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231 Cards in this Set
- Front
- Back
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A civil wrong that is not a breach of contract
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Tort
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The desire to cause certain consequences or the substantial certainty that those consequences will result from one's behavior.
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Intent
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A concious indifference to a known and substantial risk of harm created by one's behavior.
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Recklessness
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A failure to use reasonable care, with harm to another party occurring as a result
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Negligence
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Liability without fault or more precisely, liability irrespective of fault.
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Strict liability
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Contemplation of civil liability for those who commit torts
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Tort Law
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Damages paid to compensate the claimant for loss, injury, or harm suffered by another's breach of duty. E.g. Medical Expenses, lost wages and benefits
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Compensatory Damages
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Damages designed to punish wrongdoers and to deter them, as well as others, from engaging in similar conduct in the future
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Punative Damages
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The intentional and harmful or offensive touching of another without his consent
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Battery
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A defendant who intends to injure one person but actually injures another is laible to the person injured, despite the absence of any specific desire to injure him
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Transferred intent
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An intentional attempt or offer to cause a harmful or offensive contact with another person, if that attempt or offer causes a reasonable apprehension of imminent battery in the other person's mind.
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Assault
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Conduct "so outragrous in character, and so extreme in degree, as to go beyond all possbile bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community".
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Requirement for Emotional Distress
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Intentional confinement of another person for an appreciable time without his consent
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False imprisonment
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The (1) unprivileged (2) publication of (3) false and defamatory (4) statements concerning another.
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Defamation
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Written or printed defamation or to other defamation having a more of less permanent physical form but can include radio and television
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Libel
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Non written or physical defamatory statements, mainly oral defamation
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Slander
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Actual reputational injury and other actual harm
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Special Damages
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Compensation for reputational harm that is presumed to have occurrred but does not have to be proven by the plaintiff for libel
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Presumed Damages
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False statements that the plaintiff (1) has commited a crime involving moral turpitude or potential imprisonment, (2) has a lothesome disease, (3) is profesisonally incompetent or guilty of professional misconduct, or (4) is guilty of serious sexual misconduct.
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Slander per se
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A privilege that shields the author of a defamatory statement regardless of their knowledge, motive or intent.
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Absolute privilege
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Knowledge of falsity or reckless regard for the truth
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Actual malice
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(1) Proof of negligence to establish liability (2)Availability of presumed and punative damages by providing that if the private figure plaintiff wanted to recover such damages (either instead of or in addition to damages for demonstrated harm), they would need to prove actual malice by clear and convincing evidence.
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Gertz rule for private figure malice cases
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Liability on those who initiate legal proceedings, whether criminal or civil, for a primary purpose other than the one for which the proceedings were designed.
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Abuse of process
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Protection from wrongfully instituted civil lawsuits
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Wrongful use of civil proceedings
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Remedy for the wrongful institution of criminal proceedings
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Malicious prosecution
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Formal name of a tort claim that is available to victims of known misrepresentations
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Deceit (or Fraud)
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Any unauthorized or unpriveleged intentional intrusion upon another's real property
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Trespass to land
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Some interference with the plaintiff's use and enjoyment of their land.
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Private Nusiance
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The defendant's intentional exercise of dominion or control over the plaintiff's personal property without the plaintiff's consent.
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Conversion
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(1) The defendant owed a duty of care to the plaintiff (2) the defendant committed a breach of this duty (3) this breach was the actual and proximate cause of injury experienced by the plaintiff
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Proof of Negligence
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(1) A relationship between parties (2) Reasonable harm to the person injured (3) public policy concerns
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Factors determining duty
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A defendants violation of statutes, regulations and administrative regulations may create a breach of duty and may allow the plaintiff to win the case if the plaintiff (1) was within the class of persons intended to be protected by the statutes or other law, or (2) sufferred harm of a sort that the statute or other law intended to protect against.
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Negligence Per Se
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When an act, force or event contributes to a plantiff's injury was unforseeable, most courts hold that it absolves the defendant of liability for harms that resulted directly from this
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Intervening causes
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An event sufficiently related to a legally recognizable injury to be held the cause of that injury.
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Proximate cause
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The thing speaks for itself. Applies when (1) the defendant has exclusive control of the instrumentality of harm (and therefore probable knowledge of, and responsibility for, the cause of the harm) (2) the harm that occurred would not ordinarily occur in the absence of negligence (3) the plaintiff was in no way responsible for his own injuries.
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res ipse loquitur
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Contribution negligence, Assumption of Risk, Comparative negligence and Comparative fault
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Negligence Defenses
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The plaintiff's failure to exercise reasonable care for their own safety.
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Contributory negligence
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Determination of the relative negligence of the parties and awarding damages in proportion of the negligence determined.
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Comparative Negligence
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Plaintiff's voluntary consent to a known danger
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Assumption of Risk
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Liability without fault, or more precisely, irrespective of fault
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Strict Liability
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A two party relationship in which one party (the agent) is authorized to act on the behalf of, and under the control of, the other party (The principal)
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Agency
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When a manifested agreement of two parties that one party (The agent) will act for the benefit of the other (The principal) under the principal's direction.
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Agency Formation
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Duties or acts that must be performed personally and cannot be delegated to an agent.
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Non-Delegable obligations
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An agents ability to affect his pricipal's legal relations
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Authority
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Authority that must be communicated to the agent
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Actual Authority
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Authority that must be communicated to a third party
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Apparent Authority
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Actual Authority created by the principal's actual words (Written or oral)
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Express Authority
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Actual authority to do whatever is reasonable to assume that the principal wanted him to do, given the principal's expressed statements and the surounding circumstances.
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Implied Authority
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(1) Agent posseses the power to alter legal relations between principals and third parties and principal and himself.(2) The agent acts as a fiduciary regarding matters within the scope of the agency. (3) Right to control the agent's conduct with regard to matters entrusted to the agent.
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Proof of an agency's existence
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An agent continuously employed to conduct a series of actions
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General agent
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An agent employed to conduct a single transaction or a simple group of transactions.
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Special agent
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An agent who receives no compensation for his services.
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Gratuitous agent
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An agent of an agent. A person appointed by an agent to perform tasks that the agnet has undertaken to perform for his principal. E.g. Hiring an accounting firm for your employer.
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Subagent
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(1) Hiring party's right to control the manner and means by which the project is accomplished. (2) The skills required. (3) The source of the instrumentalities. (4) location of the work. (5) Duration of the relationship between parties. (6) The hiring party's right to assign additional projects to the hired party. (7) Extent of the hired party's discretion over when or how long to work. (8) Method of payment. (9) Hired party's role in hiring and paying of assistants. (10) Whether the work is part of regular business. (11) Whether the hiring party was in business. (12) Provision for employee benefits. (13) Tax treatment of the hired party.
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Definition of an employee v. independent contractor
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An agent must subordinate his personal concerns by (1) avoiding conflicts of interest with the principal and (2) not disclosing confidential information received from the principal.
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Duty of loyalty
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An agent must keep accurate records and accounts of all transactions and disclose these to the principal once the principal makes a resonable demand for them
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Duty to account
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(1) The pricipal's obligation to compensate the agent, (2) To reimburse the agent for the money spent in the principal's service and (3) to idemnify the agent for losses suffered in conducting the principal's business.
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Duties of principal to agent
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(1) At a time or upon the happening of an event stated in the agreement. (2) When a specified result has been accomplished, if the agency was created to accomplsh a specified result. (3) By mutual agreement of the parties, at any time. 4. At the option of either party (Revocation/Renunciation)
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Termination by act of parties
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(1) Death of the principal. (2) The death of the agent. (3) The Principal's permanent loss of capacity (e.g. insanity). (4) The agent's loss of capcity to perform the agency business (e.g. loss of license). (5) Changes in the value of the agency property or subject matter. (6) Changes in business conditions. (7) Theloss of destruction of the agency property or subject matter ot the termination of the principal's interest therein. (8) Changes in the law that make the agency business legal. (9) The principal's bankruptcy. (10) The agent's bankruptcy. (11) Impossibility of performance by the agent. (12) A serious breach of the agent's duty of loyalty. (13) The outbreak of war.
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Termination by operation of law
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When an agent has an interest in the subject matter of the agency that is distinct from the principal's interest and that is not exercised for the principal's benefit
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Agency coupled with an interest
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When a principal communicates an intent to ratify by words, whether written or oral
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Express ratification
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When the principal's behavior evidences an intent to ratify.
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Implied ratification
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(1) The act ratified must be one that was valid at the time it was performed. (2) The pricipal myst have been in existence at the time the agent acted. (3) When the act occurred, the agent myst have indicated to the third party that they were acting for a pricipal and not for themselves, but did not have to reveal the principal's identity. (4) The principal must be legally competent at the time of ratification. (5) The principal must have knowledge of all the material facts. (6) The principal must ratify the entire act or contract. (7) The principal must use the same formalities required to give the agent the authority to execute the transaction.
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Typical requirements for ratification
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(1) The third party's withdrawl from the contract. (2) The third party's death or loss of capacity. (2) The principal's failure to ratify within a reasonable time. (4) Changed circumstances.
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Intervening events after an agents contract but before a principal's ratification
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When a third party knows or has reason to know (1) that the agent is acting for a principal, and (2) the principal's identity. The agent is not liable.
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Disclosed Principal
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When the third parties (1) knows or has reason to know that the agent is working for a principal, but (2) lacks knowledge or reason to know the principal's identity. The agent is liable unless the parties agree otherwise.
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Partially Disclosed Principal
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When the third party lacks knowledge or reason to know both the principal's existence and the principal's identity. The agent is liable.
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Undisclosed Principal
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(1) The third party actually knows the agent lacks authority. (2)The principal ratifies the contract. (3) The agent adequately notifies the third party that he does not warranty his authority to contract.
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Situations where an agent is not liable
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An employer is liable for torts committed by agents (1) who are employees and (2) who commit the tort while acting within the scope of their employment..
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Respondeat Superior (Let the master answer)
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(1) The work was of the kind that the employee was employed to perform (2) It occurred within the quthorized time period. (3) It occurred substantially with the location authorized by the employer. (4) It was motivated in part by the purpose serving the employer.
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Respondeat Superior Scope of Employment Test
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The principal themselves is at fault and there is no need to impute liability to them.
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Direct liability
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(1) Agent must be an employee (2) Employee must act within scope of employment while committing the tort.
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Respondeat Superior (Principal's Tort liability)
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(1) Principal intends and direct's agent's intentional tort, recklessness, or negligence, or (2) Principal is negligent regarding hiring or training of agent.
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Direct Liability (Principal's Tort liability)
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(1) Principal generally is not liable. (2) Exceptions for direct liability, highly dangerous activities, and nondelegable duties
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Torts of Independent Contractors (Principal's Tort liability)
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(1) Direct liability. (2) Vicarious liability when agent has authority to make true statements on the subject of the misrepresentation. (3) An exclupatory clause may eliminate the principal's tort liability, but the third party still can rescind.
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Misrepresentation (Principal's Tort liability)
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Sole Proprietorship, Partnership, Limited Liability partnership, Limited Partnership, Limited Partnership, Limited Liability Limited Partnership, Corporation, Limited Liability Company
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Typical forms of business
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Form of business with only one owner who makes all management decisions, owns all the profits and assumes great liability
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Sole Proprietor
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Form of business with two or more owners. The owners have the right or make all the management decisions, assume personal liability for all the obligations of the business, all the debts of the business and the other owners
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Partnership
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A partnership where partners has no liability for most of this type of partnerships obligations, but retains unlimited liability for their own wrongful acts.
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Limited Liability Partnership (LLP)
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A form of partnership similar to a general partnership, except that in addition to one or more general partners (GPs), there are one or more limited partners (LPs). The limited partners have limited liability to the partnership, much like a shareholder of a corporation.
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Limited Partnership (LP)
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(True/False) If a limited partner in a limited partnership dies or leaves the company, the partnership dissolves if no other limited partner exists?
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FALSE
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(True/False) If a general partner in a limited partnership dies or leaves the company, the partnership may dissolve if there are no remaining general partners?
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TRUE
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A form of partnership identical to a limited partnership in its management and the rights and duties of its partners. However, both the limited partners and the general partners have no liability for most obligations except for full liability for torts.
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Limited Liability Limited Partnership (LLLP)
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A form of a company that is owned by shareholders who elect a board of directors to manage the business. The board then selects officers to run the company on the day-to-day affairs. Shareholders have limited liability for the obligations of the corporation.
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Corporation
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A corporation that is taxed nearly entirely like a partnership, has only one class of shareholders and not more than 100 shareholders only owned by individuals and trusts.
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S Corporation
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Similar to a business corporation, except shareholders can only be professionals holding the same type of license.
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Professional corporation
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A business form intended to combine the nontax advantages of corporations with the favorable treatment of partnerships. Members may manage their own company and have limited liability for the obligations of the company
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Limited Liability Company (LLC)
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An association of two or more persons to carry on as co-owners of a business for profit
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Partnership (Definition by RUPA)
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When a court is reluctant to call an arrangement a partnership because the purpose of the arrangement is not to establish an ongoing business involving many transactions; instead it is limited to a single project
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Joint Venture
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(1) A person purports to be or consents to being represented as a partner of another person or partnership. (2) A third party relies on the relies on the representation. (3) The third party transacts with the actual or purported partnership.
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Elements of a Purported Partnership
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Partners contribution of cash or other property to the partnership
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Partnership Capital
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A partners ownership interest, which embodies all a partner's rights in a partnership: (1) The partner's transferable interest. (2) The partner's management and other rights.
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Partnership Interest
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The only part of a partners interest that may be transferred or sold to any other person
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Transferable Interest
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An order charging all or part of a partner's transferable partnership interest with payment of the unsatisfied amount of the judgment. Obtained without the owners consent
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Charging Order
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Requirement for a partner to undertake their share of responsibility for running the day-to-day operations of the partnership business
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Duty to Serve
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Partners that merely contribute capital and have no duty to serve but share in the same liability for partnership debts
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Silent Partner
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A partner is liable for loses resulting fro gross negligence, reckless conduct, intentional misconduct, or knowing violations of the law. Decisions must be made on the grounds to believe it is in the best interest of the partnership.
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Duty to Care
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A partners duty to not exceed the authority granted by the partnership agreement, or authority normal for partners normally in their position if an agreement does not exist.
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Duty to Act within Actual Authority
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A partners duty to account for their use or disposal of partnership funds and partnership property.
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Duty to Account
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A change in the relation of partners, as when a partner dies or retires from the firm. Ceasing to take part in the carrying on of the partnership business.
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Dissociation
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The commencement of the winding up process
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Dissolution
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Orderly liquidation of the partnership assets and the distribution of the proceeds to those having a claims against the partnership.
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Winding up
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The end of the partnership's existence, automatically following winding up.
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Termination
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When a partner's dissociation does not violate the partnership agreement and otherwise is nonwrongful.
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Non-wrongful
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When a partner's dissociation violates the partnership agreement and otherwise is not allowed.
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Wrongful
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(1) Death of partner. (2) Withdrawal from a partnership at will. (3)Dissociation within 90 days of the premature departure of an important partner. (4) Dissociation in accordance of a partnership agreement, (5)Automatic dissociation by the occurrence of an agreed upon event. (6t) Expulsion in accordance with the partnership agreement (e.g. crime). (7)Expulsion of partner who transferred interest by unanimous Partner approval. (8) Expulsion of partner whom it is unlawful to carry on business. (9) Partner assigning assets to a creditor or custodian. (10) Appoint of a guardian over a partner that is incapable of performing as a partner.
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Types of Nonwrongful Dissociation
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(1) Withdrawal that is a breach of partnership agreement. (2) Withdrawal of a partner before the end of partner's term. (3) Partner's bankruptcy. (4) Expulsion by a court the request of a partner's: (A) Wrongful conduct. (B) Willful and persistent breach. (C) Partner conduct makes it reasonable impractable.
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Types of Wrongful Dissociation
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When a valuable asset is received rather than proceeds from its sale.
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Distributions In Kind
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(1) Partnership term has expired. (2) The partnership completed its undertaking. (3) When all the partners agree to wind up the business. (4) When events occur that the agreement states winding up of the business. (5) Expulsion, bankruptcy debtor, assigned assets for benefit of creditors, custodian appointed automatic dissociation of a partner at an at will partnership. (6) More than half the partners in a term partnership vote to Dissolve. (7) When the partnership is unlawful. (8)Court determined economic purpose of partnership is likely to be unreasonable frustrated by partner conduct that does not conform to the agreement. (9) Court determined equitable end of an at will or term partnership.
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Events Causing Dissolution and Winding Up
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(1) A third party knows or has reason to know that the partnership has dissolved. (2) A third party has received notification of the dissolution by delivery of a communication to the third party's place of business (e.g. email). (3) The dissolution has come to the attention of the third party. e.g. a creditor was told by another creditor. (4) A partner has filed a Statement of Dissolution with the secretary of state.
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Methods to eliminate apparent authority when winding up a business
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(1) The continuing partners release a dissociated partner from liability on a partnership debt and (2) A partnership creditor releases the dissociated partner from liability on the same obligation.
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Novation of a dissociated partner
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UPA
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Uniform Partnership Act
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RUPA
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Revised Uniform Partnership Act
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(1) For Profit. (2) Not for Profit (3) Governtment Owned
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Types of Corporations
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Law that most for profit corporations incorporate under
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General Incorporation Law
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The act that all states prequire professionals who with to incorporate such as physicians, dentists, lawyers and accountants
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Professional Corporation Acts
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Corporations whose shares are generally available to public investors.
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Publicly Held Corporations
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Corporations with very few shareholders whose shares are not available to the general public.
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Close corporations
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Special type of close corporation treated nearly like a partnership for taxation purposes. (Earnings/loses of the business reported on personal income tax) with one class of shares with 100 or fewer shareholders.
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S Corporation (Subchapter S)
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Corporations that do not issue stock and do not expect to make a profit. They provide services to their members that eliminate profit motive. Has members rather than shareholders. Pays no income tax.
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Not for Profit Corporation
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Municipalities, School corporations that can be authorized by states or congress
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Government Owned Corporations
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A model business statute for adoption by state legislatures prepared by the american bar association's committee on corporate laws
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Model Business Corporation Act (MBCA)
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A corporation in the state that has granted it's charter
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Domestic Corporations
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A corporation in all other states in which it does business
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Foreign Corporation
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A corporation domiciled in one country doing business in another country
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Alien Corporation
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Clause requiring a foreign corporation avails itself of the protection of a state's laws. It should suffer any reasonable burden that the state imposes as a consequence of such benefit.
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Benefit Theory
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The power to regulate interstate commerce is given to the federal government. States have no power to exclude or discrimintate corporations solely engaged in interstate commerce, but may regulate intrastate commerce it ir does not unduly burden interstate commerce.
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Commerce Clause
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(1) To determine whether a corporationn is subject to a lawsuit in a states court. (2) To determine whether the corporations activities are subject to taxation. (3) To determine whether the corporation must qualify to carry on its activities in the state and (4) to determine whether the state may regulate the internal affairs of the corporation.
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Activities that Constitute "Doing Business"
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Permits courts to exercise jurisdiction against foreign corporations for torts making contracts of ownership of property
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Long Arm Statutes
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A corporation has certain minimum contact suct that maintenance of a suit does not offend traditional notions of fair play and substantial justice.
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International Shoe Company v. Washington
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Qualification requirement for a foreign corporation granted by the secretary of state.
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Certificate of Authority
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A foreign ccorporation that does most if its business in one other state
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Pseudo-Foreign Corporation
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(1) Domination of a corporation by its shareholders. (2) Use of that domination for an improper purpose.
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Requirements for courts to Pierce the Corporate Veil
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When capitalization is very small related to the nature of the business of the corporation and the risks of the business normally entail. (Defrauding Creditors)
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Thin Capitalization
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Transfer of assets to shareholders for less tha fair market value
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Looting
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Holding shareholders liable for a corporation's actions (e.g. defrauding creditors, looting, circumventing a statute & evading an existing obligation)
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Piercing the Corporate Veil
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Model Statues for Createion of Corporate Laws for Not for Profit Corporations. To be adopted by state legislatures written by the American Bar Association
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Model Nonprofit Corporation Act (MNCA)
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The person who incorporates a business, organizes the initial management and raises the initial capital (Finds investors, negotiates initial operation contracts, etc…)
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Promoter
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When a corporation become bound to a promoters pre-incorporation contracts and accepts the contract with knowledge of all the material facts.
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Adoption
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A clause that may be requested by the promoter to have their liability cease automatically upon adoption.
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Automatic Novation Clause
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A perspective shareholder agrees to buy a specific number of shares at a stated price that can not be revoked for a 6 month period
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Preincorporation Share Subscription
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(1) Preparation of articles of incorporation. (2) Signing and authenticating the articles by one or more incorporators. (3) Filing the articles with the secretary of state accompanied by payment of specified fees. (4) Receipt of a copy of the articles of incorporation stamped "Filed" accompanied by a fee receipt. (5) Holding an organizational meeting for purpose of adopting by laws, electing officers and transacting other business.
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Steps of Incorporation
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The charter of the corporation stating many of the rights and responsibilities of the corporation and its management
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Articles of Incorporation
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Required: (1) Name (2) Number of Shares (3) Address and Name of Agent (4) Name and address of each incorporator. Optional: (1) Name and address of additional directors (2) Purpose (3) Duration (4) Par value of corporate shares (5) Additional Provisions
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Contents of Articles of Incorporation
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(1) Authority of Officers and Directors (2) Time and place annual shareholder meeting will be held (3) Procedure to hold special meeting. (4) Procedure of special meeting (e.g. majority attendance) (5) Provision for special committee. (Procedure for maintenance of share records. (7) Machinery for transfer of shares. (8) Procedure and Standards for declaration and payment of dividends.
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Contents of Bylaws
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When business managers attempt to incorporate but fail to comply with all the conditions to incorporate (e.g. failure to file articles of incorporation)
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Defective Attempts to Incorporate
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(For All Purposes) When promoters substantially comply wit each of the mandatory conditions precedent to the incorporation of the business.
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De Jure Corporation
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"Shall" or "Must" provisions in corporate statutes necessary to protect the public interest.
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Mandatory Provisions
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Provisions the "may" be done but are not necessary to protect public interest
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Directory Provisions
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A corporation that complies with most, but not all mandatory provisions
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Defacto Corporation
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(1) There is a valid statute under which the corporation could be organized (2) The promoters or managers make an honest attempt to organize under the statute (3) The promoters or managers exercise corporate powers (Acting as a corporation)
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Defacto Corporation Requirements
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When people hold themselves out as representing a corporation or believe themselves to be dealing with a corporation, or a court will estop those people from denying the existence of a corporation
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Corporation by Estoppel
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(1) Shares in the corporation (2) AN obligation of the corporation
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Types of Corporate Securities
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Shares that have preference with regards to assets or dividends over other classes of shares
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Preferred Shares
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A stated dollar amount that must be paid to each preferred shareholder before any common shareholder
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Liquidation Preference
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Dividends not paid in one year will accumulate
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Cumulative Dividend Preference
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Dividends that are not paid in one year do not accumulate
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Noncumulative Dividend Preference
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Preferred shares having a priority in dividends
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Participating Shares
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A corporations ability to force a buyback of shares
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Redemption
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Shares sold to stock holders
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Issued Shares
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Shares currently held by shareholders
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Outstanding Shares
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Shares bought back by a corporation that cannot be reissued
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Cancelled Shares
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Often issued to managers to top level managers of a corporation as an incentive to increase profitability of the corporation
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Options
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Options evident by certificates
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Warrants
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Short term certificated options that are transferrable
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Rights
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Long term unsecured debt
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Debentures
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Long term secured debt securities secured by collateral
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Bonds
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Short term unsecured debt
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Notes
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An arbitrary dollar amount assigned to shares by the Articles of Incorporation
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Par Value
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Shares issues for less than par value
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Discount Shares
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When a board impermissibly over values the consideration for shares
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Watered Shares
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When shares are sold for more than par value, the excess or surplus consideration received by the corporation (Eliminated by MBCA, now treated as 'Common Equity')
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Capital Surplus
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Subscription agreements made after incorporation frequently used in close corporations
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Post Incorporation Subscriptions
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Transfer of a share certificate without naming a transferee
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Street Certificate
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Requires the seller of shares to sell back to the corporation or other shareholders at an agreed upon price
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Buy and Sell Agreement
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Requires the seller to obtain consent to sell their shares before they actually sell.
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Consent restraint
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To exclude unwanted persons from buying shares, e.g. competitors
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Provision Disqualifying Purchasers
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Statutes that broaden the legal objectives of corporations permitting or requiring directors to take in account the interests of other constituencies other that shareholders to act in the best interest of the corporation over the long term.
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Corporate Constituency Statutes
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Beyond the Powers - Any act not permitted by the corporation statutes or the corporation's articles of incorporation
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Ultra Vires
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A committee who has fewer members that the board can more efficiently handle management decisions and exercise board powers
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Committees of the board
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Shareholders may cast as many votes for each nominee to a board of directors as they have shares
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Straight Voting
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Either support management or sell the shares. Selling a stock rather than trying to change a company's policies
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Wall Street Rule
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(1) Managers must make an informed decision - They must take the steps necessary to become informed about the relevant facts by making a reasonable investigation before making a decision. (2) The managers may have no conflict of interest. The managers may not benefit personally - other than as shareholders - when they transact on behalf of the corporation. (3) The managers must have a rationale basis for believing that the decision is in the best interest of the corporation.
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Business Judgment Rule
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A transaction that a person in an "Arms Length" bargain would have bound the corporation to it.
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Intrinsic Fairness Standard
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When a group of shareholders have been isolated for beneficial treatment to the detriment of another isolated groups of shareholders
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Oppression
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Merging a corporation with another corporation creating a newly formed corporation under terms by which the minority shareholders do not receive shares of the new corporation but instead only receive cash or other securities.
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Freeze Out
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Under the MBCA, a director who loses a lawsuit may be indemnified by the corporation even though the corporation is not required to do so if the corporation feels the director acted in good faith and acted in the best interests of the corporation.
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Permissible Indemnification
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A director is entitled to this for reasonable litigation expenses when they are sued and win completely.
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Mandatory Indemnification
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When each share has one vote for each director to be elected
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Straight Voting
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Allowing a shareholder to cumulate their votes by multiplying the number of directors to be elected by the shareholders number of shares
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Cumulative Voting
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Using share classes to allow each class to elect one board member. E.g. giving one class to only one shareholder in a director vote.
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Classes of shares
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When shareholders transfer their shares to one or more voting trustees and receive trust certificates in exchange. The trustees vote for directors and the shareholders still receive rights to dividends.
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Voting Trusts
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Voting trusts, shareholder voting agreements, Proxies
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Shareholder Control Devices
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A transaction where one corporation merges into another corporation
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Merger
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Similar to a merger except that both old corporations go out of existence and a new corporation takes the business, assets and liabilities of the old corporations
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Consolidation
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A transaction by which one corporation becomes the owner of all the shares of the outstanding share of a second corporation through a compulsory exchange of shares.
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Share Exchange
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(1) Cash or property dividends (2) Share dividends
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Types of Dividends
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A corporation may pay a dividend to the extent it has excess solvency (liquidity) that is does not have to pay its current maturing obligation
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Solvency Test
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A corporation may pay a dividend to the extent that it has excess assets (Assets it does not need to cover it's liabilities and the liquidation preferences of shareholders having a priority in liquidation over the shareholders receiving the dividend.
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Balance Sheet Test
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Worker Compensation, Occupational Safety and Health Act, Family and Medical Leave Act
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Protecting the health, safety and well being of workers and their families
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Unemployment Compensation, Social Security, ERISA, Fair Labor Standards Act
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Protecting wages, pensions, and benefits
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Labor Law
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Collective bargaining and union activity
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Equal Pay Act, Title VII, Age Discrimination, Americans with Disabilities Act, Other Federal and State Measures
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Protecting equal opportunity
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Employee polygraph Protection Act, Various restrictions on drug testing, searches, surveillance, improper use of records, unfair references
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Protecting employee privacy
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Exceptions to employment at will
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Enhancing job security
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Where an employee's injuries resulted from the negligence of a co employee (or fellow servant) the employer was not liable
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Fellow-Servant Rule
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(1) Contributory Negligence (2) Assumption of Risk (3) Fellow-Servant Rule
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Types of Traditional Employer Defenses
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(1) Hospital and Medical expenses (2) disability benefits (3) Specified recoveries for the loss of certain body parts and (4) death benefits to survivors
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Workers Compensation Recoveries
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The injury (1) must arise out of the employment and (2) happen in the course of employment
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Work Related Injury Requirement
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An act imposing duties on an employer to provide their employees with a workplace and jobs free from recognized hazards that may cause death or serious injury
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Occupational Health and Safety Act
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Covered employees are entitled to a total of 12 workweeks of leave during any 12 month period for one or more of the following reasons: (1) the birth of a child and the need to care for that child; (2) the adoption of a child; (3) the need to care for a spouse, child or parent with a serious health condition; and (4) the employee's own serious health condition
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The Family and Medical Leave Act
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Family members of deceased workers, disability benefits, and medical and hospitalization benefits for the elderly
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Social Security
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Law that protects employees after their employment ends for discharged workers
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Unemployment Compensation
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Pension guidelines and fiduciary duties on pension fund managers imposing record keeping, reporting and disclosure , employee participation guarantees, funding requirements and vesting requirements for employer plans
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Employee Retirement Income Security Act (ERISA)
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Regulation for wages and hours by entitling covered employees to (1) a specified minimum wage whose amount changes over time and (2) a time-and-a-half rate for work exceeding 40 hours per week. Also forbids child labor.
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Fair Labor Standards Act
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Gave workers the right to organize and bargain collectively. Also prohibited (1) interfering with employees' rights to form, join, and assist labor unions; (2) dominating or interfering with the formation or administration of a labor union, or giving a union financial or other support; (3) discriminating against employees in hiring, tenure, or any term of employment due to their union membership; (4) discriminating against employees because the have filed charges or given testimony under the NRLA; and (5) refusing to bargain collectively with the duly designated employee representative. Also established the National Labor Relations Board (NLRB)
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National Labor Relations Act
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Amendment to the NLRA that declared certain acts by unions are unfair labor practices. These include (1) restraining or coercing employees in the exercise of their guaranteed bargaining rights (e.g. their right to refrain from joining a union); (2) causing an employer to discriminate against employee who is not a union member; refusing to bargain collectively with an employer; (4) conducting a secondary strike of a secondary boycott for a specified illegal purpose; (5) requiring employees covered by union-shop contracts to pay excessive or discriminatory initiation fees or dues; and (6) feather bedding (forcing an employer to pay for work not actually performed).
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Labor Management Relations Act (Taft-Hartley Act)
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Act forbidding sex discrimination regarding pay. Requirements are met if the plaintiff's job and the higher paid male employee's job involved each of the following: (1) equal effort, (2) equal skill, (3) equal responsibility, and (4) similiar working conditions.
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Equal Pay Act
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A wide ranging employment discrimination provision that prohibits discrimination based on race, color, religion, sex and national origin in hiring, firing, job assignments, pay, access to training and apprentice programs, and most other employment decisions.
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Title VII (of the 1964 Civil Rights Act)
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Suits involving situations in which an employer has treated an individual differently because of race, sex, color, religion or national origin.
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Title ViII Disparate Treatment Suits
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A case strong enough to create a presumption of discrimination and to require a counter argument from the defendant
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Prima Facie Case
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Disparate Impact - The plaintiff ordinarily maintain that the employer uses a particular practice that is neutral on its face but has disproportionate adverse effect on one of Title VII's protect groups.
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Disparate Impact
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(1) Seniority; (2) Various 'Merit' defenses (Bona fide); (3) Bona fide occupational qualification (BFOQ) that is reasonably necessary to the business in question; (4) Business necessity.
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Title VII Defenses
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Some express or implied linkage between an employees submission to sexually oriented behavior and tangible job consequences.
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Quid Pro Quo Sexual Harassment
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When an employee is subjected to unwelcome, sex related behavior that is sufficiently severe or pervasive to change the condition of the victims employment and create an abusive working environment.
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Hostile Environment Harassment
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Sets employment discrimination standards resembling those of Title VII. This section forbids public and private employment discrimination against blacks, people of certain racially characterized national origins such as Mexicans, and ethnic groups such as gypsies and Jews. Also covers plaintiffs with certain advantages that Title VII does not provide.
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Section 1981
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Prohibits age discrimination in employment for those that are at least 40 years of age
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Age Discrimination in Employment Act
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Federal regulation of employment discrimination against people with disabilities primarily enforced by EEOC and procedures and remedies are the same as for Title VII
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Americans with Disabilities Act
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Forbids Race, color, national origin, religion and sex discrimination by certain federal contractors. Includes affirmative action and quota like preferences.
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Executive Order 11246
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Applies to public employees stating that state governments should not discriminate in pay between female-dominated and male-dominated jobs of comparable overall worth to the employer
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Comparable Worth
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Polygraph Testing, Drug and Alcohol Testing, Employee Searches, Record and References, Employee Monitoring
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Areas Involving Employee Privacy
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