Overview of Business Law Principles

FINAL IS AT 10AM ON MONDAY, MAY 6TH. QUIZLET IS HERE. THIS IS WORTH 20% OF OUR GRADE. GOOD LUCK. j *Feel free to add answers that you feel are better under the answer already provided* Arbitration: * utilizes an arbitrator (a neutral third party or panel of experts) who hears a dispute and imposes a resolution on the parties. Binding authority: * any source of law that a court must follow when deciding a case. Corporate Social Responsibility (CSR): * combines a commitment to good citizenship with a commitment to making ethical decisions, improving society, and minimizing environmental impact. CSR is not imposed by law. Defendant: * One against whom a lawsuit is brought, or the accused person in a criminal proceeding. Mediation: * A method of settling disputes outside of court by using the services of a neutral third party, called a mediator. Negotiation: * In regard to dispute settlement, a process in which parties attempt to settle their dispute without going to court, with or without attorneys to represent them. Stakeholders: * Groups, other than the company’s shareholders, that are affected by corporate decisions. Stakeholders include employees, customers, creditors, suppliers, and the community in which the corporation operates. Statutes of limitations: * a federal or state statute setting the maximum time period during which a certain action can be brought or certain rights enforced. Utilitarianism: * an action is ethical based on whether it produces the greatest good for the greatest number of people upon which it has an effect. If it affects the majority adversely, it is morally wrong. Venue: * The legally proper place where a case should be filed and heard Ethics: * Moral principles and values applied to social behavior. Concurrent jurisdiction: * Jurisdiction that exists when two different courts have the power to hear a case. What is the role of the courts/judicial branch? * Interprets and applies the laws Know the difference between a plaintiff and defendant: * Plaintiff initiates the lawsuit, defendant has the lawsuit brought against them Understand the principle of minimum contacts: * A defendant must have minimum contact with the state in which the lawsuit is held to justify the jurisdiction What happens when a state constitution and the US Constitution conflict? * Constitution takes precedent because of Supremacy Clause Understand the appeal process: * The appellant presents a brief to the panel of judges and tries to persuade that the trial courts made an error and the decision should be reversed. Know what IRAC stands for: * Issue, rule, analysis, conclusion What is standing? * The requirement that an individual must have a sufficient stake in a controversy before he or she can bring a lawsuit. When are corporations subject to personal jurisdiction? * In the state in which they are incorporated, have their principal office, and/or are doing substantial business Know the 4 schools of legal thought: * Natural law school, positivist school, historical school, legal realism The law is the moral…. Blank * minimum What is a writ of certiorari? * A writ from a higher court asking the lower court for the record of a case. What is jurisdiction? * The authority of the court to hear and decide a specific action. Understand the requirements to bring a diversity of citizenship case: * The parties in the lawsuit are 1) from different US states or countries AND 2) the dollar amount in dispute exceeds $75,000. Know the primary sources of law: * Constitution, statutes, regulations, and case law. What is a corporation’s triple bottom line? * its people, its impact on profits, and its impact on the planet. American law was heavily influenced by which country’s legal system? * England Comparative negligence: * Computes liability of plaintiff and defendant and apportions damages * Pure comparative negligence allows the plaintiff to recover even if his liability is greater than that of the defendant. * Modified comparative negligence: percentage of damages that the plaintiff causes are subtracted from the total award * 50 Percent Rule: plaintiff recovers only if liability is less than 50% * 51 Percent Rule: plaintiff recovers nothing if liability is greater than 50% Contributory negligence: * Under common law doctrine of contributory negligence, if the plaintiff caused his injury in any way, he was barred from recovery. Libel: * Defamation in writing or in some other form (such print, media, or a digital recording) having the quality of permanence. Puffery: * “Seller’s talk” * Example: Atchison sells audio and video equipment. He tells a customer, Amelia, "This MP3 player is the best one ever made." Atchison’s statement is: puffery. Slander: * Defamation in oral form * Slander of Quality: Publication of false information about another’s product (trade libel) * Slander of Title: Publication falsely denies or casts doubt on another’s legal ownership of property, resulting in financial loss Offeree: * Party to whom the offer is made Offeror: * Party making the offer Product liability: * A manufacturer’s, seller’s, or lessor’s liability to consumers, users, and bystanders for physical harm or property damage that is caused by the goods. * Strict product liability holds people liable for results of their acts, regardless of their intentions or exercise of reasonable care. Quasi contract: * (Or contract implied in law) are fictional contracts that the courts impose on the parties “as if” the parties had entered into an actual contract * Quasi contracts are imposed in the interest of fairness and justice Unilateral contract: * Offeree can accept the offer only by completing the contract performance (“a promise for an act”) Strict liability: * Liability regardless of fault. In tort law, it may be imposed on defendants in cases involving abnormally dangerous activities, dangerous animals, or defective products. * Strict product liability holds people liable for results of their acts, regardless of their intentions or exercise of reasonable care. Do negligent actions involve intentional acts? * The difference is the state of mind. A person who is negligent did not mean to cause harm, but they are still held legally responsible because their careless actions injured someone. * Unintentional Tort: a wrongful act the tortfeasor committed without knowing its wrongfulness or without intending to commit the act. * Negligence: failure to live up to a required duty of care that a reasonable person should exercise in similar circumstances. Intent is not required, only the creation of risk of the consequence experienced by the plaintiff. Statute of limitations: * Law that defines the maximum amount of time in which parties involved in a dispute must initiate legal proceedings following an alleged offense * Vary by state law but are typically two to four years Tortfeasor: * Person committing the tort In contract law, is intent determined by an objective theory or subjective theory of contracts? * Objective: what a party said when entering into the contract, how the party acted or appeared, the circumstances surrounding the transaction (intent is measured by objective facts). * Subjective: what a person was thinking. * Intent is determined by the Objective Theory of Contracts Understand the different types of damages available in a torts case: * Compensatory: reimburse plaintiff for actual losses * Special: for quantifiable losses, such as medical expenses, lost wages, and benefits. * General: for non monetary aspects, such as pain, suffering, and reputation. * Business don’t get to sue for general damages * Punitive: punish the wrongdoer and deter similar conduct in the future. Know examples of objective facts: * Objective facts include what the party said when entering into the contract, how the party acted or appeared, and the circumstances surrounding the transaction. Know the elements required for a valid contract: * Agreement (offer and acceptance) * Consideration (legally sufficient and bargained-for) * Contractual Capacity (all parties must be competent) * Legal (purpose of contract must be legal at time of execution) * Defenses to Enforceability? * Voluntary Consent: all parties must voluntarily consent to the contract. * Form: some types of contracts must be in writing. Know the standard of care used for professionals: * Refers to the level of skill, diligence, and care that a reasonably prudent professional in the same field would exercise under similar circumstances. * Expertise and skill * Diligence and care * Industry standards * Custom and practice * Specialization and expertise * Informed consent Promisor v. promisee: * Promisor? * Person that makes the promise * Promisee? * Person to whom the promisor made the promise Executed v. executory: * Executed? * A contract that has been fully performed by both (or all parties) * Executory? * A contract that has not been fully performed by one or more parties Express v. implied contracts: * Express: the terms of the agreement (oral or written) are explicitly stated. * Implied (in fact): conduct creates and defines the terms of the contract. Defamation: * Involves wrongfully hurting a person’s good reputation. * Law imposes a duty to refrain from making false statements of fact about others. Examples of ambiguous contract situations: * A contract is unclear or ambiguous when: * The parties’ intent cannot be determined from the contract’s language * The contract lacks a provision on a disputed term * A term is susceptible to more than one interpretation * When there is uncertainty about a provision Fraud v. negligence v. puffery: * Fraudulent Misrepresentation (fraud): intentional deceit, usually for personal gain. * This tort has several elements. * 1. Misrepresentation of material fact * 2. Intent to induce another to rely on the misrepresentation * 3. Justifiable reliance by innocent party * 4. Damages suffered as a result of reliance * 5. A causal connection between misrepresentation and the injury suffered * Negligence and Puffery defined above Trespassing: * Trespass to Land: occurs when a person, without permission: * Physically enters onto, above, or below the surface of another’s land; or * Causes anything to enter onto the land; or * Remains - or permits anything to remain - on the land * Trespass to Personal Property: * Intentional interference with another’s use or enjoyment of personal property without consent or privilege. * Conversion is similar to trespass - you can have conversion without trespass to personal property. Conversion is when you originally have the right and exceed these rights. Categories of product defects: * Claims that a product is unreasonable dangerous generally fall into one of three categories: * Manufacturing defects * Design defects * Warning defects Assault: * Any intentional and unexcused threat of immediate harmful or offensive contact - whether words or acts - that create a reasonable believable threat. * No physical contact is necessary for an assault to occur. Appropriation: * Use of another’s name, likeness, or other identifying characteristics for commercial purposes without the owner’s consent Know the elements that a plaintiff must prove to succeed on a negligence claim: * The plaintiff must prove the following: * Duty: defendant owed plaintiff a duty of care * Breach: defendant breached that duty * Causation: defendant’s breach caused the injury * Damages: plaintiff suffered legal injury Good Samaritan Statute: * Protects someone who renders aid to an injured person from being sued for negligence Undisclosed principal: * A principal whose identity is unknown by a third party, and that party has no knowledge that the agent is acting for a principal at the time the agent and the third party form a contract. Disclosed principal: * A principal whose identity is known to a third party at the time the agent makes a contract with the third party. Partially disclosed principal: * A principal whose identity is unknown by a third party, but the third party knows that the agent is or may be acting for a principal at the time the agent and the third party form a contract. Ratification: * The act of accepting and giving legal force to an obligation that previously was not enforceable. Wrongful discharge: * An employer’s termination of an employee’s employment in violation of the law or an employment contract. Employment at will: * A common law doctrine under which either party may terminate an employment relationship at any time for any reason, unless a contract specifies otherwise. * Montana is an exception to this Minimum wage: * The lowest wage, either by government regulation or by union contract, that an employer may pay an hourly worker. Whistleblowing: * An employee’s disclosure to government authorities, upper-level managers, or the media that the employer is engaged in unsafe or illegal activities. Generally, does the law assume that the principal is aware of information acquired by the agent? * The duties of the agent require that notification takes place: the agent is required to notify the principal of all matters that concern the subject of the agency. When a state requires a minimum wage that is higher than the federal minimum wage, does a company have to pay the higher wage? * Yes: the employee is entitled to the higher of the two minimum wages Understand the common law exceptions to employment at will contracts: * Contract theory * Tort theory * Public policy Do both employees and employers make tax contributions? * Employees typically contribute to various taxes such as: * Income Tax * Social Security Tax * Medicare Tax * Employers typically contribute to taxes on behalf of their employees * Employer’s share of social security and medicare taxes * Unemployment insurance tax * Worker’s compensation insurance Understand a principal’s duties to its agents: * Compensation: principal must pay the agreed-on (or reasonable) value for the agent’s services. * Reimbursement and indemnification: principal must reimburse the agent for any funds paid out at the principal’s request, as well as for necessary expenses. * Cooperation: principal must cooperate with and assist an agent in performing his or her duties. * Safe working conditions: principals must provide a safe working environment for agents and employees. Understand the differences between an employee and independent contract: * Independent Contractor: One who works for, and receives payment from, an employer but whose working conditions and methods are not controlled by the employer. An independent contractor is not an employee but may be an agent * Employer-Employee Relationships: employment laws (state and federal) apply only to the employer-employee relationship but not to employer-independent contractor relationship Principal v. agent: * Principal: individual or entity that authorizes another person or entity, known as the agent, to act on their behalf in legal and business matters. The principal grants authority to the agent to perform certain tasks or make decisions within the scope of the agency relationship * Agent: a person or entity authorized by the principal to act on their behalf. Agents may have various roles and responsibilities, including entering into contracts, making decisions, conducting negotiations, or representing the principal in legal matters. Understand the duties an agent owes to a principal: * Performance: agent must use reasonable diligence and skill when performing duties. * Notification: agent is required to notify the principal of all matters that concern the subject of the agency. * Loyalty: agent has a duty to act solely for the principal’s benefit. * Obedience: agent must follow all lawful and stated instructions from the principal. * Accounting: agent must provide records of all property and funds received or paid out on the principal’s behalf. Know what rights employees and independent contractors have to copyrighted work: * Copyrighted work created by an employee is owned by the employer * Copyrighted work created by an independent contractor is normally owned by the contractor unless the parties agree in writing that it is a “work for hire” and the work falls into nine specific categories. Dissociation: * When a member ceases to be associated in the carrying on the LLC business Dissolution: * The formal disbanding of a partnership, corporation, or other business entity Member: * Owners of LLC; similar to a shareholder’s ownership of a corporation Alien corporation: * A corporation that was created in another country but doing business in the U.S. Foreign corporation: * Those doing business in one state but incorporated in another state Ultra vires: * Any acts that lie beyond the authority of a corporation to perform * Ultra vires acts fall outside the powers that are specifically listed in a corporate charter or law * “Beyond the powers” Pierce the corporate veil: * In certain situations, courts will “pierce the corporate veil” and hold shareholders personally liable in the interests of justice and fairness Crowdfunding: * A cooperative activity in which people network and pool funds and other resources via the internet to assist a cause (such as disaster relief) or invest in a business venture (such as a startup) Business judgment rule: * Provides a director of a corporation immunity from liability when a plaintiff sues on grounds that the director violated the duty of care to the corporation so long as the director’s actions fall within the parameters of the rule Quorum: * Minimum number of members of a group necessary to constitute the group at a meeting. In a deliberate assembly, a quorum is necessary to conduct the business of that group Advantages and disadvantages of a sole proprietorship: * A sole proprietorship is the simplest form of business * Advantages * Owns entire business - flexibility * Fewer legal formalities * Pays personal taxes * Disadvantages * Bears all losses * Liability * Lack of continuity In a limited partnership, understand the difference between general and limited partners’: 1. Liability and 2) management responsibilities: * In a limited partnership, there are general and limited partners. These both have liability and management responsibilities. * General partners liability: General partners have unlimited liability. * Limited partners liability: limited partners have limited liability. * General partners management responsibilities: general partners have the authority and responsibility to manage the day-to-day operations of the partnership. * Limited partners management responsibilities: limited partners are typically passive investors and do not have the authority to participate in the management of the partnership. When a general partnership is winding up, do the creditors or the partners get paid first? * Once all the LLC’s assets have been sold, the proceeds are distributed to pay off creditors first and member capital contributions next. Any remaining amounts are then distributed to members in equal shares or according to the operating agreement. Franchisee v. franchisor: * Franchisor: owner of a business concept, brand, or trademark that grants the right to the franchisee, to operate a business using that concept, brand, or trademark. The franchisor provides the franchisee with a business model, operational support, training, marketing materials, and ongoing assistance in exchange for fees and royalties * Franchisee: the individual or entity that purchases the right to operate a business using the franchisor’s brand, trademarks, and business model. The franchisee invests capital, time, and effort into establishing and operating the franchise business according to the franchisor’s standards and guidelines. Know common terms found in a franchise agreement: * Common contract terms involve: * Payment * Business premises * Location * Business organization * Quality control * Pricing arrangements Know the essential elements of a general partnership: * Mutual agreement * Co-ownership and sharing profits and losses * Joint management and control * Fiduciary duties * Unlimited liability * Pass-through taxation * No formalities required In a LLP, is a supervisor liable for the associates he/she supervises? * Supervisors in an LLP are generally not automatically liable for the actions or conduct of the associates they supervise unless they personally participate in or were aware of wrongful acts or negligence and failed to take appropriate action to prevent or address them. What is a Family Limited Liability Partnership? * A limited liability partnership (LLP) in which the majority of the partners are members of a family * Common in agriculture What is the default tax method for an LLC? * Pass-through taxation: the corporation itself does not pay federal income taxes at the corporate level but rather “pass through” to the shareholders who report them on their individual tax returns Know the advantages of an LLC: * Limited liability, flexible taxation, simplified management structure, flexible ownership structure, pass-through profit allocation, ease of formation and maintenance, credibility and professionalism, continuity and transferability Can an S corporation avoid double taxation? * Yes; A close business corporation that has most of the attributes of a corporation, including limited liability, but qualifies under the Internal Revenue Code to be taxed as a partnership A corporation is owned by: * Shareholders What happens if a shareholder loses his/her stock certificate? * May not be significant since most ownerships are recorded electronically and replacements can be obtained easily * Steps to take: report the loss, request a replacement, indemnity agreement, record keeping Inside v. outside directors: * Inside directors: typically employees/executives of the company * Intimate understanding of the company’s operations, culture, and strategic direction; include CEO, CFO, COO, and other high-level executives * May prioritize the interests of management over those of shareholders * Outside directors: independent of the company and its management * Not employees of the company and do not have any significant business relationships with it * Usually selected for their expertise, experience, and objectivity * Represent the interests of shareholders and ensure that the board acts in the best interest of the company as a whole What is a shareholder’s derivative suit? * Legal action filed by a shareholder on behalf of a corporation to enforce the corporation’s rights against third parties, typical directors, officers, or other insiders of the corporation, for breaches of fiduciary duty, fraud, or other wrongdoing that harms the corporation. Know the powers of a shareholder: * Approve fundamental changes to the corporation * Amend articles of incorporation or bylaws * Shareholders also elect and remove the board of directors JEOPARDY GAME A fictional contract imposed on parties by a court in the interests of fairness and justice; usually, they are imposed to avoid the unjust enrichment of one party at the expense of another. * Quasi contract A rule under which courts will not hold corporate officers and directors liable for honest mistakes of judgment and bad business decisions that were made in good faith. * Business judgment rule In diversity of citizenship cases the parties in the lawsuit are 1) _____ and 2) ______ * 1) From different US states and/or the US and a foreign country AND 2) the dollar amount in dispute exceeds $75,000 Power Trucking Company operates a fleet of fuel trucks. When one of the trucks is positioned to receive a load, it strikes a storage tank owned by Quality Fuel, Inc. For the cost of repairing the damage to the tank, Quality Fuel is most likely to be awarded: * Compensatory damages Name at least 3 of the 5 duties an agent owes to a principal. * Performance, notification, loyalty, obedience, accounting A principal whose identity is unknown by a third party, but the third party knows that the agent is or may be acting for a principal at the time the agent and the third party form a contract. * Partially disclosed principal A corporation formed in another country but doing business in the US. * Alien corporation Mediocrite, Inc., makes and sells goods that are substandard. Naomi, who has never bought or used a Mediocrite item, files a suit against the firm, alleging that its products are defective. The company’s best ground for dismissal of the suit if that Naomi does not have: * Standing Reynaldo is a delivery driver for Southeast Asian Noodle Company. Reynaldo follows detailed instructions of the company in carrying out his work. Reynaldo is: * An employee A federal or state statute setting the maximum time period during which a certain action can be brought or certain rights enforced. * Statute of limitations Name at least 2 of the 4 principal’s duties owed to its agents. * Compensation, reimbursement and indemnification, cooperation, safe working conditions Acts of a corporation that are beyond its express and implied powers to undertake (the Latin phrase means “beyond the powers”) * Ultra vires Hope wants to file a suit against Gerry. For a court to hear the case, * The court must have jurisdiction Laredo loses his suit against McLain in a North Dakota state trial court. Laredo appeals to a state intermediate court of appeals and loses again. Laredo would appeal next to: * The North Dakota Supreme Court Objective facts include all of the following except: * What a party was internally thinking Name at least 2 of the 4 schools of legal thought. * Natural law school, positivist school, historical school, legal realism Use of another’s name, likeness, or other identifying characteristic for commercial purposes without the owner’s consent is: * Appropriation An employee’s disclosure to government authorities, upper-level managers, or the media that the employer is engaged in unsafe or illegal activities. * Whistleblowing An approach to ethical reasoning in which ethically correct behavior is related to an evaluation of the consequences of a given action on those who will be affected by it. In reasoning, a “good” decision is one that results in the greatest good for the greatest number of people affected by the decision. * Utilitarianism A common law doctrine under which either party may terminate an employment relationship at any time for any reason, unless a contract specifies otherwise. * Employment at will When a state requires a minimum wage that is higher than the federal minimum wage, does a company have to pay the higher wage? * Yes A salesperson’s exaggerated claims concerning the quality of goods offered for the sale. Such claims involve opinions rather than facts and are not considered to be legally binding promises or warranties. * Pufferies Jack enters into a contract with Jill’s Farm to provide water for Jill’s irrigation needs. Jack fails to deliver. Jill initiates a suit against Jack, asking the court to order Jack to perform. Jill is * The plaintiff Darin is a limited partner in Eco Baits, a pest control service organized as a limited partnership, which cannot pay its debts. Darin is liable for the debts: * To the extent of her capital contribution to the firm. The legislative branch creates laws. The executive branch enforces the laws. The judicial branch * Interprets and applies the laws

FINAL IS AT 10AM ON MONDAY, MAY 6TH. QUIZLET IS HERE. THIS IS WORTH 20% OF OUR GRADE. GOOD LUCK.
j
*Feel free to add answers that you feel are better under the answer already provided*

Arbitration: 
* utilizes an arbitrator (a neutral third party or panel of experts) who hears a dispute and imposes a resolution on the parties.
Binding authority: 
* any source of law that a court must follow when deciding a case.
Corporate Social Responsibility (CSR): 
* combines a commitment to good citizenship with a commitment to making ethical decisions, improving society, and minimizing environmental impact. CSR is not imposed by law.
Defendant: 
* One against whom a lawsuit is brought, or the accused person in a criminal proceeding.
Mediation: 
* A method of settling disputes outside of court by using the services of a neutral third party, called a mediator.
Negotiation: 
* In regard to dispute settlement, a process in which parties attempt to settle their dispute without going to court, with or without attorneys to represent them.
Stakeholders: 
* Groups, other than the company’s shareholders, that are affected by corporate decisions. Stakeholders include employees, customers, creditors, suppliers, and the community in which the corporation operates.
Statutes of limitations: 
* a federal or state statute setting the maximum time period during which a certain action can be brought or certain rights enforced.
Utilitarianism: 
* an action is ethical based on whether it produces the greatest good for the greatest number of people upon which it has an effect. If it affects the majority adversely, it is morally wrong.
Venue: 
* The legally proper place where a case should be filed and heard
Ethics: 
* Moral principles and values applied to social behavior.
Concurrent jurisdiction: 
* Jurisdiction that exists when two different courts have the power to hear a case.
What is the role of the courts/judicial branch? 
* Interprets and applies the laws
Know the difference between a plaintiff and defendant:
* Plaintiff initiates the lawsuit, defendant has the lawsuit brought against them
Understand the principle of minimum contacts:
* A defendant must have minimum contact with the state in which the lawsuit is held to justify the jurisdiction
What happens when a state constitution and the US Constitution conflict?
* Constitution takes precedent because of Supremacy Clause
Understand the appeal process:
* The appellant presents a brief to the panel of judges and tries to persuade that the trial courts made an error and the decision should be reversed.
Know what IRAC stands for:
* Issue, rule, analysis, conclusion
What is standing?
* The requirement that an individual must have a sufficient stake in a controversy before he or she can bring a lawsuit.
When are corporations subject to personal jurisdiction?
* In the state in which they are incorporated, have their principal office, and/or are doing substantial business
Know the 4 schools of legal thought:
* Natural law school, positivist school, historical school, legal realism
The law is the moral…. Blank
* minimum
What is a writ of certiorari?
* A writ from a higher court asking the lower court for the record of a case.
What is jurisdiction?
* The authority of the court to hear and decide a specific action.
Understand the requirements to bring a diversity of citizenship case:
* The parties in the lawsuit are 1) from different US states or countries AND 2) the dollar amount in dispute exceeds $75,000.
Know the primary sources of law:
* Constitution, statutes, regulations, and case law.
What is a corporation’s triple bottom line?
* its people, its impact on profits, and its impact on the planet.
American law was heavily influenced by which country’s legal system?
* England
Comparative negligence:
* Computes liability of plaintiff and defendant and apportions damages
   * Pure comparative negligence allows the plaintiff to recover even if his liability is greater than that of the defendant.
   * Modified comparative negligence: percentage of damages that the plaintiff causes are subtracted from the total award
   * 50 Percent Rule: plaintiff recovers only if liability is less than 50%
   * 51 Percent Rule: plaintiff recovers nothing if liability is greater than 50%
Contributory negligence:
* Under common law doctrine of contributory negligence, if the plaintiff caused his injury in any way, he was barred from recovery.
Libel:
* Defamation in writing or in some other form (such print, media, or a digital recording) having the quality of permanence. 
Puffery:
* “Seller’s talk”
* Example: Atchison sells audio and video equipment. He tells a customer, Amelia, "This MP3 player is the best one ever made." Atchison’s statement is: puffery.
Slander:
* Defamation in oral form
   * Slander of Quality: Publication of false information about another’s product (trade libel)
   * Slander of Title: Publication falsely denies or casts doubt on another’s legal ownership of property, resulting in financial loss
Offeree:
* Party to whom the offer is made
Offeror:
* Party making the offer
Product liability:
* A manufacturer’s, seller’s, or lessor’s liability to consumers, users, and bystanders for physical harm or property damage that is caused by the goods.
* Strict product liability holds people liable for results of their acts, regardless of their intentions or exercise of reasonable care.
Quasi contract:
* (Or contract implied in law) are fictional contracts that the courts impose on the parties “as if” the parties had entered into an actual contract
* Quasi contracts are imposed in the interest of fairness and justice
Unilateral contract:
* Offeree can accept the offer only by completing the contract performance (“a promise for an act”)
Strict liability:
* Liability regardless of fault. In tort law, it may be imposed on defendants in cases involving abnormally dangerous activities, dangerous animals, or defective products. 
* Strict product liability holds people liable for results of their acts, regardless of their intentions or exercise of reasonable care.
Do negligent actions involve intentional acts?
* The difference is the state of mind. A person who is negligent did not mean to cause harm, but they are still held legally responsible because their careless actions injured someone.
* Unintentional Tort: a wrongful act the tortfeasor committed without knowing its wrongfulness or without intending to commit the act.
* Negligence: failure to live up to a required duty of care that a reasonable person should exercise in similar circumstances. Intent is not required, only the creation of risk of the consequence experienced by the plaintiff.
Statute of limitations:
* Law that defines the maximum amount of time in which parties involved in a dispute must initiate legal proceedings following an alleged offense
* Vary by state law but are typically two to four years
Tortfeasor:
* Person committing the tort
In contract law, is intent determined by an objective theory or subjective theory of contracts?
* Objective: what a party said when entering into the contract, how the party acted or appeared, the circumstances surrounding the transaction (intent is measured by objective facts). 
* Subjective: what a person was thinking.
* Intent is determined by the Objective Theory of Contracts
Understand the different types of damages available in a torts case:
* Compensatory: reimburse plaintiff for actual losses
   * Special: for quantifiable losses, such as medical expenses, lost wages, and benefits.
   * General: for non monetary aspects, such as pain, suffering, and reputation.
      * Business don’t get to sue for general damages
* Punitive: punish the wrongdoer and deter similar conduct in the future.
Know examples of objective facts:
* Objective facts include what the party said when entering into the contract, how the party acted or appeared, and the circumstances surrounding the transaction.
Know the elements required for a valid contract: 
* Agreement (offer and acceptance)
* Consideration (legally sufficient and bargained-for)
* Contractual Capacity (all parties must be competent)
* Legal (purpose of contract must be legal at time of execution)
* Defenses to Enforceability?
   * Voluntary Consent: all parties must voluntarily consent to the contract.
   * Form: some types of contracts must be in writing.
Know the standard of care used for professionals:
* Refers to the level of skill, diligence, and care that a reasonably prudent professional in the same field would exercise under similar circumstances. 
* Expertise and skill
* Diligence and care
* Industry standards
* Custom and practice
* Specialization and expertise
* Informed consent
Promisor v. promisee:
* Promisor?
   * Person that makes the promise
* Promisee?
   * Person to whom the promisor made the promise
Executed v. executory:
* Executed?
   * A contract that has been fully performed by both (or all parties)
* Executory? 
   * A contract that has not been fully performed by one or more parties
Express v. implied contracts:
* Express: the terms of the agreement (oral or written) are explicitly stated.
* Implied (in fact): conduct creates and defines the terms of the contract.
Defamation:
* Involves wrongfully hurting a person’s good reputation.
* Law imposes a duty to refrain from making false statements of fact about others.
Examples of ambiguous contract situations:
* A contract is unclear or ambiguous when:
   * The parties’ intent cannot be determined from the contract’s language
   * The contract lacks a provision on a disputed term
   * A term is susceptible to more than one interpretation
   * When there is uncertainty about a provision
Fraud v. negligence v. puffery:
* Fraudulent Misrepresentation (fraud): intentional deceit, usually for personal gain.
* This tort has several elements.
   * 1. Misrepresentation of material fact
   * 2. Intent to induce another to rely on the misrepresentation
   * 3. Justifiable reliance by innocent party
   * 4. Damages suffered as a result of reliance
   * 5. A causal connection between misrepresentation and the injury suffered
* Negligence and Puffery defined above 
Trespassing:
* Trespass to Land: occurs when a person, without permission:
   * Physically enters onto, above, or below the surface of another’s land; or
   * Causes anything to enter onto the land; or
   * Remains - or permits anything to remain - on the land
* Trespass to Personal Property:
   * Intentional interference with another’s use or enjoyment of personal property without consent or privilege.
   * Conversion is similar to trespass - you can have conversion without trespass to personal property. Conversion is when you originally have the right and exceed these rights.
Categories of product defects:
* Claims that a product is unreasonable dangerous generally fall into one of three categories:
   * Manufacturing defects
   * Design defects
   * Warning defects
Assault:
* Any intentional and unexcused threat of immediate harmful or offensive contact - whether words or acts - that create a reasonable believable threat.
* No physical contact is necessary for an assault to occur.
Appropriation:
* Use of another’s name, likeness, or other identifying characteristics for commercial purposes without the owner’s consent
Know the elements that a plaintiff must prove to succeed on a negligence claim:
* The plaintiff must prove the following:
   * Duty: defendant owed plaintiff a duty of care
   * Breach: defendant breached that duty
   * Causation: defendant’s breach caused the injury
   * Damages: plaintiff suffered legal injury
Good Samaritan Statute:
* Protects someone who renders aid to an injured person from being sued for negligence
Undisclosed principal:
* A principal whose identity is unknown by a third party, and that party has no knowledge that the agent is acting for a principal at the time the agent and the third party form a contract.
Disclosed principal:
* A principal whose identity is known to a third party at the time the agent makes a contract with the third party.
Partially disclosed principal:
* A principal whose identity is unknown by a third party, but the third party knows that the agent is or may be acting for a principal at the time the agent and the third party form a contract.
Ratification:
* The act of accepting and giving legal force to an obligation that previously was not enforceable.
Wrongful discharge:
* An employer’s termination of an employee’s employment in violation of the law or an employment contract.
Employment at will:
* A common law doctrine under which either party may terminate an employment relationship at any time for any reason, unless a contract specifies otherwise. 
* Montana is an exception to this 
Minimum wage: 
* The lowest wage, either by government regulation or by union contract, that an employer may pay an hourly worker.
Whistleblowing:
* An employee’s disclosure to government authorities, upper-level managers, or the media that the employer is engaged in unsafe or illegal activities.
Generally, does the law assume that the principal is aware of information acquired by the agent?
* The duties of the agent require that notification takes place: the agent is required to notify the principal of all matters that concern the subject of the agency.
When a state requires a minimum wage that is higher than the federal minimum wage, does a company have to pay the higher wage?
* Yes: the employee is entitled to the higher of the two minimum wages 
Understand the common law exceptions to employment at will contracts:
* Contract theory
* Tort theory
* Public policy
Do both employees and employers make tax contributions?
* Employees typically contribute to various taxes such as:
   * Income Tax
   * Social Security Tax
   * Medicare Tax
* Employers typically contribute to taxes on behalf of their employees
   * Employer’s share of social security and medicare taxes
   * Unemployment insurance tax
   * Worker’s compensation insurance
Understand a principal’s duties to its agents:
* Compensation: principal must pay the agreed-on (or reasonable) value for the agent’s services.
* Reimbursement and indemnification: principal must reimburse the agent for any funds paid out at the principal’s request, as well as for necessary expenses.
* Cooperation: principal must cooperate with and assist an agent in performing his or her duties.
* Safe working conditions: principals must provide a safe working environment for agents and employees.
Understand the differences between an employee and independent contract:
* Independent Contractor: One who works for, and receives payment from, an employer but whose working conditions and methods are not controlled by the employer. An independent contractor is not an employee but may be an agent
* Employer-Employee Relationships: employment laws (state and federal) apply only to the employer-employee relationship but not to employer-independent contractor relationship
Principal v. agent:
* Principal: individual or entity that authorizes another person or entity, known as the agent, to act on their behalf in legal and business matters. The principal grants authority to the agent to perform certain tasks or make decisions within the scope of the agency relationship 
* Agent: a person or entity authorized by the principal to act on their behalf. Agents may have various roles and responsibilities, including entering into contracts, making decisions, conducting negotiations, or representing the principal in legal matters. 
Understand the duties an agent owes to a principal:
* Performance: agent must use reasonable diligence and skill when performing duties.
* Notification: agent is required to notify the principal of all matters that concern the subject of the agency.
* Loyalty: agent has a duty to act solely for the principal’s benefit.
* Obedience: agent must follow all lawful and stated instructions from the principal.
* Accounting: agent must provide records of all property and funds received or paid out on the principal’s behalf.
Know what rights employees and independent contractors have to copyrighted work:
* Copyrighted work created by an employee is owned by the employer
* Copyrighted work created by an independent contractor is normally owned by the contractor unless the parties agree in writing that it is a “work for hire” and the work falls into nine specific categories.
Dissociation:
* When a member ceases to be associated in the carrying on the LLC business
Dissolution:
* The formal disbanding of a partnership, corporation, or other business entity
Member:
* Owners of LLC; similar to a shareholder’s ownership of a corporation 
Alien corporation:
* A corporation that was created in another country but doing business in the U.S. 
Foreign corporation:
* Those doing business in one state but incorporated in another state
Ultra vires:
* Any acts that lie beyond the authority of a corporation to perform
* Ultra vires acts fall outside the powers that are specifically listed in a corporate charter or law
* “Beyond the powers”
Pierce the corporate veil:
* In certain situations, courts will “pierce the corporate veil” and hold shareholders personally liable in the interests of justice and fairness
Crowdfunding:
* A cooperative activity in which people network and pool funds and other resources via the internet to assist a cause (such as disaster relief) or invest in a business venture (such as a startup)
Business judgment rule:
* Provides a director of a corporation immunity from liability when a plaintiff sues on grounds that the director violated the duty of care to the corporation so long as the director’s actions fall within the parameters of the rule
Quorum:
* Minimum number of members of a group necessary to constitute the group at a meeting. In a deliberate assembly, a quorum is necessary to conduct the business of that group 
Advantages and disadvantages of a sole proprietorship:
* A sole proprietorship is the simplest form of business
* Advantages
   * Owns entire business - flexibility
   * Fewer legal formalities
   * Pays personal taxes
* Disadvantages
   * Bears all losses
   * Liability
   * Lack of continuity
In a limited partnership, understand the difference between general and limited partners’:
1. Liability and 2) management responsibilities:
* In a limited partnership, there are general and limited partners. These both have liability and management responsibilities.
   * General partners liability: General partners have unlimited liability.
   * Limited partners liability: limited partners have limited liability.
   * General partners management responsibilities: general partners have the authority and responsibility to manage the day-to-day operations of the partnership. 
   * Limited partners management responsibilities: limited partners are typically passive investors and do not have the authority to participate in the management of the partnership.
When a general partnership is winding up, do the creditors or the partners get paid first?
* Once all the LLC’s assets have been sold, the proceeds are distributed to pay off creditors first and member capital contributions next. Any remaining amounts are then distributed to members in equal shares or according to the operating agreement.
Franchisee v. franchisor:
* Franchisor: owner of a business concept, brand, or trademark that grants the right to the franchisee, to operate a business using that concept, brand, or trademark. The franchisor provides the franchisee with a business model, operational support, training, marketing materials, and ongoing assistance in exchange for fees and royalties
* Franchisee: the individual or entity that purchases the right to operate a business using the franchisor’s brand, trademarks, and business model. The franchisee invests capital, time, and effort into establishing and operating the franchise business according to the franchisor’s standards and guidelines. 
Know common terms found in a franchise agreement:
* Common contract terms involve:
   * Payment
   * Business premises
   * Location
   * Business organization
   * Quality control
   * Pricing arrangements
Know the essential elements of a general partnership:
* Mutual agreement
* Co-ownership and sharing profits and losses
* Joint management and control 
* Fiduciary duties
* Unlimited liability 
* Pass-through taxation
* No formalities required 
In a LLP, is a supervisor liable for the associates he/she supervises?
* Supervisors in an LLP are generally not automatically liable for the actions or conduct of the associates they supervise unless they personally participate in or were aware of wrongful acts or negligence and failed to take appropriate action to prevent or address them. 
What is a Family Limited Liability Partnership?
* A limited liability partnership (LLP) in which the majority of the partners are members of a family
* Common in agriculture
What is the default tax method for an LLC? 
* Pass-through taxation: the corporation itself does not pay federal income taxes at the corporate level but rather “pass through” to the shareholders who report them on their individual tax returns
Know the advantages of an LLC:
* Limited liability, flexible taxation, simplified management structure, flexible ownership structure, pass-through profit allocation, ease of formation and maintenance, credibility and professionalism, continuity and transferability
Can an S corporation avoid double taxation?
* Yes; A close business corporation that has most of the attributes of a corporation, including limited liability, but qualifies under the Internal Revenue Code to be taxed as a partnership
A corporation is owned by: 
* Shareholders
What happens if a shareholder loses his/her stock certificate?
* May not be significant since most ownerships are recorded electronically and replacements can be obtained easily
* Steps to take: report the loss, request a replacement, indemnity agreement, record keeping
Inside v. outside directors:
* Inside directors: typically employees/executives of the company
   * Intimate understanding of the company’s operations, culture, and strategic direction; include CEO, CFO, COO, and other high-level executives
   * May prioritize the interests of management over those of shareholders
* Outside directors: independent of the company and its management
   * Not employees of the company and do not have any significant business relationships with it
   * Usually selected for their expertise, experience, and objectivity 
   * Represent the interests of shareholders and ensure that the board acts in the best interest of the company as a whole 
What is a shareholder’s derivative suit?
* Legal action filed by a shareholder on behalf of a corporation to enforce the corporation’s rights against third parties, typical directors, officers, or other insiders of the corporation, for breaches of fiduciary duty, fraud, or other wrongdoing that harms the corporation. 
Know the powers of a shareholder:
* Approve fundamental changes to the corporation
* Amend articles of incorporation or bylaws
* Shareholders also elect and remove the board of directors

JEOPARDY GAME
A fictional contract imposed on parties by a court in the interests of fairness and justice; usually, they are imposed to avoid the unjust enrichment of one party at the expense of another.
* Quasi contract
A rule under which courts will not hold corporate officers and directors liable for honest mistakes of judgment and bad business decisions that were made in good faith.
* Business judgment rule
In diversity of citizenship cases the parties in the lawsuit are 1) _____  and 2) ______
* 1) From different US states and/or the US and a foreign country AND 2) the dollar amount in dispute exceeds $75,000
Power Trucking Company operates a fleet of fuel trucks. When one of the trucks is positioned to receive a load, it strikes a storage tank owned by Quality Fuel, Inc. For the cost of repairing the damage to the tank, Quality Fuel is most likely to be awarded:
* Compensatory damages
Name at least 3 of the 5 duties an agent owes to a principal.
* Performance, notification, loyalty, obedience, accounting
A principal whose identity is unknown by a third party, but the third party knows that the agent is or may be acting for a principal at the time the agent and the third party form a contract.
* Partially disclosed principal
A corporation formed in another country but doing business in the US.
* Alien corporation
Mediocrite, Inc., makes and sells goods that are substandard. Naomi, who has never bought or used a Mediocrite item, files a suit against the firm, alleging that its products are defective. The company’s best ground for dismissal of the suit if that Naomi does not have:
* Standing
Reynaldo is a delivery driver for Southeast Asian Noodle Company. Reynaldo follows detailed instructions of the company in carrying out his work. Reynaldo is:
* An employee
A federal or state statute setting the maximum time period during which a certain action can be brought or certain rights enforced.
* Statute of limitations
Name at least 2 of the 4 principal’s duties owed to its agents.
* Compensation, reimbursement and indemnification, cooperation, safe working conditions
Acts of a corporation that are beyond its express and implied powers to undertake (the Latin phrase means “beyond the powers”)
* Ultra vires
Hope wants to file a suit against Gerry. For a court to hear the case,
* The court must have jurisdiction
Laredo loses his suit against McLain in a North Dakota state trial court. Laredo appeals to a state intermediate court of appeals and loses again. Laredo would appeal next to:
* The North Dakota Supreme Court
Objective facts include all of the following except:
* What a party was internally thinking
Name at least 2 of the 4 schools of legal thought.
* Natural law school, positivist school, historical school, legal realism
Use of another’s name, likeness, or other identifying characteristic for commercial purposes without the owner’s consent is:
* Appropriation
An employee’s disclosure to government authorities, upper-level managers, or the media that the employer is engaged in unsafe or illegal activities.
* Whistleblowing
An approach to ethical reasoning in which ethically correct behavior is related to an evaluation of the consequences of a given action on those who will be affected by it. In reasoning, a “good” decision is one that results in the greatest good for the greatest number of people affected by the decision.
* Utilitarianism
A common law doctrine under which either party may terminate an employment relationship at any time for any reason, unless a contract specifies otherwise.
* Employment at will
When a state requires a minimum wage that is higher than the federal minimum wage, does a company have to pay the higher wage?
* Yes
A salesperson’s exaggerated claims concerning the quality of goods offered for the sale. Such claims involve opinions rather than facts and are not considered to be legally binding promises or warranties.
* Pufferies
Jack enters into a contract with Jill’s Farm to provide water for Jill’s irrigation needs. Jack fails to deliver. Jill initiates a suit against Jack, asking the court to order Jack to perform. Jill is
* The plaintiff
Darin is a limited partner in Eco Baits, a pest control service organized as a limited partnership, which cannot pay its debts. Darin is liable for the debts:
* To the extent of her capital contribution to the firm.
The legislative branch creates laws. The executive branch enforces the laws. The judicial branch
* Interprets and applies the laws

Transcript for:Overview of Business Law Principles

Transcript for:
Overview of Business Law Principles