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151 Cards in this Set
- Front
- Back
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Agency
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Fiduciary relationship where one person acts on behalf of another and under their consent and control
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Fiduciary
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agency relationship of trust
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Independent Contractors
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1) Identify contracts
2) Pay them by job and pay when its half finished and finished 3) don't do it periodically like they're employees 4) Make them report in not on a daily basis 5) Have to move them somewhere else 6) Can't tell them who you want. People get assigned |
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Dawes Critical Care v DOL
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Independent Contractors
Dawes treated nurses as independent contractors. Dawes won in this case. |
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Microsoft
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Independent Contractors
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Penthouse v Barnes
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Implied Authority
Implied how things were done in the past and held now |
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Ratification
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Somebody posing as your agent doesn't really have authority but they claim they do
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Estoppel
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The focus is that the principle did something to lead the third parties to believe the person was acting as their agent.
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Williams v Inverness Corporation
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Estoppel (Apparent Authority)
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Hamilton Hauling, Inc. v. GAF
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Estoppel
Woodchips signed by purchasing agent. GAF didn't have to pay |
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Decumbency certificate
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certificate that proves the person is who they say they are.
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Compensation
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Straight hourly fee. Obligation to fulfill duty there
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Duties of Principals
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1. Compensation
2. Reimbursement and Indemnification 3. Cooperation 4. Safe working conditions |
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Reimbursement and Indemnification
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Protect them against lawsuits that may occur because of the agency
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Cooperation
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Hiring someone to sell in oklahoma and then hiring another person to compete with you
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Agent's Duties
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1. Loyalty
2. Obedience 3. Accounting 4. Performance |
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Loyalty
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Must show them our crane and if they buy another one that's ok but can't discriminate
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Obedience
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Don't do anything I don't want you to do
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Performance
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If they breach they can be sued by the principal
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Bias v. Advantage Int'l
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Performance
Basketbal player who died during NCAA. Agent supposed to give insurance. Blood test would have revealed drugs |
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Principals generally liable for acts of its agents if such acts are _____
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within the scope of the agent's authority. Principle defines the scope. What you can do, you can't do anything else
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Respondeat Superior
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Principal liable for the acts of its agent if within the scope of the agent's authority
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Sussman v Florida Coast
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Respondeat Superior (Principal and Agent Liability to Third Parties)
Buys a cake and crashes the car for a business birthday cake. |
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A principal can be liable for a crime committed by its agent: 1. 2.
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1. Did the principal participate in the crime?
2. Did Principal have reason to know that a violation was taking place? |
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Theories of Recovery
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Negligence (Privity of contract)
failure to warn provision of inadequate warning manufacture advertising design per se |
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Negligence (Privity of contract?)
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You need not be the purchaser. If you were borrowing someone's car can you sue even though its not your car.
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Negligence failure to warn
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Hot coffee McDonalds
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Leibeck v McDonalds
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Negligence Failure to Warn
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Negligence Provision of Inadequate Warning
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gave a warning but it was inadequate. Ex. recommended dosage of tylenol. Power saw warning
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Negligence Manufacture
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Manufacturing defect. Company that sells guns and gun lock doesn't work
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Negligence Advertising
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False sense of security in your advertising. Weedwacker cuasually using the product
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Negligence Design
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Design is inherently dangerous even with warning. Ex Lawn mower with blade 8 in above ground
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Negligence per se
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violation statue retaining to that product. do not need to prove negligence
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Defense to Negligence based product liability
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Assumption of risk
misuse statutory state of the art compliance with safety regulation |
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Assumption of Risk
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ex. deciding not to get the instructions
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misuse
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ex. ice pick to pick out ear wax
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Statutory (Statute of Limitations)
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If you are injured by a product you must file your lawsuit within a certain amount of time otherwise its unfair to the people defending.
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Assumption of Risk
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ex. deciding not to get the instructions
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misuse
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ex. ice pick to pick out ear wax
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Statutory (Statute of Limitations)
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If you are injured by a product you must file your lawsuit within a certain amount of time otherwise its unfair to the people defending.
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State of the Art
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my product had all the safety devices being used by the other products in the world. can't expect more than that
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Compliance with Safety Regulation
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complied with all safety regluations and you can't expect more than that.
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Green v Collagen Corp
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Compliance with Safety Regulation
Meg Ryan, Botox concluded that complying with medical regulations was all the court was going to requires |
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Express Warranties
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a guarantee from the seller of a product that specifies the extent to which the quality or performance of the product is assured and states the conditions under which the product can be returned, replaced, or repaired.
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Implied Contract of Merchantability
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the product will pass without objection in the trade and fit for the ordinary purpose of the product
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Implied Warranty of Fitness for a particular purpose
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If the seller tells you it can be used for a purpose and you get injured you can sue
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Disclaimer
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Disclaim any liability. They work fine in commercial setting. In the consumer area courts will sometimes refuse to enforce them.
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Greenman v Yuba Power
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Product and a defect. You can be liable even if you exercise due care. Strict Liability?
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To succeed in a strict liability case: A B C
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A) Product defective when sold
B) Defective condition rendered the product unreasonably dangerous C) Product was the cause of the injury |
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Defect: A B C
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A) Flaw in manufacture or marketing that led it to being more dangerous than otherwise
B) Failure of manufacturer or seller to warn of the risk or hazard associated with the product C) Design is defective |
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Welge v Planters Lifesavers Company
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Defect. Glass of peanuts broke while trying to seal it.
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What is defective design?
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Consumer Expectation Test
Feasible Alternative Test |
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Consumer Expectation Test
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Not favored by courts difficult to apply. Did the product meet the standards that would be expected by a reasonable consumer?
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Sperry New Holland v Prestage
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Consumer Expectation Test.
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Feasible Alternative Test (Risk/Utility)
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1. Desirability of the product
2. Safety aspects of the product 3. Availability of substitute product that would be safer. 4. Manufacturer ability to eliminate unsafe aspects 5. User ability to avoid danger - warnings tell them about the danger 6. Feasibility of manufacturer spread the cost - insurance. |
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Brown v Williams
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Assumption of risk. Trencher and then he got killed by the machine
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State of the Art
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Defense to Strict Liability. Courts don't like this very much.
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Defenses to Strict Liability
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Product Misuse
Assumption of risk State of the Art |
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Enterprise Liability/Market Share Liability
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A number of manufacturers produce the product and cannot trace which one caused the injury. Then the group pays proportionally.
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Service Liability
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Lawsuits against professionals. ex. doctor taking the wrong organ.
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Service Liability duty owed to: ABC
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A) Ultramares Doctrine - only those in privity of contract
B) Section 522 of the Restatement of Torts - liable to a limited class to whom professional knows will receive a copy C) Reasonably foreseeable users. |
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First Florida v Max Mitchell
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When is it appropriate to allow a 3rd party to sue behind the scenes?
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Tort
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Injury to another person or property. Promotes a sense of justice in the country.
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Damages include: ABC
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A) Compensatory
B) Nominal C) Punitive |
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Compensatory
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Ex car gets rear ended they pay for it to be fixed. If you have to take off work you get compensated for lost work time.
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Nominal
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you win and prove they were negligent but cannot demonstrate you were injured. Ex. Slander. Have to prove you were damaged economically
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Punitive
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On top of everything else. Conduct was so outrageous they should award you an additional sum.
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BMW v Ira Gore
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4k actual damages 4 million punitive.
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Are punitive damages too much?
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1) Court supposed to look at the degree of conduct
2) Look at the disparity of actual damages and punitive damages. Most cases should be more than one digit off. 3) Would the damages be similar in a criminal case. |
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Contingent Fee
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Attorneys take 1/3 of whatever the plaintiff is awarded.
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Goal of tort law 1234
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1. Compensate victims as a result of the conduct of another
2. discourage private retaliation 3. promote a sense of justice 4. deter future wrongs |
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Cubby v Compuserve
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Intentional Torts. Website suing about article talking shit about their competitor. They said it was just a library and didn't check all articles.
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Straton v Prodigy
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Intentional Torts. Advertised as a family site with an editorial function and their editor missed an article and was liable for it.
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Opera's ex said she did drugs
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Statement of Defamation.
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Public disclosure of a private fact can sue for damages?
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True
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False imprisonment
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Suspect them of a crime and take them in the back room and question them
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Knierem v Izzo
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Intentional Infliction of Emotional Distress. DIdn't tell his brother that the mother had died.
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Conversion
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Intentional removal of someone's property
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Disparagement
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Property version of deformation. Remarks about a competing product has to be false statements. Oprah saying she won't eat meat.
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Potential Interference with a contract
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ex. google poaching microsoft employees.
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Unfair competition - antitrust
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company charging below avc and take a loss to run a competitor out of business.
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Misappropriation
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Stealing someone's idea. YOu need to send disclosure agreements
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Intentional Torts
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You punch someone in the face. Self defense must be proportional to the risk.
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Deformation
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Saying something untrue about somebody and causing damage to their reputation. Slander if ORAL. Libel when its Written. Different if its a public figure.
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Negligence Torts
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duty, breach of duty, causation
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Causation: Actual Cause/ Proximate Cause
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Actual: what your conduct actually caused. Was is foreseeable that if you rear ended someone downtown they would have nitroglycerine in their trunk.
Proximate: based on foreseeability |
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Negligence is Unintentional
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You owe a duty to the person you injure.
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Palsgraf case in the 1920s Important
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employee boosted someone onto the moving train and fireworks fell and exploded. Scale hit Miss Palsgraf. Not foreseeable. Doesn't impose liability on actual cause.
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Res Ipsa Loquitur
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the thing speaks for itself
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Escola v Coca Cola
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Res Ipsa Loquitur. Glass bottle of coke exploded before opened running on campus.
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Negligence per se
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Statutory Breach
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Automatic Negligence
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Ex regulation to have lights on front and back and you only have it on the back.
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Contributory Negligence
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Defense to Negligence. Ex. 55mph in the left lane.
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Comparative negligence
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One party is at fault but to a much lesser extent. Jury determines the percentages. California is a PURE sate. Modified if they are 50% responsible.
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Assumption of risk
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You get injured but if you hadn't of taken the risk it wouldn't have happened.
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Sole Proprietorships
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No separate tax return. Small and under the regulatory radar. Going to want a lot of insurance to protect you from risks.
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Partnerships
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Voluntary association of 2 or more persons to carry on business for a profit.
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K-1
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partnerships flow into individual tax return
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General Partners
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Fully liable for all the debts of the partnerships
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Limited Partner
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Only responsible for what he invests in the partnership. Can't vote on things or else they lose their limited status.
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C-Corp
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Most corps are these types, legal entity that pays taxes. Shareholders have limited liability.
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Closely Held Corporation
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Privately owned. Don't have to comply with all the regulations
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Publicly Held Corporation
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Stock distributed to people who aren't associated with the company
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Sub S Corporation
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Very technical. Can have no more than 75 shareholders and there are restrictions on who those people can be. All share holders must vote in favor of a subject.
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Common Stockholders
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get paid last if company liquidates. can receive dividends.
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Preferred Stockholders
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They get paid first from dividends.
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Preferred Cumulative
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5 doesn't get paid then 5 next year. they have to pay the first 5 and then they total of 10 before anything else
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Convertible Preferred
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Can make preferred stock into common stock
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Participating preferred
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Also getting some common stock dividends
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Redeemable preferred
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Not a good feature for the shareholder.
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Warrants are tradable
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Exercise price vs market price.
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Strike price
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price the day of issuance as stock option to employee. Stock options are not tradable.
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Reorganization bankruptcy
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Have to make a deal with your creditors as to how much you'll pay them in the future.
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Do corporations have to pay dividends.
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NO YOU FOOL
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Limited Liability Companies (LLC)
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Members and person running is managing member. No restrictions on who can be a shareholder. Limited Liability.
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Creating a Corporation
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Articles of Incorporation
Certificate of Incorporation Incorporators call first meeting - board elected and by-laws are adopted. |
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Articles of Incorporation
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what is it your business will do. File to state with your fee and you get a Certificate of Incorporation.
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Debt - Notes
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short term. Equipment or accounts receivable. Pledge collateral
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Debt - Bonds
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Long term 20-25 years. Maturity collateral that holds value for a long period of time ex. real estate
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Debt - Debentures
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bonds that are unsecured
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Debt/Equity Ratio
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You have debt relative to equity. 10:1 is critical for analysis
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Companies keep two sets of books for?
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Accounting Purposes - made available to shareholders
Tax Purposes. State law rules are different for each. |
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Off-balance sheet financing
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Isn't part of debt/equity ratio. Uses concept of Operating Lease.
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Capital lease
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On the balance sheet and shows as debt
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Synthetic Real Estate Lease
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GE buys a building and then leases to the customer. For tax purposes the customer is the owner and GE is the lender.
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Double DIp
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Taking advantage of the tax laws in Sweden different for US. SAAB and GE depreciated on the same assets.
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Operating Agreement
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Ex. In the event the grower defaulted they would then foreclose and tyson had to pay for the debt.
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Board of Directors
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In charge of the corporation. They hire the officers. More than half of the directors are independent. They meet periodically and don't handle day to day business. Monitor management. Should have a list of "High Pots" - replacements.
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Audit Committee
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monitoring the financial statements. External Auditor reports directly to them. Companies must disclose if there are members of the audit committee who understand accounting
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Compensation Committee
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Rewarding people for doing a good job
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Governance Committee
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If they need new members they will source people for the board. Identifying the skill sets that enhance their board. Must evaluate themselves. Some have peer review. Not effective to have Collegiality. You want them to respect each other though
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CEO is also chairman
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Often times in big corporation. They know the most about the corporation. Chairmen sets the agenda for the board meetings. You want the chairman setting their own agenda.
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Officers
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Day to day management and control of the corporation. Overseen by board of directors.
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Many ways to take over a company
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Buy enough stock, negotiate, tender.
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Most of the shares of a corp are owned by _____
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Institution investors or management. People own hardly any of the shares at all.
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Corporate Opportunity Doctrine
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If you work for a company and have a great idea must offer it to a company first
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Irving Trust v Deutsch
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Says he didn't get financing. Then he and a friend buy the other company. Court said he didn't try very hard to he could buy it himself.
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Conflict of interest
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If you have board members from other companies and they own their stock. Important that there's full disclosure and person effected doesn't take part in the decision making.
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Jack Grubman
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analyst for telecommunications and could effect stock prices with his reviews. Citi group had him give AT&T a positive rating
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Shareholder Derivative Lawsuit
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Directors and officers can be sued by shareholders
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Fiduciary 1 2 3
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1) Duty of Care
2) Duty of loyalty 3) Duty of Good Faith If one of them is broken can be sued for Derivative relief |
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Business Judgement Rule
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created in Delaware. Directors and officers should not be liable for honest business mistakes. not for courts to second guess court decisions. Presumption in favor of directors and management. Courts look at "Entire Fairness" of the transaction
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Smith v Van Gorkum
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Breached Duty of Care. The board was not informed about the decision. Court ruled they breached their duty. Gorkum sold the company and sold himself out.
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Walt Disney Company
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Breached duty of care and loyalty. Court said they didn't breach, court shouldn't second guess compensation decisions. Ovitz got 140 million severance when he clearly wasn't qualified to begin with.
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Aronson v Lewis
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Can't find a breach of duty of care unless you find they actively gross (reckless) negligence.
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Factors influencing choice of organization
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Tax ramifications
Control considerations - if you go public you lose some of your control Liability issues - need a corporate shield to protect you Regulatory issues - can it fly under radar of a smaller company? ease of formation and expense transferability projected life |
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Specialized Business Associations
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Cooperatives
Syndicates Joint Ventures Franchising |
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Cooperative
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Not for profit. In agriculture is an exception to anti trust. Allows them to pool their product and sell it as a group
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Syndicate
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Different companies taking a piece of a deal. Ex. United Airlines and a 747. People agree about defaults.
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Joint Ventures
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Much like partnerships. Very limited purpose. Ex developing a shopping center. When its built there is an exit strategy.
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Franchising
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Franchisor has a concept and trademark. Lets people use the trademark and incorporate like McDonalds.
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