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LA245 Week 2 Notes

by: Frankie Fucci

LA245 Week 2 Notes AC 222

Marketplace > Boston University > Accounting > AC 222 > LA245 Week 2 Notes
Frankie Fucci
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Managerial Accounting I
Patricia Doherty

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About this Document

This covers week 2 for LA 245, including chapter 6 and class 3 and 4 notes.
Managerial Accounting I
Patricia Doherty
Class Notes
Law, LA245, notes




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This 11 page Class Notes was uploaded by Frankie Fucci on Thursday January 28, 2016. The Class Notes belongs to AC 222 at Boston University taught by Patricia Doherty in Spring 2016. Since its upload, it has received 43 views. For similar materials see Managerial Accounting I in Accounting at Boston University.


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Date Created: 01/28/16
Podcast Tarred and Feathered Topix local news site more for small towns more like a big message board where you can post news 0 More often its gossip A woman made fake Topix user names to have fake conversations about Gene to tell horrible lies 0 Gene went to a lawyer to try and create a case 0 Used a ruling in Texas to get Topix to release the names of the people saying things about him really just the one woman 0 Sued her for defamation She argued she was protected under lst amendment BUT rst amendment does not protect al speech Not defamation lf lies hurt someone nancially the plaintiff has the right to collect payment Chapter 6 Torts Tort quotwrongquot violation of a duty imposed by civil law 0 Ex libel negligence interference with a contract fraud battery etc 0 So broad must understand its boundaries 0 In a tort case injured party must seek compensation 0 Hire a lawyer to convince the court the defendant breached some legal dutyought to pay money damages 0 No power to send them to jail Though some cases can be both a crime and a tort 0 Contract vs Criminal vs Tort determine difference in each type of obligation 0 Contract Obligation created by parties agreeing on a contract creating duties for both Obligation enforced with a suit by plaintiff Possible result money damages for plaintiff 0 Criminal law 0 Obligation created by law prohibiting certain conduct Obligation enforced through prosecution by government 0 Possible result punishment for defendant prison ne Money goes to the state not the victim o Tort Obligation created by civil law imposing duties of contact on all persons law itself creates a duty Obligation enforced with a suit by plaintiff Possible result money damages for plaintiff Divided into categories 0 Intentional torts harm caused by a deliberate action a Not to mean the harm is always intentional but the action was deliberate o NegligenceStrict liability injurieslosses caused by neglect and oversight Intentional Torts o Defamation 0 Law of defamation concerns false statements that harm someone39s reputation o Libel written defamation o Slander oral defamation o 4 elements to a defamation case must prove all these elements 0 Defamatory statement statement likely to harm another person39s reputation Falseness statement must be false Communicated statement must be communicated to at least one person other than the plaintiff o Injury plaintiff must show some injury Slander per se cases involving false statements about sexual behavior crimes contagious diseases and professional abilities Law assumes injury without requiring proof 0 ExHbelcases 0 Opinion 0 Opinions cannot usually be proven truefalse full of vague assertions Related defense cases where supposed statement of fact clearly should not be taken literally 0 Public Personalities a Rule from New York Times Co v Sullivan public of cialpublic gure can win a defamation case only by proving actual malice by the defendant Actual malice defendant knew statement was false or acted with reckless regard of the truth 0 Online defamation 0 Communications Decency Act CDA internet service provider is immune from defamation suit based on thirdparty posting 0 P vHege Defendants receive additional protection when it39s important for them to speak freely Absolute privilege someone speaking in a courtlegislature ex witness may not be sued for defamation Perjury deliberate false testimony still not slander False imprisonment intentional restraint of someone without reasonable cause and without consent 0 Most common in retail stores where employeescustomers are detained for suspected theft 0 Store may detain customerworker for alleged shoplifting if there is reasonable basis for the suspicion and the detention is done reasonably Intentional in iction of emotional distress intentional tort in which harm results from extremeoutrageous conduct that causes serious emotional harm 0 Jane Doe and Nancy Roe v Lynn Mills 0 Abortion protester found names of two women who were going to have an abortion 0 Provided those names to Lynn Mills who created signs using the women39s names asking them not to kill their babies 0 The women sued claiming intentional in iction of emotional distress and breach of privacy 0 Trial court dismissed the suit claiming Mills39 behavior was not extremeoutrageous Plaintiffs appealed Issue Is there a valid claim of intentional in iction of emotional distress Liability for intentional in iction of emotional distress can be found when act is outrageous ie average member of community would arouse resentment against the actor and lead him to exclaim quotOutrageousquot Defendant39s behavior included more than just insults lndignities threats annoyances or petty oppressions Gave unnecessary publicity to a private matter Reversed and remanded for trial 0 Additional Intentional Torts 0 Battery intentional touching of another person in a way that is unwantedoffensive O o Damages Does not require an intention of harm only an intentional act that a reasonable plaintiff would nd offensive Assault an act that makes a person reasonably fear an imminent battery Even if battery never occurs it39s still assault Fraud injuring another person by deliberate deception Commonly occurs during contract negotiation Compensatory damages money intended to restore plaintiff to the position he was in before injury 0 How damages are calculated 0 Plaintiff receives money for medical expenses proven by producing bills from doctors hospitals etc If doctor testi es plaintiff will need future treatment must offer evidence of how much that will cost Single recovery principle requires court to settler the matter once and for all by awarding lump sum for past and future expenses Lost wages daysmonths plaintiff missed work multiplied by salary If still cannot work doctor estimates future missed months of workgtcourt adds that to damages Pain and suffering Plaintiff testi es and uses expert testimonies from others to provide evidence of pain Awards vary enormously depending on injuryjury Award for future harmpain based on court39s best estimate of plaintiff39s hardship in years to come Not an exact science lfjudgment is reasonable it will rarely be overturned Punitive damages intended to punish the defendant for conduct that is extreme and outrageous o Awarded in few cases 0 Theory behind it some behavior is so unacceptable society must make an example of it Large award of money should deter from a repeat of the mistake Greed or social bene t 0 jury has wide discretion in awarding punitive damages but Supreme Court has ruled the verdict must be reasonable consider three guideposts when awarding punitive damages Reprehensibility of defendant39s conduct Ratio between harm suffered and award Difference between the punitive award and any civil penalties used in similar cases 0 State Farm v Campbell Campbell drove into oncoming traf c to pass slower cars Another driver swerved to avoid a collision and died hitting another driver who survived both sued State Farm as his representation turned down an offer to settle for 50000 but company refused as it had nothing to gain from that since that was Campbell39s policy limit Jury determined 185000 was due from Campbell and he argues with State Farm claiming they should have settled the case State Farm eventually paid the whole 185000 but Campbell sued for fraud and intentional in iction of emotional distress saying the company acted in their own personal interest instead of the client39s Jury awarded him 1 million in compensatory damages and 145 million in punitive damages State Farm appealed Issue what39s the limit on punitive damages Due Process Clause prohibits imposition of grossly excessivearbitrary punishments o In its excessiveness it furthers no legitimate purpose Cannot offer exact ratio but good estimates avoid exceeding a singledigit ratio between punitive and compensatory damages to a signi cant degree Precise award must be based on the factscircumstances of defendant39s conduct and harm to the plaintiff Reversed and remanded Court seeks to limit but not totally forbid huge punitive damages 0 Business Torts o Intentional torts that occur almost exclusively in commercial setting 0 Tortious Interference with Business Relations Tortious interference with a contract intentional tort where defendant improperly induced a third party to breach a contract with plaintiff exists if can establish these 4 elements There was a contract between plaintiff and third party Defendant knew of the contract Improperly induced third party to breach contractmade performance of contract impossible Injury to the plaintiff Defendant may rely on defense ofjusti cation claim that special circumstances make its conduct fair to establish justi cation defendant must show that o It was acting to protect existing economic interest such as its own contract with 3rd party 0 Acting in public interest 0 Existing contract could be terminate at will by either party no longterm assurances Texaco v Pennzoil one of largest verdicts in history case of contract interference Pennzoil made bid to buy 20 of Getty Oil Texaco offered more per share for entire company even after Getty agreed with Pennzoil Pennzoil sued for tortious interference Texaco said no cuz there was no binding contract 0 Jury sided with Pennzoil and demanded huge award in damages 0 After appealsnegotiations the two settled on 3 billion Tortious interference with prospective advantage malicious interference with developing economic relationship Doesn39t require a contract but must have concrete evidence of possible advantage Plaintiff who has a de nitereasonable expectation of obtaining an economic advantage may sue corporation that maliciously interferesprevents relationship from developing 0 Privacy and Publicity Intrusion tort in which reasonable person would nd the invasion of one39s private life offensive Commercial exploitation the right to commercial exploitation prohibits use of someone39s likeness or voice for commercial purposes without permission 0 Other business torts 0 Patents copyrights and trademarks 0 False advertising 0 Consumer issues Negligence when someone is injured how far should responsibility extend quotUnintentional tortquot harm caused by accident 0 To win negligence case must prove 5 elements 0 Duty of due care defendant had legal responsibility to the plaintiff Each of us has duty to behave as reasonable person would under the circumstances 0 How far does your duty extend Based on quotforeseeabilityquot if defendant could have foreseen injury there is a duty Hernandez v Arizona Board of Regents like Board of Trustees Arizona Uni frat threw a party and allowed underage students to drink Underage boy Rayner drove while intoxicated and hit Hernandez blindingparalyzing him Settled case based on insurance coverage Also sued the frat its of cers and national organization frat members who contributed to the alcohol university has more money than the frat and others Trail court granted summary judgment for all defendants Hernandez appealed lssue did the frat and other defendants have a duty of due care to Hernandez Modern authority has increasingly recognized one who provides liquor to a minor breaches commonlaw duty owed to innocent third parties who may be injured Defendant39s did have a duty of care Reversed and remanded Special Duty Landowners common law applied special rules to landowner for injury occurring on her property Lowest liability Trespassing adults liable only for intentional injuryother gross misconduct Midlevel liability Trespassing children if some manmade thing on the land that may be reasonably expected to attract children landowner is probably liable for harm Higher liability Licensee anyone on another39s land for own purposes but with permission entitled to warnings of hidden danger that owner knows about Highest liability lnvitee someone who has right to enter another39s property because it is a public placebusiness open to the public owner has duty of reasonable care Liable even if you have no idea that someone on your property poses hidden danger Special Duty Professionals person at work has heightened duty of care must act as reasonable person in her profession 0 Special Duty Hiring and Retention can be liable for hiringretaining violentdangerous workers 0 Breach of duty defendant failed to meet legal obligations Plaintiff proves this by convincing jury no reasonable person would have behaved that way Negligence per se legislature sets up a minimum standard of care for particular activity to protect certain group of people and violation of statute injured members of that group 0 If can show negligence per se doesn39t need to show breach of duty doesn39t matter if reasonable person would have acted the same way 0 Causation defendant39s conduct actually caused the injury two separate causa onissues Factual Cause if defendant39s breach led to ultimate harm Proximate cause for defendant to be liable the type of harm must have been reasonably foreseeable Superseding cause entirely unforeseeable gt defendant not liable Res lpsa Loquitar quotthe thing speaks for itself facts imply defendant39s negligence caused accident If court uses this defendant must provide evidence that it didn39t cause the harm Applies only when 0 Defendant had exclusive control of thing that caused the harm Harm normally would not have occurred without negngnce 0 Plaintiff had no role in causing the harm o Damages plaintiff has actually been hurthas suffered a measurable loss 0 Plaintiff must persuade court that he has suffered harm that is genuine not speculative o Difficult cases ones involving future harm Defenses Contributory and Comparative Negligence o Contributory negligence if plaintiff is even slightly negligent he recovers nothing Criticism unreasonable 0 Comparative negligence plaintiff may generally recover even if she is partially responsible 0 Jury will assess the relative negligence of both parties Criticism rewards a careless plaintiff In response many states don39t permit plaintiff to recover anything if he was more than 50 responsible for his own injury Assumption of the Risk person who voluntarily enters situation that has obvious danger can39t complain if injured 0 Doesn39t apply is person is injured in a way that39s not inherent part of the dangerous activity 0 Truong v Nguyen Warm good weather on California day with 30 jet skis on a lake 0 Anthony and Rachel were on Anthony39s jet ski o Nguyen siblings were on a jet ski together 0 The jet skis collided killing Rachel and injuring the others Rachel39s parents sued Anthony and the Nguyen siblings for negligent operation of their skis which they alleged killed Rachel Defendant moved for summary judgment claiming assumption of risk 0 Parents appealed arguing jet skiing isn39t a sport and Rachel never assumed any risk 0 Issue Does assumption of risk extend to jet skiing Assumption of risk applies to sports so question is was this activity considered a sport Activitysport if done for enjoymentthrill requires physical exertion and skill and involves challenge containing potential risk of injury jet skiing is considered a sport especially when you ad other skiers Statute applies to competitive and noncompetitive but active sports Even as a passenger still taking part in all the things that make jet skiing a sport Summary judgment is nal Strict Liability branch of tort law that imposes higher level of liability when harm results from ultra hazardous acts or defective products 0 Ex using harmful chemicals operating explosives keeping wild animals bringing dangerous substances onto property and other activities where danger to general public is greater 0 Defendant engaging in ultra hazardous activity is almost always liable for any hard that results 0 Plaintiff doesn39t have to prove dutybreachforeseeable harm 0 quotreasonable personquot rule is irrelevant in strict liability case 0 Product Liability 0 Defective products can create strict liability 0 One who sells any product in defective condition unreasonable dangerous to user or his property ls subject to liability for physical harm thereby caused to userproperty if 0 Seller is engaged in business of selling such a product and o It is expected to and does reach userconsumer without substantial chance in the condition in which it is sold 0 The rule applies even if 0 Seller has exercised al possible care in preparationsale of the product and Userconsumer has not bought the product fromentered into any contractual relation with the seller 0 Key terms in subsection 1 Defective condition unreasonable dangerous to the user defendant liable only is product is defective when it leaves his hands Like with prescriptions manufacturer must provide adequate warnings of non apparent dangers In the business of selling seller liable only if he normally sells this kind of product Reaches user without substantial change Important phrases in subsection 2 Has exercised all possible care it is no defense that seller used reasonable care No contractual relationship when two parties contract they are in privity exists between the user and the person from whom she actually bought the goods In strict liability cases privity is not required Contemporary trends make these strict liability cases harder to pinpoint Intentional Torts Tort Remedies 0 Purpose restore plaintiff to position she was in before the tort occurred 0 Typical remedy is money damages aka damages 0 Compensatoryactual damages make the plaintiff quotwholequot 0 Ex medical bills lost earnings pain and suffering etc o Punitiveexemplary damages punish defendant and deter others from similar conduct 0 Whatever the amount awarded highly unlikely plaintiff will end up collecting that money Defendant will ask amount to be reduced court will usually do that o If not reduced good chance defendant would appeal and appellate court would reduce it 0 Some statutes put caps ongive rules of thumb Should not exceed 9x the amount of compensatory damages 0 Equitable relief used when money cannot adequately compensate plaintiff for harm less common remedy o Contingency fee awards lawyers get percent of damages awarded to plaintiff instead of charging fees 13 Intent Continuum Actual intent plaintiff has to prove defendant39s intent 0 It39s not about the intent to cause harm but the intent to engage in the act whether it causes pain or not Recklessness willful disregard of the consequences of one39s actions Negligence breach of the duty of due care 0 Strict liability liability without fault o Engage in a certain act to which law applies strict liability and someone is harmed Only applies this to certain range of behaviors highly dangerous activities Hounds of Blairsville Legalpolicy issues defamation libel damages intentional in iction of emotional distress mob mentality town39s reaction anonymity requires ling lawsuit website liability defendant felt she had a duty to warn others Defamation prima facie case Communicationpublication of an untrue statement of fact to a third party that injures plaintiffs reputations by exposing him to hatred ridicule or contempt 0 Statement of fact compared to opinion something that can be proven Slander spoken defamation Libel written defamation or defamation communicated through broad reaching medium 0 Ex If someone says something on the news broadreaching medium 0 Opinion cannot be proven true or false therefore not defamatory Public personalities public of cials public gures those who by reason of their notoriety of their achievements or vigor and success seek the public39s attention 0 Also have to prove defendant acted with actual malice when making the statement Prove defendant knew Statement was false or Defendant acted with reckless disregard of the truth 0 quotActual malice requirementquot manifestation of First Amendment39s freedom of speechpress Defamation NOT protected under First Amendment Slander per se quotslander in itselfquot if prove slander per se doesn39t have to prove harm to reputation it is assumed 0 Ex slander related to STD criminal activity etc 0 Per se in itself 0 Website liability should website39s have liability for what people say 0 Freedom of speech argument 0 How could they monitor everything 0 Communications Decency Act ensures the website isn39t liable for anything posted on its site removes the duty to monitor and ensures no liability if it does try to monitor and does a bad job 0 Allows the environment for such robust social media Taxability of Tort Damages Damages for plaintiff39s quotpersonal physical injuriessicknessquot are excluded from plaintiff39s income 0 Not taxable Damages for non physical injures property lost wages lost pro ts are generally included in plaintiff39s income 0 Taxable Punitive damages generally included in plaintiff39s income 0 Taxable Reminder Prima facie case every single legal claim that exists in US law has a prima facie case 0 The listrecipe of elements that must be proven in order to nd defendant guilty of crimeviolation Negligence prima facie case Duty of due care defendant owed plaintiff a duty of due care Breach of duty of due care defendant breached that duty of due care 0 Actual cause defendant39s breach of duty of due care was the actual cause of plaintiff39s injury Proximate case plaintiff39s injury was a foreseeable result of defendant39s breach of its duty of due care 0 Damages plaintiff suffered injury for which law can provide remedy money or equitable relief Duty of due care the duty to act as a reasonable person would under the circumstances 0 quotreasonablequot gt calls for an objective test 0 In this case what would a hypothetical reasonable person be aware ofdo in these circumstances 0 Hernandez v Arizona Regents The scope of the defendant39s duty of due care is shaped by the context of its relationship to the plaintiff o Landowners o Liable to trespasser only for intentional injuriesgross negngnce o Liable for negligence if child trespasser is injured while exploring an quotattractive nuisancequot TBC next class


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