Honors Business Law Fall 2024 Study Guide PDF

Page 1 HONORS BUSINESS LAW FALL SEMESTER STUDY GUIDE - 2024 MRS. OGDEN CHAPTER 1: LAWS AND THEIR ETHICAL FOUNDATION Laws are: enforceable rules of conduct in a society, typically reflect the culture & circumst...

Page 1 HONORS BUSINESS LAW FALL SEMESTER STUDY GUIDE - 2024 MRS. OGDEN CHAPTER 1: LAWS AND THEIR ETHICAL FOUNDATION Laws are: enforceable rules of conduct in a society, typically reflect the culture & circumstances that create them Codes are: laws may be grouped into an organized form known as a code Common Law versus Positive Law (1) Common law: law based on the current standards or customs of the people 2. Positive law: laws set down by a sovereign or other central authority to prevent disputes & wrongs from occurring in the first place Equity is: an alternative to common law An injunction: stops something from being done Stare Decisis: A doctrine requiring lower courts to adhere to existing case law in making decisions. Four Sources of Law: Constitutions: highest source of law; U.S. Constitution is “the supreme law of the land” Statutes: must be constitutional to be valid; can be reviewed to see whether law exceeded scope of powers of body that enacted it Case law: case law decision invalidating statute is not always the end of the issue; legislative body can rewrite Administrative Regulations: can be reviewed by courts to determine whether they are constitutional Conflicts in Laws Supremacy rules hold that: (1) The Constitution, federal laws, and treaties are the “supreme Law of the Land” (2) State courts are required to follow the Constitution and federal laws (3) State constitutions are subordinate to the Constitution and federal laws  Page 2 Constitutions and Validity Constitutions are the highest sources of law, and the federal constitution is the “supreme law of the land”. This means that any federal, state or local statute, case law or administrative decision is not valid if it conflicts with the federal Constitution. Within each state’s legal framework, the state constitution is supreme to all other state laws. When any type of law is declared invalid by a state or federal court because it conflicts with a constitution, it is said to be unconstitutional The people have the power to amend constitutions if they disagree with the courts’ interpretations Statutes and validity Statutes and ordinances must be constitutional to be valid. Statutes and ordinances may be examined to see whether the law’s enacted exceeded the scope of the powers of the body that authored it. Case law and Validity A case law decision by a court holding a statute invalid is not always the end of the issue. A legislative body has the power to nullify a court’s interpretation of a statute or ordinance by rewriting the statute. Administrative agencies can do the same with their regulations, when challenged. Administrative Regulations and Validity (same as Statutes above) Civil and Criminal laws When the private legal rights of an individual are violated, the matter is governed by civil law. Police do not get involved. If a defendant is found guilty, he/she is liable and must pay money damages. When a person is injured, it’s also civil law, called torts. A crime is an offense against society rather than individuals. It disrupts the stable environment that we all depend on to make civilization work. The government prosecutes people who are alleged to commit crimes. If they are found guilty they are convicted, and may have to pay a fine, be imprisoned or executed. Sometimes when a crime occurs there are private injuries as well. A result may be both a crime and a civil offense. Procedural and Substantive Law Procedural law deals with methods of enforcing legal rights and duties Substantive Law defines legal rights and duties Business Law  Page 3 Business law covers rules that apply to business situations and transactions. Business law is mainly concerned with civil law, especially contracts. Commercial torts are also business law. Business activities are at times governed by criminal law Uniform Business Laws The growth of interstate commerce has made uniformity in business laws more important. Therefore, sets of model codes have been written and offered to the States for adoption in place of their current statutes in those areas. Example is the UCC. Civil disobedience is: open, peaceful, violation of a law to protest its alleged, or supposed injustice CHAPTER TWO: CONSTITUTIONAL RIGHTS Bill of Rights: the first ten amendments to the Constitution. Adopted to ensure that U.S. citizens would enjoy human rights. proclaimed in the Declaration of Independence 1stAmendment: Freedom of religion, speech, press, assemble 4th Amendment: freedom from unreasonable searches & seizures; warrants issued upon probable cause 5th Amendment: indictment by Grand jury; double jeopardy; self incrimination; due process Division and Balance of Governmental Powers: Legislative Branch: makes the laws Executive Branch: headed by the President and V.P Judicial Branch: headed by SCOTUS (Supreme Court of the United States) Cyberlaw is: law that governs the use of computers in e-commerce and, more generally, the Internet Long-arm statutes are: state laws that allow a court to exercise personal jurisdiction over a non-resident defendant if the defendant has a sufficient connection to the state Jurisdiction can only be established against a non-resident when: (1) The defendant has systematic and continuous activity within the court’s jurisdiction (2) The defendant has a cause of action arising from that activity (3) The defendant's contacts with the court's jurisdiction are such that maintaining the suit doesn’t offend traditional notions of fair play and substantial justice  Page 4 CHAPTER THREE: COURT SYSTEMS 4 Methods of Dispute Resolution: Litigation: to allow a court to resolve their disputes Mediation: an independent 3rd party that develops a solution acceptable to both sides oth dispute Arbitration: holds an informal hearing to determine what happened Negotiation: parties reach settlement/resolve dispute themselves Other court terminology – DEFINE: Trial court: the court in which a dispute is first heard Verdict: decision in the case Original jurisdiction: the power to make the initial decisions of fact & law Bailiffs: summon witnesses (state) Transcript: verbatim record of what went on at trial Appellate court: reviews the decision of lower courts when there’s a claim of an error of law was made at the lower level Panel of judges/justices at both state and federal levels **Both the Federal and State court systems have 3 levels of courts** The Federal Court System The Federal District Court is the lowest level of the federal system, it’s the trial level of the federal system - decides issues of fact/law In general federal district courts have jurisdiction over the following cases: 1. federal questions: cases that arise under the Constitution, U.S. law, and U.S. treaties; AND original and general jurisdiction 2. diversity jurisdiction: lawsuits between citizens of different states, between a U.S. citizen and foreign nation, or between a U.S. citizen & a citizen of a foreign nation and the amount in controversy exceeds $75,000 The Federal Appellate Courts have appellate jurisdiction over federal district courts. So, if a decision made in the federal district court is appealed, the appeal is heard in the federal appellate court. Appellate courts decide issues of law only.  Page 5 The U.S. Supreme Court can hear cases appealed from either the Federal appellate courts, or from state Supreme Courts. However, one wants their case heard by the U.S. The Supreme Court must file a petition for a writ of certiorari asking the U.S. Supreme Court to hear the case. State Court Systems State Trial Court is the first level, where the trial occurs County court hear small civil claims, traffic and misdemeanor criminal cases Associate circuit courts hear civil claims involving $25,000 or more and felony cases District courts of appeal hear appeals from the State trial courts The supreme court hear appeals from the state appellate courts Juvenile Courts hear cases involving crimes committed by minor Probate Courts hear cases involving wills and estates Family courts Courts hear cases involving marriage, divorce, adoption CHAPTER FIVE: CIVIL LAW AND PROCEDURE Private Injuries vs. Public Offenses A crime is an offense against society, a public wrong. A tort in contrast is: offense against individual Elements of a Tort: 1. Duty 2. Breach 3. Injury 4. Cause The duties created by tort law: 1. the duty not to injure another (includes person, property, reputation, and privacy) 2. duty not to interfere with the property rights of others (ex: trespassing on land) 3. duty not to interfere with the economic rights of others (right to contract) Violations of the Duty (AKA “Breach”) a violation (or breach) of the duty must be proven before the injured party can collect damages 1. intentional torts: must show defendant intended to inflict harm  Page 6 2. negligence: intent not required; only must show that harm occurred as a result of neglect or carelessness of defendant 3. strict liability: need not show intent or negligence. liability is imposed because person acted in a certain, extremely hazardous way Vicarious liability is: when one person is liable for the actionable conduct of another Intentional Torts, Negligence, Strict Liability INTENTIONAL TORTS 1. ASSAULT is: when one person intentionally puts another in reasonable fear of an offensive or harmful touching 2. BATTERY is: the intentional harmful or offensive touching of another Defenses to Battery: (1) Not intentional; (2) Self defense; (3) Consent 3. FALSE IMPRISONMENT is: the intentional confinement of a person against the person’s will and without lawful privilege. Defenses to false Imprisonment: (1) Consent; (2) Lawful privilege 4. DEFAMATION is: a false statement that injures a person’s reputation or good name. When Plaintiff is a celebrity or public official, ____________ must also be proven Slander: spoken defamation Libel: written defamation 5. INVASION OF PRIVACY is: the uninvited intrusion into an individual’s personal relationships & activities in a way likely to cause shame or mental suffering in an ordinary person 6. TRESPASS TO LAND is: entry onto the property of another without the owner’s consent 7. CONVERSION is: occurs when property is stolen, destroyed, or used in a manner inconsistent with the owner’s rights 8. FRAUD is: there is an intentional or recklessly made misrepresentation of an existing important fact Tort is when a party fails to conform to a standard of care or act reasonably and causes harm  Page 7 NEGLIGENCE is No intent element must be proven, only carelessness. Professionals and skilled tradespersons are held to a higher degree of care in their work. If a child undertakes an adult activity, they may be held to the same standard of care imposed on an adult. Defenses to negligence: (1) Comparative negligence; (2) Assumption of the risk STRICT LIABILITY Proof of both the activity and the injury substitutes for proof of a violation of a duty. Engaging in abnormally dangerous activities gives rise to strict liability. Ownership of dangerous animals also subjects you to strict liability. Civil Procedure Remedies available in a civil Suit: Injunction: a court order for a person to do or not do a particular act Damages: monetary award by the court to a person who has suffered loss or injury because of the act or omission of another Compensatory: meant to place the injured party in the position he or she was in prior to the injury loss Punitive: generally only awarded in Civil damages can be collected through a writ of execution if the defendant fails to pay Trial Process In both trial and appellate courts, the judge decides issues of law; in a trial, the jury decides issues of fact. The plaintiff is the person bringing forward the lawsuit The defendant is the person being sued Evidence is anything that the judges allows to be presented in trial that tends to prove or disprove the alleged facts Testimony consists of statements made by witnesses A witness is someone who has personal knowledge of the facts A subpoena is a written order by the judge commanding a witness to appear and give testimony. The verdict is the jury’s decision  Page 8 CHAPTER SIX: OFFER AND ACCEPTANCE Contract: agreements between 2 or more parties that create obligations 6 Major requirements that must be satisfied in order to have a valid Contract: 1. offer and acceptance 2. genuine assent 3. legality 4. consideration 5. capacity 6. proper form **only some agreements must be in writing, you can still have a legally enforceable oral contract Requirements of a Valid Offer: 1. Contractual intent must be present in the offer Words spoken in jest are not treated as an offer if a reasonable person would not interpret it as an offer. Offers made in anger or terror are not legally enforceable. Preliminary negotiations are not seen by the law as an intent to contract. Advertisements are invitations to negotiate. Social agreements are not contractual obligations. 2. the offer must be communicated to the offeree A person who is not the intended offeree cannot accept the offer. Nor can a person accept an offer without knowing it has been made. 3. the essential terms of the offer must be clear At a minimum, nearly all offers must identify the subject matter TERMINATION OF OFFERS How Offers Can be Ended: 1. time stated in offer 2. destruction of subject matter 3. death/insanity of either party 4. counteroffer 5. rejection by offeree  Page 9 6. revocation by offeror 7. reasonable length of time ACCEPTANCES - affirmative response necessary to form a legal K (no silence as acceptance) Requirements for a Valid Acceptance: 1. come from offeree 2. match terms in offer 3. must be communicated to offeror Bilateral contract is formed by the mutual exchange of legally binding promises Unilateral contract is: the offeror promises something in return for the offeree’s performance & indicates that this performance is the way acceptance is to be made Firm Offers: only applies to merchants CHAPTER SEVEN: GENUINENESS OF ASSENT GENUINE ASSENT is true and complete agreement When Genuine Assent is NOT Present: DURESS Duress occurs when: when one party uses an improper threat or act to obtain an expression of agreement UNDUE INFLUENCE Undue Influence occurs when when the dominating party to a confidential relationship exerts irresistible pressure on the dominated party to enter into a K that benefits the former When a contract lacks genuine assent, it is voidable which means the injured party has the option of cancelling or avoiding the contract if he/she so chooses. The action of ending a voidable contract is called termination To be effective, rescission must: (1) occurs shortly after the thing (the duress, misrepresentation, etc.) causing genuine assent to be lacking is discovered 1. it must occur before the contract is ratified, ratification is conduct suggesting that the party intends to be bound to the contract Mistake, Misrepresentation Unilateral Mistake is: only one party holds an incorrect belief about the facts or law related to aK  Page 10 Mutual Mistake When both parties are incorrect about a material (important) fact. If both parties are mistaken about a material fact, the contract is void Voidable - contract may be avoided due to problems - lack of genuine assent Ratification - approval of a voidable contract- one takes action that indicates an intent to be bound by the contract Misrepresentation Both Innocent misrepresentation and fraudulent misrepresentation result in the contract being voidable Elements of Misrepresentation: 1. untrue statement is one of fact or there is active concealment 2. the statement is material to the transaction or is fraudulent 3. the victim reasonably relied on the statement To prove the tort of Fraud, and collect damages, the above 3 elements must be proven PLUS 1. intent AND (2) injury CHAPTER EIGHT: CONSIDERATION Consideration is: what a person demands & generally must receive in order to make her or his promise legally binding Three Requirements of Consideration: 1. each party must make a promise, perform, or forbear 2. each party’s promise, act, or forbearance must be in exchange for 3. the exchange must have legal value Contractual Promise vs. Gift Consideration distinguishes a contractual promise from a promise to give a gift. A Gift is: the transfer of ownership without receiving anything in return a promise to make a gift is generally not legally enforceable. Only after a donor (the person giving the gift) intentionally transfers the gift to the donee and the donee accepts it does the transaction become legally binding.  Page 11 Act, Forbearance, or Promise when looking for consideration look for legal value in the underlying act that is promised. If someone promises forbearance – or to not do something – look beneath the promise and ask if the forbearance has legal value The person promising an action or forbearance is the promisor The person to whom the promise is made is the promisee In most contracts trading arises as one party exchanges a promise for the promise of the party on the other side. There has been a bargaining or a trading, of one promise for the other. Consideration must be Mutual Legal Value Legal value means there has been a change in a party’s legal position as a result of the contract QUESTIONABLE CONSIDERATION Illusory promises: promise must be binding Output contracts: buyers agree to purchase all of a particular producer’s production Requirements contracts: seller agrees to supply all the needs of a particular buyer Output & Requirement Contracts imply a duty of fair dealing, which means they are supported by consideration Termination Clauses if the clause gives one party the power to terminate the contract for any reason, the promise to perform would be terminated The promise is not illusory if: termination is allowed only after a change in defined circumstances Existing Duty A person sometimes promises something that he/she is already obligated to do by law or by prior contract. Such a promise CANNOT serve as consideration to bind the other party to the contract. Settlement of Liquidated Debts a liquidated debt is: parties agree that the debt exists and on amount of the debt an unliquidated debt is: genuine dispute between the parties about how much is owed Composition with Creditors: group of creditors agree to accept less in full satisfaction of claims  Page 12 against a debtor Past Performance: contractual bargaining takes place in the present for immediate or future performance Statute of Limitations: a law that sets a time limit for when legal proceedings can be started after an event Impeachment: process by which a legislative body or other legally constituted tribunal initiates charges against a public official for misconduct HONORS BUSINESS LAW 2021 FALL MIDTERM VOCABULARY LIST Acceptance Injunction Appellate Court Judgment Arbitrator Judicial Branch Assault Juvenile court Battery Laws Bill of Rights Legislative branch Case law Liquidated debt Civil disobedience Litigate Common law Mediator Composition with Creditors Negligence Consideration Offeree Contract Output Contracts Counteroffer Promisor Damages Ratification Defamation Rescission  Page 13 Donor Revocation Duress Subpoena Evidence Supreme Court Executive branch Transcript False imprisonment Trial Court Forbearance Undue influence Genuine assent Verdict Gift Voidable Illusory Promises Witness Impeachment Writ of Certiorari