Business Law Exam 1 Study Guide PDF

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Business Law Exam 1 Study Guide Ch. 1 - LAW AND LEGAL REASONING: Business Activities and the Legal Environment: - laws and government regulations affect almost all business activities - ex. hiring, firing, workplace safety, manufacturing, marketing of goods, financing - areas of the law that can affect business decision making - contracts; intellectual property; torts; product liability; sales; internet law, social media, and privacy; environmental law and sustainability - many different laws may affect a single business decision - ethics → principles governing what constitutes right and wrong Sources of American Law: - primary sources of American law (CSAC) 1. Constitutions (federal and state) - Constitution → written document that sets forth the general organization, powers, and limits of a government - Article VI → US Constitution is the supreme law of the land - 10th Amendment → reserves powers to states 2. Statutes (Congress, state legislatures, local bodies) - enacted by legislative bodies at any level - federal - state - local ordinances normally concerned with land use, zoning ordinances, and building and safety codes - uniform laws - differences among state laws created difficulties - movement started in 1892 to harmonize differences - uniform laws = model statutes - presented to each state to consider adopting - Uniform Commercial Code (UCC) - adopted in all 50 states, D.C., and Virgin Islands - facilitates commerce 3. Administrative Law (regulations by government agencies) - rules, orders, and decisions of government agencies - these regulations have the force of law - federal agencies (executive = FDA, HHS; independent regulatory agencies = FTC, SEC) - state and local agencies 4. Case Law and Common Law Doctrines - case law = judicial decisions, the doctrines and principles announced in cases

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typically interpretations of statutes and regulations or even constitutional provisions - common law = a body of general rules throughout the country secondary sources of American Law 1. books 2. articles (in popular or legal magazines) 3. legal encyclopedias 4. treatises 5. law review articles 6. compilations/restatements - restatements of the Law → a set of treatises on legal subjects that seek to inform judges and lawyers about general principles

The Common Law Tradition: - early English courts - 1066: Normans and William the Conqueror - sought to unify the country using “king’s courts” - evolved into the common law - courts of law (king’s courts) - limited remedies (LIM) 1. land 2. items of value 3. money - courts of equity developed - petition the king or king’s adviser (chancellor) - chancellor had power to grant new remedies (SIR) 1. specific performance 2. injunction (restriction) 3. rescission (cancellation/repeal) - most US states combined courts of law and courts of equity in the 19th century - a party may request both legal and equitable remedies - judge may grant either or both forms of relief - doctrine of stare decisis - stare decisis = to stand on the decisions - rule according to precedent - precedent → decision that establishes an example or authority for deciding subsequent cases involving identical or similar principles or facts - find cases in reports or reporters - decide new cases with references to former decisions - 2 aspects: 1. don’t overturn own precedents unless good reason

2. decisions by higher courts binding on lower ex. Brown v. Board of Education - Supreme Court overturned precedent - holding: Separate educational facilities based on race were unconstitutional. - case of first impression = no precedent exists - binding authority = case law that must be followed - persuasive authorities (PUP) 1. precedents from other jurisdictions 2. public policy 3. unpublished opinions basic steps to legal reasoning 1. What are the key facts? 2. What are the issues? 3. How does the law apply? 4. What conclusions can be drawn? no one “right” answer common law today = for areas NOT covered by statutory or administrative law -

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Schools of Legal Thought: 1. natural law school → universal law applicable to all humans 2. positive law → no law higher than that created by governments 3. historical approach → looks at legal doctrines through history 4. legal realism → pragmatic approach - Concept Summary 1.3: Schools of Jurisprudential Thought natural law school

- one of the oldest and most significant schools of legal thought - those who believe in natural law hold that there is a universal law applicable to all human beings

positivist school

- a school of legal thought centered on the assumption that there is no law higher than the laws created by the government

historical school

- a school of legal thought that stresses the evolutionary nature of law and looks to doctrines that have withstood the passage of time for guidance in shaping present laws

legal realism

- a school of legal thought that advocates a less abstract and more realistic and pragmatic approach to the law and takes into account customary practices and the circumstances surrounding the particular transaction

Classification of Law: 1. substantive vs. procedural - substantive → state law that provides employees with the right to workers’ compensation benefits for on-the-job injuries - procedural → the methods required to notify the employer, prove the injury, etc. 2. federal vs. state 3. national vs. international 4. private vs. public - public law → affects society as a whole - private law → affects individuals, families, businesses, and small groups 5. civil vs. criminal - civil → rights and duties that exist between persons and their government and relief available - criminal → wrongs committed against people as a whole - prosecuted by public officials - some statutes have both criminal and civil provisions 6. cyberlaw - emerging body of law - governs transactions conducted via internet How to Find Primary Sources of Law: - United States Code (U.S.C.) and state codes - administrative rules - Federal Register - Code of Federal Regulations - case law - regional reporters - case citations How to Read and Understand Case Law: - title of case → Adams v. Jones - first name = plaintiff - second name = defendant - opinions → written decisions by courts - can be unanimous, majority, concurring, dissenting, plurality, per curiam Ch. 2 - COURTS AND ALTERNATIVE DISPUTE RESOLUTION: Judiciary’s Role in American Government: - US has 52 court systems - one for each state - District of Columbia

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federal system - authority derived from Article III of the Constitution Supreme Court is the final controlling voice - last word in controversial debates understanding of court system is crucial for businesspersons because they are likely to face a lawsuit at some time **judicial review → courts decide whether actions of other two branches are constitutional - part of system of checks and balances - judicial review not mentioned in the Constitution - Marbury v. Madison (1803 Supreme Court case) - holding: Supreme Court simply gave itself the power of judicial review Concept Summary 2.1: Jurisdiction

personal jurisdiction

exists when a defendant: ● is located in the court’s territorial boundaries ● qualifies under state long arm statutes ● is a corporation doing business within the state ● advertises, sells, or places goods into commerce within the state

jurisdiction over property

exists when the property that is subject to a lawsuit is located within the court’s territorial boundaries

jurisdiction over subject matter

limits the court’s jurisdictional authority to particular types of cases ● general jurisdiction → exists when a court can hear cases involving a broad array of issues ● limited jurisdiction → exists when a court is limited to a specific subject matter, such as probate or divorce

original jurisdiction

exists with courts that have the authority to hear a case for the first time (trial courts, district courts)

appellate jurisdiction

exists with courts of appeal and review ● generally, appellate courts do not have original jurisdiction

federal jurisdiction

a federal court can exercise jurisdiction: ● when the plaintiff’s cause of action involves a federal question (is based at least in part on the U.S. Constitution, a treaty, or a federal law) ● in cases between citizens of different states (or cases involving U.S. citizens and foreign countries or their citizens) when the amount in controversy exceeds $75,000 (diversity-of-citizenship jurisdiction)

concurrent jurisdiction

exists when both federal and state courts have authority to hear the same case

exclusive jurisdiction

exists when only state courts or only federal courts have authority to hear a case

jurisdiction in cyberspace

the courts have developed a sliding-scale standard to use in determining when jurisdiction over a website owner or operator in another state is proper

Basic Judicial Requirements: - requirement for a lawsuit 1. jurisdiction 2. venue 3. standing to sue 1. jurisdiction - “power to speak the law” / the law speaks - authority 1. jurisdiction over persons/personal jurisdiction - typically, where does a party reside - authority over the person/corporation - for a case to proceed, plaintiff has to show the court it has personal jurisdiction over the defendant 2. jurisdiction over property/in rem jurisdiction - power of a court over an item of real or personal property 3. long-arm statute - jurisdiction based on activities in the state - need minimum contacts - International Shoe case (1945) - landmark decision of the Supreme Court - holding: a corporation is subject to the jurisdiction of a state court if it has “minimum contacts” with that state 4. jurisdiction over subject matter - certain courts are empowered to hear certain types of disputes - court of general jurisdiction vs. limited jurisdiction - general jurisdiction → can hear a “broad array of issues” - limited jurisdiction - probate courts, bankruptcy courts, small-claims courts 5. original vs. appellate jurisdiction - where the case was heard for the first time - original jurisdiction → exists with courts that have the authority to hear a case for the first time

- appellate jurisdiction → exists with courts of appeal and review 6. Federal Court jurisdiction - federal government is one of limited powers - jurisdiction of Federal Courts is limited - 2 ways to be heard: 1. federal question - issue arising from Constitution or federal statute 2. diversity of citizenship - plaintiff and defendant in different state - amount in controversy of more than $75,000 7. exclusive vs. concurrent jurisdiction - exclusive jurisdiction → exists when only state courts or only federal courts have authority to hear a case - concurrent jurisdiction → exists when both federal and state courts have authority to hear the same case 8. jurisdiction in cyberspace - internet bypasses traditional boundaries - if a defendant’s only contacts with the state are via a website, can be difficult to determine whether sufficient - courts use a sliding scale - substantial contacts - minimum contacts - when a defendant engages in passive advertising on the web, jurisdiction is never proper 2. venue - appropriate location 3. standing to sue - “sufficient stake in the matter” State and Federal Court Systems: - each state has its own court system and there is a system of federal courts - **Exhibit 2-2: The State and Federal Court Systems - state courts (typically) 1. trial courts of limited jurisdiction (ex. small-claims court) 2. trial courts of general jurisdiction 3. appellate courts - focus on questions of law (not questions of fact) 4. highest court - typically called a Supreme Court - final authority on question of state law - federal court system - 3 tiers: trial, appellate, Supreme - judges have lifetime appointments

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- appointed by President, confirmed by Senate - only 7 have been removed by impeachment U.S. Supreme Court - all other courts are “inferior” to it - 9 justices - the final authority on the Constitution and federal law - writ of certiorari - order to lower court to send Supreme Court the records in a case Concept Summary 2.2: Types of Courts

Trial Courts

trial courts are courts of original jurisdiction in which actions are initiated ● state courts → courts of general jurisdiction can hear any case that has not been specifically designated for another court ○ courts of limited jurisdiction include, among others, domestic relations courts, probate courts, municipal courts, and small claims courts ● federal courts → the federal district court is the equivalent of the state trial court ○ federal courts of limited jurisdiction include the bankruptcy courts

Intermediate Appellate Courts

courts of appeals are reviewing courts; generally, appellate courts do not have original jurisdiction ● about ¾ of the states have intermediate appellate courts ● in the federal court system, the U.S. circuit courts of appeals are the intermediate appellate courts

Supreme Courts

the highest state court is the state’s supreme court, although it may be called by some other name ● appeal from state supreme courts to the US Supreme Court is possible only if a federal question is involved ● the US Supreme Court is the highest court in the federal court system and the final authority on the Constitution and federal law

Alternative Dispute Resolution: - litigation → process of resolving a dispute through the court system - expensive and time-consuming - business people are turning to ADR - flexible → binding vs. non-binding, before experts or not 1. negotiation - typically between the lawyers to a lawsuit - process in which parties attempt to settle - simplest form of ADR

2. mediation - neutral third-party works with both sides - less adversarial than litigation 3. arbitration - more formal method of ADR - third-party hearing the dispute makes a decision - legally binding vs. non-binding - similar to a trial but more relaxed - commercial contracts often contain an arbitration clause - EXHIBIT 2-4: BASIC DIFFERENCES IN THE TRADITIONAL FORMS OF ADR Type of ADR

Description

Negotiation - parties meet informally with or without their attorneys and attempt to agree on a resolution - the simplest and least expensive method of ADR

Neutral Third Party Present? No

Who Decides the Resolution? the parties themselves reach a resolution

Mediation

- a neutral third party Yes meets with the parties and emphasizes points of agreement to bring them toward resolution of their dispute, reducing hostility between the parties

the parties, but the mediator, may suggest or propose a resolution

Arbitration

- the parties present their arguments and evidence before an arbitrator at a formal hearing - the arbitrator renders a decision to resolve the parties’ dispute

the arbitrator imposes a resolution on the parties that may be either binding or nonbinding

Yes

International Dispute Resolution: - businesspersons who engage in international business take special precautions to protect themselves Ch. 3 - COURT PROCEDURES: Procedural Rules: - American and English courts follow the adversarial system

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lawyers for each side “fight it out” - present their clients’ version of facts to the judge - make legal arguments to the court - pro se → parties who represent themselves Federal Rules of Civil Procedure (FRCP) → governs how procedures are conducted - can be complex EXHIBIT 3-1: STAGES IN A TYPICAL LAWSUIT 1. accident, breach of contract, or other event 2. the party hires a lawyer, who files a complaint and notifies (serves) the defendant 3. defendant’s attorney files an answer or a motion to dismiss 4. pretrial discovery and more motions, pretrial conference 5. trial and perhaps post-trial motions and/or an appeal stages of litigation 1. pre-trial 2. trial 3. post-trial **Exhibit 3-1: Stages in a Typical Lawsuit Pre-Trial - hire an attorney - fixed fees - hourly fees - contingency fees (typically 33% of settlement; 40% of the damages award if case goes to trial) - settlement considerations - often a client decides to settle after learning of the substantial costs that litigation entails - also need to consider a defendant’s ability to pay - judgment proof → even if plaintiff wins the lawsuit, there’s no money or assets to get from defendant - defendant might simply move out of state - file the summons and complaint - obtain service upon the defendant - default judgment if no response or defendant responds with answer - pretrial motions - discovery - pretrial conference

Pre-Trial Procedures: - plaintiff’s complaint - needs to show jurisdiction, legal theory, AND remedy

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summons → court form attached to complaint that gives basic court information and requirements (such as how many days to respond) need service of process → proof that the defendant was notified of the lawsuit - service typically effectuated by the sheriff but could also be by private companies, in person by lawyers for the case, or via social media default judgment → defendant fails to respond in a timely manner and the court rules against him or her defendant’s response 1. answer options = admit, deny, or don’t know 2. affirmative defenses → can raise new facts to show a lack of liability 3. counterclaim → defendant then sues the plaintiff pre-trial motions (pg. 54) - motion to dismiss → formal request to dismiss case - motion to strike → request by one party requesting that the judge order the removal of all or part of the opposing party’s pleading - motion to make more definite or certain → obtaining a more detailed motion from the opposing party in a civil case before interposing a responsive pleading - motion for judgment on the pleadings - motion to compel discovery → filed when either party believes the discovery responses have been insufficient - motion for summary judgment → show to court there are no issues of law or fact - makes use of affidavits → sworn statements by parties or witnesses EXHIBIT 3-4: PRETRIAL MOTIONS

motion to dismiss

a motion (normally filed by the defendant) that asks the court to dismiss the case for a specified reason, such as lack of personal jurisdiction or failure to state a claim

motion to strike

a defendant’s motion asking the court to strike (delete or remove) certain paragraphs from the complaint to better clarify the issues in dispute

motion to make more definite or certain

a motion by the defendant when the complaint is vague that asks the court to compel the plaintiff to clarify the cause of action

motion for judgment on the pleadings

a motion by either party asking the court to enter judgment in his or her favor based on the pleadings because there are no facts in dispute

motion to compel discovery

a motion asking the court to force the nonmoving party to comply with a discovery request

motion for summary judgment -

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a motion asking the court to enter a judgment in his or her favor without a trial

discovery → process of obtaining information from opposing party - rules of discovery - general rule = discovery is allowed regarding any matter that is relevant to the claim or defense of any party - depositions → oral questions under oath - interrogatories → written questions under oath - impeach a witness (challenge the credibility) - requests for admissions - requests for documents - requests for examinations - electro...