Prof. Matt McGrath
Notes on Chapters 17 (Small Business Organizations), 18 (Limited Liability
Business Forms) and 19 (Corporations).
Following is my summary of these chapters. This includes by reference the Exhibit 19-3
on pages 45
o Intellectual property (or I.P.) is becoming more important because of the
significant value of I.P. to many corporations, which in some cases may exceed
the value of physical, tangible assets.
o American founders understood the
o When choosing a business entity, entrepreneurs should consider:
Ease of creation.
Need for Capital.
o The owner is the business; doing business without creating a separate lega
Prof. Matt McGrath
MAIN TOPICS FOR THE COURSE
Below is a list of the important topics for this course. The textbook covers many
more topics, but these are the ones that you will need to know for quizzes and
tests. By the end of this course, y
Chapter 12 Main topics
Definition of a tort.
o A civil wrong not arising from a breach of contract. A breach of a legal duty that proximately
causes harm or injury to another.
o Tortfeasor one who commits a tort
o Two broad classifications of torts:
Formations of Traditional and E-Contracts
Overview of Contract Law
o Sources of Contract Law
Common Law for all contracts except sales and leases.
Sale and lease contracts Uniform Commercial Code (UCC)
o Definition of a Contract
Promise or set of prom
Chapter 10 Contract, Performance, Breach, and Remedies
Only a mistake of Fact allows a contract to be canceled.
Unilateral Mistakes cannot be canceled unless:
1. If other party to the contract knows or should have known th
Chapter 6 Administrative Agencies
The Practical Significance of Administrative Law
o Administrative law is created by administrative agencies which regulate many areas of our
government, community, and business.
o A significant cost of doing businesses r
o The simplest form of business, in which the owner is the business. The owner
reports business income on his or her personal income tac return and is legally
responsible for all debts and obligations incurred by the busine
Chapter 12 Torts
Basis of Tort Law
o Doing business today involves risks, both legal and financial.
o A tort is a civil injury designed to provide a remedy (damages) for injury to a protected interest.
o Damages Available in Tort Action.
Chapter 18 Limited Liability Partnerships
o Designed for professionals service firms, it allows limits on personal liability of
the partners but allows pass through tax advantages
o Formation of an LLP
Relatively easy to convert a partnership to an LLP
Chapter 12 The Court System
The Judiciarys Role in American Government
o Judicial Review.
Established in Marbury v. Maddison (1803) where Chief Justice Marshall wrote:
It is emphatically the province and duty of the judiciary to say what the law is
Chapter 13 Strict Liability and Product Liability
o Development of Strict Liability
Theory of strict liability started with Rylands v. Fletcher (1868 England)
Defendants liability for strict liability is without regard to: Fault, Fores
Chapter 13 Strict Liability and Products Liability
What Strict Liability means, and when it is used.
o Liability regardless of fault. In tort law, strict liability may be imposed on
defendants in cases involving abnormally dangerous activities, dangerous
Chapter 4 Main topics
Definition of Ethics
o Ethics moral principles and values applied to social behavior
o It is the study of what constitutes right or wrong behavior.
o Business ethics looks at the decisions businesses make or have to make and
Law- a body of enforceable rules governing relationships among persons/parties and between persons/
parties and their society.
Constitutional Law- law that is based on the U.S. Constitution and the constitutions of the various
Statutory Law the
The Nature and Classification of Corporations
o A corporation is a creature of statute, an artificial person.
o Corporations can have one or more shareholders, comprised of natural persons or other
o A corporation is a legal perso
o Agency = Principal and Agent.
o Agency is the most common and most important legal relationship.
o Understanding agency is crucial to understanding the legal environment of business.
o Principals use agents to conduct multiple business oper
Chapter 9. Formation of Traditional and E-Contracts
Definition of a contract
o An agreement that can be enforced in court; formed by two or more parties,
each of whom agrees to perform or to refrain from performing some act now or
in the future.
o Is a pr
Definitions of Principal and Agent
o Agency a relationship between two parties in which one party (the agent)
agrees to represent or act for the other (the principal)
o Generally, the agent owes the principal 5 duties
o In a given state, a corporation that does business in, and is organized under the
laws of, that state.
o In a given state, a corporation that does business in the state without being
Law A body of enforceable rules governing relationships among individuals and
between individuals and their society.
Sources of Law
1. The U.S. Constitution and the constitutions of the various states
2. Statutory law including laws passed by
Chapter 18 Limited Liability Business Forms
The Limited Liability Company
o An LLC is a hybrid entity that combines the limited liability of a corporation and the tax advantages
of a partnership.
o Nature of the LLC
LLCs are creatures of the state law.
o Ethics is the study of right and wrong behavior; whether an action is fair, right or just.
o In business, ethical decisions are the application of moral and ethical principles to the
marketplace and workplace.
o Why is st
Chapter 10. Contract Performance, Breach and Remedies
Material breach vs minor breach (substantial performance)
o Breach of contract The failure, without legal excuse, of a promisor to perform
the obligations of a contract.
The breach is material when p
A Civil Action(1998)
For my experiential activity, I watched the movie, A Civil Action (1998), which is a fact based
drama starring John Travolta as personal injury lawyer, Jan Schlichtmann, and the industrial
Taco Bell Franchise
Since the first restaurant opened in Southern California back
in 1962, Taco Bell has been one of the top fast food
destinations for those craving something other than
hamburgers. Owners of a Taco Bell franchise benefit f
Enforceable rules which govern interactions/relationships among individuals in a society and
between individuals and their society. Establishes rights, duties, and privileges consistent with the
values of a society
Sources of Law
500 Boundline Road
Mr. Eric Simon
Arnold and J Corr
10000 San Road
Coral Springs, FL 33071
Dear Mr. Simon:
I would like to inquire about a position with your company as an entry-level programmer.