Test Two Study Guide 2413 PDF

UNIT TWO STUDY GUIDE CHAPTER 6 THE BASIS OF TORT LAW (1 of 3) A civil wrong, not arising from a breach of contract or other agreement, a tort is a breach of a legal duty, proximately causing another person harm or injury. The Purpose of Tort Law: Generally, the purpose of tort l...

UNIT TWO STUDY GUIDE CHAPTER 6 THE BASIS OF TORT LAW (1 of 3) A civil wrong, not arising from a breach of contract or other agreement, a tort is a breach of a legal duty, proximately causing another person harm or injury. The Purpose of Tort Law: Generally, the purpose of tort law is to provide remedies for the violation of protected interests. Tort law provides remedies for acts that cause physical injury or that interfere with physical security and freedom of movement. It also provides remedies for acts that cause destruction of or damage to property. Damages Available in Tort Actions: Legal usage distinguishes between the terms damage and damages. Damage refers to harm or injury to persons or property, while damages refer to monetary compensation for such harm or injury. Compensatory Damages: A plaintiff is awarded compen-satory damages to compensate or reimburse the plaintiff for actual losses. Compensatory damages awards are often broken down into special damages (those that compensate the plaintiff for quantifiable monetary losses) and general damages (those that compensate individuals for the nonmonetary aspects of the harm suffered).  THE BASIS OF TORT LAW (2 of 3) Punitive Damages: Punitive damages are designed to punish the wrongdoer for particularly egregious conduct and to deter similar conduct in the future. Punitive damages are available in intentional tort actions and only rarely in negligence lawsuits. They may be awarded in suits involving gross negligence (reckless disregard of the consequences for the life or property of another). Legislative Caps on Damages: State laws may limit the amount of both punitive and general damages that can be awarded to the plaintiff. More than twenty-five states have placed caps on noneconomic general damages, and more than thirty states limit or ban punitive damages. Classification of Torts: Two broad classifications of torts are intentional torts and unintentional torts (those involving negligence). Classification of a tort depends largely on how the tort occurs (intentionally or negligently) and the surrounding circumstances.  THE BASIS OF TORT LAW (3 of 3) Defenses: Though a plaintiff may prove all the elements of a tort, the defendant can raise a number of legally recognized defenses (reasons why the plaintiff should not obtain damages). A successful defense releases the defendant from partial or full liability for the tortious act. Available defenses vary depending on the tort involved. A common defense to intentional torts against persons is consent. When a person consents to the act that damages her or him, there is generally no liability. The most widely used defense in negligence actions is comparative negligence. Most states have a statute of limitations that establishes the time limit within which a particular type of lawsuit can be filed.  INTENTIONAL TORTS AGAINST PERSONS (1 of 10) An intentional tort is a wrongful act that was committed knowingly and with the intent to commit the act (not necessarily with the intent to do harm). The tortfeasor (the one committing the tort) must intend to commit an act with consequences that interfere with another’s personal or business interests in a way not permitted by law. In tort law, intent means only that the person intended the consequences of his or her act or knew with substantial certainty that specific consequences would result from the act. The law generally assumes that individuals intend the normal con-sequences of their actions. Transferred intent occurs when a defendant intends to harm one individual, but unintentionally harms a second person.  INTENTIONAL TORTS AGAINST PERSONS (2 of 10) Assault: Any intentional and unexcused threat of immediate harmful or offensive contact—whether words or acts—that creates a reasonably believable threat (e.g., pointing a gun at someone) is assault. Battery: An unexcused and harmful or offensive physical contact intentionally performed (e.g., firing a gun and shooting someone) is battery. The contact can be made by the defendant or by some force set in motion by the defendant. False Imprisonment: The intentional confinement or restraint of another person’s activities without justification through the use of physical barriers, restraint, or threats. Intentional Infliction of Emotional Distress: This intentional act amounts to extreme and outrageous conduct that results in severe emotional distress to another. If the act exceeds the bounds of decency accepted by society, it becomes actionable (capable of being the basis for a lawsuit). Outrageous Conduct: Acts that cause indignity or annoyance alone usually are not sufficient. Limited by the First Amendment: Freedom of speech guarantees also limit emotional distress claims when the outrageous conduct consists of speech about a public figure.  INTENTIONAL TORTS AGAINST PERSONS (3 of 10) Defamation: Anything published or publicly spoken that injures another person’s character, reputation, or good name is known as defamation. The law imposes a general duty on all persons to refrain from making false, defamatory statements of fact about others. Libel: Written defamation. Slander: Oral defamation. To establish defamation, the following elements must be proved: (1) The defendant made a false statement of fact. (2) The statement was understood as being about the plaintiff and tended to harm the plaintiff’s reputation. (3) The statement was published to at least one person other than the plaintiff. (4) If the plaintiff is a public figure, she or he must also prove actual malice. INTENTIONAL TORTS AGAINST PERSONS (4 of 10) Statement-of-Fact Requirement: A frequent issue in defamation lawsuits (including online defamation) is whether the defendant made a statement of fact or a statement of opinion. Statements of opinion normally are not actionable, because they are protected under the First Amendment. The Publication Requirement: The basis of the tort of defamation is the publication of a statement or statements that hold an individual up to contempt, ridicule, or hatred. Publication here means that the defamatory statements are communicated (either intentionally or accidentally) to persons other than the defamed party. Damages for Libel: General damages are presumed as a matter of law once the defendant’s liability for libel has been established. General damages are designed to compensate the plaintiff for nonspecific harms such as disgrace or dishonor in the eyes of the community, humiliation, injured reputation, and emo-tional distress. Damages for Slander: The plaintiff must prove special damages to establish the defendant’s liability and that the slanderous statement caused her or him to suffer actual economic or monetary losses. INTENTIONAL TORTS AGAINST PERSONS (5 of 10) Slander Per Se: Most states recognize four types of false utterances as indefensible or unjustifiable defamation: (1) that another has a loathsome communicable disease (e.g., a sexually transmitted disease); (2) that another has committed improprieties while engaging in a profession or trade; (3) that another has committed or has been imprisoned for a serious crime; and (4) that a person (usually unmarried persons, especially women) is unchaste or has engaged in serious sexual misconduct. INTENTIONAL TORTS AGAINST PERSONS (6 of 10) Defenses to Defamation: Truth is normally an absolute defense. In other words, if the allegedly defamatory words were objectively true, the defendant cannot be held liable for publishing them. Privileged Communications: Privilege, or immunity, provides protection from liability. Only in judicial proceedings and certain government proceedings is an absolute privilege granted, protecting the person from liability for statements. Under qualified or conditional privilege, a person is not liable for statements or actions made in good faith and only to those who have a legitimate interest in the statement. Public Figures: Generally speaking, otherwise false and defamatory statements made about public figures are privileged unless they are made with actual malice—that is, with either knowledge of falsity or reckless disregard of the truth or falsity.  INTENTIONAL TORTS AGAINST PERSONS (7 of 10) Invasion of Privacy: The courts have held that certain amendments to the U.S. Constitution imply a right to privacy. Some state constitutions as well as a number of federal and state statutes explicitly provide for privacy rights. Invasion of Privacy under the Common Law: Common law recognizes four acts that qualify as improperly infringing on another’s privacy: (1) Intrusion in an individual’s affairs or seclusion in an area in which the person has a reasonable expectation of privacy; (2) Publication of information that places a person in false light; (3) Public disclosure of private facts about an individual that an ordinary person would find objectionable; and (4) Appropriation of identity through using a per-son’s name, picture, or other likeness for com-mercial purposes without his or her permission. Appropriation Statutes: Most states recognize the tort of appropriation and uphold individuals’ right of publicity.  INTENTIONAL TORTS AGAINST PERSONS (8 of 10) Fraudulent Misrepresentation: The tort of fraudulent misrepresentation (fraud) involves intentional deceit for personal gain. The tort includes several elements: (1) A misrepresentation of material facts or conditions with knowledge that they are false or with reckless disregard for the truth. (2) An intent to induce another party to rely on the misrepresentation. (3) A justifiable reliance on the misrepresentation by the deceived party. (4) Damages suffered as a result of that reliance. (5) A causal connection between the misrepresentation and the injury suffered. Fraud is more than just puffery (“seller’s talk” that does not rely on a statement of fact).  INTENTIONAL TORTS AGAINST PERSONS (9 of 10) Statement of Fact versus Opinion: The tort of fraudulent misrepresentation usually occurs only when there is reliance on a statement of fact. Sometimes, reliance on a statement of opinion may involve the tort of fraudulent misrepresentation if the individual making the statement of opinion has superior knowledge of the subject matter. Negligent Misrepresentation: The key difference between intentional and negligent misrepresentation is whether the person making the misrepresentation had actual knowledge of its falsity. Abusive or Frivolous Litigation: Tort law recognizes a right not to be sued without a legally just and proper reason. Malicious prosecution results from initiating a lawsuit out of malice and without probable cause. Abuse of process can apply to any person using a legal process against another in an improper manner or to accomplish a purpose for which it was not designed. A plaintiff need not prove malice to prove abuse of process.  INTENTIONAL TORTS AGAINST PERSONS (10 of 10) Business Torts: Business torts generally involve wrongful interference with another’s business rights. Wrongful Interference with a Contractual Rela-tionship: The tort of interference with contract requires proof of the following: (1) A valid, enforceable contract must exist between two parties. (2) A third party must know that this contract exists. (3) This third party must intentionally induce a party to the contract to breach the contract. Wrongful Interference with a Business Rela-tionship: Unreasonably interfering with another’s business in an attempt to gain a greater share of the market is prohibited. Attempting to attract customers is a legitimate competitive practice, while unlawfully targeting competitors’ customers is predatory behavior. Defenses to Wrongful Interference: Liability for wrongful interference with a contractual relationship is not applicable if the interference was justified or permissible.  INTENTIONAL TORTS AGAINST PROPERTY (1 of 5) Intentional torts against property include trespass to land, trespass to personal property, conversion, and disparage-ment of property. The law distinguishes real property from personal property. Real property is land and things permanently attached to the land such as a house. Personal property consists of all other items including cash and securities. Trespass to Land: A trespass to land occurs when a person does any of the following without permission: (1) Enters onto, above, or below the surface of land that is owned by another. (2) Causes anything to enter onto land owned by another. (3) Remains on land owned by another or permits anything to remain on it. Actual harm to the land is not an essential element of this tort because it is designed to protect the right of an owner to exclusive possession. INTENTIONAL TORTS AGAINST PROPERTY (2 of 5) Establishing Trespass: The real property owner (or person in actual and exclusive possession of the property) must establish that person as a trespasser. “Posted” trespass signs expressly establish a person who ignores these signs and enters onto the property as a trespasser. Any person who enters onto another’s property to commit an illegal act is impliedly a trespasser, with or without posted signs. Liability for Harm: At common law, a trespasser is liable for any damage caused to the property and generally cannot hold the owner liable for injuries that the trespasser sustains on the premises. Many jurisdictions favor a modified reasonable duty of care rule that varies depending on the status of the parties (e.g., the attractive nuisance doctrine). An owner can normally use reasonable force to remove a trespasser or detain the trespasser for a reasonable time without liability for damages.  INTENTIONAL TORTS AGAINST PROPERTY (3 of 5) Defenses against Trespass to Land: Trespass may be justified or excused if the trespasser can prove the following: She or he was trying to assist someone in danger. As a licensee, she or he was invited to the property [for a reason], and entered before the owner revoked the license. Trespass to Personal Property: Taking or harming another’s personal property without permission in a way that interferes with the right to exclusive possession is trespass to personal property. Harm means not only destruction of the property, but also anything that diminishes its value, condition, or quality.  INTENTIONAL TORTS AGAINST PROPERTY (4 of 5) Conversion: Any act that deprives an owner of personal property or of the use of that property without the owner’s permission and without just cause results in conversion. Failure to Return Goods: Even if the rightful owner consented to the initial taking of the property, a failure to return the property may still be conversion. Intention: Conversion can occur even when a person mistakenly believed that she or he was entitled to the goods. For example, someone who buys stolen goods can be sued for conversion even if she or he did not know the goods were stolen.  INTENTIONAL TORTS AGAINST PROPERTY (5 of 5) Disparagement of Property: This tort of disparagement of property occurs when economically injurious false-hoods are made about another’s product or property rather than about another’s reputation (as in defamation). Slander of Quality: Oral (slander of quality) or written (trade libel) publication of false information about the quality of another’s product or services that caused a third person to refrain from dealing with the plaintiff that resulted in sustained economic damages. Slander of Title: Written or oral publication of a statement (slander of title) that denies or casts doubt upon another’s legal ownership of any property, resulting in financial loss to the disparaged party.  UNINTENTIONAL TORTS—NEGLIGENCE (1 of 5) The tort of negligence occurs with a failure to live up to a required duty of care that a reasonable person would exercise in similar circumstances. Torts involving negligence, or unintentional torts, involve a wrongful act the tortfeasor committed without knowing its wrongfulness or without intending to commit the act. Negligence merely requires that the tortfeasor’s act or omission creates a foreseeable risk of the consequences complained of by the injured party. To be actionable, the plaintiff must prove the following: (1) Duty. The defendant owed a duty of care to the plaintiff. (2) Breach. The defendant breached that duty. (3) Causation. The defendant’s breach caused the plain-tiff’s injury. (4) Damages. The plaintiff suffered a legally recognizable injury.  UNINTENTIONAL TORTS—NEGLIGENCE (2 of 5) The Duty of Care and Its Breach: The duty of all persons to exercise reasonable care in their dealings with others. The courts consider several factors when determining whether a duty of care was breached: (1) The nature of the act (whether it is outrageous or commonplace). (2) The manner in which the act was performed (cautiously versus heedlessly). (3) The nature of the injury (whether it is serious or slight). The Reasonable Person Standard: 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 constitutes the reasonable person standard. The degree of care to be exercised varies and depends on the defendant’s occupation or profession, her or his relationship with the plaintiff, and other factors. UNINTENTIONAL TORTS—NEGLIGENCE (3 of 5) The Duties of Landowners: Landowners are expected to exercise reasonable care to protect from harm those persons coming onto their property—even trespassers. The Duty to Warn Business Invitees of Risks: Retailers and other businesses that explicitly or implicitly invite persons to come onto their premises are expected to exercise reasonable care toward these business invitees. They are required to warn of obvious risks and have a duty to discover and remove hidden dangers. Obvious Risks Provide an Exception: Some risks are so obvious that the owner need not warn even invitees. The Duty of Professionals: Persons with superior knowledge, skill, or expertise in a certain area are held to the standard of care that is 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 liability for professional malpractice.  UNINTENTIONAL TORTS—NEGLIGENCE (4 of 5) Causation: If a person breaches a duty of care and someone suffers injury, the person’s act must have caused the harm for it to constitute the tort of negligence. Courts Ask Two Questions: The court must address two questions in order to determine if causation is met. (1) Is there causation in fact? A causation in fact is an act or omission without (“but for”) which an event would not have occurred. (2) Was the act the proximate, or legal, cause of the injury? Proximate (or legal) cause exists when the connection between an act and an injury is direct enough to impose liability. Foreseeability: 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. The Injury Requirement and Damages: The plaintiff must have suffered a legally recognizable injury (loss, harm, wrong, or invasion of a protected interest) to recover damages. Without harm or injury, no tort exists.  UNINTENTIONAL TORTS—NEGLIGENCE (5 of 5) Good Samaritan Statutes: Under the Good Samaritan statutes, someone who is aided voluntarily by another cannot sue the “Good Samaritan” for negligence. These laws were typically used to protect physicians and medical personnel volunteering their services in a crisis situation. Dram Shop Acts: States that have passed dram shop acts hold a bar’s owner or bartender liable for injuries caused by a person who became intoxicated while drinking at the bar. The owner or bartender may also be held responsible for continuing to serve a person who was already intoxicated. Some states’ statutes also impose liability on social hosts (persons hosting parties) for injuries caused by guests who became intoxicated at the hosts’ homes. Under these statutes, it is unnecessary to prove that the bar owner, bartender, or social host was negligent.  DEFENSES TO NEGLIGENCE (1 of 2) The three basic affirmative defenses in negligence cases are assumption of risk, superseding cause, and contributory and comparative negligence. Assumption of Risk: A plaintiff who voluntarily enters a risky situation knowing the risk involved can be defended against by assumption of risk defense and may not recover from the alleged tortfeasor. Assumption of risk defense includes two elements: (1) Knowledge of the risk. (2) Voluntary assumption of the risk. Superseding Cause: An unforeseeable intervening event that breaks the causal connection between a wrongful act and an injury to another presents a superseding cause. In these cases, the defendant is relieved of liability for injuries caused by the intervening event.  DEFENSES TO NEGLIGENCE (2 of 2) Contributory Negligence: In a minority of jurisdictions, any negligence on the part of the plaintiff that contributed to his or her injury will bar him or her from recovering damages from the defendant under the common law doctrine of contributory negligence. Comparative Negligence: In most states, the doctrine of comparative negligence is used. Under this standard, both the plaintiff’s and the defendant’s negligence are computed, and the liability for damages is distributed accordingly. Some jurisdictions refuse to permit a negligent plaintiff from recovering any damages if the plaintiff is responsible for more than 50 percent of his or her own injury or loss. CHAPTER 7 STRICT LIABILITY Under the doctrine of strict liability, or liability without fault, a person who engages in certain activities can be held responsible for any harm that results to others, even if the person used the utmost care. Abnormally Dangerous Activities: These activities involve a high risk of serious harm to persons or property  that cannot be completely guarded against by the exercise of reasonable care. 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 or he knew or should have known that the animal was dangerous or had the propensity to harm others. Application of Strict Liability to Product Liability: This matter of social policy is based on two factors: (1) The manufacturer can better bear the cost of injury because it can spread the cost throughout society by increasing the prices of its goods. (2) The manufacturer is making a profit from its activities and therefore should bear the cost of injury as an operating expense.  PRODUCT LIABILITY (1 of 2) 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 is called product liability. Based on Negligence: A manufacturer who fails to exercise “due care” to make a product safe is liable to any person injured by the product. Due Care Must Be Exercised: Manufacturers must use due care in all of the following areas: (1) Designing the product. (2) Selecting the materials. (3) Using appropriate production processes. (4) Assembling and testing the product. (5) Placing adequate warnings on the label to inform the user of dangers of which an ordinary person might not be aware. (6) Inspecting and testing any purchased components used in the product.  PRODUCT LIABILITY (2 of 2) Privity of Contract Not Required: A product liability action based on negligence does not require privity of contract (the relationship that exists between the parties to the contract) between the injured plaintiff and the defendant manufacturer. A person who is injured by a defective product may bring a negligence suit even though she or he was not the one who actually purchased the product. “Cause in Fact” and Proximate Cause: The plaintiff must show that the defendant’s conduct was the “cause in fact” of an injury. “Cause in fact” requires showing that “but for” the defendant’s action, the injury would not have occurred. It must also be determined that the defendant’s act was the proximate cause of the injury. Misrepresentation: A manufacturer may also be liable for any intentional or reckless misrepresentations made to a consumer or user of its product if the misrepresentation causes the consumer or user to suffer some injury.  STRICT PRODUCT LIABILITY (1 of 6) Strict Product Liability and Public Policy: The public policy that surrounds strict product liability rests on the assumption that: (1) Consumers should be protected against unsafe products. (2) Manufacturers and distributors should not escape liability for faulty products simply because they are not in privity of contract with the user of those products. (3) Manufacturers and distributors can better bear the costs associated with injuries caused by their products because they can pass the costs on to all consumers in the form of higher prices. The majority of states recognize strict product liability, although some state courts limit its application to situations involving personal injuries (rather than property damage).  STRICT PRODUCT LIABILITY (2 of 6) The Requirements for Strict Product Liability: Found in the Restatement (Second) of Torts, Section 402A: (1) The product must be in a defective condition when the defendant sells it. (2) The defendant must normally be engaged in the business of selling or distributing that product. (3) The product must be unreasonably dangerous to the user or consumer because of its defective condition (in most states). (4) The plaintiff must incur physical harm to self or property by use or consumption of the product. (5) The defective condition must be the proximate cause of the injury or damage. (6) The goods must not have been substantially changed from the time the product was sold to the time the injury was sustained. Proving a Defective Condition: The plaintiff does not need to show why or in what manner the product became defective, but does have to prove that the product was defective at the time it left the hands of the seller or lessor.  STRICT PRODUCT LIABILITY (3 of 6) Unreasonably Dangerous Product: A product so defective as to threaten a consumer’s health and safety is an unreasonably dangerous product if: (1) the product was dangerous beyond the expectation of the ordinary consumer, or (2) the manufacturer failed to produce an economically feasible, less dangerous alternative. Product Defects: The Restatement (Third) of Torts: Products Liability defines three types of product—manufacturing defects, design defects, and inadequate warnings. Manufacturing Defects: A departure from a product unit’s design specifications that results in products that are physically flawed, damaged, or incorrectly assembled. Quality Control: The manufacturer failed to exercise due care in the manufacture, assembly, or testing of the product. Expert Testimony: Cases involving allegations of a manufacturing defect are often decided based on the opinions and testimony of experts.  STRICT PRODUCT LIABILITY (4 of 6) Design Defects: The product, even if manufactured perfectly, is unreasonably dangerous as designed—often because an economically feasible, less dangerous alter-native was not available to the manufacturer. Test for Design Defects: To successfully assert a design defect, a plaintiff has to show that: (1) a reasonable alternative design was available, and (2) as a result of the defendant’s failure to adopt the alternative design, the product was not reason-ably safe. Factors to Be Considered: According to the Restatement, a court can consider a broad range of factors in deciding claims of design defects. Risk-Utility Analysis: Most courts do a risk-utility analysis to determine whether the risk of harm from the product outweighs its utility to the user and public. Consumer-Expectation Test: Under this test, a product is unreasonably dangerous when it fails to perform in the manner that is reasonably expected by an ordinary consumer.  STRICT PRODUCT LIABILITY (5 of 6) Inadequate Warnings: The product, even if designed and manufactured perfectly, lacks adequate warnings or instructions for the consumer or another end user. Generally, a seller must also warn consumers of the harm that can result from the foreseeable misuse of its product. Content of Warnings: Courts apply a “reasonable-ness” test to determine if the warnings adequately alert consumers to the product’s risks. Obvious Risks: There is no duty to warn about risks that are obvious or commonly known. Warnings about such risks do not add to the safety of a product and could make other warnings seem less significant. State Laws and Constitutionality: An action alleging that a product is defective due to an inadequate label can be based on state law, but that law must not violate the U.S. Constitution.  STRICT PRODUCT LIABILITY (6 of 6) Market-Share Liability: Under a theory of market-share liability, a court can hold each of multiple manufacturers responsible for a percentage of the plaintiff’s damages that is equal to the percentage of the manufacturer’s market share. Many jurisdictions do not recognize the market-share theory of liability because they believe that it deviates too significantly from traditional legal principles. Other Applications of Strict Product Liability: Almost all courts extend the strict liability of manufacturers and other sellers to injured bystanders. Strict product liability also applies to suppliers of component parts.  DEFENSES TO PRODUCT LIABILITY (1 of 2) Preemption: Government regulations preempt claims for product liability; an injured party may not be able to sue the manufacturer of defective products that are subject to comprehensive federal regulatory schemes. Assumption of Risk: The defendant must show that (1) the plaintiff knew and appreciated the risk created by the alleged product defect, and (2) the plaintiff voluntarily assumed the risk, even though it was unreasonable to do so. Product Misuse: This defense is now recognized as a defense only when the particular use was not foreseeable. If the misuse is reasonably foreseeable, the seller must take measures to guard against it. Comparative Negligence (Fault): The defendant must show that the plaintiff’s own negligence or wrongful acts contributed to the injury. Such a showing may permit the plaintiff to recover only for the percentage of the injury or loss that was not caused by the plaintiff’s own negligence or wrongful acts. Commonly Known Dangers: The defendant must show that the plaintiff’s injury resulted from a danger so commonly known by the general public that the defendant had no duty to warn the plaintiff.  DEFENSES TO PRODUCT LIABILITY (2 of 2) Knowledgeable User: If a particular danger is or should be commonly known by particular users of the product, the manufacturer need not warn these users. Statutes of Limitations and Repose: The statutes of limitations for product liability vary according to state law—typically two to four years. The running of the prescribed period is frequently tolled (suspended) until the party suffering an injury has discovered it or should have discovered it. Many states have passed statutes of repose, which place outer time limits on product liability actions, in order to ensure that sellers and manufacturers are not left vulnerable to lawsuits indefinitely. CHAPTER 10 CIVIL LAW AND CRIMINAL LAW (1 of 2) Crime is a wrong against society, defined in a statute, and punishable by fines, imprisonment, or—in rare cases—death.  Key Differences between Civil Law and Criminal Law: There are numerous safeguards in place to protect the rights of defendants. Prosecuted by the State: Because crimes are offenses against society as a whole, they are prosecuted by a public official, such as a district attorney (D.A.) or an attorney general (A.G.), not by the victims. Burden of Proof: In a criminal case, the government must prove its case beyond a reasonable doubt. In contrast, the plaintiff in civil cases must prove his or her case by a preponderance of the evidence. The jury’s verdict normally must be unanimous in a criminal case. In a typical civil trial by jury, only three-fourths of jurors need to agree. Criminal Sanctions: The sanctions that are imposed on a criminal wrongdoer are typically harsher than those applied in civil cases. Criminal sanctions include fines as well as incarceration in a jail or prison.  CIVIL LAW AND CRIMINAL LAW (2 of 2) Civil Liability for Criminal Acts: Torts such as assault and battery provide a basis for criminal prosecution and civil action in tort. Classification of Crimes: Depending on their degree of seriousness, crimes are classified as felonies or misdemeanors. Felonies are crimes—such as murder, rape, or robbery—that carry the most severe sanction, ranging from one or more years in prison to forfeiture of one’s life. Misdemeanors are less serious crimes—such as disorderly conduct, trespass, or petty theft—punishable by a fine or imprisonment for up to one year. Petty offenses are a subset of misdemeanors comprised of the least serious criminal offenses, such as traffic violations and jaywalking.  CRIMINAL LIABILITY (1 of 3) The following two elements normally must exist simultaneously for a person to be convicted of a crime: (1) The performance of some prohibited act (actus reus). (2) A specified state of mind, or intent, on the part of the actor (mens rea). The Criminal Act: Most crimes require an act of commission (a person must do something in order to be accused of a crime). In criminal law, a prohibited act is referred to as the actus reus, or guilty act. In some instances, an act of omission can be a crime but only if the person has a legal duty to perform the omitted act (such as filing a tax return). A person can be punished for attempting to commit a crime but normally only if she or he has taken substantial steps toward the criminal objective. State of Mind: Mens rea (wrongful mental state) is typically used to establish criminal liability. The required mental state (intent) is indicated in the applicable statute or law.  CRIMINAL LIABILITY (2 of 3) Recklessness: The required mental state can be present when a person’s acts are reckless or criminally negligent. A defendant is criminally reckless if she or he consciously disregards a substantial and unjustifiable risk. Criminal Negligence: A mental state in which the defendant takes an unjustified, substantial, and foreseeable risk that results in harm. A defendant can be negligent even if she or he was not actually aware of the risk but should have been aware of it. Strict Liability and Overcriminalization: An increasing number of laws and regulations impose criminal sanctions on strict liability crimes, which do not require a wrongful mental state to establish criminal liability. Proponents of such laws say that they are necessary to protect the public and environment, while opponents say that laws criminalizing conduct without requiring intent have led to overcriminalization. Federal Crimes: The federal crime code lists more than four thousand criminal offenses, many of which do not require a specific mental state and/or intent.  State Crimes: Many states have also enacted laws that criminalize behavior without the need to show intent.  CRIMINAL LIABILITY (3 of 3) Corporate Criminal Liability: A corporation is a legal entity created under the laws of a state. Liability of the Corporate Entity: Corporations are normally held liable for the crimes committed by their agents or employees within the course and scope of employment. In order for liability to be imposed, the prosecutor generally must show that the corporation could have prevented the act, or that a supervisor authorized or had knowledge of the act. Corporations can also be criminally liable for failing to perform specific duties imposed by law (such as those under environmental or securities laws). Liability of Corporate Officers and Directors: Corporate officers and directors are personally liable for their own criminal acts, regardless of whether they committed them for their own benefit or the benefit of the corporation. They may also be held liable for crimes committed by those under their supervision. Under the responsible corporate officer doctrine, a court may impose criminal liability on a corporate officer who participated in, directed, or merely knew about a given criminal violation.  TYPES OF CRIMES (1 of 7) Criminal acts generally fall into five broad categories: violent crime (crimes against persons), property crime, public order crime, white-collar crime, and organized crime. When crimes are committed in cyberspace, they are referred to as cyber crimes. Violent Crime: Crimes against persons that cause them to suffer harm or death. Robbery is the forceful and unlawful taking of personal property of any value from another; force or threat of force is typically required for an act of theft to be treated as robbery. Aggravated robbery is robbery with the use of a deadly weapon—the most serious form of theft. Assault and battery are also considered violent crimes. Property Crime: The most common type of criminal activity is property crime. The goal of the offender in these crimes is economic gain or property damage. Burglary: The crime of burglary involves unlawful entry into a building with the intent to commit a felony (or, in some states, the intent merely to commit any crime). Aggravated burglary occurs when a deadly weapon is used or when the building entered is a dwelling.  TYPES OF CRIMES (2 of 7) Larceny: The crime of larceny involves wrongfully taking and carrying away another person’s personal property with the intent to permanently deprive the owner of the property. Obtaining Goods by False Pretenses: This form of theft involves trickery or fraud in order to receive property, services, or cash (e.g., writing a check knowing there are insufficient funds to cover it, buying goods using someone else’s credit card number without authorization). Theft: Some state statutes consolidate the crime of obtaining goods by false pretenses with other property offenses (such as larceny and embezzlement) into a single crime called simply “theft.” Petty theft is the theft of a small quantity of cash or low-value goods. Grand theft is the theft of a larger amount of cash or higher-value property. Receiving Stolen Goods: It is a crime to receive goods that a person knows (or should have known) were stolen or illegally obtained. Receipt of such goods implies an intent to deprive the true owner of those goods and the recipient of the goods can be convicted even if she or he does not know the true identity of the owner or the thief and/or did not pay for the goods.  TYPES OF CRIMES (3 of 7) Arson: To willfully and maliciously burn a building (and, in some states, personal property) owned by another is arson. Every state has a special statute that prohibits burning one’s own building or other property in order to collect insurance benefits on the property. Forgery: Fraudulently making or altering a writing (including an electronic record) in a way that changes the legal rights or liabilities of another is to commit forgery. Public Order Crime: Activity considered contrary to public values and morals, such as public drunkenness, prostitution, illegal gambling, and illegal drug use. Sometimes referred to as victimless crimes, states and municipalities outlaw these types of activities because they deem them to “victimize” society as a whole.  TYPES OF CRIMES (4 of 7) White-Collar Crime: An illegal act or series of acts committed by an individual or business entity using some nonviolent means to obtain a personal or business advantage. White-collar crime usually takes place in the course of a legitimate business occupation. Embezzlement: Through embezzlement, one fraudulently appropriates money or other property one has been entrusted to handle. It is typically carried out by an employee who steals a small amount at a time over a long period. The intent to return embezzled property—or its actual return—is not a defense to the crime of embezzlement. Mail and Wire Fraud: This crime involves any scheme that uses U.S. mail, commercial carriers (FedEx, UPS), or wire (telegraph, telephone, television, the Internet, e-mail) with the intent to defraud the public. Bribery: This crime involves the act of offering to give something of value to a person in an attempt to influence that person in a way that serves a private interest. Three types of bribery are considered crimes: bribery of public officials, commercial bribery, and bribery of foreign officials.  The crime of bribery occurs when the bribe is offered—it is not required that the bribe be accepted. (Accepting a bribe is a separate crime.) TYPES OF CRIMES (5 of 7) The Foreign Corrupt Practices Act: The Foreign Corrupt Practices Act (FCPA) prohibits U.S. businesspersons from bribing foreign officials to secure beneficial contracts. Prohibition against the Bribery of Foreign Officials: This part of the act prohibits the bribery of most officials of foreign governments if the purpose of the payment is to motivate the official to act in his or her official capacity to provide business opportunities. Accounting Requirements: All companies must keep detailed records that “accurately and fairly” reflect their financial activities; these requirements assist in detecting illegal bribes. Bankruptcy Fraud: This crime involves a knowing attempt to evade the effect of federal bankruptcy law. Insider Trading: Buying or selling publicly traded securities on the basis of information that has not been made available to the public is a violation of a duty owed to the company whose stock is being traded.  Theft of Trade Secrets and Other Intellectual Property: The Economic Espionage Act makes stealing trade secrets, as well as knowingly buying or possessing another’s trade secrets without the other’s authorization, a federal crime. TYPES OF CRIMES (6 of 7) Organized Crime: Organized crime operates illegitimately by providing illegal goods and services. Traditionally, organized crime has been involved with gambling, prostitution, illegal narcotics, counterfeiting, and loan sharking, while more recent ventures include credit-card scams and cyber crime. Money Laundering: The crime of money laundering involves engaging in financial transactions that conceal the identity, source, or destination of illegally gained funds through a legitimate business enterprise. Racketeering: Under the Racketeer Influenced and Corrupt Organizations Act (RICO), it is a federal crime to: (1) Use income obtained from racketeering activity to purchase any interest in an enterprise. (2) Acquire or maintain an interest in an enterprise through racketeering activity. (3) Conduct or participate in the affairs of an enterprise through racketeering activity. (4) Conspire to do any of the preceding activities.  TYPES OF CRIMES (7 of 7) Broad Application of RICO: RICO incorporates by reference twenty-six separate types of federal crimes and nine types of state felonies and has been applied in cases that have little or nothing to do with organized crime. If a person commits two or more RICO offenses, then that person is guilty of “racketeering activity.” Civil Liability: In the case of RICO violations, the government can seek not only criminal penalties but also civil penalties in the event of a RICO violation. In some cases, the statute allows private individuals to sue violators and potentially recover three times their actual losses (treble damages), plus attorneys’ fees.  DEFENSES TO CRIMINAL LIABILITY (1 of 3) Justifiable Use of Force: Self-defense is the legally recognized privilege to protect one’s self or property against injury by another. The privilege of self-defense protects only acts that are reasonably necessary to protect one’s self or property. Deadly force is likely to result in death or serious bodily harm. Deadly force can be used in self-defense only when the defender reasonably believes that imminent death or grievous bodily harm will otherwise result. Nondeadly force is force that reasonably appears necessary to prevent the imminent use of criminal force. Generally speaking, people can use the amount of nondeadly force that seems necessary to protect themselves, their dwellings, or other property, or to prevent the commission of a crime. Necessity: Criminal defendants can sometimes be relieved of liability by showing necessity—that a criminal act was necessary to prevent an even greater harm.  DEFENSES TO CRIMINAL LIABILITY (2 of 3) Insanity: A person who suffers from a mental illness may be incapable of the state of mind required to commit a crime. An insanity defense does not prevent a person from being imprisoned but it means that if the defendant successfully proves insanity, she or he will be placed in a mental institution instead of a jail or prison. Because proving insanity is extremely difficult, this defense is rarely used and usually is not successful. Mistake: Ordinarily, ignorance of the law or a mistaken idea about what the law requires is not a valid defense. A mistake of fact (as opposed to a mistake of law) can normally excuse criminal responsibility if it negates the mental state necessary to commit a crime. Example: Person A mistakenly walks off with person B’s briefcase. If person A genuinely thought that the case was his, a theft has not occurred since theft requires knowledge that the property belongs to another. Duress: When the wrongful threat of one person induces another person to perform an act that she or he would not otherwise have performed, duress exists. In such a situation, duress negates the mental state necessary to commit a crime because the defendant was forced or compelled to commit the act.  DEFENSES TO CRIMINAL LIABILITY (3 of 3) Entrapment: The defense of entrapment may be used when the defendant claims that she or he was induced by a public official—usually an undercover agent or police officer—to commit a crime that he or she would otherwise not have committed. For entrapment to be considered a defense, both the suggestion and the inducement must take place. Statute of Limitations: Most criminal prosecutions (except for murder) must be brought within a specified period of years after the crime. The running of the time period in a statute of limitations may be tolled (suspended or stopped temporarily) if the defendant is a minor or is not in the jurisdiction. Immunity: The privilege against self-incrimination is guaranteed by a clause in the Fifth Amendment to the U.S. Constitution. Accused persons cannot be forced to give information that will be used to prosecute them. When the state wishes to obtain information from a person accused of a crime, it can either grant immunity from prosecution or agree to prosecute the accused for a less serious offense in exchange for the information. A grant of immunity from prosecution for a serious crime is often part of the plea bargaining between the defending and prosecuting attorneys.  CRIMINAL PROCEDURES (1 of 5) The U.S. Constitution provides protections for those accused of crimes, including: (1) The Fourth Amendment protection from unreasonable searches and seizures. (2) The Fourth Amendment requirement that no warrant for a search or an arrest be issued without probable cause. (3) The Fifth Amendment requirement that no one be deprived of “life, liberty, or property without due process of law.” (4) The Fifth Amendment prohibition against double jeopardy (trying someone twice for the same criminal offense). (5) The Fifth Amendment requirement that no person be required to be a witness against (incriminate) himself or herself. (6) The Sixth Amendment guarantees of a speedy trial, a trial by jury, a public trial, the right to confront witnesses, and the right to a lawyer at various stages in some proceedings. (7) The Eighth Amendment prohibitions against excessive bail and fines and against cruel and unusual punishment.  CRIMINAL PROCEDURES (2 of 5) Fourth Amendment Protections: The Fourth Amendment protects the “right of the people to be secure in their persons, houses, papers, and effects.” Before searching or seizing private property, normally law enforcement officers must obtain a search warrant (an order from a judge or other public official authorizing the search or seizure). Probable Cause: Enforcement officers must convince a judge that they have reasonable grounds (probable cause) to believe a search will reveal a specific illegality. Scope of Warrant: The Fourth Amendment prohibits general warrants and requires a specific description of what is to be searched or seized. General searches through a person’s belongings are impermissible, and the search cannot extend beyond what is described in the warrant. Reasonable Expectation of Privacy: The Fourth Amendment protects only against searches that violate a person’s reasonable expectation of privacy. A reasonable expectation of privacy exists if (1) the individual actually expects privacy and (2) the person’s expectation is one that society as a whole would consider legitimate.  CRIMINAL PROCEDURES (3 of 5) The Exclusionary Rule: Under the exclusionary rule, any evidence obtained in violation of the accused’s Fourth, Fifth, and Sixth Amendment rights—as well as any evidence derived from illegally obtained evidence—generally is not admissible at trial. The exclusionary rule’s purpose is to deter police from conducting warrantless searches and following other improper procedures. The Miranda Rule: With few exceptions, individuals who are arrested must be informed of certain constitutional rights, including their right to remain silent (i.e., not to incriminate themselves) and their right to counsel, and any statements they makes to the police prior to being informed of their rights is inadmissible against them. The Supreme Court has recognized a “public safety” exception that allows certain statements to be admitted even if the defendant was not given Miranda warnings. (A defendant’s statements that reveal the location of a weapon would be admissible under this exception.)  CRIMINAL PROCEDURES (4 of 5) Criminal Process: The procedures in a criminal prosecution differ significantly from those in a civil case in order to safeguard the rights of the individual against the state. Arrest: A suspect’s arrest must be made based upon probable cause—a substantial likelihood that the person has committed or is about to commit a crime. An arrest can be made without a warrant, but the action of the arresting officer would still be judged by the standard of probable cause. Indictment or Information: Before they may be brought to trial, individuals must be formally charged with one or more specific crimes. A grand jury is a group of citizens called to decide, after hearing the state’s evidence, whether a reasonable basis (probable cause) exists for believing that a crime has been committed and whether a trial ought to be held. An indictment is the formal charge issued by the grand jury. For less serious crimes, an individual may be formally charged with a crime by an information, or criminal complaint, issued by a government prosecutor  CRIMINAL PROCEDURES (5 of 5) Trial: Once a criminal prosecution reaches trial, the state bears the burden of proving beyond a reasonable doubt that the accused is guilty of the crimes charged. The accused is not required to testify or to put on any evidence in his or her defense, although the accused is permitted to do so. If there is reasonable doubt as to whether a criminal defendant committed the crime, then the verdict must be “not guilty.” A “not guilty” verdict is not the same as stating that the defendant is innocent. It means that not enough evidence was properly presented to the court to prove guilt beyond a reasonable doubt. At the conclusion of the trial, a convicted defendant will be sentenced by the court. The U.S. Sentencing Commission performs the task of standardizing sentences for federal crimes. The judge’s sentencing discretion may be constitutionally or statutorily constrained. CHAPTER 49 THE NATURE OF REAL PROPERTY (1 of 5) Real property (or realty) consists of land and everything permanently attached to it, including structures and other fixtures. Real property encompasses airspace and subsurface rights, as well as rights to plants and vegetation. In essence, real property is immovable. Land and Structures: Land includes the soil on the surface of the earth and the natural products or artificial structures that are attached to it. Land further includes all the waters contained on or under its surface and much, but not necessarily all, of the airspace above it. The exterior boundaries of land extend down to the center of the earth and up to the farthest reaches of the atmosphere (subject to certain qualifications). Airspace and Subsurface Rights: The owner of real property has rights to both the airspace above the land and the soil and minerals below it. Any limitations on either airspace rights or subsurface rights (encumbrances) normally must be indicated on the document that transfers title at the time of purchase. Airspace Rights: Disputes concerning airspace rights may involve the right of commercial and private planes to fly over property and the right of individuals and governments to seed clouds and produce artificial rain. Flights over private land normally do not violate property rights unless the flights are so low and so frequent that they directly interfere with the owner’s enjoyment and use of the land. Leaning walls or projecting eave spouts or roofs may also violate the airspace rights of an adjoining property owner.  THE NATURE OF REAL PROPERTY (2 of 5) Subsurface Rights: In many states, the owner of the surface may sell subsurface rights to another person. When ownership is separated into surface and subsurface rights, each owner can pass title to what she or he owns without the consent of the other owner. Subsurface rights can be extremely valuable since they include the ownership of minerals, oil, or natural gas. But a subsurface owner’s rights would be of little value if he or she could not use the surface to exercise those rights. Because of this, a subsurface owner has a right (called a profit) to go onto the surface of the land to find and remove materials from the subsurface. Conflicts can arise between the surface owner’s use of the property and the subsurface owner’s need to extract minerals, oil, or natural gas. In that situation, one party’s interest may become subservient (secondary) to the other party’s interest either by statute or by case law. If the owners of the subsurface rights excavate, they are absolutely (strictly) liable if their excavation causes the surface to collapse. Many states have statutes that also make the excavators liable for any damage to structures on the land. Typically, these statutes set out precise require-ments for excavations of various depths.  THE NATURE OF REAL PROPERTY (3 of 5) Plant Life and Vegetation: Plant life, both natural and cultivated, is also considered to be real property. In many instances, the natural vegetation, such as trees, adds greatly to the value of realty. When a parcel of land is sold and the land has growing crops on it, the sale includes the crops, unless otherwise specified in the sales contract. When crops are sold by themselves, they are considered to be personal property, or goods. Consequently, the sale of crops is a sale of goods and is governed by the Uniform Commercial Code (UCC) rather than by real property law. Fixtures: A fixture is an item affixed to realty, meaning that it is attached to the real property in a permanent way. The item may be embedded in the land or permanently attached to the property or to another fixture on the property by means of cement, plaster, bolts, nails, or screws. An item may even sit on the land without being attached, as long as the owner intends it to be a fixture. Fixtures are included in the sale of land unless the sales contract specifies otherwise. The issue of whether an item is a fixture (and thus real estate) or not a fixture (and thus personal property) often arises with respect to land sales, real property taxation, insurance coverage, and divorces. How the issue is resolved can have important consequences for the parties involved.  THE NATURE OF REAL PROPERTY (4 of 5) Typical Fixtures: Items such as tile floors, cabinets, and carpeting items can only be attached to property perma-nently. Because such items are attached permanently, it is assumed that the owner intended them to be fixtures. When an item of property is custom-made for instal-lation on real property, the item usually is classified as a fixture. In addition, an item that is firmly attached to the land and integral to its use may be deemed a fixture. For instance, a mobile home or a complex irrigation system bolted to a cement slab on a farm can be a fixture. The courts assume that owners intend the objects to become part of their real property. The Role of Intent: Generally, when the courts need to determine whether a certain item is a fixture, they examine the intention of the party who placed the object on the real property. When the intent of that party is in dispute, the courts will usually deem that the item is a fixture if either or both the following are true: (1) The property attached cannot be removed without causing substantial damage to the remaining realty. (2) The property attached is so adapted to the rest of the realty as to have become a part of it.  THE NATURE OF REAL PROPERTY (5 of 5) Trade Fixtures Are Personal Property: Trade fixtures are an exception to the rule that fixtures are a part of the real property to which they are attached. A trade fixture is personal property that is installed for a commercial purpose by a tenant (one who rents real property from the owner, or landlord). For example, a walk-in cooler that is purchased and installed by a tenant who uses the premises for a restaurant is a trade fixture. Trade fixtures remain the property of the tenant unless removal would irreparably damage the building or realty. The tenant can remove the cooler from the premises when the lease terminates but ordinarily must repair any damage that the removal causes or compensate the landlord for the damage.  OWNERSHIP AND OTHER INTERESTS IN REAL PROPERTY (1 of 13) Ownership of property is an abstract concept that cannot exist independently of the legal system. No one can possess, or hold, a piece of land, the air above it, the earth below it, and all the water contained on it. One can only possess rights in real property. Numerous rights are involved in real property ownership, which is why property ownership is often viewed as a bundle of rights. One who possesses the entire bundle of rights is said to hold the property in fee simple, which is the most complete form of ownership. When only some of the rights in the bundle are transferred to another person, the effect is to limit the ownership rights of both the transferor of the rights and the recipient. Ownership interests in real property have traditionally been referred to as estates in land, which include fee simple estates, life estates, and leasehold estates.  OWNERSHIP AND OTHER INTERESTS IN REAL PROPERTY (2 of 13) Ownership in Fee Simple: In a fee simple absolute, the owner has the greatest aggregation of rights, privileges, and power possible. The owner can give the property away or dispose of the property by deed or by will. When there is no will, the fee simply passes to the owner’s legal heirs on her or his death. A fee simple absolute is potentially infinite in duration and is assigned forever to a person and her or his heirs without limitation or condition. The owner has the rights of exclusive possession and use of the property. The rights that accompany a fee simple absolute include the right to use the land for whatever purpose the owner sees fit. (Other laws, including applicable zoning, noise, and environmental laws, still may limit the owner’s ability to use the property in certain ways.) A person who uses his or her property in a manner that unreasonably interferes with others’ right to use or enjoy their own property can be liable for the tort of nuisance.  OWNERSHIP AND OTHER INTERESTS IN REAL PROPERTY (3 of 13) Life Estates: A life estate is an estate that lasts for the life of some specified individual. A conveyance, or transfer of real property, “to A for his life” creates a life estate. The life tenant’s ownership rights cease to exist on the life tenant’s death. The life tenant has the right to use the land, provided that he or she commits no waste (injury to the land that would adversely affect its value). The life tenant can use the land to harvest crops and if mines and oil wells are already on the land, he can extract minerals and oil from it but cannot establish new wells or mines. The life tenant can also create liens, easements, and leases, but none can extend beyond the life of the tenant. In addition, with few exceptions, the life tenant has an exclusive right to possession during his or her lifetime. Along with these rights, the life tenant also has some duties—to keep the property in repair and to pay property taxes. In short, the owner of the life estate has the same rights as a fee simple owner except that she or he must maintain the value of the property during her or his tenancy.  OWNERSHIP AND OTHER INTERESTS IN REAL PROPERTY (4 of 13) Concurrent Ownership: Persons who share ownership rights simultaneously in particular property (including real property and personal property) are said to have concurrent ownership. There are two principal types of concurrent ownership: tenancy in common and joint tenancy. Concurrent owner-ship rights can also be held in a tenancy by the entirety or as community property, but these types of concurrent ownership are less common. Tenancy in Common: The term tenancy in common refers to a form of co-ownership in which each of two or more persons owns an undivided interest in the property. The interest is undivided because each tenant shares rights in the whole property. On the death of a tenant in common, that tenant’s interest in the property passes to her or his heirs. Unless the co-tenants have agreed otherwise, a tenant in common can transfer her or his interest in the property to another without the consent of the remaining co-owners. In most states, it is presumed that a co-tenancy is a tenancy in common unless there is specific language indicating the intent to establish a joint tenancy.  OWNERSHIP AND OTHER INTERESTS IN REAL PROPERTY (5 of 13) Joint Tenancy: In a joint tenancy, each of two or more persons owns an undivided interest in the property, but a deceased joint tenant’s interest passes to the surviving joint tenant or tenants. Right of Survivorship: The right of a surviving joint tenant to inherit a deceased joint tenant’s ownership interest—referred to as a right of survivorship—distinguishes a joint tenancy from a tenancy in common. Termination of a Joint Tenancy: A joint tenant can transfer her or his rights by sale or gift to another without the consent of the other joint tenants. Doing so terminates the joint tenancy, however. The person who purchases the property or receives it as a gift becomes a tenant in common, not a joint tenant. A joint tenant’s interest can also be levied against (seized by court order) to satisfy the tenant’s judgment creditors. If this occurs, the joint tenancy terminates, and the remaining owners hold the property as tenants in common. (Judgment creditors can also seize the interests of tenants in a tenancy in common.)  OWNERSHIP AND OTHER INTERESTS IN REAL PROPERTY (6 of 13) Tenancy by the Entirety: A less common form of shared ownership of real property by married persons is a tenancy by the entirety. It differs from a joint tenancy in that neither spouse may separately transfer his or her interest during his or her lifetime unless the other spouse consents. In some states in which statutes give the wife the right to convey her property, this form of concurrent ownership has effectively been abolished. A divorce, either spouse’s death, or mutual agreement will terminate a tenancy by the entirety. Community Property: A limited number of states allow married couples to own property as community property. If property is held as community property, each spouse tech-nically owns an undivided one-half interest in the property. This type of ownership applies to most property acquired by the husband or the wife during marriage. It generally does not apply to property acquired prior to the marriage or to property acquired by gift or inheritance as separate property during the marriage. After a divorce, community property is divided equally in some states and according to the discretion of the court in other states.  OWNERSHIP AND OTHER INTERESTS IN REAL PROPERTY (7 of 13) Leasehold Estates: A leasehold estate is created when a real property owner or lessor (landlord) agrees to convey the right to possess and use the property to a lessee (tenant) for a certain period of time. The tenant’s right to possession is temporary, which is what distinguishes a tenant from a purchaser, who acquires title to the property. In every leasehold estate, the tenant has a qualified right to exclusive possession. It is qualified because the landlord has a right to enter onto the premises to ensure that no waste is being committed. The tenant can also use the land but cannot injure it by such activities as cutting down timber to sell or extracting oil. Fixed-Term Tenancy: A fixed-term tenancy, also called a tenancy for years, is created by an express contract stating that the property is leased for a specified time period, such as a month, a year, or a period of years. (Signing a one-year lease to occupy an apartment creates a fixed-term tenancy.) The term need not be specified by date and can be conditioned on the occurrence of an event, such as leasing a cabin for the summer.  OWNERSHIP AND OTHER INTERESTS IN REAL PROPERTY (8 of 13) At the end of the lease period, the lease ends (without notice), and possession of the property returns to the lessor. If the tenant dies during the period of the lease, the lease interest passes to the tenant’s heirs as personal property. Often, leases include renewal or extension provisions. Periodic Tenancy: A periodic tenancy is created by a lease that does not specify a term but does specify that rent is to be paid at certain intervals such as weekly, monthly, or yearly. The tenancy is automatically renewed for another rental period unless properly terminated. A periodic tenancy sometimes arises after a fixed-term tenancy ends when the landlord allows the tenant to retain possession and continue paying monthly or weekly rent. Under the common law, the landlord or tenant must give at least one period’s notice to the other party to terminate a periodic tenancy. However, state statutes often require a different period of notice before the termination of a tenancy.  OWNERSHIP AND OTHER INTERESTS IN REAL PROPERTY (9 of 13) Tenancy at Will: With a tenancy at will, either party can terminate the tenancy without notice. This type of tenancy can arise if a landlord rents property to a tenant “for as long as both agree” or allows a person to live on the premises without paying rent. Tenancy at will is rare today because most state statutes require a landlord to provide some period of notice to terminate a tenancy. States may also require a landowner to have sufficient cause (a legitimate reason) to end a residential tenancy. Tenancy at Sufferance: The mere possession of land without right is called a tenancy at sufferance. A tenancy at sufferance is not a true tenancy because it is created when a tenant wrongfully retains possession of property. Whenever a tenancy for years or a periodic tenancy ends and the tenant continues to retain possession of the premises without the owner’s permission, a tenancy at sufferance is created.  OWNERSHIP AND OTHER INTERESTS IN REAL PROPERTY (10 of 13) Nonpossessory Interests: Some interests in land do not include any rights to possess the property. These interests are therefore known as nonpossessory interests. They include easements, profits, and licenses. An easement is the right of a person to make limited use of another person’s real property without taking anything from the property. The right to walk across another’s property is an easement. In contrast, a profit is the right to go onto land owned by another and take away some part of the land itself or some product of the land. Easements and profits can be classified as either appurtenant or in gross. Because easements and profits are similar and the same rules apply to both, we discuss them together. Easement or Profit Appurtenant: An easement (or profit) appurtenant arises when the owner of one piece of land has a right to go onto (or remove something from) an adjacent piece of land owned by another. The land that is benefited by the easement is called the dominant estate, and the land that is burdened is called the servient estate. Because easements appurtenant are intended to benefit the land, they run (are conveyed) with the land when it is transferred.  OWNERSHIP AND OTHER INTERESTS IN REAL PROPERTY (11 of 13) Easement or Profit in Gross: In an easement or profit in gross, the right to use or take things from another’s land is given to one who does not own an adjacent tract of land. These easements are intended to benefit a particular person or business, not a particular piece of land, and cannot be transferred. When a utility company is granted an easement to run its power lines across another’s property, it obtains an easement in gross. Creation of an Easement or Profit: Most easements and profits are created by an express grant in a contract, deed, or will. This allows the parties to include terms defining the extent and length of time of use. In some situations, an easement or profit can be created without an express agreement. An easement or profit may arise by implication when the circum-stances surrounding the division of a parcel of property imply its creation. An easement may also be created by necessity. An easement by necessity does not require division of property for its existence. A person who rents an  apartment, for instance, has an easement by necessity in the private road leading up to it. OWNERSHIP AND OTHER INTERESTS IN REAL PROPERTY (12 of 13) An easement arises by prescription when one person exercises an easement, such as a right-of-way, on another person’s land without the landowner’s consent. The use must be apparent and continue for the length of time required by the applicable statute of limitations. (In much the same way, title to property may be obtained by adverse possession.) Termination of an Easement or Profit: An easement or profit can be terminated or extinguished in several ways. The simplest way is to deed it back to the owner of the land that is burdened by it. Similarly, if the owner of an easement or profit acquires the property burdened by it, then it is merged into the property. Another way to terminate an easement or profit is to abandon it and provide evidence of the intent to relinquish the right to use it. Mere nonuse will not extinguish an easement or profit unless the nonuse is accompanied by an overt act showing the intent to abandon. In any case, a court must be convinced that there was intent to abandon the easement or profit.  OWNERSHIP AND OTHER INTERESTS IN REAL PROPERTY (13 of 13) License: In the context of real property, a license is the revocable right of a person to come onto another person’s land. It is a personal privilege that arises from the consent of the owner of the land and can be revoked by the owner. A license grants a person the authority to enter the land of another and perform a specified act or series of acts without obtaining any permanent interest in the land. When a person with a license exceeds the authority granted and undertakes some action on the property that is not permitted, the property owner can sue that person for the tort of trespass.  TRANSFER OF OWNERSHIP (1 of 12) Ownership interests in real property are frequently transferred by sale, and the terms of the transfer are specified in a real estate sales contract. When real property is sold, the type of interest being transferred and the conditions of the transfer normally are set forth in a deed executed by the person who is conveying the property. Real property ownership can also be transferred by gift, by will or inheritance, by adverse possession, or by eminent domain. Real Estate Sales Contracts: A sale of real estate is like a sale of goods because it involves a transfer of ownership, often with specific warranties. A sale of real estate is a more complicated transaction that involves certain formalities that are not required in a sale of goods. In part because of these complications, real estate brokers or agents who are licensed by the state assist the buyers and sellers during the sales transaction. Usually, after substantial negotiation (offers, counteroffers, and responses), the parties enter into a detailed contract setting forth their agreement. A contract for a sale of land includes such terms as the purchase price, the type of deed the buyer will receive, the condition of the premises, and any items that will be included. Unless the buyer pays cash for the property, the buyer must obtain financing through a mortgage loan. Real estate sales contracts are often contingent on the buyer’s ability to obtain financing at or below a specified rate of interest.  TRANSFER OF OWNERSHIP (2 of 12) The contract may also be contingent on certain events, such as the completion of a land survey or the property’s passing one or more inspections. Normally, the buyer is responsible for having the premises inspected for physical or mechanical defects and for insect infestation. Closing Date and Escrow: The contract usually fixes a date for performance, or closing, that frequently is four to twelve weeks after the contract is signed. On this day, the seller conveys the property to the buyer by delivering the deed to the buyer in exchange for payment of the purchase price. Deposits toward the purchase price normally are held in a special account, called an escrow account, until all conditions of sale have been met. Once the closing takes place, the funds in the escrow account are transferred to the seller.  TRANSFER OF OWNERSHIP (3 of 12) Marketable Title: The title to property is especially important to the buyer. A grantor (seller) is obligated to transfer marketable title, or good title, to the grantee (buyer). Marketable title means that the grantor’s ownership is free from encumbrances (except those disclosed by the grantor) and free of defects. If the buyer signs a purchase contract and then discovers that the seller does not have a marketable title, the buyer can withdraw from the contract. The most common way of ensuring title is through title insurance, which insures the buyer against loss from defects in title to real property. When financing the purchase of real property, almost all lenders require title insurance to protect their interests in the collateral for the loan.  TRANSFER OF OWNERSHIP (4 of 12) Implied Warranties in the Sale of New Homes: The common law rule of caveat emptor (“let the buyer beware”) held that the seller of a home made no warranty as to its soundness or fitness (unless the contract or deed stated otherwise). Today, most states imply a warranty—the implied warranty of habitability—in the sale of new homes. Under this warranty, the seller of a new house warrants that it will be fit for human habitation even if the deed or contract of sale does not include such a warranty. Essentially, the seller is warranting that the house is in reasonable working order and is of reasonably sound construction. The seller can be liable if the home is defective. In some states, the warranty protects not only the first purchaser but any subsequent purchaser as well.  TRANSFER OF OWNERSHIP (5 of 12) Seller’s Duty to Disclose Hidden Defects: In most juris-dictions, courts impose on sellers a duty to disclose any known defect that materially affects the value of the property and that the buyer could not reasonably discover. Failure to disclose such a defect gives the buyer a right to rescind the contract and to sue for damages based on fraud or misrepresentation. There is normally a limit to the time within which the buyer can bring a suit against the seller based on the defect. Time limits run from either the date of the sale or the day that the buyer discovered (or should have discovered) the defect. Deeds: Possession and title to land are passed from person to person by means of a deed—the instrument used to transfer real property. Deeds must meet certain requirements, but unlike a contract, a deed does not have to be supported by legally sufficient consideration. Gifts of real property are common, and they require deeds even though there is no consideration for the gift.  TRANSFER OF OWNERSHIP (6 of 12) To be valid, a deed must include the following: (1) The names of the grantor (the giver or seller) and the grantee (the donee or buyer). (2) Words evidencing the intent to convey (e.g., “I hereby bargain, sell, grant, or give”). No specific words are necessary. If the deed does not specify the type of estate being transferred, it presumptively transfers the property in fee simple absolute. (3) A legally sufficient description of the land. The description must include enough detail to distinguish the property being conveyed from every other parcel of land. The property can be identified by reference to an official survey or recorded plat map, or each boundary can be described by metes and bounds (a system of measuring boundary lines by the distance between two points, often using physical features of the local geography). (4) The grantor’s (and usually his or her spouse’s) signature. (5) Delivery of the deed. Different types of deeds provide different degrees of protection against defects of title.  TRANSFER OF OWNERSHIP (7 of 12) Warranty Deeds: A warranty deed contains the greatest number of warranties and thus provides the most extensive protection against defects of title. In most states, special language is required to create a general warranty deed. Warranty deeds commonly include the following covenants: (1) A covenant that the grantor has the title to, and the power to convey, the property. (2) A covenant of quiet enjoyment (a warranty that the buyer will not be disturbed in her or his possession of the land). (3) A covenant that transfer of the property is made without knowledge of adverse claims of third parties. Generally, the warranty deed makes the grantor liable for all defects of title during the time that the property was held by the grantor and previous titleholders.  TRANSFER OF OWNERSHIP (8 of 12) Special Warranty Deed: A special warranty deed, or limited warranty deed, warrants only that the grantor or seller held good title during his or her ownership of the property and does not guarantee that there are no adverse claims by third parties against any previous owners of the property. If the special warranty deed discloses all liens or other encumbrances, the seller will not be liable to the buyer if a third person subsequently interferes with the buyer’s ownership. If the third person’s claim arises out of, or is related to, some act of the seller, the seller will be liable to the buyer for damages.  TRANSFER OF OWNERSHIP (9 of 12) Quitclaim Deed: A quitclaim deed offers the least protection against defects in the title. Basically, a quitclaim deed conveys to the grantee whatever interest the grantor had. If the grantor had no interest, then the grantee receives no interest. (If the grantor had a defective title or no title at all, a conveyance by warranty deed or special warranty deed would not cure the defect. Such a deed would give the buyer a cause of action to sue the seller.) Quitclaim deeds are often used when the seller, or grantor, is uncertain as to the extent of his or her rights in the property. They may also be used to release a party’s interest in a certain parcel of property. This may be necessary in divorce settlements or business dissolutions when the grantors are dividing up their interests in real property. Grant Deed: With a grant deed, the grantor simply states, “I grant the property to you” or “I convey, or bargain and sell, the property to you.” By state statute, grant deeds carry with them an implied warranty that the grantor owns the property and has not previously transferred it to someone else or encumbered it, except as set out in the deed.  TRANSFER OF OWNERSHIP (10 of 12) Recording Statutes: Once the seller delivers the deed to the buyer (at closing), legal title to the property is conveyed. However, the buyer should still promptly record the deed with the state records office. Every state has a recording statute, which allows deeds to be recorded in the public record for a fee. Deeds generally are recorded in the county in which the property is located. Many state statutes require that the grantor sign the deed in the presence of two witnesses before it can be recorded. Recording a deed gives notice to the public that a certain person is now the owner of a certain parcel of real estate. By putting everyone on notice as to the true owner, recording a deed prevents the previous owners from fraudulently conveying the land to other purchasers. Adverse Possession: A person who wrongfully possesses the real property of another (by occupying or using the property) may eventually acquire title to it through adverse possession. Adverse possession is a means of obtaining title to land without delivery of a deed and without the consent of—or payment to—the true owner. It is a method of involuntarily transferring title to the property from the true owner to the adverse possessor. Essentially, when one person possesses the real property of another for a certain statutory period of time, that person acquires title to the land. The statutory period varies from three to thirty years, depending on the state, with ten years being most common.  TRANSFER OF OWNERSHIP (11 of 12) Requirements for Adverse Possession: For property to be held adversely, the following four elements must be satisfied: (1) Possession must be actual and exclusive. The possessor must physically occupy the property. This requirement is clearly met if the possessor lives on the property, but it may also be met if the possessor builds fences, erects structures, plants crops, or even grazes animals on the land. (2) Possession must be open, visible, and notorious, not secret or clandestine. The possessor must occupy the land for all the world to see. This requirement ensures that the true owner is on notice that someone is possessing the owner’s property wrongfully. (3) Possession must be continuous and peaceable for the required period of time. This requirement means that the possessor must not be interrupted in the occupancy by the true owner or by the courts. Continuous does not mean constant. It simply means that the possessor has continuously occupied the property in some fashion and without force for the statutory time. (4) Possession must be hostile and adverse. In other words, the possessor cannot be living on the property with the owner’s permission and must claim the property as against the whole world.  TRANSFER OF OWNERSHIP (12 of 12) Purpose of the Doctrine: There are several public-policy reasons for the adverse possession doctrine. These include society’s interest in resolving boundary disputes, in deter-mining title when title to property is in question, and in assuring that real property remains in the stream of commerce. More fundamentally, the doctrine punishes owners who do not act when they see adverse possession and rewards possessors for putting land to productive use.  LIMITATIONS ON THE RIGHTS OF PROPERTY OWNERS (1 of 3) No ownership rights in real property can ever be absolute and the rights of every property owner are subject to certain conditions and limitations. Property ownership is also conditional on the payment of property taxes. Zoning laws and building permits frequently restrict the use of realty. If a property owner fails to pay debts, the property may be seized to satisfy judgment creditors. Eminent Domain: The government has an ultimate ownership right in all land in the United States. This right, known as eminent domain, is sometimes referred to as the condemnation power of government or as a taking. It gives the government the right to acquire possession of real property in the manner directed by the takings clause of the U.S. Constitution and the laws of the state whenever the public interest requires it. The power of eminent domain generally is invoked through condemnation proceedings. Condemnation proceedings usually involve two distinct phases. The first seeks to establish the government’s right to take the property, and the second determines the fair value of the property.  LIMITATIONS ON THE RIGHTS OF PROPERTY OWNERS (2 of 3) Right to Take the Property: In the first phase of condemnation proceedings, the government must prove that it needs to acquire privately owned property for a public use. Just Compensation: The U.S. Constitution and state constitutions require that the government pay just compensation to the landowner when invoking its condemnation power. Just compensation means fair value. In the second phase of the condemnation proceeding, the court determines the fair value of the land, which usually is approximately equal to its market value. Property may be taken by the government only for public use, not for private benefit.  LIMITATIONS ON THE RIGHTS OF PROPERTY OWNERS (3 of 3) Inverse Condemnation: Inverse condemnation occurs when a