...Contract Formation Author: Jason Dorman Business Law Professor Riggs 11-24-2013 A contract must have certain elements to be considered a contract. However, there are also elements that exist that will negate a contract as well. Fraud, undue influence and duress are all elements that will negate a contract. When a contract is breached or negated one party can collect damages or seek equitable remedies. The common law doctrine of election of remedies prevents individuals from taking advantage of the system. These elements are what an individual would not want to deal in any business situation. There are also elements in place to prevent a party from double recovery and this is called the common law doctrine of election of remedies. What we can learn from contracts is that neither side will deceive the other. What is fraud and how does it affect a contract? Fraud is an intentional act by one party to deceive another. “Fraud prevents a mutual agreement to a contract because one party intentionally deceives another as to the nature and the consequences of a contract.” [legal-dictionary.thefreedictionary.com] When each party involved in the contract states their terms. The terms must be factual and any misrepresentation of the truth can void the contract. However, there are situations where an individual’s intentions are to get over on the other party. This is why it is important to read the contract before signing it. What is undue influence? “Undue...
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...2. The Consent (continuare) As you know the juridical act, is the expression of smbdy's will meant to produce legal effects. From a juridical point of view, the juridical will of the parties is a complex issue. It is composed by two elements: - the consent; - the consideration. The consent means the externalized decision or intent to conclude a contract. In order to be valid, the consent must fulfill several conditions as follows; 1. To be expressed by person who is mentally capable to conclude the act. It means that the parties must have judgment or discernment, must be able to understand the nature of the act and its consequences. A pers that has a full concrete capacity is presumed by law to have judgment or discernment. This legal presumption may be overruled by proving the temporary lack of judgment of the person in question, as for example for temporarily mental illness, or influence of drugs. You can find this in the civil code Art. 1205 paragraph 1 2. To be expressed by a pers. who has the intention to produce legal effects. This condition is not fulfilled when for example the pers. Is only kidding, he has no real intention to conclude a contract – informal bet. 3. To be externalized. It means that the consent must result from the words or even the actions of the parties. In this respect several problems arise in case of silence. Generally in our law the consent cannot be implied and therefore in case of silence it is considered that there is no consent...
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...FRAUD BASICS WHAT IS FRAUD? Fraud, sometimes referred to as the fraudulent act, is an intentional deception, whether by omission or commission, that causes its victim to suffer an economic loss and/or the perpetrator to realize a gain. A simple working definition of fraud is theft by deception. Legal Elements of Fraud Under common law, fraud includes four essential elements: 1. A material false statement 2. Knowledge that the statement was false when it was spoken 3. Reliance on the false statement by the victim 4. Damages resulting from the victim’s reliance on the false statement In the broadest sense, fraud can encompass any crime for gain that uses deception as its principal technique. This deception is implemented through fraud schemes: specific methodologies used to commit and conceal the fraudulent act. There are three ways to relieve a victim of money illegally: force, trickery, or larceny. Those offenses that employ trickery are frauds. The legal definition of fraud is the same whether the offense is criminal or civil; the difference is that criminal cases must meet a higher burden of proof. For example, let’s assume an employee who worked in the warehouse of a computer manufacturer stole valuable computer chips when no one was looking and resold them to a competitor. This conduct is certainly illegal, but what law has the employee broken? Has he committed fraud? The answer, of course, is that it depends. Let us briefly review the legal ramifications...
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...Ethical violations Sharon Miller Colorado technical University online (MGM365, Ms. Holy Faust 9/5/2011 Portions of this task had previously submitted) This task asked us to pick a business that has committed an ethical violation as well as a legal violation. I will discuss the impact of the violations as a consumer or investment. Also discuss why there is an increase in these types of legal and ethical violations. What does this say about the United States business environment? The company that I chose is KP MG. KPMG is an accounting firm. In August of 2005 KPMG admitted to criminal wrongdoing. They will pay $456 million for, finds, restitution, as well as penalties, to stay out of jail. From 1996 until 2003, KPMG and a lawyer decide to set up four phony tax shelters. The name of the four tax shelters is FLI P, OPIS, BLIPS, and SOS. These tax shelters targeted people who needed $10,000,000 to$ 20,000,000 in tax loss. Instead of paying the IRS they paid KPMG a percentage of the tax loss. They also file fraudulent tax returns. These returns were phoning. Even though KPMG tax department told the nine individuals that the tax shelters would not stand up to IRS scrutiny, they did the tax fraud anyway. The Tax fraud cost the United States at least $2.5 billion in lost tax revenue. KPMG were ordered to pay the following amounts, 100 million in fines, hundred and 28 million in criminal fines, 228 million in clinical restitution. Also KPMG had to stop doing two...
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...discharge, and the UCC. The team gained a better understanding of the elements of a binding contract and how the UCC is involved with contracts. The class discussion was mainly regarding contracts, the UCC code, and the differences. The concept for Diana that sometimes is difficult is deciding if both parties in a contract gave consideration. If that element is missing this constitutes the lack of a contractual agreement. However, under the UCC code for merchants this is not a required element. The other piece that can be difficult to discern is deciding when the date of the contract begins, which must also meet certain elements to be a legal accord. The oral or written information must include the parties, price, object, and time that both parties mutually agree, and if not clear, one party may believe something different from the other party. Additionally, businesses need to pay close attention to the acceptance portion in contacts because of the “mailbox rule” because if specific date requirements are not in the arrangement this could be a reason for a dispute. The Statue of Frauds portion was another area of discussion to decide when written agreements are a requirement such as in UCC for amounts greater than 500.00 or 5,000 in certain areas. Additionally, land contracts, performances greater than one year, contracts in consideration of marriage, surety for another, and executing a will are elements under contracts to verify. These and other contract and agreement topics...
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...is extremely fascinating and very important to understand prior to entering into such contracts. “A contract is a legally enforceable agreement between two or more people.” (Rogers, 2012) There are many types of contracts to be aware of and there are numerous steps that are involved within each part of a contract, and must be understood and followed for the contract to be legal and binding. In our modern times people enter into contracts often times without even knowing thay have because there are so many different types of valid contracts. The following is a list of contracts that are entered into by companies and people on a regular basis. Implied, unilateral, bilateral, expressed, quasi, formal and simple contracts. An express contract is “formed by the express language of the parties—the actual words they use in their agreement—and can be either written or oral.” (Rogers, 2012) This particular contract is entered into without any written documentation and is a valid contract. Expressed contracts have several parts including an offer, the acceptance of an offer and the consideration elements. Express and implied contracts are very comparable and similar The contract called implied is “formed not by the express words of the parties, but rather by their actions.” (Rogers, 2012) In this type of contract agreement expressed words are not implied within the contract. Implied contracts cannot have a...
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...CASE 4: ACCOUNTING FRAUD AT WORLDCOM Betty Vinson: victim or villain? Should criminal fraud charges have been brought to her? How should employees react when ordered by their employer to do something they do not believe in or feel uncomfortable doing? In discussing whether Vinson should been charged with criminal fraud, it can be analyzed from ethical perspective which can truly judge whether she was morally responsible for the wrong or not. In order to determine whether Vinson was morally responsible for the fraud, these three criteria should be fulfilled first: causality, knowledge and freedom. The causality criteria can be referred as whether that individual caused or helped cause the wrong, or failed to prevent it when she could and should have. The knowledge criteria then requires the individual to did so knowing what she is doing while freedom criteria requires the individual did so own her free will before being morally responsible for causing the wrong. Examining the cause of the fraudulent activities, Vinson initially been pressured by Yates, Myers and Sullivan to aid in painting the financial result of the company only one time and assured by Sullivan that he would take full responsibility for the action. Being a senior manager worked under them and believing in Sullivan’s words, Vinson did as told accordingly. However, she decided against quitting when been asked to continually carry out the wrong as she justified herself as the main supporter of her family. Moreover...
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...White-Collar Crime SOCI 225 Instructor: John Casey Student: Date: April 14, 2012 Table of Contents Introduction 3 What is White-collar Crime? 3 Workplace Safety 4 Fraud 6 Sentencing 9 Conclusion 10 Endnotes 11 Introduction Crime is such a general word, and describes a whole conundrum of activities that are seen as unlawful. The oxford dictionary defines crime as “an action of omission which constitutes an offence and is punishable by law”. There are many different types of crimes, and they are classified based on the seriousness of the crime. Minor crimes/offences, for example a traffic offence, are called misdemeanors. More serious crimes, like murder, are called felonies and are punishable by more than a year in prison. When people hear the word crime, they most often associate it with a dangerous, violent act. There are crimes that are not violent in nature, but are still considered criminal acts because of their nature and their purpose. White-collar crime is one of those types of crimes that are non-violent but have a great impact on its victims. What is White-Collar Crime? White-collar crime is “generally identified as non-violent crimes that public officials and business people commit predominantly for their own personal gain”. Edwin Sutherland came up with the term “white-collar crime” to explain the crimes that both middle class and upper class people committed in the course of their business activities. White-collar crime is so often neglected...
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...CASE 4: ACCOUNTING FRAUD AT WORLDCOM Betty Vinson: victim or villain? Should criminal fraud charges have been brought to her? How should employees react when ordered by their employer to do something they do not believe in or feel uncomfortable doing? In discussing whether Vinson should been charged with criminal fraud, it can be analyzed from ethical perspective which can truly judge whether she was morally responsible for the wrong or not. In order to determine whether Vinson was morally responsible for the fraud, these three criteria should be fulfilled first: causality, knowledge and freedom. The causality criteria can be referred as whether that individual caused or helped cause the wrong, or failed to prevent it when she could and should have. The knowledge criteria then requires the individual to did so knowing what she is doing while freedom criteria requires the individual did so own her free will before being morally responsible for causing the wrong. Examining the cause of the fraudulent activities, Vinson initially been pressured by Yates, Myers and Sullivan to aid in painting the financial result of the company only one time and assured by Sullivan that he would take full responsibility for the action. Being a senior manager worked under them and believing in Sullivan’s words, Vinson did as told accordingly. However, she decided against quitting when been asked to continually carry out the wrong as she justified herself as the main supporter of her family. Moreover...
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...FRAUD: FRAUDULENT ACTIVITIES A REVIEW OF THE CRIMES Introduction Investigations into fraudulent activities have brought much attention to Federal Government spending. The impact of fraud and the corruption caused by internal parties or external entities targeting government funds can be substantiated. For example, the Association of Certified Fraud Examiners (ACFE) in a 2012 Report to the Nations on Occupational Fraud and Abuse projected a global fraud loss of more than $3.5 trillion per year. Fraud and corruption is a common problem that is all over the world. The U.S. Nuclear Regulatory Commission (NRC, 2006) wrote in its “Fraud Awareness” handbook that fraud is an enormous problem that can waste valuable funding and other resources. Fraud is a potential problem that threatens the Federal Government mission of protecting the health and welfare of the American peoples. According to the Legal Information Institute (LII) at Cornell University Law School fraud precise legal definition varies in the area over which legal authority extends or the given power or authority that has exclusive jurisdiction to decide legal matters. LII defines fraud as “deliberately deceiving someone else with the intent of causing damage.” On December 2nd 2012 Special Agent Jason Muldrew of the Air Force Office of Special Investigations at Kunsan Air Base, Republic of Korea printed news story said, “Fraud is defined as the crime of obtaining money or other benefits by deliberate deception...
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...Fraud is defined as the, “intentional perversion of truth in order to induce another to part with something of value or to surrender a legal right” (Fraud, n.d.). However, not all fraud is intentional. According to Kranacher, Riley & Wells (2011), there are four elements to fraud: a material false statement, knowledge that the statement was false when it was spoken, reliance on the false statement by the victim, and damages resulting from the victim’s reliance on the false statements (pp. 2-3). Negligence within a company, also referred to as unintentional fraud, implies a party not living up to minimal standards of care (Kranacher, Riley & Wells, 2011, p. 61). When an employee commits an honest mistake without the intention of deceiving the employer or gaining an advantage over others is considered negligence. Negligence has five legal elements: duty, breach, cause in fact, proximate case, and damages (Kranacher, Riley & Wells, 2011, p. 61). All elements need to be present for negligence to be considered. In 2001, Enron became the center of one of the biggest fraud scandals of the decade. The executive officers Kenneth Lay, Andrew Fasto, Jeffrey Skilling including the accounting firm Arthur Andersen committed the biggest financial fraud against its employees and stakeholders. Enron’s officers drove the company into bankruptcy causing thousands of employees to lose their jobs as well several billions of dollars in lost retirement accounts (Kranacher, Riley & Wells...
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...Running head: INDIVIDUAL PROJECT: Forensic Accountants: Fraud Busters 1 Individual Project: Forensic Accountants: Fraud Busters Pamela Turner Professor Ann Nelson Contemporary Business 508 February 13, 2013 Strayer University INDIVIDUAL PROJECT: Forensic Accountants: Fraud Busters 2 Individual Project: Forensic Accountants: Fraud Busters Determine the most important five skills that a forensic accountant needs to possess and evaluate the need for each skill. Be sure to include discussion regarding the relationship between the skill and its application to business operations. The age of information technology there is a definite rise in computer crimes, financial frauds, employee thefts and securities scams, insurance and bank frauds. The forensic accountant searches out fraud and criminal transactions in banking, corporate entity or from any other financial records within an organization. Forensic accountants take a more proactive, skeptical approach in examining books of accounting. The base of a forensic accountant is accounting knowledge. The dispersement of the knowledge of auditing, internal controls, risk assessment and fraud detection. There must be a basic or general understanding of the legal environment. The legal environment is essential in order to support the litigation. A strong set of communication skills both oral and written (Houck, 2006). Forensic...
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...agreement between 2 or more entities to do or not to do something with consideration for which the law provides a remedy (enforceability). Reason we have contract law is so that we have business. Without a contract you can only have bargain (exchange). There are 5 elements in the contact: 1. offer-a manifestation of willingness to enter into a legally enforceable contract 2. acceptance- a meeting of the minds and the mirror image rule 3. consideration- anything of value (money, airplane ticket) ------------------------------------------------------------------------------------------------------------ 4. capacity- adjudication of incompetency and minority(a judge has to grant incapacity) 5. legal subject matter If missing one of these elements you have a quasi contract: we will still enforce the contract even if one of these elements is missing. Promissory estoppel- when there’s some potential of one of these issue (reasonable believe that there was a meaning of the mind) Contract in writting 4 corners rule Parole evidence Even thought the document says you cannot go outside 4 corners there are 4 examples where it can be 1. omitted 2. ambiguous 3. misrepresentation 4. fraud Purpose of the contract is a preventative tool. If an issue occurs then you have proof to refer to...
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... the contracting parties must have clearly and deliberately conferred a favor upon a 3rd person; 3. the 3rd person must have communicate his acceptance; 4. neither of the contracting parties bears the legal representation of the 3rd party. General Rule: Contracts (except real contracts) are perfected from the moment there is a manifestation of concurrence between the offer and the acceptance regarding the object and the cause. Except: Acceptance by letter or telegram which does not bind the offerror except from the time it came to his knowledge. Theories applied to perfection of contracts: 1. Manifestation theory - the contract is perfected from the moment the acceptance is declared or made; 2. Expedition theory - the contract is perfected from the moment the offeree transmits the notification of acceptance to the offerror; 3. Reception theory - the contract is perfected from the moment that the notification of acceptance is in the hands of the offerror; 4. Cognition theory - the contract is perfected from the moment the acceptance comes to the knowledge of the offerror. This is the theory adopted in the Philippines. Persons incapacitated to give consent: 1. Unemancipated minors; Except: 1. Contracts for necessaries; 2. Contracts by guardians or legal representatives; 3. Contracts where the minor is estopped to urge minority through his own misrepresentation; 4. Contracts of deposit with the Postal Savings...
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...losses for victims of cybercrime is complicated and could be very time consuming, not to mention very costly. Although, after winning the lawsuit, lawyer fees can be asked to be compensated, but in the beginning, the lawyer fees are the company’s or individual’s responsibility. It requires adequate measures for dressing of the grievances. The involvement of political parties in personal and political white-collar crimes are challenges for an effective legal system. The economic conditions and lack of jobs lead to vocational crimes. White-collar legislation: There are multiple types of white-collar crime and the case law has recognized several types. It is evident that insider trading has been recognized well before other cybercrimes as an important type of white-collar crime. The provisions of law as well as the remedies available for white-collar crime are developed and improved frequently in today’s world. The changes in technology and online presence of shopping, trading, and e-commerce activity is also prone to fraud and numerous other crimes. The online identities are used in several ways by criminals to unlawfully damage the financial, business, and trade position of individuals and corporations (Friedrichs, 2009). It us observed that case laws provide...
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