LAW B FINAL
Chapter 1
Common Law- Based off of Great Britain laws, King made all rules and everyone
followed them. Once a decision is made on a case, it should be respected, and future
cases of similarity should be judged accordingly.
Precedent- Stare Decisis- Once a decision is made on a case, and a future case of
similarity comes up, the court uses the same decision in the new case.
Judicial Review- The process in which the judiciary branch of government can decide
whether or not the laws or actions of the other two branches are constitutional.
State Action- Constitutional law concept, only provide against state action trying to take
your liberties away
Restatement- Summary of the law in a particular area or state- like Cliffnotes
Equal Protection- Only applies to Federal Government, NOT private sector.
Ex. Arkansas passes law saying Walmart must pay 10% income tax but all other
companies pay only 5% tax. This is NOT legal under equal protection.
Treating classes of people differently is not always illegal.
Double Jeopardy- Multiple prosecutions by the same sovereign is not allowed. Trial
cannot be retried even if new evidence is discovered later. If you are tried for rape and
proven innocent, they cant try you for assault and battery. Can be sued in civil court if
found innocent in criminal court. Ex. O.J. Simpson
Burden of Proof- Criminal court has to prove defendant guilty beyond all reasonable
doubt. Civil court only has to prove guilty by preponderance of doubt (dont have to be
completely sure the defendant is guilty)
Chapter 2
US Court of Appeals- Eighth Circuit- Arkansass Federal Court of Appeals- Heard by 3
judges, they all write formal documents with their opinion on the case, and the decisions
are final on all other courts within its boundaries.
Federal Jurisdiction- Power of civil court to hear a case- must have jurisdiction over
person and subject matter to accept case. To have jurisdiction over a person, the
defendant must be a resident of the state in question unless Long Arm Statute, which
allows suing in a different state because of sufficient contacts. US Constitution requires
minimum contacts.
Minimum Contacts- Having a business in state, committing a tort in that state, or an
accident on highway in that state.
Summary Judgment- Occurs when judge reviews case and decides that there is no
disputable evidence and the judge makes the verdict before the trial.
Jury Selection- Anyone can be chosen. Discriminating is not allowed, only if you know
either the defendant, plaintiff, or either of the lawyers can you not participate in the jury.
Alternative Dispute Resolution- Faster and cheaper than trial, avoids the all-or-none
result. Two types
1. Arbitration- Third party settles the case, non-binding or binding
2. Mediation- Third party settles the case, binding only
Chapter 3
Deadly Force- Can only be used as a means to defend property. Deadly force is
appropriate when danger to life is present.
-Assault- Any intentional, unexcused act that creates in another person a reasonable
apprehension or fear of immediate harmful or offensive contact. Main thing is that there
is NO contact.
-Battery- An unexcused and harmful or offensive physical contact intentionally
performed.
Shopkeepers Privilege- The store has the right to detain the suspect for reasonable
amount of time, using responsible methods of constraint. They have to be careful not to
harm the character of that suspect if they are innocent (defamation).
Defamation- Wrongfully hurting someones good reputation. Must be communicated to
a third party, must be false, and must cause damages to the person. Two types
1. Libel- Defamation in writing
2. Slander- Defamation orally
-Public Figure- Must prove malice to win case.
-Malice- Statement that is made with either knowledge of falsity or reckless disregard of
the truth.
Intentional Infliction of Emotional Distress- An intentional act that amounts to extreme
and outrageous conduct resulting in severe emotional distress to another.
Ex. A prankster calls an individual and says that the individuals spouse has just been in a
horrible accident. As a result, the individual suffers intense mental pain or anxiety. This
is deemed to be extreme and outrageous conduct that exceeds the bounds of decency
accepted by society.
Conversion- Any act that deprives an owner of personal property without that owners
permission and without just cause.
Shannon v. Ashworth- Case involving three underage teenagers that bought alcohol from
a store, where the clerk did not card them. One of them got out of the car later, and the
other two crashed into a tree and died. The family of these two tried to sue the alcohol
store and the clerk. The court ruled that the clerk was not responsible for these kids death
because a reasonable person would not believe that they would drink, drive, and crash
into a tree, killing themselves.
Negligence- Unintentional Tort- Generally, there is no issue of law, all based on fact.
There are 3 basic elements
1. Duty- The job, what you are supposed to do on a daily basis for that job.
2. Breach of Duty- Reasonable Person Standard- The court asks how a reasonable
person would have acted in the same circumstances.
3. Causation- The failure to exercise reasonable care, must have caused the victim
harm.
Comparative Negligence- Enables both the plaintiffs and the defendants negligence to
be computed and the liabilities for damages distributed accordingly. Ex. If a plaintiff is
35% at fault, he could recover 65% of his/her damages. If over 50% at fault, you cannot
recover any of it.
Chapter 4
Elements of Contract- Agreement, consideration, capacity, and legality. A contract does
not have to be in writing.
Irrevocable Contract- This has to be in writing and will say in the contract that it is
irrevocable.
Mailbox Rule- Once an acceptance has been deposited in a mailbox, it is out of the
offerees possession. Under this rule, if the authorized mode of communication is the
mail, then an acceptance becomes valid when it is dispatched by mail (Even if it is never
received by the offeror).
Pre-existing Duty- States that consideration does not exist if parties are already
contractually obligated to carry out the contract. Ex. Trevor is the star pitcher for an
MLB team and they are playing in the 7th game of the World Series (the last one) and
he comes up to the manager and says he wont play unless he gets more money. The
manager agrees and the pitcher plays. After the game, the pitcher demands for the money
and the manager will not comply. The pitcher sues but gets no money because he had a
previous contract that obligated him to play in the 7th game, or any other game.
Statute of Frauds- Not all contracts must be in writing; however there are a few
exceptions to the rule.
1. Sale of land
2. Contracts that can not be completed within one year
3. Promise to stand behind the debt of another (Collateral)
4. Marriage
5. Sale of goods greater than $500
Chapter 5
Condition Precedent- No deal unless something specific happens. Ex. Contract to buy is
depended upon buyers ability to receive financing. Does not mean breach of contract, it
is just a failure to meet precedents.
Subject Satisfaction- Satisfaction Guaranteed- Two Types
1. Subjective Standard- Consumer products- If you are not completely satisfied with
an item, you can take it back and not give a reason.
2. Objective Standard- Business environment- If you have a contract with someone
else and want to end it, you have to give a good reason and the other party has to
agree.
Time of Performance- Contract must be fulfilled in a reasonable amount of time, unless it
says time is of the essence in the contract. If not completed by this date, than the
contract is void.
Operation of Law Discharge- Recission= Mutual agreement to end contract- A provision
in law allowing for the void of the contract.
-Statute of Limitations- Only limited amount to sue for breach. Differs from state to
state/case to case. If a contract is breached, but a new contract has been established, the
statute of limitations resets if it had previously expired.
Mitigation of Damages- Responsibility of the wronged to make damages as small as
possible. In the event of a breach of contract, we are responsible to make the damages of
the contract as little as possible. Not allowed to take actions to increase the damages
done.
Specific Performance- Forces party to complete the responsibilities of the contract.
Consequential Damages- Indirect and Foreseeable- Ex. Walmart supplier is late
delivering the goods, causes a loss of profit- The supplier could be held liable for the loss
of earnings that would normally be achieved through the sale of the products to be
delivered.
Liquidated Damages- Prenuptial agreement- Damages the parties have agreed to in the
contract in case of a breach.
Chapters 6 and 7
Partnership- Organization of two or more entities to carry out business for a profit. Could
be two people who just shake hands, contract is not necessary. All profits are split
equally, even if one partner paid more. Each partner is responsible for the others debts
and their actions are liable to you.
LLP- Limited Liability Partnership- Same as partnership, but not responsible for the other
partners tort debts.
Corporation Pyramid- Corporations are set up like a pyramid
1. Shareholders/Stockholders- they hire
2. Board of Directors- they actually run the business- they hire
3. Officers/Employees
Derivative Action- Class action suit from shareholders to directors/officers because of
some negligence on the part of directors/officers
Piercing Corporate Veil- Treating business as though it is a partnership. Hiding behind
the corporation to try and get out of debt.
LLC- Limited Liability Corporation- LLC does not pay income taxes. Liability is just like
a normal corporation, meaning that shareholders have liability only up to their
investment. Can have as many members/shareholders as they want.
Articles of Incorporations- Filing in appropriate state office. Must include
1. Name- Name must actually be available and include Inc or some other
abbreviation determined by state (corp., co., company, etc.)
2. Name of Incorporators- the people who are actually incorporating the firm
3. Numbers of authorized shares of stock
Chapter 8
Supervision and Control- A principal is represented by an agent- Two types of agents
1. Master/Servant- Employer/Employee- Hired for multiple jobs, not just a one time
thing.
2. Independent Contractor- Someone who has been hired to achieve some outcome,
but there is no day to day control on part of principal- one time deal
Power of Attorney- Written Express Authority
Express Authority- Most common- An actual and affirmative declaration by the principal,
basically the principal writes out what the agent can and cant do
Implied Authority- Authority someone has because of his/her position in a business.
Their normal responsibilities
Apparent Authority- Not an actual agency, very rare- Legal Doctrine rarely used in which
a person appears to be an agent because of some action by the principal
Contract Liability- The principal is responsible for the agent if he follows the expressed,
implied, apparent or authority. Only if it is Master/Servant, if it is an independent
contractor, than the principal is not responsible
Ratification- Occurs when the principal affirms an agents unauthorized act. The act is
treated as if it had been authorized by the principal from the outset.
Termination- Two types1. Agents of Term- They are hired for exactly that: a predetermined period of time
(term). A reason is absolutely necessary to fir someone who has a contract over a
term.
2. Agents Hired at Will- There is no time restriction of the employment, and the
relationship can be terminated at any time for any reason, be there a reason or not
Respondeat Superior- The principal may be held liable for torts caused by the agent. Has
to be on the job.
Taylor v. Gill- Lawnmower case. A nice neighbor mows a couples house weekly and
does not make any contact with the couple one week. He accidentally mows over a rock
and it hits a lady in the eye. She sues the owners of the house and the mower. The
owners are not held responsible because they did not stand outside and give him
instructions. He is treated as an independent contractor and was the only one held
responsible.
Chapter 9
Fee Simple Absolute- The highest form of ownership. Complete ownership
Fixture- Any item in a house that cannot be taken out. Ex. Pool, chandelier, lights, trees,
A/C
Life Estate- An estate that lasts for the life of the some specified individual and is handed
down to whomever the individual chooses.
Forms of Ownership- Three types
1. Ownership in Common- Most typical- Doesnt have to be equal ratios of
ownership, you can sell your portion, can be given to heirs
2. Ownership in Joint- Ownership must be equal (1/3, 1/3, 1/3). Upon death, interest
is absorbed by the other owners (now it is , )
3. Tenancy by Entirety- Married couple. Only two people, different genders, neither
can sell their half separately, must be sold in entirety
Restrictive Covenants- Private restriction on the use of land.
Term Lease- If you rent an apartment for a year, you cannot get out of the contract before
one year without breaching the contract
At Will Lease- Paying rent from month to month- You can get out of the contract
whenever if you give the landlord a 30 day notice
Chapter 10
Trademark- A word or design used by a merchant to identify its goods and distinguish it
from others.
-Acquiring it- Federal Registration, State Registration, Common Law (No registration)
-Duration- Lifetime, if it is regularly renewed
Copyright- Books
-Acquiring it- Registration with the US Copyright Office, Common Law
-Duration- Life of the author plus 70 years
Patent- Inventions
-Acquiring it- Must register with the Federal Government
-Duration- 20 years from the date of filing
Free TV- It is completely legal to use TIVO and tape a football game or any TV show or
movie on TV. It is illegal to rent a movie and make a copy of it though.
Digital Millennium Copyright Act- Among other things, the act established civil and
criminal penalties for anyone who circumvents (bypasses or gets around- by using a
special decryption program, for example) encryption software or other technological
antipiracy protection.
Chapter 11
Lien- Claim that a debtors property that must be satisfied before the property (or its
proceeds) is available to satisfy the claims of the claims of other creditors
Consensual Lien- Interest in car- The government generates money in order to pay
someone off.
Statutory Lien/Mechanics Lien- When a person contracts for labor, services, or materials
to be furnished for the purpose of making improvements on real property but does not
immediately pay for the improvements; the creditor can place a mechanics lien on the
property. This creates a special type of debtor-creditor relationship in which the real
estate itself becomes security for the debt. Ex. A painter agrees to paint a house for a
homeowner for an agreed-on price to cover labor and materials. If the homeowner
cannot pay, or pays only a portion of the charges, a mechanics lien against the property
can be created. The painter is the lien holder, and the real property is encumbered with a
mechanics lien for the amount owed. If the homeowner does not pay the lien, the
property can be sold to satisfy the debt. Notice of the foreclosure (the enforcement of the
lien) must be given to the debtor in advance.
Judicial Lien- Swing someone and getting a judgment- When a debt is past due, the
creditor can bring a legal action against the debtor to collect the debt. If the creditor is
successful in the action, the court awards the creditor a judgment against the debtor.
Frequently, however, the creditor is unable to collect the awarded amount. To ensure that
the judgment in the creditors favor will be collectable, creditors are permitted to request
that certain non-exempt property of the debtor be seized to satisfy the debt.
Garnishment- An order for garnishment permits a creditor to collect a debt by seizing
property of the debtor that is being held by a third party. In a garnishment proceeding,
the third party is called the garnishee (the person or entity on which the garnishment
judgment is served). A creditor may seek a garnishment judgment against the debtors
employer so that part of the debtors usual paycheck will be paid to the creditor.
Suretyship- A promise made by a third person to be responsible for the debtors
obligation. It is an expressed contract between the surety and the creditor. The surety in
the strictest sense is primarily liable for the debt of the principal.
Guaranty- A guaranty contract is similar to a suretyship contract in that it includes a
promise to answer for the debt or default of another. With a guaranty agreement, the
guarantor (the third person making the guaranty) is secondarily liable. The guarantor can
be required to pay the obligation only after the principal debtor defaults, and usually only
after the creditor has made an attempt to collect from the debtor.
Bankruptcy- Bankruptcy law in the US has 2 goals, to protect a debtor by giving him a
fresh start, free from creditors claims, and to ensure equitable treatment to creditors
who are competing for the debtors assets.
-Two types1. Straight Liquidation- Fastest and easiest way. Hand over the assets and debts to courts.
They pay off as many debts as possible and then forgive the debtor of the other debts.
2. Wage Earners Plan- Takes 3-5 years. Limited to consumer cases/debts. Essentially, it
is a plan to get the debtor out of debt by automatically taking out a portion of his
paycheck every time and paying it towards his creditors.
Voidable Preference- Paying one creditor before another, and then filing for bankruptcy.
Paying on off rather than another. Preferred creditor must give the money back.
Fraudulent Transfer- A transfer by debtor to third party within statutory period of time
where the debtor did not receive fair value for the exchange (the time period in Ark is 2
years). Someone sells their computer for $1 because they are going to lose it anyway, it
is not allowed. The transfer is cancelled and the person who received the transfer will
have to turn it over to the creditors.
Chapter 12
Overtime- Applies only if a covered worker who works more than 40 hours a week.
They get paid 1.5 times regular wage.
States have the right to set minimum wage higher than nation, but no required
Workers Compensation- State law, not federal law- they can differ across state lines. No
fault system, providing compensations to workers who somehow get hurt on the job.
Even if the employer has no negligence, workers compensation is still valid. The fault
and irresponsibility do not matter. Unless you intentionally hurt yourself, you are
covered by workers comp. You must be on the job to qualify. Sole remedy against
employer for injury is workers comp. You can sue a third party, unless it is employer.
You are not covered under the influence of drugs or alcohol.
Family Medical Evac- 12 week unpaid leave allowing employees to care for a newborn
baby, a sick family member, etc. During this time, health coverage must continue, and
the job must remain available to the employee. Exception for key personnel. Must be
employee for at least 1 year prior to the leave. Companies must have 50+ employers.
Chapter 13
Protected Classes- Civil Rights Act of 1964- Discriminating in American business is
completely legal, unless you discriminate based on race, color, religion, gender, or
national origin. Congress has ability to control interstate commerce (pretty much
everything). The business must have 15 or more employees for this act to be enforced.
No preferential treatment for underrepresented groups, no special treatment. You are
only required to consider them equally across the board in that aspect.
Sexual Harassment- Two forms- Quid Pro Quo and Hostile Environment Harassmentthese are only covered for employment harassment
Quid Pro Quo- Exchanging one thing for another. Requiring sexual favors to be hired or
obtain promotion.
Hostile Work Discrimination- Severe enough to alter the conditions of employment.
Single act not normally sufficient, must be a series of events. Telling one crude joke
against women is not enough. Conduct need not be romantic.
Americans with Disabilities Act- Employees given 2 years to comply. Congress defines
disability as physical or mental impairment that substantially limits major life activity.
Employee must be able to perform the essential functions of the job, with or without
reasonable accommodations by the employer. Employer is not required to incur undue
hardship.
Chapter 14
Obey the Law- When in business, use ethics at all times and do not break any laws.
Sarbanes Oxley Law- Congresss reaction to Enron and related scandals.
1. Requires companies whose stock is publicly traded to set up a confidential system
to allow employees and others to report questionable activities.
2. Provides Whistleblower protection to employees who provide evidence of fraud.
3. Establishes independent board to oversee audits of publicly traded companies.
4. Prevents auditing firms from certain non-auditing services that can be provided by
the audit firm.
5. Requires rotation of audit partner, generally 5 years.
6. Requires SEC to direct the national securities exchanges to delist a company that
does not comply.
7. Both CEO and CFO must personally attest that they have reviewed the financial
report and that it does not contain any untrue statements, and fairly presents the
financial status of the firm.
8. If the company is required to prepare a restatement of the financial report as a
result of the misconduct, the CEO and CFO must forfeit any profit associated with
the report.
9. Companies must disclose if it has adopted a code of ethics that applies to the
companies principal executive officers and other high ranking officers.
Companies that do not have a code of ethics must disclose this fact and explain
why they do not.
10. Code of Ethics must be reasonably designed to deter wrong doing and promote
honest and ethical conduct.
11. It must promote full, fair, accurate, timely, and understandable disclosure in
reports and documents filed with the SEC.