BLAW Chapter 14-18, 24 Notes Business Law
BLAW Chapter 14-18, 24 Notes Business Law BLAW 2001
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This 7 page Class Notes was uploaded by Megan Hanson on Thursday April 21, 2016. The Class Notes belongs to BLAW 2001 at University of Minnesota Duluth taught by Thomas Reed in Spring 2016. Since its upload, it has received 23 views. For similar materials see Business Law in Business Law at University of Minnesota Duluth.
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Date Created: 04/21/16
3/29/16 CHAPTER 16 Fiduciary – a person having a duty created by his/her undertaking to act primarily for another’s benefit in matters connected with the undertaking; a relationship founded on trust and confidence Agency relationships exist between employers and employees Agent vs. Principal o Employment: Employees = A / Employers = P o Corporation = P / Officers (president, VP, secretary, treasurer) = A Determining employee status: o How much control the employer exercises over their work o Whether the worker engages in other business o Whether the employee supplies the tools o Length of employment and method of payment o Degree of skill required Agency relationships o Are consensual o Require no consideration o Require the principal to have contractual capacity o Can be created for any legal purpose Formation of agencies: o Agreement of the parties – formed through express consent or implied conduct o Agency by ratification – principal, by act or agreement, ratifies conduct of a person who is not an agent 3/31/16 Agent’s duties to the principal: o Performance – reasonable diligence and skill in performing work o Notification – inform of important matters o Loyalty – act solely for the benefit of the principal o Obedience – follow instructions Principal’s duties to the agent: o Compensation – payment for services rendered in a timely matter o Reimbursement and Indemnification Must reimburse for expenses paid on the principal’s behalf Compensation for liabilities incurred through lawful acts o Cooperation – assistance with duties Agent’s authority: o Express authority – can be oral or written o Equal dignity rule – if the principal’s contract must be in writing, the agency contract must be in writing too If not in writing, the contract is voidable at the principal’s option o Power of attorney – acting on another’s behalf o Ratification – principal accepts responsibility for an agent’s unauthorized act. Liability for contracts – depends on how the principal is classified and whether the actions of the agent were authorized or not o Classifications: Disclosed – principal whose identity is known by the third party at the time the contract is made Partially disclosed – third party knows he is dealing with an agent but doesn’t know the principal’s identity Undisclosed – third party does not know he is dealing with an agent and therefore the principal’s identity is unknown Authorized acts: o Disclosed or unidentified principal: liable if agent acts within scope of authority Agent has no liability to a third party for disclosed principal’s non-performance o Undisclosed principal: no liability unless The principal was expressly excluded Contract is a negotiable instrument Agent’s performance is personal Unauthorized acts: o Outside the agent’s authority o Principal is not liable, but agent is personally liable 4/05/16 CHAPTER 17 Employment at will – private sector – either party can end the relationship at any time for any reason o Exceptions: Contract theory – if a contract exists, whether express or implied, that will control the employment arrangement Tort theory – termination could lead to a wrongful discharge claim Public policy – ex. Whistleblowing – an employee views something the employer is doing as illegal. Employee contacts government – cannot be fired Public sector – good/just cause required for termination o Union – an organization that represents employees in attempt to configure the best contract possible for employees Federal Laws to protect workers: o FLSA – fair labor standards act (min wage, overtime) o OSHA – occupation standards health act – workplace safety o FMLA – family and medical leave act – required employers with >50 employees to provide up to 12 weeks unpaid leave for family/medical reasons o TVII – Title 7 CRA o ADA – American’s with disabilities act – prevents and prohibits discrimination against persons with an impairing disability o COBRA – provides a federal right to continued health insurance – NOT FREE, payments depend on conditions and worker status If you quit, or are fired, you have the right to continue with your health insurance on your cost o ADEA – must prove that you are ≥40 years and that you were discriminated against based on age 4/07/16 Wrongful discharge – if the employer terminates the employee in violation of statute or contract, a claim can be brought Worker’s Compensation – establishes a procedure for workers injured on the job CHAPTER 18 – Employment Discrimination Title VII of the Civil Rights Act – all about employee protections Equal employment opportunity commission (EEOC) – monitors compliance with the Title VII o Generally only investigates “priority” cases like retaliatory firings Sexual harassment – two types: o Quid Pro Quo – This for that – ex. in exchange for a raise, favors o Hostile environment – harassment – discriminatory intimidation, ridicule, creates an abusive working environment 4/12/16 ADA – American’s with disabilities act o Only disabilities that limit one or more major life activities o Must first file claim with EEOC BFOQ – bona fide occupational qualified system o Ex. If a man tried to sue Victoria Secret for not hiring him because he was a man, VS could defend themselves with the BFOQ in that they only hire women because their customers will feel more comfortable CHAPTER 14 – Small Business Organizations Business entities – when choosing which to pursue, entrepreneurs should consider capital, cost, liability to creditors and for torts, and taxes o LLC – limited liability company Capital – low-medium Cost to create – medium-high Liability to creditors – not personal Liability for torts – not personal Taxes – one owner: personal income – two owners: partnership by default or C. Corp o Sole Proprietorship – one owner Capital – low Cost to create - $0-low Liability to creditors – personal liability Liability for torts – personal Taxes – taxed to the owner as personal income o Corporation – S. Corp or C. Corp Capital – low-medium Cost to create – medium-high Liability to creditors – not personal Liability for torts – not personal Taxes – personal income/double tax o Partnership – G.P. (general) or L.L.P. (limited liability) Capital – medium Cost to create – low-medium Liability to creditors – personal – joint and several (bank can come after partnership, one, or both) Liability for torts – personal – joint and several Taxes – each partner flies personal income taxes o Partnership – L.P. (limited) The limited partner is not personally liable – a silent partner The general partner is personally liable – joint and several o L.L.P. – limited liability – if doctors are together in a L.L.P., and one gets sued for malpractice, the others are protected 4/14/16 CHAPTER 15 Corporations - recognized as legal persons o Can have one or more share owners o Profits can be kept as retained earning or passed on to the shareholders as dividends o Can be taxed twice – once on the retained earnings and once on the dividends o Respondeat superior – corporation is liable for the torts committed by its agents or officers within the scope of employment o Officers – hired by board of directors – hire employees President/CEO V.P. Secretary Treasurer o Board of directors - elected by shareholders Overall management o Shareholders - owners LLC – same as corporations with officers, board of governors (directors) and members (shareholders) Corporation classifications: o Domestic – the corporation does business in and is organized under the law of that state o Foreign – the corporation does business in the sate without being incorporated therein Ex. filing articles in MN but doing business in WI – WI would consider it a foreign corporation o Alien – the corporation was formed in another country but doing business in the U.S. Piercing the corporate veil (going after persons) – factors: o A party is tricked into dealing with the corporation rather than the individual o Corporate formalities are not followed o Personal and corporate interests are commingled to such an extent that the corporation has no separate identity No separate checking accounts… Business judgment rule – immunizes a director or officer from liability from bad decisions that may or may not hurt the company 4/19/16 Corporation formation and powers o Incorporation procedures Select state of incorporation Secure the corporate name by confirming its availability Prepare the articles of incorporation File the articles of incorporation with the secretary of state and pay the fees Corporations are legal entities created and recognized by STATE law Corporate financing: o Stocks – an ownership interest in a corporation o Bonds – a security that evidences a corporate (or government) debt Directors – not agents of the corporation, can also be a shareholder CHAPTER 24 – Investor Protection and Corporate Governance Minimum number of directors that need to be present to validly transact business Securities Act of 1933 – one time securities law – investor protection o Info for the issuance of securities o Essential purpose: require disclosure – in order to protect investors o Registration statement: Unless exempt, an offering must be registered before offered to the public Issuing corporation must file a registration statement and prospectus with the SEC Prospectus is alter distributed to investors o Can be subject to criminal and/or civil lawsuits Securities and Exchange Act of 1934 – prohibit insider trading o Continuous periodic disclosures o Section 10b and SEC Rule 10b-5: prohibit insider trading - INTENT o Section 16b: prohibits short swing profits – must wait 6 months to sell after buying – NO INTENT o Prevents sale of insider information Sarbanes Oxley Act of 2002 – corporate governance accountability o Imposes strict disclosure requirements and harsh penalties for securities violations o Applies to all public companies The Howey Test – SCOTUS held that a security exists in any transaction in which a person: (1) invests (2) in a common enterprise (3) reasonably expecting profits (4) derived primarily from others’ managerial or entrepreneurial efforts Registration statement to the SEC – prospectus to investors - before you can issue securities to the public 4/26/16 CHAPTER 22 – Real Property Law Nature of ownership rights o Immovable o Includes the soil and all natural and artificial structures on it o Fixtures – included in real property o Possessory interests (right to hold): Fee simple absolute (FSA) Life estates – real property can be held in someone’s name solely for their life Leases (joint) Tenancy in common – when deceased person, passes to property heirs Joint tenancy – when deceased person, passes to surviving joint tenants o Non possessory interests (don’t have the right to hold): Easement – right of a person to make limited use of another person’s real property without taking anything from it Profit – right to go onto another’s land and take away some part of the land itself or some products of the land License – a revocable right of a person to come onto other person’s land. Grants no interest in the land Landlord/tenant relationship Environmental law 4/28/16 Transfer of ownership: o Warranty deeds – provides the greatest amount of protection – guarantees no title troubles have ever been present o Special warranty deeds – doesn’t warrant that there were never defects o Quitclaim deeds (QCD) – conveys only whatever interest the grantor had – the least amount of protection th Eminent domain – the 5 amendment gives the government right to take property for public use with just compensation to the owner
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