Business Law and the Regulation of Business BU 385: Senior Outcomes Seminar Definition of Law— “a rule of civil conduct prescribed by the supreme power.

Business Law and the Regulation of Business

BU 385: Senior Outcomes Seminar

Definition of Law— “a rule of civil conduct prescribed by the supreme power in a state, commanding what is right, and prohibiting what is wrong” (Blackstone)

Functions of Law — to allow a civilized society

Classification of Law Substantive Law or Procedural Law

Substantive— law creating rights and duties Procedural— rules for enforcing substantive

law Public Law or Private Law

Public— law dealing with the relationship between government and individuals

Private— law governing the relationships among individuals and legal entities

Classification of Law (cont.) Civil and Criminal Law

Civil— law dealing with rights and duties the violation of which constitutes a wrong against an individual or other legal entity

Criminal— law establishing duties which, if violated, constitute a wrong against the entire community

Classification of Law

Substantive Law

Public Law

Constitutional LawCriminal Law

Administrative Law

Private Law

TortsContracts -- SalesCommercial Paper

AgencyPartnershipsCorporations

PropertyMethods of enforcement

(courts)

ProceduralLaw

OR

Comparison of Civil & Criminal Law

Civil Law Criminal LawCommencement ofaction

Aggrieved individual(plaintiff) sues

State or federal governmentprosecutes

Purpose Compensation PunishmentDeterrence Deterrence

RehabilitationPreservation of peace

Burden of proof Preponderance of theevidence

Beyond a reasonable doubt

Outcome Liable/Not liable Guilty/Not guiltyMonetary damages Capital punishmentEquitable remedies Imprisonment

Fines

Principal sanctions

Five Sources of Law1. Constitutional Law -- fundamental law of a

government establishing its powers and limitations

Judicial Law -- 2. Common Law body of law developed by the

courts 3. Equity based upon principles distinct from

common law and providing remedies not available at law

Five Sources of Law

4. Legislative Law -- statutes adopted by legislative bodies includes Treaties and Executive Orders 

5. Administrative Law -- rules, regulations, orders, and decisions made by administrative agencies¤

Political System Review Three branches of government create laws:

Legislative: elected representatives write specific laws (“statutes”) to deal with future problems

Executive: issues Executive Orders and recommends new laws to legislature

Judicial: judges decide existing cases based on laws, constitutions, administrative regulations

“Fourth Branch of Government” - Administrative Agencies

Dual System of GovernmentState: Legislative

Trenton State Senators State Assembly

Executive Governor

Judicial Superior Courts State Courts of Appeal State Supreme Court

Federal: Legislative

Congress (D.C.) Senate House of Reps.

Executive President

Judicial Federal Dist. Courts Circuit Cts. of Appeal U.S. Supreme Court

Constitutional Law United States was the first to create Preamble:

“…of the people, by the people, for the people.” Purposes:

Establish system of government Limit the role of government Guarantee certain rights

Can be altered by Amendment process (rare) 1 Federal and 50 State constitutions

Statutory Law “Legislative” laws created by elected reps. Designed to deal with frequently-arising

problems or issues Process:

Drafted by committees Discussed and voted upon Codified in orderly manner in statute books

Must be consistent with constitution Cf: federal vs. state constitution

Exec. Orders, Admin. Rules Executive Orders

President, Governor, Mayors, County Execs. Limited on only by applicable constitution Appoint administrative agencies

Administrative Agency Rules and Regs. “The Fourth Branch of Government” “In-your-face” government Binding on all citizens, if properly adopted APA: Administrative Procedures Act

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Judicial Law: “Common Law” and Precedents

Concept of stare decisis: similar cases should be decided similarly Purpose: promote fair outcomes Creates ordered society

When confronted with a precedent, courts: Accept precedent as binding authority “Distinguish” precedent from present case Modify in view of changing social norms Over-rule in view of new law or social norms

Law of Equity Evolved from the Chancellor’s Court

King’s court applied the common law Common law: Specified remedies

When money damages will not work Injunctions Restitution Specific performance Habeas corpus

Lawsuits: Terminology Parties

Plaintiff vs. Defendant (State vs. Defendant)

Complaint, summons, pleadings Motions to the court Judgment Appellant vs. Appellee or Respondent Collecting on Judgment or Sentence

Jurisdiction Subject Matter Jurisdiction – authority of a

court to decide a particular kind of case. Jurisdiction over the Parties – the power of a

court to bind the parties to a suit .

Civil Procedure The Pleadings – a series of statements that give

notice and establish the issues of fact and law presented and disputed. Complaint – initial pleading by the plaintiff stating his

case. Summons – notice given to inform a person of a lawsuit

against her. Answer – defendant's pleading in response to the

plaintiff's complaint. Reply – plaintiff's pleading in response to the defendant's

answer.

Stages in Civil ProcedurePleadings

Pretrial

Trial

Appeal

Enforcement

Determine what facts are in dispute

Discover what evidence there is to prove the facts in dispute

Determine what facts are provided by the evidence

Review the lower court’s actions for prejudicial error

Implement the court’s judgment

Complaint, Answer, Reply

Discover, Conference, Summary Judgment

Jury Selection Opening Statements

Introduction of Evidence Closing Arguments

Judgment on Verdict

Briefs and TranscriptOral Argument, Decision

Execution, Garnishment

Alternative Dispute Resolution Arbitration – a nonjudicial proceeding in which a neutral

party selected by the disputants renders a binding decision (award).

Conciliation – a nonbinding process in which a third party acts as an intermediary between the disputing parties.

Mediation – a nonbinding process in which a third party acts as an intermediary between the disputing parties and proposes solutions for them to consider.

Criminal Law Definition – any act or omission forbidden by

public law. Essential Elements

Actus Reus – wrongful or overt act. Mens Rea – criminal intent or mental fault.

Classification Felony – a serious crime. Misdemeanor – a less serious crime

Liability for Crimes Vicarious Liability – liability imposed for

acts of employees if the employer directed, participated in, or approved of the acts.

Liability of a Corporation – under certain circumstances a corporation may be convicted of crimes and punished by fines.

White-Collar Crime Definition – nonviolent crime involving

deceit, corruption, or breach of trust. Computer Crime – use of a computer to

commit a crime. Racketeer Influenced and Corrupt

Organizations Act (RICO) – federal law intended to stop organized crime from infiltrating legitimate businesses.

Crimes Against Business Larceny = stealing Embezzlement = larceny + breach of trust False Pretenses = larceny + lie Robbery = larceny + force Burglary = larceny + breaking / entering Extortion = larceny + threats Bribery = undue influence Forgery = falsifying documents

Defenses to Crimes Defense of Person or Property – individuals

may use reasonable force to protect themselves, other individuals, and their property.

Duress – coercion by threat of serious bodily harm; a defense to criminal conduct other than murder.

Mistake of Fact – honest and reasonable belief that conduct is not criminal.

Entrapment – inducement by a law enforcement official to commit a crime.

Tort LawI. Negligence

A. Breach of Duty of Care B. Proximate CauseC. InjuryD. Defenses to Negligence

Negligence Definition of Negligence – conduct that falls below

the standard established by law for the protection of others against unreasonable risk of harm.

Reasonable Person Standard – degree of care that a reasonable person would exercise in a given situation.

Duty to Act – except in special circumstances, no one is required to aid another in peril.

Defenses to Negligence Contributory Negligence – failure of a plaintiff to

exercise reasonable care for his own protection, which in a few States prevents the plaintiff from recovering anything.

Comparative Negligence – damages are divided between the parties in proportion to their degree of negligence; applies in almost all States.

Assumption of Risk – plaintiff's express consent to encounter a known danger, some states still apply implied assumption of the risk – negates negligence.

Strict Liability Definition – liability for non-intentional and non-

negligent conduct. Activities Giving Rise to Strict Liability

Abnormally Dangerous Activities – involve a high degree of serious harm and are not matters of common usage.

Keeping of Animals – strict liability is imposed for wild animals and usually for trespassing domestic animals.

Products Liability – imposed upon manufacturers and merchants who sell goods in a defective condition unreasonably dangerous to the user.

Defenses to Strict Liability Contributory Negligence – is NOT a defense

to strict liability. Comparative Negligence – most States apply

this doctrine to products liability cases. Assumption of Risk – is a defense to an

action based upon strict liability.

Contracts Definition of Contract – a binding

agreement that the courts will enforce. Governing Law: either

Common Law – most governed by common law (employment, services, insurance, real property, patents, and copyrights).

Article 2 of the Uniform Commercial Code (UCC) – for sale of goods over $500

Requirements of a Contract Mutual Assent – the parties state by words or

conduct that they have agreed to enter into a contract (offer + acceptance)

Consideration – each contracting party’s intentional exchange of a legal benefit for a legal detriment

Legality of Object – the purpose of a contract must not be criminal, tortious, or otherwise against public policy

Capacity – the parties to a contract must have contractual capacity

Classification of Contracts Express and Implied Contracts

Express Contract – an agreement that is stated in words, either orally or in writing.

Implied in Fact Contract – a contract in which the agreement of the parties is inferred from their conduct.

Bilateral and Unilateral Contracts Bilateral Contract – a contract in which both

parties exchange promises. Unilateral Contract – a contract in which only

one party makes a promise.

Classification of Contracts (cont.) Enforceability:

Valid Contract – one that meets all of the requirements of a binding contract.

Void Contract – no contract at all; agreement has no legal effect.

Voidable Contract – a contract capable of being made void.

Unenforceable Contract – a contract for the breach of which the law provides no remedy.

Essentials of an Offer 1. Communication – offeree must have

knowledge of the offer and the offer must be made by the offeror to the offeree.

2. Intent – determined by an objective standard of what a reasonable offeree would have believed.

3. Definiteness – offer's terms must be clear enough to provide a court with a basis for giving an appropriate remedy.

Terminating an Offer1. Acceptance

2. Lapse of Time – reasonable or stated time passes

3. Revocation –terminated before it is accepted

4. Rejection – refusal to accept an offer

5. Counteroffer – counterproposal

6. Death of Offeror or Offeree

7. Destruction of Subject Matter of the offer

8. Subsequent Illegality of subject matter of offer

Conduct Invalidating Assent Duress Undue Influence Fraud

Fraud in the Inducement Fraud in the Execution

Mutual Mistake

Consideration Definition – the inducement to enter into a

contract Elements –

Legal Benefit – obtaining something to which one had no prior legal right.

Legal Detriment – doing an act one is not legally obligated to do or not doing an act that one has a legal right to do.

Adequacy – not required where the parties have freely agreed to the exchange.

Consideration: special cases Past consideration: not valid Illusory Promises: not valid Outputs Contracts: (“I’ll buy whatever you

produce”) = valid Requirements Contracts: (“All I require, I’ll

buy from you”) = valid Accord & Satisfaction = valid

Illegal (unenforceable) bargains Gambling Statutes Usury Laws Agreements to commit a crime or tort Restraint of trade, with exceptions:

Non-compete agreements Trade secrets

Unconscionable bargains

EFFECT: court leaves the parties as they were

Contractual Capacity Three exceptions to presumed capacity: Minors – liable only for necessaries Incompetent Persons –

Under guardian care: contracts void No guardian: contracts voidable

Intoxicated Persons – must act promptly upon regaining sobriety

EFFECT: must disaffirm or ratify when capable

Contracts in Writing: “my legs” Marriage: contracts in consideration of marriage Year: can’t possibly be performed in 1 year Land: any agreement pertaining to land Executor’s promise to personally pay for estate Goods over $500 Surety: promise to pay for the debt of another EFFECT: court leaves the parties as they were; will

not enforce the agreement

Third Parties to Contracts1. Assignment of Rights: (“you get what I

would have gotten”) Consent of benefitting party is not needed

2. Delegation of Duties: (“you do what I was supposed to do”)

Requires consent of new acting party Original party still bound unless novation

(substitution) obtained

3. Third-Party Beneficiary Contracts:

3.Third Party Beneficiary Contracts Definition – a contract in which one party promises to

render a performance to a third person (the beneficiary). Intended Beneficiaries – third parties intended by the

two contracting parties to receive a benefit from their contract (e.g., insurance contract).

Donee Beneficiary – a third party intended to receive a benefit from the contract as a gift (enforceable against promisor).

Creditor Beneficiary – a third person intended to receive a benefit from the agreement to satisfy a legal duty owed to her (enforceable against promisor and promisee).

Conditions: an event that affects duty or performance

Express Condition – contingency explicitly stated Implied Conditions:

Implied-in-Fact Conditions – contingency understood by the parties to be part of the agreement, although not expressed.

Implied-in-Law Conditions – contingency not contained in the contract but imposed by law; also called a constructive condition.

Concurrent Conditions – conditions that are to take place at the same time.

Conditions Precedent – an event that must or must not occur before performance is due.

Discharge of Contracts Discharge by performance Discharge by agreement:

Rescission: mutual agreement to terminate Substituted contract Accord and satisfaction

Discharge by breach: Material breach Substantial performance Anticipatory repudiation

Discharge by operation of law (bankruptcy, etc.)

Remedies Monetary Damages: benefit of the bargain Remedies in Equity: non-monetary Restitution: restore to pre-contract position Limitations on Remedies

Foreseeable Certain Mitigation of damages

Remember: do the math!

Statutes to know Sarbanes-Oxley Act (“SOX”) Sherman Anti-Trust Act Uniform Partnership Act Revised Model Business Act Americans with Disabilities Act (“ADA”)

When in doubt …1. Go with the plain meaning of words

2. Look for the outcome that promotes:A. regular course of business practices

B. individual accountability

Good luck!