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Midterm Ch. 1-14 - Flashcards

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Class:BUL 4310 - The Legal Environment of Business
Subject:Business Law
University:Florida International University
Term:Spring 2013
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Constitutional Law


The law as expressed in the U.S. Constitution and the state constitutions. The U.S.

Constitution is the supreme law of the land. State constitutions are supreme within

state borders to the extent that they do not violate a clause of the U.S. Constitution

or a federal law.

Statutory Law

Laws (statutes and ordinances) enacted by federal, state, and local legislatures and

governing bodies. None of these laws may violate the U.S. Constitution or the

relevant state constitution. Uniform laws, when adopted by a state, become

statutory law in that state.

Administrative Law

The rules, orders, and decisions of federal, state, or local government administrative

agencies.

Case Law and Common Law Doctrines

Judge-made law, including interpretations of constitutional provisions, of statutes

enacted by legislatures, and of regulations created by administrative agencies.

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Origins of the Common Law

The American legal system is based on the common law tradition, which originated

in medieval England. Following the conquest of England in 1066 by William the

Conqueror, king’s courts were established throughout England, and the common

law was developed in these courts.

Legal and Equitable Remedies

The distinction between remedies at law (money or items of value, such as land)

and remedies in equity (including specifi c performance, injunction, and rescission of

a contractual obligation) originated in the early English courts of law and courts of

equity, respectively.

Case Precedents and the Doctrine of Stare Decisis

In the king’s courts, judges attempted to make their decisions consistent with previous

decisions, called precedents. This practice gave rise to the doctrine of stare

decisis. This doctrine, which became a cornerstone of the common law tradition,

obligates judges to abide by precedents established in their jurisdictions.

Stare Decisis and Legal Reasoning

Legal reasoning is the reasoning process used by judges in applying the law to the

facts and issues of specifi c cases. Legal reasoning involves becoming familiar with

the key facts of a case, identifying the relevant legal rules, applying those rules to

the facts, and drawing a conclusion. In applying the legal rules to the facts of a case,

judges may use deductive reasoning, linear reasoning, or reasoning by analogy.

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Natural Law School

One of the older and more signifi cant schools of legal thought. Those who believe

in natural law hold that there is a universal law applicable to all human beings.

This law is discoverable through reason and is of a higher order than positive

(national) law.

Positivist School

A school of legal thought centered on the assumption that there is no law higher

than the laws created by the government. Laws must be obeyed, even if they are

unjust, to prevent anarchy.

Historical School

A school of legal thought that stresses the evolutionary nature of law and looks

to doctrines that have withstood the passage of time for guidance in shaping

present laws.

Legal Realism

A school of legal thought that advocates a less abstract and more realistic and

pragmatic approach to the law and takes into account customary practices and

the circumstances surrounding the particular transaction. Legal realism strongly

infl uenced the growth of the sociological school of jurisprudence, which views

law as a tool for promoting social justice.

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Ordinances

statutes (laws, rules, or orders) passed by municipal

or county governing units to govern matters not covered

by federal or state law ;commonly have to do with city or county land use (zoning ordinances), building and safety codes, and other matters affecting the local community

Uniform Laws

model laws, for the states to consider adopting

Uniform Commercial Code (UCC)

All fifty states, the District of Columbia, and the Virgin

Islands have adopted the UCC. It facilitates commerce

among the states by providing a uniform, yet

flexible, set of rules governing commercial transactions

Administrative Law

consists of the rules, orders, and decisions of administrative agencies

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Administrative Agency

a federal, state, or local government agency established to perform a specific

function

Executive Agencies

are subject to the authority of the president, who has the power to appoint and remove their officers

Independent Regulatory Agencies

the president’s power is less pronounced in regard to independent agencies, whose officers serve for fixed terms and cannot be removed without just cause.

Case Law

the doctrines and principles announced in cases—governs all areas not covered

by statutory law or administrative law and is part of our common law tradition

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Common Law

a body of general rules that applied throughout the entire English realm

Remedies

the legal means to enforce a right or redress a wrong

Remedies at Law

Today, it normally takes the form of monetary damages

Courts of Law

courts that awarded compensation

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Damages

an amount given to a party whose legal interests have been injured

Equitable Maxims

propositions or general statements of equitable rules

Laches

an equitable doctrine that arose to encourage people to bring lawsuits while the evidence was fresh

(a term derived from the Latin laxus, meaning “lax” or “negligent”), and it

can be used as a defense

Defense

is an argument raised by the defendant (the party being sued) indicating

why the plaintiff (the suing party) should not obtain the remedy sought. (Note that in equity proceedings, the party bringing a lawsuit is called the petitioner, and the party being sued is referred to as the respondent.)

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Statutes of Limitations

after the time allowed under a statute of limitations has expired,

no action (lawsuit) can be brought, no matter how strong the case was originally

Precedent

a decision that furnished an example for deciding subsequent cases involving

identical or similar legal principles or facts

Stare Decisis

(a Latin phrase meaning “to stand on decided cases”) under this doctrine, judges are obligated to follow the precedents established within their jurisdictions

has two aspects: first, that decisions made by a higher court are binding on lower courts; and second, that a court should not overturn its own precedents unless there is a compelling reason to do so

Jurisdiction

refers to a geographic area in which a court or courts have the power to apply

the law

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Binding Authorities

is any source of law that a court must follow when deciding a case. Include constitutions, statutes, and regulations that govern the issue being decided, as well as court decisions that are controlling precedents within the jurisdiction

Cases of First Impression

the courts must decide cases for which no precedents exist

Legal Reasoning

is the reasoning process used by judges in deciding what law applies to a given

dispute and then applying that law to the specific facts or circumstances of the case. Through the use of this reasoning, judges harmonize their decisions

with those that have been made before, as the doctrine of stare decisis requires

Deductive/Syllogistic Reasoning

a logical relationship involving a major premise, a minor premise, and a conclusion

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Linear Reasoning

proceeds from one point to another, with the fi nal point being the conclusion

Analogy

is to compare the facts in the case at hand to the facts in previous cases and, to the extent that the patterns are similar, to apply the same rule of law to the

present case

Jurisprudence

involves learning about different schools of jurisprudential thought and discovering how the approaches to law characteristic of each school can affect judicial decision making

Civil Law

the rights and duties that exist between persons and between persons and

their governments, as well as the relief available when a person’s rights are violated

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Criminal Law

is concerned with wrongs committed against the public as a whole; are defined and prohibited by local, state, or federal government statutes

Cyberlaw

to refer to the emerging body of law that governs transactions conducted via the Internet

Judicial Review

enables the judicial branch to act as a check on the other two branches of government, in line with the system of checks and balances established by the

U.S. Constitution

Basic Judicial Requirements

-jurisdiction

-venue

-standing to sue

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In personam jurisdiction

(personal jurisdiction) over any person or business that resides in a certain geographic area

In rem jurisdiction

“jurisdiction over the thing.” exercise jurisdiction over property that is located within its boundaries

Long Arm Statute

a court can exercise personal jurisdiction over certain out-of-state defendants

based on activities that took place within the state. Must demonstrate minimum contacts first

Minimum Contacts

this means that the defendant must have enough of a connection to the state for the judge to conclude that it is fair for the state to exercise power over the defendant

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Probate Courts

are state courts that handle only matters relating to the transfer of a person’s assets and obligations after that person’s death, including issues relating to the custody and guardianship of children

Personal Jurisdiction

Exists when a defendant is located within the territorial boundaries within which a

court has the right and power to decide cases. Jurisdiction may be exercised over

out-of-state defendants under state long arm statutes. Courts have jurisdiction over

corporate defendants that do business within the state, as well as corporations that

advertise, sell, or place goods into the stream of commerce in the state.

Property Jurisdiction

Exists when the property that is subject to a lawsuit is located within the territorial

boundaries within which a court has the right and power to decide cases.

Subject Matter Jurisdiction

Limits the court’s jurisdictional authority to particular types of cases.

1. Limited jurisdiction—Exists when a court is limited to a specifi c subject matter,

such as probate or divorce.

2. General jurisdiction—Exists when a court can hear cases involving a broad array

of issues.

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Original Jurisdiction

Exists with courts that have the authority to hear a case for the first time (trial courts).

Appellate Jurisdiction

Exists with courts of appeal and review. Generally, appellate courts do not have

original jurisdiction.

Federal Jurisdiction

1. Federal questions—A federal court can exercise jurisdiction when the plaintiff’s

cause of action is based at least in part on the U.S. Constitution, a treaty, or a

federal law.

2. Diversity of citizenship—A federal court can exercise jurisdiction in cases between

citizens of different states when the amount in controversy exceeds $75,000,

between a foreign country and citizens of a state or of different states, or

between citizens of a state and citizens or subjects of a foreign country.

Concurrent Jurisdiction

Exists when both federal and state courts have authority to hear the same case.

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Exclusive Jurisdiction

Exists when only state courts or only federal courts have authority to hear a case.

Cyberspace Jurisdiction

Gradually, the courts are developing standards to use in determining when jurisdiction

over a Web site owner or operator in another state is proper. Jurisdictional

disputes involving international cyberspace transactions present a signifi cant legal

challenge.

Small claims courts

are inferior trial courts that hear only civil cases involving claims of less than a certain amount, such as $5,000. Conducted informally, lawyers are not required.

Writ of certiorari

an order issued by the Court to a lower court requiring the latter to send it the record of the case for review. The Court will not issue a writ unless

at least four of the nine justices approve of it (rule of four).

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Trial Courts

Trial courts are courts of original jurisdiction in which actions are initiated.

1. State courts—Courts of general jurisdiction can hear any case that has not been

specifi cally designated for another court; courts of limited jurisdiction include

domestic relations courts, probate courts, and small claims courts.

2. Federal courts—The federal district court is the equivalent of the state trial court.

Federal courts of limited jurisdiction include the bankruptcy courts

Intermediate Appellate Courts

Courts of appeals are reviewing courts; generally, appellate courts do not have original

jurisdiction. About three-fourths of the states have intermediate appellate courts;

in the federal court system, the U.S. circuit courts of appeals are the intermediate

appellate courts.

Supreme Courts

The highest state court is that state’s supreme court (it may be called by another

name). Appeal from state supreme courts to the United States Supreme Court is

possible only if a federal question is involved. The United States Supreme Court

is the highest court in the federal court system and the fi nal arbiter of the

Constitution and federal law.

voir dire

The jury selection process; attorneys ask oral questions to determine whether a potential jury member is biased or has any connection with a party to the action or with a prospective witness

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Opening Statements

Each party’s attorney is allowed to present an opening statement indicating what the

attorney will attempt to prove during the course of the trial.

Rules of Evidence

a series of rules that have been created by the courts to ensure that any evidence presented during a trial is fair and reliable

Relevant Evidence

evidence that tends to prove or disprove a fact in question or to establish the degree of probability of a fact or action

The Pleadings

1. The plaintiff’s complaint—The plaintiff’s statement of the cause of action and the

parties involved, fi led with the court by the plaintiff’s attorney. After the fi ling, the

defendant is notifi ed of the suit through service of process.

2. The defendant’s response—The defendant’s response to the plaintiff’s complaint

may take the form of an answer, in which the defendant admits or denies the

plaintiff’s allegations. The defendant may raise an affi rmative defense and/or

assert a counterclaim.

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Pretrial Motions

1. Motion to dismiss—May be made by either party; requests that the judge dismiss

the case for reasons that are provided in the motion (such as failure to state a

claim for which relief can be granted).

2. Motion for judgment on the pleadings—May be made by either party; will be

granted only if no facts are in dispute and only questions of law are at issue.

3. Motion for summary judgment—May be made by either party; will be granted

only if no facts are in dispute and only questions of law are at issue. Unlike the

motion for judgment on the pleadings, the motion for summary judgment may

be supported by evidence outside the pleadings, such as testimony and other

evidence obtained during the discovery phase of litigation.

Discovery

The process of gathering evidence concerning the case; involves (1) depositions

(sworn testimony by either party or any witness); (2) interrogatories (in which parties

to the action write answers to questions with the aid of their attorneys); and

(3) requests for admissions, documents, examinations, or other information relating

to the case. Discovery may also involve electronically recorded information.

Pretrial Conference

A pretrial hearing, at the request of either party or the court, to identify the matters in

dispute after discovery has taken place and to explore the possibility of settling the dispute without a trial. If no settlement is possible, the parties plan the course of the trial.

Jury Selection

In a jury trial, the selection of members of the jury from a pool of prospective jurors.

During voir dire, the attorneys for both sides may challenge prospective jurors either

for cause or peremptorily (for no cause).

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Closing Arguments, Jury Instructions, and Verdict

Each party’s attorney argues in favor of a verdict for his or her client. The judge

instructs (or charges) the jury as to how the law applies to the issue, and the jury

retires to deliberate. When the jury renders its verdict, this brings the trial to an end.


Examination of Witnesses

1. Plaintiff’s introduction and direct examination of witnesses, cross-examination

by defendant’s attorney, possible redirect examination by plaintiff’s attorney, and

possible recross-examination by defendant’s attorney.

2. Both the plaintiff and the defendant may present testimony from one or more

expert witnesses.

3. At the close of the plaintiff’s case, the defendant may make a motion for a

directed verdict (or judgment as a matter of law), which, if granted by the court,

will end the trial before the defendant presents witnesses.

4. Defendant’s introduction and direct examination of witnesses, cross-examination

by plaintiff’s attorney, possible redirect examination by defendant’s attorney, and

possible recross-examination by plaintiff’s attorney.

5. Possible rebuttal of defendant’s argument by plaintiff’s attorney, who presents

more evidence.

6. Possible rejoinder by defendant’s attorney to meet that evidence.

Alternative Dispute Resolution (ADR) -describes any procedure or device for resolving disputes outside the traditional judicial process
- less expensive & less time consuming than litigation
- advantage of being more private; no public record is published
- online methods available to resolve disputes
- more than 90% of cases are settled before going to trial in this manner

Negotiation - simplest form of ADR
- parties come together informally, with or without attorneys to represent them
- being well-prepared results in a likely favorable outcome
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Mediation - one of the oldest forms of ADR
- a neutral third party acts as a mediator & works with both sides in the dispute to facilitate a resolution
- emphasizes points of agreement between parties
- may propose a solution, called a mediator's proposal
- mediator is selected by the parties based on their expertise in the relevant field
Arbitration - more formal method of ADR
- neutral third party or panel of experts hears a dispute & makes a decision for both parties
- parties can agree to legally binding or nonbinding arbitration
The Federal Arbitration Act - does not establish a set arbitration procedure
- the parties must agree on the manner of resolving their dispute
- provides the means for enforcing the procedures that the parties have chosen 
covers any arbitration clause in a contract that involves interstate commerce
The Arbitration Process 1. Submission - referring a dispute to an arbitrator
2. Hearing - evidence and arguments are presented to the arbitrator
3. Award - the decision of the arbitrator (must be made within 30 days of closing the hearing)
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American Arbitration Association (AAA) - major source or private arbitration
- has offices in every state & settles over 200,000 disputes per year
- non profit organization
- cases are heard by experts in the relevant field
- provides services for international and domestic disputes

Online Dispute Resolution (ODR) - dispute resolution services using the Internet
- most commonly involve disagreements over the rights to domain names or disagreements over the quality of goods sold online
Moral Minimum minimum acceptable standard for ethical business behavior considered to be in compliance with the law
Sarbanes-Oxley Act requires companies to set up confidential systems, sometimes online, so that employees can "raise red flags" about suspected illegal activities and unethical auditing or accounting practices
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Stock buyback - management of corporations believe their stock prices are "below fair value"
- instead of issuing dividends to shareholders, management uses the company's funds to buy its shares in the open market, thereby boosting the price of the stock
- management benefits by selling their shares and making profit
- stock buyback is legal, but will most likely result in only short-run profit
Categorical Imperative - Immanuel Kant's belief that individuals should evaluate their actions in light of the consequences that would follow if everyone in society acted in the same way
- example: deciding whether or not to cheat on an exam; if everyone cheated, the exam would be meaningless
Principle of rights - also known as "rights theory"
- believe that a key factor in determining whether a business decision is ethical is based on how that decision affects the rights of others (owners, employees, consumers, suppliers, community, and society)
Utilitarianism an action is morally correct, or "right," when it produces the greatest amount of good for the greatest number of people
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Corporate Social Responsibility - the idea that those who run corporations can and should act ethically and be accountable to society for their actions
- have a duty to shareholders & stakeholders (employees, community, society)
- corporations should behave as good citizens by promoting goals that society deems worthwhile & should take positive steps towards solving social problems
Foreign Corrupt Practices Act (FCPA) - prohibits US businesspersons from bribing foreign officials to secure beneficial contracts
- however, does not prohibit substantial sums made to minor officials who may help speed up a process
- requires all companies to keep detailed records that "accurately and fairly" report their financial activities (this assists in detecting illegal bribes)
- prohibits any person from giving false information to an accountant 
- business firms that violate this act may be fined up to $2 million
Federal form of government the national government and the states share sovereign power 
Sovereignty is the power of a state to do everything necessary to govern itself, such as making, executing, and applying laws; imposing and collecting taxes; making war and peace; and forming treaties or engaging in commerce with foreign nations.
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Police powers - state regulatory powers
- refers to the right of state governments to regulate private activities to protect or promote the public order, health, safety, morals, and general welfare
Privileges and Immunities Clase prevents the state from treating the nonresident differently from the resident when engaging in business activities in another state; such as, transferring property, seeking employment, accessing the court system
Full faith and credit clause - applies only to civil matters
- it ensures that rights established in one state under deeds, wills, and contracts will be honored in another state
- also ensures that any judicial decision with respect to such property rights will be honored and enforced in all states
- promotes mutual friendship among people from different states
Checks & balances allows each branch to limit the actions of the other 2 branches, preventing any one branch from exercising too much power
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Three branches of government 1. Legislateive - makes the laws
2. Executive - enforces the laws
3. Judicial - interprets the laws
Commerce clause - has had the greatest impact on business than any other provision in the constitution 
- provides the basis for the national government's regulation of state and local affairs (regulates business activities)


Supremacy clause - provides that the constitution, laws, and treaties of the US are "the Supreme Law of the Land."
- when there is a conflict between the federal and state laws, the state law is said to be invalid
- concurrent - when powers are shared by the federal gov and the states
Preemption when congress chooses to act exclusively in an area in which the federal gov and the states have concurrent powers
- prevents the federal gov or states from acting/making a decision
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Establishment clause - prohibits the gov from establishing a state-sponsored religion , as well as from passing laws the promote religion or show a preference for one religion over another
- requires the gov to accommodate religions
Free exercise clause - guarantees that a person can hold any religious belief they want, or hold no religious beliefs at all
- prevents the gov from forcing a person to do something that is contrary to their religious beliefs
- the gov can act only when the religious practices work against public welfare
- example: gov can require that a child receive medical vaccines if their life is in danger, regardless of their religious beliefs
Search warrant an order from a judge or other public official authorizing a search of seizure of property
- law officers must convince a judge that a search will result in evidence of a specific illegality
- must establish probable cause, which means the officers must have trustworthy evidence to convince a reasonable person that the proposed search or seizure is more likely justified than not
Due process clause - two aspects:
1. Procedural - requires that any gov decision to take life, liberty, property must be made equitably (give person proper notice and an opportunity to be heard)
2. Substantive - protects an individual's life, liberty, property against certain gov actions regardless of the fairness of the procedures used to implement them (limits what the gov may do)
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Equal protection clause - the gov cannot enact laws that treat similarly situated individuals differently
- when a law limits the liberty of some people, but not others, this clause is violated
- 3 tests for this clause:
1. Strict scrutiny - based on suspect trait such as race, origin, citizenship status (discrimination)
2. Intermediate scrutiny - gender (laws on rape, only women can get pregnant, therefore men and women would be treated differently)
3. Rational basis - based solely on rational explanations
Gramm-Leach-Bliley Act made pretexting (obtaining financial information by false means) illegal

Health Insurance Portability and Accountability Act (HIPAA) a person's medical records may not be used for purposes unrelated to healthcare or disclosed to others without the individuals' permission
USA Patriot Act - gives gov officials increased authority to monitor Internet based activities such as e-mail and website visits and to gain access to personal financial information and student information 
- law enforcement officials may now track e-mail and telephone communications of one party to gain information about another party; the gov must certify that the information to be obtained by this monitoring is relevant to an ongoing criminal investigation
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Administrative Agency Powers - can make legislative rules (substantive rules) that are as legally binding as laws that Congress passes
- can make interpretive rules, which declare policy and do not affect legal rights

Delegation doctrine - grants Congress the power to make administrative agencies that can create rules for implementing the laws
Administrative Procedure Act (APA)

provides that courts should “hold unlawful and set aside” agency

actions found to be “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law."

Notice-and-comment rulemaking involves 3 steps:
1. Notice of the proposed rulemaking - the agency publishes a notice of the proposed rulemaking proceedings in the Federal Register, a daily publication of the executive branch, stating where and when the proceedings will be held
2. Comment period - after publication, the agency must allow enough time for people to comment in writing on the proposed rule to express opinions and perhaps influence agency policy
3. Final rule - after the agency reviews all comments, it publishes the final rule in the Federal Register 
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Adjudication the process of resolving a dispute by presenting evidence and arguments before a neutral third party decision maker
Freedom of Information Act (FOIA) - requires the federal gov to disclose certain records to anyone on written request, even if no reason is given for the request
- all federal gov agencies must make their records available electronically on the Internet and other formats
- records must be accessible on the computer within a year of its creation
- agencies have 20 working days to respond to a request and fees are typically charged for use of the records
Government in the Sunshine Act - the open meeting law
- requires the establishment of procedures to let the public know about the scheduled meetings with enough time in advance
- contains certain exceptions that will not allow open meetings (criminal cases or future rulemaking)
Regulatory Flexibility Act - whenever a new regulation will have a significant impact upon many small entities, he agency must conduct a regulatory flexibility analysis in order to consider less burdensome alternatives
- small businesses must be alerted about forthcoming regulations 
- reduces record-keeping burdens for small businesses
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Small Business Regulatory Enforcement Fairness Act (SBREFA) - allows congress to review new federal regulations for at least 60 days before they take effect (this period gives opponents of the rules time to present their arguments to congress)
- authorizes the courts to enforce the Regulatory Flexibility Act (ensures that federal agencies will consider ways to reduce the economic impact of new regulations on small businesses)
Criminal Sanctions - designed to punish those who commit a crime and deter others from committing a similar crime in the future
- fines, jail, prison, probation, or death penalty
Felony - serious crimes punishable by death r by imprisonment for more than one year
Misdemeanor - less serious than crimes, punishable by a fine or by confinement for up to one year
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Petty offenses - a subset of misdemeanors
- jaywalking or violations of building codes

Criminal Liability - 2 elements must exist for a person to be convicted of a crime:
1. performance of a prohibited act; guilty act (actus reus)
2. specific state of mind, or intent, on the part of the actor; wrongful mental state (mens rea)
*these two elements must occur together
Actus reus - "guilty act"
- based on a person being punished for doing harm to a society
- for a crime to exist, the guilty act must do harm to a person or property
Criminal negligence - involves the mental state in which the defendant deviates away from the standard care that a reasonable person would use under the same circumstances
- the defendant is accused of taking a foreseeable risk that resulted in harm
- a homicide is classified as involuntary manslaughter when it results from criminal negligence (like Dr. Murray giving MJ a powerful sleep aid while knowing he was on other sedatives)
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Economic Espionage Act - makes the theft of trade secrets a federal crime
- also makes it a federal crime to buy or possess another person's trade secrets without that person's authorization
Comity - one nation will defer and give effect to the laws and judicial decrees of another country, as long as they are consistent with the law and public policy of the accommodating nation
- the US is required to honor other states' actions, but internationally, other nations other nations are not required to honor the actions of other nations
Expropriation - occurs when a gov seizes a privately owned business or privately owned goods for public use and awards just compensation
Confiscation - occurs when a gov seizes private property for an illegal purpose and without just compensation
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Doctrine of sovereign immunity - exempts foreign nations from the jurisdiction of US courts
- this rule was codified in the Foreign Sovereign
Immunities Act (FSIA)
- this act governs the circumstances in which an action may be brought into US court against a foreign nation
Import controls restrictions include:
- strict prohibitions
- quotas (number that could be imported)
- tariffs (taxes on imports)
Wholly owned subsidiary the parent company, which remains in the US, holds complete ownership of all the facilities in the foreign country, as well as total authority and control over all phases of the operation
Joint venture - the US company owns only part of the operation; he rest os owned by either local owners or y another foreign entity
- all of the firms involved in a joint venture share responsibilities, profits, and liabilities 
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Dumping - the sale of imported goods at a "less than fair value"
- fair value is usually determined by the price of those goods in the exporting country
- to prevent this, an extra tariff known as the antidumping duty may be assessed on imports
Normal trade relations (NTR) status - means that every member of the World trade organization (WTO) is obligated to treat other members as well as it treats the country that receives its most favorable treatments in regards to imports and exports
- helps minimize trade barriers (restriction on imports) between nations
Sherman Act - most important US antitrust law
- provides for extraterritorial effect of US antitrust laws
- the US is a major proponent of free competition on the global economy; therefore, any conspiracy that has a substantial effect on US commerce is within the reach of the Sherman Act
example: a conspiracy to fix prices for products sold to the US
Alien Tort Claims Act (ATCA) allows even foreign citizens (aliens) to bring civil suits in US courts for injuries caused by violations of the law of nations or a treaty of the US
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Contract Law - designed to provide stability, predictability, and certainty for both buyers and sellers
- deals with the formation and enforcement of agreements between parties
pacta sunt servanda "agreements shall be kept"
Contract “a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.” (textbook definition)
- a legally binding agreement between two or more parties who agree to perform or to refrain from performing some act now or in the future
4 requirements of a valid contract

1. Agreement. An agreement to form a contract includes an offer and an acceptance. One party must offer to enter into a legal agreement, and another party must accept the terms of the offer.

2. Consideration. Any promises made by the parties to the contract must be supported by legally sufficient and bargained-for consideration (something of value received or promised, such as money, to convince a person to make a deal).

3. Contractual capacity. Both parties entering into the contract must have the contractual capacity to do so. The law must recognize them as possessing characteristics that qualify them as competent parties.

4. Legality. The contract’s purpose must be to accomplish some goal that is legal and not against public policy.

Defenses to the enforceability of a contract

a contract may be unenforceable if the following requirements are not met:

1. Voluntary consent. The consent of both parties must be voluntary. For example, if a contract was formed as a result of fraud, undue influence, mistake, or duress, the contract may not be enforceable.

2. Form. The contract must be in whatever form the law requires. For example, some contracts must be in writing to be enforceable.

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Bilateral Contracts - a "promise for a promise"
- simply a promise to perform
- the contract comes into existence one the promises are exchanged
example: Javier offers to buy Ann’s digital camcorder for $200. Javier tells Ann that he will give her the $200 for the camcorder next Friday, when he gets paid. Ann accepts Javier’s offer and promises to give him the camcorder when he pays her on Friday. Javier and Ann have formed a bilateral contract.
Unilateral Contracts - a "promise for an act"
- offer can only be accepted by completing the contract performance
- the contract comes into existence at the moment the contract is actually performed
example: Reese says to Celia, “If you drive my car from New York to Los Angeles, I’ll give you $1,000.” Only on Celia’s completion of the act—bringing the car to Los Angeles—does she fully accept Reese’s offer to pay $1,000. If she chooses not to accept the offer to drive the car to Los Angeles, there are no legal consequences.
Revocation of Offers for Unilateral Contracts

For instance, recall the earlier example in which a car is to be driven from New York to Los Angeles. Now suppose that Celia is driving through Nevada and is only a few hundred miles from Los Angeles when Reese calls her on her cell phone and says, “I revoke my offer.” Under traditional contract law, Reese’s revocation would terminate the offer. Under the modern view of unilateral contracts, however, Reese will not be able to revoke his offer because Celia has undertaken performance and has driven more than 2,500 miles. In these circumstances, Celia can finish driving to Los Angeles and bind Reese to the contract.

Formal contracts

- are contracts that require a special form or method of creation (formation) to be enforceable

- one example is letters of credit, which are frequently used in international sales contracts

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Informal contracts (also called simple contracts) include all other contracts
- no special form is required (except for certain types of contracts that must be in writing), as the contracts are usually based on their substance rather than their form
- typically, businesspersons put their contracts in writing to ensure that there is some proof of a contract’s existence should disputes arise
Express Contracts the terms of the agreement are fully and explicitly stated in words, oral or written
examples: A signed lease for an apartment or a house is an express written contract. If one classmate calls another on the phone and agrees to buy his textbooks from last semester for $300, an express oral contract has been made
Implied Contracts - a contract that is implied from the conduct of the parties
- this type of contract differs from an express contract in that the conduct of the parties, rather than their words, creates and defines the terms of the contract
Implied Contract Requirements

1. The plaintiff furnished some service or property.

2. The plaintiff expected to be paid for that service or property, and the defendant knew or should have known that payment was expected.

3. The defendant had a chance to reject the services or property and did not.

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Executed Contract a contract that has been fully performed on both sides 
Executory Contract a contract that has not been fully performed by the parties
- if one party has fully performed but the other has not, the contract is said to be executed on the one side and executory on the other, but the contract is still classified as executory
example: Jackson, Inc., agreed to buy ten tons of coal from the Northern Coal Company. Northern delivered the coal to Jackson’s steel mill, where it is being burned. At this point, the contract is executed on the part of Northern and executory on Jackson’s part. After Jackson pays Northern, the contract will be executed on both sides.
Voidable Contracts a valid contract but one that can be avoided at the option of one or both of the parties
The party having the option can elect either to avoid any duty to

perform or to ratify (make valid) the contract. If the contract is avoided, both parties are released from it. If it is ratifi ed, both parties must fully perform their respective legal obligations.

- Contracts made by minors, mentally incompetent persons, and intoxicated persons may be voidable

- Additionally, contracts entered into under fraudulent conditions are voidable

at the option of the defrauded party. Contracts entered into under legally defined duress or undue influence are also voidable.

Void Contracts - is no contract at all
- the terms void and contract are contradictory
- there are no legal obligations on the parties
example: a contract can be void because one of the parties was adjudged by a court to be legally insane (and thus lacked the legal capacity to enter into a contract) or because the purpose of the contract was illegal.
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Revocation - the offeror's act of withdrawing (revoking) an offer
- the offeror can revoke an offer as long as it is communicated to the offeree before the offeree accepts
Option Contracts - is created when an offeror promises to hold an offer open for a specified period of time in return for a payment given by the offeree
- offeror cannot revoke the offer for the specified time period in the option
- example: Tyrell agrees to lease a house from Jackson, the property owner. Included in the lease contract is a clause stating that Tyrell is paying an additional $15,000 for an option to purchase the property within a specifi ed period of time. If Tyrell decides not to purchase the house after the specifi ed period has lapsed, he loses the $15,000, and Jackson is free to sell the property to another buyer.

Silence as acceptance

For example, John is a student who earns extra income by washing store windows. John taps on the window of a store, catches the attention of the store’s manager, and points to the window and raises his cleaner, signaling that he will be washing the window. The manager does nothing to stop him. Here, the store manager’s silence constitutes an acceptance, and an implied contract is created. The store is bound to pay a reasonable value for John’s work. Silence can also operate as acceptance when the offeree has had prior dealings with the offeror.

Consideration is defined as the value (such as cash) given in return for a promise (in a bilateral contract) or in return for a performance (in a unilateral contract)
is broken down into two parts: 
1. something of legally sufficient value must be given in exchange for the promise
2. usually, there must be a bargained-for exchange
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Legally sufficient value may consist of:
1. a promise to do something that one has no prior legal duty to do
2. the performance of an action that someone is not obligated to do
3. the refraining from an action that someone has a legal right to do (called a forbearance)
Bargained-for exchange - the item of value must be given by the promisor (offeror) in return for the promise, performance, or promise of performance
- the promise/performance is the distinguishing factor of a contract and a gift
Rescission - the unmaking of a contract so as to return the parties to the positions that they occupied before the contract was made
- rescind - to cancel a contract
Past consideration - is no consideration
- promises made in return for actions or events that have already taken place are unenforceable
- a person can bargain for something to take place now or in the future but not for something that has already taken place
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Promissory Estoppel - also called detrimental reliance
- a person who has reasonably relied on the promise of another may be able to obtain some measure of recovery
- under this doctrine, a court may enforce an otherwise unenforceable promise in order to avoid an injustice that may occur 
Contractual capacity - the legal ability to enter into a contractual relationship
when a person is young, intoxicated, or mentally incompetent, capacity is lacking or may be questionable
Minors - age of majority for contractual purposes is 18 years
- emancipation may occur when a minor's parent decides to exercise control over the child
- a minor may petition a court to be treated as an adult
- a contract entered into by a minor may be voidable at the option of that minor, subject to certain exceptions
- the legal avoidance of a contractual obligation is referred to as disaffirmance
- to disaffirm, the minor must express in words or conduct not to be bound by the contract; and they must disaffirm from the whole contract, not just parts of it

Intoxication - a contract entered into by an intoxicated person may be voidable or valid (and enforceable)
- if the person was so intoxicated that it affected their mental capacity, then the contract may be voidable, even if they voluntarily chose to become intoxicated
- if the person understood the legal consequences of the agreement while being intoxicated, then the contract will still be valid and enforceable
- for the contract to be voidable, the person must prove that intoxication impaired their judgement so severely that they did not comprehend the legal consequences of entering into the contract
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Mental incompetence - if a court has previously determined that a person is mentally incompetent and has appointed a guardian to represent the individual, any contract made by the mentally incompetent person is void (no contract exists). Only the guardian can enter into a legally binding contract
- if a court has no previously judged a person to be mentally incompetent, the contract may be voidable if the person did not know what they were entering into or lacked the mental capacity to understand the agreement
- a contract entered into by a mentally incompetent person may be valid and enforceable if the person had mental capacity at the time the contract was formed
Statute of Frauds - contracts that MUST be in writing to be enforceable:

1. Contracts involving interests in land.

2. Contracts that cannot by their terms be performed within one year from the day after the date of formation.

3. Collateral, or secondary, contracts, such as promises to answer for the debt or duty of another and promises by the administrator or executor of an estate to pay a debt of the estate personally—that is, out of his or her own pocket.

4. Promises made in consideration of marriage.

5. Under the UCC, contracts for the sale of goods priced at $500 or more.

Discharge by Mutual Rescission (both parties agree to cancel a contract) the parties must make another agreement that also satisfies the legal requirements for a contract. There must be an offer, acceptance, and consideration. 
Anticipatory Repudiation before either party to a contract has a duty to perform, one of the parties may refuse to carry out their contractual obligations
- this is treated as a material breach (less than substantial)
- nonbreaching party is permitted to bring in action for damages immediately
- the repudiating party can retract their anticipatory repudiation and y proper notice and restore he parties to their original obligations
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Tender an unconditional offer to perform by a person who is ready, willing, and able to do so
Condition a possible future event, the occurrence or nonoccurrence of which will trigger the performance of a legal obligation or terminate an existing obligation under a contract
Discharge by performance there are 2 types of performances:
1. Complete performance - conditions expressly stated in a contract must be fully satisfied for complete performance
2. Substantial performance - a party who in good faith performs substantially all of the terms of a contract can enforce the contract against the other party under the doctrine of substantial performance. Intentional failure to comply with the terms is a breach of contract
Discharge by Settlement Agreement the two original parties to the contract form a different agreement to substitute for the original one
- in contrast to a novation, a settlement agreement does not involve a third party
an agreement will be substituted as a new contract, and it will either expressly or impliedly revoke and discharge the obligations under any prior contract
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Discharge by Accord and Satisfaction

An accord is a contract to perform some act to satisfy an existing contractual duty that is not yet discharged. A satisfaction is the performance of the

accord agreement. An accord and its satisfaction discharge the original contractual obligation. For a contract to be discharged by accord and satisfaction, the parties must agree to accept performance that is

different from the performance originally promised.

Discharge by Operation of Law 1. Alteration of the contract
2. Statutes of limitations - restricts the period of time in which a party can sue 
3. Bankruptcy - collects the debtor's assets in a fair manner
4. Impossibility or impracticability of performance 
- when one of the parties to the contract dies or becomes incapacitated prior to performance
- when the specific subject matter of the contract is destroyed
- when a change in law makes the performance illegal
5. Commercial Impracticability - when an event makes the performance much more difficult or expensive, but not impossible
6. Frustration of purpose - a contract will be discharged if circumstances make it impossible to attain the purpose both parties wanted in the contract
Damages

There are four broad categories of damages:

1. Compensatory (to cover direct losses and costs).

2. Consequential (to cover indirect and foreseeable losses).

3. Punitive (to punish and deter wrongdoing).

4. Nominal (to recognize wrongdoing when no monetary loss is shown).

Mitigation of Damages

when a breach of contract occurs, the innocent injured party is held to a duty

to mitigate, or reduce, the damages that he or she suffers.

example: a wrongfully terminated employee has the duty to take a job if a similar one is available.

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Liquidated Damages Provisions

- specifies that a certain dollar amount is to be paid in the event of a future default or breach of contract. (Liquidated means determined, settled, or fixed.)

- example: a provision requiring a construction contractor to pay $300 for every day he or she is late in completing the project is a liquidated damages

provision.

- Liquidated damages provisions are frequently used in construction contracts and for the sale of goods.

Penalty

specifies a certain amount to be paid in the event of a default or breach of contract and is designed to penalize the breaching party. Liquidated damages

provisions usually are enforceable. In contrast, if a court fi nds that a provision calls for a penalty, the agreement as to the amount will not be enforced.

Equitable Remedies 1. Rescission and restitution - returning goods, property, or funds previously obtained
2. Specific performance - calls for the performance of the act promised in the contract (usually something unique that cannot be compensated for by monetary damages)
3. Reformation - used when the parties have imperfectly expressed their contract agreement in writing (reformation allows a court to rewrite the contract to reflect the parties' true intentions). This usually occurs when fraud or mutual mistake is present
Election of remedies

- to prevent double recovery. 

Suppose that McCarthy agrees in writing to sell his land to Tally. Then McCarthy changes his mind and repudiates the contract. Tally can sue for compensatory damages or for specific performance. If Tally could seek compensatory damages in addition to specific performance, she would recover twice for the same breach of contract. The doctrine of election of remedies requires Tally to choose the remedy she wants, and it eliminates any possibility of double recovery.

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Waiver of breach

The waiver erases the past breach in order to keep the contract going. The contract continues as if the breach had never occurred. Of course, the waiver of breach of contract extends only to the matter waived and not to the whole contract. Ordinarily, a waiver by a contracting party will not operate to waive subsequent, additional, or future breaches of contract that are unrelated to the first breach. 

Predominant-factor test

to determine whether a contract is primarily for the sale of goods or for the sale of services. If a court decides that a mixed contract is primarily a goods contract, any dispute, even a dispute over the services portion, will be

decided under the UCC (Uniform Commercial Code).

Merchant a person who deals in goods of the kind in the contract, who possesses expert knowledge specifically related to the goods being sold, or a person who employs a merchant as a broker, agent, or other intermediary has the status of a merchant.
Article 2: The sale of goods

First, Article 2 deals with the sale of goods. It does not deal with real property (real estate), services, or intangible property such as stocks and bonds. Thus, if the subject matter of a dispute is goods, the UCC governs. If it is real estate or services, the common law applies. Second, in some situations, the rules may vary quite a bit, depending on whether the buyer or the seller is a merchant. 

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Article 2A: Leases

Article 2A is essentially a repetition of Article 2, except that it applies to leases of goods rather than sales of goods and thus varies to reflect differences between sales and lease transactions. (Note that Article 2A is not concerned with leases of real property, such as land or buildings.) A lessor is one who transfers the right to the possession and use of goods under a lease. A lessee is one who acquires the right to the possession and use of goods under a lease. In other words, the lessee is the party who is leasing the goods from the lessor.

Requirements contract

the buyer agrees to purchase and the seller agrees to sell all or up to a stated amount of what the buyer needs or requires. There is implicit consideration in a requirements contract because the buyer gives up the right to buy from any other seller, and this forfeited right creates a legal detriment. Requirements contracts are common in the business world and normally are enforceable.

Output contract

the seller agrees to sell and the buyer agrees to buy all or up to a stated amount of what the seller produces. Again, because the seller essentially forfeits the right to sell goods to another buyer, there is implicit consideration in an output contract.

Merchants firm offer

arises when a merchant-offeror gives assurances in a signed writing that the offer

will remain open. The merchant’s firm offer is irrevocable without the necessity of consideration for the stated period or, if no defi nite period is stated, a

reasonable period.

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Communication of acceptance

The UCC is more stringent than the common law in this regard because it requires notification. Under the UCC, if the offeror is not notified within a reasonable time that the offeree has accepted the contract by beginning performance, then the offeror can treat the offer as having lapsed before acceptance.

Identification

takes place when specific goods are designated as the subject matter of a sales

or lease contract. Title and risk of loss cannot pass to the buyer from the seller unless the goods are identified to the contract.

- If the contract calls for the sale or lease of specifi c and ascertained goods that are already in existence, identifi cation takes place at the time the contract is made.

- In a sale or lease of any other future goods, identifi cation occurs when the goods are shipped, marked, or otherwise designated by the seller or lessor as the goods to which the contract refers.

Shipment contract

the seller is required or authorized to ship goods by carrier, such as a trucking

company. Under a shipment contract, the seller is required only to deliver the goods into the hands of a carrier, and title passes to the buyer at the time

and place of shipment.

- a contract is assumed to be a shipment contract if nothing to the contrary is stated in the contract.

Destination contract

the seller is required to deliver the goods to a particular destination, usually

directly to the buyer, but sometimes to another party designated by the buyer. Title passes to the buyer when the goods are tendered at that destination.

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Document of title

title passes to the buyer when and where the document is delivered. If the goods are stored in a warehouse, title passes to the buyer when the appropriate documents are delivered to the buyer. The goods never move. When no document of title is required, and delivery is made without moving the goods, title passes at the time and place the sales contract is made, if the goods have already been identifi ed. If the goods have not been identifi ed, title does not pass until identification occurs.

Insurable interest

A buyer or lessee has an insurable interest in identified goods. The moment the contract goods are identified by the seller or lessor, the buyer or lessee has a special property interest that allows the buyer or lessee to obtain the necessary insurance coverage for those goods, even before the risk of loss has passed.

Perfect tender rule

The UCC preserves the perfect tender doctrine by stating that if goods or tender of delivery fails in any respect to conform to the contract, the buyer or lessee has the right to accept the goods, reject the entire shipment, or accept part and reject part.

Cure

- refers to the right of the seller or lessor to repair, adjust, or replace defective or nonconforming goods

- when any delivery is rejected because of nonconforming goods and the time for performance has not yet expired, the seller or lessor can attempt to “cure” the

defect within the contract time for performance

- to do so, the seller or lessor must timely notify the buyer or lessee

of the intention to cure

- once the time for performance under the contract has expired, the seller or

lessor can still exercise the right to cure if he or she has reasonable grounds to believe that the nonconforming tender will be acceptable to the buyer or lessee

- buyers and lessees must act in good faith and state specific reasons for refusing to accept goods

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Assurance and Cooperation

The UCC provides that if one of the parties to a contract has “reasonable grounds” to believe that the other party will not perform as contracted, they may in writing “demand adequate assurance of due performance” from the other party. Until such assurance is received, she or he may “suspend” further performance without liability. The party can hold the uncooperative party in breach or proceed to perform the contract in any reasonable manner.

Cover buyers and lessees can protect themselves by obtaining cover - by buying or leasing substitute goods for those that were due under the contract. This option is available when the seller repudiates the contract or fails to deliver the goods. 
Replevin

is an action to recover identified goods in the hands of a party who is unlawfully withholding them. Under the UCC, a buyer or lessee can replevy goods identified to the contract if the seller or lessor has repudiated or breached the contract.

Warranties of Title 3 types of title warranties:
1. Good title - sellers warrant that they have a good and valid title to the goods sold and and that the transfer of the title is rightful
2. No liens - protects buyers who are unaware of any claims, charges, or liabilities (liens) against goods at the time the contract is made. Basically, protects buyers who unknowingly purchased goods that are subject to a creditor's security interest (an interest on the goods that secure payments or performance of an obligation)
3. No infringements - when the seller is a merchant, they automatically warrant that the buyer takes the goods free of infringements. Basically, the merchant promises that the goods delivered are free from any copyright, trademark, or patent claims
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Express Warranties - a seller can create this type of warranty by making representations concerning the quality, condition, description, or performance potential of the goods
- express warranties are made when:
1. the goods conform to any fact or promise that the buyer has made to the seller (this drill will easily penetrate through stainless steel)
2. the goods conform to any description of them (150 horsepower diesel engine)
3. the goods conform to any sample or model shown to the buyer
- can be found in a seller's advertisement, brochure, or promotional materials in addition to being made orally in a sales or lease contract
Puffery - an expression of opinion by a seller that is not made as a representation of fact
- example: seller’s opinion that the vehicle is “the best used car to come along in years,” however, is known as “puffery” and creates no warranty.
Implied Warranties is a warranty that the law derives based on merchants implying that the goods they sell or lease are merchantable, and in some circumstances, fit for a particular purpose.

Implied warranty of merchantability

Every sale or lease of goods made by a merchant who deals in goods of the kind sold or leased automatically gives rise to this type of warranty.

- example: a merchant who is in the business of selling ski equipment makes an implied warranty of merchantability every time he sells a pair of skis. A neighbor selling her skis at a garage sale does not (because she is not in the business of selling goods of this type).

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Merchantable Goods goods must be “reasonably fit for the ordinary purposes for which such goods are used.”
must be of at least average, fair, or medium-grade quality
quality must be comparable to quality that will pass without objection in the trade or market for goods of the same description
the goods must also be adequately packaged and labeled, and they must conform to the promises or affirmations of fact made on the container or label, if any
Merchantable Food

The UCC treats the serving of food or drink to be consumed on or off the premises as a sale of goods subject to the implied warranty of merchantability.

- “Merchantable” food is food that is fi t to eat on the basis of consumer expectations.

Implied warranty of fitness for a particular purpose

arises when any seller (merchant or nonmerchant) knows the particular

purpose for which a buyer or lessee will use the goods and knows that the buyer  is relying on the skill and judgment of the seller to select suitable goods

- Goods can be merchantable but unfit for a particular purpose

- example: you need a gallon of paint to match the color of your living room walls— a light shade somewhere between coral and peach. You take a sample to your local hardware store and request a gallon of paint of that color. Instead,

you are given a gallon of bright blue paint. Here, the salesperson has not breached any warranty of implied merchantability—the bright blue paint is of high quality and suitable for interior walls—but she or he has breached an implied warranty of fitness for a particular purpose.

E-contracts

- must meet the same basic requirements (agreement, consideration, contractual

capacity, and legality) as paper contracts

- online contracts may be formed not only for the sale of goods and services but also for licensing. The “sale” of software generally involves a license, or a right to use the software, rather than the passage of title (ownership rights) from the seller to the buyer

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Forum-selection clause indicates the forum, or location (such as a court or jurisdiction), in which contract disputes will be resolved
will help to avert future jurisdictional problems and to ensure that the seller will

not be required to appear in court in a distant state (since online transactions can occur in any state)

Choice-of-law clause the parties specify that any dispute arising out of the contract will be settled in accordance with the law of a particular jurisdiction, such as a state or country
particularly common in international contracts, but they may also appear in e-contracts to specify which state’s laws will govern in the US
Click-on agreement

(sometimes referred to as a click-on license or click-wrap agreement)

- courts have used the Restatement and UCC provisions to conclude that a

binding contract can be created by conduct, including the act of clicking on a box indicating “I accept” or “I agree” to accept an online offer

- the law does not require that the parties have read all of the terms in a contract for it to be effective. Therefore, clicking on a box that states “I agree” to certain terms can be enough.


Shrink-wrap agreement

(or shrink-wrap license)

- the terms are expressed inside the box in which the goods are packaged

- the term shrink-wrap refers to the plastic that covers the box

- the party who opens the box is told that she or he agrees to the terms by keeping whatever is in the box

- a shrink-wrap agreement is not between a retailer and a buyer, but between the

manufacturer of the hardware or software and the ultimate buyer-user of the product

- terms generally concern warranties, remedies, and other issues associated with the use of the product

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Browse-wrap terms can occur in transactions conducted over the Internet
a person can install the software without clicking “I agree” to the terms of a license (unlike the click-on agreements)
- browse-wrap terms are often unenforceable because they do not satisfy the agreement requirement of contract formation
Uniform Electronic Transactions Act (UETA) the UETA has been adopted, at least in part, by 48 states
the UETA declares that a signature may not be denied legal effect or enforceability solely because it is in electronic form
- the UETA does not apply to a transaction unless each of the parties has previously agreed to conduct transactions by electronic means

Electronic Signatures in Global and National Commerce Act (E-SIGN Act) provides that no contract, record, or signature may be “denied legal effect” solely because it is in electronic form
under this law, an electronic signature is as valid as a signature on paper, and an e-document can be as enforceable as a paper one
Tort law

designed to compensate those who have suffered a loss or injury due to another person’s wrongful act. In a tort action, one person or group brings a lawsuit against another person or group to obtain compensation (monetary damages) or other relief for the harm suffered

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Compensatory damages

intended to compensate or reimburse a plaintiff for actual losses—that is, to make the plaintiff whole and put her or him in the same position that she or he would have been in had the tort not occurred

2 types of damages:

1. Special damages - compensate the plaintiff for quantifiable monetary losses, such as medical expenses, lost wages and benefi ts (now and in the future), extra costs, the loss of irreplaceable items, and the costs of repairing or replacing damaged property 

2. General damages - compensate individuals (not companies) for the nonmonetary aspects of the harm suffered, such as pain and suffering. A court might award general damages for physical or emotional pain and suffering, loss of companionship, loss of consortium (losing the emotional and physical benefits of a spousal relationship), disfigurement, loss of reputation, or loss or impairment of mental or physical capacity

Assault and Battery An assault is any intentional and unexcused threat of immediate harmful or offensive contact, including words or acts that create in another person a reasonable apprehension of harmful contact. An assault can be completed even if there is no actual contact with the plaintiff, provided that the defendant’s conduct creates a reasonable apprehension of imminent harm in the plaintiff.
The completion of the act that caused the apprehension, if it results in harm to the plaintiff, is a battery, which is defi ned as an unexcused and harmful or offensive physical contact intentionally performed
- example: Ivan threatens Jean with a gun, then shoots her. The pointing of the gun at Jean is an assault; the fi ring of the gun (if the bullet hits Jean) is a battery
False Imprisonment the intentional confinement or restraint of another person’s activities without

justifi cation

- interferes with the freedom to move without restraint

- Businesspersons often face suits for false imprisonment after they have attempted to confine a suspected shoplifter for questioning. Under the “privilege to detain” granted to merchants in most states, a merchant can use reasonable force to detain or delay persons suspected of shoplifting and hold them for the police. Although laws vary from state to state, most states require that any detention be conducted in a reasonable manner and for only a reasonable length of time

Intentional Infliction of Emotional Distress

The tort of intentional infl iction of emotional distress is an intentional act that amounts to extreme and outrageous conduct resulting in severe emotional

distress to another. To be actionable (capable of serving as the ground for a lawsuit), the act must be extreme and outrageous to the point that it exceeds the bounds of decency accepted by society

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Defamation

of character involves wrongfully hurting a person’s good reputation. The law

imposes a general duty on all persons to refrain from making false, defamatory statements of fact about others. Breaching this duty in writing or other permanent form (such as a digital recording) involves the tort of libel. Breaching this duty

orally involves the tort of slander.

- tort of defamation also arises when a false statement of fact is made about a person’s product, business, or legal ownership rights to property

Invasion of Privacy A person has a right to solitude and freedom from prying public eyes—in other words, to privacy

- Tort law also safeguards these rights through the tort of invasion of privacy

- 4 acts can qualify as invasions of privacy:

1. Appropriation of identity. Under the common law, using a person’s name, picture, or other likeness for commercial purposes without permission is a tortious invasion of privacy

2. Intrusion into an individual’s affairs or seclusion. For example, invading someone’s home or searching someone’s personal computer without authorization is an invasion of privacy

3. False light. The publication of information that places a person in a false light is another categoryof invasion of privacy. This could be a story attributing to someone ideas not held or actions not taken by that person

4. Public disclosure of private facts. This type of invasion of privacy occurs when a person publicly discloses private facts about an individual that an ordinary

person would fi nd objectionable or embarrassing (sex life or financial affairs)

Appropriation

The use of another person’s name, likeness, or other identifying characteristic, without permission and for the benefit of the user, constitutes the tort of appropriation (sometimes referred to as the right of publicity). Under the law, an individual’s right to privacy normally includes the right to the exclusive

use of his or her identity. 

Fraudulent Misrepresentation

- involves intentional deceit for personal gain

The tort includes several elements:

1. A misrepresentation of material facts or conditions with knowledge that they are false or with reckless disregard for the truth.

2. An intent to induce another party to rely on the misrepresentation.

3. A justifi able reliance on the misrepresentation by the deceived party.

4. Damages suffered as a result of that reliance.

5. A causal connection between the misrepresentation and the injury suffered.

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Abusive or Frivolous Litigation

- If the party that initiated a lawsuit did so out of malice and without probable cause (a legitimate legal reason), and ended up losing that suit, the party can be sued for malicious prosecution. 

- Abuse of process can apply to any person using a legal process against another in an improper manner or to accomplish a purpose for which the process was not designed.

Business torts

apply only to wrongful interferences with the business rights of others.

Business torts generally fall into 2 categories—

interference with a contractual relationship and

interference with a business relationship

Wrongful Interference with a Contractual Relationship

3 elements are necessary for wrongful interference with a contractual relationship to occur:

1. A valid, enforceable contract must exist between two parties.

2. A third party must know that this contract exists.

3. This third party must intentionally induce a party to the contract to breach the contract

Wrongful Interference with a Business Relationship

Attempting to attract customers in general is a legitimate business practice,

whereas specifically targeting the customers of a competitor is more likely to be predatory.

- A plaintiff must prove that the defendant used predatory methods to intentionally harm an established business relationship or prospective economic advantage. The plaintiff must also prove that the defendant’s interference

caused the plaintiff to suffer economic harm.

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Trespass to Land

The tort of trespass to land occurs any time a person, without permission, enters onto, above, or below the surface of land that is owned by another; causes anything to enter onto the land; or remains on the land or permits anything to remain on it. 

- Common types of trespass to land include walking or driving on another’s land; shooting a gun over another’s land; throwing rocks at or spraying water on a building that belongs to someone else; building a dam across a river, thereby causing water to back up on someone else’s land; and constructing one’s building so that it extends onto an adjoining landowner’s property.

Trespass to Personal Property

Whenever any individual wrongfully takes or harms the personal property of another or otherwise interferes with the lawful owner’s possession and enjoyment of personal property, trespass to personal property occurs. This tort may also be called trespass to chattels or trespass to personalty.

- examples: If Kelly takes Ryan’s business law book as a practical joke and hides it so that Ryan is unable to find it for several days before the fi nal examination, Kelly has engaged in a trespass to personal property.

Conversion

Whenever a person wrongfully possesses or uses the personal property of another without permission, the tort of conversion occurs. Any act that deprives an owner of personal property or of the use of that property without that owner’s permission and without just cause can be conversion.

- when conversion occurs, a trespass to personal property also occurs because the original taking of the personal property from the owner was a trespass, and wrongfully retaining it is conversion.

- example: Chen borrows Mark’s iPad to use while traveling home from school for the holidays. When Chen returns to school, Mark asks for his iPad back, but Chen says that he gave it to his little brother for Christmas. In this situation, Mark can sue Chen for conversion, and Chen will have to either return the iPad or pay damages equal to its value.

Disparagement of Property

occurs when economically injurious falsehoods are made about another’s product or property rather than about another’s reputation (as in the tort of defamation).

- is a general term for torts that can be more specifically referred to as slander of

quality or slander of title.

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Slander of quality (or trade libel)
- the publication of false information about another’s product, alleging that

it is not what its seller claims.

- the plaintiff must prove that the improper publication caused a third person to

refrain from dealing with the plaintiff and that the plaintiff sustained economic damages (such as lost profits) as a result.

Slander of title

When a publication falsely denies or casts doubt on another’s legal ownership of

property, resulting in fi nancial loss to the property’s owner.

- this is an intentional tort in which someone knowingly publishes an untrue statement about another’s ownership of certain property with the intent of

discouraging a third person from dealing with the person slandered.

- example: it would be diffi cult for a car dealer to attract customers after competitors published a notice that the dealer’s stock consisted of stolen automobiles

Negligence

occurs when someone suffers injury because of another’s failure to live up to a

required duty of care.

Plaintiff must prove the following:

1. Duty. That the defendant owed a duty of care to the plaintiff.

2. Breach. That the defendant breached that duty.

3. Causation. That the defendant’s breach caused the plaintiff’s injury.

4. Damages. That the plaintiff suffered a legally recognizable injury.

Assumption of Risk

A plaintiff who voluntarily enters into a risky situation, knowing about the risk involved, will not be allowed to recover. The requirements of this defense are:

1. knowledge of the risk

2. voluntary assumption of the risk

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Superseding Cause

it relieves a defendant of liability for injuries caused by the intervening event

- example: Derrick, while riding his bicycle, negligently hits Julie, who is walking on the sidewalk. As a result of the impact, Julie falls and fractures her hip. While she is waiting for help to arrive, a small aircraft crashes nearby and explodes, and some of the fi ery debris hits her, causing her to sustain severe burns. Derrick will be liable for the damages related to Julie’s fractured hip, but normally he will not be liable for the injuries caused by the plane crash—because the risk of a plane crashing nearby and injuring Julie was not foreseeable.

Contributory and Comparative Negligence

contributory negligence - a plaintiff who was also negligent (failed to exercise a reasonable degree of care) could not recover anything from the defendant

comparative negligence - enables both the plaintiff’s and the defendant’s negligence to be computed and the liability for damages distributed accordingly

Res Ipsa Loquitur

translates as “the facts speak for themselves.”

- This doctrine is applied only when the event creating the damage or injury is one that ordinarily does not occur in the absence of negligence.

Negligence Per Se translates as “in or of itself”
may occur if an individual violates a statute or an ordinance providing for a criminal penalty and that violation causes another to be injured
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Good Samaritan statutes

someone who is aided voluntarily by another cannot turn around and sue the “Good Samaritan” for negligence. These laws were passed largely to protect physicians and medical personnel who volunteer their services in emergency situations to those in need, such as individuals hurt in car accidents.

Dram shop acts

a tavern owner or bartender may be held liable for injuries caused by a person who became intoxicated while drinking at the bar or who was already intoxicated when served by the bartender

Cyber torts Torts committed via the Internet
most cyber torts have involved defamation
Market-Share Liability

John Smith, a resident of Hawaii, was a hemophiliac. Because of his condition, Smith received injections of a blood protein known as antihemophiliac factor (AHF) concentrate. Smith later tested positive for the acquired immune defi ciency

syndrome (AIDS) virus. Because it was not known which manufacturer was responsible for the particular AHF received by Smith, the court held that all of the manufacturers of AHF could be held liable under the theory of market-share liability (since Smith could not possibly prove which manufacturer it was)

- usually applied in cases involving drugs or chemicals, when it is diffi cult or impossible to determine which company made a particular product

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Statutes of repose

place outer time limits on product liability actions. For example, a statute of

repose may require that claims be brought within twelve years from the date of sale or manufacture of the defective product. If the plaintiff does not bring

an action before the prescribed period expires, the seller cannot be held liable.

Strict liability

liability without fault

- a person who engages in certain activities can be held responsible for any harm that

results to others, even if the person used the utmost care

Product liability

refers to the liability incurred by manufacturers and sellers of products when product defects cause injury or property damage to consumers, users, or bystanders (people in the vicinity of the product when it fails)

Trademark

a distinctive mark, motto, device, or implement that a manufacturer stamps, prints,

or otherwise affi xes to the goods it produces so that they can be identifi ed on the market and their origins made known. In other words, a trademark is a source indicator.

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Lanham Act

was enacted, in part, to protect manufacturers from losing business to rival companies that used confusingly similar trademarks

Federal Trademark Dilution Act

allowed trademark owners to bring suits in federal court for trademark dilution.

Trademark dilution laws protect “distinctive” or “famous” trademarks (such as Jergens, McDonald’s, Dell, and Apple) from certain unauthorized uses even when the use is on noncompeting goods or is unlikely to confuse

Service mark

is essentially a trademark that is used to distinguish the services (rather than the

products) of one person or company from those of another. For example, each airline has a particular mark or symbol associated with its name. Titles and character names used in radio and television are frequently registered as service marks.

Certification mark

is used by one or more persons, other than the owner, to certify the region, materials, mode of manufacture, quality, or other characteristic of specific goods or services. When used by members of a cooperative, association, or other organization, it is referred to as a collective mark. Examples of certification marks are the phrases “Good Housekeeping Seal of Approval” and “UL Tested.”

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Trade dress

refers to the image and overall appearance of a product. Trade dress is a broad concept and can include either all or part of the total image or overall impression created by a product or its packaging. For example, the distinctive decor, menu, layout, and style of service of a particular restaurant may be regarded as trade dress. Basically, trade dress is subject to the same protection as trademarks.

Stop Counterfeiting in Manufactured Goods Act (SCMGA)

was enacted to combat counterfeit goods. The act makes it a crime to traffic intentionally in or attempt to traffic in counterfeit goods or services, or to knowingly use a counterfeit mark on or in connection with goods or services.

Trade name

is used to indicate part or all of a business’s name, whether the business is a sole proprietorship, a partnership, or a corporation. Generally, a trade name is directly related to a business and its goodwill. A trade name may be protected as a trademark if the trade name is also the name of the company’s trademarked product—for example, Coca-Cola.

Cybersquatting

occurs when a person registers a domain name that is the same as, or confusingly similar to, the trademark of another and then offers to sell the domain name back to the trademark owner.

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Anticybersquatting Consumer Protection Act (ACPA)

- amended the Lanham Act (the federal law protecting trademarks)

- makes it illegal for a person to “register, traffic in, or use” a domain name:

1. if the name is identical or confusingly similar to the trademark of another and

2. if the one registering, traffi cking in, or using the domain name has a “bad faith intent” to profit from that trademark.

Typosquatting

or registering a name that is a misspelling of a popular brand, such as hotmai.com or myspac.com. Because many Internet users are not perfect typists, Web pages using these misspelled names receive a lot of traffic. More

traffic generally means increased profit (advertisers often pay Web sites based on the number of unique visits, or hits), which in turn provides incentive for more cybersquatters.

License

in this context is essentially an agreement, or contract, permitting the use of a trademark, copyright, patent, or trade secret for certain purposes

Patent

a grant from the government that gives an inventor the right to exclude others from making, using, or selling his or her invention for a period of 20 years from the date of fi ling the application for a patent. Patents for designs, as opposed to those for inventions, are given for a 14 year period.

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Copyright

an intangible property right granted by federal statute to the author or originator of a literary or artistic production of a specifi ed type. The Copyright Act of 1976, as amended, governs copyrights.

Copyright Act Protects:

1. Literary works (including newspaper and magazine articles, computer and training manuals, catalogues, brochures, and print advertisements).

2. Musical works and accompanying words (including advertising jingles).

3. Dramatic works and accompanying music.

4. Pantomimes and choreographic works (including ballets and other forms of dance).

5. Pictorial, graphic, and sculptural works (including cartoons, maps, posters, statues, and even stuffed animals).

6. Motion pictures and other audiovisual works (including multimedia works).

7. Sound recordings.

8. Architectural works.

Digital Millennium Copyright Act (DMCA) gave significant protection to owners of copyrights in digital information
the act established civil and criminal penalties for anyone who circumvents (bypasses) encryption software or other technological antipiracy protection
prohibited the manufacture, import, sale, and distribution of devices or services for circumvention
Trade secret is basically information of commercial value
may include customer lists, plans, research and development, pricing information, marketing methods, production techniques, and generally anything that makes an individual company unique and that would have value to a competitor
- unlike copyright and trademark protection, protection of trade secrets extends both to ideas and to their expression
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List View: Terms & Definitions

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 Constitutional Law


The law as expressed in the U.S. Constitution and the state constitutions. The U.S.

Constitution is the supreme law of the land. State constitutions are supreme within

state borders to the extent that they do not violate a clause of the U.S. Constitution

or a federal law.

 Statutory Law

Laws (statutes and ordinances) enacted by federal, state, and local legislatures and

governing bodies. None of these laws may violate the U.S. Constitution or the

relevant state constitution. Uniform laws, when adopted by a state, become

statutory law in that state.

 Administrative Law

The rules, orders, and decisions of federal, state, or local government administrative

agencies.

 Case Law and Common Law Doctrines

Judge-made law, including interpretations of constitutional provisions, of statutes

enacted by legislatures, and of regulations created by administrative agencies.

 Origins of the Common Law

The American legal system is based on the common law tradition, which originated

in medieval England. Following the conquest of England in 1066 by William the

Conqueror, king’s courts were established throughout England, and the common

law was developed in these courts.

 Legal and Equitable Remedies

The distinction between remedies at law (money or items of value, such as land)

and remedies in equity (including specifi c performance, injunction, and rescission of

a contractual obligation) originated in the early English courts of law and courts of

equity, respectively.

 Case Precedents and the Doctrine of Stare Decisis

In the king’s courts, judges attempted to make their decisions consistent with previous

decisions, called precedents. This practice gave rise to the doctrine of stare

decisis. This doctrine, which became a cornerstone of the common law tradition,

obligates judges to abide by precedents established in their jurisdictions.

 Stare Decisis and Legal Reasoning

Legal reasoning is the reasoning process used by judges in applying the law to the

facts and issues of specifi c cases. Legal reasoning involves becoming familiar with

the key facts of a case, identifying the relevant legal rules, applying those rules to

the facts, and drawing a conclusion. In applying the legal rules to the facts of a case,

judges may use deductive reasoning, linear reasoning, or reasoning by analogy.

 Natural Law School

One of the older and more signifi cant schools of legal thought. Those who believe

in natural law hold that there is a universal law applicable to all human beings.

This law is discoverable through reason and is of a higher order than positive

(national) law.

 Positivist School

A school of legal thought centered on the assumption that there is no law higher

than the laws created by the government. Laws must be obeyed, even if they are

unjust, to prevent anarchy.

 Historical School

A school of legal thought that stresses the evolutionary nature of law and looks

to doctrines that have withstood the passage of time for guidance in shaping

present laws.

 Legal Realism

A school of legal thought that advocates a less abstract and more realistic and

pragmatic approach to the law and takes into account customary practices and

the circumstances surrounding the particular transaction. Legal realism strongly

infl uenced the growth of the sociological school of jurisprudence, which views

law as a tool for promoting social justice.

 Ordinances

statutes (laws, rules, or orders) passed by municipal

or county governing units to govern matters not covered

by federal or state law ;commonly have to do with city or county land use (zoning ordinances), building and safety codes, and other matters affecting the local community

 Uniform Laws

model laws, for the states to consider adopting

 Uniform Commercial Code (UCC)

All fifty states, the District of Columbia, and the Virgin

Islands have adopted the UCC. It facilitates commerce

among the states by providing a uniform, yet

flexible, set of rules governing commercial transactions

 Administrative Law

consists of the rules, orders, and decisions of administrative agencies

 Administrative Agency

a federal, state, or local government agency established to perform a specific

function

 Executive Agencies

are subject to the authority of the president, who has the power to appoint and remove their officers

 Independent Regulatory Agencies

the president’s power is less pronounced in regard to independent agencies, whose officers serve for fixed terms and cannot be removed without just cause.

 Case Law

the doctrines and principles announced in cases—governs all areas not covered

by statutory law or administrative law and is part of our common law tradition

 Common Law

a body of general rules that applied throughout the entire English realm

 Remedies

the legal means to enforce a right or redress a wrong

 Remedies at Law

Today, it normally takes the form of monetary damages

 Courts of Law

courts that awarded compensation

 Damages

an amount given to a party whose legal interests have been injured

 Equitable Maxims

propositions or general statements of equitable rules

 Laches

an equitable doctrine that arose to encourage people to bring lawsuits while the evidence was fresh

(a term derived from the Latin laxus, meaning “lax” or “negligent”), and it

can be used as a defense

 Defense

is an argument raised by the defendant (the party being sued) indicating

why the plaintiff (the suing party) should not obtain the remedy sought. (Note that in equity proceedings, the party bringing a lawsuit is called the petitioner, and the party being sued is referred to as the respondent.)

 Statutes of Limitations

after the time allowed under a statute of limitations has expired,

no action (lawsuit) can be brought, no matter how strong the case was originally

 Precedent

a decision that furnished an example for deciding subsequent cases involving

identical or similar legal principles or facts

 Stare Decisis

(a Latin phrase meaning “to stand on decided cases”) under this doctrine, judges are obligated to follow the precedents established within their jurisdictions

has two aspects: first, that decisions made by a higher court are binding on lower courts; and second, that a court should not overturn its own precedents unless there is a compelling reason to do so

 Jurisdiction

refers to a geographic area in which a court or courts have the power to apply

the law

 Binding Authorities

is any source of law that a court must follow when deciding a case. Include constitutions, statutes, and regulations that govern the issue being decided, as well as court decisions that are controlling precedents within the jurisdiction

 Cases of First Impression

the courts must decide cases for which no precedents exist

 Legal Reasoning

is the reasoning process used by judges in deciding what law applies to a given

dispute and then applying that law to the specific facts or circumstances of the case. Through the use of this reasoning, judges harmonize their decisions

with those that have been made before, as the doctrine of stare decisis requires

 Deductive/Syllogistic Reasoning

a logical relationship involving a major premise, a minor premise, and a conclusion

 Linear Reasoning

proceeds from one point to another, with the fi nal point being the conclusion

 Analogy

is to compare the facts in the case at hand to the facts in previous cases and, to the extent that the patterns are similar, to apply the same rule of law to the

present case

 Jurisprudence

involves learning about different schools of jurisprudential thought and discovering how the approaches to law characteristic of each school can affect judicial decision making

 Civil Law

the rights and duties that exist between persons and between persons and

their governments, as well as the relief available when a person’s rights are violated

 Criminal Law

is concerned with wrongs committed against the public as a whole; are defined and prohibited by local, state, or federal government statutes

 Cyberlaw

to refer to the emerging body of law that governs transactions conducted via the Internet

 Judicial Review

enables the judicial branch to act as a check on the other two branches of government, in line with the system of checks and balances established by the

U.S. Constitution

 Basic Judicial Requirements

-jurisdiction

-venue

-standing to sue

 In personam jurisdiction

(personal jurisdiction) over any person or business that resides in a certain geographic area

 In rem jurisdiction

“jurisdiction over the thing.” exercise jurisdiction over property that is located within its boundaries

 Long Arm Statute

a court can exercise personal jurisdiction over certain out-of-state defendants

based on activities that took place within the state. Must demonstrate minimum contacts first

 Minimum Contacts

this means that the defendant must have enough of a connection to the state for the judge to conclude that it is fair for the state to exercise power over the defendant

 Probate Courts

are state courts that handle only matters relating to the transfer of a person’s assets and obligations after that person’s death, including issues relating to the custody and guardianship of children

 Personal Jurisdiction

Exists when a defendant is located within the territorial boundaries within which a

court has the right and power to decide cases. Jurisdiction may be exercised over

out-of-state defendants under state long arm statutes. Courts have jurisdiction over

corporate defendants that do business within the state, as well as corporations that

advertise, sell, or place goods into the stream of commerce in the state.

 Property Jurisdiction

Exists when the property that is subject to a lawsuit is located within the territorial

boundaries within which a court has the right and power to decide cases.

 Subject Matter Jurisdiction

Limits the court’s jurisdictional authority to particular types of cases.

1. Limited jurisdiction—Exists when a court is limited to a specifi c subject matter,

such as probate or divorce.

2. General jurisdiction—Exists when a court can hear cases involving a broad array

of issues.

 Original Jurisdiction

Exists with courts that have the authority to hear a case for the first time (trial courts).

 Appellate Jurisdiction

Exists with courts of appeal and review. Generally, appellate courts do not have

original jurisdiction.

 Federal Jurisdiction

1. Federal questions—A federal court can exercise jurisdiction when the plaintiff’s

cause of action is based at least in part on the U.S. Constitution, a treaty, or a

federal law.

2. Diversity of citizenship—A federal court can exercise jurisdiction in cases between

citizens of different states when the amount in controversy exceeds $75,000,

between a foreign country and citizens of a state or of different states, or

between citizens of a state and citizens or subjects of a foreign country.

 Concurrent Jurisdiction

Exists when both federal and state courts have authority to hear the same case.

 Exclusive Jurisdiction

Exists when only state courts or only federal courts have authority to hear a case.

 Cyberspace Jurisdiction

Gradually, the courts are developing standards to use in determining when jurisdiction

over a Web site owner or operator in another state is proper. Jurisdictional

disputes involving international cyberspace transactions present a signifi cant legal

challenge.

 Small claims courts

are inferior trial courts that hear only civil cases involving claims of less than a certain amount, such as $5,000. Conducted informally, lawyers are not required.

 Writ of certiorari

an order issued by the Court to a lower court requiring the latter to send it the record of the case for review. The Court will not issue a writ unless

at least four of the nine justices approve of it (rule of four).

 Trial Courts

Trial courts are courts of original jurisdiction in which actions are initiated.

1. State courts—Courts of general jurisdiction can hear any case that has not been

specifi cally designated for another court; courts of limited jurisdiction include

domestic relations courts, probate courts, and small claims courts.

2. Federal courts—The federal district court is the equivalent of the state trial court.

Federal courts of limited jurisdiction include the bankruptcy courts

 Intermediate Appellate Courts

Courts of appeals are reviewing courts; generally, appellate courts do not have original

jurisdiction. About three-fourths of the states have intermediate appellate courts;

in the federal court system, the U.S. circuit courts of appeals are the intermediate

appellate courts.

 Supreme Courts

The highest state court is that state’s supreme court (it may be called by another

name). Appeal from state supreme courts to the United States Supreme Court is

possible only if a federal question is involved. The United States Supreme Court

is the highest court in the federal court system and the fi nal arbiter of the

Constitution and federal law.

 voir dire

The jury selection process; attorneys ask oral questions to determine whether a potential jury member is biased or has any connection with a party to the action or with a prospective witness

 Opening Statements

Each party’s attorney is allowed to present an opening statement indicating what the

attorney will attempt to prove during the course of the trial.

 Rules of Evidence

a series of rules that have been created by the courts to ensure that any evidence presented during a trial is fair and reliable

 Relevant Evidence

evidence that tends to prove or disprove a fact in question or to establish the degree of probability of a fact or action

 The Pleadings

1. The plaintiff’s complaint—The plaintiff’s statement of the cause of action and the

parties involved, fi led with the court by the plaintiff’s attorney. After the fi ling, the

defendant is notifi ed of the suit through service of process.

2. The defendant’s response—The defendant’s response to the plaintiff’s complaint

may take the form of an answer, in which the defendant admits or denies the

plaintiff’s allegations. The defendant may raise an affi rmative defense and/or

assert a counterclaim.

 Pretrial Motions

1. Motion to dismiss—May be made by either party; requests that the judge dismiss

the case for reasons that are provided in the motion (such as failure to state a

claim for which relief can be granted).

2. Motion for judgment on the pleadings—May be made by either party; will be

granted only if no facts are in dispute and only questions of law are at issue.

3. Motion for summary judgment—May be made by either party; will be granted

only if no facts are in dispute and only questions of law are at issue. Unlike the

motion for judgment on the pleadings, the motion for summary judgment may

be supported by evidence outside the pleadings, such as testimony and other

evidence obtained during the discovery phase of litigation.

 Discovery

The process of gathering evidence concerning the case; involves (1) depositions

(sworn testimony by either party or any witness); (2) interrogatories (in which parties

to the action write answers to questions with the aid of their attorneys); and

(3) requests for admissions, documents, examinations, or other information relating

to the case. Discovery may also involve electronically recorded information.

 Pretrial Conference

A pretrial hearing, at the request of either party or the court, to identify the matters in

dispute after discovery has taken place and to explore the possibility of settling the dispute without a trial. If no settlement is possible, the parties plan the course of the trial.

 Jury Selection

In a jury trial, the selection of members of the jury from a pool of prospective jurors.

During voir dire, the attorneys for both sides may challenge prospective jurors either

for cause or peremptorily (for no cause).

 Closing Arguments, Jury Instructions, and Verdict

Each party’s attorney argues in favor of a verdict for his or her client. The judge

instructs (or charges) the jury as to how the law applies to the issue, and the jury

retires to deliberate. When the jury renders its verdict, this brings the trial to an end.


 Examination of Witnesses

1. Plaintiff’s introduction and direct examination of witnesses, cross-examination

by defendant’s attorney, possible redirect examination by plaintiff’s attorney, and

possible recross-examination by defendant’s attorney.

2. Both the plaintiff and the defendant may present testimony from one or more

expert witnesses.

3. At the close of the plaintiff’s case, the defendant may make a motion for a

directed verdict (or judgment as a matter of law), which, if granted by the court,

will end the trial before the defendant presents witnesses.

4. Defendant’s introduction and direct examination of witnesses, cross-examination

by plaintiff’s attorney, possible redirect examination by defendant’s attorney, and

possible recross-examination by plaintiff’s attorney.

5. Possible rebuttal of defendant’s argument by plaintiff’s attorney, who presents

more evidence.

6. Possible rejoinder by defendant’s attorney to meet that evidence.

 Alternative Dispute Resolution (ADR)-describes any procedure or device for resolving disputes outside the traditional judicial process
- less expensive & less time consuming than litigation
- advantage of being more private; no public record is published
- online methods available to resolve disputes
- more than 90% of cases are settled before going to trial in this manner

 Negotiation- simplest form of ADR
- parties come together informally, with or without attorneys to represent them
- being well-prepared results in a likely favorable outcome
 Mediation- one of the oldest forms of ADR
- a neutral third party acts as a mediator & works with both sides in the dispute to facilitate a resolution
- emphasizes points of agreement between parties
- may propose a solution, called a mediator's proposal
- mediator is selected by the parties based on their expertise in the relevant field
 Arbitration- more formal method of ADR
- neutral third party or panel of experts hears a dispute & makes a decision for both parties
- parties can agree to legally binding or nonbinding arbitration
 The Federal Arbitration Act- does not establish a set arbitration procedure
- the parties must agree on the manner of resolving their dispute
- provides the means for enforcing the procedures that the parties have chosen 
covers any arbitration clause in a contract that involves interstate commerce
 The Arbitration Process1. Submission - referring a dispute to an arbitrator
2. Hearing - evidence and arguments are presented to the arbitrator
3. Award - the decision of the arbitrator (must be made within 30 days of closing the hearing)
 American Arbitration Association (AAA)- major source or private arbitration
- has offices in every state & settles over 200,000 disputes per year
- non profit organization
- cases are heard by experts in the relevant field
- provides services for international and domestic disputes

 Online Dispute Resolution (ODR)- dispute resolution services using the Internet
- most commonly involve disagreements over the rights to domain names or disagreements over the quality of goods sold online
 Moral Minimumminimum acceptable standard for ethical business behavior considered to be in compliance with the law
 Sarbanes-Oxley Actrequires companies to set up confidential systems, sometimes online, so that employees can "raise red flags" about suspected illegal activities and unethical auditing or accounting practices
 Stock buyback- management of corporations believe their stock prices are "below fair value"
- instead of issuing dividends to shareholders, management uses the company's funds to buy its shares in the open market, thereby boosting the price of the stock
- management benefits by selling their shares and making profit
- stock buyback is legal, but will most likely result in only short-run profit
 Categorical Imperative- Immanuel Kant's belief that individuals should evaluate their actions in light of the consequences that would follow if everyone in society acted in the same way
- example: deciding whether or not to cheat on an exam; if everyone cheated, the exam would be meaningless
 Principle of rights- also known as "rights theory"
- believe that a key factor in determining whether a business decision is ethical is based on how that decision affects the rights of others (owners, employees, consumers, suppliers, community, and society)
 Utilitarianisman action is morally correct, or "right," when it produces the greatest amount of good for the greatest number of people
 Corporate Social Responsibility- the idea that those who run corporations can and should act ethically and be accountable to society for their actions
- have a duty to shareholders & stakeholders (employees, community, society)
- corporations should behave as good citizens by promoting goals that society deems worthwhile & should take positive steps towards solving social problems
 Foreign Corrupt Practices Act (FCPA)- prohibits US businesspersons from bribing foreign officials to secure beneficial contracts
- however, does not prohibit substantial sums made to minor officials who may help speed up a process
- requires all companies to keep detailed records that "accurately and fairly" report their financial activities (this assists in detecting illegal bribes)
- prohibits any person from giving false information to an accountant 
- business firms that violate this act may be fined up to $2 million
 Federal form of governmentthe national government and the states share sovereign power 
 Sovereigntyis the power of a state to do everything necessary to govern itself, such as making, executing, and applying laws; imposing and collecting taxes; making war and peace; and forming treaties or engaging in commerce with foreign nations.
 Police powers- state regulatory powers
- refers to the right of state governments to regulate private activities to protect or promote the public order, health, safety, morals, and general welfare
 Privileges and Immunities Claseprevents the state from treating the nonresident differently from the resident when engaging in business activities in another state; such as, transferring property, seeking employment, accessing the court system
 Full faith and credit clause- applies only to civil matters
- it ensures that rights established in one state under deeds, wills, and contracts will be honored in another state
- also ensures that any judicial decision with respect to such property rights will be honored and enforced in all states
- promotes mutual friendship among people from different states
 Checks & balancesallows each branch to limit the actions of the other 2 branches, preventing any one branch from exercising too much power
 Three branches of government1. Legislateive - makes the laws
2. Executive - enforces the laws
3. Judicial - interprets the laws
 Commerce clause- has had the greatest impact on business than any other provision in the constitution 
- provides the basis for the national government's regulation of state and local affairs (regulates business activities)


 Supremacy clause- provides that the constitution, laws, and treaties of the US are "the Supreme Law of the Land."
- when there is a conflict between the federal and state laws, the state law is said to be invalid
- concurrent - when powers are shared by the federal gov and the states
 Preemptionwhen congress chooses to act exclusively in an area in which the federal gov and the states have concurrent powers
- prevents the federal gov or states from acting/making a decision
 Establishment clause- prohibits the gov from establishing a state-sponsored religion , as well as from passing laws the promote religion or show a preference for one religion over another
- requires the gov to accommodate religions
 Free exercise clause- guarantees that a person can hold any religious belief they want, or hold no religious beliefs at all
- prevents the gov from forcing a person to do something that is contrary to their religious beliefs
- the gov can act only when the religious practices work against public welfare
- example: gov can require that a child receive medical vaccines if their life is in danger, regardless of their religious beliefs
 Search warrantan order from a judge or other public official authorizing a search of seizure of property
- law officers must convince a judge that a search will result in evidence of a specific illegality
- must establish probable cause, which means the officers must have trustworthy evidence to convince a reasonable person that the proposed search or seizure is more likely justified than not
 Due process clause- two aspects:
1. Procedural - requires that any gov decision to take life, liberty, property must be made equitably (give person proper notice and an opportunity to be heard)
2. Substantive - protects an individual's life, liberty, property against certain gov actions regardless of the fairness of the procedures used to implement them (limits what the gov may do)
 Equal protection clause- the gov cannot enact laws that treat similarly situated individuals differently
- when a law limits the liberty of some people, but not others, this clause is violated
- 3 tests for this clause:
1. Strict scrutiny - based on suspect trait such as race, origin, citizenship status (discrimination)
2. Intermediate scrutiny - gender (laws on rape, only women can get pregnant, therefore men and women would be treated differently)
3. Rational basis - based solely on rational explanations
 Gramm-Leach-Bliley Actmade pretexting (obtaining financial information by false means) illegal

 Health Insurance Portability and Accountability Act (HIPAA)a person's medical records may not be used for purposes unrelated to healthcare or disclosed to others without the individuals' permission
 USA Patriot Act- gives gov officials increased authority to monitor Internet based activities such as e-mail and website visits and to gain access to personal financial information and student information 
- law enforcement officials may now track e-mail and telephone communications of one party to gain information about another party; the gov must certify that the information to be obtained by this monitoring is relevant to an ongoing criminal investigation
 Administrative Agency Powers- can make legislative rules (substantive rules) that are as legally binding as laws that Congress passes
- can make interpretive rules, which declare policy and do not affect legal rights

 Delegation doctrine- grants Congress the power to make administrative agencies that can create rules for implementing the laws
 Administrative Procedure Act (APA)

provides that courts should “hold unlawful and set aside” agency

actions found to be “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law."

 Notice-and-comment rulemakinginvolves 3 steps:
1. Notice of the proposed rulemaking - the agency publishes a notice of the proposed rulemaking proceedings in the Federal Register, a daily publication of the executive branch, stating where and when the proceedings will be held
2. Comment period - after publication, the agency must allow enough time for people to comment in writing on the proposed rule to express opinions and perhaps influence agency policy
3. Final rule - after the agency reviews all comments, it publishes the final rule in the Federal Register 
 Adjudicationthe process of resolving a dispute by presenting evidence and arguments before a neutral third party decision maker
 Freedom of Information Act (FOIA)- requires the federal gov to disclose certain records to anyone on written request, even if no reason is given for the request
- all federal gov agencies must make their records available electronically on the Internet and other formats
- records must be accessible on the computer within a year of its creation
- agencies have 20 working days to respond to a request and fees are typically charged for use of the records
 Government in the Sunshine Act- the open meeting law
- requires the establishment of procedures to let the public know about the scheduled meetings with enough time in advance
- contains certain exceptions that will not allow open meetings (criminal cases or future rulemaking)
 Regulatory Flexibility Act- whenever a new regulation will have a significant impact upon many small entities, he agency must conduct a regulatory flexibility analysis in order to consider less burdensome alternatives
- small businesses must be alerted about forthcoming regulations 
- reduces record-keeping burdens for small businesses
 Small Business Regulatory Enforcement Fairness Act (SBREFA)- allows congress to review new federal regulations for at least 60 days before they take effect (this period gives opponents of the rules time to present their arguments to congress)
- authorizes the courts to enforce the Regulatory Flexibility Act (ensures that federal agencies will consider ways to reduce the economic impact of new regulations on small businesses)
 Criminal Sanctions- designed to punish those who commit a crime and deter others from committing a similar crime in the future
- fines, jail, prison, probation, or death penalty
 Felony- serious crimes punishable by death r by imprisonment for more than one year
 Misdemeanor- less serious than crimes, punishable by a fine or by confinement for up to one year
 Petty offenses- a subset of misdemeanors
- jaywalking or violations of building codes

 Criminal Liability- 2 elements must exist for a person to be convicted of a crime:
1. performance of a prohibited act; guilty act (actus reus)
2. specific state of mind, or intent, on the part of the actor; wrongful mental state (mens rea)
*these two elements must occur together
 Actus reus- "guilty act"
- based on a person being punished for doing harm to a society
- for a crime to exist, the guilty act must do harm to a person or property
 Criminal negligence- involves the mental state in which the defendant deviates away from the standard care that a reasonable person would use under the same circumstances
- the defendant is accused of taking a foreseeable risk that resulted in harm
- a homicide is classified as involuntary manslaughter when it results from criminal negligence (like Dr. Murray giving MJ a powerful sleep aid while knowing he was on other sedatives)
 Economic Espionage Act- makes the theft of trade secrets a federal crime
- also makes it a federal crime to buy or possess another person's trade secrets without that person's authorization
 Comity- one nation will defer and give effect to the laws and judicial decrees of another country, as long as they are consistent with the law and public policy of the accommodating nation
- the US is required to honor other states' actions, but internationally, other nations other nations are not required to honor the actions of other nations
 Expropriation- occurs when a gov seizes a privately owned business or privately owned goods for public use and awards just compensation
 Confiscation- occurs when a gov seizes private property for an illegal purpose and without just compensation
 Doctrine of sovereign immunity- exempts foreign nations from the jurisdiction of US courts
- this rule was codified in the Foreign Sovereign
Immunities Act (FSIA)
- this act governs the circumstances in which an action may be brought into US court against a foreign nation
 Import controlsrestrictions include:
- strict prohibitions
- quotas (number that could be imported)
- tariffs (taxes on imports)
 Wholly owned subsidiarythe parent company, which remains in the US, holds complete ownership of all the facilities in the foreign country, as well as total authority and control over all phases of the operation
 Joint venture- the US company owns only part of the operation; he rest os owned by either local owners or y another foreign entity
- all of the firms involved in a joint venture share responsibilities, profits, and liabilities 
 Dumping- the sale of imported goods at a "less than fair value"
- fair value is usually determined by the price of those goods in the exporting country
- to prevent this, an extra tariff known as the antidumping duty may be assessed on imports
 Normal trade relations (NTR) status- means that every member of the World trade organization (WTO) is obligated to treat other members as well as it treats the country that receives its most favorable treatments in regards to imports and exports
- helps minimize trade barriers (restriction on imports) between nations
 Sherman Act- most important US antitrust law
- provides for extraterritorial effect of US antitrust laws
- the US is a major proponent of free competition on the global economy; therefore, any conspiracy that has a substantial effect on US commerce is within the reach of the Sherman Act
example: a conspiracy to fix prices for products sold to the US
 Alien Tort Claims Act (ATCA)allows even foreign citizens (aliens) to bring civil suits in US courts for injuries caused by violations of the law of nations or a treaty of the US
 Contract Law- designed to provide stability, predictability, and certainty for both buyers and sellers
- deals with the formation and enforcement of agreements between parties
pacta sunt servanda "agreements shall be kept"
 Contract“a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.” (textbook definition)
- a legally binding agreement between two or more parties who agree to perform or to refrain from performing some act now or in the future
 4 requirements of a valid contract

1. Agreement. An agreement to form a contract includes an offer and an acceptance. One party must offer to enter into a legal agreement, and another party must accept the terms of the offer.

2. Consideration. Any promises made by the parties to the contract must be supported by legally sufficient and bargained-for consideration (something of value received or promised, such as money, to convince a person to make a deal).

3. Contractual capacity. Both parties entering into the contract must have the contractual capacity to do so. The law must recognize them as possessing characteristics that qualify them as competent parties.

4. Legality. The contract’s purpose must be to accomplish some goal that is legal and not against public policy.

 Defenses to the enforceability of a contract

a contract may be unenforceable if the following requirements are not met:

1. Voluntary consent. The consent of both parties must be voluntary. For example, if a contract was formed as a result of fraud, undue influence, mistake, or duress, the contract may not be enforceable.

2. Form. The contract must be in whatever form the law requires. For example, some contracts must be in writing to be enforceable.

 Bilateral Contracts- a "promise for a promise"
- simply a promise to perform
- the contract comes into existence one the promises are exchanged
example: Javier offers to buy Ann’s digital camcorder for $200. Javier tells Ann that he will give her the $200 for the camcorder next Friday, when he gets paid. Ann accepts Javier’s offer and promises to give him the camcorder when he pays her on Friday. Javier and Ann have formed a bilateral contract.
 Unilateral Contracts- a "promise for an act"
- offer can only be accepted by completing the contract performance
- the contract comes into existence at the moment the contract is actually performed
example: Reese says to Celia, “If you drive my car from New York to Los Angeles, I’ll give you $1,000.” Only on Celia’s completion of the act—bringing the car to Los Angeles—does she fully accept Reese’s offer to pay $1,000. If she chooses not to accept the offer to drive the car to Los Angeles, there are no legal consequences.
 Revocation of Offers for Unilateral Contracts

For instance, recall the earlier example in which a car is to be driven from New York to Los Angeles. Now suppose that Celia is driving through Nevada and is only a few hundred miles from Los Angeles when Reese calls her on her cell phone and says, “I revoke my offer.” Under traditional contract law, Reese’s revocation would terminate the offer. Under the modern view of unilateral contracts, however, Reese will not be able to revoke his offer because Celia has undertaken performance and has driven more than 2,500 miles. In these circumstances, Celia can finish driving to Los Angeles and bind Reese to the contract.

 Formal contracts

- are contracts that require a special form or method of creation (formation) to be enforceable

- one example is letters of credit, which are frequently used in international sales contracts

 Informal contracts(also called simple contracts) include all other contracts
- no special form is required (except for certain types of contracts that must be in writing), as the contracts are usually based on their substance rather than their form
- typically, businesspersons put their contracts in writing to ensure that there is some proof of a contract’s existence should disputes arise
 Express Contractsthe terms of the agreement are fully and explicitly stated in words, oral or written
examples: A signed lease for an apartment or a house is an express written contract. If one classmate calls another on the phone and agrees to buy his textbooks from last semester for $300, an express oral contract has been made
 Implied Contracts- a contract that is implied from the conduct of the parties
- this type of contract differs from an express contract in that the conduct of the parties, rather than their words, creates and defines the terms of the contract
 Implied Contract Requirements

1. The plaintiff furnished some service or property.

2. The plaintiff expected to be paid for that service or property, and the defendant knew or should have known that payment was expected.

3. The defendant had a chance to reject the services or property and did not.

 Executed Contracta contract that has been fully performed on both sides 
 Executory Contracta contract that has not been fully performed by the parties
- if one party has fully performed but the other has not, the contract is said to be executed on the one side and executory on the other, but the contract is still classified as executory
example: Jackson, Inc., agreed to buy ten tons of coal from the Northern Coal Company. Northern delivered the coal to Jackson’s steel mill, where it is being burned. At this point, the contract is executed on the part of Northern and executory on Jackson’s part. After Jackson pays Northern, the contract will be executed on both sides.
 Voidable Contractsa valid contract but one that can be avoided at the option of one or both of the parties
The party having the option can elect either to avoid any duty to

perform or to ratify (make valid) the contract. If the contract is avoided, both parties are released from it. If it is ratifi ed, both parties must fully perform their respective legal obligations.

- Contracts made by minors, mentally incompetent persons, and intoxicated persons may be voidable

- Additionally, contracts entered into under fraudulent conditions are voidable

at the option of the defrauded party. Contracts entered into under legally defined duress or undue influence are also voidable.

 Void Contracts- is no contract at all
- the terms void and contract are contradictory
- there are no legal obligations on the parties
example: a contract can be void because one of the parties was adjudged by a court to be legally insane (and thus lacked the legal capacity to enter into a contract) or because the purpose of the contract was illegal.
 Revocation- the offeror's act of withdrawing (revoking) an offer
- the offeror can revoke an offer as long as it is communicated to the offeree before the offeree accepts
 Option Contracts- is created when an offeror promises to hold an offer open for a specified period of time in return for a payment given by the offeree
- offeror cannot revoke the offer for the specified time period in the option
- example: Tyrell agrees to lease a house from Jackson, the property owner. Included in the lease contract is a clause stating that Tyrell is paying an additional $15,000 for an option to purchase the property within a specifi ed period of time. If Tyrell decides not to purchase the house after the specifi ed period has lapsed, he loses the $15,000, and Jackson is free to sell the property to another buyer.

 Silence as acceptance

For example, John is a student who earns extra income by washing store windows. John taps on the window of a store, catches the attention of the store’s manager, and points to the window and raises his cleaner, signaling that he will be washing the window. The manager does nothing to stop him. Here, the store manager’s silence constitutes an acceptance, and an implied contract is created. The store is bound to pay a reasonable value for John’s work. Silence can also operate as acceptance when the offeree has had prior dealings with the offeror.

 Considerationis defined as the value (such as cash) given in return for a promise (in a bilateral contract) or in return for a performance (in a unilateral contract)
is broken down into two parts: 
1. something of legally sufficient value must be given in exchange for the promise
2. usually, there must be a bargained-for exchange
 Legally sufficient valuemay consist of:
1. a promise to do something that one has no prior legal duty to do
2. the performance of an action that someone is not obligated to do
3. the refraining from an action that someone has a legal right to do (called a forbearance)
 Bargained-for exchange- the item of value must be given by the promisor (offeror) in return for the promise, performance, or promise of performance
- the promise/performance is the distinguishing factor of a contract and a gift
 Rescission- the unmaking of a contract so as to return the parties to the positions that they occupied before the contract was made
- rescind - to cancel a contract
 Past consideration- is no consideration
- promises made in return for actions or events that have already taken place are unenforceable
- a person can bargain for something to take place now or in the future but not for something that has already taken place
 Promissory Estoppel- also called detrimental reliance
- a person who has reasonably relied on the promise of another may be able to obtain some measure of recovery
- under this doctrine, a court may enforce an otherwise unenforceable promise in order to avoid an injustice that may occur 
 Contractual capacity- the legal ability to enter into a contractual relationship
when a person is young, intoxicated, or mentally incompetent, capacity is lacking or may be questionable
 Minors- age of majority for contractual purposes is 18 years
- emancipation may occur when a minor's parent decides to exercise control over the child
- a minor may petition a court to be treated as an adult
- a contract entered into by a minor may be voidable at the option of that minor, subject to certain exceptions
- the legal avoidance of a contractual obligation is referred to as disaffirmance
- to disaffirm, the minor must express in words or conduct not to be bound by the contract; and they must disaffirm from the whole contract, not just parts of it

 Intoxication- a contract entered into by an intoxicated person may be voidable or valid (and enforceable)
- if the person was so intoxicated that it affected their mental capacity, then the contract may be voidable, even if they voluntarily chose to become intoxicated
- if the person understood the legal consequences of the agreement while being intoxicated, then the contract will still be valid and enforceable
- for the contract to be voidable, the person must prove that intoxication impaired their judgement so severely that they did not comprehend the legal consequences of entering into the contract
 Mental incompetence- if a court has previously determined that a person is mentally incompetent and has appointed a guardian to represent the individual, any contract made by the mentally incompetent person is void (no contract exists). Only the guardian can enter into a legally binding contract
- if a court has no previously judged a person to be mentally incompetent, the contract may be voidable if the person did not know what they were entering into or lacked the mental capacity to understand the agreement
- a contract entered into by a mentally incompetent person may be valid and enforceable if the person had mental capacity at the time the contract was formed
 Statute of Frauds- contracts that MUST be in writing to be enforceable:

1. Contracts involving interests in land.

2. Contracts that cannot by their terms be performed within one year from the day after the date of formation.

3. Collateral, or secondary, contracts, such as promises to answer for the debt or duty of another and promises by the administrator or executor of an estate to pay a debt of the estate personally—that is, out of his or her own pocket.

4. Promises made in consideration of marriage.

5. Under the UCC, contracts for the sale of goods priced at $500 or more.

 Discharge by Mutual Rescission(both parties agree to cancel a contract) the parties must make another agreement that also satisfies the legal requirements for a contract. There must be an offer, acceptance, and consideration. 
 Anticipatory Repudiationbefore either party to a contract has a duty to perform, one of the parties may refuse to carry out their contractual obligations
- this is treated as a material breach (less than substantial)
- nonbreaching party is permitted to bring in action for damages immediately
- the repudiating party can retract their anticipatory repudiation and y proper notice and restore he parties to their original obligations
 Tenderan unconditional offer to perform by a person who is ready, willing, and able to do so
 Conditiona possible future event, the occurrence or nonoccurrence of which will trigger the performance of a legal obligation or terminate an existing obligation under a contract
 Discharge by performancethere are 2 types of performances:
1. Complete performance - conditions expressly stated in a contract must be fully satisfied for complete performance
2. Substantial performance - a party who in good faith performs substantially all of the terms of a contract can enforce the contract against the other party under the doctrine of substantial performance. Intentional failure to comply with the terms is a breach of contract
 Discharge by Settlement Agreementthe two original parties to the contract form a different agreement to substitute for the original one
- in contrast to a novation, a settlement agreement does not involve a third party
an agreement will be substituted as a new contract, and it will either expressly or impliedly revoke and discharge the obligations under any prior contract
 Discharge by Accord and Satisfaction

An accord is a contract to perform some act to satisfy an existing contractual duty that is not yet discharged. A satisfaction is the performance of the

accord agreement. An accord and its satisfaction discharge the original contractual obligation. For a contract to be discharged by accord and satisfaction, the parties must agree to accept performance that is

different from the performance originally promised.

 Discharge by Operation of Law1. Alteration of the contract
2. Statutes of limitations - restricts the period of time in which a party can sue 
3. Bankruptcy - collects the debtor's assets in a fair manner
4. Impossibility or impracticability of performance 
- when one of the parties to the contract dies or becomes incapacitated prior to performance
- when the specific subject matter of the contract is destroyed
- when a change in law makes the performance illegal
5. Commercial Impracticability - when an event makes the performance much more difficult or expensive, but not impossible
6. Frustration of purpose - a contract will be discharged if circumstances make it impossible to attain the purpose both parties wanted in the contract
 Damages

There are four broad categories of damages:

1. Compensatory (to cover direct losses and costs).

2. Consequential (to cover indirect and foreseeable losses).

3. Punitive (to punish and deter wrongdoing).

4. Nominal (to recognize wrongdoing when no monetary loss is shown).

 Mitigation of Damages

when a breach of contract occurs, the innocent injured party is held to a duty

to mitigate, or reduce, the damages that he or she suffers.

example: a wrongfully terminated employee has the duty to take a job if a similar one is available.

 Liquidated Damages Provisions

- specifies that a certain dollar amount is to be paid in the event of a future default or breach of contract. (Liquidated means determined, settled, or fixed.)

- example: a provision requiring a construction contractor to pay $300 for every day he or she is late in completing the project is a liquidated damages

provision.

- Liquidated damages provisions are frequently used in construction contracts and for the sale of goods.

 Penalty

specifies a certain amount to be paid in the event of a default or breach of contract and is designed to penalize the breaching party. Liquidated damages

provisions usually are enforceable. In contrast, if a court fi nds that a provision calls for a penalty, the agreement as to the amount will not be enforced.

 Equitable Remedies1. Rescission and restitution - returning goods, property, or funds previously obtained
2. Specific performance - calls for the performance of the act promised in the contract (usually something unique that cannot be compensated for by monetary damages)
3. Reformation - used when the parties have imperfectly expressed their contract agreement in writing (reformation allows a court to rewrite the contract to reflect the parties' true intentions). This usually occurs when fraud or mutual mistake is present
 Election of remedies

- to prevent double recovery. 

Suppose that McCarthy agrees in writing to sell his land to Tally. Then McCarthy changes his mind and repudiates the contract. Tally can sue for compensatory damages or for specific performance. If Tally could seek compensatory damages in addition to specific performance, she would recover twice for the same breach of contract. The doctrine of election of remedies requires Tally to choose the remedy she wants, and it eliminates any possibility of double recovery.

 Waiver of breach

The waiver erases the past breach in order to keep the contract going. The contract continues as if the breach had never occurred. Of course, the waiver of breach of contract extends only to the matter waived and not to the whole contract. Ordinarily, a waiver by a contracting party will not operate to waive subsequent, additional, or future breaches of contract that are unrelated to the first breach. 

 Predominant-factor test

to determine whether a contract is primarily for the sale of goods or for the sale of services. If a court decides that a mixed contract is primarily a goods contract, any dispute, even a dispute over the services portion, will be

decided under the UCC (Uniform Commercial Code).

 Merchanta person who deals in goods of the kind in the contract, who possesses expert knowledge specifically related to the goods being sold, or a person who employs a merchant as a broker, agent, or other intermediary has the status of a merchant.
 Article 2: The sale of goods

First, Article 2 deals with the sale of goods. It does not deal with real property (real estate), services, or intangible property such as stocks and bonds. Thus, if the subject matter of a dispute is goods, the UCC governs. If it is real estate or services, the common law applies. Second, in some situations, the rules may vary quite a bit, depending on whether the buyer or the seller is a merchant. 

 Article 2A: Leases

Article 2A is essentially a repetition of Article 2, except that it applies to leases of goods rather than sales of goods and thus varies to reflect differences between sales and lease transactions. (Note that Article 2A is not concerned with leases of real property, such as land or buildings.) A lessor is one who transfers the right to the possession and use of goods under a lease. A lessee is one who acquires the right to the possession and use of goods under a lease. In other words, the lessee is the party who is leasing the goods from the lessor.

 Requirements contract

the buyer agrees to purchase and the seller agrees to sell all or up to a stated amount of what the buyer needs or requires. There is implicit consideration in a requirements contract because the buyer gives up the right to buy from any other seller, and this forfeited right creates a legal detriment. Requirements contracts are common in the business world and normally are enforceable.

 Output contract

the seller agrees to sell and the buyer agrees to buy all or up to a stated amount of what the seller produces. Again, because the seller essentially forfeits the right to sell goods to another buyer, there is implicit consideration in an output contract.

 Merchants firm offer

arises when a merchant-offeror gives assurances in a signed writing that the offer

will remain open. The merchant’s firm offer is irrevocable without the necessity of consideration for the stated period or, if no defi nite period is stated, a

reasonable period.

 Communication of acceptance

The UCC is more stringent than the common law in this regard because it requires notification. Under the UCC, if the offeror is not notified within a reasonable time that the offeree has accepted the contract by beginning performance, then the offeror can treat the offer as having lapsed before acceptance.

 Identification

takes place when specific goods are designated as the subject matter of a sales

or lease contract. Title and risk of loss cannot pass to the buyer from the seller unless the goods are identified to the contract.

- If the contract calls for the sale or lease of specifi c and ascertained goods that are already in existence, identifi cation takes place at the time the contract is made.

- In a sale or lease of any other future goods, identifi cation occurs when the goods are shipped, marked, or otherwise designated by the seller or lessor as the goods to which the contract refers.

 Shipment contract

the seller is required or authorized to ship goods by carrier, such as a trucking

company. Under a shipment contract, the seller is required only to deliver the goods into the hands of a carrier, and title passes to the buyer at the time

and place of shipment.

- a contract is assumed to be a shipment contract if nothing to the contrary is stated in the contract.

 Destination contract

the seller is required to deliver the goods to a particular destination, usually

directly to the buyer, but sometimes to another party designated by the buyer. Title passes to the buyer when the goods are tendered at that destination.

 Document of title

title passes to the buyer when and where the document is delivered. If the goods are stored in a warehouse, title passes to the buyer when the appropriate documents are delivered to the buyer. The goods never move. When no document of title is required, and delivery is made without moving the goods, title passes at the time and place the sales contract is made, if the goods have already been identifi ed. If the goods have not been identifi ed, title does not pass until identification occurs.

 Insurable interest

A buyer or lessee has an insurable interest in identified goods. The moment the contract goods are identified by the seller or lessor, the buyer or lessee has a special property interest that allows the buyer or lessee to obtain the necessary insurance coverage for those goods, even before the risk of loss has passed.

 Perfect tender rule

The UCC preserves the perfect tender doctrine by stating that if goods or tender of delivery fails in any respect to conform to the contract, the buyer or lessee has the right to accept the goods, reject the entire shipment, or accept part and reject part.

 Cure

- refers to the right of the seller or lessor to repair, adjust, or replace defective or nonconforming goods

- when any delivery is rejected because of nonconforming goods and the time for performance has not yet expired, the seller or lessor can attempt to “cure” the

defect within the contract time for performance

- to do so, the seller or lessor must timely notify the buyer or lessee

of the intention to cure

- once the time for performance under the contract has expired, the seller or

lessor can still exercise the right to cure if he or she has reasonable grounds to believe that the nonconforming tender will be acceptable to the buyer or lessee

- buyers and lessees must act in good faith and state specific reasons for refusing to accept goods

 Assurance and Cooperation

The UCC provides that if one of the parties to a contract has “reasonable grounds” to believe that the other party will not perform as contracted, they may in writing “demand adequate assurance of due performance” from the other party. Until such assurance is received, she or he may “suspend” further performance without liability. The party can hold the uncooperative party in breach or proceed to perform the contract in any reasonable manner.

 Coverbuyers and lessees can protect themselves by obtaining cover - by buying or leasing substitute goods for those that were due under the contract. This option is available when the seller repudiates the contract or fails to deliver the goods. 
 Replevin

is an action to recover identified goods in the hands of a party who is unlawfully withholding them. Under the UCC, a buyer or lessee can replevy goods identified to the contract if the seller or lessor has repudiated or breached the contract.

 Warranties of Title3 types of title warranties:
1. Good title - sellers warrant that they have a good and valid title to the goods sold and and that the transfer of the title is rightful
2. No liens - protects buyers who are unaware of any claims, charges, or liabilities (liens) against goods at the time the contract is made. Basically, protects buyers who unknowingly purchased goods that are subject to a creditor's security interest (an interest on the goods that secure payments or performance of an obligation)
3. No infringements - when the seller is a merchant, they automatically warrant that the buyer takes the goods free of infringements. Basically, the merchant promises that the goods delivered are free from any copyright, trademark, or patent claims
 Express Warranties- a seller can create this type of warranty by making representations concerning the quality, condition, description, or performance potential of the goods
- express warranties are made when:
1. the goods conform to any fact or promise that the buyer has made to the seller (this drill will easily penetrate through stainless steel)
2. the goods conform to any description of them (150 horsepower diesel engine)
3. the goods conform to any sample or model shown to the buyer
- can be found in a seller's advertisement, brochure, or promotional materials in addition to being made orally in a sales or lease contract
 Puffery- an expression of opinion by a seller that is not made as a representation of fact
- example: seller’s opinion that the vehicle is “the best used car to come along in years,” however, is known as “puffery” and creates no warranty.
 Implied Warrantiesis a warranty that the law derives based on merchants implying that the goods they sell or lease are merchantable, and in some circumstances, fit for a particular purpose.

 Implied warranty of merchantability

Every sale or lease of goods made by a merchant who deals in goods of the kind sold or leased automatically gives rise to this type of warranty.

- example: a merchant who is in the business of selling ski equipment makes an implied warranty of merchantability every time he sells a pair of skis. A neighbor selling her skis at a garage sale does not (because she is not in the business of selling goods of this type).

 Merchantable Goodsgoods must be “reasonably fit for the ordinary purposes for which such goods are used.”
must be of at least average, fair, or medium-grade quality
quality must be comparable to quality that will pass without objection in the trade or market for goods of the same description
the goods must also be adequately packaged and labeled, and they must conform to the promises or affirmations of fact made on the container or label, if any
 Merchantable Food

The UCC treats the serving of food or drink to be consumed on or off the premises as a sale of goods subject to the implied warranty of merchantability.

- “Merchantable” food is food that is fi t to eat on the basis of consumer expectations.

 Implied warranty of fitness for a particular purpose

arises when any seller (merchant or nonmerchant) knows the particular

purpose for which a buyer or lessee will use the goods and knows that the buyer  is relying on the skill and judgment of the seller to select suitable goods

- Goods can be merchantable but unfit for a particular purpose

- example: you need a gallon of paint to match the color of your living room walls— a light shade somewhere between coral and peach. You take a sample to your local hardware store and request a gallon of paint of that color. Instead,

you are given a gallon of bright blue paint. Here, the salesperson has not breached any warranty of implied merchantability—the bright blue paint is of high quality and suitable for interior walls—but she or he has breached an implied warranty of fitness for a particular purpose.

 E-contracts

- must meet the same basic requirements (agreement, consideration, contractual

capacity, and legality) as paper contracts

- online contracts may be formed not only for the sale of goods and services but also for licensing. The “sale” of software generally involves a license, or a right to use the software, rather than the passage of title (ownership rights) from the seller to the buyer

 Forum-selection clauseindicates the forum, or location (such as a court or jurisdiction), in which contract disputes will be resolved
will help to avert future jurisdictional problems and to ensure that the seller will

not be required to appear in court in a distant state (since online transactions can occur in any state)

 Choice-of-law clausethe parties specify that any dispute arising out of the contract will be settled in accordance with the law of a particular jurisdiction, such as a state or country
particularly common in international contracts, but they may also appear in e-contracts to specify which state’s laws will govern in the US
 Click-on agreement

(sometimes referred to as a click-on license or click-wrap agreement)

- courts have used the Restatement and UCC provisions to conclude that a

binding contract can be created by conduct, including the act of clicking on a box indicating “I accept” or “I agree” to accept an online offer

- the law does not require that the parties have read all of the terms in a contract for it to be effective. Therefore, clicking on a box that states “I agree” to certain terms can be enough.


 Shrink-wrap agreement

(or shrink-wrap license)

- the terms are expressed inside the box in which the goods are packaged

- the term shrink-wrap refers to the plastic that covers the box

- the party who opens the box is told that she or he agrees to the terms by keeping whatever is in the box

- a shrink-wrap agreement is not between a retailer and a buyer, but between the

manufacturer of the hardware or software and the ultimate buyer-user of the product

- terms generally concern warranties, remedies, and other issues associated with the use of the product

 Browse-wrap termscan occur in transactions conducted over the Internet
a person can install the software without clicking “I agree” to the terms of a license (unlike the click-on agreements)
- browse-wrap terms are often unenforceable because they do not satisfy the agreement requirement of contract formation
 Uniform Electronic Transactions Act (UETA)the UETA has been adopted, at least in part, by 48 states
the UETA declares that a signature may not be denied legal effect or enforceability solely because it is in electronic form
- the UETA does not apply to a transaction unless each of the parties has previously agreed to conduct transactions by electronic means

 Electronic Signatures in Global and National Commerce Act (E-SIGN Act)provides that no contract, record, or signature may be “denied legal effect” solely because it is in electronic form
under this law, an electronic signature is as valid as a signature on paper, and an e-document can be as enforceable as a paper one
 Tort law

designed to compensate those who have suffered a loss or injury due to another person’s wrongful act. In a tort action, one person or group brings a lawsuit against another person or group to obtain compensation (monetary damages) or other relief for the harm suffered

 Compensatory damages

intended to compensate or reimburse a plaintiff for actual losses—that is, to make the plaintiff whole and put her or him in the same position that she or he would have been in had the tort not occurred

2 types of damages:

1. Special damages - compensate the plaintiff for quantifiable monetary losses, such as medical expenses, lost wages and benefi ts (now and in the future), extra costs, the loss of irreplaceable items, and the costs of repairing or replacing damaged property 

2. General damages - compensate individuals (not companies) for the nonmonetary aspects of the harm suffered, such as pain and suffering. A court might award general damages for physical or emotional pain and suffering, loss of companionship, loss of consortium (losing the emotional and physical benefits of a spousal relationship), disfigurement, loss of reputation, or loss or impairment of mental or physical capacity

 Assault and BatteryAn assault is any intentional and unexcused threat of immediate harmful or offensive contact, including words or acts that create in another person a reasonable apprehension of harmful contact. An assault can be completed even if there is no actual contact with the plaintiff, provided that the defendant’s conduct creates a reasonable apprehension of imminent harm in the plaintiff.
The completion of the act that caused the apprehension, if it results in harm to the plaintiff, is a battery, which is defi ned as an unexcused and harmful or offensive physical contact intentionally performed
- example: Ivan threatens Jean with a gun, then shoots her. The pointing of the gun at Jean is an assault; the fi ring of the gun (if the bullet hits Jean) is a battery
 False Imprisonmentthe intentional confinement or restraint of another person’s activities without

justifi cation

- interferes with the freedom to move without restraint

- Businesspersons often face suits for false imprisonment after they have attempted to confine a suspected shoplifter for questioning. Under the “privilege to detain” granted to merchants in most states, a merchant can use reasonable force to detain or delay persons suspected of shoplifting and hold them for the police. Although laws vary from state to state, most states require that any detention be conducted in a reasonable manner and for only a reasonable length of time

 Intentional Infliction of Emotional Distress

The tort of intentional infl iction of emotional distress is an intentional act that amounts to extreme and outrageous conduct resulting in severe emotional

distress to another. To be actionable (capable of serving as the ground for a lawsuit), the act must be extreme and outrageous to the point that it exceeds the bounds of decency accepted by society

 Defamation

of character involves wrongfully hurting a person’s good reputation. The law

imposes a general duty on all persons to refrain from making false, defamatory statements of fact about others. Breaching this duty in writing or other permanent form (such as a digital recording) involves the tort of libel. Breaching this duty

orally involves the tort of slander.

- tort of defamation also arises when a false statement of fact is made about a person’s product, business, or legal ownership rights to property

 Invasion of PrivacyA person has a right to solitude and freedom from prying public eyes—in other words, to privacy

- Tort law also safeguards these rights through the tort of invasion of privacy

- 4 acts can qualify as invasions of privacy:

1. Appropriation of identity. Under the common law, using a person’s name, picture, or other likeness for commercial purposes without permission is a tortious invasion of privacy

2. Intrusion into an individual’s affairs or seclusion. For example, invading someone’s home or searching someone’s personal computer without authorization is an invasion of privacy

3. False light. The publication of information that places a person in a false light is another categoryof invasion of privacy. This could be a story attributing to someone ideas not held or actions not taken by that person

4. Public disclosure of private facts. This type of invasion of privacy occurs when a person publicly discloses private facts about an individual that an ordinary

person would fi nd objectionable or embarrassing (sex life or financial affairs)

 Appropriation

The use of another person’s name, likeness, or other identifying characteristic, without permission and for the benefit of the user, constitutes the tort of appropriation (sometimes referred to as the right of publicity). Under the law, an individual’s right to privacy normally includes the right to the exclusive

use of his or her identity. 

 Fraudulent Misrepresentation

- involves intentional deceit for personal gain

The tort includes several elements:

1. A misrepresentation of material facts or conditions with knowledge that they are false or with reckless disregard for the truth.

2. An intent to induce another party to rely on the misrepresentation.

3. A justifi able reliance on the misrepresentation by the deceived party.

4. Damages suffered as a result of that reliance.

5. A causal connection between the misrepresentation and the injury suffered.

 Abusive or Frivolous Litigation

- If the party that initiated a lawsuit did so out of malice and without probable cause (a legitimate legal reason), and ended up losing that suit, the party can be sued for malicious prosecution. 

- Abuse of process can apply to any person using a legal process against another in an improper manner or to accomplish a purpose for which the process was not designed.

 Business torts

apply only to wrongful interferences with the business rights of others.

Business torts generally fall into 2 categories—

interference with a contractual relationship and

interference with a business relationship

 Wrongful Interference with a Contractual Relationship

3 elements are necessary for wrongful interference with a contractual relationship to occur:

1. A valid, enforceable contract must exist between two parties.

2. A third party must know that this contract exists.

3. This third party must intentionally induce a party to the contract to breach the contract

 Wrongful Interference with a Business Relationship

Attempting to attract customers in general is a legitimate business practice,

whereas specifically targeting the customers of a competitor is more likely to be predatory.

- A plaintiff must prove that the defendant used predatory methods to intentionally harm an established business relationship or prospective economic advantage. The plaintiff must also prove that the defendant’s interference

caused the plaintiff to suffer economic harm.

 Trespass to Land

The tort of trespass to land occurs any time a person, without permission, enters onto, above, or below the surface of land that is owned by another; causes anything to enter onto the land; or remains on the land or permits anything to remain on it. 

- Common types of trespass to land include walking or driving on another’s land; shooting a gun over another’s land; throwing rocks at or spraying water on a building that belongs to someone else; building a dam across a river, thereby causing water to back up on someone else’s land; and constructing one’s building so that it extends onto an adjoining landowner’s property.

 Trespass to Personal Property

Whenever any individual wrongfully takes or harms the personal property of another or otherwise interferes with the lawful owner’s possession and enjoyment of personal property, trespass to personal property occurs. This tort may also be called trespass to chattels or trespass to personalty.

- examples: If Kelly takes Ryan’s business law book as a practical joke and hides it so that Ryan is unable to find it for several days before the fi nal examination, Kelly has engaged in a trespass to personal property.

 Conversion

Whenever a person wrongfully possesses or uses the personal property of another without permission, the tort of conversion occurs. Any act that deprives an owner of personal property or of the use of that property without that owner’s permission and without just cause can be conversion.

- when conversion occurs, a trespass to personal property also occurs because the original taking of the personal property from the owner was a trespass, and wrongfully retaining it is conversion.

- example: Chen borrows Mark’s iPad to use while traveling home from school for the holidays. When Chen returns to school, Mark asks for his iPad back, but Chen says that he gave it to his little brother for Christmas. In this situation, Mark can sue Chen for conversion, and Chen will have to either return the iPad or pay damages equal to its value.

 Disparagement of Property

occurs when economically injurious falsehoods are made about another’s product or property rather than about another’s reputation (as in the tort of defamation).

- is a general term for torts that can be more specifically referred to as slander of

quality or slander of title.

 Slander of quality(or trade libel)
- the publication of false information about another’s product, alleging that

it is not what its seller claims.

- the plaintiff must prove that the improper publication caused a third person to

refrain from dealing with the plaintiff and that the plaintiff sustained economic damages (such as lost profits) as a result.

 Slander of title

When a publication falsely denies or casts doubt on another’s legal ownership of

property, resulting in fi nancial loss to the property’s owner.

- this is an intentional tort in which someone knowingly publishes an untrue statement about another’s ownership of certain property with the intent of

discouraging a third person from dealing with the person slandered.

- example: it would be diffi cult for a car dealer to attract customers after competitors published a notice that the dealer’s stock consisted of stolen automobiles

 Negligence

occurs when someone suffers injury because of another’s failure to live up to a

required duty of care.

Plaintiff must prove the following:

1. Duty. That the defendant owed a duty of care to the plaintiff.

2. Breach. That the defendant breached that duty.

3. Causation. That the defendant’s breach caused the plaintiff’s injury.

4. Damages. That the plaintiff suffered a legally recognizable injury.

 Assumption of Risk

A plaintiff who voluntarily enters into a risky situation, knowing about the risk involved, will not be allowed to recover. The requirements of this defense are:

1. knowledge of the risk

2. voluntary assumption of the risk

 Superseding Cause

it relieves a defendant of liability for injuries caused by the intervening event

- example: Derrick, while riding his bicycle, negligently hits Julie, who is walking on the sidewalk. As a result of the impact, Julie falls and fractures her hip. While she is waiting for help to arrive, a small aircraft crashes nearby and explodes, and some of the fi ery debris hits her, causing her to sustain severe burns. Derrick will be liable for the damages related to Julie’s fractured hip, but normally he will not be liable for the injuries caused by the plane crash—because the risk of a plane crashing nearby and injuring Julie was not foreseeable.

 Contributory and Comparative Negligence

contributory negligence - a plaintiff who was also negligent (failed to exercise a reasonable degree of care) could not recover anything from the defendant

comparative negligence - enables both the plaintiff’s and the defendant’s negligence to be computed and the liability for damages distributed accordingly

 Res Ipsa Loquitur

translates as “the facts speak for themselves.”

- This doctrine is applied only when the event creating the damage or injury is one that ordinarily does not occur in the absence of negligence.

 Negligence Per Setranslates as “in or of itself”
may occur if an individual violates a statute or an ordinance providing for a criminal penalty and that violation causes another to be injured
 Good Samaritan statutes

someone who is aided voluntarily by another cannot turn around and sue the “Good Samaritan” for negligence. These laws were passed largely to protect physicians and medical personnel who volunteer their services in emergency situations to those in need, such as individuals hurt in car accidents.

 Dram shop acts

a tavern owner or bartender may be held liable for injuries caused by a person who became intoxicated while drinking at the bar or who was already intoxicated when served by the bartender

 Cyber tortsTorts committed via the Internet
most cyber torts have involved defamation
 Market-Share Liability

John Smith, a resident of Hawaii, was a hemophiliac. Because of his condition, Smith received injections of a blood protein known as antihemophiliac factor (AHF) concentrate. Smith later tested positive for the acquired immune defi ciency

syndrome (AIDS) virus. Because it was not known which manufacturer was responsible for the particular AHF received by Smith, the court held that all of the manufacturers of AHF could be held liable under the theory of market-share liability (since Smith could not possibly prove which manufacturer it was)

- usually applied in cases involving drugs or chemicals, when it is diffi cult or impossible to determine which company made a particular product

 Statutes of repose

place outer time limits on product liability actions. For example, a statute of

repose may require that claims be brought within twelve years from the date of sale or manufacture of the defective product. If the plaintiff does not bring

an action before the prescribed period expires, the seller cannot be held liable.

 Strict liability

liability without fault

- a person who engages in certain activities can be held responsible for any harm that

results to others, even if the person used the utmost care

 Product liability

refers to the liability incurred by manufacturers and sellers of products when product defects cause injury or property damage to consumers, users, or bystanders (people in the vicinity of the product when it fails)

 Trademark

a distinctive mark, motto, device, or implement that a manufacturer stamps, prints,

or otherwise affi xes to the goods it produces so that they can be identifi ed on the market and their origins made known. In other words, a trademark is a source indicator.

 Lanham Act

was enacted, in part, to protect manufacturers from losing business to rival companies that used confusingly similar trademarks

 Federal Trademark Dilution Act

allowed trademark owners to bring suits in federal court for trademark dilution.

Trademark dilution laws protect “distinctive” or “famous” trademarks (such as Jergens, McDonald’s, Dell, and Apple) from certain unauthorized uses even when the use is on noncompeting goods or is unlikely to confuse

 Service mark

is essentially a trademark that is used to distinguish the services (rather than the

products) of one person or company from those of another. For example, each airline has a particular mark or symbol associated with its name. Titles and character names used in radio and television are frequently registered as service marks.

 Certification mark

is used by one or more persons, other than the owner, to certify the region, materials, mode of manufacture, quality, or other characteristic of specific goods or services. When used by members of a cooperative, association, or other organization, it is referred to as a collective mark. Examples of certification marks are the phrases “Good Housekeeping Seal of Approval” and “UL Tested.”

 Trade dress

refers to the image and overall appearance of a product. Trade dress is a broad concept and can include either all or part of the total image or overall impression created by a product or its packaging. For example, the distinctive decor, menu, layout, and style of service of a particular restaurant may be regarded as trade dress. Basically, trade dress is subject to the same protection as trademarks.

 Stop Counterfeiting in Manufactured Goods Act (SCMGA)

was enacted to combat counterfeit goods. The act makes it a crime to traffic intentionally in or attempt to traffic in counterfeit goods or services, or to knowingly use a counterfeit mark on or in connection with goods or services.

 Trade name

is used to indicate part or all of a business’s name, whether the business is a sole proprietorship, a partnership, or a corporation. Generally, a trade name is directly related to a business and its goodwill. A trade name may be protected as a trademark if the trade name is also the name of the company’s trademarked product—for example, Coca-Cola.

 Cybersquatting

occurs when a person registers a domain name that is the same as, or confusingly similar to, the trademark of another and then offers to sell the domain name back to the trademark owner.

 Anticybersquatting Consumer Protection Act (ACPA)

- amended the Lanham Act (the federal law protecting trademarks)

- makes it illegal for a person to “register, traffic in, or use” a domain name:

1. if the name is identical or confusingly similar to the trademark of another and

2. if the one registering, traffi cking in, or using the domain name has a “bad faith intent” to profit from that trademark.

 Typosquatting

or registering a name that is a misspelling of a popular brand, such as hotmai.com or myspac.com. Because many Internet users are not perfect typists, Web pages using these misspelled names receive a lot of traffic. More

traffic generally means increased profit (advertisers often pay Web sites based on the number of unique visits, or hits), which in turn provides incentive for more cybersquatters.

 License

in this context is essentially an agreement, or contract, permitting the use of a trademark, copyright, patent, or trade secret for certain purposes

 Patent

a grant from the government that gives an inventor the right to exclude others from making, using, or selling his or her invention for a period of 20 years from the date of fi ling the application for a patent. Patents for designs, as opposed to those for inventions, are given for a 14 year period.

 Copyright

an intangible property right granted by federal statute to the author or originator of a literary or artistic production of a specifi ed type. The Copyright Act of 1976, as amended, governs copyrights.

 Copyright ActProtects:

1. Literary works (including newspaper and magazine articles, computer and training manuals, catalogues, brochures, and print advertisements).

2. Musical works and accompanying words (including advertising jingles).

3. Dramatic works and accompanying music.

4. Pantomimes and choreographic works (including ballets and other forms of dance).

5. Pictorial, graphic, and sculptural works (including cartoons, maps, posters, statues, and even stuffed animals).

6. Motion pictures and other audiovisual works (including multimedia works).

7. Sound recordings.

8. Architectural works.

 Digital Millennium Copyright Act (DMCA)gave significant protection to owners of copyrights in digital information
the act established civil and criminal penalties for anyone who circumvents (bypasses) encryption software or other technological antipiracy protection
prohibited the manufacture, import, sale, and distribution of devices or services for circumvention
 Trade secretis basically information of commercial value
may include customer lists, plans, research and development, pricing information, marketing methods, production techniques, and generally anything that makes an individual company unique and that would have value to a competitor
- unlike copyright and trademark protection, protection of trade secrets extends both to ideas and to their expression
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