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375 Cards in this Set

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Assault
The intentional creation of immediate apprehension of injury or lack of physical safety. It includes the expectation that one is about to be physically injured. Example: a store manager threatens an unpleasant customer with a wrench.
Assumption-of-the-risk
Negligence doctrine that bars the recovery of damages by an injured party on the ground that such a party acted with actual or constructive knowledge of the hazard causing injury. EX: Entering a hockey arena while knowing the risk of flying pucks.
Battery
The cause of action for physical contact that is not consented to and is offensive. Example: a store manager actually hits the customer with the wrench.
Cause in fact
The actual cause of an event; the instrument that is the responsible force for the occurrence of a certain event. A required element of a tort.
Comparative responsibility
A doctrine that compares the plaintiff's contributory fault with the defendant's fault and allows the jury to reduce the plaintiff's verdict by the percentage of the plaintiff's fault. Also called comparative negligence.
Compensatory damages
Usually awarded in breach-of-contract cases to pay for a party's losses that are a direct and foreseeable result of the other party's breach. The award of these damages is designed to place the nonbreaching party in the same position as if the contract had been performed.
Contingency fee
An arrangement whereby an attorney is compensated for services in a lawsuit according to an agreed percentage of the amount of money recovered; permits a plaintiff to sue without first having to pay an attorney, encourages litigation.
Contributory negligence
A failure to use reasonable care by the plaintiff in a negligence suit.
Conversion
An unlawful exercise of dominion (power) and control over another's personal (nonland) property that substantially interferes with property rights. Examples: failing to return something properly acquired at the designated time, delivering something to the wrong party, and destruction or alteration of what belongs to another.
Defamation
The publication of anything injurious to the good name or reputation of another. "Publication" means that the untruth must be made known to third parties.
Design defect
A defect arising when a product does not meet society's expectation for a safely designed product. EX: Lack of adequate warnings concerning inherently dangerous products.
Dram shop act
Statutes adopted in many states that impose strict liability upon tavern owners for injuries to third parties caused by their intoxicated patrons.
Duty
A legal obligation imposed by the law. EX: a person doing something has a legal duty to act reasonably to avoid injuring others.
Exclusive remedy rule
States that an employee's sole remedy against an employer for workplace injury or illness shall be workers' compensation.
False imprisonment
The tort of an intentional, unjustified confinement of a nonconsenting person who knows of the confinement.
Fraud
A false representation of fact made with the intent to deceive another that is justifiably relied upon to the injury of that person. An intentional misrepresentation means a lie. The lie must be of a material fact---an important one. EX: Lying about assets or liabilities in order to get credit or a loan.
Infliction of mental distress
An intentional tort of the emotions that causes both mental distress and physical symptoms as a result of the defendant's outrageous behavior. This tort usually requires the plaintiff to prove not only mental distress but also physical symptoms.
Injurious falsehood
Trade disparagement; a statement of untruth that causes injury or damage to the party against whom it is made. The plaintiff must establish the falsity of the defendant's statements. The plaintiff must also show actual damages arising from the untrue statements. EX: Potential harm to Procter & Gamble of the assertions that associated its former logo of moon and stars with satanism.
Intent
A legal doctrine indicating that parties meant to do what they did; the desire to bring about certain results.
Intentional interference with contractual relations
The tort of causing another to break a contract. Most common example involves one company raiding another for employees.
Invasion of privacy
A tort based on misappropriation of name or likeness, intrusion upon physical solitude (ex: illegal searches or invasions of home or possessions, illegal wiretapping, and persistent and unwanted telephoning), or public disclosure of objectionable, private information.
Libel
A defamatory written statement communicated to a third party.
Malicious prosecution
False arrest; an action for recovery of damages that have resulted to person, property or reputation from previous unsuccessful civil or criminal proceedings that were prosecuted without probable cause and with malice.
Negligence
A person's failure to exercise reasonable care that foreseeably causes another injury.
Production defect
A defect arising when a product does not meet its manufacturer's own standards.
Proximate cause
Legal cause; In tort law, those engaged in activity are legally liable only for the foreseeable risk that they cause. Foreseeability has come to mean that the plaintiff must have been one whom the defendant could reasonably expect to be injured by a negligent act. EX: It is reasonable to expect, thus foreseeable, that a collapsing hotel walkway should injure those on or under it. But many courts would rule as unforeseeable that someone a block away, startled upon hearing the loud crash of the walkway, should trip and stumble into the path of an oncoming car.
Punitive damages
Monetary damages in excess of a compensatory award, usually granted only in intentional tort cases where defendant's conduct involved some element deserving punishment. Exemplary damages arise from intentional torts or extreme "willful and wanton" negligence.
Slander
An oral defamatory statement communicated to a third person.
State-of-the-art defense
A defense that the defendant's product or practice was compatible with the current state of technology available at the time of the event in question.
Statute of repose
A statute that applies to product liability cases. It prohibits initiation of litigation involving products more than a certain number of years (e.g., 25) following their manufacture.
Strict liability
The doctrine under which a party may be required to respond in tort damages without regard to such party's use of due care. This applies only against "commercial" sellers, those who normally sell products like the one causing injury, or who place them in the stream of commerce.
Strict products liability
The cause of action under which commercial sellers of defective products are held liable without negligence.
Tort
A civil wrong other than a breach of contract.
Trespass
An act done in an unlawful manner so as to cause injury to another; an unauthorized entry upon another's land.
Willful and wanton negligence
Extremely unreasonable behavior that causes injury. EX: Allowing a ship captain to be in charge of a ship when you know he is an alcoholic.
Workers' compensation
A plan for the compensation for occupational diseases, accidental injuries, and deaths of employees that arise out of employment. Compensation includes medical expenses and burial costs and lost earnings based on the size of the family and the wage rate of the employee.
Copyright
A statutorily created property in creative EXPRESSION that protects authors.
Fair use
A statutorily permitted use of another's copyright for criticism, comment, news reporting, teaching, scholarship, or research. This is not an infringement of the owner's property.
Generic
To lose distinctiveness in reference to the source of goods and thus to lose trademark protection.
Infringement
The tort establishing violation of intellectual property rights.
Injunction
A court order directing a party to do or to refrain from doing some act.
Intellectual property
A type of property in information and its application or expression. Patents and copyrights are examples.
Patent
A specific legal monopoly in the intangible resource of copying and marketing a new invention; it is an exclusive right created by statute and recognized by the U.S. Patent and Trademark Office (PTO) for a limited period of time.
Property
A bundle of private, exclusive rights in people to acquire, possess, use, and transfer scarce resources; the legal right to exclude others from resources that are originally possessed or are acquired without force, theft, or fraud.
Trade dress
A legal doctrine giving someone ownership of a distinctive overall appearance or look and feel of a product or service. Example: The red color scheme of Coca-Cola when associated with the general design of Coca-Cola labeling.
Trademark
A statutorily created property in a mark, word, picture, or design that attaches to goods and indicates their source. Example: McDonald's golden arches and the Nike "swoosh."
Trademark dilution
Using someone's trademark in such a way so as to reduce the value of the trademark's significance, reputation, and goodwill even if the public is not confused by the use.
Trade secret
Any formula, pattern, machine, or process of manufacturing used in one's business that may give the user and opportunity to obtain an advantage over its competitors. Trade secrets are legally protectable.
Accessory
A term used at the state level that is similar to "aiding and abetting." Accessory to a crime generally is either before the criminal act or after it.
Aiding and abetting
A criminal action that arises from association with and from assistance rendered to a person guilty of another criminal act.
Bankruptcy crime
An action involving the falsification of documents filed in a bankruptcy case.
Burglary
Theft by breaking and entering.
Concealment
An intentional misrepresentation of a material fact occurring through the silence of a party.
Conspiracy
A combination or agreement between two or more persons for the commission of a criminal act.
Double jeopardy
A constitutional doctrine that prohibits an individual from being prosecuted twice by the same governing body based on the same factual situation: no "person [shall] be subject for the same offense to be twice put in jeopardy of life or limb."
Endangerment of workers
A criminal act that involves placing employees at risk with respect to their health and safety in the work environment.
Exculpatory no
The doctrine that merely denying guilt is not a criminal lie in response to a question from an agency of the federal government. This doctrine is no longer valid.
Expectation of privacy
The expectation that one will not be observed by the state.
Felony
A criminal offense of a serious nature, generally punishable by death or imprisonment in a penitentiary for a period of one year or more; to be distinguished from a misdemeanor.
Fraud
A false representation of fact made with the intent to deceive another that is justifiably relied upon to the injury of that person.
Good faith
Honesty in dealing; innocence; without fraud or deceit.
Indictment
A document issued by a grand jury formally charging a person with a felony.
Information
A written accusation by the prosecutor presented in court charging an accused person with a misdemeanor.
Intent
A legal doctrine indicating that parties meant to do what they did.
Intent to defraud
Applies to an individual who knowingly and willfully makes a misrepresentation of a material fact that is relied on and thereby causes injury or harm; the defendant asserts a good-faith defense to the allegations of the indictment.
Knowingly
Intentionally.
Larceny
The unlawful taking of personal property with the intent to deprive the right owner of this property.
Mail fraud
The use of the United States Postal Service or any interstate carrier to conduct fraudulent activities with the intent to deprive an owner of property.
Misdemeanor
A criminal offense of less serious nature than a felony, generally punishable by fine or jail sentence other than in a penitentiary for less than one year.
Nolo contendere
A plea entered by the defendant in a criminal case that neither admits nor denies the crime allegedly committed but, if accepted by the court, permits the judge to treat the defendant as guilty.
Obstruction of justice
A criminal act involving the interference of the administration of the laws during the investigations and conduct of trials.
Overt act
An essential element of a crime. Without this action by a party, the intent to engage in criminal activity is not wrongful.
Pattern of racketeering
Two acts of racketeering activity within a 10-year period.
Presumption of innocence
The basis of requiring the government to prove a criminal defendant's guilt beyond a reasonable doubt.
Probable cause
The reasonable basis on which law enforcement officials convince a judge that criminal activity has occurred. This is the basis that must be satisfied before a judge will issue a criminal search warrant.
Racketeering
A crime under RICO involving a pattern of actions that are indictable under state or federal laws.
RICO
The Racketeer Influenced and Corrupt Organizations Act.
Robbery
Illegally taking something by force.
Scheme to defraud
A plan to misrepresent a material fact in order to obtain something, usually money, from another.
Search warrant
A court order required by the Fourth Amendment of the U.S. Constitution to be obtained from government officials prior to private property being searched or seized.
Sentencing guidelines
Adopted by the U.S. Sentencing Commission as a means of standardizing the sentences given to similar criminals committing similar crimes.
Unreasonable search and seizure
A violation of the Fourth Amendment of the U.S. Constitution that occurs when a valid search warrant is not obtained or when the scope of a valid warrant is exceeded.
White-collar crime
Violations of the law by business organizations or by individuals in a business-related capacity.
Willfully
With intent to defraud or deceive.
Wire fraud
The use of radio, television, telephone, Internet, or other wired forms of communication to conduct fraudulent activities with the intent to deprive an owner of property.
Alter-ego theory
One method used by courts to pierce the corporate veil when a shareholder fails to treat the corporate organization as a separate legal entity.
Articles of incorporation
The legal document that forms the application for a state charter of incorporation.
Articles of organization
The document used to create a limited liability company. Its purpose corresponds to the purpose of the articles of partnership and the articles of incorporation.
Articles of partnership
Another name for a formally drafted partnership agreement.
Assumed-name statute
A state law that requires partners to make a public filing of their identities if their partnership operates under a name that does not reveal the partners' identities.
Buy and sell agreement
A contract, usually among partners, but perhaps among shareholders, wherein one party agrees to buy the ownership interest held by another party or the first party agrees to sell such an interest to the other party. These contractual provisions help provide for a transition of owners without harming the business of the organization.
Charter
The legal document issued by a state when creating a new corporation.
Closely held
An organization that is owned by only a few people.
Corporation
An artificial, but legal, person created by state law. As a business organization, the corporation's separation of owners and managers gives it a high level of flexibility.
Derivative suit
A lawsuit filed by one or more shareholders of a corporation against that organization's management. This suit is brought to benefit the corporation directly and its shareholders indirectly.
Directors
Those individuals who are elected by the shareholders to decide the goals and objectives for the corporate organization.
Dissolution
The cancellation of an agreement, thereby rescinding its binding force. A partnership is dissolved anytime there is a change in partners. A corporation's dissolution occurs when that business entity ceases to exist.
Domestic corporation
A business organization created by the issuance of a state charter that operates in the state that issued the charter.
Double tax
A disadvantage of a corporate form of organization in that the corporation must pay a tax on the money earned and the shareholder pays a second tax on the dividends distributed.
Foreign corporation
A business organization, created by the issuance of a state charter, that operates in states other than the one issuing the charter.
General partner
The owner of a limited partnership that enjoys the control of the partnership's operation. This type of partner is personally liable for the debts of the limited partnership.
Incorporators
Those individuals who are responsible for bringing a corporation into being.
Jointly and severally liable
The legal principle that makes two or more people, usually partners, liable for an entire debt as individuals or in any proportional combination.
Limited liability company (LLC)
A type of business organization that has characteristics of both a partnership and a corporation. The owners of an LLC are called members, and their personal liability is limited to their capital contributions. The LLC, as an organization, is not a taxable entity.
Limited liability partnership
A hybrid business partnership.
Limited partners
Those owners of a limited partnership who forgo control of the organization's operation in return for their liability being limited to the amount of their investment.
Limited personal liability
This term is used to describe the exposure of business owners to pay the debts of their businesses when such exposure does not exceed the owner's investment in the business.
Manager
A person designated and charged with day-to-day operations of a Limited Liability Company.
Members
The individuals or business entities that belong to a limited liability company.
Officers
Those individuals appointed by directors of a corporation to conduct the daily operations of the corporate organization.
Organizers
The parties responsible for bringing a limited liability company into existence. These parties correspond to the functions of incorporators with respect to corporations.
Partnership
A business organization involving two or more persons agreeing to conduct a commercial venture while sharing its profits and losses.
Piercing the corporate veil
The legal doctrine used by courts to disregard the existence of a corporation, thereby holding the shareholders personally liable for the organization's debts.
Proxy
The legal document whereby a shareholder appoints an agent to vote the stock at a corporation's shareholders' meeting.
Publicly held
A business organization that has hundreds, if not thousands, of owners who can exchange their ownership interest on public exchanges.
S corporation
A business organization that is formed as a corporation but, by a shareholders' election, is treated as a partnership for taxation purposes.
Say-on-pay
A policy of companies that allow the compensation of executives to be reviewed by shareholders.
Shareholders
The owners of corporations. Typically these owners vote on major decisions impacting their corporations, most commonly the election of a board of directors.
Sole proprietorship
The simplest form of business organization, created and controlled by one owner.
Beneficiary
A person entitled to the possession, use, income, or enjoyment of an interest or right to which legal title is held by another; a person to whom an insurance policy is payable.
Celler-Kefauver amendment
Passed in 1950 to amend the Clayton Act by broadening the scope of Section 7 on mergers and acquisitions.
Clayton Act
Legislation passed in 1914 that exempts labor unions from the Sherman Act. This law expanded the national antitrust policy to cover price discrimination, exclusive dealings, tying contracts, mergers, and interlocking directors.
Colgate doctrine
The legal principle that allows a form of vertical price fixing in that manufacturers may maintain the resale price of their products by announcing their pricing policy and refusing to deal with customers who fail to comply with the policy.
Concerted activities
Those activities involving an agreement, contract or conspiracy to restrain trade that may be illegal under the Sherman Antitrust Act.
Conglomerate merger
The merger resulting when merging companies have neither the relationship of competitors nor that of supplier and customer.
Cost justification defense
A defense to a price discrimination (Section 2 of the Clayton Act) case wherein the defendant seeks to justify charging different customers different prices due to that defendant's costs varying because of the differing quantities purchased by the customers.
Exclusive dealing
A buyer agrees to purchase a certain product exclusively from the seller or the seller agree to sell all of his or her production to the buyer.
Federal Trade Commission Act
Passed in 1914, this legislation created the Federal Trade Commission (FTC) and authorized it to protect society against unfair methods of competition. The law was amended in 1938 (by the Wheeler-Lea amendment) to provide the FTC with authority to regulate unfair or deceptive trade practices.
Full-line forcing
An arrangement in which a manufacturer refuses to supply any portion of the product line unless the retailer agrees to accept the entire line.
Geographic extension merger
A combining of companies involved with the same product or service that do not compete in the same geographical regions or markets.
Good-faith meeting-of-competition defense
A bona fide business practice that is a defense to a charge of violation of the Robinson-Patman Act. The Robinson-Patman Act is an amendment to the Clayton Act, which outlaws price discrimination that might substantially lessen competition or tends to create a monopoly. This exception allows a seller in good faith to meet the equally low price, service, or facility of a competitor. The good-faith exception cannot be established if the purpose of the price discrimination has been to eliminate competition.
Horizontal merger
Merger of corporations that were competitors prior to the merger.
Horizontal price fixing
A per se illegal agreement among competitors as to the price all of them will charge for their similar products.
Horizontal territorial agreement
An arrangement between competitors with respect to geographical areas in which each will conduct its business to the exclusion of the others. This type of agreement is illegal per se under the Sherman Act.
Market extension merger
An acquisition in which the acquiring company increases its market through product extension or geographical extension.
Merger
The extinguishment of a corporate entity by the transfer of its assets and liabilities to another corporation that continues its existence.
Monopoly
Exclusive control of a markte by a business entity.
Noerr-Pennington doctrine
This doctrine exempts from the antitrust laws concerted efforts to lobby government officials regardless of the anticompetitive purposes. It is based on the First Amendment freedom of speech.
Parker v. Brown doctrine
The name given to the state action exemption to the Sherman Act.
Per se illegality
Under the Sherman Act, agreements and practices are illegal only if they are unreasonable. The practices that are conclusively presumed to be unreasonable are per se illegal. If an activity is per se illegal, only proof of the activity is required, and it is not necessary to prove an anticompetitive effect. For example, price fixing is per se illegal.
Predatory conduct
An anticompetitive action that is intended to drive competitors out of business. A common example occurs when a business lowers it prices in the hope of gaining such a large market share that it can then raise prices without the fear of competition.
Predatory pricing
A policy of lowering the price charged to customers for the purpose of driving competitors out of business. Typically, this policy involves prices that are below the seller's costs of the products sold with resulting losses to the seller.
Price fixing
An agreement or combination by which the conspirators set the market price, whether high or low, of a product or service whether being sold or purchased.
Product extension merger
A merger that extends the products of the acquiring company into a similar or related product by one that is not directly in competition with existing products.
Reciprocal dealing
A contract in which two parties agree to mutual actions so that each party can act as both a buyer and a seller. The agreement violates the Clayton Act if it results in a substantial lessening of competition.
Requirements contract
A contract under which the buyer agrees to buy a certain item only from the seller.
Resale price maintenance
Manufacturer control of a brand- or trade-name product's minimum resale price.
Restraint of trade
Monopolies, combinations, and contracts that impede free competition.
Robinson-Patman amendment
The amendment to Section 2 of the Clayton Act covering price discrimination. As originally adopted, the Robinson-Patman Act outlawed price discrimination in interstate commerce that might substantially lessen competition or tends to create a monopoly.
Rule of reason
Under the Sherman Act, contracts or conspiracies are illegal only if they constitute an unreasonable restraint of trade or attempt to monopolize. An activity is unreasonable if it adversely affects competition. An act is reasonable if it promotes competition. The rule of reason requires that an anticompetitive effect be shown.
Sherman Act
An 1890 congressional enactment designed to regulate anticompetitive behavior in interstate commerce.
State action exemption
The Sherman Act exemption of the sovereign action of a state that replaces competition with regulation if the state actively supervises the anticompetitive conduct.
Triple damages (or treble damages)
An award of damages allowable under some statutes equal to three times the amount found by the jury to be a single recovery.
Trust
A fiduciary relationship whereby one party (trustee) holds legal title for the benefit of another (beneficiary).
Trustee
One who holds legal title to property for the benefit of another.
Tying contract
A contract that ties the sale of one piece of property (real or personal) to the sale or lease of another item or property.
Vertical merger
A merger of corporations where one corporation is the supplier of the other.
Vertical price fixing
An agreement between a seller and a buyer (for example, between a manufacturer and a retailer) to fix the resale price at which the buyer will sell goods.
Vertical territorial agreement
Arrangement between a supplier and its customers with respect to the geographical area in which each customer will be allowed to sell that supplier's products. This type of agreement is analyzed under the rule of reason to determine whether it violates the Sherman Act. Limitations on intrabrand competition may be permitted if there is a corresponding increase in interbrand competition.
Wheeler-Lea amendment
Legislation passed in 1938 that expanded the Federal Trade Commission's authority to protect society against unfair or deceptive practices.
Accession
Property acquired by adding something to an owned object. Example: when the owner of an old airplane engine has it restored and has an airplane built around it, the owner of the engine now owns the entire airplane.
Adverse possession
Property ownership acquired through open, notorious, actual, exclusive, continuous, and wrongful possession of LAND for a statutorily prescribed period of time (EX: 10-20 years).
Artisans lien
The lien that arises in favor of one who has expended labor upon, or added value to, another person's personal property. The lien allows the person to possess the property as security until reimbursed for the value of labor or materials. If the person is not reimbursed, the property may be sold to satisfy the claim.
Attachment
The event that creates an enforceable security interest under the Uniform Commercial Code (UCC). In order that a security interest attach, there must be a signed, written security agreement, or possession of the collateral by the secured party; the secured party must give value to the debtor; and the debtor must maintain rights in the collateral.
Bailee
In a bailment, the person who takes possession of an object owned by another and must return it or otherwise dispose of it.
Bailment
An owner's placement of an object into the intentional possession of another person with the understanding that the other person must return the object at some point or otherwise dispose of it. Examples: when you store something in a warehouse, rent furniture from the rental store, lease a piece of equipment, loan our lawnmower to a neighbor, or store your car in a friend's garage while you are on vacation.
Bailor
In a bailment, the person who transfers possession of tangible, personal property to another person with the understanding that the other person must return the object at some point or otherwise dispose of it.
Buyer in the ordinary course of business
A buyer who buys from someone who ordinarily sells such goods in his or her business; he/she has priority over a perfected security interest.
Collateral
The valuable thing put up by someone to secure a loan or credit.
Confusion
Property ownership that arises when fungible goods (i.e., goods that are identical), such as grain, are mixed together.
Contract
A legally enforceable promise.
Deed
A document representing the title or ownership of land; it contains a precise legal description of the land that specifies the exact location and boundaries according to a mapping or surveying system.
Deeds of trust
A type of document to secure an extension of credit through an interest in the land.
Deficiency
In a land based security interest, the amount of the loan which remains unpaid after the land has been sold.
Easement
The right of one other than the owner of land to some use of that land. At common law owners of land also had a natural easement to get from their land to the nearest public road.
Eminent domain
The government's constitutional power to take private property for public use upon the payment of just compensation (the takings clause of the Fifth Amendment). Public use means basically the same thing as common good, and "just compensation" has generally been defined in terms of market value. Due process requires that an owner can go to court and have a jury determine a just compensation if the owner cannot agree with the government's offer.
Estate
The bundle of rights and powers of real property ownership.
Fee simple
The maximum bundle of rights, or estate, permitted by law.
Financing statement
An established form that a secured party files with a public officer, such as a state official or local court clerk, to perfect a security interest under the Uniform Commercial Code (UCC). It is a simple form that contains basic information such as a description of the collateral, names, and addresses. It is designed to give notice that the debtor and the secured party have entered into a security agreement.
Fixture
Personal property that has become real property (1) by physical annexation (attachment) to the land or its buildings, or (2) whose use has become closely associated with the use to which the land is put. Example: carpeting.
Foreclosure
If a mortgagor fails to perform his or her obligations as agreed, the mortgagee may declare the whole debt due and payable, and she or her may foreclose on the mortgaged property to pay the debt secured by the mortgage. The usual method of foreclosure authorizes the sale of the mortgaged property at a public auction. The proceeds of the sale are applied to the debt.
Gift
Transfer of ownership by intent and the delivery of the object gifted.
Joint tenancy
A property ownership that is undivided (common) and equal between two or more owners (e.g., one-half and one-half). Permits survivorship, meaning that if one of the joint tenants dies, the remaining tenant becomes the sole owner of the entire resource.
Land sales contract
A type of document to secure an extension of credit through an interest in the land purchased.
Leasehold estate
The property granted to tenants (lessees) by a landlord (lessor). A landlord may lease land for a definite duration of time like two years, or for an indefinite duration with rent payable at periodic intervals like monthly, or simply at will, which means "for as long as both shall agree."
Life estate
A property that grants land ownership for the lifetime of a specified person. Upon death, the land reverts to the original grantor who is said to keep a reversion interest in the land. If the land goes to someone other than the grantor upon death, that person has a remainder interest.
Mechanic's lien
A lien on real estate that is created by statute to assist suppliers and laborers in collecting their accounts and wages. Its purpose is to subject the owner's land to a lien for material and labor expended in the construction of buildings and other improvements.
Mortgage
1) A transfer of an interest in property for purpose of creating a security for a debt. 2) A type of security interest in land, usually securing an extension of credit.
Mortgagor
The owner of land who places a mortgage on it.
Ownership
The property right that makes something legally exclusive to its owner.
Perfection
The status ascribed to security interests after certain events have occurred or certain prescribed steps have been taken, e.g., the filing of a financing statement.
Personal property
All property that does not involve land and interests in land.
Private nuisance
An unreasonable use of one's land so as to cause substantial interference with the enjoyment or use of another's land.
Purchase money security interest (PMSI)
A security interest given to the party that loans the debtor the money that enables the debtor to buy the collateral.
Real property
Property in land and interests in land.
Right of redemption
The right to buy back before foreclosure. A debtor may buy back or redeem his or her mortgaged property when he or she pays the debt.
Rule against perpetuities
The rule that prohibits an owner from controlling what he or she owns beyond a life in being at the owner's death, plus 21 years.
Rule of first possession
The rule that says one becomes an owner by reducing to possession previously unowned objects or abandoned objects; the law determines whether or not someone has abandoned what they previous owned by measuring intent. (EX: Sylacauga meteorite)
Secured transactions
Any credit transaction creating a security interest; an interest in personal property that secures the payment of an obligation.
Security interests
An application of property that gives someone an interest in what belongs to another, usually to secure an extension of credit.
Tenancy in common
A property ownership that is undivided (common) but not necessarily equal between two or more owners (e.g., two-thirds and one-third).
Title
A synonym for ownership. Sometimes represented as a document.
Zoning ordinance
Laws that limit land use based usually on residential, commercial, or industrial designations.
Sometimes the state does not permit you property in particular resource. For example:
You cannot sell human kidneys, although you can give away one of yours.
Communism:
The state requires that its citizens produce according to their abilities and share according to the needs of everyone else.
Private property:
The state recognizes and enforces an individual's right to acquire, possess, use, and transfer scarce resources.
Three Faces of Property:
1) Private property--protects private persons and allows them to exclude others from interfering with resources that are acquired without force, theft, or fraud.
2) Public property--the state's right under various circumstances to exclude people from state monuments, buildings, equipment, land, and other public resources.
3) Common property--the private ownership of two or more people of a specific resource such as a piece of land.
T or F: People will generally expend more effort when they have a protected property in what the produce than when they do not.
TRUE; Under conditions where others are likely to take through force, theft, fraud, or even government mandate what people have or produce, there comes a point at which people will simply not work as hard, take as many risks, nor innovate as much.
Two basic divisions of property:
1) Real property
2) Personal property
Divisions of personal property:
1) Tangible property--things one can touch, physical things (EX: computers, cars, and carrots)
2) Intangible property (EX: corporate stock)
Five basic legal ways to become an owner of something in a property system:
1) Exchange (most common way)
2) Possession
3) Confusion
4) Accession
5) Gift
Distinguish between things that are lost and things that are mislaid.
1) Things that are lost can acquire a new owner through possession. The finder of a lost item becomes its owner by reducing it to possession and following a statutory procedure, such as turning the item over to the police or advertising it in a local paper for a period of time to allow the original owner to claim it.
2) Things that have been mislaid go to the person who owns the premises where the item was mislaid (assumption: the original owner will know where to come back and reclaim mislaid things).
Homestead Act of 1862
Allowed those who lived on certain public land to obtain legal ownership of it by possessing it for five years and making certain improvements.
If confusion occurs by honest mistake or agreement . . .
the owners of the originally separate goods now own a proportional share of the confused goods.
If a court determines that the confusion was intentionally wrongful, perhaps done by someone willfully attempting to defraud another,. . .
the court will grant ownership of the entire confused mass to the innocent party.
Testamentary gift
One that is made through a will; The rules of such a gift pass ownership not by delivery but upon the death of the donor (called a "testator") and the proving of a valid will that specifies the gift.
Types of ownership
1) Fee simple
2) Life estate
3) Leasehold estate
4) Concurrent ownership
Fee simple absolute vs. fee simple defeasible
The fee simple absolute estate has no limitations or conditions attached; the fee simple defeasible may have a condition attached to its conveyance (transfer). For example: a seller may convey land to a buyer "as long as it is used for agricultural purposes."
Concurrent ownership
More than one person can own the same thing; the ownership is undivided, meaning that no concurrent owner owns a specific piece of the resources that are owned.
Warranty deed
Promises the grantee (usually, the buyer) that the grantor (seller) has good ownership and the full power to convey it.
Special warranty deed
Specifies that certain legal claims against the land, like mortgages, exist but guarantees that no other claims exist.
Quitclaim deed
Makes no guarantees other than that the grantor surrenders all claim against the land.
The private legal fence of property allows an owner to exclude others from interfering with. . .
1) The possession of an object or resource
2) The transfer of the object or interest by gift or through exchange with other owners
3) All uses of the object that do no harm other owners in what belongs to them.
Negative easement
An adjoining landowner cannot do anything that would cause your land to cave in or collapse, such as digging a ditch that would cause the land on your side to collapse.
Easement by prescription
Arises when one person has used another's land, such as by crossing it openly, wrongfully, and continuously for a period of years (frequently 20), and once an easement by prescription arises, a titleholder of the land can no longer prevent a person from continuing to use the land by crossing it.
Bailments fall into three categories:
1) For the sole benefit of the bailor.
2) For the sole benefit of the bailee.
3) For the mutual benefit of both parties.
What is a major way that small business owners raise money to begin their businesses?
Mortgaging their homes.
If mortgagees failed to record mortgages . . .
new buyers of the lands who are unaware of mortgages will take the lands free and clear of the mortgages.
Antideficiency judgment statutes
Prevent mortgagees from obtaining anything else from mortgagors once the land has been foreclosed and auctioned.
Article 9 of the Uniform Commercial Code (UCC) covers. . .
the law of secured transactions.
Financing statements expire ____ years after the date of filing unless a maturity date is stated.
Five
T/F: A creditor with an attached security interest has priority over a creditor without a security interest.
TRUE; Additionally, a creditor with a perfected security interest has priority over one whose security interest has not been perfected, and when two creditors have perfected security interests the one whose interest was perfected first has priority.
Two types of nuisance:
Public and private.
Public nuisance
An owner's use of land that causes damage or inconvenience to the general public (EX: Discharging industrial waste from one's land that kills the fish in a river). Claims may be brought only by a public official, not private individuals, unless the latter have suffered some special damage to their property as a result.
Nuisance law attempts to balance the equal right of all in the property system by preventing landowners from ____________ interfering with other publicly and privately owned resources.
Unreasonably
An owner can ask a zoning board for a ________ to allow use of land in a way not permitted under a zoning ordinance.
Variance
Zoning ordinances allow uses of land that existed prior to passage of the ordinances; such uses are called "_____________" uses.
Nonconforming
Federal taxation is a specified power of Congress, contained in Article 1, Section 8 of the Constitution:
"The Congress shall have the Power to lay and collect Taxes . . . to . . . provide for the common Defense and general Welfare of the United States . . ."
The top __ percent of taxpayers pay __ percent of all federal income tax.
20, 60
______ taxpayers pay a higher percentage of their incomes in state and local sales taxes than do _________ taxpayers.
Poorer, wealthier
A property system functions best when. . .
there is a large middle class with adequate resources.
Tort law
Sets limits on how people can act and use their resources so they do not violate the right others have to their resources.
Tortious behavior
Behavior that constitutes a tort.
Tortfeasor
One who commits a tort.
Torts are divided into three main categories:
1) Intentional torts involve deliberate actions that cause injury.
2) Negligence torts involve injury following a failure to use reasonable care.
3) Strict liability torts impose legal responsibility for injury even though a liable party neither intentionally nor negligently causes the injury.
Types of intentional torts:
1) Assault and battery
2) Intentional infliction of mental distress
3) Invasion of privacy
4) False imprisonment and malicious prosecution
5) Trespass
6) Conversion
7) Defamation
8) Fraud
9) Common law business torts
The news media are protected under the _____ Amendment when they publish information about public officials and other public figures.
First
Nearly _________ of all defamation suits are currently brought by employees against present and former employees.
one-third
Two basic defenses to a claim of defamation:
1) The statements made were true. Truth is an absolute defense.
2) The statement arose from privileged communications. EX: statements made by legislators, judges, attorneys, and those involved in lawsuits are privileged under many circumstances.
Because of the First Amendment, media are not liable for the defamatory untruths they print about public officials and public figures unless . . .
plaintiffs can prove that the untruths were published with "malice" (evil intent, that is, the deliberate intent to injure) or with "reckless disregard for the truth." Public officials are those who have conscious brought themselves to public attention.
The U.S. Supreme Court issued the "public official" standard in ___ ____ _____ _ ________. The Court extended essentially the same standard to defamation cases against "public figures" in ______ __________ __ _ _____.
New York Times v. Sullivan, Curtis Publishing Co. v. Butts
U.S. companies lose an average of _ percent of their profit to fraud.
6
Business torts
Involve intentional interference with business relations.
In the United States, more lawsuits allege _________ than any other single cause of action.
negligence
Elements of Negligence:
1) Existence of a duty of care owed by the defendant to the plaintiff.
2) Unreasonable behavior by the defendant that breaches the duty.
3) Causation in fact.
4) Proximate causation.
5) An actual injury.
Malpractice
Negligence of professionals.
Willful and wanton negligence allows an injured plaintiff to recover ________ as well as ______ damages.
punitive, actual
T/F: In a negligence suit the plaintiff must prove that the defendant actually caused the injury.
TRUE
When two or more tortfeasors contributes to cause the plaintiff's injury, each tortfeasor is _______ ___ _________ liable for the entire judgment.
Jointly and severally
The proximate cause doctrine requires the injury to be caused ________ by the defendant's negligence.
directly
Two principal defenses to an allegation of negligence:
1) Contributory negligence
2) Assumption of risk

Both of these are affirmative defenses, meaning that the defendant must specifically raise these defenses to take advantage of them.
Strict liability only applies to the sale of unreasonably dangerous defective products. There are two kinds of defects:
1) Production defects
2) Design defects
Defense under strict products liability:
1) Assumption-of-the-risk
2) Misuse (EX: removing safety guards from equipment)
Common carriers, transportation companies licensed to serve the public, are also strictly liable for damage to goods being transported by them. They can, however, limit their liability in certain instances through contractual agreement, and they are not liable for . . .
1) Acts of God, such as natural catastrophes
2) Action of an alien enemy
3) Order of public authority, such as authorities of one state barring potentially diseased fruit shipments from another state from entering their state
4) Inherent nature of the goods, such as perishable vegetables
5) Misconduct of the shipper, such as improper packaging.
The courts impose strict liability in tort for types of activities they call ultrahazardous. This includes . . .
Transporting and using explosives and poisons, keeping dangerous wild animals, and artificially storing large quantities of liquid.
Three major types of loss that potentially follow tort injury:
1) Past and future medical expenses
2) Past and future economic loss (including property damage and loss of earning power)
3) Past and future pain and suffering
In 2003, President Bush called for the limitation of tort damages for pain and suffering in a case to ______.
$250,000
Juries award punitive damages in only about _ percent of litigated cases.
2
Alternatives to tort litigation:
1) Arbitration
2) No-fault insurance
3) Workers' compensation acts
Tests for determining whether an employer must pay workers' compensation to any employee:
1) Was the injury accidental?
2) Did the injury arise out of and in the course of employment?
T/F: Workers' compensation is a form of insurance required by the states.
TRUE
Article 1, Section 8, of the Constitution grants Congress the power to . . .
"promote the Progress of Science [new things and new ways of doing things] and Useful Arts [business and trade], by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries."
T/F: If there were no intellectual property in new invention, the pace of creative research and development (R&D) in business would slow dramatically.
TRUE because if businesses have to finance R&D and then compete against others who quickly copy new invention, the businesses paying for R&D will be at a competitive disadvantage.
T/F: The poor in a nation without a strong property system under the rule of law are often wealthy by the average per person standards of the poor in nations without such laws.
FALSE--with a strong property system
Knowledge-based assets that businesses may possess include the following:
1) Employee skills and talents
2) Production designs, inventions, and technologies
3) Processes and methods of business operation
4) Reports, manuals, and databases
5) Relationships with customers and suppliers
6) Software
7) New product or service research
8) Marketing plans
A trade secret is any form of knowledge or information . . .
1) that the owner (usually a business owner) has taken reasonable measures to keep secret
2) that has economic value from not being known to the public.
Trade secret audit
Lists all the valuable forms of information possessed by the business, including formulas, plans, reports, manuals, research, and knowledge of customers and suppliers.
The law states that employees can enforce agreements (or contractual "covenants") not to compete only when . . .
there is a "valid business purpose"for the contract.
Businesses can claim trade secret only if the knowledge protected has ________ value.
economic
Misappropriation or infringement
The wrongful taking of any kind of intellectual property.
Economic Espionage Act
Makes it a crime to steal (intentionally misappropriate) trade secrets and provides for fines and up to 10 years' imprisonment for individuals and up to a $5 million fine for organizations.
T/F: Ideas are themselves patentable.
FALSE; Only invention that applies new ideas is patentable.
To obtain a patent, an inventor must pay a filing fee and file an application with the PTO. The application must in words and drawings . . .
1) Explain how to make and use the basic invention
2) Show why the invention is different from prior art, that is, from all previous and related inventions or state of knowledge
3) Precisely describe what aspects of the invention (called claims) deserve the patent
Only a _____ can finally determine patent validity.
court
The Patent Statute of 1952 and its amendments identify patentable subject matter as the following:
1) Processes--ways of doing something through a series of operations
2) Machines
3) Compositions of matter
4) Improvements to processes, machines, or compositions of matter
5) Nonfunctional designs of a manufactured article
6) Certain plants
Characteristics of an invention:
Nonobvious, novel, and useful
The most common way of challenging a patent's validity is to claim that. . .
the "invention" is obvious to someone with knowledge in the field.

Nonobviousness refers to the ability of an invention to produce surprising or unexpected results, that is, results not anticipated by prior art (the previous stae of knowledge in the field).
Novelty
Indicates that something is new and different from the prior art.
Usefulness
Also defined as utility.
Patent Duration and Enforcement
Statute limits utility patents to 20 years, plant patents to 17 years, and design patents to 14 years.
When a patent expires . . .
the patent is in the public domain, and others may use it without limitation.
Approximately ____ patent lawsuits are filed every year.
3,000
If the defendants can prove by "clear and convincing evidence" (a higher standard than "preponderance of the evidence") that the plaintiff's invention was in commercial use at least one year before the patent was taken out, the patent is _______.
invalid
Patent holding companies
Companies that threaten to sue other companies that fail to pay a patent royalty (license fee) on the patents held by the holding companies.
Patent trolls
Individuals or companies that own patents but do not develop them, and merely sue others who violate the patents.
Function of trademarks:
Recognizability or distinctiveness
Lanham Act of 1946 protects the following marks used to represent a product, service, or organization:
1) Trademark--any mark, word, picture, or design that attaches to goods to indicate their source.
2) Service mark--a mark associated with a service, for example, Monster.com.
3) Certification mark--a mark used by someone other than the owner to certify the quality, point of origin, or other characteristics of goods or services, for example, the Good Housekeeping Seal of Approval.
4) Collective mark--a mark representing membership in a certain organization or association, for example, the National Football League logo.
T/F: Under the Lanham Act, trade dress is protected from being copied as long as it is distinctive.
TRUE; If it is distinctive and registered, the law protects it even when the public has not yet come to identify the trade dress with a specific source.
Under the Lanham Act, a person must qualify a trademark for registration with the PTO by . . .
using it in interstate commerce. Example: positing the trademark on an Internet website.
The PTO will deny registration in the following circumstances:
1) If the mark is the same or similar to a mark currently used on similar related goods, for example, a computer company's cherry mark that resembles the apple mark for Apple Inc.
2) If the mark contains certain prohibited or reserved names or designs, including the U.S flag, other governmental symbols, immoral names or symbols, the names or likenesses of living persons without their consent, and the names or likenesses of deceased American presidents without the permission of their spouses.
3) If the mark merely describes a product or service, for example, "Fast Food"for a restaurant franchise.
4) If the mark is generic and represents a produce or service, for example, "Telelphone" for a communication company.
As part of the trademark application process, the PTO places a proposed mark in the ________ _______, which gives existing mark owners notice and allows them to object that the proposed mark is similar to their own.
Official Gazette
If the PTO determines the mark acceptable, it registers the mark on the _________ ________.
Principal Register
T/F: The trademark enjoys a potentially unlimited protection period.
TRUE; but after six years, the trademark owner must notify the PTO that the trademark is still in use. Currently, every 10 years the owner must renew the trademark.
A trademark is most likely to become generic . . .
1) When an owner does not defend against unauthorized use
2) When the public becomes confused as to whether a term refers to a particular product/service or refers to a general class of products/services
To win a trademark infringement lawsuit, a defendant will usually present one of three basic defenses:
1) The mark is not distinctive
2) There is little chance of the public's being confused by use of a term trademarked by someone else
3) The use is a "fair use"
T/F: A court can declare a mark invalid even if the PTO accepted registration.
TRUE
Federal Trademark Dilution Act
Prohibits you from using a mark the same as or similar to another's "famous" trademark so as to dilute its significance, reputation, and goodwill.
Three criteria are necessary for copyright protection to occur:
1) A work must be original. It must be created, not copied.
2) The work must be fixed in a tangible medium of expression like a book, canvas, compact disk, tape, or computer disk.
3) The work must show some creativity. For example: The Supreme Court ruled in Feist Publications, Inc. v. Rural Telephone Service Co. that the mere effort and alphabetic arrangement of names that went into a telephone directory's white pages was insufficiently creative to wrarant a copyright.
Who do copyright laws protect?
Authors--NOT inventors
How long do copyrights run?
For the author's lifetime, plus 70 additions years for all works published after 1977.
In determining whether a particular use is a fair one, a court will consider:
1) The purpose and character of the use, including whether such use is for commercial or nonprofit education purposes.
2) The nature of the copyrighted work.
3) The amount and substantiality of the portion used in relation to the copyrighted work as a whole.
4) The effect of the use upon the potential market for the copyrighted work.
T/F: Under copyright law it is illegal not only to make copies that violate the law but also to assist others in doing so.
TRUE
The PTO will NEVER accept a person's name or descriptive term for protection on the Principal Register
FALSE; There is a process by which a name or descriptive term can achieve full trademark status and protection. If it is listed on the PTO's Supplemental Register for five years and acquires a second meaning, it can then be transferred to the Principal Register for full protection.

Secondary meaning refers to a public meaning that is difference from its meaning as a person's name or as a descriptive term. Example: "Ford"now refers to an automobile rather than a person.
Definition of property:
1) Right to exclude
2) Right to possess
3) Right to use
4) Right to transfer
________is the way owners exchange resources in a property-based legal system.
Contract
If both sides are equally believable in an oral contract, who does the jury find for?
The defendant because the plaintiff has the burden of proof.
The PTO assigns a ______ ________ to consider your patent application.
patent examiner
What makes counterfeiting criminal is the deliberate intent to pass off, or ____ ___, fake products as real by attaching an unauthorized trademark.
palm off
Digital Millennium Copyright Act
1) Makes illegal the effort to get around technological copyright protections
2) Exempts internet service providers under certain circumstances from copyright violation.
Respondeat superior (Latin: "Let the master answer")
Employer’s liability for torts committed by employee within the scope of business.
Three pleas to charges of crime:
1) Guilty (most common)
2) Not guilty
3) Nolo contendere (Latin for "no contest")
Exceptions to the search warrant requirement:
1) Searches incident to an arrest
2) Consent given for the search
3) Automobile searches w/ probable cause
4) “Emergency” searches, e.g., cry for help, fire, etc.
5) Border searches
4th Amendment
Prohibits Congress, and the states through the Due Process Clause of the 14th Amendment, against unreasonable searches and seizures, including the requirement of the search warrant based (why & where?) on probable cause
Exclusionary rule
You can’t search for an elephant in a matchbox (somewhere an elephant wouldn’t be). But if you were being searched for a stolen elephant in a barn and the police found a stolen cow instead, you may still be charged.
5th Amendment right against self-incrimination:
1) Individuals cannot be compelled to testify against themselves.
2) But fingerprints, voice, and handwriting samples, lineups, and blood samples are unprotected.
3) Business records are usually unprotected.
5th Amendment prohibition against double jeopardy (federal cases):
Once you have been found guilty, you cannot be tried again.
6th Amendment rights:
1) To a speedy and public trial.
2) To a trial by jury.
3) To be informed of the charge against you.
4) To confront your accuser.
5) To subpoena witnesses in your favor.
6) To have the assistance of an attorney.
Specific Business Crimes (apply only to federal law):
1) Endangerment of workers
2) Willfully making a false statement in order to obtain a loan from a federally insured financial institution.
3) Mail and wire fraud
4) Fraud by counterfeit or unauthorized access device
5) Knowingly and willfully making a materially false statement to an agency of the federal government. No “exculpatory no.” (EX: Martha Stewart)
6) Bankruptcy crimes of debtors and creditors
7) Racketeer Influence and Corrupt Organizations Act (RICO) requires a “pattern” of racketeering activity defined as two or more related acts of racketeering within a 10-year period.
Which of the following terms does not belong?

a. Limited liability
b. Corporation
c. Derivative suit
d. Member managed
d. Member managed
Which of the following terms does not belong?

a. Partnership
b. Corporation
c. S corporation
d. Hybrid organization
b. Corporation
Which of the following business organizations can only act through agents?

a. Subchapter S Corporation
b. General Partnership
c. Limited Partnerships
d. Hybrid business organizations
a. Subchapter S Corporation
T/F: White-collar crime affects the targeted companies as well as consumers who must pay higher prices to make up for the loses.
TRUE
White-collar crimes costs business over ___ billion annually.
$100
Examples of white-collar crimes:
Accounting fraud, bankruptcy fraud, bribery, conspiracy, counterfeiting, embezzlement, false statements, forgery, income tax evasion, insider trading, kickbacks, larceny, mail fraud, money laundering, obstruction of justice, price fixing, racketeering, securities fraud, wire fraud
Felony cases are commenced by a _____ ____ indictment; misdemeanor cases are usually commenced when the government files a charged called an ___________.
grand jury, information
A _____ jury determines if there is sufficient evidence to warrant a trial; a _____ jury determines the guilt or innocence of the accused.
grand, petit
T/F: Criminal cases are brought or prosecuted by public officials such as a U.S. attorney or a state's attorney (often called a district attorney) on behalf of the people.
TRUE
T/F: In the case of federal crimes, the United States brings an action against the individual defendant.
TRUE; "The United States v. you"
A grand jury normally consists of __ citizens who live within jurisdiction of the court that would try one accused of a crime; at least __ persons must be present for the grand jury to hear evidence and vote on cases.
23, 16
For an indictment to be returned. . . .
a majority of the grand jury must find a crime has been committed and that the evidence is sufficient to warrant the accused's standing trial.
Are warrantless searches of junkyards constitutional?
Yes because operators of commercial premises in closely regulated industries have a reduced expectation of privacy.
The only business protected by the Fifth Amendment privilege against compulsory self-incrimination is a ____ ______________.
sole proprietorship
Does double jeopardy prohibit two trials if an illegal activity violates both federal and state laws?
No. Although federal and state governmental prosecutors may cooperate resulting in only one conviction, the double jeopardy clause does not prevent two prosecutions.
In civil law, the doctrine of ___ ________ bars subsequent civil actions involving the same parties, claims, demands, or causes of action.
res judicata
Miranda rights:
1) You have the right to remain silent and refuse to answer questions.
2) Anything you do say may be used against you in a court of law.
3) You have the right to consult an attorney before speaking to the police and to have an attorney present during questioning now or in the future.
4) If you cannot afford an attorney, one will be appointed for you before any questioning if you wish.
5) If you decide to answer questions now without an attorney present you will still have the right to stop answering at any time until you talk to an attorney.
T/F: Fraud is also actionable under state criminal codes.
TRUE; In many states, "theft by deception" is a crime.
Most common forms of identity theft:
1) Dumpster diving--rummaging through trash looking for personal information
2) Skimming--stealing credit/debit card numbers using a special storage device when processing a card
3) Phishing--pretending to be financial institutions or companies to get individuals to reveal their personal information
4) Changing your address--diverting billing statements to other locations
5) "Old-fashioned" stealing--stealing wallets, purses, mail, credit cards, checks, tax information, and so forth
A statement or representation is false or fraudulent if. . .
it is known to be untrue or is made with reckless indifference as to its truth or falsity and if it constitutes a half-truth or effectively conceals a material fact with intent to defraud
Material fact
Fact that would be important to a reasonable person in deciding whether to engage or not to engage in a particular transaction.
The burden of proof is not on the _________ to prove good faith or honesty, because he or she has no burden to prove anything.
defendant
Examples of health care fraud:
1) Billing for services not actually performed.
2) Falsifying a patient's diagnosis to justify tests, surgery, or other procedures that are not medically necessary.
3) "Uncoding" or billing for a more costly procedure than the one actually performed.
4) Accepting kickbacks for patient referrals.
5) Billing a patient more than the copay amount for services that were paid in full by a benefit plan under the terms of a managed care contract.
To convict a person of conspiracy, the evidence must show beyond a reasonable doubt that:
1) Two or more persons, in some way or manner, came to a mutual understanding to try to accomplish a common and unlawful plan.
2) The defendant willfully became a member of such conspiracy.
3) During the existence of the conspiracy, one of the conspirators knowingly committed at least one of the overt acts described in the indictment.
4) Such overt act was knowingly committed in an effort to carry out or accomplish some object of the conspiracy.
Racketeering activity encompasses many criminal acts, including:
1) Acts or threats involving murder, kidnapping, gambling, arson, robbery, bribery, extortion, dealing in obscene matter, or controlled substances.
2) Counterfeiting
3) Mail and wire fraud
4) Financial institution fraud
5) Obstruction of justice
6) Bribery, including sports bribery
7) Tampering with a witness, victim, or informant
8) Trafficking in counterfeit goods
Possible forms of business organizations:
Three basic forms:
1) Sole proprietorships
2) Partnerships
3) Corporations

Hybrid forms:
1) Limited partnerships
2) S corporations
3) Limited liability companies (LLC)
4) Limited liability partnerships
Significant factors to consider in selecting the best organizational form for a particular business activity include:
1) The cost of creating the organization
2) The continuity or stability of the organization
3) The control of decisions
4) The personal liability of the owners
5) The taxation of the organization's earnings and its distribution of profits to the owners.
Creation
Legal steps necessary to form a particular business organization.
Advantages of partnerships:
1) A partnership is easily formed because it is based on a contract among persons.
2) Costs of formation are not significant.
3) Partnerships are not a tax-paying entity.
4) Each partner has an equal voice in management, unless there is a contrary agreement.
5) A partnership may operate in more than one state without a license to do business.
6) Partnerships generally are subject to less regulation and less governmental supervision than are corporations.
Disadvantages of partnerships:
1) For practical reasons, only a limited number of people can be partners.
2) A partnership is dissolved anytime a partner ceases to be a partner, regardless of whether the reason is withdrawal or death.
3) Each partner's liability is unlimited, contrasted with the limited liability of a corporate shareholder.
4) Partners are taxed on their share of the partnership's profits, whether the profits are distributed or not. In other words, partners often are required to pay income tax on money they do not receive.
Advantages of corporations:
1) This form is the best practical means of bringing together a large # of investors.
2) Control may be held by those with a minority of the investment.
3) Ownership may be divided into many unequal shares.
4) Shareholders' liabilities are limited to their investments.
5) The organization can have perpetual existence.
6) In addition to being owners, shareholders may be employees entitled to benefits such as workers' compensation.
Disadvantages of corporations:
1) The cost of forming and maintaining a corporation, with its formal procedural requirements, is significant.
2) License fees and franchise taxes often are assessed against corporations but not partnerships.
3) A corporation must be qualified in all states where it is conducting local or intrastate business.
4) Generally, corporations are subject to more governmental regulation at all levels than are other forms of business.
5) Corporate income may be subject to double taxation.
T/F: In a limited partnership, limited partners have a right to participate in management.
FALSE; the general partners are in control.
S corporations cannot have more than __ shareholders, each of whom must elect to have the corporate income allocated to the shareholders annually in computing their income for tax purposes, whether actually paid out or not.
75
Only ___________ are eligible to elect under subchapter S.
individuals
The Sherman Act seeks to preserve competition by prohibiting two types of anticompetitive business behavior:
1) Contracts, combinations, and conspiracies in restraint of trade or commerce.
2) Monopolies and attempts to monopolize.
Section 1 of Sherman Act:
"Every contract, combination, in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal."
Section 2 of the Sherman Act . . .
regulates monopoly and the attempts to monopolize any part of interstate or foreign commerce.
Courts follow to principles to guide applicability in antitrust laws:
1) The rule of reason
2) Per se illegality
The test of reasonableness asks whether challenged contracts or acts are unreasonably restrictive of competitive conditions. Unreasonableness can be based on:
1) The nature or character of the contracts.
2) Surrounding circumstances giving rise to the inference or presumption that the contracts were intended to restrain trade and enhance prices.
The Sherman Act as amended by the Clayton Act recognizes four separate legal sanctions:
1) Violations may be subject to criminal fines (up to $1 million) and imprisonment (up to 10 years).
2) Violations may be enjoined by the courts.
3) Injured parties may collect triple damages.
4) Any property owned in violation of Section 1 of the Sherman Act that is being transported from one state to another is subject to a seizure by and forfeiture to the United States.
A corporation found in violation of the Sherman Act may be fined up to ___ million for each offense.
$100
Antitrust Sanctions:
1) Four sanctions are recognized by the antitrust laws:
a. Federal criminal penalties.
b. Injunctions ordered by the courts.
c. Triple damages payable to an injured party.
d. Seizure and forfeiture of property owned in restraint of trade if such property is transported between states.
2) The federal criminal penalties are, for an individual, up to a $1 million fine plus up to 10 years in prison, and for a corporation, up to $100 million in fines.
3) An injunction may prevent anticompetitive behavior.
4) Under the triple-damage sanctions, a defendant cannot seek contribution from other wrongdoers.
5) To avoid the impact of a guilty plea or a conviction on a pending civil antitrust suit, the criminally accused defendant often pleads nolo contendre (no contest).
Price fixing:
1) Horizontal price fixing in the sales of goods or services is illegal per see.
2) It is just as illegal for competitors to fix a low price as it is a high price.
3) Professionals and service providers cannot legally conspire to fix prices.
4) Ethical standards cannot be used to fix prices.
5) Attempts by manufacturers to control the ultimate sale of their product (vertical price fixing) is analyzed under the rule of reason.
6) The mere exchange of price information among competitors may constitute a Sherman Act violation.
Basic provisions of National Cooperative Production Amendment Act:
1) Joint production ventures will be subject to the rule of reason analysis rather than the per se illegality standard.
2) A joint production venture must notify the Justice Department and the FTC of its plans to engage in joint activities.
3) In a private civil antitrust action brought against the joint production venture, the plaintiff can be awarded only actual damages plus costs. The joint production venture will not be subject to triple damages.
The Robinson-Patman amendment recognizes certain exceptions or defenses:
1) Sellers may select their own customers in good-faith transactions and not in restraint of trade.
2) Price changes may be made in response to changing conditions, such as actual or imminent deterioration of perishable goods, obsolescence of seasonal goods, distress sales under court process, or sales in good faith in discontinuance of business in the goods concerned (changing conditions defense).
3) Price differentials based on differences in the cost of manufacture, sale, or delivery of commodities are permitted (cost justification defense).
4) A seller in good faith may meet the equally low price of a competitor (good-faith meeting-of-competition defense).
Robinson-Patman Amendment
1) It is a violation to sell the same goods to competing buyers for resale at different prices.
2) The law also is violated by a buyer that knowingly receives a lower price.
3) The law does not apply to transactions wholly in intrastate commerce or to transactions that do not involve goods.
4) Price discrimination may result from quantity discounts, unearned brokerage allowances, or promotional allowances.
5) Functional discounts must be based on legitimate marketing functions actually performed.
6) It is a crime for a seller to sell at low prices in an attempt to drive out a competitor.
7) Plaintiffs must prove actual injury to collect triple damages for Robinson-Patman violations.
8) The good-faith meeting-of-competition defense is available to both the seller and the buyer.