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Terms in this set (184)
Class 2 HOW TO PREDICT THE LAW
Factors to Consider about a case
1) Classifications of Law (What law is at issue?)
2) Geography (Where is court located?)
3) Hierarchy (Which court is deciding case?)
4) Facts (Is case similar on facts?
How to run a lawsuit?
Commence, defend, manage, settle
What are the types of law?
1) Common (case) law
2) Statutory Law
3) Administrative law
-defined by a judicial decision
-made by the Judicial Brand of government
What does contract law govern?
Governs federal and state contracts
What are general principles based on?
Specific facts (based on principal of precedent)
an earlier event or action that is regarded as an example or guide to be considered in subsequent similar circumstances.
-enacted by a legislative body
-written for general public with no specific facts
-examples include tax, tort, traffic laws
made by the Executive Branch
-the body of law that regulates the operation and procedures of government agencies.
Process in Administrative Law
-draft their own laws
-draft regulations and rules
-have their own judges
-An appeal can then lead to Federal court taking a look at the case
deference applies when a federal court yields to an agency's interpretation of either a statute that Congress instructed the agency to administer or a regulation promulgated by the agency.
What happens when an appeal occurs in admin law?
An appeal can lead to Federal court taking a look at the case
How do judges make current decisions?
Judges make current decisions based on prior decisons (precedent - practice of resolving similar cases in a similar fashion)
-Sources of law are the origins of laws, the binding rules that enable any state to govern its territory
-used by judges in making this law & writing their decisions
-Prior case law
-restatement of the law by academics
When are sources most useful?
Most useful in cases of First Impression
Risk Management: how to limit the blow of a lawsuit?
1) Choose the law & courts in deal contract
2) Prevent / manage any litigation
3) Settlement leverage
Hybrid Law Making
A hybrid of state and federal law is created whenever federal. rights, obligations, or standards are voluntarily incorporated into the. body of state public or private law
-Statutes or administrative rules or regulations written by legislature or administrative agency
Examples of hybrid law making
Tax Code - written by US Congress and Senate
Tax Rules and Regulations - written Internal Revenue Service
"Strict" Interpretation or "Original" Intent
-refers to a particular legal philosophy of judicial interpretation that limits or restricts judicial interpretation
-a person who follows the doctrine of strict construction of the Constitution tries to ascertain the intent of the framers at the time the document was written by considering what the language they used meant at that time.
A statute is a formal written enactment of a legislative authority that governs the legal entities of a city, state, or country by way of consent. Typically, statutes command or prohibit something, or declare policy
Lower Courts want to deal with
Regarding the court, the higher the court, the _____ the decision
STRONGER (highest court level = most binding)
What does SC do with decision?
Affirms, overturns, holds?
Subject Matter Jurisdiction
the power of a court to hear the type of claim asserted
State Court subject matter
Jurisdiction is PLENARY
-can hear state or federal law cases
State Court cannot hear what type of cases?
Can hear state or federal law cases except for EXCLUSIVELY federal law cases (common law, treaty)
Exclusive federal law cases include...
Cases in which federal law only exists (patent & copyright)
Federal Court SM Jurisdiction
Jurisdiction is LIMITED
Can Federal Court SM Jurisdiction be waived?
Federal Court can hear what type of cases
All federal and certain state law cases
2 Types of FC SM Jurisdiction
1) Federal Question Jurisdiction (US Constittution, US Statute, Treaty - Federal Law)
2) Federal Diversity Jurisdiction
Subject matter jurisdiction for federal courts
(1) federal question jurisdiction (violation of constitution)(2) diversity jurisdiction (the amount in controversy exceeds $75,000 and where the persons that are parties are "diverse" in citizenship or state of incorporation (for corporations being legal persons), which generally indicates that they differ in state and/or nationality.)
(3) suits by or against the US
(4) Admiralty, federal criminal prosecution, bankruptsy, antitrust, patent, trademark, copyright
State Law applies with which two requirements
1) All plaintiffs & all defendants are citizens of DIFFERENT states
2) the amount in controversy exceeds $75,000 and where the persons that are parties are "diverse" in citizenship or state of incorporation (for corporations being legal persons), which generally indicates that they differ in state and/or nationality.
Lifecycle of a Lawsuit
1. in most states filing complaint starts a lawsuit
2. defendant responds (admits to claim, denies them, etc.)
3. discovery phase- attorneys gather as much evidence as possible about the situation
4. either trial or no trial.
4a- many cases are disposed before going to trial
4b- if going to trial- placed on a court docket and date set.
Answer to Complaint
Settlement / Mediation
In legal terminology, a complaint is any formal legal document that sets out the facts and legal reasons that the filing party or parties believes are sufficient to support a claim against the party or parties against whom the claim is brought that entitles the plaintiff to a remedy
Motions to Dismiss
-a motion is a procedural device to bring a limited, contested issue before a court for decision. It is a request to the judge to make a decision about the case.
-when granting a motion to dismiss, the judge essentially decides the case in the defendant's favor — most often denying the plaintiff the opportunity to go to trial
Answer to Complaint
Admit or Deny allegation
-"answer" is the first formal response given by the defense to a complaint filed with the court by the plaintiff. This opening written statement will admit or deny the allegations, or demand more information about the claims of wrongdoing.
the exchange of legal information and known facts of a case. Think of discovery as obtaining and disclosing the evidence and position of each side of a case so that all parties involved can decide what their best options are - move forward toward trial or negotiate an early settlement.
a request for the court to rule that the other party has no case, because there are no facts at issue. The party making the motion is claiming that either the case should not go before a jury at all, or a jury could only rule in favor of the moving party
Settlement / Mediation
Mediation is a procedure in which the parties discuss their disputes with the assistance of a trained impartial third person(s) who assists them in reaching a settlement
Settlement is a resolution between disputing parties about a legal case, reached either before or after court action begins
a formal examination of evidence before a judge, and typically before a jury, in order to decide guilt in a case of criminal or civil proceedings.
n appeal is the process in which cases are reviewed, where parties request a formal change to an official decision. Appeals function both as a process for error correction as well as a process of clarifying and interpreting law
Class 3 PERSONAL JURISDICTION
a sworn pretrial testimony taken out of court in response to oral examination and reduced to writing by a stenorapher for use in court
3 dispute resolution mechanisms
refers to whether a court has power over the person being sued and can be difficult to determine.
refers to whether a court can hear a case on a particular subject and is usually pretty clear.
Levels to PJ
PJ 1: Express Consent
PJ 2: Physical Presence + Process
PJ 3: General Jurisdiction / Citizenship
PJ 4: Specific Jurisdiction
PJ 1: Express Consent
-defendant expressly agrees to subject self to the jurisdiction of State X
-Express consent is permission for something that is given specifically, either verbally or in writing.
What does Express Consent?
Due process rights (Due process rights are basically the guarantee that a person has the right to the fair application of the law before they can be imprisoned, executed, or have their property seized)
How to obtain Express Consent?
a) Obtain in a written agreement
b) Oral Statement
c) Showing up in court to defend
d) Failure to file motion to dismiss on grounds of lack of PJ
Specific jurisdiction refers to jurisdiction that arises from the defendant having certain minimum contacts with the forum state so that the court may hear a case whose issues arise from those minimum contacts. The defendant in the case could be an individual or a business.
Key ethical obligations for lawyers
1. conflict of interest
2. confidentiality of information
3. communication with person represented by counsel
4. imputed disqualification (when an entire firm cant represent someone because someone at the firm has a conflict of interest)
A fiduciary duty is an obligation to act in the best interest of another party. Common law fiduciary duties include• Duty of Obedience - obey all reasonable directions in regard to the manner of performing a service• Duty of Loyalty - act solely for the benefit of the employer• Duty of Care - act with the standard of care and with the skill which is the standard in the locality for the kind of work which you are employed to perform
breach of fiduciary duty
1. existence of a duty- loyalty, obedience, care
2. breach of duty
Limited jurisdiction, or special jurisdiction, is the court's jurisdiction only on certain types of cases such as bankruptcy, family matters, etc. Courts of limited jurisdiction, as opposed to general jurisdiction, derive power from an issuing authority, such as a constitution or a statute.
PJ 2: Physical Presence + Process requirements
1) Presence (physical) in state x = defendant is located in state x AND
2) Personal (physical) service of process in state x = defendant is personal handed the complaint
When is PJ2 useful?
-No proof required other than physical acceptance
-Limited jurisdiction is created only for the cause of action alleged in complaint and not for any other lawsuit
PJ 3: General Jurisdiction / Citizenship
Defendant has established citizenship as follows - either has -
1) A domicile (permanent) or Residence (temporary) in State X
-Corporation (state of formation = domicile)
-Principal place of business (residence)
-LLC (member domicile or residence)
2) "Continuous and systematic" with State X (assess frequency and extent of contact)
PJ3: General Jurisdiction
General Jurisdiction is the court's authority to hear all kinds of cases, which arise within its geographic area. Therefore a court of general jurisdiction is one that can hear different types of cases like a tort case, a contracts law case, or any number of other related cases.
PJ4: Specific Jurisdiction
Specific jurisdiction refers to jurisdiction that arises from the defendant having certain minimum contacts with the forum state so that the court may hear a case whose issues arise from those minimum contacts. The defendant in the case could be an individual or a business.
Two part test for Specific Jurisdiction
1) Defendant has minimum contacts with State X that permit the exercise of specific per constitutional due process
2) Jurisdiction must comport with "notions of fair play and substantial justice"
Part 1 of SJ: Minimum Contacts -- Minimum Contacts
1) the defendant must have purposefully availed itself of the privilege of conducting activities in the forum state, taking advantage of the benefits and protections of its laws.
2) The purposeful availment requirement in determining personal jurisdiction ensures that a nonresident defendant will not be haled into court based upon "random, fortuitous or attenuated" contacts with the forum state --> this is foreseeable event
Part 2 of SJ: Notions of Fair Play & Substantial Justice (if part 1 is proved, then presumed fair to hale defendant into court; Part 1 can't be proved, then Part 2 can help prove)
Weigh the following factors
a) was contract arms-length (make sure other side has counsel, are aware of terms of teh contract)
b) Plaintiff's interest in convenient relief
c) Judiciary's interest in efficient resolution
d) Defendant's state's interest in adjudicating dispute & furthering social policy
How will SJ be established?
-To Establish Personal Jurisdiction, Minimum Contacts Must Be With Forum State, Not Just Its Resident
A nonresident defendant's connections with the forum state (i.e., the state where the lawsuit is brought) that are sufficient for jurisdiction over that defendant to be proper.
Alternative Dispute Resolution
the use of methods such as mediation and arbitration to resolve a dispute instead of litigation.
Benefits of ADR
-Reduce costs of dispute resolution
What is the American Rule?
Each party pays its own legal fees (attorney fees make litigation expensive // the ones with deeper pockets yield more leverage)
Legal Solutions to American Rule
-Loser pays attorney fees of winner
Shift or mitigate risk
-Attorney Fee Clause
-Aribitration & Mediation Clauses
Process of Arbitration: What does arbitrator do?
Makes a binding decision in arbitration proceeding (better to be winner because decision is enforceable by courts // unfortunate to be loser because it is not appealable to court)
What does Federal do about arbitration clauses and class action waivers?
Enforces them through the three different governing bodies of law
3) Administrative Agency
Class action Waiver
A class action waiver is typically one provision within an arbitration agreement stating that the employee agrees to resolve employment disputes on an individual basis and agrees to refrain from pursuing or joining any class or collective actions in conjunction with his or her fellow employees
An arbitration clause is a clause in a contract that requires the parties to resolve their disputes through an arbitration process.
What are some contract solutions to arbitration?
a) Opt-out clauses
b) Eliminate arbitration re issues ??
c) Neutral Procedure for choice of arbitrator
d) Smart Contracts (arbitrator has key, neutral process with no biases
e) Court Programs (appealable to trial court)
Opt out clauses
Opt-out clause refers to a clause that is contained in many arbitration agreements that allows the consumers to reject the unacceptable terms of an arbitration agreement within a permitted time frame by keeping the other terms of the agreement intact. As the name suggests, an opt-out clause in an agreement gives consumers a choice not to be involved in or opt out of one part of the agreement.
Mediation is a dynamic, structured, interactive process where an impartial third party assists disputing parties in resolving conflict through the use of specialized communication and negotiation techniques
What is the goal with mediation?
Is the mediator decision binding?
Is mediation process legal?
No, not legal. It is not circumscribed by legal rules
Do courts require mediation prior to trial to try to effect settlement?
Yes, they often do this
Class 5 CONTRACTS
A contract is a legally enforceable promise or set of promises.
A contract is a legally binding agreement that recognizes and governs the rights and duties of the parties to the agreement. A contract is legally enforceable because it meets the requirements and approval of the law. An agreement typically involves the exchange of goods, services, money, or promises of any of those.
TWo primary sources of contract law
1) Common law
Uniform Commercial Code
recognized as the most important statute in business law, it includes provisions which regulate certain sales of goods and negotiable instruments
The Uniform Commercial Code (UCC) is a comprehensive set of laws governing all commercial transactions in the United States. It is not a federal law, but a uniformly adopted state law. Uniformity of law is essential in this area for the interstate transaction of business. Because the UCC has been universally adopted, businesses can enter into contracts with confidence that the terms will be enforced in the same way by the courts of every American jurisdiction. The resulting certainty of business relationships allows businesses to grow and the American economy to thrive.
UCC Article 2
Applies to contracts for the sale of goods.
Article 2 of the UCC governs the sale of goods, such as computers, automobiles,
and sacks of flour.
Statute of Frauds
A state statute under which certain types of contracts must be in writing to be enforceable.
Global and Internet Commerce
In the absence of global agreements or treaties, the principles of "comity"
gives "persuasive" (as opposed to binding) weight to foreign laws that are
similar to the US court's laws
Contracts can be
written, oral, or implied . Although most contracts are enforceable even if they
are not in writing, the statute of frauds (discussed below) requires certain types of contracts to
be in writing to be enforceable.
What qualifies as writing?
Email, text, social media
a) Essential terms of deal
b) Signed by enforcing party
c) UCC requires quantity
A severability clause refers to a contractual provision that describes the effect that an unenforceable part of a contract will have on an agreement.
In general, a severability clause consists of two parts:
1) Savings language for preserving the rest of an agreement if a court decides that a certain part is unenforceable
2) Reformation language stating how the contracting parties will modify the unenforceable parts or simply delete them
There are four basic requirements for a contract:
(1) there must be an agreement between the parties formed by an offer and acceptance;
(2) the parties' promises must be supported by something of value, known as
(3) both parties must have the capacity to enter into a contract (i.e., not be mentally
incompetent or a minor)
(4) the contract must have a legal purpose
Contract Process Definition -- What happens with a contract?
is a statement by a person (the offeror) that indicates a willingness to enter into
a bargain on the terms stated.
occurs when the person to whom the offer was addressed (the offeree)
indicates a willingness to accept the offeror's proposed bargain.
is anything of value that is exchanged by the parties. (promises
exchanged by the parties)
What qualifies as a business contract?
Statute of Frauds
1. Contracts that cannot be performed within one year
2. Contracts for the sale of goods for $500 or more (which are governed by the
UCC's statute of frauds).
a) Monetary Damages
b) Non-Monetary Equitable Remedies
If one party breaches a contract, the nonbreaching party is usually entitled to monetary
damages. Damages can take one of three forms: expectation damages, reliance
damages, and restitution
(MD) Expectation Damages
Expectation damages compensate the plaintiff for the amount it lost as a
result of the defendant's breach of contract; in other words, the damages
are the amount necessary to put the plaintiff in the position it would have
been in if the contract had been fulfilled.
(MD) Reliance Damages
second measurement of damages is reliance, which compensates the
plaintiff for any expenditures made in reliance on a contract that was
subsequently breached. Instead of giving the plaintiff the benefit of the
bargain (expectation damages), reliance damages return the plaintiff to
the position that he or she was in before the contract was formed
-suppose that Jim agrees to sell Frank a mainframe computer system,
and Frank invests in renovating a room to allow for proper ventilation and
cooling of the computer. If Jim then sells the computer to someone else,
Jim will be required to reimburse Frank for the renovation expenses
(MD) Restitution Damages
Restitution is similar to reliance damages, but whereas reliance damages
look at what the plaintiff has lost, restitution looks at what both parties
have gained from the transaction. Restitution puts both parties back in the
same position they were in before the contract was formed
(MD) Consequential Damages
Consequential damages are damages that the plaintiff is entitled to as
compensation for additional losses that occur as a foreseeable result of a
breach. Consequential damages are available only if the breaching party
knew, or should have known, that the loss would result from a breach of
contract. Thus, consequential damages can include harm resulting from
the loss of future business but only if the damages were reasonably
foreseeable. The nonbreaching party is entitled to receive consequential
damages based on lost future profit only if he or she can demonstrate that
the profit would have been earned had the other party not breached the
(MD) Liquidated Damages
A liquidated damages provision, agreed on ahead of time, will specify a
set figure that the breaching party will pay the injured party in the event of
breach. The figure should be both parties' best estimate of what their
expectation damages would be. If the specified amount exceeds this
reasonable estimate, the court may consider it a form of punishment,
which is not permissible under contract law, and refuse to enforce the
liquidated damages provision
Why is a severability clause a good idea?
it is a good idea to include a severability provision in an agreement to show that the contracting parties are willing to delete unenforceable or illegal provisions and save the rest of the contract. (do not include good faith)
(NMER) Specific Performance
Specific performance is used if (1) the item involved in the contract was unique
(e.g., a sculpture); (2) the contract involved real property; or (3) it is difficult to
calculate monetary damages accurately, making it unfair to award damages
court orders to do something or to refrain from doing something. For
example, although specific performance by an employee may never be required
in a case for breach of an employment contract (individuals may not be forced to
work), courts can enjoin the employee from working for the injured party's
some situations, such as mistake or misrepresentation, in which enforcing the
contract would be unfair, a court may exercise its equitable powers and rescind
(cancel) the contract and order restitution
Merger and Non reliance clauses
A non reliance clause is a clause that provides that the parties have not relied on any representations other than those set out in the contract. This is an acknowledgement of non-reliance, not an exclusion or limitation of the representations that the parties believe to have been made.
An indemnity clause is a contractual transfer of risk between two contractual parties generally to prevent loss or compensate for a loss which may occur as a result of a specified event.
A clause that releases a contractual party from liability in the event of monetary or physical injury, no matter who is at fault.
Undoing Contract: Recission
the act of rescinding; the cancellation of a contract and the return of the parties to the positions they would have had if the contract had not been made; "recission may be brought about by decree or by mutual consent"
Mistake of Fact, not law
Deemed void (not enforceable, but valid), Unconscionability
Unconscionability (sometimes known as unconscionable dealing/conduct in Australia) is a doctrine in contract law that describes terms that are so extremely unjust, or overwhelmingly one-sided in favor of the party who has the superior bargaining power, that they are contrary to good conscience.
In jurisprudence, duress or coercion refers to a situation whereby a person performs an act as a result of violence, threat, or other pressure against the person
A doctrine that applies when a promisor makes a clear and definite promise on which the promisee justifiably relies; such a promise is binding if justice will be better served by the enforcement of the promise.
In this example, promissory estoppel may be enforced by the court, as Charles relied upon his employer's offer (verbal contract), in making a major decision. Here, promissory estoppel doctrine dictates that the employer could be legally estopped from not making good on his promise.
Doctrine of Respondeat Superior
employer is vicariously liable for employee's negligent torts committed within the agent's "course and scope of employment."
Frolic and detour
Frolic and detour is term used in the law of torts. It occurs when an employee (or agent) makes a physical departure from the service of his employer (or principal)
a frolic constitutes a major departure wherein the employee is acting on his own and for his own benefit, rather than a minor sidetrack in the course of obeying an order from the employer.
A detour occurs when an employee or agent makes a minor departure from his employer's charge
Indemnity is a contractual obligation of one party to compensate the loss incurred to the other party due to the acts of the indemnitor or any other party.
Employee vs. Independent Contractor
if employer can exercise considerable control over the details of the work, this indicates employee status
Does the company control or have the right to control what the worker does and how the worker does the job?
Does the company control the business aspects of the worker's job? These include arrangements like how the worker is paid, whether expenses are reimbursed, and who provides tools and supplies.
Is there a written contract or employee benefits such as a pension plan, insurance, or vacation pay?
Will the relationship continue and is the work a key aspect of the business?
Cause of action
A cause of action, in law, is a set of facts sufficient to justify a right to sue to obtain money, property, or the enforcement of a right against another party.
wrongful or criminal deception intended to result in financial or personal gain
the action of damaging the good reputation of someone; slander or libel.
An intentional tort that occurs when a tortfeasor communicates false statements to third parties about a person's goods, services, or business enterprise. The tortfeasor must intend to harm the victim's ability to use goods, furnish services, or conduct business
per se defamation
a legal cause of action in which a court deems some types of statements to be so negative that injury is assumed
damages awarded for financial losses such as loss of future earnings and cost of future care; part of general damages
A product of the intellect, such as an expressed idea or concept, that has commercial value.
Trade secrets are:
information . . . that (i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other person who can obtain economic value form its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy
agents can neither disclose nor use for their own benefit any confidential information they acquire during their agency
Trade Secret derives its value from...
1) has competitive value to prior business
2) Business has taken reasonable steps to keep secret under the circumstances
How does trade secret get acquired?
1) Plaintiff's disclosure of trade secret to defendant in a confidential relationship
2) Plaintiff's disclosure of Trade Secret to defendant under circumstances in which defendant owed a duty not to use or disclose (this is fidiciuary duty of confidentiality)
3) Improper means
How long does confidentiality last?
Misapropriation of a Trade Secret
1. acquisition of trade secret by a person who knows or has reason to know that the trade secret was acquired by improper means
2. disclosure or use of a trade secret of another without express or implied consent by a person who (a) used improper means to acquire knowledge or at the time of disclosure or use, knew or had reason to know that his knowledge was either derived from a person who had utilized improper means to acquire..acquired under circumstances giving rise to a duty to maintain secrecy, or derived through a person who owed a duty to the person seeking relief
For TS to be enforceable, what has to occur?
1) Defendant USED OR DISCLOSED the TS without plaintiff's permission
2) Plaintiff was harmed by its own loss or defendant's gain from this use or disclosure
trying to tear down a contract that you are aware of with a third party
making false statements about a third party with the intention of harming them
Inevitable Disclosure Doctrine (IDD)
1.The employee's former and current employers are direct competitors providing substantially the same products or services;
2.The employee's new position is similar to his or her prior position to such a degree that he or she could not reasonably be expected to fulfill his or her new job responsibilities without relying on the former employer's trade secrets (inevitably rely on TS); and
3. Evidence demonstrating "unworthiness" and that misappropriation is a substantial probability and not a mere threat. (PepsiCo, Inc. v. Redmond)
Which state rejects IDD?
CA because it is a restraint on trade
BUT CA UTSA
yields same result via element of "threatened" disclosure as did Bimbo
WE CONCLUDE that judicial/legislative "semantics" drives outcome
common law duties
1. fiduciary duties
2. wrongful conversion of trade secrets
3. tortious interference with contracts
4. wrongful disparagement
5. inevitable disclosure
4 sources of law
Model statutes drafted by private bodies of lawyers
Uniform acts" are collaboratively written model laws intended to facilitate the enactment of identical or similar laws by the separate states. Such laws are distinct from interstate compacts.
Contractual duties to your employer
2. non-solicitation covenants
3. non-interference covenants
4. non-cmpetition covenants
When do confidentiality covenants occur?
1. the sale of a business
2. employment context
3 types of Confidentiality Covenants
1. covenants based on geography
2. Client based on non-compete (most ocmmon), you cant go against my clients or specific people in the industry
3. Activity based (using a specific skill youve developed in this person)
during or after employment you will not solicit / hire anyone to terminate their employment with them (related to employees, customers, and vendors)
non-competition covenants (and what makes for an enforceable noncompete)
geo based client based, activity based. In order to enforce it...
1. covenant (aka agreement) must be reasonable in scope and duration (up to 1 year / 18 months normally and focused on whatever the noncompete is trying to protect)
2. Narrowly tailored to a protectable interest (e.g., grade secrets, customer lists, goodwill)
3. gien in exchange for a valid consideration
4. not contrary to public policy
about referral patterns (be careful with this and proceed to give everyone great remarks)
The law of fraud: 5 elements you must satisfy to commit fraud
1. The person commiting fruad must be aware
2. misrepresentation of a material fact
3. it must be a material fact
4. someone must rely on the material fact
5. there must be damages as a result of the fraud
2 duties to your former employer
1. common law duties
2. noncompetition covenants
Restrictive covenants are not considered illegal, but restrictions that are particularly exacting have been found to limit the ability of an individual to do business
using work time and resources to complete something other than their job duties, such as assignments for another job
This is a contract between an employer and an employee that states that the employee will net reveal the employer's trade secrets to future employers.
prevents an individual from competing against a former employer for a specific period of time
doctrine of inevitable disclosure
May Prevent an employee who has left company A from working for Company B if the employee's new job duties will inevitably cause the employer to rely upon knowledge of the former employer's trade secrets.
To Prove the Doctrine of Inevitable Disclosure was not violated, must prove :
1. The former and new employer are not competitors
2. The employee possesses trade secrets
3. The employee's new job is at least very similar to his old job so that the trade secrets would inevitable be used in his new job
"Hands-off" or "anti-piracy" provisions are one type of restrictive covenant that prohibits a former employee from contacting customers or using proprietary information gained as a result of his or her position
Invention Assignment Agreement
An employee assigns to the
organization any and all rights the
employee may have to inventions and
ideas generated through the
employment with the organization.
A fiduciary duty is an obligation to act in the best interest of another party. For instance, a corporation's board member has a fiduciary duty to the shareholders, a trustee has a fiduciary duty to the trust's beneficiaries, and an attorney has a fiduciary duty to a client
Misapprooriation of Trade Secret
Misappropriation" means: (1) Acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or (2) Disclosure or use of a trade secret of another without express or implied consent by a person who: (A) Used improper means to acquire knowledge of the trade secret; or (B) At the time of disclosure or use, knew or had reason to know that his or her knowledge of the trade secret was: (i) Derived from or through a person who had utilized improper means to acquire it; (ii) Acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or (iii) Derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or (C) Before a material change of his or her position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.
arrange and set down in writing
(n.) exclusive rights over an invention; copyright; (v.) to arrange or obtain such rights; (adj.) plain, open to view; copyrighted
An exclusive right granted by the federal government allowing the owner to reproduce and sell an artistic or published work.
Designs and names, often officially registered, by which merchants or manufacturers designate and differentiate their products
a practice or arrangement by which a company or government agency provides a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a premium.
Insurance Company has duties of..
2) Defend Litigation
3) Implied duty of good faith and fair dealing
Types of insurance
1) First Party
2) Third Party
3) Primary / Excess
First Party" insurance coverage insures against loss or damage sustained by the "insured" (person for whom the policy is written to protect and/or person or business entity who purchases the insurance)
These are meant to insure against liability of a person or entity for loss, damage or personal injury caused to a "third person" (i.e. someone other than the "insured").
Excess Liability insurance is a type of policy that provides limits that exceed the underlying liability policy. It is no broader concerning the incidents covered by the primary insurance, meaning it will not expand the stated coverage but will provide higher limits on top of the original policy. The primary purpose of Excess Liability insurance is to close coverage gaps and to offer an added layer of protection in case the underlying insurance is exhausted of all possible resources.
Statute of Limitations
A statute of limitations is a law passed by a legislative body in a common law system to set the maximum time after an event within which legal proceedings may be initiated
A provision of a claims-made liability policy that allows the insured to purchase coverage for claims made during a specified time period after the end of the policy. It covers the claim as long as the incident occurred during the time the policy was in effect.
a specified amount of money that the insured must pay before an insurance company will pay a claim
An exclusion is a policy provision that eliminates coverage for some type of risk. Exclusions narrow the scope of coverage provided by the insuring agreement. In many insurance policies, the insuring agreement is very broad. Insurers utilize exclusions to carve away coverage for risks they are unwilling to insure
The process by which an insurer can, after it has paid a loss under the policy, recover the amount paid from any party (other than the insured) who caused the loss or is otherwise legally liable for the loss.
-One example of subrogation is when an insured driver's car is totaled through the fault of another driver. The insurance carrier reimburses the covered driver under the terms of the policy and then pursues legal action against the driver at fault
common law entity
created by intent
no distinguishing between sole proprietors and sole proprietorship
1. you always have unlimited personal liability to all of your actions
2. unlimited personal liability for all actions of the business
3. unlimited responsibility for all employees--> respondent superior
continuity: sole proprietarship dissapears when you die
corp governance: n/a
formality: inexpensive, low formality
taxation: only taxed once
formed by intent
common law entity
1. you are always responsible for your own actions
2. Respondeant superior- you are responsible for the actions of your employees
3. you are responsible for all of the actions taken by your partners
continuity: depends on continuous mutual consent, fragile
Formality: formed on intent, very little formality
taxes: not a taxpaying entity; tax conduit, laibility for taxes flow through. File an IRS 1065; US parternship return. Taxes are passed on based on allocations which are typically aligned with equity but not necessarily. Allocation is not necessarily equal to distribution
pros: 1. not paying an entity tax 2. prior to the tax act, at every level of income the corporate tax rate was higher than the individual (this was brought way down)
cons: unless you are cash rich this can be tough, because allocation doesnt equal tax distribution necessarily
entitity created to raise money (often used in private equity and real estate). limited partnerships need at least one general partner and one imited partner
GP: unlimited personal liability to the same extent of a general partnership
LP: limited liability to your investment
Continuity of existence: Into perpetuity unlesss you have affirmatively decided otherwise
transferability: the interest that people own are security, you are subject to federal and state securities laws
expense / formality: pretty expensive because you are forming two different entities; medium grade formality
Taxation: same as General Partnership-- phantom income / double arbitrage
Incorporation: requires certificate of incorporation and a name that does not conflict with anyone else in the state
Jurisdiction: once you start doing business in a state, you need to have an address-- hire a registered agent to act as a legal address
simple company: common stock
more complex: common stock + preferred stock
Anatomy / structure:
1. Board of Directors: biforcate ownership and managemen, BoD is management- responsible to corporation and shareholders. Duty of care and duty of loyalty; unlimited personal liability
2. Shareholders: owe fiduciary duties to one another, liability is limited to investment
3. Officers: owe loyalty, obedience, and care to the corporation
continuity of existence: in perpetuity
Formality- very high, required annual board meetings and minutes, annual shareholderher meetings and minutes
ways to lower taxes paid by corporations (2)
1. bonus money out
2. retirement contributions
piercing the corporate veil
when you try to sue a corporation instead of the subsidiary that you actually did business with. 2 arguments used to pierce the corporate veil
1. subsidiary is the parent company's alter ego
2. subsidiary is the parent company's agent
S corp (structure / additional requirements)
An S corp only effects the corporation from a tax point of view. The income, gains, losses, and deductions are passed through in proportion to one's share of ownership in the S corp
The additional requirements:
1. the s corporation must be domestic
2. max 100 shareholders
3. shareholders must be individuals or estates
4. shareholders must not be non-resident aliens
5. only common stock (no preferred)
6. must make s selection within 75 days of formation
How to reduce personal liability for the board of directors
1. have an indemnification- an agreement that creates an exemption from incurred liabilities
2. have a contract that specifies indemnification
3. have diretor and officer (d&o) insurance
LLC- limited liability company
corporate form is extremely flexible and can be setup to mirror a different type of org (80% setup to mimic a corp)
shareholders own a membrship interest that is divided into "units", whoever owns the majority of the stock elects the board of members and controls provisions pay out
Low expense and formality
Tax: double arbitrage, flexible income distribution
Transferrability of interest-- acts the same as stock
formality / expense: inexpensive to form and maintain because there are no formalities
Liability- members (stock owners) have limited liability to investment, officers have respondeant superior, board of managers- loyalty, care, candor
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