * Will my case benefit from emotion appeals? * Is there anything about the case that may evoke distaste in a jury for me or my position?
What does the plaintiff have to prove to win?? * Burden Is ALWAYS on the plaintiff to prove their claims * Must prove: * Defendant violated the law in some way * Plaintiff suffered an injury or loss * Cause of the plaintiff injury or loss --finish from ppt
Stages of Trial * Vior dire – examination of prospective jurors * Any juror can be struck for cause * After that, each side gets a number of peremptory challenges – dismissal of jurors without a stated cause * Cannot strike a juror because of their race, ethnicity, national origin or gender
Stages of Trial * Opening statements * Plaintiff’s case in chief * Direct examination of each witness * Cross examination by opposing counsel * Re-direct examination * All physical evidence is introduced at this stage as well * Defendants case in chief * Plaintiffs rebuttal case * Charging the jury – telling the jury the law they must apply the facts to * Closing arguments * Jury deliberations
The Verdict and Judgment * In most states, a verdict must be unanimous in criminal cases * Verdict does not have to unanimous in civil cases * Hung jury – occurs when less than the necessary number of jurors are in agreement * Judgment – official decision of a judge about the rights and claims of each side in a lawsuit * Verdict is not binding until a judgment has been entered
Judgment * Before Judgment is entered, the losing party may… * Ask that the jury be polled * Ask for judgment notwithstanding the verdict – order from judge reversing the jury’s verdict * Ask for a new trial on the grounds of an erroneous ruling of the judge during the trial * Ask for a remittitur - ruling that the amount ppt
Appeal * Complaint made by a litigant to a superior court that a trial judge commuted an error * Unlike in a criminal case, both the plaintiff and the defendant are able to appeal
Appeals Courts * Do not re-try the case * Rely on the trail record, written briefs and oral argument from the attorneys * Looking for * Mistakes made by the trail court * Constitutional or procedural defects
Appeals courts can… * Affirm the decision of the lower court; judgment stands * Reverse the decision of the lower court and order a new trail * Order that the case be dismissed
Alternative Dispute Resolution (ADR) * Very few cases make it all the way to trial * ADR is often used in place of the legal process * Less time and money are wasted * Mediation * Involves a neutral third party who listens to the case and renders a recommendation * The recommendation is NON-BINDING * Mediation can be ordered by a court prior to trial * Arbitration * Involves the use of a neutral party who renders a BINDING DECISION * Parties must voluntarily enter into Arbitration
1/27/16 Chapter 5 and 6: Intentional Torts and Negligence
What is a tort? * Tort – a wrongful act of omission that results in physical or financial injury to another
Duty of Care * Legal obligations that one person owes to the rest of the world * People are required to act prudently and with reasonable care * Intentional Torts – duty not to deliberately harm others (ex. Keying someone’s car) * The law protects people from unauthorized touching, restraint, or other unwanted contact * The law also protects peoples reputations and privacy * Deliberate violations of these are actionable as torts * Types of Intentional Torts * Defamation – false statements that are deliberately made to harm the reputation of another * Libel – Written defamation * Slander – Verbal defamation * To prove a defamation lawsuit, the plaintiff must show: * Uttering of a statements likely to hurt another’s reputation * Statement must be false * Statement must be communicated to someone other than the plaintiff * Injury to character or reputation of the plaintiff * Defenses to Defamation Suits * TRUTH * Opinion (first amendment) * Public Personalities * Government officials and public figures get less protection * To win, the public personality must prove Actual Malice * False Imprisonment * Intentionally restraining or imprisoning a person against their will * Was common in shoplifting cases * Virginia and other state now have laws that permit an LPO to detain and question in a reasonable manner and for a reasonable period of time * Assault and Battery * Battery – any harmful or otherwise offensive touching * Assault – any attempted or uncompleted battery that places the plaintiff in fear of an imminent battery * Trespass to Chattel * Chattel is another word for personal property * Deliberate and willful destruction or damage to the property of another is actionable in tort * TESTS – assault and battery, trespass to Chattel * Fraud * Deliberate lying or misleading to induce a person to part with money or property * Intentional infliction of Emotional Distress * Much harder to prove than it sounds * Extreme and outrageous conduct that causes serious emotional harm * Plaintiff must show ACTUAL physical harm (doctor bills/psychiatrist bills etc..) * Tortious Interference with Contract * A valid contract must exist between two parties * A third party must be aware of the existence of the contract * Third party must intentionally cause or induce one of the contacting parties to break the contract with the third party * Brumfield v. Death Row Records * Commercial Exploitation * Unauthorized use of another persons likeness or character for commercial purposes and financial gain
* Unintentional torts – duty to act with due regard for others (ex. Avoiding safety standards) * People are generally liable for harm that results from the foreseeable consequences of his or her actions * NEGLIGENCE * The omission to do something which a reasonable person would do; or * Doing something which a prudent and reasonable man would not do * IMPORTANT: To win a negligence lawsuit, the plaintiff must prove: * The defendant owed a duty of care to the plaintiff * The defendant breached the duty of care * The plaintiff suffered injury * The defendants negligent act was the proximate cause of the plaintiffs injury * Duty of Care – the obligation we all each other not to cause any unreasonable harm or risk of harm * The courts apply a reasonable person standard * Defendants are measured against a reasonable professional standard * Who is a “reasonable person” * Reasonable person does not have bad days * Always up to standard * Personification ideal of reasonable behavior * Special Duties Owed * Invitee – someone who comes to an establishment for the purpose for which the business is open to the public * Greatest duty of care is owed to invitees * Duties owed to Invitees * Hotel or restaurant owes a duty to it invitees to * Reasonably inspect the premises for dangerous conditions * Exercise reasonable care to eliminate the danger * Necessary reasonable care (lack of negligence) encompasses both repair of and warning about the dangerous condition * Special Duties Owed * Licensees – someone who is on the premises of another by permission or acquiescence of the owner or occupier, and not by invitation * Degree of care owed to the licensee is greater than degree owed to a trespasser but less than an invitee * Duty owed to Licensees * To refrain from willfully or wantonly injuring the licensee or acting in a manner to increase peril and * To warn any latent dangers on the remises of which the property owner has knowledge * Special duties owed * Trespasser – person who enters a place without the permission of the owner or occupier * Least duty owed to trespassers * Duty not to deliberately harm. No liability for simple negligent behavior. * Children and Negligence * Legally, a child is anyone who has not yet reached the age of majority (18) * Children are presumed to be idiots * Attractive Nuisance Doctrine * Attractive nuisance is a potentially dangerous object or condition of exceptional interest to young people * Swimming pool * Large empty box * Snow pile suitable for sliding * Equipment or ditches at a construction site * Children do not comprehend dangers obvious to more mature persons nor are they able to weigh cause and effect * The duty imposed on adults to act reasonably is usually elevated when young children are involved * Under the attractive nuisance doctrine, landowners must generally treat children with the same care as invitees * Employers duties * Employers have a duty to use reasonable care in certain situations including * Hiring and firing of employees * Proper training of employees * IMPORTANT Respondeat Superior * Respondeat Superior – employers are liable for the negligent acts of their employees when they are acting “in the scope of their employment” * Founded on theory that an employee is an agent of the employer * Employer is vicariously (through a substitute) liable for the employees wrongful conduct * Independent contractor – someone who contracts to do one or more specific projects for someone else and maintains control of the method for doing the work * Case examples * Stevens v. Spec * Stevens gets hit in head w bottle at bar * Can he sue the bar? -> no because the band is independent contractor * They brought own instruments, came once in a while, paid by the gig * Non-delegable duties – duties that cannot be transferred (delegated) to another * Exception that exists to the general rule that an employer is not liable for the acts of an independent contractor * Typically, the duty imposed to keep the premises reasonably safe is non-delegable * Examples of non delegable duties * Premises safety * Parking lot maintenance * Pest control
Breach of Duty and Proximate Cause * To win a lawsuit, the plaintiff must prove not only that there was a duty wowed, but also that the defendant BREACHED that duty and that the breach was the PROMIXATE CAUSE of the injuries sustained * If u cant show proximate cause, you cant win a negligent case
Proximate case (TEST QUESTION) * Refers to direct and immediate cause * There must be a cause-and-effect relationship between the unreasonable conduct and the injury
Injury * Can be physical or financial * If there is no injury, then the plaintiff can not recover
Damages * Damages=money * In tort cases we are concerned with two major types of damages * Compensatory damages * Meant to COMPENSATE the injured party for the loss sustained * Damage to property * Medical bills (past and future) * Lost wages (past and future) * Pain and suffering * Loss of consortium (sex life) * Punitive damages * Used to PUNISH for willful, fraudulent or grossly negligent behavior * Meant to act as a deterrent to the defendant and others * Money goes to the injured party * Gross Negligence * Total disregard for the safety and welfare of others * Persons found guilty of gross negligence open themselves up to having PUNITIVE DAMAGES entered against them * Special Negligence Doctrines * Res Ipsa Loquitur** * Means “the thing speaks for itself” * To use Res Ipsa you must show.. * Plaintiffs injury was caused by an accident that would not normally have happened without negligence * The thing causing the injury was within the exclusive control of the defendant * The plaintiff did not contribute to the accident * Negligence Per Se************** * Conduct that violates a law, regulation or ordinance designed to protect the safety of the public * It alone is sufficient, if un-rebutted, to support a judgment for the plaintiff * Don’t forget!!!!! * Even if there’s negligence per se… the plaintiff must still show that the injury was the result of the negligence (proximate cause) * Truett v. Morgan * Strict Liability * Normally defendants are not liable unless they do something wrong however.. * In certain scenarios, a defendant will be liable even though they violated no duty and did nothing wrong * Imposes liability for injury caused by an ultra-hazardous activity without regard for or wrongdoing by the party engaging in the dangerous conduct * Blasting** * Imposes liability for resulting injuries even if the defendant took every precaution and was not negligent * Harboring of wild animals** * Such circumstances, in lieu of outlawing the activity, the law imposes liability for the activity on the party who engages in it, without regard to fault * If a question on a test has strict liability as an answer and its not blasting or harboring of wild animals, its not the answer
* DEFENSES: Assumption of the Risk * To establish assumption of risk, the defendant must show that the plaintiff * Had knowledge of the risk * Understood the risk * Had a choice of wither avoiding the risk or engaging in conduct that confronted the risk * Voluntarily chose to take the risk * Demarco v. Ouellette * DEFENSES: Contributory Negligence * Contributory Negligence * Plaintiff contributes to his/her own injuries * Complete bar to recovery * Only 4 contributory negligence states left (Virginia is one) * Comparative Negligence: The fault of both parties is allocated by the judge or jury and the award made to the plaintiff is reduced by the amount that he/she is at fault * Most states have a comparative negligence approach to recovery * A plaintiff who would normally be awarded $100,000 is found to be 25% at fault for the accident * Judge or jury will reduce the verdict by 25% * Plaintiff will be awarded $75,000
(McDonalds hot coffee case)
* Strict products Liability
2/3/16 Insurance
Definitions:
* Person – individual, corporation, partnership or other legal entitiy * Insurance – contract in which one person, for a fee, agrees to guarantee another against a specific loss * Insurer – person who issues the insurance policy * Insured – person whose loss is the subject of the insurance policy * Owner – person who enters into the insurance contract and pays the premiums * Premium – consideration that the owner pays under the policy * Beneficiary – person who receives the proceeds from the insurance policy
Why Insurance? * Most people do NOT have the type of money that would be necessary to pay off a debt incurred as a result of a tort * Its there to protect us when we (or our employees) commit torts so that we don’t lose everything
What is Insurance? * Insurance is a three part CONTRACT and must meet all the normal requirements for a contract * The insured pay PREMIUMS on a periodic basis to keep the coverage active * An insurance contract is not valid unless the owner has an insurable interest in the subject matter of the policy * This means you must have some financial stake in the subject of the insurance policy * The insurable interest must exist at the time of loss, and cannot be for more than the amount of loss
Misrepresentation and Bad Faith * Insurers have the right to void a policy if, during the application process, the insured makes a material misstatement or conceals a material fact * However, Insurers act in Bad Faith when they: * Refuse to pay on a valid claim * Refuse to accept a settlement offer
Types of Insurance * Property Insurance * Life insurance * Annuities * Health insurance * Disability insurance * Automobile insurance * Liability insurance
KNOW AT LEAST 4 IN DEPTH
Insurance Policies * Remember that insurance companies are business whoa re trying yo earn a profit
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Property Insurance * Covers physical damage to real estate, personal property or inventory from causes such as fire, smoke, lighting, wind, riot, vandalism or theft. (also known as casualty insurance)
Flood Insurance * NOTE: Many casualty and home insurance policies do NOT cover floods and flood insurance often must be purchased either as a “rider” or in a separate policy
Life Insurance * Term Insurance – simple, cheap; covers a particular time period * Whole Life Insurance (straight life) – more expensive, but forces policyholder to save; part of premium goes into a savings, giving the policy cash value
Annuities * Annuities are the reverse of life insurance- they make payments until death whereas life insurance pays after death. * Owner makes a lump sum payment to an insurance company in return for a guaranteed fixed income for life * Deferred annuities work the same way, except they don’t begin immediately. The payments begin at a designated time in the future
Health Insurance * Health insurance is, generally designed to help pay medical bills in the event of catastrophic injuries * Medical bulls are one of the top reasons that individuals end up in Bankruptcy * Patient Protection and Affordable Care Act – more commonly known as “Obamacare” * Passed in 2010 and generally upheld as constitutional by the Supreme Court in 2012 * These 4: * Prohibits companies from denying coverage for pre-existing conditions * Generally disallows insurance companies from charging more for premiums based on “traditional” reasons * Greatly expanded Medicaid eligibility
Disability Insurance * Disability insurance replaces the insured’s income if he becomes unable to work because of illness or injury * Avg person is 7 time more likely to be disabled for at least 90 days than to die before the age of 65 * Half of all mortgage foreclosures are due to an owners disability
Automobile Insurance************** * Collision – pays to repair or replace a car damaged in an accident * Comprehensive – covers fire, theft and vandalism * Liability – covers harm to other people or other property (usually required) * Uninsured motorist – covers the insured and all passengers who are injured by another driver who does not have insurance
Liability Insurance * The purpose of liability insurance is to financially protect the insured for any liability she incurs by (accidentally) harming someone else * Liability insurance covers * Injured sustained on the insured’s property * Injuries to another’s property caused by insured * Professional malpractice/liability * Product liability * Remember…. * Certain types of business entities are REQUIRED to carry liability insurance (LLP and LLC)
Liability for the Sale of Alcohol * Under the old common law, licensee was not liable for damages caused when it served alcohol illegally and that patron was injured or caused injury to another * Many intoxicated persons who cause injury have little money with which to compensate those they injure * Now…licensees face potential liability for injuries caused by a customer who is served alcohol illegally
Dram Shop Acts * Dram shop acts impose CIVIL liability on restaurants and bars for certain injuries resulting from illegal sales * Affords compensation to victims whose injuries emanate from the unlawful sale of alcohol * Potential liability is very significant * Dram Shop Acts do not impose liabilities for injuries to wrongfully served customers
Liability to Passengers * If passenger purchased alcohol or encouraged driver to drink, most states will not impose dram shop liability * If passenger did not contribute to drivers intoxication, the bar or restaurant may be liable for passengers injuries
What about bar hoppers? * More than one establishment may be held liable * Is a visibly intoxicated person is served first at one bar then at a second one, both will be held liable * Injured person cannot recover twice for the same injuries * Liability will be allocated between the two bars * If drinker was not visibly intoxicated until he arrives at the second bar, the first bar will not be liable * You’re entitled to ONE recovery
Liquor Liability Insurance * If your business sells alcohol, you should probably secure insurance to cover dram shop liability * Cost is based on numerous factors: * Volume of alcohol sold by licensee * Prior incidents of illegal sales * Nature of establishment * Hours it is open
Test:
Liquor liability
Criminal Law – Chapter 7
Crime- An act done by an individual in violation of the duties that he/she owes to society and for which the law provides that the wrongdoer must make amends to the public.
Criminal Law v. Civil Law * Main purpose of criminal law is proof * Punish * Rehabilitate * Protect society * Restitution
Remedies in Criminal Cases * Jail or prison * Fines * Probation * Death in some states
Types of Crimes**** * Malum in se * Acts that are considered to be “inherently evil” * Ex. Murder, burglary, burning houses down * malum prohibitum * Crimes that are not “evil” but that have been made illegal society has deemed them to e particularly dangerous or unsafe.. * Ex. Smoking weed, dui * All crimes can be classified into one of the following categories * Felonies * Most serious types of crimes * Usually involve the potential for more than one year of imprisonment * Conviction results in the loss of certain civil rights (voting, right to bear arms, etc) * Misdemeanors * Less serious crimes * Most involve crimes that are malum prohibitum * Normally involve the potential for less than one year of incarceration * No loss of civil rights * Infractions * Crimes that are neither a felony nor a misdemeanor that are usually punishable only by a fine * Speeding is most common infraction
The Layout of the Criminal Justice System * In a criminal case, the plaintiff is always either the sate or federal government * This is because the act is against society as a whole and not just one person * Burden of Proof is: * BEYOND A REASONABLE DOUBT
Essential Elements of a Crime * Two elements must be proven for a person to be found guilty of most crimes * Mens Rea – intent to do wrong * Actus Reus – Wrongful Act
Protections afforded to Defendants * Remember that the amendments to the constitution protect individual liberties * These protections are important when someone’s property, freedom or life are being taken from them by the government
The Fourth Amendment**** * Generally, the government needs a search warrant to search private residences and businesses * Generally, the government needs an arrest warrant to take people into custody * THERE ARE EXPPTIONS…BUT * To get a warrant, the government must show PROBABLE CAUSE * Exceptions to the warrant requirement * “Exigent circumstances” * Keonhee is getting chased through whales house, cops chase him, see bong, let him go, give whales ticket * Search incident to arrest * Plain view * Leaving cocaine or weed in plain view in your car * Automobile exceptions * Pulled over for speeding, pull down window smells like weed, they can search your car * Consent * Probable cause – a reasonable person must be satisfied that a crime was probably committed and that the accused was probably the one who committed it * Very low standard to meet
What if Police violate the 4th amendment? * Exclusionary rule – evidence that is obtained in violation of the constitution is INADMISSIBLE at trial (unable to be used against the defendant)
The Fifth Amendment**** * Statements made to the police must be VOLUNTARY * Involuntary statements are INADMISSIBLE pursuant to the exclusionary rule the ruling in Miranda v. Arizona * To trigger Miranda, there must be two things: * Custody * Interrogation * People have an ABSOLUTE RIGHT TO REMAIN SILENT and the exercise of that right cannot be considered against them in court * Prohibits Double Jeopardy: cannot be tired twice for the same crime * Requires a Grand Jury to consider evidence and return an Indictment prior to the government going to trial * Grand jury’s job is to determine If there is probable cause to try the Defendant
The Sixth Amendment**** * Right to a lawyer * ALWAYS entitled to hire your own lawyer if you want one * Only entitled to a court appointed lawyer in cases where you could go to jail * You are entitled to a lawyer at all “critical” stages of the case * Right to a trial by jury * All jurors must unanimously agree on guilt * If no unanimous decision can be reached then it is a hung jury * Defendant can waive this right and ask for a Bench Trial
The Eighth Amendment**** * Prohibits the use of Cruel and Unusual Punishment * This clause does not prohibit capital punishment…yet..
Crimes Involving Business * Burglary * Breaking and entering into a building or structure of another to commit some type of crime inside * Robbery * Forcing you to give something to me
* Larceny * Ex. Steals a painting from metropolitan museum of art * Take something away from you without force * Embezzlement * When your working for someone and you lawfully in possession of cash register, but if you steal that money its embezzlement * “an employer and ….. * Arson * Money laundering
What is a contract? - An agreement between 2 or more parties that is enforceable in court * Verbal contracts * Enforceable * Can be difficult to prove * Written contracts * Clearly lay out the terms of the agreement * Certain types of contracts MUST be in writing
Types of Contracts * Bilateral Contracts * Each side makes a promise to do something * “a promise for a promise” * Unilateral Contract * One party makes a promise that the other party can only accept by doing something
Express and Implied Contacts * Express Contract * Both parties explicitly state the terms of the contract (can be oral or written) * Implied Contact * The words and conduct of the parties indicate an agreement even if no words are spoken or written
Executory and Executed Contacts * Executory Contract * A contact that has been formed, but not yet fully performed by one or more of the parties * Executed Contract * A contract that has been fully performed by all parties
Valid and Unenforceable Contracts * Valid Contracts * Meet all these criteria * Offer * Acceptance * Consideration * Capacity * Legality * Genuine consent * Proper form * Unenforceable Contracts * Parties intend to form a valid contract, but some rule or law forbids enforcement
How are contracts formed?
Offer * Offeror – person making the offer * Offeree – person to whom the offer is made * The terms on an offer must be sufficiently definite so that they can be accepted by the offeree * Once offer is made, several ways it can be terminated
Outright revocation * Can be revoked at any time prior to acceptance
Lapse in time
Rejection
* Terminate an offer and offeree then loses the ability to accept unless the offer is put back on the table again
Counteroffer
* Act as rejections * Acts to reject an offer and put a different offer on the table
Destruction of the subject matter
Acceptance * Offeree must say or do something to accept * in a bilateral contract, the offeree generally must accept by making a promise * in a unilateral contract, the offeree must accept by performing * The Mirror Imagine Rule * Requires that acceptance be on precisely the same terms as the offer * If the offer and the acceptance do not match EXACTLY, then no contract is formed * The Mailbox Rule * When has an offer been accepted? * Normally, the offer has been accepted once the offeree has “dispatched” it or otherwise “placed it in the mail” * Oral acceptance * Faxes * email
Consideration * Contracts must be a 2-way street. If one side gets all the benefit and the other side gets noting, then an agreement lacks consideration and it is not an enforceable contract. * 3 rules * both parties must get something of measurable value from the contract. It can be money, property, an agreement not to sue or anything else that has value * a promise to give something of value counts as consideration. * The 2 parties must have bargained for whatever was exchanged and struck a deal: “if you do this, ill do that.” * Gift Promise * Unenforceable because they lack consideration * A “completed gift promise” becomes a true gift, which by definition is irrevocable * Contracts lacking consideration * Illegal consideration * A contract cannot be supported by a promise to refrain from doing an illegal act because that is illegal consideration * Contracts based on illegal consideration are void * Preexisting duties and past consideration * A promise lacks consideration if a person promises to perform an act or do something he or she is already under an obligation to do or that they have already done * The promise is unenforceable because no new consideration has been given
Capacity
* Contracts entered into by persons without the capacity to do so are generally voidable at the option of the “incapacitated” individual * The burden to prove incapacity is always on the person asserting the incapacity * Minors * The infancy doctrine – allows minors to disaffirm (cancel) most contracts that they enter into with adults * The minor still has the duty of restoration meaning that is disaffirmed, the minor must return the goods in the condition they are in at the time of the disaffirmance * Ratification – upon reaching the age of majority, the person may also “accept” the contract that they previously entered into as a minor * This can be done formally or by virtue of the person’s actions * Once ratified, the contract can no be disaffirmed * Minors are obligated to pay for the necessaries of life that they contract for: * Food, shelter, clothing, medical services * Mentally Incompetent Persons * The law protects people suffering from substantial mental incapacity from enforcement of contracts against them * To be relieved of his or her duties under a contract, the law require a person to have been legally insane at the time of entering into the contract * Legal Insanity – a state of contractual incapacity as determined by law * The law has developed 2 standards concerning contracts of mentally incompetent persons * Adjudged insane * A person who has been adjudged insane by a proper court or administrative agency * A contract entered into by such a person is void * Neither party can enforce the contract * Insane, but no adjudged insane * A person who is insane but has not been adjudged insane by a court or administrative agency * A contract entered into by such a person is generally voidable * Some states hold that such a contract is void * Intoxicated Person * A person under contractual incapacity because of ingestion of alcohol or drugs to the point of incompetence * Most sates provide that contracts entered into by such intoxicated person are voidable by that person * The contract is not voidable by the other part if that part had contractual capacity
Legality * The object of every contract must be lawful * Contracts with an illegal object are void and therefore unenforceable * There are two key categories of illegality: * Contracts contrary to statues * Contracts contrary to public policy
Contracts Contrary to Statutes * Federal and state legislatress have enacted statutes that prohibit certain types of conduct * Contracts to preform an activity that is prohibited by statute are illegal contracts
Contracts Contrary to Public Policy * Contracts that have a negative impact on society or that interfere with the publics safety and welfare * Such contracts are void * Flood v. Fidelity * Sues fidelity cuz they wont pay life insurance * Took out mill doll life insurance policy on husband, then killed husband to collect money (poisoned him) * Sues in court to get money for them “killing” husband * Covenants Not to Compete * Courts will look at * Line of businesses protected * Geographic area protected * Duration of the restriction * If the contract is unreasonable, the court may not enforce the contract * Ex. Open Ferrari in Harrisonburg, you get lots of leeway cuz of geographic area, you aren’t trying to compete so others can’t come in * If open in NYC, you can’t keep them from opening cuz of location * Non-Compete Agreements * Employment * Cant take it too far or courts may not enforce it * King V. Head Start Family Hair Salons
Unconscionable Contracts * Some lawful contracts are so oppressive or manifestly unfair that they are unjust * To prevent the enforcement of such contracts, the courts have developed the equitable doctrine of unconscionable: * Elements that have to be shown to prove that a contract or clause is unconscionable: * The parties possessed severely unequal bargaining power * The dominant party unreasonably used its unequal bargaining power * The adhering party had no reasonable alternative * ON TEST: needs to be very severe
Remedies for Unconscionability * Where a contract or contract clause is found to be unconscionable, the court may do one of the following: * Refuse to enforce the contract * Refuse to enforce the unconscionable clause but enforce the remainder of the contract * Limit the applicability of any unconscionable clause so as to avoid any unconscionable result
Genuine Assent (Consent) * The requirement that a party’s assent to a contract be genuine or real * The genuineness of assent is lacking in certain cases of: * Mistake * Fraud and misrepresentation * Duress * Undue influence
Mistakes * Unilateral mistake – error made by only one party to the contract * Mutual mistake – error made by both parties to the contract * Mistakes made by a buyer as to the value or quality of a good being purchased will not affect the validity of the contract * Mistakes to price cannot be undone
Fraud * The elements of fraud * The wrongdoer made a false representation of material fact * The wrongdoer intended to deceive the innocent party * Material representation= giant lie * Ex. Go to used car deal, want to buy a car, dealer says new engine in car, but dealer is lying * The innocent party was injured * Fraudulent Contracts are voidable at the option of the innocent party
“Puffery” * The act of “puffing up” or making your product or services look more attractive * True puffery is NOT FRAUD * Ex. “worlds best coffee” and you don’t think so, you can’t sue
Innocent Misrepresentation * Occurs when a person unintentionally makes an assertion that is not in accord with the facts * The innocent party may rescind the contract but cannot recover damages * Innocent misrepresentation in NOT FRAUD
Duress * When one party threatens to do some wrongful act unless the other party enters into a contract * A contract entered into under duress can’t be enforced
Undue Influence * When a person takes advantage of another person’s mental, emotional, or physical weakness and unduly persuades that person to enter into a contract * The persuasion by the wrongdoer must overcome the free will of the innocent party
Proper Form**************** * Some types of contracts must be in proper format or they are not enforceable * Although many oral contract are valid and enforceable, common law has traditionally required certain contracts to be in writing * This is called the STATUTE OF FRAUDS * Failure to adhere to the Statute of Frauds makes a contract unenforceable in court
Statute of Frauds * All of the following contracts must be in writing: * Contracts regarding interests in land * Contracts that cannot be performed within a year * Contracts to pay another person’s debt if that person fails to pay * Contracts for the sale of more than $500 in goods
Promissory Estoppel * Equitable doctrine that prevents the application of the Statute of Frauds * Allows the enforcement of oral contracts that should have otherwise been in writing under the statute of frauds to prevent injustice or unjust enrichment
What the writing must contain * Contract or memorandum must be: * Signed by defendant and: * Must state with reasonable certainty * Name of each party * Subject matter of the agreement * All the essential terms and promises
Internet Contracts * Every commercial deal can be, and is, achieved via Internet * General rule: internet contracts are as enforceable as their “land-based” counterparts * “click-on acceptance” – generally considered to be signed consent
The Parole Evidence Rule * parole evidence rules states that is there is a written contract, any prior contemporaneous oral or written statements are inadmissible as evidence to alter or contradict the terms of the written contract * also called “four corners rule” because you can’t normally look beyond the four corners of the document
Expectations to the Parole Evidence Rule * Parole evidence may be admitted in court to: * Prove mistake, fraud, misrepresentation, undue influence, or duress * Explain ambiguous language * Explain a prior course of dealing or course of performance between the parties or a usage of trade * Fill in the gaps of a contract * Correct obvious clerical or typographical errors
Privity * The state of two specified parties being in a contract * Contracting parties have a legal obligation to perform the duties specified in their contract * If one party fails to perform as promised, the other party may enforce the contract and sue for breach
Beneficiaries to a Contract * Normally, the parties to the contract (those who are in privity) enter into the contract with the intent to benefit themselves…but * Some types of contracts will also benefit a 3rd party * Intended beneficiary * Incidental beneficiary
Intended Beneficiary * 3rd person whom the parties intend to benefit from the contract * life insurance * health insurance * “gift” contracts
Incidental Beneficiaries * Other types of contracts may benefit a 3rd party even though the benefit to the 3rd party was not the intent of the contract * Normally, incidental beneficiaries can’t sue to enforce a contract entered into by others
Assignments and Delegations * Assignment – giving someone else the benefit of your contract. You only assign RIGHTS arising from the contract * Delegation – giving someone else the responsibility to perform the contract on your behalf. Only DUTIES are delegated
Assignment of Rights * Assignment – the transfer of contractual rights by the obligee to another party * Assignor – the obligee who transfers the right * Assignee – the party to whom the right has been transferred
PPT EXAMPLES
Delegation of Duties – look at ppt * Delegation – a transfer of contractual duties by the obligor to another party for performance * Delegator – the obligor who transferred his or her duty * Delegate – the party to whom the duty has been transferred * Duties taken on by a General Contractor in a building contract are often delegated to sub-contractors * Certain types of duties are NOT DELEGABLE
Performance and Breach
Defenses to Performance * Discharge by agreement – the parties agree to cancel contract * Discharge by impossibility – the contract is cancelled due to the complete inability of one party to perform (death, war, eminent domain, destruction of the subject matter, subsequent illegality)
Force Majeure Clauses * The parties may agree in their contract that certain events will excuse nonperformance of the contract * Force majeure clauses: * Natural disasters * Labor strikes * Shortages of raw materials
Breach of Contract * Failure of one or both parties to perform the duties owed to the other party under the contract * Normally, non-breaching party will sue for monetary damages
Statute of Limitations
Expectation Remedies * Designed to put non-breaching party in the position they would have been if the contract had been fully performed * Each party financially gets what they would have gotten under the contract * Compensatory damages * Consequential damages
Cant get punitive damages in a breach contract case*******
Ppt for examples
Compensatory Damages * Award of money intended to compensate a non-breaching party for the loss of the bargain * They place the non-breaching party in the same position as if the contract had been fully performed
Consequential Damages * Foreseeable damages that arise from circumstances outside the contract * To be liable for these damages * The breaching party must know or have reason to know that the breach will cause special damages to the other party * Ex. Original building contract called for completion of the project by june 30, 2012. * Due to B’s breach, C can’t complete the project until October, 2012
Mitigation of Damages * A plaintiff seeking to collect damages for break of contract must prove that he/she attempted to mitigate the loss * Mitigate – to reduce or lessen
Equitable Remedies * Equitable remedies are available if there has been a breach of contract that cannot be adequately compensated by a legal remedy * They are also available to prevent unjust enrichment
Specific Performance * Situation where the court will compel the breaching party to uphold his/her end of the contract * Not often used * Most often used when the subject matter of the contract is UNIQUE
******when the contract is for something very specific and unique*********
-ex. keonhee is art dealer, he has original Picasso painting, offers to sell to abby for 25,000 and they enter a contact where ab agrees to pay. Keonhee breach’s and dsnt want to give the painting but he said he would give. Ab sues him to force keonhee to give the painting and court can do it
-ex. Keonhee has a house in Georgia, ab wants to buy it, sign contract, he breach’s. ab goes to court to have them force Keonhee to sell the house land contracts are the most common for specific performance, cuz land it unique
Injunctions * Court requires one party to refrain from doing something * Ex. Enforcement of non-compete agreements
The Uniform Commercial Code (UCC) * Designed to simplify, modernize and ensure consistency in the enforcement of certain contracts.. * Sales * Leases of goods * Commercial paper (notes, drafts, ect..) * Warranties * Secured transactions
The UCC * Article 2 of the UCC deals with the SALE OF GOODS and WARRANTIES ON THE SALE OF GOODS * Goods – any movable physical object other than money or securities * Merchants – persons who routinely deal in particular goods * Merchants are held to a higher standard than non-merchant under the UCC
Contract Formation under the UCC * UCC allows the parties to make quick and relatively informal contracts when necessary * UCC protect consumers and allows merchant to merchant transactions to be more loose (quick, painless and easier)
Statute of Frauds * Statute of Frauds applies generally to contracts under COMMON LAW rules * Under the UCC – there are really only 3 rules regarding written contracts * All contracts for the sale of goods worth $500 or more must be in writing * Generally, the wiring must be signed by the defendant * Quantity of goods must be clear in the contract
Merchant Contracts * When 2 merchants make an oral contract which is followed up by a “sufficiently definite” memo, the memo is valid against the merchant who received it unless objected to within 10 days
Breach of Contract Remedies under the UCC * Buyers * Buyers are entitled to goods that are not defective and conform to the contract * Buyers have the right to inspect and reject non-conforming goods * The seller does get a chance to CURE the breach * Seller * If the buyer fails to make a payment, the seller can refuse to deliver the goods * If the goods are conforming and the buyer refuses them, the seller may re-sell the goods and recover the difference in price (if there is any) plus incidentals * Seller can always sue for what is owed
Warranties under the UCC * A warranty is the seller’s assurance to the buyer that the goods meet certain standards of quality (term of the contract) * If the goods fail to meet a warranty, the buyer can sure the seller or lessor for breach of contract
UCC WARRANTIES * Express * Verbal * Written * Implied * Implied warranty of merchantability * Implied warranty of fitness for a particular purpose
Express Warranties * Created when a seller or lessor makes an affirmation that the goods he or she is selling or leasing meet certain standards of quality, description, performance, or condition * Not necessary to use formal words to create an express warranty * Affirmations of fact or promise * “these tires will last for at least 150,000 miles” * descriptions * “made of ‘genuine leather’” * organic vegetables * models or samples * free samples * model homes or vehicles * puffery does not create and express warranty * “our product is worth its weight in gold” * “softest toilet tissue you can buy”
Express Warranties and Truth in Menu Laws * given a lot of leniency but you cant lie to your customers * controversies can result from: * omitting ingredients * shorting the customer on weight and number * mistaking a products origin * inaccurately identifying the cooking method
Express Warranties and Accuracy in Advertising * some states require that you list the calorie content of the food that you serve * becoming more popular as consumers become more conscientious about what they eat
Implied Warranty of Merchantability******************* * unless properly disclosed, a warranty is implied when a merchant sells goods that they are average quality and for the ordinary purpose for which they are sold * the implied warranty of merchantability does not apply to sales or leases by non-merchants or casual sales
Implied Warranty of Merchantability - FOOD * does not have to be nutritional or taste good, just edible * inappropriate objects in food make it un-merchantable as does food infected with harmful bacteria or viruses
Foreign Substance Test * if the object that causes the injury is not normally found or could not expect to be found associated with the dish * fly in a bowl of soup * human hair * broken glass
Reasonable Expectation Test * court must determine based on the totality of all of the circumstances if it was “reasonable” for the item to be found in the dish * ex: Webster v. Blue Ship Tea Room * in new England, lady orders fish chowder, bites into fish, bone goes through top of mouth, many medical bills from it, wants to sue, it breached the implied warranty because the bone wasn’t supposed to be there. (compensatory damages, consequential damages, foreseeable damages) , didn’t win cause they did a reasonable expectation test, could sue for negligence, but that is a tort theory. Ultimately wins because the chef was negligent
Warranties in Advertising * Obesity is often described as an epidemic in this country * Be careful about making claims about “healthy” food in your advertising
Implied Warranty of Fitness for a Particular Purpose********* * A warranty that arises where a seller warrants that the goods will meet the specific needs of the buyer as told to them * The warranty is breached if the goods do not meet the buyers or lessees expressed needs * The warranty applies only merchant sellers. . * Customer comes in, asks for product that does X, you say it does X, and it doesn’t
Warranty Disclaimers * Warranties can be disclaimed or limited * If an express warranty is made, it can only be limited if the disclaimed and the warranty can be reasonable construed with each other * All implied warranties of quality may be disclaimed by expressions like as is, with all faults, or other language that makes it clear to the buyer that there are no implied warranties
Strict Products Liability * This is a theory related to TORT, rather than contract * Again, since there may not be privity between the injured party and the party who caused the injury, the courts DO NOT like leaving innocent injured parties without a means of compensation * To win a SPL lawsuit, the Plaintiff must prove three elements: * Defendant sold product in defective condition * Plaintiff was injured * Injury was caused by the defect
Strict Liability: Chain of Distribution * All parties in the chain of distribution of a defective product are strictly liable for the injuries caused by that product * All manufacturers, distributors, wholesalers, retailers, lessors, and subcomponent manufacturers may be sued under this doctrine (doctrine of strict liability in tort) * Similar to the doctrine of Res Ipsa Loquitur
Debt and Bankruptcy
Unsecured Debt * Debt that does not require any security (collateral) to protect the payment of the debt * The creditor relies on the debtor’s promise to repay the principle (plus an interest) when it is due * Creditor may bring legal action if the debtor fails to make the payments
Secured Debt * Debt that requires some thing of value to secure payment of the loan * Security interests may be taken in real, personal, intangible, and other property * The collateral may be repossessed to recover the outstanding amount if the debtor fails to make payment
How do we acquire debt? * Most debt is acquired through some sort of CONTRACT involving * Commercial paper * Credit cards or other unsecured commercial transactions * Secured transactions
Commercial Paper * Commercial paper is a contract to pay money and basically fall into two categories * NOTES * A note (or promissory note) is a written promise to pay money * the person who makes the note is called the MAKER * the person to whom the note is payable to is called the PAYEE * DRAFTS * A draft is an order that directs someone else to pay for you * Every time you write a check, you are creating a draft * Every draft involved 3 parties instead of 2
REMEMBER!!!! * Notes and drafts are CONTRACTS * Notes and drafts are UNSECURED DEBTS * So when someone defaults on a note or a draft, it is a breach of contract * Even assuming that you file suit and win, you still have to find a way to get your money
What happens after I win a lawsuit? * The judgment granted by the court does not come with an order to pay * It is up to the judgment creditor to find and collect the money owed
Ways to collect on a Judgment * Voluntary Payments * Garnishments (taking percentage of (for ex.) wages every month) * Writs of Seizure and Levy * Judgment Liens * This is all a giant pain in the ass….
Default * Default: when debtor fails to make payments due or enters bankruptcy * Taking possession of the collateral * When the debtor defaults, the secured party may take possession of the collateral * The secured party can take the collateral without a court order if it can be done without disturbing the peace
Collection of Secured Debts * So unlike an unsecured debt, secured creditors often don’t have to jump through as many (or any) hoops to get paid back * Secured parties may sell, lease, or otherwise dispose of the collateral in any commercially reasonable manner * A debtor is liable for any deficiency (insufficient funds to pay off the debt) * Any surplus is to be returned to the debtor
Why is this important? * BECAUSE SECURED CREDITORS ALWAYS TAKE PRECIDENT OVER UNSECURED CREDITORS VIRTUALLY EVERY SINGLE SITUATION
Bankruptcy
* According to the small business association (SBA), nearly 50% of small businesses fail within the first 5 years * Article I, section 8, clause 4 of the US Constitution provides that “the congress shall have the power to establish uniform laws on the subject of bankruptcies throughout the US” * Bankruptcy law is exclusively federal law * There are no state bankruptcy laws
“Fresh Start” * Primary purpose of federal bankruptcy law is to discharge the debtor from burdensome debts * The law gives debtors a fresh start by freeing them from legal responsibility for past debts
Types of Bankruptcy * General there are 2 types that are spread over several chapters * Liquidation * Reorganizations
The most important thing to know about Bankruptcy * Once the bankruptcy filing is made the AUTOMATIC STAY is activated * The AUTOMATIC STAY is a court order that is designed to stop creditors from taking further action against the debtor
Automatic Stay * The stay is only activated once the PETITION is filed with the Bankruptcy court * HUGE venalities for violating the stay * Relief from stay – may be granted only by the Bankruptcy Court in situations involving depreciating assets where the secured property is not adequately protected during the bankruptcy proceedings
Chapter 7 * Liquidation used by individuals, partnerships and corporations * Individuals emerge from chapter 7 almost entirely free from debt * Partnerships and corporations do not survive Chapter 7 * A TRUSTEE is appointed to look at the debtors ESTATE * Trustee is a government appointed position * Trustee s job is generally to collect as much money from the debtor for the creditors as possible
Reaffirmation * Reaffirmation is the process used by debtors to reaffirm the debt owed to secured creditors * This is done during the course of the bankruptcy to ensure that a secured creditor does not repossess certain secured items (homes, cars, etc)
Chapter 7 * Debtor must list all of his creditors and the amounts owed to each * Trustee goes through all of the debtors property, assets, accounts pending * Trustee sells everything he can sell (everything that is not EXEMPT by the law) to make money
Exempt Property
*Trustees job is to sell anything that he can get his hands on that is not exempt* * Property that may be retained by the debtor pursuant to either federal or state law * Not all state will allow you to choose the federal exemptions
Chapter 7 (people and companies) * Money made from the sale of non-exempt property is then divided among the unsecured creditors by priority * Generally, unsecured creditors receive little if anything in a chapter 7 bankruptcy
Voidable Transfers * The bankruptcy code prevents debtors from making unusual payments or transfers of property on the eve of bankruptcy that would unfairly benefit the debtor or some creditors at the expense of others * Preferential transfers to insiders * Fraudulent transfers to hide assets
Chapter 7 Discharge * Once all the assets are sold and the available money distributed, the debtor receives a DISHCHARGE of any remaining unsecured debts * Business’s never get a discharge * There are exemptions!!!***
Chapter 11 – Reorganization * Normally only available to corporations and partnership * Restructure and reorganize that corporation* * Designed to give the business time to restructure the business and re-emerge a stronger business * Corporations and partnerships usually continue on after a chapter 11 filing * No estate created
Chapter 11 (companies) 1. Goal is to help the company reorganize a. Does not get a discharge for debt 2. Executory contracts ***** entitled to cancel or void these b. If company can’t reorganize, they liquidate
Chapter 11 – executory contract * All contracts are either executed or executory * Executed – contract that has been completed * Executory – contract that is ongoing and has not been completed * When a debtor files bankruptcy, they can VOID all executory contracts without fear of getting sued * Helps make company stronger
Chapter 11 * Debtors don’t get DISCHARGE of debt when they finish w chap 11 * Debt is consolidated and streamlines so that the debtor emerges from bankruptcy leaner and more streamlined
Chapter 13 – reorganization * Similar to chap 11 in that there is no ESTATE created * Debtor keeps all of their property and submits a plan for the payment of unpaid debts in installments * Debtor avoids the stigma of chap 7 liquidation – debtor keeps all their property * Debtor must disclose EVERYTHING to the trustee about their finances * Debtor must utilize all of their DISPOABLE MONTHY INCOME to make payments to creditors over a period of time * The plan period cannot exceed 3 years unless the court approves a longer period
Chapter 13 (only available for people) 1. Keep all your property 2. Trustees going to look at your income to debt ratio a. If u have a bigger income to debt ratio, then the trustee is going to require u to take all the money to pay the trustee i. All disposable income 1. Normally 3 years a. If there is any debt left over, you get a discharge
Business Structures
Entrepreneurial Forms of Conducting Business
1.Solo proprietorship * A form of business where the owner is actually the business * Business is not a separate legal entity * Solo proprietorships are the most common form of business organization in the US * There are no formalities * No paperwork, very little to open it up * No federal or state government approval is required * Some local governments require businesses to obtain a license to do business * Can operate under the name of the sole proprietor or a trade name
Advantages of solo proprietorship * Ease and low cost of formation * Owners right to make all management decisions concerning the business * The solo proprietor owns all of the business and has the right to receive all of the businesses profits * A solo proprietorship can be easily transferred or sold id and when the owner desires to do so
Disadvantages of solo proprietorship * Liability – owner has unlimited liability for the debts of the business and creditors can go after the personal assets of the owner/operator * Taxes – owner is taxed individually for all income
2.General partnership * A voluntary association of 2 or more persons carrying on a business as co-owners for profit * Also called a partnership * General partners, or partners are personally liable for the debts and obligations of the partnership * If you partner up with somebody, if it starts to go to debt, the creditor can come after 1 or both to get their money. If one of the partners is better off than the other, the creditors go to them first * Liability – all partners have unlimited liability for the debts of the partnership and debtors can go after each partner’s individual assets after the partnerships assets are exhausted * Taxes – each partner is taxed individually on the income earned
Dissolution of Partnerships * Partnership for a term * A partnership for a fixed duration * Partnership at will * A partnership with no fixed duration * A partner has the power to withdraw and dissolve the partnership at any time, but he or she may not have the right to do so
3.Limited Partnership (when one partner is not managing the business) * A type of partnership that has at one of at least 2 types of partners: * General partners – who invest capital, manage the business, and are personally liable for partnership debts * Limited partners – who invest capital but do not participate in management and are not personally liable for partnership debts beyond their capital contribution * Liability * General partners have unlimited personal liability for business debts * Limited partners are only responsible for debt up to their capital contribution * Taxes * Each partner is taxed individually on any income
Formation of Limited Partnerships * the creation of limited partnerships is formal and requires public disclosure * ex. 2 guys that open a business and do all the day to day shit that makes business work, but 1 person that provides the money and gets a percentage of the profits (shark tank) * certificate of limited partnership – a document that two or more persons must execute and sign that makes the limited partnership legal and binding
4.Limited Liability Partnership (LLP) * a special form of partnership where all partners are limited partners and there are no general partners * none of the partners is personally liable for the debts and obligations of the partnership beyond his or her capital contribution
* LLP is taxed as a partnership * Each partners share of the income or loss from the partnership is reported on his or her individual income tax return * The LLP is required to file an informational income tax return with the IRS * LLPs are mainly used for professionals such as accountants and lawyers * Many state laws require LLPs to carry a minimum of $1 million of liability insurance that covers negligence, wrongful acts, and misconduct by partners or employees of the LLP * This requirement guarantees that injured third parties will have compensation to recover for the injuries
5.Limited liability Corporations (LLC’s) – owners called members * Becoming increasingly popular * Only need one owner * Owners/proprietors – unlimited number called MEMBERS * Member managed – all members vote * Manager managed – members vote on manager and manager runs the business * Limited liability companies are creatures of state law, not federal law * Legal entity – an LLC is a separate legal entity (an artificial person) that can: * Own property * Sue and be sued * Enter into and enforce contracts * Be found civilly and criminally liable for violations of law * An incorporated business entity that combines the most favorable attributes of general partnerships, limited partnerships, and corporations * Liability – members are not liable for the debts of the corporation * Requirements for the LLC to carry liability insurance * Taxes – members can elect to be taxed as a corporation or a partnership * No double taxation * Do not have stock
Corporations * Corporations have legal identities separate from their owners * Owners/proprietors – unlimited number called SHAREHOLDERS
C Corporations * Shareholders typically elect directors who oversee the operation of the Corporation * Liability – Shareholders are NOT liable for the debts of the Corporation * Taxes * Corporate profits are taxed and then.. * Individuals are taxed on their dividends (profits) * Profits are taxed TWO TIMES!!!
S Corporation * Must meet certain criteria including – * Not more than 100 shareholders * Only one class of stock * All shareholders must be US citizens * Shareholders vote to control the operation of the business, but may also elect directors * Liability – Shareholders are not liable for the debts of the Corporation * Taxes – Profits are distributed directly to the shareholders in proportion to the ownership on the corporation * No corporate tax, only individual taxes on shareholders
Stock * Stock can be: * Authorized and unissued * Authorized and issued or outstanding * Treasury stock (been issued, then bought back by company) * Par value – minimum issue price***** * Classes * Owners of preferred stock have preference on dividends and liquidation * Common stock is last in line for any corporate payouts, including dividends and liquidation * CORPORATIONS HAVE STOCK**** * LLC does not issue stock****
Once Formed.. * Directors and officers are elected, unless all shareholders agree to not have a board of directors * Small corporations may elect directors by written consent * Minute book holds records of all meetings * Bylaws set the rules for the corporation
Termination * Terminating a corporation is a 3 step process * Vote by a majority of the shareholders * Filing articles of dissolution with the secretary of state * Winding up – paying debts and distributing assets
Franchises * One party licenses another party to sue the franchisors trade name, trademarks, commercial symbols, patents, copyrights, and other property in the distribution and selling of goods and services * A franchise agreement is really a contract for the “lease” of intellectual property * Generally, the franchisor and the franchise are established as separate organizations
Types of Franchises * Distributorship franchise – the franchisor manufactures a product and licenses a retail franchisee to distribute the product to the public * Processing plant franchise – the franchisor provides a formula or process to the franchisee who manufactures the product and distributes it to retailers * Chain style franchise - the franchisor licenses the franchisee to make and sell its products or distribute services to the public from a retail outlet serving an exclusive territory
Why Franchise? * Licensor * More profit with fewer expenditures * Decreased liability * Licensee * Increased profits * Credibility/visibility * Assistance with operations and managerial decisions
Why Avoid a Franchise? * Licensee is giving up the freedom to run things his/her own way * Contract disputed with the parent company * Franchisee must pay commission to the parent company
Franchise | Corporate | Liable for their own contracts | | Liable for own tort liability | | Employee does something corporate told them to do, corporate gets involvedEx. McDonalds coffee | * Lady broke the wall between these two because corporate told McDonalds to put the coffee at that temperature | | | | | | | | |
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Property Chap 28-30
Types of Property * Real property * Land and everything attached to it (realty) * Personal property * Pretty much every other type of property * Tangible * Intangible
Real Property * Land itself as well as buildings, trees, soil, minerals, timber, plants and other things permanently affixed to the land * Land * Buildings * Subsurface rights * Plant life and vegetation * Fixtures * Air rights
Acquiring Real Property * Sale or gift * Death * Marriage * Divorce * Bankruptcy * Each of these transfer ownership!!
Purchasing Real Property * To acquire real property, the would be owner must obtain legal title to the realty * Title can be shown via a DEED to the property * REMEMBER – legal contracts for the sale or permanent transfer of real estate MUST be in writing (Statute of Frauds)
Recording * Once the new deed has been issued/created, it MUST be filed amongst the land records in the jurisdiction where the property is located * Why do we file deeds? * If an accident happens, you know who the owner is * Government and everyone else wants to know who owns property
Contract of Sale** * The contract for sale of property DOES NOT constitute transfer of the property * The contract for sale includes * Offer * Acceptance * Consideration (promise t pay in exchange for the promise to relinquish the deed) * The ownership is not transferred until the money and the deed to the property are exchanged
Ownership of Real Property * The bundle of legal rights that the owner has to possess, use, and enjoy the property * The type of estate that an owner possesses is determined form the deed, will, lease, or other document that transferred the ownership rights to him or her * Think of owning a real property as if you owned a bundle of sticks * You want to own the whole bundle but… * You can also own certain sticks without owning the entire bundle
Ways Real Property is owned****************SUPER IMPORTANT KNOW VERY VERY VERY VERY WELL * Alone * Fee simple absolute * Highest and BEST form of ownership of real property * Ownership: * Is infinite in duration * Has no limitation on inheritability * You own the WHOLE BUNDLE of sticks * Fee simple defeasible * Grants owner all of the incidents of a fee simple absolute except that it may be taken away if a specified condition occurs or does not occur * You only own SOME of the bundle, not all * Ex. Give property to the church so long as the property remains undeveloped, if they build on it the property goes back to me * Ex. Give brother property for 10 years and then back to me or someone else. There’s a line that allows me to get it back. * Both situation, if I die, property goes back to my airs, unless says otherwise in will * Life estate * Jointly with others * Tenancy in Common * Joint Tenancy * Tenancy by Entireties
More About Deeds * Generally, there are 2 types of deeds * Warrants Deed * Best kind of deed * Grantor is handing over everything (the entire bundle of sticks * Quitclaim Deed * Grantor is only handling over those sticks out of the bundle that he/she has a right to
Life Estate * Interest in property that lasts for the life of a specified person * A life estate terminates upon the death of the names person and reverts back to the grantor or his or her estate or other designated person * Ex. To my son for the remainder of his life, then to the children of my daughter
Tenancy in Common * Most common form of joint tenancy * There are an unlimited number of owners each owning some share * Shares do NOT have to be equal * Shares can be transferred to others without affecting the interests of the other owners * Ownership transfers to the heirs of each owner upon their death
Joint Tenancy * Unlimited number of owners however… * Each person has a right of survivorship * When one owner dies, his interest in the property transfers to the survivor * Deed specify that a tenancy is a joint tenancy with right of survivorship or else it is a tenancy in common
Tenancy by the Entireties * Similar to a joint tenancy, but UNIQUE to married couples * Each person owned the whole property * Allows husband and wife to shelter their real property from the debts of the other
Paying for Property * Most people do not have sufficient capital to buy property real property outright * Unless the property is gifted or you inherit it, you must often go to a 3rd party to obtain a loan
Third Party Financing * Normally, the promise to pay back a loan comes in the form of a PROMISSORY NOTE * In order to protect the lender form default by the borrower, the new owner agrees that the 3rd party lender (normally a bank) will obtain a SECURITY INTEREST on the property * The Security Interest MUST be filed or recorded as either a * MORTGAGE or * DEED OF TRUST * Don’t get confused by this!!! * Mortgage and deed of trust are synonymous terms * Don’t confuse deed of trust with deed!!!! * If owner of property defaults, 3rd party financer can call the lien due under the terms of the Deed of Trust/Mortgage and force the sale of the property to pay off the debt
REMEMBER THE ORDER FOR TEST*******
Contract for Sale
Sign Promissory Note with Bank
Sign Deed of Trust or Mortgage, give money to…
You get a deed
Landlord/Tennant Law * LEASE – a relationship created when the owner of a freehold estate (landlord/lessor) transfers a right to exclusively and temporarily possess the owner’s property to another * (tenant/lessee) * leases can be either oral or written * Statute of Frauds require written leases for period of time longer than one year
Leasing Real Property * Remember, with a lease, the owner isn’t giving the whole bundle of sticks to the lessee, only the sticks that give the lessee the right to occupy or possess the property
Types of Tenancy******** * Tenancy for years * Continues for the duration of the lease and then terminates automatically without notice * A definite time * Periodic tenancy * Continues form payment interval to payment interval * It may be terminated by either party with adequate notice * Month to month, year to year * Tenancy at Will * Continues at the will of the parties * It may be terminated by wither party at any time with adequate notice * Tenancy of Sufferance * Arises when a tenant wrongfully occupies real property after the expiration f another tenancy or life estate * It continues until the owner either evicts the tenant or holds the tenant over for another time
Unlawful Detainer * Legal procedure a landlord can bring to evict a tenant for non-payment or rent (eviction)
Buy or Lease?
* Buy * Unlimited use of property * Depreciable asset for tax purposes * Property can be used as collateral * Can alter the property however you want * BUILD EQUITY in your own business! * Basically like having your own bank account * Lease * Must follow the lease * Lease payments deductible as business expense * Improvements limited to lease terms * No EQUITY built
What is Equity? * Calculation * Market value of property – any lien or mortgage * Equity goes up as.. * Payments are made or.. * Value of the property increases
Personal Property * Tangible Property * Property that you can see/touch/taste * Intangible Property * Money * Stocks * Bends * Intellectual property (patents, copyrights, trade secrets) * Includes basically EVERYTHING other than real estate * Cars * Coins * Jewelry * Books * Stocks/bonds * Intellectual property * Some types of personal property have titiles to show who the property belongs to * Most do not!!!!
Fixtures******* * Items of personal property that are normally categorized as personal property but once they are attack to real property, they become part of the real estate and are treated as part of the real property (unless there is a contract to say otherwise) once you put it in, you can’t take it out * Ex. Buying stove from Lowes, get it out in your house and attach it, becomes part of real property and becomes a fixture * Tables, computers aren’t fixtures
Transfers of Personal Property * Sales * Gift * Devise * Found property * Bailments**********
Selling/Purchasing Personal Property * Personal property is far less complicated to sell and purchase than realty * Sales of Goods of $500 or more are controlled by * Statute of Frauds * Uniform Commercial Code
Sales of $500 or more * Bill of Sale – contract used to transfer ownership of personal property * Names of seller and buyer * Consideration on both sides * Concise description of the property * Statement of ownership by seller * Date of sale
“Found” Property * Sometimes you find stuff that other people left behind * Lost Property * Owner permanently forgets where the property is but clearly did not mean to part ownership with it * May have a duty to try and find the true owner if possible * Finder or landowner normally get to keep lost property * Mislaid Property * Property owner temporarily forgets where they have left the property * Required to used reasonable care to protect property until the owner returns * After reasonable amount of time, the ownership of property will go to finder of the property * Abandoned Property * Owner voluntary gives up ownership of the property * No duty to protect abandoned property * Abandoned property belongs to the person who claims it
BAILMENTS * Transfer of possession of personal property form one person to another with understand that property will be returned * Bailor – person transferring possession of property * Bailee – person receiving possession * Ex. Valet parking * Essential elements of a bailment: * Personal property * Delivery of possession * Acceptance of possession * Bailment agreement
Type of Bailments********** * Benefit of the Bailor * Valuables given to the hotel by a guest to be held in its vault/safe * Having mechanic look at car, leave it overnight * Benefit of the Bailee * Friend borrows your car to go somewhere * Benefit of both * Rental cars * Valet parking (for a fee)
Duty of the Bailee * Liable to redeliver the the goods on time to bailor * Bailee must exercise the appropriate amount of care while the property is in his/her possession
Degree of Care in Bailments**** * Benefit of the Bailor * Slight care * Bailee only liable for acts of gross negligence * Benefit of the Bailee * Bailee must use an extremely high degree of care * Benefit of both * Bailee must be ordinary ad reasonable care * Bailor is obligated to warn Bailee of any defects in bailed property that might result in injury to Bailee or interfere with use of property
Items inside of Bailed Property * Bailment of property inside exists if Bailee could reasonable anticipate property would be inside * Bailment liability only applies to those items that the Bailee knows or should know that he is responsible for * Ex. Check your coat, ring in it, falls out, try and blame coat check, they had no idea it was in there, aren’t held responsible
Intellectual Property * Intellectual Property is normally intangible property that includes each of the following: * Trademarks and Service Marks * Trademark – any work, symbol, or device adopted and used by a manufacturer or merchant to identity its goods and distinguish them from products sold or manufactured by others * Service mark – similar to a trademark except that it identifies services rather than goods * How to get a trademark? * First person to use a mark in trade own it * Registration with the PTO is not necessary, but does have advantages * Allows owner to use the symbol * Makes trademark protection valid nationally * Notifies public of its use, which makes challenges virtually moot * Generally, gives first right to use the trademark as an internet domain name * How long is a trademark good for? * As long as they are in use * Original registration of mark is valid for 10 years * Can be renewed for unlimited 10 year periods * Trademark Infringement * Plaintiff must show * Ownership of a distinctive mark or name * Defendants use of a similar mark is likely to cause confusion as to the source of the products or services * Exceptions * Public domain – when a mark has become so commonly used that it loses its trademark protection * Asprin * Frisbee * Kleenex * Cellophane * Trade Secret - Protection that allows persons to protect a product formula, pattern design, compilation of data, customer list, or other business secret * Crabby patty formula * Has to be kept secret or else becomes public use * Stealing trade secret is illegal * Trade secret protection * If owner fails to take precautions, the secret is no longer subject to protection under state unfair completion laws * Can be don literally or contractually * Trade secrets are valid indefinitely * Why important? * Franchise relationship are contractual and for the most part, involve the lease or right to use intellectual propety
* Copyrights * Copyright is exclusive right of an author or other copyright owner to reproduce and license reproduction of: * Literature * Art * Music * Drama * Sculpture * Motion pictures * Computer software * Broadcast of sporting events * A holder of copyright owns the particular tangible expression of an idea, but not the underlying idea or method of operation * A work is automatically copyrighted once it is in tangible form * Registration with the copyright office of the library of congress can be done at ANY TIME and is necessary ONLY if the holder brings suit to enforce the copyright * Using symbol is recommended to make ownership clear * Copyright terms * Individual Copyright Holder – life of authors plus 70 years * Owners will charge fee for permission to use the work * Enables owner to benefit repeatedly * Is artist sells the copyright, the purchaser becomes the copyright owner and can reproduce the work without further authorization * Copyright Infringement * Using someone else’s work * Plaintiff must show.. * Infringer actually copied the work * Infringer had access to the original and the 2 works are substantially similar * Biggest problems ensue when you are using the material for COMERCIAL PURPOSES * When permission is not necessary * Fair use doctrine permits use of protected work without permission in certain circumstances * quotation of the copyrighted work for review or in a scholarly or technical work * use in a parody or satire * brief quotation in a new report * reproduction by a teacher or student of a small part of the work to illustrate a lesson * incidental reproduction of a work in newsreel or broadcast of an event being reported * reproduction of a work in a legislative or judicial proceeding
* Patents * Used to protect new inventions * To be patent, must be * Novel – not known or sued in this country and not published anywhere * Nonobvious – cannot be an obvious way to do something * Useful – must have some application, even it not commercially practical * How to get patent? * Federal patent of 1952 * Patents MUST be registered with the patent and trademark Office (PTO) * Patents are valid for 20 years * Patent term beings to run from the date the patent application is filed instead of when the patent is issued as was previously the case * A patent cannot be renewed * Gives holder exclusive use and control for limited period of time and then the invention becomes public * Types of patents * Machines * Stop light * Processes * microwave * Composition of matter * Stuff on pans that make it non-stick * Improvements to * Existing machines, processes or composition of matter * Living material invented by a person * Oil devouring bacteria * Square watermelons * Patent Infringement * Unauthorized use of another’s patent * A patent holder may recover damages and other remedies against a patent infringer * Patent holders own exclusive rights to use and exploit their patent * Trade secrets
Agency * Agency relationships are formed by the mutual consent of a principal and an agent * Agency is the fiduciary relationship where one party (agent) agrees to perform a task for, and sunder the control of, a second party (the principal) * Definitions * Principles-the party who employs another person to act on his or her behalf * Agent – the party who agrees to act on behalf of another * fiduciary relationship – a relationship with special standards of good faith and fair dealing between the parties (normally financial)
Duties of the Agent to the Principal * Duty of loyalty * Cant use information to try and make money * Cant compete with principal * Cannot act for 2 principles whose interests conflict (ex. Cant represent 2 people) * Cant engage in inappropriate behavior that reflects badly on the principal * Agent must obey the principal’s instructions * This is waived if the instructions are illegal or unethical * Agent must act with reasonable care * An agent with special skills is held to a high standard * Agent must give accurate information * Duty to provide the principal with all information the agent has reason to believe the principal wants to know
Duties of Principal to Agent * Duty to compensate * Duty to reimburse the agent for reasonable expenses * This can include unauthorized purchases if the agent reasonably believed he was authorized and the principal received a benefit * Duty to cooperate * Cannot unreasonable interfere with the agent’s ability to accomplish the task * Unless the contract provides otherwise, the principal may compete with the agent * Principal must perform his/her part of the contract
Terminating an Agency Agreement * Mutual agreement * At-will termination * Purpose of the agreement is achieved * Lapse of time * Occurrence of some specified event * Death of the principal or agent * Insanity of the principal or agent * REMEMBER CONTRACT LAW
Authority * Principals vest their agents with varying levels of authority to complete the task they were hired for. * Agents must normally act within the scope of their authority in order for the principal to be bound to the agent’s actions
Express Authority * Granted by words or conduct that, reasonably interpreted, cause the agent to believe the principal desired her to act * Ex. Scali tells me to buy golf clubs and spend X amount of money
Implied Authority * Authority to conduct a transaction includes the authority to do acts that are reasonably necessary to accomplish it unless otherwise agreed to * Ex. Sports agent is told by star athlete he wants endorsement deal, agent goes out, negotiates with multiple organizations, and signs with Doritos
Apparent Authority***** * A principle can be liable for the acts of an agent who is not, in fact, acting with authority if the principles conduct causes a 3rd party reasonably to believe that the agent is authorized * An agent with actual authority may perform an act beyond the scope of that authority. If the action appears to the 3rd party to be within the scope of the authority, the principal will be bound * Scali tells me to buy golf clubs for $1,000 and comes with me, scali leaves cuz he has something important, tells salesman ill be fine with picking, I buy 2 sets for $2,000, I get in trouble not seller cuz seller didn’t know I was told only one set for $1,000
Contract Liability- Principles * Principles are liable for and required to perform the contracts that are entered into by an agent acting with proper authority * A 3rd party can enforce the contract and recover damages if the principal fails to perform it
Contract liability – Agents * The agent can also be held liable on the contract in certain circumstances * Liability depends on whether the agency is classified as: * Fully disclosed * Partially disclosed * Undisclosed * Fully disclosed principal * An agent is not liable under the contract * Unidentified principal * A 3rd party can recover form wither the agent or the principal * unauthorized principal * 3rd party can recover from with the agent or the principal * unauthorized agent * the principal is not liable and the agent is
Employer – Employee relationships * dealing with employees is normally the number one problem area for most employers * there are a lot of laws to comply with and it can be hard to keep up * lawsuits normally come in 2 forms * suits from employees * suits from the government
At-Will Employment * employers generally have the right to hire and fire at will (whenever it is in the best interest of the business) * allows the employer to fire most workers without cause, but you must comply with federal and state law * you have great discretion in terminating but you cannot terminate the following: * in violation of manual or handbook * policies laid out in employee handbooks can carry the force of law just as if they were contractual requirements * to deny accrued benefits * cannot fire someone to avoid paying vacation or sick leave * because of legitimate illness or absence from work * for attempting to unionize * for whistle blowing * employees are protected both at common law and by several statutes for reporting the illegal behavior of their employers * for belonging to a protected class * violating for a written contract * firing someone in violation of a written employment contract you can be sued
Fair Labor Standards Act (FLSA)**************** * Enforcement is overseen by the department of labor * Controls: * Minimum wage * Minimum wage laws!!!!!! * Employers involved in interstate commerce must pay employees at least the minimum wage set by congress * If there is a conflict between state and federal minimum wage laws, you must comply with the law most favorable to the employee * Employers with les than $500,000 is annual sales are expected from minimum wage requirement * Up to 59% of min wage can be replaced by tips * Tips +wages must still equal at least the min wage for each employee * Overtime pay * Employees who are paid hourly and work more than 40 hours in one week must be paid at least 1 ½ times their regular pay for each house in excess 40 * Time on the job includes * Coffee and snack breaks * Meetings * Rest periods of 20 minutes or less * Travel from job site to job site or to customers * Required training * Exceptions * Executives * Administration * Professionals * Must be paid at least $455.00 per week * Generally, must have hire/fire power or otherwise be responsible for management of other employees * Equal pay for the equal work * Equal pay act – amendment to the FLSA * Requires that men and women of the same job that requires equal skill, effort, and responsibility, be paid the same or according to the same pay schedule * Also protects employees from retaliatory discharge for filing complaints * Restrictions on child labor * Min age of 14 for all employees * Restricts the number of hours’ persons under 18 can work and limits the task they can perform * An employee whose rights have been violated has 2 options in pursuing the case: * File a claim with department of labor * Commerce a lawsuit against the employer seeking damages and attorney fees * Damages can include back pay x2 and other incidentals
Family and Medical Leave Act enforced by * Entities eligible employees to take up to 12 weeks of unpaid leave per year for: * Childbirth * Adoption * Foster placement * Employees own health situation * Employer eligibility * To be covered by FMLA, employers must carry at least 50 employees for each working day for at least 20 weeks per year * Employee eligibility * Worked for at least 12 months before leave starts * Worked at least 1250 hours during the 12-month period immediately prior to the leave * When they return, the employee must be reinstated to he same position or one of equal pay and responsibility******* * If the employee is unable to perform the tasks of the job, the employer is not obligated to reinstate the employee
Workplace Safety * Occupational Safety and Health Act (OSHA) * Sets specific health and safety standards * Obliges employers to keep workplace “free from recognized hazards” * Requires records of all injuries and accidents * Allows inspection of workplaces and dines for unsafe conditions
Workplace Privacy * In many places, off-duty conduct cannot be regulated by the employer * Alcohol and drug testing is allowed by private businesses; government employers may test if signs of use are seen or if job safety is an issue * Employers may not require or even suggest the use of lie detector tests, except in investigations of crimes
Employment Eligibility * Not everyone in USA is elibable to work here * To work and live in USA you need permission form the immigration and naturalization service (INS)
Employment Eligibility * Civil rights acts outlaw’s discrimination based on national origin; does not include noncitizens as a protected class * Employers cannot refuse to hire, based on citizenships status, a qualified alien authorized to work
Immigration Reform and Control Act (IRCA) enforced by department of homeland security (IMS also) * Federal law passed in 1986 that enlists employers in the effort to prevent illegal aliens from working in this country * An employer must complete and train an employment eligibility verification form (form I-9) for every person hired * Employer is required to examine documents to determine if its genuine * When reviewing documents, employers responsibility to check expiration dates
* Penalties for hiring illegal aliens:
* Cease and desist order * Fine that ranges from $250 to $2,000 per unauthorized alien for the first offense
Illegal Job Discrimination * Employers cannot discriminate against workers on the basis of protected classes: * Race * Color * Religion * Gender * Pregnancy * National origin * Disability * Age * Union membership
The Civil Rights Act of 1964 * Title VII of the Act covers employers with 15 or more employees * Created the equal employment opportunity commission (EEOC) which is the federal agency responsible for enforcing the act * Makes it unlawful: * Refuse or hire someone that falls under a certain class * Only applies to following * Race * Color * Gender * Ethnicity * Religion * Does not apply to: * Age * Disability * Union membership * Disparate treatment – intentional discrimination against an individual based on considerations of race, color, religion, gender or national origins * Disparate impact – neutral practices that appear neutral but result, often unintentionally, in unequal treatment as to a protected group of people * Discrimination charges must be filed with EEOC * EEOC has specific rules and procedures for filing and strict time limits within which cases must be pursued * Employers who lose theses claims can face * Injunctions * Attorneys fees * Back pay * Punitive damages
Race * Outlawed discrimination includes: * Refusal to hire * Resistance to promote * Unjustified firings * Termination a white employee for associating with a black employee * Employer can defend against discriminatory firing by establishing a legitimate, nondiscriminatory reason for firing
Racially Hostile Working Environment * Employment atmosphere that allows racially derogatory comments, jokes, and conduct has been determined to significantly and adversely affect the psychological well being of an employee
National Origin * Refers to the country where people were born or from which their ancestors came * Refusing to hire someone whose English is faltering may constitute illegal discrimination on the basis of national origin * Unlawful discrimination does not occur when a plaintiff’s accent affects ability to perform the job effectively * DNOT NOT confuse national origins discrimination with employment eligibility
Religion * Employee must establish that the religious foundation for the requested accommodation is bona fide
Gender * An employer cannot refuse to grant women or men a benefit of employment based on their gender * Applies equally to men and women * Gay/lesbian/transgender is protected under federal
Defenses to Charges of Discrimination * Valid reasons for hiring one employee over another or paying one more than the other * Merit * Seniority * Quality of work * Quantity of work
Bona Fide Occupational Qualification (BFOQ) * Relieves an employer from liability for disparate treatment whereby selection of an employee is reasonably necessary for the normal operation of the business * Job must require a worker of a particular gender, religion, age or national origin * Such requirement must be necessary to the essence of the business operation * Not a defense to a claim of racial discrimination * Still required to make reasonable accommodations when possible
Sexual Harassment * Includes two types of illegal action: * Quid pro quo – unwelcome sexual advances or requests for sexual favors in return for job benefits * Hostile environment – verbal or physical conduct of a sexual nature that creates an intimidating, hostile, or offensive work environment * Most often, male harassing female * Has to be unwelcomes * Consent doesn’t establish that the conduct is welcome * Quid pro quo – harasser’s employer is always liable because the employer is liable for the wrongful acts of an employee done in furtherance of the employees job responsibilities * Respondeat superior
Liability for employers * Hostile environment * Employer can escape liability if 3 elements are satisfied * No adverse employment action was taken against employee * Employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior * The plaintiff unreasonably failed to take advantage of perceptive or corrective opportunities provided by the employer
Pregnancy * Pregnant women are protected under title VII * Job action can only be taken based on the inability to work * Business necessity * If employer can show business is not good for pregnancy, they can require pregnant employees to take a leave of absence pending wellness following birth
Age * Age discrimination is Employment Act (ADEA) bars an employer from discriminating against an employee on the basis of being 40 yeas of age or older * An employer can refuse to hire older workers if it can show that youth is a legitimate business necessity
Americans with Disabilities Act (ADA) * Applies only to employers with a minimum of 15 employees
