Business Law Notes PDF

Chapter 31: Starting a business Compare sole proprietorships, general partnerships, corporations and limited liability companies in terms of (i) personal liability of the owners, (ii) income taxation, (iii) management (iv) ownership, (v) the ability to transfer ownership, and (vi) formation requ...

Chapter 31: Starting a business Compare sole proprietorships, general partnerships, corporations and limited liability companies in terms of (i) personal liability of the owners, (ii) income taxation, (iii) management (iv) ownership, (v) the ability to transfer ownership, and (vi) formation requirements of the entity  What are C corporations and S corporations Know the different terminology used with corporations and limited liability companies: shareholders own corporations / members own limited liability companies Know the role of shareholders, directors and officers of a corporation What are the 3 options for management of a LLC What officers must a corporation have? President and secretary Review the formation requirements for a LLC and a corporation **Chapter 32** **Duty of loyalty**-most be solely focused on improving the company **Duty of care**-If your a manager and you are asked to go do something like buy a piece of land and it was done poorly you can be sued for not having a duty Of care **Chapter 33** **Promoter's liability** example if I do something on behalf of Tony's pizza inc before the corporation is made, I have done wrong under this idea What is the registration agent for a coporpoartion or for a LLC? That is the person designated in its official document to receive **any official mailings** or to serve in any lawsuits If you form a corporation or a LLC the law requires that your name includes one of the words in the statute like INC., CO. or Corp. For those business entities to fill the document they fill it in the secretary of state officer **Corporate veil** the legal concept that protects the individuals associated with the business that is connected with liabilty However in some cases the law can **pierce the corporate veil** means that the corporations have done something improper causing the law to pursue that [There's only one way to sign the agreements] **Tony's Pizza, Inc.** **By: Tony Saunders** **Tony Saunders,** **Member** **What is authorized stock?** A maximum amount of stocks a company can legally use **Straight voting**-normal voting **Cumulative voting**- multiplying there votes **Chapter 34** **The business judgment rule**-this protects the manager because everyone makes mistakes, if it's shown that you tried and you approach it correctly this would be make you NOT liable **Corporate opportunity doctrine-** if you took an opportunity away from your company. For example if you found a piece of land and bought it for yourself instead for the company then you can be sued for this. **Asset sale:** if jet's pizza wants to acquire tony's pizzas asset it just pay tony's pizza those assets, tony's pizza doesn't have anything expect the money. The thing with asset sale is Jet's pizza doesn't take in any of the liability just the assets so its good for the company. **Merger**: two companies merge and one company is the surviving company. When you merge you take all assets and liabilities **Stock Sale**: you directly go to the shareholders and buy the stocks from them **Chapter 36 Bankruptcy** **Chapter 7**-liquidation- all the company of an asset is all liquidated and the cash is all spread out with the predators **Chapter 11**-reorganization for business- the company stays in business, they have the help brankcurpcty corp to help organize to debts. Spirit airlines just filled a chapter 11 bankruptcy. **Chapter 13**- reorganziation for individual wage earners- it's the same thing as chapter 11 but for individuals not business entities **Chapter 37** **Securities act of 1933** governors and regulates the initial issuateds of securities. Stocks or other types of sophisticated instruments **Securities exchange act of 1934** regulations the subsequent buyong and selling of previously issued securities **Contracts** [Contract law comes primarily from the common law, law made by the courts.] But there is a statute known as the **uniform commercial code**, contracts that deal the sales of goods To have a valid contract it has to have an o[ffer, acceptance, consideration, legailuty, capacity, and constent ] If one of those aren't completed, in theory, you can use promissory estoppel and quasi-contract **Promissory estoppel** is when a promise is made to you and it would be inequitable to allow a company relive on that promise. Example if an insurance comapny **tells** you that you that you have coverage against flood damage **Quasi-contract** if the contract is defective and it involves tangible items you have to give them back. For example, a 17 year old goes by a car and that agreement to buy that car is defective because of capacity of age, the car company can't sue under breach on contract but they can sue under this theory of quasi contract which says you can't keep the items under a defiecitve agreement **Chapter 12 Offers and acceptances** **Offers**- Are price quotes or a letter of credit is considered to be an offer by the public? The answer is No but there was no exception, from old england where they advertised the smoke ball that killed the flu and she still got the flu. Because the advertisement was so specific, they said they would give her 100 pounds, that's the only exception I**n order to have a valid contract, it needs to more specific especially when looking at cases like the sopranos. The director and t**he writer and TV series because th director told the writer that if the sopranos took off he would "take care of the writer" **Mirror image rule**- the acceptances has to be the mirror offer of the agreement. You cannot change it **Mailbox rule**-once you put your acceptance letter in the mail then you have binding agreement, it's binding before it even reaches the other person in the mail **Chapter 13 Consideration** Each party must give something of value for legal consideration **the peppercorn theory-** Even something as small as a peppercorn suffices as a consideration Having preexisting duty is not consideration for a new promise or agreement. For example, if Saunders said "I'll come to class if you pay me" to the studenets and Saunders shows up and we don't pay him and he says "he'll sue" he can't because he already has preexisting duty to teach **Chapter 14 Legaility** Subject matter of the contract must be legal Questions about licensing If you enter an agreement with someone and they don't have a license it makes it defective Saunders farm builder must have a liscense if he doesn't then it's not legal **Noncompete agreement-** (an employer requires that an employee sign as a condition of employment) -- are for the most part unenforceable after the recent Federal Trade Commission Ruling **Exculpatory clauses** (a contract clause that attempts to pre-release a party from any future liability to the other party). in business, it protects directors from personal liability to the corporation and its shareholders. Usually those are not effective but there is an exception- **"bailment relationships"** (i.e., you leave your clothes in a locker at the gym). **Chapter 15 Capacity** You have to be 18 at least if not the contract is not valid How old do you have to be to be protected of age disrcimantion? 40 years If you are not able to understand the nature of the agreement, then it's not valid. Even if you are so drunk you are not able to understand the court deems it to be a defective contract Consent If you have a valid contract, your consent must be freely given if there is fraud, mistake, or un due influence then it is not a contract **Chapter 16 Written Contracts** Some contracts must be in writing to be enforceable for example contracts dealing with land Parole evidence rule- a rule of evidence that states that if you do have a written contract and there is dispute between the parties that written contract is **only** used to help fight the dispute **Chapter 17 Third Parties** Noramlly, only parties to a contract may sue to enforce it Third party beneficiary-this means they are not apart of the deal directly but they do gain something from the contract examples are subcontractpors on a construction contract Signing rights to a contract, you can seal your rights to someone else unless the contract prohibits it Even if you do seal your rights, it's important to assign your rights and delegate your duties, and you need to push both those things to whoever your assigning them too **Chapter 18 termination** **Conditions**- where you have a contract that has a condition in it that must be met before the other parties duty to perform has been triggered **Condition precedent**- is like a real estate purchase agreement where the buyers duty is conditioned whether or not they can get it financed Quality of your performances under a contract It doesn't have to be perfect, you just have to substantial peroframce meaning that a reasonable person can see that you worked hard Time of the essence clauses- deadlines are to be strictly construed **Anticipatory breach**- is where you announce a head of time tht you are gonna breach the agreement, it discharges the other party from any duty to perform **Chapter 19 Remedies** **3 Primary types of damages** 1. 2. 3. **Chapter 41 Intellectual property** **Patent types** **1. Design** **2. Utility** **3. Plant** The volksegawen example with the unique design is a **design** patent type **Utility** is something completely new **Plant** is a type of science or biology You have to fill a patent application and it's the first one who fills [Utility and plant patents have a longer period of protection than design, they get 20 years compared to 15 years] If you merely discover something like stephen hawkins like black holes that's naturally occuring stuff you **dont** get a patent cause its a discover **Copyrights** owns the particular tangible expression of an idea (not the idea itself) **Copyrights as soon as you put your idea in a tangible form you get protection but it's still important to fill** **Patents you need to fill out the form** **First sale doctrine** means you can purchase copyrighted material and sell it but can't copy it. Buying a book and selling it at a yard sale, but you can\'t make a copy and sell it **Parody** is another exception under the first sale doctirne **Digital millennium copyright act** a federal statue to increase pentatliy and it protects copyright owners from online theft **Trademarks** come immediately and it's a word or symbol that a business uses to identify themselves like the nike swoosh sign. ™ or R. **Chapter 29** **Employment at Will doctrine** says that an employer can hire and fire without showing a reason cause. However, there are many expectations to the doctrine If you fire someone wrongfully you can sue for **wrongful discharge** What's a tort for workplace bullying? **Intentional infliction of emotional distress** **Family and Medical leave act**- provides for the right of up to 12 weeks of unpaid leave each year for childbirth, adoption or medical emergenices **OSHA**- protects employee safety in the workplace and establishes a federal agency to enforce, requires hardhats on a construction site **Guns**- employers have the right to prohibit guns in the workplace byt in about ½ of the states "Bring your gun to work" laws prevenet companies from banning firearms left by employees in their locked vehicles in the parking lot of the job site. **FLSA** (addresses minimum wages, overtime and child labor restrictions **Worker's compensation insurance**-insurance available to employees for injuries at work. **COBRA**- maintains health insurance for 18 months after termination of employment but you do have to pay for it **Social Security Act-** (an entitlement program providing benefits at retirement age or if temporarily unemployed, etc.) **ERISA-** protects workers covered by private pension plans. **​​National Labor Relations Act** -- protects union activity and they cannot tell them to stop and have to listen to them **Chapter 30** **Constitutional protections**- 14th amendment prohibts the government from discriminating in the workplace to do so would violate the equal protection clause **Equal Pay act of 1963**- a federal statue requiring equal pay for comparable worl irrespective of the sex of the employee **Title VII of the civil rights act of 1964**- prohibits all employers with 15 or more employees from discriminating on the basis of race, color, religion, sex or national orgin. ***Sexual Harassement: there are two types*** **Quid quo pro**-one thing in return for the other, go out with me and you'll get a promotion **Hostile work environment** is like inaprottatie pictures in the work room or pictures on someomnes screensaver **Age discrimantions after age of 40** cannot be discriminate by age **Americans with disabilities act-** a law requiring employers to make reasonable accommodations for disabilities **Affirmative action** is a tool not a legal requirement **Reverse dsicrmination** is ones that aren't minorities **Genetic information nondiscrimnation act**-protects employees against the use by employers of genetic information in employment decisions **Chapter 42** **Real Property** includes: surface of land, subsurface rights, permanent buildings, air space to some level, plant life, and fixtures **Ownnership interests in land** **Fee simple absolute**- where you own the land fully **Life estate/remainder interest**-for example if Tony's mother still lives in the farm house it's life estate but after she died the remainder interset goes to her son, Tony, becomes the owner. **Fee simple defeasible**- for example if Tony Saunders gave his land to Belmont as long as they are using it for a higher education is a common example for a church **Joint ownership** 1. 2. 3. **Other Property Rights** **Easements**- the right to cross or enter someones land **Profit-** The right to enter land belonging to another and take something from it because you informed them of something valuable like a mining company telling you there are valuable nickels under you land, the mining company has a right to receive profit from that **License-** The right to temporarily enter land belonging to another, for example entering a basketball arena **Deed of trust/mortgage-** A document that pays a loan that secures payment from the loan to the bank. A security interest in real property. a lien on land to secure payment of a debt) **Adverse possession** is as if you own something to the world but you really don't and if nothing is said then 1. 2. 3. 4. Commerical type of lease known as a **triple net lease**. A mall with all those stores they pay the landlord and they pay the triple net lease, property taxes, property insurances and utility