Business Law Midterm 1 PDF

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Chapter 1 ● Law should be created to serve the public and because we are the public, the law is important to us ● Law: consists of enforceable rules governing relationships among individuals and between individuals and their society ○ Responsible for establishing rights, duties, and privileges that are consistent with the values and beliefs of a society or its ruling group ● Liability: state of being legally responsible for something Ex. debt/obligation What are four primary sources of law in the United States? Primary Source of Law: document that establishes the law on a particular issue, such as constitution, a statute, an administrative rule, or court decision 1) Constitutional Law 2) Statutory Law - including laws passed by Congress, state legislatures, and local governing bodies 3) Administrative Law 4) Case Law and Common Law Doctrines (court decisions) Remember: Connor Sat Across Carrington Clicker: Which is not a source of American law: Model statute established by Uniform Law Constitutional Law ● Supreme Law of the land because it provides a framework for statutes and regulations ● Derived from the U.S. Constitution and the constitutions of the various states ● Any law that challenges it will be declared unconstitutional and will NOT be enforced ● 10th Amendment states that any power that is not given to the federal government is given to the people or the states ○ Each state has its own constitution ○ Unless it conflicts with the U.S. Constitution or a federal law, a state constitution is the supreme law of the land within that state's borders ● Federal Constitutional Law ○ Can regulate any commerce affecting interstate commerce ○ States cannot regulate interstate commerce ■ States can pass laws involving commerce if the laws DO NOT conflict with federal laws or place a burden on interstate commerce

Statutory Law ● Laws enacted by legislative bodies at any level of government, such as statutes passed by Congress or by state legislatures ● If passed by U.S. Congress, a federal statute applies to all states; cannot violate the U.S. Constitution; must be based on a power granted by the U.S. Constitution ● If passed by a state legislature, a state statute only applies within that state's borders; cannot violate the U.S. Constitution or the relevant state constitution ● Ordinances: laws, rules or orders passed by local governing body; cannot violate the U.S. Constitution or the relevant state constitution ○ Commonly have to do with city or county land use, building and safety codes, and other matters affecting only the local governing unit ➔ Uniform Laws: developed by the National Conference of Commissioners on Uniform State Laws ◆ Addresses need for standardization, especially in business ◆ Drafts uniform laws ("model statutes") for the states to consider adopting ◆ Only if a state legislature adopts a uniform law will that law become part of the statutory law of that state ◆ States can choose to adopt parts of a uniform law OR amend it (rewrite the sections they adopted)

➔ Uniform Commercial Code (UCC) is one of the most important uniform acts created through Uniform Law Commission and the American Law Institute ◆ Issued in 1950s and adopted by ALL 50 states, the District of Columbia, and the Virgin Islands ◆ Facilitates commerce among states by providing a uniform, yet flexible, set of rules governing commercial transactions, including the sale of goods and secured transactions, which is updated periodically ● Goods: all things that are moveable ● Does not address real estate ● Only focuses on personal property ● Fills in the blanks when an agreement is silent

Administrative Law ● Consists of rules, orders, and decisions established by administrative agencies of the federal, state, or local governments to carry out their duties and responsibilities ● Administrative Agencies: federal or state government agency created by legislatures to perform specific functions by enacting enabling legislation ○ Enabling Legislation: statute enacted by Congress that authorizes the creation of an administrative agency and specifies its name, composition, purpose, and powers of the agency being created ○ Affect almost every aspect of a business’s operations

■ Regulations govern a business capital structure and financing, its hiring, and firing procedures, its relations with employees and unions, and the way it manufactures and markets its products Clicker: How are the powers of an agency established? Enabling legislation ➔ Functions of Administrative Agencies ◆ Rulemaking: formally adopting a new regulation or amending an old one ● When Congress enacts an agency’s enabling legislation, it grants the power to make legislative rules, or substantive rules, which are legally binding on all businesses and carries the same weight as a congressionally enacted statute ● MUST comply with the Administrative Procedure Act ○ Imposes strict procedural requirements that agencies must follow in legislative rulemaking and other functions ○ Aimed at preventing arbitrariness or overreach by agencies ● Issues interpretive rules that are non-binding rules or policy statements that explains how it interprets and intends to apply the statutes it enforces ◆ Enforcement & Investigation: agencies often enforce their own rules and have both investigatory and prosecutorial powers ● Investigate a wide range of activities, including coal mining, automobile manufacturing, and the industrial discharge of pollutants into the environment ○ Can request specific books, papers, electronic records, or other documents and conduct inspections ○ Can take further action against the accused ◆ Adjudication: ability to conduct mini-trials involving its rules based on investigatory and prosecutorial powers ● Trial like hearing before an administrative law judge: one who presides over an administrative agency hearing and has the power to administer oaths, take testimony, rule on questions of evidence, and make determinations of act ● Can appeal decision to the mission or board that governs the agency ● If the party fails to get relief there, it can be appealed in federal court Examples of Federal Administrative Agencies: ■ Federal Trade Commission: investigate industries engaging in interstate commerce. It was created to stop unfair trade practices and to regulate and crush monopolies

● The FTC holds trial-like hearings and to adjudicate (resolve judicially) certain kinds of disputes involving its regulations ■ Securities and Exchange Commission: oversees securities transactions, activities of financial professionals and mutual fund trading to prevent fraud and intentional deception. ■ U.S. Patent & Trademark Office: issues patents to inventors and businesses for their inventions, and trademark registration for product and intellectual property identification. ■ Department of Health & Human Services: protects the health of all Americans and providing essential human services, especially for those who are least able to help themselves. ■ Department of Labor: responsible for standards in occupational safety, wages and number of hours worked, unemployment insurance benefits, re-employment services and a portion of the country's economic statistics. ■ Department of Treasury: collects revenue and administers federal finances ■ Department of Commerce: Promotes the nation’s international trade, economic development, and technological advancement Examples of State Administrative Agencies ■ Secretary of State ■ Department of Revenue ■ Department of Regulatory Agencies ■ Department of Labor and Employment ■ Department of Public Safety ■ Department of Law

Case Law and Common Law Doctrines Case Law: rules of law announced in court decisions. Case law interprets statutes, regulations, constitutional provisions, and other case law ● Govern all areas not covered by statutory law or administrative law and is part of our common law tradition What is our common law tradition? Much American law is based on the English legal system because of our colonial heritage. The body of law developed from custom or judicial decisions in English and U.S courts. It's largely based on previous court decisions to ensure consistencies regarding similar cases. What is precedent? When might a court depart from precedent?

Court decision that furnishes an example or authority for deciding subsequent cases involving identical or similar facts. Courts are obligated to follow precedent but can choose not to if the precedent seems incorrect or that societal changes have rendered it inapplicable ● Example: Brown v. Board of Education of Topeka is an example of an overturned precedent because the U.S. Supreme Court concluded that separate educational facilities for whites and blacks, which had been upheld as constitutional in numerous previous, were inherently unequal Stare Decisis: doctrine under which judges are obligated to follow the precedents established in prior decisions when deciding new cases ● Two Aspects of Stare Decisis: ○ Court should not overturn its own precedents unless there is a strong reason to do so ○ Decisions made by a higher court are binding on lower courts ● Controlling precedents in a jurisdiction are referred to as binding authorities. A binding authority is any source of law that a court must follow when deciding a case. ○ Binding authorities include: constitutions, statutes, and regulations that govern the issue being decided, as well as court decisions that are controlling precedents within the jurisdiction ➔ The stare decisis helps the courts to be: ◆ more efficient because if other courts have carefully reasoned through a similar case, their legal reasoning and opinions can serve as guides ◆ Makes the law more stable and predictable ➔ When there is no precedent ◆ When a case raises issues that have not been raised before in jurisdiction, so there is no precedent to rely on - “cases of first impression” ◆ Courts turn to persuasive authority: any legal authority or source of law that a court may look to for guidance, but need not follow when making its decision

What is the difference between remedies at law and remedies in equity? ● Remedies at law are limited to payments of money or property (including land) as damages. ● Remedies in equity is available only when there is no adequate remedy at law. A court of equity, could issue a decree for specific performance- an order to perform what was promised; or they can also issue an injunction, directing a party to do or refrain from doing a particular act; possibly even a contract rescission (cancellation). Sometimes known as Equity Relief. ● Today, actions at law has the right to demand a jury trial, whereas, actions in equity cannot.

Remedy: relief granted to an innocent and injured party to enforce a right or as compensation for the violation of a right by a guilty party Plaintiff: person who brings an action claiming wrongdoing by another person (bring the lawsuits) Defendant: person against whom such an action is brought Schools of Legal Thoughts Jurisprudence: science or philosophy of law ➔ How judges apply the law to specific cases depends on their philosophical approaches to law Natural Law: oldest school of legal thought, based on the belief that the legal system should reflect universal (“higher”) moral and ethical principles that are inherent in human nature Legal Positivism: centered on the assumption that there is no law higher than the laws created by a national government. Laws must be obeyed, even if they are unjust, to prevent anarchy Historical School: looks to the past to determine what the principles of contemporary law should be Legal Realism: holds that the law is only one factor to be considered when deciding cases and that social and economic circumstances should also be taken into account Classifications of Law Substantive Law: define, describe, regulate, and create legal rights and obligations Procedural Law: establish the methods of enforcing the rights established by substantive law ● Example: securities laws involving 10-Ks (annual report) Clicker: Which of the following is an example of a procedural law? Public company must file an annual report with the Securities and Exchange Commission within 60 days of the end of its fiscal year Civil Law: spells out the rights and duties that exist between persons and their governments, and the relief available when a person’s rights are violated ● Compensate the injured/damaged party (obtain remedy) ● Typically private party sues another private party to ensure compliance or to pay damages caused by noncompliance ● Regulates disputes between private parties ○ ○ ○ ○

Parties: individual vs. individual (government is not usually a party) Focus: harm caused by an action/in action (Ex: damages) Question: is defendant liable or not liable? Standard of proof: by a preponderance of the evidence) (>50%)

Criminal Law: defines and punishes wrongful actions committed against the public ● Forbidden by local, state, or federal government statutes ● Prosecuted by public officials, such as a district attorney on behalf of the state ○ Government vs. individual

○ Focus: "Wrong" committed against society ○ Question: is defendant guilty or not guilty? ○ Standard of proof: beyond a reasonable doubt Cyber Law: An informal term used to describe all laws regarding electronic communications, transactions, particularly ones that are done online National Law: law of a particular nation ➔ Varies from country to country because each country’s law reflects the interests, customs, activities, and values that are unique to that nation’s culture ➔ Can be enforced by government authorities International Law: body of written and unwritten and unwritten laws observed by independent nations and governing the acts of individuals as well as governments ➔ Governs relations among nations ➔ Can ONLY be enforced by other countries or international organizations

Chapter 3 What is the judiciary’s role in American government? We need someone to interpret and apply the various statutes and ordinances. Judicial Review: process by which a court decides on the constitutionality of legislative branch enactments and executive branch actions ● Part of the checks and balances system ● Not mentioned in U.S. Constitution ● Marbury v. Madison (1803) Clicker: Which branch of the federal government is responsible of determining whether or not he actions of the other branches of the federal government are constitutional? - Judicial branch Basic Judicial Requirements Before a court can hear a lawsuit, certain requirements must first be met: 1) Jurisdiction (who) -Who can hear the case? -Which state? Can a federal courts hear the case?

a) In personam jurisdiction - over the person (or company) against whom the suit is brought (defendant) OR b) In rem (Latin: the thing) jurisdiction - over the property involved in the lawsuit (Example: dispute over ownership of a boat AND c) Subject matter jurisdiction - over the subject matter of the dispute (usually defined in statute or constitution creating the court) ● Long Arm Statute: state statute that enables a state to exercise jurisdiction over nonresident defendants based on activities that took place within the state d) All states have one e) Minimum Contacts: basis used to determine if a nonresident defendant had sufficient dealings with a state to justify that state’s jurisdiction over the nonresident defendant Clicker: Which of the following businesses is LEAST likely to be subject to personal jurisdiction by a Colorado court by way of the long-arm statute? Fluffy's Pet Supplies which is a family owned pet store in Dubuque, Iwow that does not have a website and only advertises within the city limits of Dubuque Same principles used by courts to determine whether it is fair to exercise jurisdiction over businesses ● Example: ○ Company incorporated under the laws of Maine ○ It has branch office and manufacturing plant in Georgia ○ It also advertises and sells its products in Georgia Jurisdiction over Subject Matter ● Court of general jurisdiction: court that can hear ANY case ● Court of limited jurisdiction: court that is limited to hearing only certain types of cases (Example: probate or divorce) ○ Probate court: state court of limited jurisdiction that conducts proceedings relating to the settlement of a deceased person’s estate ○ Bankruptcy court: federal court of limited jurisdiction that handles only bankruptcy proceedings, which are governed by federal bankruptcy law ● Who or what determines a court’s jurisdiction over subject matter? ○ Statute or constitution which creates the court ★ A court’s jurisdiction over subject matter can be limited by: ○ Subject of the lawsuit ○ Amount in controversy ○ Whether the case involves a felony (serious crime resulting in one or more year of imprisonment) or a misdemeanor (less serious type of crime)

➔ Jurisdiction of Federal Courts ◆ Federal courts are courts of limited jurisdiction ◆ Federal courts can only hear cases based on: ● Federal question: question that pertains to the U.S. Constitution, a federal statute or a treaty ○ Federal Law ● Diversity of Citizenship: when citizens of different states are involved with a lawsuit ○ With $75,000 minimum amount in controversy ○ Corporations are citizens of state in which they are incorporated and where principal place of business is ○ The relevant state law (which is often the law of the state in which the court sits) ➔ Concurrent or. Exclusive Jurisdiction ◆ Concurrent Jurisdiction: when two different courts have the power to hear a case ● Both state and federal court can hear a case ◆ Exclusive Jurisdiction: when a case can be heard only in a particular court or type of court ● By federal court: (Example: involving federal crimes, bankruptcy, patents and copyrights, lawsuits against the federal government ● By state court: (Example: divorce and adoption) File in Federal or State Court? ● State: Most cases ○ Applies to both civil and criminal ● Federal (exclusive) ○ Violations of federal statutes, trademark and patent, admiralty ● Concurrent (can file in federal or state) Plaintiff can choose federal if: 1) Federal question 2) Diversity of citizenship Jurisdiction in Cyberspace Sliding Scale Standard: used by courts to determine when the exercise of jurisdiction over an out-of-state defendant is proper (in connection with minimum contacts standard) based on three types of Internet business contacts: 1) Substantial business conducted over the Internet (Example: with contracts and sales) Yes 2) Some interactivity through a website - Maybe

3) Passive advertising (if people have to voluntarily access it to read the message vs. it being send to them - No a) Example: You purchase a used RV outside your home state via ePay; can you file a lawsuit International Jurisdiction Issues ● The world’s courts seem to be developing a standard that resembles the minimum contacts requirements applied by U.S. courts ○ Therefore, a business has to comply with the laws in any jurisdiction in which it targets customers for its products ○ Can cost a lot of time, money, and energy because every jurisdiction’s laws differ 2) Venue (where): geographic district in which a legal action is tried and form which the jury is selected ➔ In which location(s) can the case be heard (which county or counties) a) What is the most appropriate physical location for a trial? b) Policy: court trying a suit should be in the geographic neighborhood (usually the county) where the incident leading to the lawsuit occurred or where the parties involved in the lawsuit reside c) Plaintiff picks venue based on where she/he/it files d) Defendant can submit a motion for change of venue in order to receive a fair trial Examples of change in venue: ● Dallas jury’s conviction of Jack Ruby relating to assassination of President John F. Kennedy ○ Appellate court ruled Ruby’s motion to change venue should have been granted because of Dallas citizens’ mindset ● Boston Marathon bombing ○ Judge denied Tsarnaev’s motion to change venue ● Business context ○ Small towns where a company is based ○ Establishing venue in contracts ○ Forum shopping 3) Standing: legal requiremen...