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BUS 404 Stern Final Terms

Terms in this set (107)

Three types of torts
intentional
negiligent
strict liability
torts laws
-civil wrongs that do not arise from contacts
-involve breches of duty to particiular persons causing injury of loss
-initated by individuals ​​
-point is to make whole an injured party/ seek compensatory damages
Intentional Torts
-Voluntary, purposeful acts that harm a protect interest: Mens Rea & Actus Reus

-Has to be intentional plan (mens rea)
-Physical act of injury (actus reas)

--Ex.: assault, battery, conversion, false imprisonment, intentional infliction of emotional distress, trespass to land, and trespass to chattels

-Defenses: Protect self (aka self-defense), defense of others, defense of property, Mistake, Consent (MMIA), Necessity
Three major product liability causes of action
1. negligence
2. breach of warranty
3. strict liability
Strict Liability torts
-individual or organization is responsible for harm without proof of carelessness
-proof of negilgence is not required bc risks of inherent in that situation are so great
-No fault, Unreasonably dangerous activities
-No duty to breach, operation is automatically liable for damages (involved in an unreasonably dangerous activity

-Defenses: Contributory Negligence (3rd party may have caused it--unforeseeable), assumption of risk, product misuse
Classes of Negligence claims
1. Manufacturing defects
2. Design Defects
3. inadequate warnings
Negligence torts
-Breach of the duty of due care

-To establish a claim must meet:
1. Duty
2. Breach of duty
3. Causation (actual cause vs. proximate cause)
4. Injury

a civil wrong that occurs when the defendant acts in a way that subjects other people to an unreasonable risk of harm (i.e., the defendant is careless, to someone else's detriment).
Negligence claims are usually used to achieve compensation for accidents and injuries.

-Defenses: Superseding Causation, Contributory Negligence, Comparative Negligence, Assumption of the Risk
Superseding Causation (Defense against Negligence)
-Yes, they breached their duty--but something else caused the injury
Comparative Negligence (Defense against Negligence)
-weighing the relative negligence of the parties
-plaintiffs recovery is reduced by a percentage equal to the percentage of the plaintiff's fault in the case
-30% responsible = 30% of damages (true in states like CA)
Contributory Negligence (Defense against Negligence)
-any contribution by the plaintiff to his or her own harm constitutes as a complete bar to recovery

-If you contribute even 1% to the accident, you won't collect anything in negligence (depends on the state, can be 51%)
Assumption of Risk (Defense against Negligence/SL)
-Defense against Negligence
-Kind of like signing a waiver
-Also not heading to warnings, i.e. surfing anyways despite high tide warnings
Assault
Fear of an unlawful touching (being put in genuine fear)
Battery
Unlawful touching
Fraud/ Deceit (4 step general test)
1. A material fact was misrepresented
2. The misrepresentaion was intentional
3. The injured party justifiably relied on the misrepresentation
4. Injury resulted
Defamation
-Has to
1) be a false statement
2) harm the victim's reputation
3) publication of the statement
-Hold someone up to Hate, Ridicule or Scorn
-Public Person can use truth is a Defense & has to know it's actual malice (which is hard to prove)
-Private Person only has to prove negligence

a false statement or an action that harms the reputation or character of an individual, business, product, group, government, or nation

Libel: defamation published in permanent form (does not require showing of actual harm)

Slander: defamation made orally (must show actual harm)

Slander per se: inherently harmful (saying they have a loathsome, communicable disease; committed crime; professionally incompetent; sexual misconduct
Libel
-printed
-needs to be heard/seen by a 3rd party
Slander
-oral
-needs to be heard/seen by a 3rd party
Invasion of Privacy/Right to Privacy torts (4 forms)
1. Missappropriation of a person's name of likeness

2. Intrusion

3. Public disclosure of private facts- only one where truth may not be a complete defense

4. False Light- injury to one's mental or emotional well-being rather than one's reputation
"Slander per se"
- so damaging in itself that no actual injury is needed

Includes allegations of:
-Chastity (sexual misconduct)
-Loathsome Disease
-Criminal Activity
-Business Behavior (fraud, theft, etc.)
Intentional Infliction of emotional distress
-evidence of outrageous conduct causing severe emotional pain
Intentional torts against property:
trespass to real property
-occurs with the intentional entry on to the land of another without consent
-involves intentional interference with a persons right to enjoy his or her personal property
Disparagement (also called Injurious Falsehood)
-A false or misleading statement about a competitor's goods. It is made with the intention of influencing people adversely so they will not buy the goods
-Generally, if the aspersons are cast upon the quality of what the person has to sell, or the person's business itself, the proof of damages is essential
Conversion
-When someone takes another's property and uses it for a different use/their own benefit
Vicarious Liability
-Someone being directly liable for their (employee/contractors) actions
Procedural Unconsciousability
-the bargaining power of the parties was so unequal that the agreement, as a practical matter, was not freely entered
-Usually arises from lack of knowledge (ex. Fine print) or lack of choice (ex. Urgent circumstances)
Substantive Unconsciousability
-the clause or contract in question was so manifestly one-sided, oppressive, or unfair as to "shock the conscience of the court"
-Ex. a contract that does not provide a remedy for a breach
Unconscionable Contracts
-Includes both Procedural & Substantive Unconsciousability
Consumer Financial Protection Bureau
-Charged with writing and enforcing rules covering financial products and services including mortgages, credit cards, payday loans, loan servicing, check cashing, debt collection, and others
-Expected to prohibit and prevent the commission of "an unfair, deceptive, or abusive act or practice"
-Also provides financial education, thereby promoting Americans' financial literacy
-Enforces the finance laws such as the Electronic Fund Transfer Act and the Fair Credit Billing Act
Commerce Clause
-affords Congress exclusive jurisdiction over foreign commerce
Dorman Commerce Clause
refers to a constitutional principle that is inferred from the commerce clause. ... The negative consequence is a restriction prohibiting a state from passing legislation that improperly discriminates against interstate commerce.
Supremacy Clause
we divide authority among federal, state, and local units of government
Federal Agencies
-2 kinds: executive (Pres has direct control over) and independent

-administrators are appointed by pres for staggard terms usually 7 years

Agency duties:
1. control of supply
2. control of rates
3. control of conduct

Also have
1. Executive functions
2. Legislative Functions
-rules: procedural, intrepretive, legislative
-formal and informal processes
3. Judicial Functions
-administrative hearing
-admin law judge
Federal Trade Commission (FTC)
Government watchdog: protects consumers
-Anti-competitive laws - companies can't practice decisions that create an anti-competitive market
Prevent scams
-Created in 1914 to prevent "unfair methods of competition and unfair or deceptive acts or practices in and affecting commerce"
-Operates as a miniature government with powerful quasi-legislative (rule-making) and quasi-judicial (adjudication) roles
-Rules specify particular acts or practices that the commission deems deceptive
-Primary legislative direction is in issuing trade regulation rules to enforce the intent of broadly drawn congressional legislation
-Unfair and deceptive trade practices are forbidden under Section 5 of the FTC Act
Dodd-Frank Wall Street Reform and Consumer Protection Act
-The 2010 Dodd-Frank bill provides increased legislative oversight of the nation's financial processes
-requires CEO salary ratio be disclosed anually and relationship between executive compensation and financial performance of the company
-Requires lenders to affirmatively protect borrowers
The Consumer Product Safety Commission
-The federal agency charged with protecting us from "unreasonable risks of injury and death" from consumer products
-Pursues product safety, initially, be collecting data and issuing rules
-To enforce its policies and decisions, the CPSC holds both compliance and enforcement powers
Truth in Lending Act (TILA)
-Designed primarily to assure full disclosure of credit terms
(1) The debtor must be a "natural person" rather than on organization
(2) The creditor must be regularly engaged in extending credit
(3) The purpose of the credit must be "primarily for personal, family, or household purposes"
(4) The credit must be subject to a finance charge or payable in more than four installments
-Designed to protect consumers from credit abuse and to assist them in becoming more informed about credit terms and costs so they could engage in comparison shopping
-If new terms sent out, declined: account dropped
-The heart of the act is the required conspicuous disclosure of the amount financed, the finance charge, the APR, and the number of payments
Fair Credit Billing Act
-Provides a mechanism to deal with the billing errors that accompany credit card and certain other "open-end" credit transactions
-A cardholder who received an erroneous bill must complain in writing to the creditor within 60 days of the time the bill was mailed
-The creditor must acknowledge receipt of the complaint within 30 days
Electronic Funds Transfer Act (EFTA)
-Provides remedies for lost or stolen cards, billing errors, and other such problems involving ATMs, point of sale machines, electronic deposits, and the like
-Liability for misuse of missing cards is capped at $50 if the consumer provides notice within two business days after learning of the loss
Equal Credit Opportunity Act
-Designed to combat bias in lending
-Credit must be extended to all creditworthy applicants regardless of sex, marital status, age, race, color, religion, national origin
Fair Debt Collection Practices Act (FDCPA)
-Designed to shield debtors from unfair debt collection tactics by debt collection agencies and attorneys who routinely operate as debt collectors
-FDCPA does not extend creditors who are themselves trying to recover money owed to them
-Protects consumers by forbidding:
--Use of obscene language
--Contact with third parties other than for the purpose of locating the debtor
--Use of or threats to use physical force
--Contact with the debtor during "inconvenient hours" (9pm-8am)
--Repeated phone calls with the intent to harass
--Contacting the debtor in an unfair, abusive, or deceptive manner
Unsecured Debt
-If you fail to make a payment for your unsecured debt, then the bank cannot take away your property (i.e. house or car) without first suing you & getting a court judgement
Secured Debt
-This debt is backed by collateral to reduce the risk of lending, the bank can seize your property to pay back the debt you owe
Chapter 7: Liquidation
-Individuals, married
-Can get rid of all your unsecured debt
--All creditors get 0
--Can give back assets (ex. car)
-Can be voluntarily filed in federal court by a debtor, or creditors can seek an involuntary bankruptcy judgment
Chapter 11: Reorganization
-Celebrities with a lot of debt/assets
-Keeps creditors from the debtor's assets while the debtor, under the supervision of the court, works out a financial reorganization plan and continues to pay creditors
Chapter 12
-allows them to restructure their debt in order to avoid liquidation or foreclosure, for Farmers/Fisherman
Chapter 13: Adjustment of Debt
-Permits only voluntary bankruptcies and is restricted to those with steady incomes and somewhat limited debts
-Reorganization of debts
--Make payments to figure out your disposable income
--Every month, 3-5 years
Job Classification: Employee
-State wants tax return
-When an employer controls or has the ability to control the worker's performance, the worker is likely to be considered an employee
Job Classification: Contractor
-Treated as one but may be employee
-Increasingly relied on to perform specific, shorter-term, nonrecurring jobs
-Benefits
--Business doesn't need to provide insurance for them
--Employers generally are not liable for employment discrimination claims by independent contractors or for most torts committed by independent contractors in the course of their work
Equal Employment Opportunity Commission (EEOC)
-Issued an enforcement guidance on the use of criminal background checks
-Employers cannot use this tool to screen applicants or current employees unless the conviction is relevant to the position for which they are being considered
Qualified Privilege (Defamation)
-Legitimate business communications, with some exceptions, are shielded from liability (related to employment references)
Mandatory Arbitration Agreement
-Employee signs this so that they cannot sue company, it instead goes straight to arbitration
-Some states find this to be illegal
Restrictive Convenant
-Agree to not work for any competitors within certain amount of time or geographic location
Injurious Falsehood (Disparagement)
-It is a tort & is a form of defamation
-It is a lie that was uttered with malice, that is, the utterer knew it was false or would cause damage or harm or for them not to buy it
-Directed against property or products
Misappropriation
-It is a tort
-Using someone's voice or face or name to promote/bash something for their own benefit
-cause of action for someone's invasion of privacy
Respondeat Superior
-Is a US legal doctrine which states that, in many circumstances, an employer is responsible for the actions of employees performed within the course of their employment
Fair Labor Standards Act
-Directed toward 4 major objectives:
(1) Establishment of a minimum wage that provides at least the foundation for a modest standard of living for employees
(2) A flexible ceiling on hours worked weekly
Overtime pay: At least 1.5 times their regular pay rate for hours worked over 40 hours per week
(3) Child labor protection
(4) Equal pay for equal work regardless of gender
Copyright
Copyright gives you a monopoly on your material
It lasts 95 years, but then it goes to the public domain and anyone can use it
Anything that you put into a fixed medium automatically has a copyright but you only get the value of the material for it (b/c its not a registered copyright)
But if you do register it, then you can get up to $25,000 for it
Trademarks = protect words, logos, etc.
Patents = normally mechanical or design or technology
Tort of Nuisance
-private nuisance: causing a substantial and unreasonable interference with a [claimant]'s land or his use or enjoyment of that land"
-public nuisance: defendant's actions "materially affects the reasonable comfort and convenience of life for someone
Duress
-also known as coercion
-performs an act as a result of violence, threat or other pressure against the person
Res Ispa Loquitur (under Manufacturing Defects claim)
-"it speaks for itself" -used to demonstrate negligence

-permits the court to infer the defendant's negligence even though that negligence cannot be proved: the facts suggest that the plaintiff's injury must have resulted from the defendant's negligence, but the circumstances are such that the plaintiff is i=unable to prove negligence

Showing this requires:
1. the injury was caused by an instrumentality under the control of the defendant
2. the accident ordinarily would not happen absent the defendant's negligence
3. there is no evidence of other causes for the accident
Risk-Utility Test
-used to determine whether a product's design or warning is defective, thereby making the manufacturer liable for injuries caused by its product
-risks outweigh benefits of a product
Consumer Expectations Test
-a standard used for determining if a design defect exists
-makes the seller of a product liable if the product is in a defective condition unreasonably dangerous to the consumer
Implied Warranty of Merchanability
-implied, unless it says "as is" or "with all faults"
-to be "merchantable", the goods must reasonably conform to an ordinary buyer's expectations, i.e., they are what they say they are
Implied Warranty of Fitness
-warranty implied by law that if a seller knows or has reason to know of a particular purpose for which some item is being purchased by the buyer, the seller is guaranteeing that the item is fit for that particular purpose.
Express Warranty
- a guarantee made by affirmation of fact or promise, by description of the goods, or by sample or model
-deals with the character of the quality of goods
-having certain characteristics

Best defenses:
1. comparative/contributory negligence
2. assumption of risk
Business Judgment Rule
s a presumption that in making a business decision, the directors of a corporation acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company.

Shlensky v. Wrigley case
Puffing
-talk something up, make it seem better than it is
-not factual, an exaggeration/opinion
Magnusson-Moss Warranty Act
-federal statute that governs warranties on consumer products
-act extended and clarified warranty rules of the Uniform Commercial Code
-applies only to consumer products and only to written warranties
Fraud
-fraud is intentional
-needs to result in actual injury
-wrongful or criminal deception intended to result in financial or personal gain
Fair Credit Reporting Act
-enacted to promote the accuracy, fairness, and privacy of consumer information contained in the files of consumer reporting agencies
-If a person makes a request, the concerned credit reporting agency must give the person a list of all those who have recently sought information about him or her
-if they tell the credit company about inaccurate information, the company needs to investigate and potentially revaluate their credit decision
Degree of Control
-primary tests used to determine if someone is an employee or a contractor
Resume Fraud
-misrepresenting your credentials
Imputed Liability
-something caused by someone else
-respondeat superior
Whistle-Blowing
-reporting an employer's illegal activity
-can't take retaliation against an employee because of what they said (if its true)
Dumping
-sell your products in a different country for a different price
General Agreement on Tariffs & Trade (GATT)
-Under GATT, once a good has been imported, it must be treated just as domestic goods are treated
-substantial reduction of tariffs and other trade barriers and the elimination of preferences, on a reciprocal and mutually advantageous basis
US Export Administration Act
-permits restrictions on goods and technology where selling goods to other countries would harm national security, significantly advance U.S. foreign policy, prevent an excessive drain of scarce materials, or reduce serious inflationary impacts from foreign demand
Comity
-that countries should abide by international custom, treaties, and other sources of international direction because that is the civil way to engage in relationships
World Trade Organization
-includes countervailing duties
Piercing Corporate Veil
Committing Fraud, Misrepresentation, Collusion; can become personally liable for damages
administrative law
The collection of rules and decisions made by administrative agencies to fill in particular details missing from constitutions and statutes
tort law
a violation of another person's rights or a civil wrongdoing that does not arise out of a contract or statute; primary types are intention, negligent, and strict-liability torts
Res Ispa Loquitor
"it speaks for itself"
strict liability
a civil wrong that occurs when the defendant takes an action that is inherently dangerous and cannot ever be undertaken safely, no matter what precautions the defendant takes. In such situations, a defendant is liable for the plaintiff's damages without any requirement for the plaintiff to prove that the defendant was negligent
Sec. 230 Communications Decency Act (Safe Harbor)
"No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider". In other words, online intermediaries that host or republish speech are protected against a range of laws that might otherwise be used to hold them legally responsible for what others say and do.
Risk Utility Test
probability of injury times the gravity of injury under the current product design is more than the cost of an alternative reasonable design plus the diminished utility resulting from modifying the design.
if the economic costs are higher than the cost of changing the product design plus the loss of use of the product
Consumer Expectation Test
the product is considered defective if a reasonable consumer would find it defective
But for test
"But for" you starting this in motion this never would have happened
Copyright Act
copyright protection extends to "original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device."
the duration of the author's life plus seventy years for general copyrights and to ninety-five years from date of publication or 120 years from date of creation, whichever comes first, for works made for hire
What can be copyrighted: literary works;
musical works, including any accompanying words;
dramatic works, including any accompanying music;
pantomimes and choreographic works;
pictorial, graphic, and sculptural works;
motion pictures and other audiovisual works; and
sound recordings
fair use depends on: the purpose and character of the use (commercial or educational, transformative or reproductive);
the nature of the copyrighted work (fictional or factual, the degree of creativity);
the amount and substantiality of the portion of the original work used; and
the effect of the use upon the market (or potential market) for the original work.
Implied warranty
implied warranty is a contract law term for certain assurances that are presumed to be made in the sale of products or real property, due to the circumstances of the sale
Express warranty
An express warranty is an agreement between the contract seller (dealer, manufacturer or independent company) and the buyer of a product to provide repair or replacement for covered components of the product for some specified time period
Commerce Clause
Clause 3 of Article I, Section 8, of the U.S. Constitution, which authorizes Congress to "regulate Commerce with foreign Nations, and among the several states, and with the Indian Tribes"
Dormant Commerce Clause
a restriction on states' authority that is implied in the commerce clause of the U.S. Constitution. The power given to Congress to enact legislation that affects interstate commerce in effect prohibits a state from passing legislation that improperly burdens interstate commerce.
10th Amendment
The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.
Defamation per se
a statement that is deemed to cause such great harm to the one who has been defamed that damages are presumed.
Defamation per quod
defamation that is either
a. not apparent and requires extrinsic evidence to prove its injurious nature; or b. is apparent but is not an actionable per se statement
Business evaluated on on:
1. Formation and non tax costs
2. Management structure
3. Limited liability
4. transferability of ownership interests
5. Duration of existence
6. Taxes
7. Capital structure
Sole Proprietorship/Partnership
Personal Liability Exposure
Personal/Business Tax, no double taxation
Process: Hang a shingle, get a business license
No fringe business deductions
Partnership is similar to sole proprietorship but more than one person
Express withdrawal/death of partner could dissolve partnership
Each partner personally liable for the acts of other partner(s)
S-Corporation
Shareholders, directors, and officers
Single flow taxes like LLC/sole proprietorship
More formality than a LLC
Restricted to 100 shareholders
Can only have one-class of stock
C-Corporation
Shareholders, directors, and officers

Two types: public and closely held

Tax on corporation and then any income to owners is taxed as dividends, which is considered personal income
-liability to shareholders is limited to the loss of their investment in the corp
-double taxation: taxed on corps income, then shareholders are taxed on dividends

-centralized managment

-Most formality of meetings, resolutions

Can have multiple classes of stock - voting/nonvoting

Preferential for a start-up corporation seeking investors
Capital structure of C Corps
Debt & Equity

1. Equity Capital (stocks)- long-term horizon
-property rights: rights to participate in earnings, participate in assets upon liquidation, participate in control
-common stock and preferred stock
Limited Liability Company (LLC)
Hybrid sole proprietorship / partnership and corporation

-to create: owners/members file articles of organization with the state

Taxed like a single flow (sole proprietorship) but with limited liability of each member/managers
Process: file articles of incorporation with a state; list member/manager ownership interest; create an operating agreement
Less formality (no annual meetings); and transferability of ownership interests
Death or other reason could dissolve LLC if not provided for in an operating agreement
Limited Liability Partnerships (LLP)
Process: statement of qualification filing with RUPA

taxed like a general partnership

Like a general partnership but potentially limited liability for contract and torts

LLP partner's limited liability is extended only to the negligence or malpractice of other partners
Limited Partnerships
Process: statement of qualification filing

Two classes of owners: general partners (have control) and limited partners (dont have control)

Limited partnerships limited to amount of capital investment
General partner is usually a corporation with limited assets
Sarbanes Oxley Act of 2002
-limit CEO's control of audit info reaching the board, requires a board audit committee consisting exculsively of independent directors
-gives the audit committee direct responsibility for hiring the outside auditing firm
-prohibits the firm from rendering most types of consulting services to audit clients
-requires a nominating committee also composed solely of independent directors
Describe the differences between the two classes of partners in a limited partnership.
Limited partnerships have existed for a considerable time in the United States and were extremely popular until the advent of limited liability companies. They are entities with two classes of owners: general partners and limited partners. General partners have the same legal benefits and burdens as the partners of a general partnership. They (often only one) are the sole managers of the entity. Limited partners invest in the entity by contributing capital but do not participate in control (except to a limited extent analogous to shareholders). In exchange for limited control, they receive limited liability. The principal disadvantage of general partner status is unlimited liability. In practice, however, most general partners are corporations with minimal capital investment, so unlimited liability is little threat unless grounds for piercing the corporate veil exist.
List the potential problems with the partnership form of doing business.
The partnership relationship carries substantial risks for the individual partners. One would expect the contract that creates and governs the partnership, the partnership agreement, to very precisely specify the terms of that relationship. This may be true if the partnership agreement is written. However, the vast majority are oral agreements. If disagreements arise over an oral agreement, the partners may find it very difficult to establish conclusively what the original agreement was. This will not be helped by the fact that when important disagreements arise, the partners often discover that their interests have become adverse and that the hopeful emotions shared at formation have been displaced by anger and a sense of betrayal.
Partnership agreements also tend to be expensive to draft because of the many opportunities for customization, because state law provides only a general framework, and because the personal risks of being a partner are so significant. Similarly, partnership accounting systems are the most expensive of all the business forms because of the need to track the customized economic arrangements. However, the partnership form generally requires few, if any, annually recurring events such as state filings or mandatory meetings of owners.
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