Business Law I Midterm Set

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  1. LAW
    • A body of enforceable rules governing relationships among individuals and
    • between individuals and their society.
    • A system of universal moral and ethical principles that are inherent in human nature and that people can discover by using their natural intelligence (e.g., murder is
    • wrong; parents are responsible for the acts of their minor children).
    The conventional, or written,law of a particular society at a particular point in time (e.g., the U.S. Constitution, the Texas Securities Act, the Internal Revenue Code, and published judicial decisions).
    The study of different schools of legal philosophy and how each can affect judicial decision making.
  5. Natural Law Theory
    • presupposes that
    • positive law derives its legitimacy from natural law and holds that, to the
    • extent that natural law and positive law differ, natural law must prevail.
  6. Legal Positivism
    • holds that there is
    • no higher law than that created by legitimate governments and that such laws
    • must be obeyed, even if they appear unjust or otherwise at odds with natural
    • law.
  7. Historical School
    • emphasizes the
    • evolutionary process of law by concentrating on the origin and history of a
    • legal system and holds that law derives its legitimacy and authority through
    • the test of time.
  8. Legal Realism
    • contends that
    • positive law cannot be applied in the abstract; rather, judges should take into
    • account the specific circumstances of each case, as well as economic and social
    • realities.
  9. Sociological School
    views law as a tool for promoting social justice.
  10. Four primary sources of domestic law
    • 1. Constitutions
    • 2. Federal or State Statutes and Local Ordinances
    • 3. Administrative Rules and Regulations
    • 4. Common Law
  11. Constitutions
    • setting forth the fundamental rights of the people living within the United States or a
    • given state, describing and empowering the various branches of government, and prescribing limitations on that power;
  12. Statutes
    Laws enacted by congress or state legislatures
  13. Ordinances
    Laws enacted by local governments covering areas not covered under state and federal laws
  14. Uniform Laws and Model Acts
    A given state statute may be based on a uniform law (e.g., the Uniform Commercial Code) or on a model act (e.g., the Model Business Corporations Act). 

    However, each state is free to depart from the uniform law or model act as it sees fit.
  15. Administrative Rules and Regulations
    promulgated by federal, state, and local regulatory agencies
  16. Common law
    • the body of judicial decisions that interpret and enforce any of the foregoing as well as those relationships among individuals or between individuals and their society which
    • are not subject to constitutional, statutory, or administrative law
    1.The United States Constitution takes precedence over

    2. federal statutory law, which takes precedence over

    3. a state constitution, which takes precedence over

    4. state statutory law, which takes precedence over

    • 5. a local ordinance, which takes precedence
    • over

    6. administrative rules and rulings, which take precedence over

    7. common law.
  18. Courts of Law
    empowered only to award wronged parties money or other valuable compensation for their injuries or other losses.
  19. Courts of Equity
    empowered to award any manner of non-monetary relief, such as ordering a person to do something (a.k.a. “specific performance”) or to cease doing something (a.k.a. “injunction”).
  20. Courts of Law and Equity in US
    In most of the United States the courts of law and equity have merged.  Nonetheless, American courts still recognize legal remedies and equitable remedies.
  21. Remedy
    The means given to a party to enforce a right or to compensate for another’s violation of a right.
  22. Stare Decisis
    The doctrine by which judges are obligated to follow precedents established within a particular jurisdiction.
  23. Precedent
    The authority afforded to a prior judicial decision by judges deciding subsequent disputes involving the same or similar facts and the same jurisdiction’s substantive law.
  24. Codified Statutes
    Statutes are typically collected and reported by subject matter.

    Codified statutes passed by Congress are reported in the United States Code, which has a number of “Titles,” roughly corresponding to major subject matter areas.

    Codified statutes passed by a state legislature are typically reported by subject in that state’s code (e.g., California Commercial Code).
  25. Plaintiff
    The party who filed a court action
  26. Defendant
    The party against whom the plaintiff filed its action
  27. Appellant/Petitioner
    The party challenging the trial court’s disposition of the action.
  28. Appellee/Respondent
    The other party to a disposition that has been appealed.
  29. Power of judicial review
    courts can decide whether the laws or actions of the executive branch and the legislative branch are constitutional.
  30. Marbury v. Madison (1803)
    • The U.S. Supreme Court preached that it is the duty of the courts to say what the law is.  So if the law were to be in opposition to the Constitution, it is the Court’s duty to determine which of these conflicting rules governs the case.  This is the very
    • essence of judicial duty.
  31. Jurisdiction
    The authority of a court to hear and decide a specific action.  Jurisdiction has many dimensions. To hear a case, a court must have jurisdiction over

    (1) the defendant or the property involved


    (2) the subject matter.
  32. Jurisdiction over Persons or Property
    • Persons or in personam:
    • The authority of a court to hear and decide a dispute involving the particular parties before it.  Personal jurisdiction is generally a geographic concept.  Courts have jurisdiction over persons or entities residing or doing business within a particular county, district, state, or in some cases, anywhere within the United States.

    **The key to whether a nonresident will be subject to a court’s jurisdiction is the quantity and nature of the nonresident’s contacts with the state within which the court sits.

    • Property or In Rem Jurisdiction:
    • Courts also have personal jurisdiction over disputed property located within the county, district, or state.  Ie - A court has in rem jurisdiction over property within its area.
  33. Long-arm statute
    • Dictates under what terms a nonresident person or entity, who would otherwise not be subject to the court’s jurisdiction, may
    • nonetheless be required to appear before the court.
  34. Jurisdiction over subject matter
    A court of general jurisdiction can decide virtually any type of case.  A court’s jurisdiction may be limited by the subject of a suit, the amount of money in controversy, or whether a proceeding is a trial or appeal.

    A court whose jurisdiction is limited by one or more of these factors is considered to have limited jurisdiction; otherwise, a court has general jurisdiction.
  35. Exclusive v. Concurrent Jurisdiction
    Exclusive: when cases can be tried only in federal courts or only in state courts.

    Concurrent: When both federal and state courts can hear a case. Examples:

    • Bankruptcy Courts: Federal courts that hear and decide matters relating to a person’s
    • or entity’s bankruptcy; and

    Probate Courts: State courts that handle matters relating to the transfer of a person’s assets and obligations after her death, as well as, in some jurisdictions, the affairs of minors and of persons lacking legally sufficient mental capacity.
  36. Jurisdiction of the Federal Courts
    • Federal Question Jurisdiction arises if a case involves an alleged violation of the U.S.
    • Constitution, federal statute or regulation, or a treaty between the U.S. and one or more foreign countries.

    Diversity Jurisdiction arises if:

    (1) the amount in controversy exceeds $75,000; and

    (2) the lawsuit is between

    a. citizens of different states,

    • For purposes of diversity jurisdiction, a corporation is a citizen of both:
    • (1) its state of incorporation, and
    • (2) the state of its principal place of business, if the two are not the same.

    b. a foreign country and citizens of one or more states, or

    • c. citizens of a state and citizens or subjects
    • of a foreign country.
  37. Venue
    • Concerned with the most appropriate location
    • for a trial and from which a jury will be selected.
  38. Standing to Sue
    • Standing is the interest (injury or threat) that
    • a plaintiff has in a case. An individual or entity must have a sufficient stake in the controversy before he, she, or it may bring suit
  39. Justiciable controversy
    • Whether standing exists will depend
    • in part on whether there is a justiciable
    • controversy – that is, a real and substantial controversy, not one that is moot, hypothetical, or academic.
  40. Trial Courts
    • ·        
    • Trial courts are where litigation begins.  Trial courts have either general jurisdiction – meaning that they are empowered to
    • consider any matter before them – or limited
    • jurisdiction – meaning that they are only empowered to hear certain types of
    • cases or cases in which the amount in controversy is above, below, or between,
    • specified bounds (e.g., small claims
    • courts and family law courts).
  41. Appellate Courts
    • ·        
    • Every state has at least one appellate court,
    • to which a litigant who was unsuccessful at the trial court may appeal for
    • relief.  Some states have intermediate
    • appellate courts (akin to the U.S. Courts of Appeals) which are subject to
    • review by the state’s supreme court, also known as the “court of last resort.”

    o  Appellate courts typically review only questions of law (what law governs a dispute), not questions of fact (what occurred in the dispute),

    • o  Decisions of a state’s court of last resort
    • are final unless they implicate the U.S. constitution – in which case they are
    • subject to review by the U.S. Supreme Court.
  42. U.S. District Courts
    • The federal equivalent of a state trial court
    • of general jurisdiction.  There is at least one federal district court in every state. Federal trial courts include the U.S. Tax Court and the U.S. Bankruptcy Court.
  43. U.S. Courts of Appeals
    • Appellate courts to which litigants in the
    • U.S. District Courts have an automatic right to appeal.
  44. U.S. Supreme Court
    • The “highest court in the land,” the U.S.
    • Supreme Court exercises discretionary review over all federal appellate courts,
    • as well as, state supreme and appellate courts.

    Most cases reach the U.S. Supreme Court on writ of certiorari, which requires that at least four out of the nine justices agree the case merits the Court’s review.
  45. Alternative Dispute Resolution (ADR)
    Options for resolving conflicts out of court. Primary reasons for choosing ADR are to save money and time.
  46. Negotiation
    • Parties come together informally, with
    • or without attorneys, to try to settle or resolve their differ­ences without involving independent third parties.
  47. Mediation
    • Using the services of a neutral third
    • party to assist negotiations and recommend a resolution of the parties’
    • dispute.  A mediator is often an expert
    • in a particular field. Mediation is non-adversarial and tends to reduce
    • antagonism.
  48. Arbitration
    Dispute resolution utilizing either a neutral third party or a panel of three persons chosen by the court or agreed to by the parties (or both).

    Arbitration can be either binding – in which case the arbitrator’s decision is legally binding – or nonbinding – in which case the arbitrator’s decision is merely advisory.

    1. The Arbitration Process

    • At an arbitration hearing, the parties make their arguments, present evidence, and
    • call and exam­ine witnesses, and the arbitrator makes a decision. The decision
    • is called an award, even if no money is involved.

    2. Arbitration Clauses

    Many contracts include an arbitration clause, which provides that any dispute arising out of the contract will be submitted to arbitration.  Courts enforce these clauses.
  49. International Dispute Resolution
    • To protect themselves, parties to international contracts
    • may include special clauses, including a forum-se­lection clause (stating which
    • jurisdiction will hear a dispute), a choice-of-law clause (stating which law
    • applies), and an arbitration clause (stating that a dispute must go first to
    • arbitration).
  50. Pre-suit considerations
    • Consulting with an Attorney: The first
    • step to take when contemplating a lawsuit, as well as when facing a lawsuit, is to consult with a qualified attorney.

    • Legal Fees: The anticipated expenses of
    • investigating and prosecuting or defending the case and the manner in which those fees will be paid.

    Fixed Fees: A flat rate for the attorney’s time and effort, typically excluding expenses for expert witnesses, depositions, etc.

    • Hourly Fees: A fee based on the attorney’s time expended on the matter, sometimes varying depending on whether that time is
    • spent researching, engaging in discovery, or before the court.

    Contingent Fees: Typically set as a percentage (or a declining percentage) of the damages recovered in the event of a successful outcome.

    Settlement Considerations: The limited time and money a client has to invest in a lawsuit, particularly when the remedy the client might recover is also limited, may suggest trying to resolve the dispute without filing suit or early in the litigation process.
  51. Pleadings
    • Written documents that inform each of the
    • parties of one another’s claims and defenses and specify the issues involved in the lawsuit.  The primary pleadings are:

    • 1. Plaintiff’s Complaint, which sets forth the claims asserted by the party seeking
    • affirmative relief.

    2. Defendant’s Answer, which:

    a. responds to the claims set forth in the Complaint and,

    • b. asserts affirmative defenses (reasons why the plaintiff’s claims fail or are limited as a
    • matter of law or equity), and,

    c. asserts counterclaims (claims for affirmative relief asserted by the defendant).

    • If the defendant does not answer within the
    • time allotted by the applicable rules, the plaintiff may seek a default judgment.

    3. If the defendant asserts a counterclaim, the plaintiff may file a Reply
    Once the plaintiff has filed her complaint or petition, she must have each defendant served with process – typically, a copy of the complaint and a summons from the court informing each defendant of his obligation to answer or otherwise appear within a specified time or risk default.

    • -A court may not exercise jurisdiction over a
    • defendant until it has proof that the defendant was properly served.

    • -While the acceptable means of service of
    • process vary depending on the court and the circumstances, generally:
    • --An individual defendant may be served at his residence or at his principal place of
    • business;

    --A corporate defendant may be served by serving an officer or registered agent, designated for the purpose of receiving service.
  53. Motion
    • A request for relief from the court prior to
    • the ultimate disposition of a lawsuit.
  54. Motion to Dismiss
    A motion seeking to terminate the lawsuit due to Plaintiff’s failure to comply with proper procedure or failure to state a justiciable claim – this must also generally be filed with or prior to Defendant’s Answer.
  55. Motion for Judgment on the Pleadings
    A motion by either party requesting the court to decide the case solely on the pleadings. 

    This motion may be granted only if there are no fact issues in dispute.
  56. Motion for Summary Judgment
    • A motion requesting the court to enter
    • judgment, based on the pleadings and discovery to date. 

    This motion may be granted only if there are no fact issues in dispute.
  57. Discovery
    • Depositions
    • Interrogatories
    • Requests for Admission
    • Requests for Documents, Objects, or Entry
    • Requests for Examination
    • Electronic Discovery
  58. Depositions
    Sworn testimony, recorded by a court reporter and often by videotape, of the parties and other key witnesses. 

    • Depositions are taken prior to trial, and are
    • often used to obtain the testimony of witnesses who cannot be compelled to
    • attend and testify at trial.
  59. Interrogatories
    • Written questions related to the subject
    • matter of the lawsuit that must be answered under oath.
  60. Requests for Admission
    • Questions to the responding party phrased in an “admit” or “deny” format, giving no opportunity for explanation, and binding
    • the responding party to its admissions.
  61. Requests for Documents, Objects, or Entry
    • Written requests either detailing the types of
    • documents and other things that the requesting party considers relevant to the
    • lawsuit or requesting permission to enter premises.
  62. Requests for Examination
    • When the physical or mental condition of a party is in question, the opposing party may seek a third-party physical or mental
    • examination.
  63. Electronic Discovery
    • The federal rules and most state rules now
    • allow for the parties to obtain electronic “data compilations.”
  64. Pretrial Conference
    • Prior to trial, a court will typically schedule
    • one or more conferences or hearings to resolve procedural matters and to narrow
    • the issues for trial.
  65. Pretrial Matters
    Pretrial Conference: Prior to trial, a court will typically schedule one or more conferences or hearings to resolve procedural matters and to narrow the issues for trial.

    Once the trial court has ruled on all pending motions, if one or more of plaintiff’s claims or defendant’s counterclaims has/have survived, the case will proceed to trial.

    Trial may be with or without a jury.  A trial without a jury is called a bench trial. In a bench trial, the trial judge is the arbiter of all questions of fact and of law.

    By contrast, in a jury trial, the judge decides questions of law, but the jury decides all questions of fact.

    • Jury Selection: In the case of a jury trial, the trial judge or the attorneys for the parties ask a panel of prospective jurors to answer a series of questions (a.k.a. voir dire) – most
    • of which may not have any apparent relationship to the lawsuit. The judge and attorneys will then remove certain members from the panel until a group of six or twelve jurors (depending on the court) is chosen.
  66. Evidentiary Matters
    • Since much of the trial is directed toward
    • proving or disproving facts, and facts are gathered from the evidence, it is important to understand a couple of basic concepts:

    • Relevance: Evidence is relevant if it tends to prove or disprove a disputed fact or to establish the likelihood of a disputed
    • fact. Even highly relevant evidence may be disallowed by the court if its probative value is outweighed by the prejudice it would likely cause to the opposing party’s case.

    • Hearsay: Any oral or written testimony given in court about a statement made by someone else is inadmissable. Courts recognize numerous exceptions to the rule against hearsay – indeed, most law students
    • spend the better part of a semester on that one subject.
    1. Opening Statements: Counsel are permitted to present to the jury an overview of their case and the reasons they believe their client should prevail. 

    2. Examination of Witnesses: The plaintiff, who has the burden of proving her (its) case, presents her witnesses first.

    • Direct Examination: Questioning
    • of a witness by counsel for the party who called the witness.

    Cross-Examination: Questioning of a witness by counsel for the opposing party.

    Re-Direct and Re-Cross: More of the same, typically limited in scope to issues raised by opposing counsel’s questioning.

    • 3. Motion for Judgment as a Matter of Law: A motion for the judge to take the decision out of the jury’s hands and direct a verdict
    • for the moving party because the non-moving party has failed to provide sufficient evidence to prevail on its claims.
    1. Closing Argument: After both sides have presented all of their witnesses and evidence and the judge has determined that the case should proceed to the jury, counsel for each party is permitted to summarize the evidence for the jury and argue why the evidence proves or disproves the plaintiff’s case.

    2. Jury Instructions: The judge instructs the jury on the issues they must decide and the law governing the case.
    • 1. Verdict: After deliberating the judge’s
    • instructions and the evidence, the jury renders a verdict setting forth its findings and the amount of damages, etc.

    • If the verdict includes a finding that one
    • party owes the other money damages, the jury will decide the amount of the award.

    2. Posttrial Motions: Motions asking the trial court to alter or disregard the jury’s verdict or to order a new trial.

    Motion for Judgment Notwithstanding the Verdict: A motion asking the court to enter judgment in favor of the moving party, despite the jury’s verdict in favor of the non-moving party.

    • Motion for New Trial: A motion asserting that the trial was so fundamentally flawed – because of error by the trial judge, newly discovered evidence, prejudice, or other reason(s) – that a new trial is required to
    • prevent a miscarriage of justice.

    • 3. If the losing party is unsuccessful in
    • persuading the trial court to grant any of its post-trial motions, the trial court will enter its judgment, based on the jury’s verdict.
    • Following entry of judgment, the losing party
    • may timely file an appeal, asking a
    • court with appellate jurisdiction over the trial court to review and set aside
    • the judgment.

    • What is filed with the appellate court?  While it varies from state to state and from
    • state to federal court, generally:

    1. a notice of appeal, evidencing the appellant’s intent to appeal the judgment or one or more rulings of the trial court;

    2. a record or transcript of the pleadings, motions, hearings, and trial before the trial court, and particularly the judgment and any other ruling by the trial court that is being challenged; and

    • 3. briefs outlining the legal arguments supporting the appellant’s request to set-aside the judgment and the appellee’s request that the appellate court let
    • the trial court judgment stand.

    Appellate courts generally do not rule on questions of fact unless the evidence is so overwhelming that no reasonable person could disagree.
    • Once all of the briefs are on file, the
    • appellate court will generally, though not always, schedule an oral argument at which counsel for the parties may briefly outline their positions and at which the court may ask counsel pointed questions to aid the court’s disposition of the appeal.

    • Based on the arguments raised in the briefs
    • and, if there is one, at oral argument, the appellate court may:

    1. affirm the trial court’s judgment or ruling,

    2. reverse the trial court’s judgment or ruling and remand the case for further proceedings in the trial court, or

    3. reverse the trial court’s judgment or ruling and render a new judgment or ruling without further proceedings by the trial court.

    • If the party that loses before the appellate
    • court chooses, it may appeal that intermediate appellate court’s ruling to the
    • jurisdiction’s supreme court or its equivalent, beginning a new round of briefing.
  72. Federal Government
    • A form of government where states form a union and the sovereign power is divided between the national government and the
    • various states.
  73. The Privileges and Immunities Clause
    Article IV of the U.S. Constitution provides that “Citizens of each State shall be entitled to all Privileges and Immunities of Citizens in the several States.”

    In other words, a state may not treat citizens of other states differently from citizens of its own state without a substantial reason.
  74. The Full Faith and Credit Clause
    • Article IV also requires the states to afford “Full Faith and Credit… to the public Acts, Records, and judicial Proceedings of every
    • other State.

    • ”As a consequence, rights established under
    • deeds, wills, contracts, and the like in one state must be recognized by other states.

    • Likewise, a judgment of a court of competent jurisdiction in one state must be recognized and enforced by the courts
    • of another state.
  75. Tri-Partite Government
    • The national government of the United States of America is composed of three separate branches, each of which acts as a check
    • on the others’ power
  76. The Executive Branch
    (i.e.,the President), which has the power to veto legislation passed by Congress and to appoint the members of the Judiciary
  77. The Legislative Branch
    • (i.e., Congress), which may override the President’s veto and which may define the
    • jurisdiction of the Judiciary and must confirm Judiciary appointees
  78. The Judicial Branch
    (i.e., the Supreme Court and the federal court system), which has the power to void the acts of the Executive and Legislative branches because they are unconstitutional
    • Article I, Section 8 of the U.S. Constitution empowers Congress “[t]o regulate Commerce with foreign nations, and among the
    • several States, and with the Indian Tribes.”

    • Since 1824, the Supreme Court has interpreted the Commerce Clause to permit Congress to regulate both interstate commerce (i.e., commerce between two or
    • more states) and intrastate commerce (i.e., commerce within a single state),

    as long as the intrastate commerce at issue “substantially affects” interstate commerce.

    • Congress’s power to regulate interstate commerce is not absolute.  Supreme Court decisions in 1995, 1997, and 2000 struck down parts or all of three federal laws on
    • the ground that Congress had exceeded scope of its Commerce Clause powers.
    • Police Powers: As part of their sovereign powers, states possess the power to regulate private activities in order to protect or promote public order, health, safety,
    • morals, and general welfare.

    • The “Dormant” Commerce Clause – Balancing the Commerce Clause with the States’ Police
    • Powers: When state regulations impinge on interstate commerce, courts must balance the state’s interest in the merits and purposes of the regulation against the burden that the regulation places on interstate commerce.  Generally speaking, state laws enacted pursuant to the state’s
    • police powers are presumed to be valid
    • notwithstanding their effect on interstate commerce; however,if the state law substantially interferes with interstate commerce, it will most likely be held
    • to violate the Commerce Clause (i.e.,
    • to be unconstitutional).
    Federal constitutional and statutory law and treaties supersede their state counterparts due to the Supremacy Clause, Article VI, Section 2 of the U.S. Constitution

    • This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made,
    • or which shall be made, under the Authority of the United States, shall be the Supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the
    • Contrary notwithstanding.

    Preemption: Federal law is said to preempt a conflicting state or local law, regulation, or ordinance iffederal law is so pervasive, comprehensive, or detailed that it leaves state and local law no room to supplement it, or federal law creates a federal regulatory agency that is empowered to enforce federal law.
  82. Taxing and spending powers
    • Taxing Power: Article I, Section 8 empowers Congress to “lay and collect Taxes . . ."
    • Generally speaking, as long as a proposed measure bears a reasonable relationship to revenue production, it will be deemed to fall within Congress’ taxing authority.

    • Uniformity of Taxes: Article I, Section 8 further provides that taxes “shall be
    • uniform throughout the United States.” 

    Therefore, Congress may not tax some states while not taxing others – though, certainly, some taxes may affect some states more than others.

    Spending Power: Article I, Section 8 also empowers Congress “to pay the Debts and provide for the common Defence and general welfare of the United States.”
  83. Tort Law
    • The law of torts is concerned with wrongful conduct by one person that causes injury to
    • another. 

    Tort is French for “wrong.”  For acts that cause physical injury or that interfere with physical se­curity and freedom of movement, tort law provides remedies, typi­cally damages (money).
    • A tort is a “civil” wrong, punishable by
    • compensating, or paying damages to,
    • the injured party, rather than a “criminal wrong,” punishable by paying a fine
    • to the government or being imprisoned.
  85. The Purpose of Tort Law
    The purpose is to provide remedies for the violation of protected interests, including personal safety, property, privacy, family relations, reputation, and dignity.
  86. Damages Available in Tort Actions
    1. Compensatory Damages: Compensatory damages compensate a person for the actual value of the plaintiff’s losses.

    a. Special damages cover quantifiable losses, such as medical expenses, lost wages, irreplace­able items, and damaged property.

    b. General damages are for non-monetary harm, such as pain and suffering, loss of reputation, and loss or impairment of mental or physical capacity.

    • 2. Punitive Damages: Punitive damages are intended to punish a wrongdoer and deter others from similar wrongdoing.  These are awarded only when wrongful conduct
    • is particularly egregious or reprehensible.
    A. Intentional Tort: A wrongful act committed knowingly and with the intent to commit the act (not necessarily with the intent to do harm).

    B. Unintentional Tort: A wrongful act committed without knowledge of its wrongfulness or without the intent to commit the act.

    C. Business Tort: Wrongful interference with another’s business rights.
    • Intentional torts involve acts that were intended or could be expected to bring about
    • consequences that are the basis of the tort. 

    A tortfeasor (one committing a tort) must intend to com­mit an act, the consequences of which interfere with the personal or business interests of another in a way not per­mitted by law.

    • A. Assault and Battery
    • B. False Imprisonment
    • C. Intentional Infliction of Emotional Distress
    • D. Defamation
    • E. Invasion of Privacy
    • F. Fraudulent Misrepresentation
  89. Assault and Battery
    • 1. Assault is an intentional act that creates in another person a rea­sonable appre­hension or fear of immediate harmful or
    • offensive contact. (e.g., pointing a gun at someone).

    • 2. Battery is an intentional and harmful or
    • offensive physi­cal contact.  Physical in­jury
    • need not occur. The reasonable person standard determines whether the conduct is offensive. (e.g., firing the gun).

    Compensation: A plaintiff may be compensated for emotional harm or loss of reputation resulting from a bat­tery, as well as for physical harm.
  90. Defenses to Assault and Battery
    a. Consent: If a person consents to an act of harm or damage, there may be no liability.

    b. Self-Defense: An individual who is defending his or her life or physical well-be­ing can claim self-defense.

    • c. Defense of Others: An individual can act
    • reasonably to protect others who are in real or apparent danger.

    • d. Defense of Property: Reasonable force may be used in attempting to remove intruders from one’s home, al­though force that is likely to cause death or great bodily injury can never be used just to protect
    • property.
  91. False Imprisonment
    • False imprisonment is the intentional
    • confinement or restraint of another person without justi­fication. Confinement
    • can be by phys­ical barrier, physical restraint, or threat of physical force.
    • The Defense of Probable Cause: In some states, a merchant’s security personnel are
    • justified in delaying suspected shoplifters if there is prob­able cause. The detention must be done in a reasonable man­ner and for only a reasonable time.
  92. Intentional Infliction of Emotional Distress
    • Infliction
    • of emotional distress is an
    • intentional act that amounts to extreme and outrageous conduct re­sulting in
    • severe emotional distress to another (a few states require physical symp­toms).  Repeated an­noyance, with threats (such as
    • extreme methods of debt collection), is one way to commit this tort.
  93. Defamation
    Anything published or publicly spoken that injures another’s character, reputation, or good name.

    a.      Slander: Defamation in oral form.

    b.     Libel: Defamation in written form.

    c.      The Publication Requirement: The speaker must have communicated the statement to persons other than the defamed party.

    • d.     Defamation Per Se: Common law recognizes four types of false utterances that constitute indefensible or unjustifiable
    • defamation:

    ·     that another has a loathsome communicable disease (e.g., a sexually-transmitted disease);

    ·     that another has committed improprieties while engaging in a profession or trade;

    • ·     that another has committed or has been
    • imprisoned for a serious crime.
  94. Defenses to Defamation
    -Truth: The statement is true.  It must be true in whole, not in part.

    -Privileged Speech

    • 1.       Privilege: The ability to act contrary to another person’s right without giving legal
    • redress for such acts.

    • 2.       Absolute Privilege: Statements made or actions taken in judicial and certain
    • legislative proceedings (e.g., statements made by attorneys during trial, statements made by legislators during floor debate) are privileged against any claim of wrongful conduct.

    • 3.       Qualified Privilege: In other situations, statements or actions made in good faith and, in the case of statements, made only to those who have a legitimate
    • interest in the statement, are privileged.

    • A.      Public Figures: We are referring to an
    • otherwise false and defamatory statement made about a public figure, made in a
    • public medium, and re­lated to a matter of gen­eral public interest.  These statements tend to be privileged unless they are made with actual malice.

    ·        To recover dam­ages, a public figure must prove a statement was made with actual malice:

    1.       knowledge of its falsity or

    2.       reckless disregard for the truth.
  95. Invasion of Privacy
    Four acts qualify as invasions of privacy:

    • a.       Appropriation: the use of a person’s name, picture, or other likeness for
    • commercial purposes without their permission;

    • ·        Right of Publicity: The common law of
    • many states protects an individual’s financial interest in using her or his identity for commercial gain.  Most states that recognize a right of publicity treat it as a property right that survives the individual for the benefit of her or his estate or heirs.

    • b.     Intrusion in an
    • individual’s affairs or seclusion
    • in an area in which the person has a reasonable
    • expectation of privacy;

    c.      Publication of information that places a person in false light; and

    d.     Public disclosure of private facts about an individual that an ordinary person would find objectionable.
  96. Fraudulent Misrepresentation
    • a.      Fraud: Intentional deceit, usually for
    • personal gain.  Actionable fraud consists
    • of the following elements:

    ·        A misstatement or omission of a material fact,

    • note: Mere puffery, or “seller’s talk,” will not give rise to a cause of action for fraud, because such claims involve opinions, not facts, and therefore cannot be justifiably
    • relied upon by a reasonable person.

    However, statements of opinion may give rise to a claim of fraud if the party expressing the opinion has a superior knowledge of the subject matter.

    ·        made knowingly or with reckless disregard for the truth,

    ·        and with the intention of deceiving another by inducing them to rely on the misrepresentation,

    ·        on which a reasonable person would justifiably rely to her detriment, and

    ·        on which the injured party did, in fact, rely to her detriment resulting in some harm to the innocent party.
  97. Business Torts
    • Torts involving wrongful interference with another’s business rights generally fall
    • into these two catego­ries:

    1. Wrongful Interference with a Contractual Relationship

    2. Interference with Business Relationship
  98. Wrongful Interference with a Contractual Relationship
    The tort of interference with contract requires proof of the following:

    1.      a valid contract exists between parties X and Y;

    2.      a third party, Z, knows that said contract exists; and

    3.      Z intentionally causes X or Y to breach the contract.
  99. Interference with Business Relationship
    • Interference with a prospective business relationship is also actionable, where:
    • 1.While no contract or other business relationship presently exists between X and Y, Z knows or has reason to believe that X and Y might enter into a business
    • relationship, by contract or otherwise; and

    2. Z intentionally interferes with X’s attempt to establish a business relationship with Y. Ex: If there are two yogurt stores in a mall, placing an employee of Store A in front of Store B to divert customers to Store A constitutes the tort of wrongful interference with a business relationship.
  100. Intentional Torts against Property
    • 1. Trespass to land
    • 2. Trespass to personal property
  101. Trespass to land
    • Entry onto, above, or below the surface of land without the owner’s permission or
    • legal authorization.

    1.       Any person who enters onto another’s property to commit an illegal act is deemed to have trespassed as a matter of law. 

    Otherwise, the owner or legal occupant of the real property must establish that

    ·        the trespasser ignored a posted “no trespassing”  sign (or comparable notice), or

    ·        the trespasser ignored the owner’s or legal occupant’s request to leave the property.

    2.       “Attractive Nuisance”: A landowner may be liable for injuries to children enticed to enter the property by, e.g., a swimming pool or an abandoned building.

    3.       Defense to Trespass: Trespass may be justified or excused if the trespasser can prove

    • -       Necessity: she was trying to rescue
    • another or save another’s life or property, or

    • -       License: she was invited, and entered
    • before the owner revoked the license.
  102. Trespass to Personal Property
    Taking or harming another’s personal property, in such a way as to interfere with the other person’s right to exclusive possession of his personal property, without the owner’s permission or legal authorization.

    • The focus of trespass is injury to the owner’s enjoyment of his personal property, not
    • injury to the property itself
  103. Negligence
    • Failing to exercise the standard of care that a reasonable person would exercise in
    • similar circumstances

    A.     In contrast to intentional torts, negligence:

    • 1.      requires no intent on the part of the
    • tortfeasor,

    2.      nor does it require that the tortfeasor know or believe the consequences that his act or omission may cause. 

    3.      Negligence merely requires that the tortfeasor’s act or omission create a risk of the consequences complained of by the injured party.
  104. Actionable negligence requires 4 elements
    • 1. the tortfeasor owed the plaintiff a duty of care
    • 2. which the tortfeasor breached,
    • 3. actually causing the plaintiff
    • 4. a legally recognizable injury
  105. Negligence: Duty of care
    • The duty of all persons to exercise reasonable care in their dealings with others.  A failure to comply with the duty of care requirement may consist of an act or
    • its omission.

    • ·        Reasonable Care: The degree of care expected of a hypothetical “reasonable person”; not necessarily how a reasonable person would act, rather how a reasonable
    • person should act.

    ·        Tort law presumes that the reasonable person will be, at a minimum: careful, conscientious, even tempered, and honest.

    ·        No Duty to Rescue:  If a person fails to aid a stranger in peril, that person would not be negligent under tort law, although most people would impose an ethical duty on the person to render aid.


    • 1.      Duties of Landowners: Landowners are expected to exercise reasonable care to
    • protect from harm those persons coming onto their property – even trespassers.

    • 2.      Business Invitees: Retailers and other business that explicitly or implicitly invite
    • persons to come onto their premises are expected to exercise reasonable care
    • toward these business invitees.

    3.      Obvious Risks: Some risks are so obvious that the owner need not warn even invitees

    • ·        Duties of Professionals: If an individual has knowledge, skill, or expertise
    • superior to that of the ordinary person, the individual is held to that standard of care expected of a reasonable person with the same or similar knowledge, skill, or expertise.  Failure to perform up to the standard of a “reasonable professional” can result in the professional being subject to liability for professional malpractice
  106. Negligence: Causation
    • a.      Causation in Fact: The breach of the duty of care must cause the injury—that is, “but for” the wrongful act, the injury
    • would not have occurred.

    b.     Proximate Cause: There must be a connection between the act and the injury strong enough to justify imposing liabil­ity.

    c.      A common and critical element of proximate cause is foreseeability – if the consequence of the act or omission or the victim who is harmed by the act or omission is unforeseeable, no proximate cause exists.
  107. Negligence: Legally Recognizable Injuries
    a.      The purpose of tort law is to compensate those who suffer legally recognizable injuries.  If no such injury occurs, no tort exists and there is nothing to compensate. 

    b.     To recover damages, a party must have suf­fered a loss, harm, wrong, or invasion of a protected interest.

    • ·        
    • Damages: Compensatory damages are the norm, but punitive damages may be awarded if a de­fendant was grossly negligent (acted with reckless disregard for the consequences).
  108. Negligence Defenses
    • 1. Assumption of Risk
    • 2. Contributory and Comparative Negligence
  109. Assumption of Risk
    • A plaintiff who voluntarily enters a risky situation, knowing the risk involved, may not
    • recover from the alleged tortfeasor.

    1.      Risk may be assumed by express agreement or be implied by the plaintiff’s knowledge and conduct.

    2.      Plaintiffs do not assume risks other than those inherent in the situation.

    3.      Assumption of risk will not arise in emergencies.

    4.      Assumption of risk will not arise when the plaintiff is a member of a statutorily-protected class of persons.
  110. Contributory and Comparative Negligence
    • 1.      Contributory Negligence: In some states, a plaintiff cannot recover for an injury if he or she was negligent.  No matter how insignificant the plaintiff’s own negligence is when compared to that of the defendant, in a minority of jurisdictions any negligence on the part of the plaintiff that contributed in any way to the injury of which plaintiff complains will bar the plaintiff from
    • recovering damages from defendant.

    2.      Comparative Negligence: More popular today than contributory negligence, a comparative negligence scheme permits plaintiff to recover only for the percentage of his or her injury or loss that was not caused by plaintiff’s own negligence. The plaintiff’s and the defendant’s negli­gence is com­pared and liability pro­rated.

    • 3.      “50% Caps” – Some jurisdictions further refuse to permit a negligent plaintiff
    • from recovering any damages if the plaintiff is responsible for more than 50% of his or her own injury or loss.
    • A.     “Good Samaritan” Statutes: Many states have passed legislation preventing those who are aided voluntarily from then suing the person who rendered the
    • assistance.


    B.     “Dram Shop” Liability: Many jurisdictions hold that a business, and in some jurisdictions an individual, that served alcoholic beverages to a person after he or she arrived intoxicated or became intoxicated is liable for any injuries caused by the intoxicated patron or guest.
    • Negligence Per Se: An act or omission in violation of a statutory duty or obligation.  Negligence per se often arises where the
    • tortfeasor both violates a criminal statute or ordinance and causes injury to another party.


    B.     The plaintiff must prove that:

    • 1.      the statute or ordinance clearly sets out what standard of conduct is expected, when it is expected, and of whom it is
    • expected,

    • 2.      the plaintiff is in the class of persons
    • intended to be protected by the statute or ordinance, and

    3.      the statute or ordinance was intended to prevent the type of injury that the plaintiff suffered as a result of the defendant’s wrongful act.
  113. Strict Liability
    Strict Liability: Liability regardless of fault.  Among others, defendants whose activities are abnormally dangerous or involve dangerous animals are strictly liable for any harm caused.

    • Abnormally Dangerous Activities: Some
    • activities are so inherently dangerous that they give rise to liability without regard to fault because the activity

    1.      involves serious potential harm to persons or property,

    2.      involves a high degree of risk that cannot be completely guarded against by the exercise of reasonable care, or

    3.      is not commonly performed in the community or under the circumstances.


    Animals: A person who keeps a wild animal is strictly liable for any harm the animal inflicts; whereas, the owner of a domestic animal is only strictly liable if she knew or should have known that the animal was dangerous or had the propensity to harm others.
Card Set:
Business Law I Midterm Set
2013-03-08 19:09:24
Business Law

Set of review cards for Brooklyn College Business Law I course midterm.
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