Legal 2700 notes
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Introduction to Law amp The Regulation of Business 0 What is Law Lecture Outline 0 Three Primary Elements 1 A rule 2 Laid down by the government 3 Enforced by the government 0 Code of Hammurabi The first known written set of laws If anyone bring an accusation against a man the accused leaps into the river if he sinks in the river his accuser shall take a possession of his house If river proves him not guilty he who brought accusation shall be put to death while he who leaped shall take possession of the house that had belonged to his accuser 0 Benefits provided by the US legal system 0 Types of Law it has to be written down and accessible to public Law provides certainty predictability and stability 0 The law allows businesses and individuals to have the confidence to enter business agreements and make longterm investments 0 Common law versus Civil law Common Law Judges interpret and apply the law The judges look back to see how prior courts have ruled They can make a new lawmake an exception 0 Grand jury decides whether a criminal can be charged 0 Prior case precedent can never be rejected Aka stare decisis 0 When a judge applies common law she is applying a legal rule based on judicial decisions Civil Law the judges have a lot less powerauthority They don t have the power to create new law Everyone s treated the same Its cleaner and simpler because it s the same law and is fair all around Q It s illegal to drive after midnight if you re under 18 Your grandma needs to go to the hospital but you re 17 You drive her anyway 0 Common law the judge would say technically you re breaking the law but do we want to punish you for driving to the hospital They are allowed to make an exception because they think there is a legitimate excuse 0 Civil Law technically you re under 18 and were driving after midnight I39m sorry but you re going to get a ticket because you did break the law 0 Civil law versus Criminal law what type of case are you dealing with I Civil Law totally different than above everything but a criminal case Louisiana operates under a civil law system because they were a French colony I Criminal Law a case brought by the government The government is punishing someone on behalf of society You only go to jail in criminal law suits 0 Sources of Law 0 US Constitution I It is the highest If the constitution says something that is it It is the law so you can t change it 0 State Constitutions I States also have constitutions which establish and regulate the state governments 0 Legislation I We elect politicians they make the laws I Statute or Act 0 It is either federal law or state law 0 Federal law civil rights act 0 State law Hope scholarship I Ordinance 0 Local people city council township people I Issues with Legislation 0 Uniformity Same all the way around 0 Potential Solutions 0 1 Congress there s a problem everyone s doing different things We need one law where it is all the same I Downfall it could take a lot of time lobbying O 2 Go to all 50 states and work in all 50 state legislations and get them to pass the same law I Downfall time intensive expensive lobbying less likely to happen I Interpretation 0 I need to figure out what this law means and what I need to do in order to comply with the law 0 Statutory construction 0 Interpreting a statute 0 Administrative Regulations 0 I Federal and state I EX congress passes the clean water act Power to administrative agency epa to create details I Noticeandcomment Rulemaking I Epa comes and says this is what we propose That is what we think is the safest and best proposal Then the pubic then has an opportunity to comment on the proposal Then the epa collects the comments and sort through the criticism Do we agree I Requirements for overturning regulations in court 0 1 If congress improperly gave power to an agency 0 2 if the agency didn t follow the proper procedure I 3 if the agency exceeded its authority and did something it wasn t authorized to do I Enforcement of Regulations Judicial Decisions Judicial Opinions Case Law I Doctrine of stare decisis 0 The doctrine of following prior precedents I Advantages of reliance on judicial decisions I 1 Reliance in past precedent offers stability and predictability in the legal system 0 2 Allows judges to take unique facts of a case into consideration to reach a just outcome 0 3 Allows judges to consider changes in circumstances since the law was passed technological changes I Disadvantages of reliance on judicial decisions 0 1 volume time and expense 0 2 con icting precedent Different courts reaching different decisions I 3 lack of precedent so there s no old case to base it off of 0 4 precedent is rejected You still lose anyway 0 Disadvantage ofjudicial decisions is that it places too much emphasis on legislation and does not give judges the discretion to apply and interpret the law Judicial review is the right of a court to review statutes and declare them unconstitutional 0 Hierarchy of Law 1 US Constitution 2 Federal Statutes 3 Federal Administrative Regulations highest source of law 4 State Constitutions apply only in the applicable state 5 State Statutes apply only in the applicable state 6 State Administrative Regulations apply only in the applicable state 7 Local ordinances apply only in the applicable locality 8 Judicial Decisions Case Law OOOOOOOO Chapter Three The Court System Lecture Outline 0 Court Personnel 0 Judges Justices I Judges main job is to interpret and apply the law Which includes resolving questions of law I Justice title granted to those on the US Supreme Court along With some other state appellate courts I Questions of Fact versus Questions of Law 0 Question of Fact 0 Jurors a factual issue disputed by the parties Where an act was committed or not by Whom etc 0 Question of Law 0 An issue concerning the application or interpretation of the law 0 Only for the judge Never for the jury 0 Bench trial is When the judge decides question of fact and question of law Usually cheaper than a jury trial I Trial court judges 0 All the evidence is showed here Can judge body movement etc I Appellate judges I Just to decide question of law Don t care about question of fact I You can only win if you prove that the judge made a mistake 0 They re only shown a transcript of what was said I Will only over rule a lower court judge in manifest error I don t care what the jury decided but I think it was 100 impossible for you to commit the crime Extremely rare for manifest error to occur I Judicial decisions case law important decisions I Selection Appointment of Judges 0 If you want to become a judge you usually go to law school or you can be appointed a judge I If you are a current judge it depends on if you re federal or court 0 Federal court judges are appointed by the president but confirmed by the senate You will be a judge for life They are insulated they can judge whichever way without worry of losing their job because they are a judge for life 0 State court judges usually use judicial election They are appointed by the people They must rerun for election Every state does it different ways I ProsCons Pro If you re in a state that believes one thing then the judge stays true to the community 0 Jurors I Petit Jury 0 Traditional jury 12 people They listen to both sides of case look at evidence and decide whether or not the person is guilty or innocent I Grand Jury I Only used in criminal cases Usually 1623 people They decided whether or not the government can even charge you of the particular crime Mistrial vs 0 Lawyers I Represent clients prosay is when the person serves as their own attorney Organization of the Court System 0 State Court System I Hears cases involving state laws property disputes car accidents 0 Federal Court System I Types of cases in federal court 0 1 Federal Law cases 0 Cases arising under federal law patents federal income tax invasions immigrant 0 2 Cases involving US as a party I 3 Any case involving 2 different state governments 0 One state is suing another state 0 4 Diversity Jurisdiction O A resident of one state is suing a resident of another state And the law suit has to be 75000 or more 0 Every corporation is headquartered and incorporated Where the papers are filed can be different states If the plaintiff is from one state and the defendant is from a different state then there is diversity Plaintiff cant have a state in common With the defendant Cant overlap If they overlap it goes to state If it doesn t overlap then its federal Examples state vs federal Susie of GA sues James of F1 for 25000 State Tom sues Max for violation of federal patent law Federal Amanda of Texas sues Tim of NY for car accident of 100000 your choice Bob of Oregon sues Goodyear in Ohio and Salesman of Oregon for selling defective tires state because the plaintiff and salesman overlap 0 Trial courts I There s only 1 judge I That s Where the jury is Federal district court 0 Appellate courts I Aka court of appeals I There39s usually 3 judges and you need 2 judges on your side to Win 0 Supreme Court I They don t care about small cases they want to hear cases that effect the Whole nation I There39s 9 justices in the supreme court You need at least 5 of them to agree I If you lose at the state supreme court you can appeal to the US supreme court by saying my us constitutional rights have been violated Chapter Four Litigation Lecture Outline 0 Litigation 0 Bringing andor defending an action in court to enforce a particular right 0 Parties 0 Plaintiff V Defendant I Plaintiff the victimthe party who has been hurt and is trying to get compensation Try and get the person who s responsible in trouble 0 In a criminal case the plaintiff is always the government 0 State suing someone I Defendant the person who is accused of wrong doing I You can have one plaintiff suing 5 defendants and viceversa O Counterclaims I When the defendant files a legal claim back against the plaintiff I They are usually related to what the original law suit was about 0 Thirdparty Defendant I Party brought into a lawsuit as an additional defendant by the original defendant I The defendant is basically like I didn t do anything but it s this other person s fault brings in another person 0 Ex you go to the mechanic to get your brakes fixed Your car gets fixed and you drive home but the brakes don t work and you get into an accident The driver wants to sue the mechanic but the mechanic is 100 sure he did everything right Turns out the brakes were defective 0 Class Actions I When a large number of plaintiffs come together and file one law suit A large group has been hurt the same way 0 Benefits 0 Everyone is going to be treated the same way 0 There is a lot more negotiating power when there are a lot of people That way the company won t look bad unlike if it s just one person suing 0 It makes it look more like a legitimate case when there are so many people 0 Drawbacks 0 It causes companies to file petty cases that aren t entirely legitimate They re just trying to make money 0 Requirements for Bringing Suit 0 Standing Actual case or controversy 0 I39m asserting a real legal claim against you It doesn t mean I m on good grounds to sue you but I have legal claim 0 EX I don t like you because you punched me in my face Personal stake in the resolution of the dispute 0 If you ve been personally effected in the case 0 Personal Jurisdiction Does the court have the powerauthority over the people in the case Cases are state by state Criminal case has to occur in the state where the crime was occurred Civil case the plaintiff agrees to abide by the court s jurisdiction when filing the lawsuit Subjectmatter jurisdiction Ways to establish jurisdiction over defendants 0 1 If the defendant voluntarily appears 0 EX the people in the case have to abide by the state s jurisdiction 0 2 If the defendant is served and processed where the court is located 0 Served and processed The court makes a Summons calling the defendant to come appear in court Then someone takes the document and serves it to the defendant 0 3 I ve sued you in state A for tort any injury I do not find you in state A But I serve you with the process in state B Now go to state A and appear in court 0 The court will say you have been accused of hurting someone in State A the defendant has to now go back to state A to defend yourself because that s where you did the wrong doing 0 4 I39m suing you about the property you own in State A even though you live in state B 0 The court will say you have to go back to state A to defend yourself I 5 I39m suing you about the businessbusiness transaction that you did in State A even though you live in state B 0 The court will say you have to go back to state A to defend yourself 0 Pretrial Process 0 Pleadings I Each side knows what each other s position is on all of the issues I Complaint 0 Plaintiff files a complaint complaining to the court asking for judicial relief that the other person has in icted upon them 0 Answer 0 The defendant answers the complaint If you don t answer in 20 days then you automatically lose 0 Countercomplaint if the defendant sees the complaint and responds then they can file a countercomplaint and write a complaint about the plaintiff 0 Reply 0 The plaintiff files a reply to the defendants counterclaim 0 Discovery This is when you go out and get all the facts eyewitness testimony in order to help prove your point in the case It is the most time consuming and expensive I Interrogatories A written question and answer The plaintiff writes out a question and wants to know everything about that issue The defendant has about 30 days to thoroughly and honestly reply under oath EX Identify any individual that you are aware has personal knowledge of the facts and circumstances of this case including all eyewitnesses to the accident List all insurance agreements you have regarding the vehicle operated by defendant at the time of the collision with the plaintiff Viceversa between plaintiff and defendant I Requests for Production of Documents You may have physical evidence in your possession EX getting someone to examine the defendant s car to see if they had faulty brakes Getting maintenance records pertaining to the car All notes bills photographs Xrays or other documents Trial prepared or reviewed by any doctor performing a medical examination on the plaintiff following the accident I Depositions Oral questioning by an attorney of a witness under oath there is a record of what was said Benefits I find out what you know won t be surprised at trial helps pin you down if your story changes between deposition and trial you probably lied under oath I Requests for Admission Written questions asking the other party to specifically admit or deny a certain fact Admit that you were driving a 2000 Toyota with Maryland motor vehicle tags on the date of the car crash Admit that you were convicted of driving under the in uence on the night of the accident Jury Selection Voir dire I Select the jury before you start the trial I Peremptory challenge rejecting someone during the voir dire examination No reason is needed Opening Statement I They preview all the evidence to the jury What you want them to pay special attention to Presentation of Evidence I Call in the witnesses asking them questions The plaintiff s attorney can ask the witness any question and the defendant s attorney can cross examine it Closing Argument I Both sides really argue their case Jury Instructions I A statement made by the judge to the jury informing them of the law applicable to the case I The judge will sit down with the jury and gives them a road map He tells them the facts and tells them to vote guilty or not guilty based on the factswhat they believe They try to come up with a unanimous decision Jury Verdict I Burdens of Proof How strongly do you have to believe the plaintiff How convinced as a jury do you have to be in order to rule for one side 0 Criminal cases lBeyond a Reasonable Doubt The jury has to believe that the defendant did ABC make 90 sure Only in criminal cases most difficult to prove 0 Civil Cases I Preponderance of the Evidence You re 51 sure you have to vote one way or the other Weighing it all out 0 Clear and Convincing Evidence Somewhere in between 70 sure You may still have reasonable doubt but you re still going to vote one way Hardest one to prove Know these sequence of events for order of litigation Will be on the test Pretrial Procedure 1 Plaintiff files complaint I 2 Complaints and summons are served to defendant 3 Defendant answers with counterclaims and defenses 4 Court rules on motion 5 Plaintiff files reply to answer I 6 Attorneys conduct discovery procedures I 7 Parties may file motions for summary judgment or judgment on pleading 8 Court conducts pretrial conference Trial Jury Selection Opening Statement Presentation of evidence Closing Argument Jury Instructions Jury Verdict Appeal 0 Appeals 0 Parties submit trial records and written briefs explaining their legal position and a short description of the case 0 Appellate court process I You re not satisfied with the outcome so you appeal 0 Supreme Court process I Petition for certiorari when a party petitions against their case s rejection from the supreme court Chapter Five Alternative Dispute Resolution Lecture Outline 0 Alternative Dispute Resolution 0 Procedures for settling disputes by means other than litigation 0 Settlement 0 Resolution reached through direct negotiation between the parties Arbitration O Submitting a dispute to a neutral thirdparty who issues a binding decision 0 Instead of you and I going to court and getting a judge and a jury to decide the case you go to an arbitrator Both parties agree to let the arbitrator to decide the outcome It replaces the court system with a single panel consisting of maybe like 3 arbitrators It is usually cheaper than a court case And is a lot quicker process 0 Once the decision has been decided it can t be taken back Its set in stone whether the parties like it or not 0 The company usually wins 99 of the time not the customer 0 0 Types of Arbitration I Voluntary Arbitration previously arbitrated at any time in your life I You and the other side both agree to arbitrate a case voluntarily 0 If you ever agree to sign a contract and you want to file a case against a company if the contract says you agreed for arbitration you have to go through arbitration first whether you want to or not since you agreed Even if you want to go to court you still have to go through arbitration first 0 Hard for court to overturn I Mandatory Arbitration forced to arbitrate I Can be mandated 0 Certain types of cases must go through arbitration divorce I Some states the law says you have to go through arbitration first I Examples 0 Alan files suit against his former employer for wrongful termination Alan s employment contract states that any disputes between the company and employee must be arbitrated The court orders Alan to arbitrate the dispute voluntary 0 Robert and Natalie decide to get divorced They cannot agree how to split their property and ask the divorce court to issue a ruling The court forces the couple to arbitrate mandatory 0 Arbitration Process I Anyone can be an arbitrator doesn t even have to be in college 0 As long as you both agree on who the arbitrator is I You meet with an arbitrator I You can have it anywhere you want it can be in a restaurant I It usually takes 24 hours 0 Judicial Review of Arbitration Decisions I Mediation 2 parties who are in a dispute have some person they agree upon to hear the case The mediator will come to a decision he thinks is best and the two sides have to agree upon the mediator s decision It doesn t matter whether its voluntary or mandatory mediation There s no qualifications to be a mediator it can be anyone 0 O I If it is a voluntary arbitration it is really hard to get the judge to overturn the decision I Review of Voluntary Arbitration Decisions ways a judge can overturn 1 If the judge in the court determines that the arbitrators decision is arbitrary It wasn t based on any merits or facts and just randomly picked a winner 2 If the decision was based on fraud if one side has bribed the arbitrator 3 If you can argue that the decision was contrary to public policy 0 The arbitrator forces you to break the law and do something illegal I Review of Mandatory Arbitration Decisions Available if one party is dissatisfied with result You have an automatic right to judicial review The court has to consider things brand new from scratch It doesn t interfere with anything that happened with the arbitrator I Examples Pic 1 Arbitration he has the right to go to court Pic 2 Arbitration Voluntary arbitration so it has to be proved that fraud took place Pic 3 Arbitration The court wont look at it because it is a voluntary arbitration that does not fall into one of the three cases Mediation Process I The mediator will come to a decision he thinks is best and the two sides have to agree upon the mediator s decision I An arbitrator can impose a binding solution on the parties while a mediator can only reach a resolution agreeable to both parties Chapters Six amp Fifteen The Constitution amp The Commerce Clause Lecture Outline 0 Structure of the Constitution 0 Article IV Full Faith and Credit Clause 0 Different states have to honor each other s laws and decisions 0 You can t escape one s states decisions by moving to another state Privileges and Immunities Clause 0 States have to treat other state residents similar to its own 0 You can t give preferential treatment to state residents 0 Separation of Powers Supremacy Clause 0 Federal law is supreme over state law 0 If the federal law has the power to do something under the constitution 0 Federal minimum wage every state has to have at least that wage 0 Ex fed government requires passengers to average at least 30 miles per gallon Cali requires at least 40 miles per gallon This is constitutional Preemption 0 Exemption to supremacy clause 0 Congress has the only voice states don t have the right to say anything at all 0 Examples 0 If congress they are the only voice on a certain law 0 Congress doesn t explicitly say they are permitting 0 Contract Clause No state shall pass any law impairing the obligation of contract 0 No one can pass a law changing an existing contract Only applies to future contracts Example The state of TN passes a law prohibiting any leases of residential house longer than 5 years from being signed after January 1 2015 constitutional The state of Utah passes a law banning contracts longer than 10 years effective immediately illegal Pic The us congress passes a law prohibiting professional athletes from earning more constitutional O Commerce Clause I Commerce business activity I Regulation of Foreign Commerce 0 Congress has the power to regulate foreign commerce 0 Tariffs tax on imports O Embargo you can t trade with that country cuba North Korea Iran Limiting the amount of imports O Freetrade agreement there are no tariffs We can move goods back and forth between Mexico and Canada We can bring in stuff without paying any taxes 0 0 Regulation of Interstate Commerce 0 Probably the most important 0 Power to regulate commerce between twomultiple states 0 Interstate vs Intrastate Commerce 0 Interstate trade from one state to another 0 Intrastate trade within one state 0 It used to be a big deal but it has changed a bit I Limitation of State Police Powers 0 10th amendment preserves rights for the state I States generally have the rights to in act police powers 0 Police powers monitor and regulate health safety and welfare of citizens I Setting the drinking age Sunday liquor sale speed limit 0 Federal government has the power to limit police powers I Dormant Commerce Clause 0 no state can use its police power in some way that will effect interstate commerce I It can t pass a law that will effect business outside of my state I Gives congress broad power to regulate business activity in the US I Everything today is considered interstate commerce and congress can regulate it I Focus on interstate regulation power I Dormant commerce clause prevents states from enacting laws that interfere with interstate commerce Bill of Rights 0 First Amendment I Freedom of Speech 0 Applies equally to business as it does individual 0 It includes verbal and nonverbal communication 0 Government can restrict your speech 0 Shouting fire in a theater etc 0 Commercial speech 0000 Deals With business related speech Prime example advertismenet Historically it said commercial speech is not protected Now govt can regulate advertisement as long as there is an important need to fix it I Alcohol ads has to say injurious to health I Medicine has to say the consequences I Freedom of the Press I Only private industry that has singledout consititutional protection 0 The government cannot infringe on the freedom of the press 0 Priorrestraint O 0 They cannot demand that the media gets approval of a story in advance They can t ask to see a story before its published It s only a problem if the government asks It s okay for a person to go and inquire about the story I Freedom of Religion 0 Establishment Clause 0 O O The government cannot say that the US or GA is going to be a Christian country or a Baptist state The government has to be neutral on religion It cannot establish a certain state to be a certain religion EX congress passes a law requiring all schools instruct students on biblical history 0 Free Exercise Clause 0 O 0 Generally have the right to practice Whatever religion Not 100 uniform You can t do Whatever you want I You can t try and get out of government stuff If they catch you With drugs you can t say that my religion requires you to do the drug and try and get out of getting arrested EX Montana passes a law prohibiting houses of worship from offering parishioners Wine or bread during a church service 0 Second Amendment I Courts are starting to be more strict about this now 0 Due Process of Law I You have the right to be treated fairly by the government I The government has to give you notice for your hearing in advance I 3 situations Take away your life liberty or your property I You have the right to defend yourself and participate 0 Equal Protection Clause I Government has to treat all people equally I Can t discriminate against race I The government has to have a legitimate reason as to why they are targeting you Test 1 50 multiple choice questions 4 or 5 are from the reading Look at syllabus Bolded definition Definitions Applying the law Not just knowing what the law says Chapter 1 and 15 0 Different types of law common law vs civil law 0 How does a common law system work Different sources of law Slide of the hierarchy of the laws Understand the issues of the issue of legislature How you get uniform law Regulation process of how you pass administrative notice and comment process OOOOO Chapter 3 0 Distinguish questions of law vs questions of fact 0 State courts vs federal court 0 State under state law 0 Diversity jurisdiction issue 0 Diversity jurisdiction vs personal jurisdiction I Under div residents of diff states Its where the headquater and incorporated Chapter 4 0 Know the different parties 0 Counter claims 0 Class actions 0 3rd party defendants I 3 requirements for bring suit 0 Know standing and its 2 requirements Personal jurisdiction Trial process and pretrial process 0 Know the diff types of pleading 0 Discovery Jury selection process Burdens of proof 0 3 honors Compare by easiest to provehardest Which ones in criminalcivil cases Chapter 5 0 Settlement 0 Arbitration 0 Diff between voluntarymandatory arbitration 0 How arbitration works and how to select them 0 Judicial reView 0 Mediation how it compares and contrasts to arbitration Chapter 6 0 Separation of power 0 Supremeacy clause 0 Commerce clause Notes after test 1 Chapter Seven Property Law Lecture Outline 0 What is Property 0 Something is your property if you have the legal right to exclude others from using resources that you lawfully posses 0 Resources basically anything someone in the world places some value on I It s important to have a law that governs the use of resources because I People would take whatever they want I Resources are not unlimited I Find a way to protect your resources I There has to be some order in order to determine who owns what resource I Communismsocialism the government owns all of the resources 0 They divide it up and they can tell you what job you are going to be Then people won t compete with each other for resources 0 Capitalism what we use The people own things and decide what we want to buysell how we want to use our resources I Government still has some say restrictions on property They can take your property regulations on what you can build on your land environmental rules You just can t do whatever you want shooting a gun 0 Types of Property 0 Only two types of property Real or Personal 0 different properties have different rules 0 Real Property I Real estate ownership of land I If you buy land any fixture goes a long with it I Fixtures 0 Anything that is permanently or semipermanently attached to the land houses barns garages within the house carpet plants I Usually requires some sort of effort to remove 0 If it can be moved easily then it s not a fixture 0 Personal Property I Anything that is not attached to the ground I Moveable resources I Tangible Personal Property 0 Anything you can touch I Intangible Personal Property 0 Property you own even though they don t have a physical existence 0 Intellectual property patents copyright trademark 0 Corporate stock 0 Acquisition of Property How you can legally own property 5 main ways 0 Acquisition through Exchange I 99 of how you acquire property I Anytime you have one resource and someone else has another resource and then you exchange resources with each other 0 Money 0 Buying something in exchange for cash 0 Working for someone and getting paid 0 Anything else sandwich for hat etc I Contract law what are the rules that go along with the exchange 0 Acquisition through Possession I Just because you possess something makes you the owner of it 0 Rule of First Possession 0 If you are the first person to ever possess an item then you are the owner of it I Back in the day Explorer finds land and then plants a ag I If you own a plot of land and someone else finds a diamond underneath it the owner of the land is the owner of the diamond I Present day someone was renting out a house and then an asteroid crashes through the house The landlord says its mine because I own the house but the renter is the owner because he is the first person to pick it up and own it 0 Abandonment 0 If you have given up your ownership to an item If someone gives up property then the first person who comes and claims it is now the owner I Original owner has to intend to abandon it It has to be clearly abandoned I Major League Baseball has stated that any baseball that enters the stand is abandoned property I Uga football has not stated that therefore you have to return the football because it wasn t intended to be given away 0 Lost Mislaid Property 0 O O Courts say that lost property is treated one way and mislaid property is treated another way Mislaid property I Intentionally placing property somewhere but then forgetting about it and leaving 0 Placing wallet on the table but accidentally walking away 0 The wallet eventually goes to the owner of the premises if cant track original owner Lost property I Unintentionally placing property somewhere and losing it I Accidentally dropping your wallet on the oor and walking away 0 The person who picks it up eventually becomes the owner if cant track original owner 0 Adverse Possession O 0 Only applies to real property If I live on your land long enough without your permission I eventually become the owner of the land Requirements 1 The possession of the land has to be open and notorious I I am out there in the open and am not hiding it nor am I ashamed of it I39m not afraid of getting caught 2 The possession of the land is actual and exclusive I You re actually using the land sleeping there eating there farming the land on a regular basis actually using it I You re the only person using it 3 It has to be continuous I For the required period of time you are there actively openly notoriously I You re there like a normal person would be 4 It has to be wrongful I It has to be unauthorized O 5 Have to have done all these things for the entire legally required length of time I Varies by state Georgia is 20 years 0 Acquisition through Confusion I We both own identical things There39s no distinguishing feature to tell the two items apart If the two items become mixed together then acquisition through confusion Ex two farmers put both of their corn into the same pot They cant tell which corn was grown through which farmer Through acquisition through confusion then they both get half rather than figuring out whose is whose I Has to be identical and has to be mixed through 2 ways Accident Agreement we both agree to share it and then split it half and half 0 Acquisition through Accession I If you are the original owner of the property and someone comes and improves it then you also own the improvement EX You want to have a party in your backyard and then hire someone to build a deck The landlord is the owner of the deck even though it was built through the worker s supplies labor and effort 0 Acquisition through Gift I Abandonment you leave it I Gift you give it to one person I 2 requirements The donor giver of the gift has to intend to give it as a gift They realize they are losing possession of the item and are handing it over to someone else You have to physically or constructively hand it to you O Physically Handing it over mailing it 0 Constructively giving someone keys and saying take my car didn t actually give the car but handed the keys over instead I Testamentary Gift Tvpes of Ownership 0 Fee Simple I What we would usually think about as ownership of property You are the owner of that property so you have the right to do whatever you want with it You have total control over that forever I Fee Simple Absolute 0 You have the right to do whatever you want with that land 0 You own it and have those rights forever I Fee Simple Defeasible I You can generally do whatever you want with the land but there are somethings you cannot do restrictions 0 EX I may leave the land in my will and you get it as long as you never sell alcohol on the land 0 You get the land as long as you don t turn it into a neighborhood 0 There s usually a backup incase the person doesn t oblige In this case the person who gets it in the backup plan usually monitors to see when the person messes up 0 Life Estate I Total control of the land You can generally do whatever you want with it I You only get it for a lifetime You specify who it goes to after your specified lifetime It could be till you die or till whenever LeBron James dies 0 Person A gets the land as long as Person A or Whoever is alive 0 George gives his son Carl the family farm for life and then to the Nature Conservancy 0 Leasehold Estate I Anytime you rent property dorm apartment house etc I You don t have the right to sell it burn it down You have to preserve it I 2 ways 0 Definite period of time 5 year lease 0 Indefinite period of time no set period of time 0 Concurrent Ownership I Anytime two or more people own property jointly I Its divided proportionally by how many owners there are I 2 people own half I 3 people own 13 0 Titl md Property Registration 0 Title I Legal term meaning ownership of property technically used for real estate I An actual piece of paper 0 Deed The way titles are transferred in land I Warranty Deed 0 I promise you I am the rightful owner of this house and I promise you I will never come back and try to challenge your ownership I am guaranteeing you that I will transfer full legal ownership 0 If someone does come and say no they are the rightful owner then the person can go and find the fake person and then sue them for the whole value of the house I Quitclaim Deed 0 Means you need to be aware that there could be something wrong requires you to do some further research on the property 0 You are personally promising the buyer that you won t come back and claim ownership However someone else can come back and claim ownership of that property 0 Common in divorce its fast 0 Special Applications of Property 0 When people have rights and possession of land even if you are not the owner of it 0 Easements I Parcel one has the right to use parcel twos land basically the legal right to use someone else s land I Ways to Acquire I 1 You buy it from the owner of the other property 0 2 can be reserved when you re selling the land to someone else 0 Would be reserved by the seller 0 3 Easement by prescription 0 Just like adverse possession you take land without permission 0 If I use the land actively exclusively without permission for 20 years then you have a easement by prescription 0 Bailment 0 When I own property but you are temporarily in possession of that property 0 Only deal with personal property I Bailor vs Bailee 0 Bailor someone who is giving property to someone else 0 Can be done for the sole benefit of the bailor 0 Bailee when you borrow someone s property 0 They receive no benefit 0 Has to take voluntary possession of that item I Bailment for mutual benefit 0 Both the bailor and the bailee benefit I Renting a car dry cleaning I Standard of care The law imposes different duties of care 0 Duty of care you owe me a legal right to protect me and my items The level of care you are required to provide is reasonable care 0 Picture 1 he is going to be legally liable 0 Picture 2 sole benefit of the bailor Donnas not gonna be liable 0 Limitations on Property for the Common Good Government poses limitations on your property They are doing this on the benefit of the greater good 0 Nuisance I You re in your apartment its 3 am and the neighbor plays loud music and wakes you up I Public Nuisance 0 Something that affects a large number of people Thousands people I Usually regulated by the government I Private Nuisance 0 Limited it only affects a smaller number of people 0 Zoning I When the government says you cannot use property in certain ways 0 Eminent Domain I Government takes your property They are claiming it from you I Requirements 0 1 Government has to actually take your land 0 They have to seize ownership 0 2 Has to be for public use I 3 Just compensation has to be paid Fair market value Chapter Eleven Intellectual Property Law Lecture Outline 0 Overview of Intellectual Property Idea of intangible property 0 Sources of Intellectual Property law The constitution provides 2 ways patents and copyright 0 Trade Secrets Authorsinventors have exclusive rights to their writingsdiscoveries for a limited period of time 0 Article 1 section 8 the founding fathers gave exclusive rights Gives the public and incentive to be creative Judges originally created trade secrets and trade marks 0 Valuable commercial information not known by your competitors EX cocacola formula google algorithm manufacturing process ad campaign Don t go and register with the government 0 Requirements 1 have to show that you have taken reasonable measures to keep knowledgeinfo a secret Measures vary depending on the secret 0 Can refuse to give it out to publicmake employees sign contracts Non disclosure agreements promise not to disclose info you learned when you leave the company Noncompete agreement you promise you will not go out and compete with that company when you leave Can lock the formula or limit the number of employees who have certain information Have firewalls installed 2 Information has value for not being publically known Easy to prove in most cases You wouldn t be taking so many steps to keep something secret if it didn t have any value to it 0 You don t have to show that you are the only one that knows the information 0 Trade Secret Enforcement Civil We re going to issue an injunction You cannot use this information anymore or we will send you to jail It forces you to stop using the information You have the information and then eventually leave the company and use it It s still wrong but it s not stealing it The most common 0 Patents Criminal Intentionally stealing without authorization Breaking in and stealing it 0 Inventions new machine device manufacturing process 0 You have to file an application with the government 0 Patent duration You get a 20 year patent can sell the right to other companies 0 Requirements Patentable Subject Matter Under the law we only give patents to certain kinds of inventions You have to prove that your invention should get patent protection law 1 Machine 0 Some type of device 2 Process 0 Manufacturing process 0 You didn t come up with any new product but you found out a way to improve an existing product I Henry ford assembly line Wasn t first to make cars but he thought of a faster and cheaper way to make cars 3 Composition of matter 0 If you come up with a new chemical compound I When DuPont made Te on 4 Improvement of any of the first 3 0 If you improve upon any of the first 3 5 Design patent O The way you package something or make it look 0 Apple has design patents for the iphone 6 Plants 0 Certain types of plants Nonobvious Novel and Useful 0 Is it really an invention Is it really new Did no one really come up with this 0 Has to have some useful purpose 0 Obtaining a Patent I Send application to gov PTO office I Application Requirements 0 1 have to explain what invention it is and how it works 0 2 Explanation of how this is different from the prior art I 3 Identify specifically what part of invention you want protected 0 Called a patent claim I Issued Patents 0 Patent Enforcement I Only civil enforcement won t be sent to jail I Defenses if you get sued 0 Noninfringement O Saying I don t infringe the patent I do something different 0 Invalidity O Saying it doesn t matter if you do it or not this patent is bogus and is invalid because it isn t a new novel invention 0 Patents versus Trade Secrets can t have both I Patents have to be made public trade secrets have to be a secret I Have to pick what kind you want based on which is more valuable I Would be a patent if you think other people come up with it on your own I Would be a trade secret when you think its going to be valuable for more than 20 years of a patent Trademarks Logoslogan that people associate with your companyproduct Protected under federal law Benefits keep people from stealing logos can differentiate between realfake product The most valuable asset a company owns 0 Types of Trademarks I Trademarks I For it to be legally considered a trademark it has to be attached or displayed to some good O Cocacola nike swoosh mcdonalds arch 0 Normally we think of it as logo visual 90 of time I It can be a sound or smell if its distinctive and particular for your company 0 TM is usually a statelevel trademark R is usually a federallevel trademark I Service marks 0 Associated with a service that is provided 0 HBO I Certification marks I one entity gets the trademark and then sells trademarks to other companies to use 0 Energy star wifi certified logo I Collective marks 0 To show your membership in a particular group 0 All 32 NFL teams can use the NFL logo I Trade Dress 0 Only if it s the same product 0 I ve made my product appear very similar to the real thing so it confuses customers 0 A competitor won t steal their exact trademark but they ll use something really similar I You can get sued if it looks way to similar 0 Same color scheme same general pictures 0 Making restaurants look really similar to one another 0 Trademark Registration Process I 1 You have to use it in business first before it becomes a trademark 0 Advertisement sign I 2 You then file it for a trademark in the Patent and Trademark Office 0 Distinctiveness O I Won t be distinctive if it s too similar to brandtrademark in the same industry 0 2 Can t use certain prohibited terms or items someone else s appearancename O 3 Can t be deemed offensive or disparaging O Trademark Duration I Someone has 30 days to reject the use of that trademark I Can be potentially forever but has to be renewed 0 Originally have to renew after first 6 years then every 10 years 0 Trademark Enforcement You have the duty to protect your trademarks keep it from becoming generic I Civil 0 The owner sues you for using their trademark without their permission 0 Common defenses O 1 If you say that the trademark is no longer distinctive to one company 0 2 There39s little chance of confusion by the public 0 3 you are entitled to use other people s trademarks even without their permission I Criticism is allowed between 2 different companies I Parroting making fun of another company I Criminal 0 The federal government can come and prosecute you and throw you in jail if you have intended infringementcounterfeit product 0 Trademark Dilution I Not directly copying your trademark but are still hurting the value of that trademark somehow 0 Copyright 0 You cannot copyright facts only expression 0 Requirements I 1 has to be copyrightable subject matter I 2 fixed in a tangible medium 0 Recorded written down preserved somewhere I Speeches are not physical recorded not copyright I 3 Work has to be original and creative 0 Copyright Duration I Lasts for the writer s lifetime 70 years I Corporation limited to 95 years 0 Copyright Enforcement I You do not have to file for copyright protection I If you want to sue someone for stealing your work you have to have it registered I Civil owner sues you 0 Fair use defense I don t have these either so I guess he didn t go over it 01 02 03 04 I Criminal 0 Intentionally selling fake copies of your thing 0 Bootlegging cds dvds 0 Copyright Issues in the Digital Age I Digital Millennium Copyright Act I If you are an internet service provider and get a notice that something on your server violates a copyright law then have to immediately take that file down to not be responsible 0 When YouTube deletes the videos that are violating the copyright law It is not possible to obtain both patent and trade secret protection for the same info because a patent require the company to make its information public while a trade secret must not be known publicly Trademarks was not established by the us constitution Once a patent is ranted it lasts for 20 years unless court nds it invalid rs Eight amp Nine Contract Law Lecture Outline Sources of Contract Law 0 Common Law I Apply to all contracts that do not involve the sale of goods 0 Employment contracts any contract for a service waivers land contracts I States can set up their own common law system I Ex walter agrees to buy a house I EX mitch hires greg an accountant I EX andy rents a car from enterprise for five days CL because rental not technically sale 0 Uniform Commercial Code I Universal throughout the united states all 50 states share the same laW I only applies to certain types of contracts sale of goods I does not apply to rentals I ex Sheila buys a tv from best buy for 250 Contract Formation In order to be a legally bounded contract it must have an offer acceptance consideration capacity lawful purpose 0 Offer I Specific promise and demand I EX this is What I want from you and this is What I Will give you in return I The offer has to be sufficiently specific I If you look at that offer that is potentially the entire deal right there I No part of the deal is not included in that offer I Has to be a legitimate offer I Termination of an Offer 0 l Revoke the offer 0 Make you an offer but before I accept it I take it back and back out 0 2 Provision in the offer 0 In the offer I ll say you have to accept this offer by Saturday at noon 0 If you don t accept the offer by that time it is terminated I 3 Counteroffer or rejection 0 Risk of negotiation and original offer disappears I 4 Lapse of a reasonable period of time 0 Offers just don t stay open forever I 5 Death or Insanity 0 Offers expire if the person dies or goes insane I 6 Destruction of the subject matter 0 If the item we re negotiating for no longer exists in its original condition then the item is off the table I 7 If the item becomes illegal 0 If an item becomes illegal while negotiating then the item is off the table Acceptance Legally binded acceptance has to be identical to offer I accept we have a deal shaking hand I Mirror Image Rule 0 The offer and the acceptance have to be mirror images of each other 0 You do not change any piece of the deal while the person is accepting the offer I Mailbox Rule I Acceptance becomes binding when it is deposited with the postal service I A sends B an offer on Monday via mail On Tuesday B gets the letter and signs the contract and return it in the mail On Wednesday A revokes the offer and say the deals off On Thursday A receive signed contract in mail 0 The contract became locked in on Tuesday and is in place 0 If you want to revoke the offer you have to contact the person and tell them the deal is off before they sign it Consideration Both parties to the deal have to give up something of value to the other side 2 way deal we both get something from the other side I Past Consideration 0 Things that you have done in the past for someone is not valid for consideration 0 There has to be new considerations both ways if you are trying to modify an agreement I Promissory Estoppel 0 In certain cases a court will enforce a promise of a gift 0 Even though there is no consideration in both ways 0 Requires that whoever is receiving the giftpromise justifiably relies on that promise 0 Capacity Both sides must have the mental capacity to enter into the contract I Minors 1130 0 Under the age of 18 do not have the full mental legal capacity 0 You have up until the time you turn 18 to terminate the contract 0 So long as the minor can return what they got from the other side then they can get their money back I Intoxicated Persons 0 If you are drunk or high and have an altered mental state because of alcohol or drugs 0 Court will want to know how drunk you are I Mentally Impaired Persons 0 Mentally incompetent people some mental condition that prevents them from fully understanding what they are doing I They can t enter a contract because of this 0 Lawful Purpose I Whatever we re negotiating has to be legal 0 Written vs Oral Contracts Contracts don t have to be in writing Most contracts are verbal Going out to eat you order a meal and agree to pay for it 0 Statute of Frauds 4 types that have to be in writing to be enforced A written record signed by both parties I Contracts Involving an Interest in Land 0 Someone selling you land or the rights to what is on the land 0 Any rental lease 0 Land was the most valuable resource I Contract to Pay the Debt of Another 0 Agreeing to pay someone else s debt has to be in writing 39 Contracts that Cannot be Performed Within One Year 0 A contract that is impossible to perform in less than a year 39 Contracts for the Sale of Goods of 500 or More 0 Some commercial item you pick off the shelf 0 Exceptions to the Statute of Frauds These 3 can be verbal I 1 Part Performance 0 This one only applies to ones with interest in land 0 Sold you my house but we don t have a written contract 0 We both acted in a manner that shows you bought the house from me Person B pays person A the money and moves into the house and repairs the house The court says there is no contract but it makes sense that the house was bought The sale is still valid but let s figure out the terms I 2 CustomizedSpeciallymanufactured goods rule 0 Verbal contract is enforceable if the good being purchased is more than 500 and is being customized to the buyer 0 Court will say the person obviously bought it if it is madecustomized for just Person B O Sorority ordering winter formal sweatshirt customized portrait 39 3 Judicial admission 0 Both parties admit we had a verbal contract 0 Proves that there was an agreement Emma verbally agrees to purchase a table for 800 but later changes her mind and refuses to pay Steve sues to enforce the contract not enforceable because it is not personalized Wayne verbally agrees to clean gail s house once per month for the next two years After three months wayne stops showing up and gail sues him under the contract not enforceable bc not in writing Robert verbally agrees to sell house for 250000 Amanada pays down payment of 5000 and moves into house After two months of living in the house Amanda decides she doesn t like it and moves out refusing to pay the rest of the money not enforceable because 5000 isnt enough to consider as buying the house George a general contractor verbally agrees to build a bridge for 5 million He changes his mind and refuses to build the bridge They sue him it is enforceable because it doesn t fall in any of the four categories It coulddd be completed in a year they re not sellingtransferring land they re not paying off any debt not a sale of a good 0 Other Reasons to Void a Contract 0 Fraud I An intentional misstatement or lie and you believe I m telling you the truth I When you find out I lied you can go to court and have the contract cancelled O Misrepresentation I An unintentional lie an honest mistake by accidentally not telling you something or lying about it 0 Duress I If you force someone to sign a contract against their will 0 Kidnap their kid held at gun point 0 Undue In uence I Usually happens with elderly people I Pressure to do something that they wouldn t have normally done 0 Using a relationship to take advantage of someone else 0 Grandchild pressuring grandma to include him in the will 0 Mutual Mistake I We are both confused about the central element of the contract I We both think we are talking about the same thing but we re actually talking about two different things no meeting of the mind I EX you go to a car dealership you find a car that you like and you go to salesperson and point and say you want that red Honda accord You want 2012 but he thought you were buying 2005 You potentially signed the contract but it gets taken back because of the misunderstanding Ruth hires Vince to renovate her kitchen after he says has a licensed contractor In reality he had his licensed revoked last year fraud Ian offers to sell Kevin his car for 500 Kevin accepts it and Ian delivers a mustang horse and Kevin refused to pay mutual mistake Laura buys a bike at a yard sale after the owner says its 2 years old but it was actually 3 years old misrepresentation 0 Third Party Rights Someone who has not signed the contract but has acquired rights in the contracts or became a part of it 0 Third Party Beneficiaries When third party benefits from the contract between you and me I Intended Beneficiaries O A and B sign a contract and intend for it to benefit someone else I Parents go to car dealership and buy you a car because of your good grades I Incidental Beneficiaries 0 A and B enter into a contract and never intend for their contract to benefit anyone else 0 You hire a security guard for my house its benefiting me and my protection but it also benefits my neighbors security 0 Assignment of Contracts Sublease type way becomes contract between party A and party C Party A is liable In order to avoid liability Have to sign a novation I Contracts that cannot be assigned 0 1 If the contract itself says you cannot be in this contract I 2 When the assignment is going to increase the burden on the non assigning party 0 If you are party A and you buy a piano from party B and agree to pay shipping cost B tries to assign contract to store in Atlanta party C and therefore shipping goes up I 3 Personal serVice contract 0 If you hire someone that is uniquely skilled they cannot assign that contract to someone else Notes after test 2 Chapter Ten Tort Law Lecture Outline 0 Tort Law Background tort is any wrongful action other than a breach of contract that injuresany type of harm somebody in someway would then sue under tort law 0 Most common tort are physical injuries 0 Does NOT have to be a physical injury I Can be emotional distressdamage I Reputation is harmed 0 Monetary recovery for the Victim 0 Intentional vs Unintentional Torts I Intentional intentionally do something to you know what I m about to do and I do it anyway I Unintentional negligence the most common I sue you because you unintentionally hurt me by not caring enough being reckless etc I You can commit a crime and be prosecuted under criminal law and THEN ALSO be sued under tort law 0 Not all torts are also crimes like negligence 0 Intentional Torts intentionally do something to you that causes an injury 0 Do something on purpose but doesn t mean you re trying to cause any injuryharm I You re INTENDED to take the act I If you re playing with friends and you push them playfully and they fall against something and get hurt I You are responsible for that injury though you never intended for the harm to occur 0 The action was still made 0 If you do this I You are responsible for any injuries that result I Even if the results are totally unforeseeable 0 Touching someone who has a bone condition that a touch would break their bones 0 Intentionally giving them a hug though you didn t know about the health issues 0 You would still be responsible for their hurt bones O Intent read above 0 Assault and Battery I Assault me putting you in immediate fearapprehension for your physical safety 0 Taking out a gun and pointing it at you I Battery taking any physical contact with you without permissionconsent 0 From a tort perspective there are no differences in levels of battery 0 From a criminal perspective there is a difference I Can have assault without battery I Can have battery without assault 0 Hitting someone or making contact someone from behind where they weren t aware it was about to happen 0 Intentional Infliction of EmotionalMental Distress IIED I do something to you whether physicallyverbally that is so extreme that I know will likely cause emotional damage to you I The standard for this 0 You know you ve done this if the average person in the community would be appalled shocked by it 0 Invasion of Privacy covers 3 different types I Misappropriation of a Person s Name or Likeness I use somebody s namepicture without their permission and do so for a monetary value I Commonly happens when a business uses a celebrity nameimage without their permission to help their own business I Intrusion Upon a Person s Physical Solitude invading someone s private space without their knowledge or their permission 0 Intrusion in extremely private spaces I Public Disclosure of Highly Objectionable Private Information there s some types of info about that courts say are deeply personal and that we have a deep right to object courts from using it 0 Medical records etc 0 The public has no reason to know that information 0 False Imprisonment detaining you somewhere intentionally without your permission or justification I Would come up in a business setting 0 Keeping a shoplifter from leaving the store until the cops arrive 0 Have to balance two factors I How strong was the evidence I How long did you keep them there 0 Trespass entering someone s land without permission I Even if you re invited into someone s land and then they want you to leave but you refuse you are trespassing O Unruly customers who refuse to leave 0 Unionized employees cannot go on strike on company property 0 Conversion whoops missed this 0 Fraud intentionally lying about a fact and entering the contract I Can be sued for breach of contract and then also for tort law 0 Defamation libel slander spreading false statements that damage somebody s reputation and then they get fired or nobody wants to do business with then I Defenses 0 1 If you can prove what you said is true then you cant get sued for defamation 0 2 The public figure defense 0 Celebrities politicians athletes etc 0 The standard is different I The press has to intentionally lie about that person I Business worry about this in terms of recommendation letters 0 Business Torts I Injurious Falsehood spreading false info about someone that harms reputation 0 Different from defamation 0 Only comes up in business contexts 0 Lying about product safetyquality etc I Intentional Interference with Contractual Relations INTENTIONALLY interfering wit ha contract of yours making someone break a contract with you 0 Person A and B have a contract and person B breaks it because of person C O B breaks it because of person C I Person A can sue person B for breach of contract I Person A can sue person C for intentional interference with contractual relations I Unintentional Torts didn t intentionally do anything still responsible if the person gets hurt O 1 Negligence most common type of unintentional tort AND the most common type of lawsuits 50 an unintentional injury that arises due to the defendants failure to use reasonable care I Elements all of this is determined by the jury O Duty of Care you are the plaintiff was injured have to show that the defendant had a legal obligation to take care of youprotect youavoid dangerous situations 0 General rule you do not owe any one a duty of care I There has to be some kind of special relationship between the plaintiff and defendant 0 Land owners owe visitors to land a duty of care 0 Drivers on the road owe other driverspedestriansbicyclist 0 Business owe duty of care to customers and employees 0 Professionals owe their clients a duty of care 0 Malpractice cases Breach of Duty did I do something that I should not have done how would the reasonable average person of the community have responded acted in this circumstance Causation in Fact Butforcausation the defendant s breach caused the injury would you have been injured had I acted responsibly or would you have gotten hurt anyway 0 What is it specifically that you didn t do that would have saved me from an injury Proximate Causation is this type of injury reasonably foreseeable think about train station case where firework hit the older lady the old lady lost the lawsuit when she sued the train station 0 Can only be responsible for a reasonable injury Injury you actually have to get injured if you are the plaintiff usually will be physical injury but it doesn t have to be Defenses ContributoryComparative Negligence you sue me for your injury I say yes I was negligent but you were also being negligent and could have been more careful you helped contribute to your injury but being negligent yourself 0 Court will determine what share of the injury each side is responsible for Assumption of Risk if you assumed the risk of your injury then you cannot sue me for you getting hurt 0 You were given stuffiest warning of the risks 0 By Agreement you agree that your going to assume the risk of injury I When you go skydiving you sign a waiver that says you will assume the risk of the injury 0 Implied by the Circumstances whatever you re doing is clearly obviously dangerous that you assume the risk of injury I Nazca drivers 0 2 Strict Liability Torts imp not sueing you because you did something wrong and did everything right you are still responsible for my injury Strict Products Liability if you are the seller distributor or manufacturer of a defective product you are automatically responsible for any injury that results only applies to commercial sellers so not your neighbor who sells you something does not protect business that have economic loss due to defective products Types of Defects 1 Production defect one bad apple out of the bunch 2 All of the products are dangerous because of the design engineering wise injury due to unsafe design lawsuits are common but often very controversial Defenses contributory negligence is not a defense 0 O O Assumption of the risk is a defense I Protected tobacco manufactueres from health injury liability Misuse If a product meets some federally required standard it cannot be considered defective Tort Reform Because of rapid growth of product litigation 0 O O O Permitting only negligence actions against businesses unless the product manufacturer is insolvent Eliminating strict liability recovery Barring products liability claims against sellers if the products have been altered by user Creating a statue of repose that would specify a period following the sale which after plaintiffs lose their rights Reducing or eliminating punitive damages Providing for the presumption of reasonableness defense in product design cases in which the product meets the state of the art where the prevailing industry standards at the time of product manu Capping amount of damages state by state I Abnormally Dangerous Activities by doing something super dangerous I share all responsibility if someone gets hurt Explosives Keeping wild exotic animals Dram Stop Acts strict liability imposed upon tavern owners for injuries to third parties caused by their intoxicated patron Transporttion companies are not liable for O O O O O Acts of God Action of an alien enemy Order of public authority The inherent nature of the goods Misconduct of the shipper Requirements 0 O O 1 Activity requires strong degree of risk of harm super dangerous with super dangerous results 2 No matter how careful you are you cannot simply guarantee anyone s safety 3 Not commonly performed in this area 0 Tort Damages for both intentional and unintentional tort O Compensatory Damages most common same way contracts are dealt with 39 Court isn t trying to punish for wrongdoing but is trying to make sure individual is made whole again 0 Consider medical expenses 0 Economic losses wages or salary 0 Property damages 0 Pain and suffering damages I To calculate damages juries use state adopted life expectancies and present value discount tables 0 Punitive Damages the exception not the rule meant to punish would go on top of the compensatory damages the key to the award is the defendants motive I Courts want to make an example out of you so others will learn and never want to do that I Come in cases of intentional torts or willfull and wanton negligence 0 WW negligence 0 Being extremely and in credibly irresponsible I Big exon oil spill with the drunk driver Readings pgs 289291 292300 301316 0 Introduction 0 Do not have protected use of a thing if our use harms what others own including their persons 0 Tort a civil wrong other than a breach of contract I Law sets limits on how people can act and use their resources so they do not violate the right others have to their resources I Tortious behavior that constitutes a tort I Tortfeasor one who commits a tort I Concept of duty and causation are incredibly important 0 Intentional Torts O Intent the desire to bring about certain results I Results that are substantially likely to result from an action 0 Types of Intentional Torts I Assault and Battery 0 Assault the placing of another in immediate apprehension for his or her physical safety 0 Excludes the expectation that one is about to be physically injured 0 Battery an illegal touching of another 0 Done without justification and without the consent of the person touched I Intentional In iction of Mental Distress 0 A battery to the emotions I One who sues must prove that the defendants outrageous behavior caused not only mental distress but also physical symptoms such as headaches or sleeplessness 0 Most common cases come up with employees who have discriminated against or fired 0 In business come from the effort of creditors to extract payment from their debtors 0 Fairly recent judge made tort I Invasion of Privacy 0 Misappropriation of a person s name or likeness 0 Proper release from such person was not obtained 0 Using their identities for product promotion 0 Intrusion upon plant if s solitude 0 Illegal searches or invasions illegal wiretapping or persistent and unwanted telephoning 0 Public Disclosure of Highly Private Information 0 Even if the information is true can be a tort I False Imprisonment and Malicious Prosecution 0 False imprisonment intentional unjustified confinement of a non consenting person 0 Think about the shoplifting example 0 Unnecessary use of force lack of reasonable suspicion of shoplifting or an unreasonable length of confinement O Malicious Prosecution false arrest causing someone to be arrested criminally without proper grounds 0 In Albany NY dude was arrest for indecent exposure when a security guard caught him with his zipper down jury then awarded the dude 200000 I Trespass 0 To enter another s land without consent or to remain there after being asked to leave When union picketers protest on a company s property I Concerns the crossing of an owners boundaries 0 Usually refers to the physical boundaries 0 In legal history trespass was the legal remedy for direct injuries caused by another to one s person as well 0 Fred Maitland trespass is the fertile mother of actions I He meant that many of our modern day causes of action in tort from trespass I Conversion 0 The wrongful exercise of dominion power and control over the personal nonblank resources that belong to another 0 Deprives owners of their lawful rights to exclude others from such resources 0 May be temporary or permanent but it must constitute a serious invasion of the owners legal rights 0 Lincoln once conVinced IL court that a defendants actions in riding the plant if s horse for 15 miles was not suffiently serious to be a conversion since the defendant had returned the horse in good condition Stealing something from employers or purchasing something that is stolen Failing to return something at the proper time If property gets ruined when you transported it to the wrong area you are responsible I Defamation I Fraud The publication of untrue statements about that hold up that individuals character or reputation to contempt and ridicule Libel and slander Both individuals and corporations can sue for defamation Nearly 13 of all suits are brought in by employees against present and former employers 0 As a result many employers don t give reference letters With regards to the first amendment 0 The media are not liable for the defamatory untruths they print about public officials and public figures unless plaintiffs can prove that the untruths were published with malice or with reckless disregard for the truth 0 Plaintiffs verdicts are often overturned by trails or appellate judges or really in all cases Intentional misrepresentation of a material fact that is justifiable relied upon by someone to his or her injury Lying about assets and liabilities Given evidence that another has harmed you by failing to disclose a material hidden fact A defendant who has intentionally concealed an important fact and has induced reliance on it to the plaintiffs injury is liable NY State filed suit based on fraud against Guidant Corporation 0 Heart defibrillators were defective and had been implanted and failed in 28 patients NOT ONLY A TORT BUT A CRIME AS WELL Can be committed in the hiring process 0 Employers can be held liable for misrepresenting to employees about conditions at a business that later affect employment adversely I Common Law Business Torts Injurious Falsehood trade disparagement O The publication of untrue statements that disparage the business owners product or its quality 0 Different from defamation because it applies to business or a product 0 Defendant must establish faulty of the defendants statements Intentional interference with contractual relations 0 When one company raids another company for employees I If employees are under contract another employer cannot induce them to break their contracts 0 Negligence O Unreasonable behavior that causes liability 0 Duty of care I Usually arises out of a person s conduct or activity I A person has no duty to avoid injuring others through non conduct I There has to be a special relationship between the persons 0 Special business relationships between seller and buyers I Most recent cases have involved failure to protect customers from crimes I Goes for business professionals too 0 Unreasonable behavior breach of duty I How we do separate reasonable behavior that causes accidental injury from unreasonable behavior that causes injury I Judges continue to be involved in the definition of negligence though it is normally the duty of a jury I Willful and Wanton Negligence 0 Extreme lack of due of care 0 Plaintiff can recover punitive damages as well as actual damages 0 Causation in Fact I The person s failure to use reasonable care must actually have caused the injury I How is lack of care determined 0 Leave the question to jury as facts reveal themselves I Problems arise 0 When the carelessness of two or more Tortfeasor contributes to cause the plaintiffs injury 0 Tortfeasor is jointly and severally liable for the entire judgment 0 Proximate Causation I That those engaged in the activity are legally liable only for the foreseeable risk that they cause I The plaintiff must have been on whom the defendant could reasonably expect to be injured by a negligent act I The injury must be caused directly by the defendants negligence O Defenses to Negligence I Contributory Negligence 0 Originally barred the plaintiff from recovery if the plaintiffs own fault contributed to the injury in any degree 0 Comparative Responsibility 0 Plaintiffs contributory negligence dost not bar recovery I Assumption of Risk 0 Plaintiffs knowing and willing undertaking of an activity made dangerous by the negligence of another 0 Spectators of hockey used to sue hacker players for getting hit 0 Now they understand that is one of the dangers of attending a hockey game 0 May be implied from the circumstances or it can arise from an express agreement 0 Strict Liability in Tort 0 Legal responsibility for injury causing behavior that is neither intention nor negligent 0 Strict Products Liability l Commercial sale of defective products Chapter Fourteen Business Organizations Lecture Outline 0 Factors to Consider 0 Ease of Creation O Managerial Control I How much control does the owner of the business have directly in managing the day to day affairs of the business 0 Continuity I If ownership changes does my original business continue to go on as an entity or does it dissolve upon exchange of business 0 Liability I What is the owners personal liability of the debts of the business I Whoever the business owes money to O Taxation I Different businesses are taxed in different ways I Some can get taxed once at an individual level personal income tax I Some get double taxed 0 Sole Proprietorship 0 Ease of Creation I It can only have one owner for the business 0 Managerial Control I Total control of the business since you are the only owner 0 Continuity I If I am selling you my business the person s sole proprietorship ends after the deal is over and the buyer becomes the owner now I Everything with the name gets changed Documents etc I Customer s perspective nothing may change since they may not know the change occurred 0 Liability I The owner is totally 100 legally responsible of all debts I If someone gets hurt at the store any debts O Taxation I Single taxed all of the income of the business is considered personal income of the owner Don t fill out business tax return instead fill out personal tax return I You may pay moreless taxes depending on amount 0 Partnerships 0 Ease of Creation I 2 or more owners I No extra paperwork required just do it I From a public perspective if you have a fake name Big red tomato pizzeria you have to register it If it clearly indicates the owners name Thomas and Jones pizzeria then you don t have to register it 0 Managerial Control I Partners have sole control of business operations specifics are left to the partners I Should draft a partnership agreement Who gets what of company 0 Continuity I The partnership dissolves any time there is a change in ownership 0 Liability I Partners are all personally liable for the debt of partnership 0 Taxation I All partnership income is considered personal income for tax purposes I Corporations 0 Ease of Creation I Most difficult to set up costly time consuming I Have to register this with the state government I Article of Incorporation I When you have to file a formal legal document that lays out basic info 0 The name of the corporation going to be unique and different 0 Have to indicate this is a corp Corp Inc Co Ltd 0 Who are the original owners 0 How much stock is the corp selling 0 Every few years based on state have to renew registration 0 Managerial Control Based on tierlevel of corporation ownership is based on ownership percentage of corp I Shareholders I They elect a board of directors who hire the officers ceo cfo vp I Set general policy for corp 0 Publiclyheld vs Closelyheld I Directors I Officers 0 Fiduciary Duty 0 Owe them a duty of care I an officer have to make informed decisions on behalf of the corp O Owe them a duty of loyalty I have to put the corp best interest first before my own personal interests Business judgment rule satisfying the fiduciary duties 0 How do you get punished if you get caught I when shareholders file derivative lawsuit filing a suit on behalf of the corporation 0 Oct 28 pic 1 Violate loyalty but not duty of care 2 Doesn t breach fiduciary agreement 3 Violates duty of care 0 Continuity I Do not dissolve has totally continuity as owners come and go 0 Liability I Owners of a corp are generally not personally liable for debts I Piercing the corporate veil 0 Certain limited circumstances the courts will say the shareholders acted so bad that they are going to be held personally liable for the corp debt 0 If I39m suing your corporation and holding you personally liable I have to prove the following two 0 1 the court says there has to be a unity of interest between corporation and shareholder I It s hard to tell when the shareholders interest stopped and the corporations interest began O 2 you ve done so and committed some type of fraud or injustice O Taxation I Potentially double taxed file own income tax return for the corp 0 Limited Partnerships Has to have two or more owners Generally share profits and losses equally Traditional partnership everyone s responsible for debt equally Limited partnership limited liability OOOO 0 S Corporations 0 O O 0 Just like a corp but it is taxed like a partnership Single taxation Can also get limited liability If you want to be listed on the stock exchange you need to be a traditional corp You need to have less than 100 shareholders I Have to be individual human beings not other business entitites 0 Limited Liability Companies 0000 LLC most states have removed the ownership restrictions Just like S corp Piercing the veil applies Most exible gives you limited liability so youre protected Chapter Sixteen Antitrust Law Lecture Outline What is Antitrust Law Regulates any potential coordination between competing companies in other countries called competition law want to make sure that competition actually happens because that is good for the economyconsumers that reap the benefits of a freemarket system 0 Legislation I Sherman Act of 1890 the main law most important one I Clayton Act of 1914 came along to close out some loopholes 0 Liability I Criminal can potentially go to jail can individually be fined up to 1M corp can be fined to 10M I Civil can sue a company civilly because I found out you and competitors were colluding triple damages in civil anti trust cases I Usually happens after the government does all sorts of investigations so customers realize how they were screwed over and begin to sue I An Example Microsoft got prosecuted under Sherman since they knew they dominated op system market they decided to tie in all program made it difficult to use anything besides their stuff I Gov prosecuted them for that I And then customers decided to file suit after that 0 Paid billions in civil damages Sherman Act of 1890 0 Section One versus Section Two I Conduct of one company section 2 I Collusion between multiple companies section 1 O Sherman Act Section One two or more companies working together collusion regulations restraints of trade contracts between companies that hurt competition I Types of Cases majority of cases 0 Price Fixing agreeing to set the prices even though the market is supposed to get the price has to be two independent firms 0 Will be true no matter how big businesses are I Could be cokepepsi or two gas stations across from each other 0 Territory Allocation Agreements dividing up territory with competitors agreeing not to compete at all I Standards of Review 0 Per se illegality means automatically illegal certain things will not allow a defense 0 Price fixing and territory allocation agreements 0 Rule of Reason court has to judge on a case by case basis 0 Look at two things I What s good about this agreement is there an argument that it helps customers if more bad than good illegal 0 Problem for companies this is subjective is in the customers interest no guidelines at all I Types of Section One Cases 0 Horizontal Agreements pe se illegality price fixing agreements and territory allocation agreements competitors who do the same thing general type of service I Vertical Agreements manufacturers distributors etc 0 Vertical Price Fixing supplier and distributor entering into a contract I Company sets MSRP and requires its distributors to sell at that prices or else lose the right to sell those products I Has to judged by rule of reason Sherman Act Section Two regulated when one company has a monopoly in a certain market having a monopoly is not automatically illegal a patent gives you a legal monopoly can have a utilities monopoly I okay to have one if you offer the best product at the best price 0 back when apple had a monopoly in the mp3 player market 0 good technology at a good price I Monopoly Power in a Relevant Market first asking if you even have a monopoly to begin with do you have the power to arbitrarily increase your price without any ramifications 0 have to look at how much competition there is in that market 0 whats the relevant market I Have to see what would be a substitute for that product 0 Takes into consideration mergers of big sections of the market that would form a monopoly 0 Barriers to Entry how hard is it for people to enter into the market 0 Almost impossible to start an airline company 0 But anyone could start up a new lawn service company within their town Exclusionary Conduct you re doing something to keep people out of the market You ve driven people out of the market not necessarily because you have the best productbest price 0 If ford buys every single tire in the US then everyone else would go out of business because they don t have any tires to sell It forces everyone to buy tires from Ford Predatory pricing when a company says lets sell every product for a loss for the next 3 years We do this because we can withstand those losses and our competitors cant sustain those losses Then those companies will go out of business after the 3 years and my company can now raise the prices to whatever they want because theyre the only one in the market 0 Clayton Act wanted to close loopholes from Sherman Act 0 Price Discrimination you charge different prices for the same quantity of the same good to different buyers Has to be a good not a service Effects competition because one company is trying to pick winners in the market More at the wholesale level 0 Justin the head of sales for the Louisville slugger company is good riends with shelly the exec in charge of purchasing baseball bats for the academy sports chain Justin agrees to sell his company bats for cheaper to Shelly illegal 0 Delta charges employees less than the general public Stan an attorney tries to sue legal because it s a service not good 0 Kroger offers dicsounts to Kroger plus cards customers Mary is upset she cant get the discounted price because she doesn t have a KPC legal because its at retail level 0 Tying Contracts not always illegal judged under real of reason when a company says we offer lots of products ranging in popularity 0 if you want to buy one of our popular products you have to buy one of our less popular products 0 Mergers and Acquisitions in order to merge two companies you have to have government approval Any company with a combined value of 76m or more in combined assets before they can merge have to inform govt and get their approval Have to see if this merge will substantially decrease competition in any market 0 Will look at product market overall and geographic basis If govt says they cant merge then the two companies have to go to court Whole FoodsWild Oats Merger 0 Wild oats wasn t a nationwide chain 0 Combined worth was greater than 75m 0 Gov had to look at what markets they operate in I Whole foods operate in premium organic market 0 But whole foods say they are just another grocery store I So if they merged with whole foods in some citities there will only be on provided 0 So they went to court I The district court agreed with whole foods so they merged The gov appealed Appellate court agrees with the govt CEO ended up admitting stuff in the discovery phase So the merger was cancelled Chapter Seventeen Securities Regulation Lecture Outline Enron documentary The Smartest Guys in the Room Jeijkilling 19 charges 24 years in jail 0 Argued that one of his crimes that he was convicted of was unconstitutional Andy Fastow Kenneth Lay I dijferent charges died after being found guilty and before being sentenced so all charges were thrown out What caused Enron s collapse the mark to market accounting 0 allows you to estimate what something would be worth in the future 0 if you wanted to find out a property s worth today would have to sell it or find an appraiser 39 compare recent sales 0 was this appropriate in Enron s case Not really 0 Was being abused in this case Took lots of unnecessary risksstrategies that never paid 01f 0 Andy would set up all partnerships that would do business with Enron I Partnerships would fundraise money from banks 39 That partnership would buy un needed assets that would then represent as profits for Enron s stockholders 0 The banks say they didn t fully realize what was happening but prosecutors knew better than that Paid out bonuses based on future profits that never worked out Energy crisis of CA Forcing banks to fire analysts Wont 100 honest with investors 39 Making company look more profitable than it actually was 0 Accountants from Arthur Anderson shredded all documents 39 Oldest and biggest accounting firm was brought down What unethical activities were involved GOOD What role did the banks play 0 What is a Security Any type of investment activity one of the most common company s stock there are TONS of types supreme court came up with a test to see if something is a security all three have to be true and have to them comply with security regulation laws when one person invests money and looks to others to manage the money for profit 0 1 if the investment in a common business activity fundraising for a business activity 0 2 is it based on a reasonable expectation of profits are you intendingdesiring to make a profit off of this even if you end up making a loss 0 3 if that profit going to be earned through the efforts other than the investor give my money to somebody to someone else and through their laborhard work the profit is coming back to me 0 Securities Exchange Commission keeps tracks of all of this regulations 5 commissioners appointed by president for 5 year terms has both quasi legislative power adopted rules and regulations and quasi judicial power investigation Securities Act of 1933 regulates the initial sale of the security people were starting to lose faith in the markets because of the great depression wanted to ensure investors that they were receiving honest information Regulates 4 different types of people 0 Parties Regulated use example of company Facebook offering stock to public for the first time I Issuer the company itself Facebook I Controlling Persons have a controlling share in that company controls or is controlled by the issuer Mark Zuckerburg I Underwriter usually an investment bank or stock brokerage firm help provide consulting and guidance for the issuer have experience and can walk you through the process usually buys a large percentage of that stock Morgan Stanley I Seller anyone who actually goes out and tries to sell the stock to the company 0 law requires a couple things 0 before you send these documents in you are in the pre filing period I you are forbidden from selling with investors 0 have to file a registration statement your applicationregistration of the security 0 have to file a persecutes more detailed financial statements 0 once those documents are filed you are in the waiting period I SEC is reviewing your information I Usually 20 days I Cannot sell your security during this period but can start to advertise it with investors 0 Once SEC has approved security you are in the post effective period I Can start selling the security now 0 Required Documentation viewed as a disclosure law I Registration Statement your applicationregistration of the security I Prospectus more detailed financial statements provides investor with sufficient facts so that they can make an intelligent business decision DON T rely on the prospectus as assurance the investment will make money 0 Statutory Time Periods I Pref39iling Period before documents are sent in forbidden from selling with investors legal for the issuer to engage in preliminary negotiations and agreements offers to sell or buy securities is prohibited I Waiting Period SEC is reviewing the information cannot sell your security during this period but can start to advertise it with investors offers cannot be accepted 0 Many solicitations during this period are made in advertisements called tombstone ads 0 Brief announcements identifying the security and stating its price by whom orders will executed and from whom a prospectus may be obtained I Posteffective Period once SEC has approved registration any amendment filed without commission consent starts the 20day period running again 0 Liability communicated untrue fact to investors I Criminal up to 25 years in jail 5 million in fines I Civil say I bought stock in the company after post effective period because you told me something during the waiting period that wasn t true just to get me to buy the stock are sueing to get my investment back I 3 sections apply to civil liability 0 section 11 deals with registration statements 0 section 12 relates to prospectus and oral and written communication 0 section 17 concerns fraudulent interstate transactions 0 Defenses O 1 materiality means that its important saying that the false and misleading information was not material does not cover minor errors 0 2 statute of limitations how long you have to file suit for both criminal and civil I very short have to file within 1 year of discovering the fraud or when discovery would have been made with reasonable dilligence I total of 3 years after the purchase mx I reasoning don t want you to sit back and wait to see how investment works out file a suit if you really felt like you had been fraud 0 3 due diligence I if there was a wrongdoing or mishappen in the information an accountant may say that they did everything by the book 0 the reason a mistake was made is because I was given faulty data 0 burden of proof is on the expect Securities Exchange Act of 1934 deals with subsequent resale of the security the vast majority of investments that we undergo during everyday life to give the public a ton of information to have confidence in the market 0 Requirements can have civilcriminal liability if any fraud is committed I in order to buy stock directly off the stock exchange you have to be registered with the government 0 stock brokers agree to keep detailed records that are reported to SEC I if you are the issuer you have to file periodic updates with the SEC regarding the conditions of the investmentsecurity must also report significant developments that would affect the value of the security 0 a 10K is an annual report filed with the SEC gives all investors a ton of information 0 a lOQ is a quarterly report includes a release of profits and losses 0 Section 10b and Rule 10b5 declare that it is unlawful to use the mails of any instrumentality of interstate commerce or any national securities exchange to defraud any person in connection with the purchase or sale of any security I Common issues 0 Who is liable 0 What can be recovered by the plaintiff and does the defendant have the right to seek contribution form third parties 0 When is information material to the transaction 0 Where does the law apply I Liability 0 Don t have to read about this I Damages 0 Plaintiff must prove damages 0 Allegation of fraud or drop in stock price is not enough 0 Actual out of pocket losses or the excess of what was paid over the value or what was received 0 Benefit of the bargain measures 0 Computation of a defrauded seller is more difficult 0 Difference between the fair value of all that the seller received and the fair value of what he or she would have received had there been no fraud I Materiality 0 Plaintiff must establish the existence of a material misrepresentation or omission made in connection with the purchase or sale of a security and the culpable state of mind of the defendant 0 Proof of the defendants intent to deceive I Practice is manipulative and not just corporate mismanagement I International application 0 depends on nationality of purchaser and seller as well as the location of the actual sales transaction 0 Insider Transactions stock transactions traded by insiders of the company I An insider any one of these three I Owns 10 of more of the companies stock 0 If you are the officer of a corporation 0 If you are the directorboard of directors of a corporation 0 Disclosure Requirements 0 Have to file a report with SEC within 10 days of becoming an insider disclosing all holdings with that companies stock I Then have a continuing obligation any time you buy or sell a stock you have to notify the SEC 0 This information then becomes public I Shortswing Pro t an insider is not supposed to be buying AND selling own companies stock within a 6 months period of time for a profit not a problem if you make a loss not entirely enforced by the SEC enforced by civil actions filed by the issuer of the security or by a person who owns a security of the issuer 0 if in Feb you buy lOshare in June you sell 20share make a 10 profit or in Feb you sell 20share in June you buy back lOshare still make a 10 profit I this is all illegal cannot do this because you are making a profit within 6 months I can be sued and be forced to give up any profit you make Nonpublic Information the classic insider trading case 0 I work at company and I know there is about to be a big announcement about company that will either increase or decrease stock so then I go buy or sell stock based on what I know 0 Employees someone who works at company not just an insider and knows nonpublic info cannot act upon that information 0 NonEmployees illegal for me to act upon information I learned from an employee of another company 0 I would have to get information that was supposed to be confidential and in exchange whoever gave it to me is getting something in return 0 Even if you getting this information from a friend the courts will still consider it insider trading 0 A tippee is a person who learns of nonpublic info from an insider a temporary insider O Liable for the non public information I Only if the tipper breaches a fiduciary duty to the business organization or fellow shareholders I If info was given for other reasons than personal gain no liability O Misappropriation Theory a person would be considered to be a temporary insider if that person conveys nonpublic information that was to have been kept confidential Additional Civil Liability an individual that has violated law can be prohibited from serving as an officer or director of business organization 0 Defendant s good faith is a defense 0 Freedom from a fraud is a defense No liability under section for simple negligence 0 Cannot just say that the filling was inaccurate Criminal Liablity O For false material statements 0 Corp can face huge fine and indivduals face up to 25 years in jail 0 Compliance with GAAP is a defense of good faith I Other Considerations 0 Private Securities Litigation Reform Act of 1995 0 Limits the recovery for securities Violations against third parties who are not directly responsible for the Violation the SEC can pursue these claims requires lead plaintiffs in class action securities suits and restricts recovery of damages and attorneys fees 0 State Blue Sky Laws 0 State regulations regarding securities laws I Protect potential investor from buying a piece of attractive blue sky worthlessrisky securities without financial or other information about what was being purchased 0 Enactment has not been uniform 0 Registration requirements I by notification 0 offer securities for sale automatically after a state time period expires I by qualification 0 a more detailed disclosure by the issuer 0 Exemptions I For an isolated transaction I For an offer or sale to a limited number of offerees or purchasers within a stated time period the most common I For a private offering I For a sale if the number of holders after the sale does not exceed a specified number SarbaneSOxley Act of 2001 passed after Enron situation congress wanted to update securities laws 0 5 things it did I Revitalization of the SEC strengthening the SEC gave it more power and more ability to stop these types of things from happening did so by increasing its budget 0 Created new rules 0 Public companies to have a majority of independent directors on their boards 0 The focus on agency s efforts to collect ciVil damages against exec and their company so long as the shareholders value will not be harmed 0 The increase in emphasis on how the Internet can assist shareholders in expressing their Views 0 The disclosure of exec compensation I Accounting Reforms 0 Created the Public Company Accounting Oversight Board PCAOB O A gov agency that regulated accounting firms that provide accounting services to public traded corporations 0 Would regulate firms to make sure that they were following all proper accounting procedures 0 Said that accounting companies cannot offer both accounting services and consulting services to the same client 0 Auditing firms refrain from performing nonauditing services 0 Marktomarket accounting is still legal not addressed by this act I Corporate Governance Reform any publically traded company has to establish a separate independent auditing committee within the firm one member has to be a financial expert I So the CEO does not have power over all accountants within a company 0 The accountants have to report to the separate committee I Financial Statements and Controls the CEO and CFO have to personally sign and certify the accuracy of any financial statements reported by the company 0 if any reports are false later on executives have to pay back any bonuses they received based on those false reports 0 the most costly for companies to implement I Securities Fraud increased the punishments 0 DoddFrank Wall Street Reform and Consumer Protection Act of 2010 O Followed the near collapse for the US economy 0 Authorized the creation of many new organizations I Consumer financial protections board I Financial stability oversight council I Federal insurance office I Office of financial research I Office of minority and woman inclusion I Office of housing counseling I Office of credit ratings I Investment advisory committee I Office of investor advocate Notes after test 3 Chapters Nine amp Twentyone Agency and Employment Law Lecture Outline 0 Types of Employment Relationships 0 EmployerEmployee I Somebody who works for you consistently routinely for you I They may perform one functions for you 0 EmployerIndependent Contractor I The employer does not have a lot of control over them 0 Consultants housing contractor doctor accountant I They can decide what to do and what order they want to do it in I They usually work for lots of different people at the same time I Factors Differentiating Employees and Independent Contractors 0 1 How much control does the employer exercise over the detail of the work 0 Independentcontractor is more free to do what they want over an employee I 2 Whether the worker is engaged in an occupation different than that of the employer 0 The more similar job is to the overall purpose of business employee I 3 How long are you employed for O Independentcontractor is usually employed for a specific time I 4 What s the frequency of how youre paid 0 Employees get paid at a consistent schedule Independent contractor is infrequent possibly only when they get the job done I 5 Whether the type of work being done is usually subject to a lot of control by the employer 0 6 Does the employer provide the necessary toolssupplies 0 If the employer provides it it s usually an employee I 7 How specialized is the work 0 The more general the work is employee and the more specialized is independentcontractor 0 Tort Liability Is the worker an employee or independentcontractor 0 Employees I The employer is responsible for any tort committed by an employee within the scope of their employment I Frolic and Detour 0 Doing something outside the scope of your job significant deviation from the job 0 Has to clearly show that you have removed yourself from the job 0 Court can say that employer is not responsible I UPS driver on regular route of delivery They go 10 miles out of the way to visit a friend and then get into an accident UPS can argue that they are not responsible for the employee I Dominos pizza 30 min or less or its free They stopped that program because too many employees were getting into car accidents I An attorney was driving to work on Sunday morning and took a call from a case she was working on She hits a pedestrian and kills her and drives off The family sued the worker and the law firm 0 Independent Contractors I You are generally not responsible for any torts committed by an IC I There are two exceptions 0 Inherently Dangerous Activities 0 If you hire an IC to perform this dangerous activity for you you remain liable if someone gets hurt I Negligentlyhired Independent Contractors 0 If you hire someone who is not qualified for the job You are liable if the person gets hurt I If you are hiring a security guard as an IC you should check to see if they have a criminal record After 2 weeks they start breaking into your house and stealing your stuff You are at fault because you didn t do a thorough check Examples Alex an employee is restocking shelves when he drops a box on a customer The customer sues Home Depot Home depot is liable Ginny hires Vic an IC to install a computer system While carrying the system Vic trips and causes Terrence to swerve out of the way to avoid hitting him with his car Terrence hits a wall and sues Ginny for the damage to his car there is no liability for Ginny Jim an employee leaves work 2 hours early to go to the hospital Jim hits Francis car and Francis sues HampR for the damages HampR is not responsible Louise hires Kevin an IC to trim a tree even though she knows he doesn t have experience The tree branch hits Roberta Roberta sues Louise Louise is responsible because of negligently hiring an IC 0 Contract Liability 0 Authority What type of authority did the person have I Actual Authority 0 I39m actually authorizing you to do something 0 You re entering in on a contract on certain terms I Implied Authority 0 You re working for me you re doing something for me but I never specifically told you 0 You re a general manager of a restaurant If we run out of some ingredient one day you as the gm can go out and get something as an implied authority I Never specifically told you to go buy the bread that night though I Apparent Authority 0 When you don t actually have any authorization from me but some thirdparty thinks you represent me 0 You used to work for me and have authority You ve entered contracts with this company in the past but you ve already been fired The thirdparty still believes that you work for me and can enter into a contract with me though 0 A homeless person pretends to be a valet person in front of a hotel and takes a customer s car and drives off The customer can sue the hotel and say they are liable for letting a homeless guy hangout in the front I Agency by Ratification 0 Basically means that you are not my agent never have been authorized to be my agent but I still will honor the contract that you ve entered into 0 Disclosure of Principal You re my agent you re entering into a contract on my behalf Does the person you re entering a contract in with know you are my agent Do they know who the actual boss is I Fully Disclosed 0 You re entering into a contract for me The thirdparty knows who I am I Partially Disclosed 0 You re entering into a contract for me the thirdparty knows you are doing the contract for someone else but they don t know who the person is I Undisclosed 0 You re entering into a contract for me but the thirdparty does not know who I am They don t even know I exist and just think it s you two in the contract 0 Contract Liability Scenarios I Disclosed Principal Agent has Actual or Implied Authority 0 The contractual liability lies between the principal and the third Party I Disclosed Principal Agent has Apparent Authority but no Actual or Implied authority 0 I m going up to buy my merchandise but I did not know the cashier just got fired 5 minutes ago The cashier wants to do one more sale and screw target over The cashier sells 500 worth of merchandise for 5 The thirdparty isn t suspicious because the cashier agent is still wearing his red polo The cashier has no actual authority though 0 Target can t sue the customer but they can sue the ex employee for the difference I Disclosed Principal Agent has No Actual Implied or Apparent Authority 0 Only liability is between the agent and the thirdparty I PartiallyDisclosed Principal Agent has Actual or Implied Authority 0 If Donald Trump asks an agent to buy property but tells the agent not to tell the seller who the developer is The agent knocks on my door and says he is buying land for a developer If I agree to sell you my house the agent is on the hookliable for any contract he enters in 0 It is because the agent kept information from seller 0 But if seller later finds out who it really was principal the seller can then sue Trump principal I PartiallyDisclosed Principal Agent has No Actual Implied or Apparent Authority 0 All liability is between the agent and the thirdparty I Undisclosed Principal Regardless of Agent s Agency StatusAuthority 0 Donald Trump tells the agent to buy the land but don t even tell them you are working for someone The seller thinks he is just in a contract between the seller and the buyer doesn t realize he is an agent If the seller later finds out that the buyer was actually working for someone else then the seller can go back and sue 0 All liability is between the thirdparty and agent UNTIL the principal reveals himself to the seller 0 Duties of Agents and Principals O Agent s Responsibilities obligations to the principal I Duty of Loyalty O the agent is always supposed to be working on the principal s behalf and in the principal s best interest 0 Agent should not be working for their own interest I Duty of Obedience 0 the agent had to obey reasonable not illegal commands from the principal 0 Even if its not normally in your job description I Duty of Care 0 the agent has to do a reasonablly careful job when acting on behalf of the principal 0 Principal s Responsibilities I Compensation 0 Have to pay the agent I Indemnification O the principal has to reimburse any expenses that the agent took on the principal s behalf to complete duties 0 Reimburse business related expenses 0 Termination of the Agency Relationship 0 Principal now has to worry about apparent authority because then principal could still be bound by contracts formed by the agentt O 1 if either one of the sides decides to terminate the relationship I if principal terminates agency does not mean agent is fired 0 means you no longer have the legal authority to represent principal when entering into contracts 0 2 the task is achieved I if agent is hired to buy a house once the house is bought the agency relationship is terminated O 3 lapse of time I many agency contracts have a time limit in them 0 4 by operations of law I certain legal situations 0 death of an agentprincipal O destruction of subject matter 0 businessprincipal goes bankrupt 0 Employment Law 0 Types of Employment I Employmentatwill the most common in US voluntarilly signed up to work and as long as employer is willing to have you 0 Employee free to leave when they want 0 Employer free to terminate it when you want I Employment for a de nite period of time xed term contract covers a certain period of time like atheletes 0 Employee cannot leave during that period of time 0 Employer can only fire employee for a situation if its already agreed upon in the contract wihtout having to pay 0 If it wasn t laid out in the contract employer still has to pay I 3 protection for employees 0 cannot be fired for performaning an important civil obligation I ex Jury duty military service 0 if you excersize your statutory rights 0 whistleblowing I cant fire you because you reported a violation of law happening at company 0 Fair Labor Standards Act I Federal minimum wage 725 I Specifies overtime provisions 0 Supposed to get time and a half 0 Work Adjustment and Retraining Noti cation Act WARN if employer about to lay off big chunk of workforce and knows about this for some period of time have to provide atleast 60 days of notice to those affected I Restirciton 0 Only applies to 100 or more employees I Plant Closing shutting down entire factory have to provide notice I Mass Layoff 0 Within a 30 day period of time 0 Either firing 500 working 0 OR 0 13 of workforce I if employees gets fired without a notice 0 court will make employer pay employees for the time they shouldve received notice 0 Family and Medical Leave Act business has to have 50 employees any employee whos been working there atleast halftime for 12 months then you are entitled to take leave up to 12 weeks of unpaid leave in any 12 month period of time LEAVE HAS TO FALL UNDER 3 CIRCUMSTANCS I 1 Birth or care of a newborn or adopted child true for both mother and father I 2 to care for an immediate family member with a serious health condition I 3 for employee s own serious medical condition I cant discriminate against employee when they come back have to treat them as if they never left 0 Occupational Safety and Health Administration OSHA I A Dangerous Business Chapter Twenty Employment Discrimination Lecture Outline Only certain types of discrimination are protected under these laws 0 Civil Rights Act of 1964 original federal discrimination law we will be focusing on Title 7 how do employers have to treat their employees applies to any business with 15 employees 0 Prohibited forms of discrimination 5 I Race I Color I Religion I Gender I National Origin 0 Prohibited discriminatory acts I 1 terminating employment because of above 5 things I 2 not hiring you in the first place I 3 if you are compensated differently even for the same type of positions I 4 any other terms and conditions of employment 0 Enforcement I Equal Employment Opportunity Commission EEOC 0 If you believe you were discriminated against you contact EEOC first don t file discrimination lawsuit first within 180 days 6 months 0 Lay out what happened 0 EEOC launches an investigation to see if they can support your claim I If EEOC does believe there is a legitimate case then they will represent you and try to settle the case with the business for you 0 If they cannot settle case voluntarily then they can go to court and sue on your behalf I If EEOC declines to take your case you are allowed to go forth with your own employment discrimination suit 0 If you win your case I You can be reinstated I Get back pay I Company can receive punitive damages 0 Types of Cases Under the Civil Rights Act I 1 Disparate Treatment traditional discrimination 0 Bona fide occupational quali cation BFOQ a defense companies can make 0 Employers admits they discriminated against you but did so because they had to I Maybe one gender can really only perform this job I Have to consider religionnational gender I Only works in those three categories I Saying that no one outside of this certain group would ever be qualified for this position I 2 Disparate Impact employers has a policy that discriminates against a certain group of people example I only want sales persons 6ft or taller would generally discriminate against woman and certain races 0 Business necessity defense is this policy relatively reasonably necessary for the job 0 Saying that my sales people have to reach for high up stuff quite often I 3 Retaliation I am discriminating against you because 0 you made a discrimation charge so now im pissed and want to punish 0 you agreed to testify one of your colleague s case 0 you in some other way assited someone elses case I Examples Jeremy native American disparate treatment color discrimination Jack hiring new female disparate impact being blonde doesn t get to raceskin colorgendernational origin 0 Would have to show statistics of how very few Asian Americans have blonde hair naturally 0 Bar would not be able to make business necessity defense Candice a muslin disparate treatment against her religion 0 Cant really use BFOQ I Can still sell the books even if not the Christian faith I Unless the store required her to talk customers about the faith DaVid encourages retaliation assisting in the case Josh a doctor disparate impact 0 Could use business necessity defense Erin is hiredpeeing disparate impact doesn t have to do with gender itself 0 Potentially Challengeable Employment Practices I Testing and Educational Requirements If employer says that you must have an MBA for this job 0 And stats show that one minority group is less likely to have an MBA and they sue over that I The courts will have to look into if an MBA is really necessary for the job and see if it really eliminates one minority group from the pool If a job says that all applicants will be given a test and the person who scores the highest is hired 0 And for some reason some minority group did the worst 0 Court will have to look at if that test is really necessary for the job I Height and Weight Requirements HaVing certain requirements can eliminate certain genders and racial group Have to make sure that its really necessary for the job I Appearance Requirements and Other Religious Issues Religious discrimination Some jobs will have requirements on facial hair length or attire Are you making the potential applicant decide between their religious beliefs or taking the job 0 Have to ask why that requirement is necessary If there is no business necessity the courts say the employer has to try and make a reasonable accommodation 0 Can you make an exception for the one applicant without making a burden to your operatons Work scheduling issues 0 Can sue for disparate impact O Courts will ask employers to make a reasonable impact if they can 0 Examples 0 Shelly at burger king business necessity potential sanitation and safety reasons I Can make a reasonable accommodation 0 Work as a cashier or wear a long skirt 0 Charles owner of small automotive not religious discrimination because the prayer session is optional I As long as that employee isn t being punished and is still being treated fairly O Rashid and religious pilgrimage was disparate impact because Muslims have to go on this pilgrimage during a certain season that directly coincides with the school year I Would be put in the position of deciding between religion and work I Courts said he had to be rehired 0 Sharon a devout Christian employee wins the case because she was fired I If she hadn t been fired then she just has to deal with the verses being printed I EnglishSpeaking Requirements 0 Falls into national origin category 0 Disparate impact case I Courts will have to see if this a business necessity or not I Af rmative Action I Not required under the law 0 But still cant discriminate on the basis of race 0 Courts say you cannot have a quota of certain minority group 0 Genderbased Issues I Sexual Harassment traditionally against women 0 Quid pro quo 0 Means this for that I Basically saying I will hirepromote you if you ll have sex with me O Hostile work environment 0 The more common type 0 The working atmosphere is so highly sexually charged that the employee girl would never feel comfy I The harassing behavior have to be abusivecommon enough that it creates a hostile atmosphere for a particular joke 0 Not just a one time joke that is offensive 0 An every day thing I The employer has to know about it and refuses to address 0 Employee has to tell them about it or will not have a sexual harassment case 0 Will only have a case if management is aware and chooses to do nothing about it 0 Examples 0 Alice is a lifeguard yes to sexual harassment hostile work enV I Have to show manager knows I And that it makes her uncomfy 0 Bob slaps Sharon not sexual harassment it was just a one time thing and management knew about it and punished him for it 0 Female employees rating colleagues feeling uncomfortable about being obj ectified and if management didn t do anything about it then yes I Pregnancy Discrimination 0 Treat pregnant woman equally with men employees 0 Just because they are pregnant or could be pregnant I cant discriminate against them I Cant force an expectant mother to stop working at some point because they want you to stay at home and rest 0 Mother has to make that decision I Equal Pay Act 0 Its illegal to discriminate on the basis of pay for each gender 0 Has to be for EQUAL work 0 The man and the woman are working the same job 0 Age Discrimination in Employment Act 0 Applies to business with 20 employees 0 Not equal in protecting against being too old or too young I Only illegal on discriminating for not hiring 40 years older I Not illegal to not hire because they are too young 0 Illegal to have a mandatory retirement age within company 0 Disparate Treatment I Directly discriminating against you because of your age I Have to show that there is a clear intentional direct policy I Age is never a BFOQ 0 Disparate Impact I HaVing to have a certain Vision requirement or computer skills I Don t have to prove it s a business necessity 0 But have to show that the requirement is reasonable for the job 0 A lower standard than business necessity Illegal age discrimination If she was 65 and was guaranteed 45000 a year it would be legal In order to ensure that all of its officers are physically fit enough to chase criminals the Athens police requires all officers to pass a fitness exam Officers in their 50s fail Officers sue engaged in age discrimination they cant sue Terry is hiring a new sales ex Evan is 50 but terry wants someone with more seniority He picks 60 year old Brenda Evan sues for age discrimination Americans with Disabilities Act Talking about from an employment prospective Applies to business with 15 employees Prohibits Discriminating if you are currently disabled Anybody who has been previously been disabled If you think they are disabled but they are not 0 Definition of Disability Some type of mental or physical impairment that substantially limits one or more major life activities 0 Some type of disease disorder paralysis mentally incapable etc 0 Effects things like walking talking being able to take care of self 0 The disability cannot be temporary or intransatory meaning it doesn t last 6 months or less 0 Reasonable Accommodations Do not ask about disability during job interview decision should be based on merits If you would normally hire that person but want to make sure you disability can accommodate the job Would then decide if you can make an accommodation or not Karen a barista at Starbucks and has a condition causing her to occasionally faint Karen is ultimately fired and sues for disability discrimination Starbucks needs to cater to her Safety is an issue though Paula a ight attendant is paralyzed from the waist down and is in a wheelchair After several months of recovery in the hospital she wants her old job The airline tells paula there isn t a way to accommodate her wheelchair and cannot come back The airline needs to work with her Larry an employee at a vacuum factory is injured and misses a week of work When he comes back he finds out for being fired for failing to call in each day from the hospital to notify the factory he wouldn t be working that day Larry sues for disability discrimination He would most likely lose that case
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