Business Law

Front 1

Process of Legal Analysis

Back 1

a. Issue: Frame the legal issue in the form of a question
b. Rule: Quote the applicable rule of law, identify the legal theory – only state what applies
c. Application: Apply EACH element to the fact pattern, analyze each part whether or not it applies
d. Conclude: Based on your analysis, state conclusion to resolve issue

Front 2

Sources of American Law (4)

Back 2

1. Constitution: US & State
2. Statutory Law: Legislature passed by US & State
3. Case Law & Court Systems – A prior case serves as precedent (Brown vs.
4. Regulation by Agencies (US, State, & Local – FDA, Dept of Revenue, Zoning and Building

Front 3

Civil vs. Criminal Law (4)

Back 3

1. There is higher burden of proof in criminal law
2. A defendant losing a civil case has to follow a court order or pay money vs. a criminal case, which can be much higher
3. A defendant who loses a criminal case is GUILTY vs. a civil case is LIABLE
4. Civil cases are usually brought by two private parties vs. a criminal case, which is usually brought in by the government

Front 4

A state court has jurisdiction over the defendant when (2 +)

Back 4

i. Defendant resides in that state; or
ii. Defendant consents by
1. Appearing in court
2. By agreeing in contract
iii. Long Arm Statute:
1. Are there sufficient minimum contacts?
2. …so that it’s fair and foreseeable that it is fair to hail the defendant in court in this state.
* Part of fairness involves foreseeability: Could the person foresee that they would be sued in that state in eyes of defendant

Front 5

Personal Jurisdiction in Federal Courts

Back 5

1. suit is between people (or entities) of different states AND the amount in controversy exceeds $75,000
2. cases arise under the federal Constitution or a federal treaty or law

Front 6

Define Assault:

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a. Defendant intentionally creates a REASONABLE fear or apprehension in plaintiff
b. of IMMINENT (about to happen – if there is no sense of time as in about to happen, is not assault) bodily harm or offensive contact

Front 7

Define Battery

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a. Harmful or offensive CONTACT
b. and defendant INTENDS to bring about the harmful or offensive contact

Front 8

Define Intentional Infliction of Emotional Distress

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a. Defendant committed an extreme and outrageous act (Level of outrageous is determined by societal norm), and
b. Defendant intended (planned) to or was reckless to cause plaintiff to suffer severe emotional distress, and
c. Defendant’s acts did, in fact, cause plaintiff mental anguish

Front 9

Define Battery w/o Assault

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Harm without the fear of the defendant

Front 10

Define False Imprisonment:

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a. Defendant Intentionally confines
b. or restrains the plaintiff to a bounded area
c. without jurisdiction

Front 11

Define Defamation: (4)

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a. Defamatory language (that is false and injuring the plaintiff’s reputation), and
b. Language is “of or concerning” plaintiff (it’s about the plaintiff), and
c. Publication of the defamatory language to a third person
d. Causing damage to the reputation to the plaintiff

Front 12

Slander

Back 12

Oral

Front 13

Libel

Back 13

Written

Front 14

Define Invasion of Privacy (2)

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a. Appropriation (to take) by defendant of plaintiff’s picture or name or other likeliness, and
b. Use it for defendant’s commercial advantage

Front 15

Define Misrepresentation (And Fraud)

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a. Induced (persuaded)
b. By justifiable reliance on (if you didn’t rely there is no misrepresentation, it must be justifiable and foreseeable)
c. The other party’s misrepresentation
d. Of a MATERIAL fact (must be able to prove or disprove and must be IMPORTANT to case)
e. ADD’TL for FRAUD – Scienter: the knowledge that you know you are deceiving

Front 16

Define Wrongful Interference with a Contract (3)

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a. A valid contract exists between the Plaintiff and X
b. The defendant knows that the contract exists
c. The defendant intentionally causes X to breach the contract

Front 17

Define Conversion (4)

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a. Taking, Using, Selling, or Restraining Possession of
b. Personal Property
c. Which belongs to someone else
d. Without the owner’s permission or legal authorization

Front 18

Elements of Negligence

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a. Duty of care existed from defendant to plaintiff (reasonable care)
b. Defendant breached that duty of care
c. Defendant’s breach caused
d. Harm to the plaintiff

Front 19

Causation (2)

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Actual, Proximate

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Actual causation

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BUT FOR the defendants breach, plaintiff’s injuries would not have occurred

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Proximate causation

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there must be a close enough connection (reasonably foreseeable) between defendant’s breach and plaintiff’s harm

Front 22

Potential defenses in a negligence action (2)

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1. Potential defenses in a neglia. Comparative Negligence: Compare plaintiff’s % of fault with defendant’s % of fault. Plaintiff’s damages are deceased by the percentage that he was at fault
b. Assumption of Risk: Plaintiff voluntarily exposed him/herself to known danger
gence action

Front 23

Trademark (vs. Generic):

Back 23

any word, name, symbol, device, or combination of their used by a manufacturer or seller to identify its products and to distinguish them from the products of competitors

Front 24

Define Copyright

Back 24

Protects the expression of an idea fixed in a tangible medium from copying

Front 25

Terms of Copyright (3)

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a. Author has sole right to copy, reproduce, and profit from it
b. Does not protect ideas, just method of displaying and compilation
c. 70 years

Front 26

Patent Requirements (3)

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i. Novel
ii. Non-obvious and
iii. Useful

Front 27

Define Trade Secret (3)

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a. Gives its owners an advantage over competitors who do know it or use it, and
b. Has enough value to provide an actual or competitive advantage; and
c. Company took reasonable measures to assure secrecy

Front 28

Define Contract:

Back 28

a promise or set of promises under which the law recognizes a duty to perform and for breach of which the law gives the aggrieved party a remedy

Front 29

Types of Contracts (4)

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a. Express K: parties state their agreement orally or in writing
b. Implied K: parties manifest agreement through conduct
c. “VOID K”: No such thing not legally enforceable, an agreement without any legal effect from its inception
d. Voidable K: A K which one or both parties may elect to end

Front 30

Elements of a Sales of Goods Contract (5)

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i. Subject Matter
ii. Time of Delivery
iii. Place of Delivery
iv. Price
v. QUANTITY: only factor that MUST be determined in the formation of contracts

Front 31

Define Offer

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a definite proposal by one person to another indicating a present intention to enter a contractual relationship

Front 32

Factors of Determination (Offer)

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i. Need language of present commitment
ii. The more definite the terms the more likely it was an offer
iii. Communication to specific person is more likely to be an offer than to public

Front 33

Offer Terminates when (4)

Back 33

Lapse of time
Revocation
Rejection
Operation of Law (death)

Front 34

Define Acceptance

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an indication by the offeree of his willingness to be bound to the terms of the offer

Front 35

Two types of Acceptance

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a. Express: acceptance is stated clearly
b. Conduct: acceptance is indicated by action

Front 36

Define Consideration

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something of legal value which is bargained for and given in exchange for an act or a promise

Front 37

Pre existing duty rule

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There is no consideration when one party promises to do something he’s already legally obligated to do or promises to refrain from doing something he can’t legally do

Front 38

Define Capacity

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Legal capacity and Minors: a minor can disaffirm a K at any time before reaching the age of majority and for a reasonable period of time after reaching the age of majority

Front 39

Illegal Agreements (3)

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a. Agreements that violate statute
b. Agreements that violate public policy developed in court
c. Unconscionable agreements (Absence of meaningful choices together with terms unreasonable advantageous to one of the parties)

Front 40

Define Antitrust Law

Back 40

Agreements restraining competition

Front 41

Noncompetition clauses are permitted if (4)

Back 41

a. They are part of an otherwise valid K
b. Clauses serve as a legitimate business purpose (other than preventing competition)
c. Restriction competition is reasonable in time, scope, and geographic area
d. AND clauses can’t impose an undue hardship (cannot get a job)

Front 42

Elements of Mutual Mistake (2)

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a. Both parties made a mistake as to a basic assumption about a vital fact on which the contract was made, and
b. The mistake has a material effect on the agreed-upon exchange

Front 43

Elements of Duress

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a. The K was induced by an improper threat, and
b. The victim had no reasonable alternative but to enter in the K

Front 44

When is there justifiable reliance? (3)

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i. Fiduciary relationship (guardian, trustee, doctor, lawyer, clergy, investor) – specific relationships are fiduciary that have legal importance
ii. Relying party is unusually vulnerable (elderly, infirm)
iii. Reliance on someone with superior skill or judgment (mechanic)

Front 45

Some types of contracts covered by SOF (4)

Back 45

a. Years – contracts which cannot be performed within one year (can lose information in the course of a year)
b. Land – any interest in land (purchase and sale MUST be in writing)
c. Goods costing more than $500 or more
d. Suretyship – K to perform the financial obligation of another person

Front 46

Some exceptions to SOF requirement (2)

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a. Merchant’s Memo
b. Part payment in advance

Front 47

Define Condition:

Back 47

An act or event, which unless excused, must occur before performance under a K is due
Failure to perform a condition is a breach

Front 48

Types of Breaches (2)

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a. Material Breach: Failure to give substantial performance, duty to perform does not arise in the other party
b. Minor breach: substantial (but not complete) performance is given, duty to perform arises in other party

Front 49

How do you avoid liability for contractual breach? (5)

Back 49

1. Discharge by novation (3rd party completion)
2. Statute of limitations (been too long to file case)
d. Commercial Frustration
e. Commercial Impracticability
c. Impossibility

Front 50

Burden of Proof (3)

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i. Must be able to prove losses with reasonable certainty
ii. Only allowed to recover losses that were foreseeable to the defendant at the time of contracting
iii. Plaintiff has a duty to mitigate damages

Front 51

Types of Damages (3)

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a. Compensatory damages (What exactly incurred)
b. Consequential damages (What incurred as a result)
c. Liquidated damages (Damages stated in formation of K)

Front 52

Remedy Seller’s Breach: sales of goods case

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1. Compensation includes cost of having to find other supplier, price down then nothing owed

Front 53

Remedy Buyer’s breach – sales of goods

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1. Profit that would have made on deal

Front 54

Remedy Seller’s Breach – sale of land

Back 54

1. Cannot take back property after K made, no other substitute, get land

Front 55

Remedy Buyer’s breach – sale of land

Back 55

1. Money fixes problem (sometimes keep deposit)

Front 56

Equitable remedies (3)

Back 56

a. Injunction: A court order requiring a person to do something or not to do something, only appropriate if monetary damages are inadequate
b. Specific performance: court order breaching party to perform his contractual duties
c. Rescission and Restitution: Rescission means a K is cancelled; restitution means the parties must give back what they already received from the other party

Front 57

Agencies can be created by... (3)

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i. In writing or orally (by communicating their agreement)
ii. By implication (actions imply their agreement)
iii. Estoppels (3rd party thinks its an agency)

Front 58

Duties of Agent to Principal (5)

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i. Duty of Loyalty
ii. Duty to Obey Instructions
iii. Duty to perform with care and skill
iv. Duty to notify principal
v. Duty to Account

Front 59

Conflicts of Interest Examples (4)

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a. Self-dealing (can’t take assets for yourself that don’t belong to you)
b. Competition with P
c. Acting on behalf of another party in the transaction
d. Keeping confidential information

Front 60

Duties of P to A (2)

Back 60

Compensate
Reimburse

Front 61

Kinds of Authority (2)

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a. Actual authority: based on what P communicates and implies to A
b. Apparent Authority: (authority by estoppels)

Front 62

Types of ACTUAL authority (2)

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i. Express authority
ii. Implied authority

Front 63

Liability to Third Parties – Contractual liability of A and P (2)

Back 63

a. Full or partially disclosed P
b. Undisclosed P

Front 64

Define Full or partially disclosed P

Back 64

if the P and the agency are disclosed to the third party or if the third party knows A is acting as agent but doesn’t know what P is, then A has no contractual liability

Front 65

Define Undisclosed P

Back 65

third party doesn’t know/doesn’t have reason to know f Ps existence and Ps identity) A is contractually liable

Front 66

Liability to Third Parties – Tort liability of A

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A is liable in tort, where he acted at Ps command or not

Front 67

Liability to Third Parties – Tort liability of P

Back 67

i. An employer is liable for an employee’s tort if committed within the scope of the of the employee’s employment.

Front 68

Criminal liability of P

Back 68

a. Ps are not liable for crimes committed by their agents unless the P directed, approved, or participated in the crime

Front 69

Termination of Agencies (5)

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a. Stipulation of Contract
b. Lapse of time or accomplishment of agency’s stated purpose
c. Mutual agreement
d. By either party
e. Automatically for impossibility, bankruptcy, significant change in circumstance, etc

Front 70

A PS is formed whenever this definition is met: (4)

Back 70

a. An association of two or more people
b. Carrying on a business
c. As a co-owner of the business
d. For profit

Front 71

Duties of Partners in a GP to the PS and to each other (2)

Back 71

b. Duties of Partners in a GP to the PS and to each other

Front 72

Basic Characteristics of Corp (5)

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i. Continuity of Life
ii. Limited Liability
iii. Free transferability
iv. Separate, taxable entity
v. Centralized Management

Front 73

Define Board of Directors

Back 73

BOD acts as a board its function is to direct, they are agents and owe fiduciary duties to the corporation

Front 74

Define Officers

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Officers are agents and owe fiduciary duties to the corporation

Front 75

e. Directors and Officers duties to the corporation

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i. To act within the scope of their authority
ii. Duty of Care
iii. Duty of Loyalty

Front 76

Define Business Judgment Rule

Back 76

Officers and directors are not liable for negligence if their decisions are within the scope of authority and comply with fiduciary duties.

Front 77

Business Judgement Rule (3)

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a. The manager must make an informed decision
b. The manager must have no conflicts of interest
c. The manager must have a rational basis for his decision

Front 78

How can duty of loyalty be breached in corp?

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1. Self dealing
2. Competing with the corporation or working for a competitor
3. Usurping a corporate opportunity

Front 79

Stock transfer restrictions: Reasons (4)

Back 79

1. Maintain a balance of power through distribution of stock
2. Don’t want shares to be distributed to other outside members, competitors
3. Don’t want shareholders who are not in sync with your strategy
4. You might want to force the liquidation of your shares

Front 80

Shareholder rights (4)

Back 80

1. Hold meetings
2. Elect Directors
3. Vote
4. Inspection and formation rights (non-SEC)

Front 81

Absolute right: (3)

Back 81

i. To inspect list of shareholder with number of shares owned
ii. To inspect bylaws
iii. Articles and minutes of last three years of SH meetings

Front 82

Qualified Rights (3)

Back 82

i. To inspect accounting records
ii. Board and committee meeting minutes
iii. SH must make good faith demand and have proper purpose