Business Law Final Exam Study Guide PDF

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BUSINESS LAW FINAL EXAM STUDY GUIDE Torts and Crimes Ch. 6: Tort Law (112)…..……………………………………………………………………………………….. 1 Ch. 7: Strict Liability and Product Liability (134)…….………………………………………... 4 Ch. 8: Intellectual Property Rights (150).…………………………………………………………... 6 Ch. 10: Criminal Law and Cyber Law (187)………….…………………………………………….. 10 Contracts and E-Contracts Ch. 11: Nature and Terminology (216).…………………………………………………………….... 15 Ch. 12: Agreement in Traditional and E-Contracts (231)………...……………..………... 17 Ch. 13: Consideration (250)…….………………………………………………………………………….. 20 Ch. 14: Capacity and Legality (263)….………………………………………………………………... 22 Ch. 15: Mistakes, Fraud, and Voluntary Consent (280)….…………………………………. 25 Ch. 16: The Writing Requirement in Our Digital World (295)…………………………... 27 Agency and Employment Ch. 32: Agency Formation and Duties (606)………………………….………………………….. 29 Charts and Tables…..…………………………………………………………………………………………………..….. 32

Chapter Notes Vocab Terms Quizlet Ch. 6 - TORT LAW: Basis for Tort Law: - tort → a wrongful act (other than under contract) leading to civil liability - two bases: 1. wrongs 2. compensation - purpose of tort law 1. safety 2. protection of property 3. provide for compensation of injured - damages → compensation for injury or harm - special damages → quantifiable monetary losses - general damages → non-monetary aspects - typically pain and suering - punitive damages - punish the wrongdoer - deter others - legislative caps on damages - some states seek to limit (especially medical malpractice) Intentional Torts Against Persons: - assault and battery - assault → any intentional and unexcused threat of immediate harmful or oensive contact - battery → the apprehension of assault is completed and results in harm - false imprisonment → intentional confinement of another without justification - intentional infliction of emotional distress → an intentional act that amounts to extreme and outrageous conduct resulting in severe emotional distress to another - courts are wary of these claims - need outrageous behavior - limited by the 1st Amendment - defamation → wrongfully hurting a person’s good reputation - slander = oral - libel = written - if public figures involved, need to show actual malice - statement of facts v. opinion - to prove liability, plainti needs to show publication of the statement - “communicated to persons other than the defamed party” - truth is normally an absolute defense against a defamation charge - false statements about public figures that are published in the media will not constitute defamation unless the statements are made with actual malice

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“made with either knowledge of its falsity or reckless disregard for the truth” - public figures have a greater burden of proof invasion of privacy → publishing or otherwise making known or using information relating to a person’s private life and aairs, with which the public has no legitimate concern, without that person’s permission or approval fraudulent misrepresentation (fraud) → intentional deceit for personal gain abusive or frivolous litigation - tort law protects people from the misuse of litigation - frivolous lawsuits - abuse of process business tort = wrongful interference - basis: public policy favors free competition - 2 categories of wrongful interference 1. wrongful interference with a contractual relationship - 3 elements 1. a valid enforceable contract between 2 parties 2. a third party must know that contract exists 3. this third party must intentionally induce a party to the contract to breach the contract - claims of this type have greatly increased 2. wrongful interference with a business relationship - competitive practices to gain market share or an economic advantage = ok - predatory behavior to gain market share or an economic advantage = not ok - defenses to wrongful interference - defendant must show the interference was justified or permissible (ex. marketing or advertising)

Intentional Torts Against Property: - intentional torts against property include: 1. trespass to land ex. walking or driving on another’s property, shooting a gun over another’s land, throwing rocks at a building that belongs to someone else, constructing a building so that part of it extends onto an adjoining property 2. trespass to personal property - also called “trespass to chattels” 3. conversion - typically, wrongfully retaining someone else’s property - failure to return goods 4. disparagement of property - ex. publication of false information about another’s product ***not necessary to know

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all are wrongful actions that interfere with an individual’s rights regarding land or personal property

Unintentional Torts: Negligence: - negligence → occurs when someone suers injury because of another’s failure to live up to a required duty of care - distinguished from the intentional torts because element of intent is missing - 4 elements of negligence 1. duty of care - element #1: the defendant owed a duty of care to the plainti - tort law measures duty by a reasonable-person standard - how would a reasonable person have acted under this circumstance - an objective standard - duty of landowners → landowners are expected to exercise reasonable care to protect individuals coming on to their property from harm - in rental situations, the duty applies to common areas (stairs, entryways, laundry rooms) - store owners need to warn business invitees of foreseeable risks - duty of professionals → people who possess superior knowledge are held to a higher standard - malpractice → professional negligence - ex. medical malpractice, legal malpractice 2. breach of the duty - element #2: the defendant breached his or her duty of care - can be an act (accidentally setting fire to a building) or can be a failure to act (omission) (ex. forgetting to put out a campfire) 3. causation - element #3: the defendant’s breach caused the harm - causation in fact → the injury occurred because of the defendant’s act - proximate cause → typically described as “but-for” or “legal” causation - often involves a string of events - questions of proximate cause often turn on the issue of foreseeability - unfair to impose liability on a defendant unless the defendant’s actions created a foreseeable risk of injury 4. damages - element #4: the plainti suered a legally-recognizable injury - loss, harm, or wrong - general rule: no injury, no damages

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Defenses to Negligence: - 3 basic armative defenses 1. assumption of the risk - plainti voluntarily enters into a risky situation, knowing the risk involved - ex. skiing or skydiving 2. superseding cause - an unforeseeable intervening event may break the causal connection between a wrongful act and an injury to another - defendant is relieved of further liability for additional injuries 3. comparative or contributory negligence - contributory negligence - old common law doctrine - a plainti who was also negligent could not recover anything from the defendant - comparative negligence - has replaced contributory negligence in most states - both plainti and defendant’s negligence are computed, then liability for damages is distributed accordingly - typically, if you’re more than 50% responsible, cannot recover Ch. 7 - STRICT LIABILITY AND PRODUCT LIABILITY: Strict Liability: - strict liability → a person who engages in certain activities can be held responsible for any harm that results to others (even if the person used utmost care) - also called “liability without fault” - based on old case from England - Ryland v. Fletcher (1868) - defendants were liable, even though the circumstances did not fit within existing tort liability theories - holding: defendant is liable for anything that is likely to do mischief if it escapes and is answerable for all the damage - abnormally dangerous activities - strict liability for damages proximately caused - ex. blasting or storing explosives, keeping wild animals, keeping domestic animals with propensity to harm others Product Liability: - product liability → those who make, sell, or lease goods can be held liable for physical harm or property damage caused by those goods to consumers, users, or bystanders - need to exercise “due care” - designing the product - selecting the materials

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- assembling the product - placing adequate warnings - inspecting/testing any purchased components “privity of contract” not required - normally, only parties to a contract can enforce it - 1916 case established this exception (MacPherson v. Buick Motor Company) - the injured party does not have to be the buyer - holding: duty to inspect, responsible for the finished product

Strict Product Liability: - California was the first state to impose “strict product liability” on manufacturers - ex. power tool injury (Greenman v. Yuba Power Products) - holding: apply tort law rather than contract law when injured by products - requirements for strict product liability 1. product must be in a defective condition when the defendant sells it 2. defendant normally engaged in the business of selling or distributing 3. product must be unreasonably dangerous 4. plainti must incur physical harm to self or property by use of the product 5. defective condition must be the proximate cause 6. goods must not have been substantially changed - a finding that there’s a “product defect” often requires expert testimony - most courts engage in a risk-utility analysis - foreseeable risks v. advantages of product - analysis may involve government programs set up to mitigate the risk - companies engage in a similar risk-utility process when deciding how to create their products - ex. door-latch system in Ford F-150 - other courts (rather than risk-utility) use a consumer-expectation test to determine whether a product design was defective - a product is unreasonably dangerous when it fails to perform in the manner that would reasonably be expected by a normal consumer - a product may also be deemed defective because of inadequate warnings - ex. defibrillator manufactured by Medtronic - warning labels may protect a manufacturer from risk - ex. trampoline warning labels - there is no duty to warn about risks that are obvious and commonly known - “obviousness of the risk” is matter of opinion - almost all courts extend strict liability to injured bystanders - ex. defective forklift that will not go into reverse injures a passerby - strict product liability also applies to suppliers of components - ex. brake pads from subcontractor

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Defenses to Product Liability: 1. preemption → government regulations preempt claims for product liability - ex. medical devices are subject to extensive government regulation and premarket testing 2. assumption of the risk → plainti knew and voluntarily assumed it - some states do not allow 3. product misuse → consumer misused the product in an unforeseeable way 4. comparative negligence → apportions liability if defendant also negligent - typically raised to reduce damages 5. commonly-known dangers - typically with matches and sharp knives - ex. exercise rope 6. knowledgeable user → if a particular danger is commonly known by particular users of a product, the manufacturer need not warn these users of the danger - ex. McDonald’s food 7. statute of limitations of repose - statute of limitations → limit the time in which a suit can be brought - typically 2-4 years from date of injury - statutes of repose → place outer time limits - ex. 12 years from date of sale Ch. 8 - INTELLECTUAL PROPERTY RIGHTS: Trademarks and Related Property: - trademark → a distinctive mark that a manufacturer stamps, prints, or otherwise axes to the goods it produces - purposes - identify goods on the market - make their origins known - Lanham Act of 1946 → protects manufacturers from rival companies with similar trademarks - provides statutory protection of trademarks and related property at the federal level - many states have similar laws - trademark owners are also protected from dilution - dilution → use of a similar mark that gives rise to an association - need not be identical - trademarks may be registered with the federal or state government - registration is renewable - between the 5th and 6th years after initial registration and then every 20 years thereafter - registration gives notice that the trademark belongs exclusively to the registrant - trademark infringement - means “used without authorization”

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when a trademark has been infringed, the owner has a cause of action against the infringer - the owner need not prove that the infringer acted intentionally - can recover actual damages plus profits the infringer wrongfully received - injunction = most commonly-granted remedy a trademark must be suciently distinctive - fanciful trademarks → use invented words - ex. Google, Xerox - arbitrary trademarks → use common words in an uncommon way that is not descriptive of the product - ex. “Dutch Boy” for paint - suggestive trademarks → indicate something about the product’s nature or characteristics without describing the product directly - ex. Dairy Queen descriptive terms, geographic terms, and personal names are not inherently distinctive and do not receive protection under the law until they acquire a secondary meaning (ex. London Fog) a color can qualify for trademark protection generic terms that refer to an entire class of products receive no protection, even if they acquire a secondary meeting - ex. bicycle, computer - a trademark does not become generic just because it is commonly used trade dress → the image and overall appearance of a product - broad concept - can include the “impression created by a product or its packaging” - subject to the same protections as trademarks - test: whether consumers likely to be confused counterfeit goods - growing problem for US businesses - can even present serious public health risks - ex. nutritional supplements, pharmaceuticals licensing → agreement permitting the use of a trademark, copyright, patent, or trade secret for certain purposes - way to avoid litigation - licensee generally pays fees or royalties

Patents: - patent → grant from the government that gives an inventor the exclusive right to make, use, or sell his or her invention for a period of 20 years - patents for designs (as opposed to inventions) are good for 14 years - period for patent protection begins on the date the patent application is filed, rather than when issued - after the patent period ends, the product or process enters the public domain

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- then anyone can make, sell, or use the product invention must be novel, useful, and not obvious almost anything is patentable - except laws of nature, natural phenomena, and abstract ideas (including algorithms) - hybrids or genetically engineered plants are patentable patent infringement → make, use, or sell another’s product or process without permission - tech companies frequently involved in these types of lawsuits US Supreme Court has narrowly construed patent infringement as it applies to exported software - general rule: under US law, no patent infringement occurs when a patented product is made and sold in another country remedies for patent infringement - sue for relief in federal court - injunction - damages for royalties and lost profits - treble (triple) damages, if infringement was willful - in the past, permanent injunctions were routinely granted - now, courts have discretion to decide what is equitable - public interest vs. party interest

Copyrights: - copyright → an intangible property right granted by federal statute to the author or originator of an artistic or literary production - Copyright Act of 1976 - works created after January 1, 1978, are automatically given copyright protection for the life of the author plus 70 years - if more than one author, 70 years after the death of the last surviving author - when copyright protection ends, works enter into the public domain - public domain works belong to everyone and are not protected by copyright or patent laws - registration - copyrights can be registered with the US Copyright Oce in Washington, D.C. - registration is not required - a copyright owner no longer needs to place the symbol © or the term Copr. or Copyright on the work to have it protected - to be protected, a work must be “fixed in a durable medium” from which it can be perceived, reproduced, or communicated - can include books, records, films, architectural plans, menus, music videos, product packaging, and computer software - exclusions - facts widely known to the public (exception: compilations of facts)

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page numbers mathematical calculations ideas → anyone can freely use the underlying ideas in a work - exception: the particular way the idea is expressed - if an idea and expression are inseparable, no copyright infringement → copying the form or expression of an idea - occurs even if the reproduction is not exactly the same - if a substantial part of the original is reproduced, the copyright has been infringed - ex. 50 Cent lawsuit remedies for copyright infringement - actual damages - based on the harm caused to the copyright holder - statutory damages - found in the Copyright Act - not to exceed $150,000 - criminal proceedings for willful violations - injunction Fair Use Exception → in certain circumstances, a person can reproduce copyrighted materials without paying royalties - criticism, comment, news reporting, teaching, research - guidelines are broad (reviewed on a case-by-case basis) First Sale Doctrine → owner of a particular item that is copyrighted can, without the authority of the copyright owner, sell or otherwise dispose of it copyright protection for software - law was amended to include computer programs in the list of creative works protected by federal copyright law - does not extend to “look and feel”

Trade Secrets: - the law of trade secrets protects some business processes and information that are not, or cannot be, patented, copyrighted, or trademarked - trade secret → information of commercial value such as customer lists, plans, research & development International Protection for Intellectual Property: - United States has been a party to international agreements relating to intellectual property rights - Paris Convention of 1883 - Berne Convention - TRIPS (Trade-Related Intellectual Property Rights) - Madrid Protocol

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Ch. 10 - CRIMINAL LAW & CYBER CRIME: Civil Law & Criminal Law: - civil law → duties between persons or between persons and their governments - crime → wrongs against society set forth in a statute and punishable by fine/imprisonment/death - prosecuted by a public ocial - DA = district attorney - AG = attorney general - key dierences between civil law and criminal law 1. sanctions - criminal sanctions are designed to punish - fines, loss of liberty, probation, community service, death 2. burden of proof - civil = preponderance of evidence - criminal = beyond a reasonable doubt - some acts can be the basis for both - assault and battery, bad checks, child support - classifications of crimes - felonies → serious crimes punishable by death or by imprisonment for more than a year - misdemeanors → less serious crimes, punishable by a fine or by confinement for up to a year - petty oenses/infractions → minor violations Criminal Liability: - general rule: 2 elements for a person to be convicted 1. performance of a prohibited act - actus reus - *thoughts do not harm until acted upon 2. criminal state of mind - mens rea - ex. theft - actus reus: taking another person’s property - mens rea: awareness the property belongs to another and the desire to deprive owner - criminal recklessness → consciously disregards substantial risk - criminal negligence → occurs when someone acts in a way that is an extreme departure from the way that ...