Business Law Final Exam Study Guide PDF

BUSINESS LAW FINAL EXAM STUDY GUIDE 1. Minimum wage a. Department of Labor Regulations AGE (in years) OCCUPATION Less than 14 Newspaper deliverers 14-15 Non-hazardous jo...

BUSINESS LAW FINAL EXAM STUDY GUIDE 1. Minimum wage a. Department of Labor Regulations AGE (in years) OCCUPATION Less than 14 Newspaper deliverers 14-15 Non-hazardous jobs – limited hours 16-17 Non-hazardous jobs – unlimited hours 18 and above Any job b. Minimum Wage and Overtime Pay (only works for per-hour payments) - employees should be paid the federal minimum wage for all hours worked - students and apprentices can be paid less than the minimum wage - employees should be paid overtime pay of one-and-a-half times their regular pay for each hour worked over 40 hours that week c. Exceptions from Minimum Wage and Overtime Pay Requirements - white-Collar Workers – the FLSA requires that white-collar workers be paid overtime pay unless they are explicitly made exempt from the requirement - categories of white-collar workers who do not have to be paid overtime include: executive employee administrative employees learned professionals creative professional highly compensated employees computer employees outside sales representatives teachers - job title and employees’ duties: job titles do not establish exempt status. A fancy title doesn’t mean an employer doesn’t have to pay their employees overtime. 2. Federal statutes - laws passed by the United States Congress that the President usually approves a. Civil Rights Act – prohibits discrimination based on race, color, religion, sex, or national origin in various areas such as employment and public accommodation b. Voting Rights Act – aims to overcome legal barriers that prevented African Americans from exercising their right to vote c. Fair Labor Standards Act – establishes minimum wage, overtime pay, and child labor standards d. Family and Medical Leave Act – grants eligible employees unpaid leave for specific family and medical reasons while maintaining job protection e. Uniform Computer Information Transactions Act (UCITA) – a model act that establishes uniform legal rules for the formation and enforcement of electronic contracts and licenses 3. US Constitution - 1787 – Constitutional Convention to strengthen the Fed. Government, and after debate, the US Constitution was enacted  - 1788 – States’ ratification of the US Constitution was completed - there are only 27 Amendments in the Constitution since it’s a well-written document and it’s very complex to make an Amendment - Bill of Rights – 10 first Amendments in the Constitution - the US Constitution serves two major functions it creates the three branches of Federal government and allocates powers to these branches it protects individual rights by limiting the government’s ability to restrict those rights a. The Constitution - is the supreme law of the land - any law that conflicts with it is unconstitutional and unenforceable - establishes a structure of the federal government: legislative branch (write, and enact law) executive branch (President, enforces the laws) judicial branch (Supreme Court) – interprets and applies laws 4. Police Powers - the state did NOT delegate all power to regulate business to the Federal government - police power permits states and local governments to enact laws to protect or promote the public health, safety, morals, and welfare - states retained the power to regulate intrastate and interstate commerce within the borders - food and drug regulations, environmental preservation laws, and workplace safety laws 5. US Legal System - the English legal system of law was adopted as a system of jurisprudence in early American colonies - principles announced in cases became precedent for later judges deciding similar cases a. State court system - Limited jurisdiction trial courts (e.g., traffic courts, juvenile courts, justice of the peace courts, probate courts, family courts, and courts that hear misdemeanor cases) When you get a ticket, divorce, misdemeanor (not important criminal cases) *Small claims courts: hear civil cases involving small dollar amounts ($5,000 or less), you don’t need a lawyer - General jurisdiction trial courts Hear cases that are not within the jurisdiction of limited-jurisdiction trial courts (such as felonies or civil cases that include a dollar amount of more than $5000 - Appellate courts – hear appeals from the above courts - Highest state court (State Supreme Court)  The function of the HSC is to hear appeals from intermediate appellate state courts and certain trial courts Decisions of the state supreme court are final unless there is something super important Death penalty cases involving U.S. Constitutional violations are often cases that are appealed to SCOTUS b. Federal court system - the US district court (94 of them) - the US court of appeal - SCOTUS 6. Federal Law - Art III, section 2 of the Constitution set forth the jurisdiction of Federal Courts – they have limited jurisdiction a. Federal question (FQ) cases arise under the violation of: - the U.S. Constitution - treaties - federal statutes and regulations - no dollar-amount requirements on these cases b. Diversity of citizenship - citizens of different states or citizens of a state and a citizen of a foreign country and the dollar amount of controversy must exceed at least $75,000 - we have the Federal Courts because the Constitution states that they need to be created 7. Contracts - a promise or a set of promises that the law will enforce. If someone breaks the promise, the law provides. Solution or requires them to fulfill their obligation - parties voluntarily enter into contracts - terms of the contract become private law between the parties - parties to a contract (at least two parties): offeror – party who makes an offer to enter into a contract offeree – party to whom an offer is made - a contract is created when the offeree accepts the offer - for a valid contract, we need 4 elements: agreement consideration contractual capacity lawful object - void contract – a contract that has no legal effect, neither party is obligated to perform nor can enforce the contract - voidable contract one or both parties have the option to void their contractual obligations if a contract is voided, both parties are released from their contractual obligations 8. Sources of contract in the United States a. Common law of contracts - contract law developed primarily by state courts b. Uniform Commercial Code (UCC) - comprehensive statutory scheme that includes laws that cover aspects of commercial transactions - the UCC has been adopted, in whole or in part, by every state, and takes precedence over common law - Article 2 UCC: deals with sales of goods (everything you can touch and move) - Article 2A UCC: deals with leases of goods if you buy a car, you get the car and the title (possession and right to do whatever you want with the car) when you lease (rent), you get just the car c. Restatement of the Law of Contracts - compilation of model contract law principles drafted by legal scholars - restatement is not a law - lawyers and judges often refer to it for guidance in contract disputes because of its stature 9. Brown v. Board of Education In this case, the US Supreme Court ruled unanimously that racial segregation in public schools violated the Fourteenth Amendment to the Constitution, which prohibits the states from denying equal protection of the laws to any person within their jurisdictions. The decision declared that separate educational facilities for white and African American students were inherently unequal. Separating children in public schools based on their race was unconstitutional. The plaintiff is the party that initiates a legal action against another party, known as the defendant. 10. Fisher v. University of Texas The Court held that the race-conscious admissions program at the University of Texas did not violate the Equal Protection Clause. The Court stated that the university had met the “strict scrutiny” requirements by showing that its use of race was carefully tailored to achieve diversity in education. Justice Kennedy disproved Abigail Fisher’s arguments against the University of Texas because schools are not allowed to consider race in the admission process just to achieve a given number of students from minority groups. They are rather allowed to consider race since having a diverse student body (different experiences and backgrounds) also offers educational benefits for everyone. 11. Negligence - there are three categories of torts: intentional torts, unintentional torts (negligence), and strict liability a. Intentional torts – wrongful civil acts done on purpose - assault - battery - false imprisonment  - shoplifting - misappropriation of the right to publicity = tort of appropriation - invasion of the right to privacy - defamation of character b. Unintentional torts (negligence) - omission to do something that a reasonable person would do, or doing something that a prudent and reasonable person would not do c. Strict liability = liability without fault – a legal rule where a person or company is held responsible for their actions or products, even if they didn’t act negligently or intend to cause harm. This often applies in cases like defective products or dangerous activities 12. Statute of Fraud a. intended to ensure that the terms of important contracts are not forgotten, misunderstood, or fabricated b. requires certain types of contracts to be in writing - contracts involving interests in real property/real estate - contracts that by their own terms cannot possibly be performed within one year - collateral contracts in which a person promises to answer for the debt or duty of another - promises made in consideration of marriage - contracts for the sale of goods for $500 or more - contracts for the lease of goods with payments of $1,000 or more c. exceptions to the SOF - the part performance doctrine - the doctrine of promissory estoppel 13. Parol Evidence Rule a. Parol evidence – any oral or written words outside the four corners of a written contract b. Parol Evidence Rule - If a written contract is a complete and final statement of the parties’ agreement, any prior or contemporaneous oral or written statements that alter, contradict, or are in addition to the terms of the written contract are inadmissible in court regarding a dispute over the contract c. Exceptions to the Parol Evidence Rule - parol evidence rule may be admitted in court if it: shows that a contract is void or voidable explains ambiguous language concerns about a prior course of dealing or course of performance between the parties or a usage of trade fills in the gaps in a contract corrects an obvious clerical or typographical error 14. UCC, Art. 2, 2A, and 3 a. UCC – a model act that includes comprehensive laws that cover most aspects of commercial transactions  - all the states have enacted all or part of the UCC as statutes, except for Louisiana, since they follow French Civil Law, not English Common Law - Article 2 (sales) and Article 2A (leases) of the UCC intended to provide clear, east-to-apply rules that place the risk of loss of the goods on the party most able either to bear the risk or insure against it (most often it happens during private sales, like garage sales) b. Article 2 - governs the sales of goods - contracts for the provision of services, including legal, medical, and dentist services, are NOT covered by Article 2 - mixed sales – involves the provision of a service and a good in the same transactions - Article 2 applies to mixed sales only if the goods are predominantly part of the transaction (if the good is more expensive than the service, then we can apply Article 2) for example, a dentist places a crown on a patient’s tooth. Although the crown is good, the predominant part of the transaction is the provision of services by the dentist. Therefore, the UCC would not apply to the transaction. general rule – whichever has the highest dollar value is what is the predominant aspect of the sale c. Article 2A - governs the lease of goods - Lease – transfer of right to possession and use of named goods for a set term, in return for certain consideration - Lessor – a person who transfers the right of possession and use of goods under a lease - Lessee – a person who acquires the right to possession and use of goods under a lease d. UCC and the Statue of Fraud - requires all contracts for the sale of goods costing $500 or more and lease contracts involving payments of $1,000 or more to be in writing contracts do not have to be in writing if they are for (oral contracts are valid for the following): o specially manufactured goods - Parol Evidence rule – when you have a written sales or lease contract that’s meant to be the final agreement between the parties, you generally cannot use outside evidence to contradict what’s written in it. this includes prior oral or written agreement made before the final contract was written oral agreements made at the same time as the final written contract e. Article 3 - establishes rules for the creation of, transfer of, enforcement of, and liability on negotiable instruments - to qualify as a negotiable instrument, a document must meet the requirements established by Revised Article 3 of UCC 15. Type of employment contracts a. Term employment - it’s an employee who has an employment contract with an employer for a stated period - if a term employee is fired before the term has expired and without cause, the employer is liable for wrongful discharge b. Employment at-will - an employee who does not have a term contract and can be fired or quit at any time without cause - an ongoing employment relationship which may be terminated between the parties for no cause, any cause, or cause - an employer is not required to show cause to terminate the employee - exceptions to at-will employment Labor union exception – federal and state statutes restrict employers’ ability to discharge employees who are union members protected by labor laws and collective bargaining agreements Public policy exception – employees cannot be fired for violations of public policy (i.e., refusing to do something unlawful). For example, if you’ve been selected as a member of a jury, your employer cannot fire you. Statutory exception – can’t fire an employee violating federal and state statutes. Employers from effusing to hire or not promote employees because of their race, religion, national origin, gender, age, sex, sexual orientation c. Worker’s compensation - compensation paid to workers and their families when workers are injured in connection with their jobs 16. Type of visas - B-1 visa issued to persons seeking temporary entry into the U.S. for business purposes - B-2 visa issued to persons seeking temporary entry to the U.S. for tourism and nonbusiness purposes - F-1 visa issued to persons wanting to study at colleges and universities and English language programs in the U.S. - H-1B visa Foreign Guest Worker Visa: these visas allow foreign nationals who are skilled in specialty occupations to work in the U.S this is a non-immigration visa these visas have a three-year duration with a renewal possibility for another three years additional extensions are permitted in addition and the employee may sponsor the foreigner for a lawful permanent residency and ultimately, for U.S. citizenship - H-2A Temporary Agricultural Worker Visa: allows U.S. employers to employ foreign nationals to perform agricultural work - H-2B Temporary Nonagricultural Worker Visa: allows U.S. employers to employ foreign nationals to perform nonagricultural work (summer destinations, ski resorts)  - EB-1 Extraordinary Ability Visa: allows U.S. employers to employ foreign nationals who possess extraordinary ability for certain types of employment - EB-5 Investor Visa: permits a foreigner to come to the U.S. and to invest a minimum of $1,000,000 into a U.S business the business must create or preserve 10 full-time jobs and meet other financial goals business must be open for two years 17. Negotiable instruments (important money substitutes) a. Functions of negotiable instruments - substitute of money - act as a credit device – buying things on credit - act as a record-keeping device – you can track if someone steals your check b. Types of orders to pay - draft - check Order to pay Parties Description Draft Drawer Person who issues a draft Drawee Person who owes money to a drawer; person who is ordered to pay a draft and accepts the draft Payee Person to whom a draft is made payable Check Drawer Owner of a checking account at a financial institution; person who issues a check Drawee Financial institution where drawer’s checking account is located; party who is ordered to pay a check Payee Person to whom a check is made payable c. Types of promises to pay - promissory note (PN) is an unconditional written promise by a party - certificate of deposit is a special form of note that is created when a depositor (payee) deposits money with a financial institution (maker) in exchange for a promise from the bank to pay back the deposited sum plus interest at the set time bank is the borrower (the maker of a CD) depositor is the lender (the payee of the CD) it’s a two-part instrument small CD’s – under $100K, and jumbo CD’s - $100K or more Promise to pay Parties Description Promissory Maker Party who issues a promissory note; this is usually the borrower note Payee Party to whom a promissory note is made payable; this is usually the lender Certificate of Maker Financial institution that issues a CD deposit (CD) Payee Party to whom a CD is made payable; this is usually the depositor d. Requirements for creating negotiable instruments - be in writing  permanency requirement – they must be in a permanent state, such as written on ordinary paper (preprinted form, but typewritten and handwritten are also acceptable). Not ok to have a promissory note written on tissue paper - be signed by a maker or a drawer - be an unconditional promise or order to pay - state a fixed amount of money - not required any undertaking in addition to the payment of money - be payable on demand or at a definite time - be payable to order or a bearer e. Nonnegotiable contract - if an order of promise to pay does not meet one of the previously discussed requirements of negotiability, it is a nonnegotiable contract and is not subject to the provisions of UCC Article 3 - a nonnegotiable contract is not rendered either non-transferable or unenforceable - a nonnegotiable contract can be enforced under normal contract law - if the maker or a drawer of a nonnegotiable contract fails to pay it, the holder of the contract can sue the nonperforming party for breach of contract 18. Breach of contract – a situation that occurs if one or both parties do not perform their duties as specified in the contract 19. Strict performance = complete performance – a situation in which a party to a contract renders performance exactly as required by the contract. Complete performance discharges that party’s obligations under the contract - A fully performed contract is called an executed contract 20. Will and requirements for making a will a. Will – declaration of how one wants his or her property to be distributed on death - transfer property upon death (if one dies intestate, your property is distributed according to the state statute) - testator – is a person who makes a will - beneficiary of a will - b. Requirements for making a will - testamentary capacity – the person who writes the will is required to have been of legal age and sound mind when the will was made - writing – wills are required to be in writing to be valid - testator’s signature – the testator’s signature is required to appear at the end of the will - attestation – only mentally competent witnesses can attest to a formal will 21. Special types of will a. holographic will – entirely handwritten and signed by the testator b. nuncupative (dying declarations or deathbed) will – oral will that is made before the witnesses during the testator’s last illness - it’s only valid in the war zone/armed conflict and for the members of the army 22. Probate = settlement of the estate - probate – process of a deceased’s property being collected, debts and taxes being paid, and the remainder of the estate being distributed - it is governed by the state statute and usually administered through a probate court - a personal representative is appointed to handle the will, either by the court or by the testator naming an executor or executrix in the will - if you die intestate (without the will), the court appoints an administrator or an administratrix to handle your estate 23. Trusts: Irrevocable trust and Revocable trust - is a legal arrangement in which a settlor, trustor, or transferor delivers and transfers property to a trustee to hold for the benefit of a beneficiary - trust can be created during the lifetime of a trustor and become effective while they are still alive or at their demise - the trustee collects money owed to the trust, handles investments of the trust monies, and makes distributions to the beneficiary - created to avoid going to the probate court a. revocable trust and living trust - can be modified after they are created - are easier to set up than irrevocable trust - because the owner retains such a level of control, the assets they put into it are not shielded from creditors the way they are in an irrevocable trust - if they are sued, the trust assets can be ordered liquidated to satisfy any judgment put forth - if the owner of this trust dies, the assets held in the trust are also subject to state and federal estate taxes - a living trust lets you avoid probate because assets are owned by the trust b. irrevocable Trust - describes a trust that cannot be modified after it is created without the beneficiaries’ consent - cannot be modified after they are created; or at least they are very difficult to modify - main reason to select an irrevocable trust trust structure is taxes (the money put on this trust is not subject to estate tax upon death) - it’s protected from creditors - offer tax-shelter benefits that revocable trusts do not - may be good for individuals whose jobs may put them at higher risk of a lawsuit - you avoid going to the probate court - inter vivos trust – these trusts that are created and the assets distributed while the settlor is alive - testamentary trust – these trusts are created by will and executed after death. You omit to go to the probate court, and it gives you privacy because the will is public 24. Undue influence - wills will be declared invalid if they are the result of undue influence - one person takes advantage of another person’s mental, emotional, or physical weakness and unduly persuades that person to make a will - persuasion by the wrongdoer is required to overcome the free will of the testator 25. Living will - the Supreme Court has determined that the right to refuse medical treatment is a personal liberty protected by the Due Process Clause - states which life-saving measures the signor does and does not want