Business Law Flashcards
“Blackstone’s definition.” Rules of civil conduct commanding what is right and prohibiting what is wrong. A governmental rule prescribing conduct / caring out a penalty for violation.
law
bodies of law
Criminal Law / Civil Law
Related to crimes and punishment of wrong doers.Laws dealing with offenses against society
criminal law
legal proceedings concerned with the rights of public citizens.Laws dealing with the enforcement or protection of private rights..Examples: Tort Law Contract Law
civil law
Criminal offense punishable by confinement in prison or by death. Example: Murder Bank Robbery
felony
Criminal offense which is neither treason nor a felony. Example: Speeding ticket Running a stop sign.
misdemeanor
bending or breaking the law
tort law
a private or civil wrong, either intentional or caused by negligence, for which there may be action for damages / private wrong for which damages might be recovered
tort
basis for tort liability
Intentional / Negligence/ Strict Liability)
“Failure to exercise ordinary care.”
negligence
failing to do something which a reasonable and prudent person would do under ordinary circumstance.
act of omission
doing something which a reasonable and prudent person would not do under ordinary circumstance.
act of commision
liability for injury regardless of negligence or intent.
strict liability
when seller is liable for any and all defective or hazardous products which threaten a consumer’s personal safety.
product liablility
Improper or negligent professional act by a professional person. Example: poor embalming. or the doctor leaves instrument in abdominal cavity during or after surgery.
malpractice
Related to making and executing contracts.Laws dealing with making contacts.
contract law
Rules of conduct prescribed by a government and its agencies to regulate business transactionsRules of conduct for the performance of business transactions
business law
Rules of conduct prescribed by a government and its agencies, in regulating transactions related to Real and Personal property.
property law
Land and objects permanently attached to land. Real Estate.Land, Building, Fences, Trees, etc.
real property
All property which is not real property.Cars, Furniture, Jewelry, Insurance, Stocks, Bonds, etc.
personal property
sources of US law
o Common Law o Constitutional Lawo Statuary Lawo Police Powero Administrative Lawo Ordinanceso Case Lawo Stare Decisis
The Pyramid of Law
Stare DecisisCase LawOrdinancesAdministrative LawPolice PowerStatutory LawConstitutional LawCommon Law
- customs which have become recognized by the courts as binding on the community. 2. Forms the historical foundation of U.S. Law. 3. Based on human experience. “Common good” of all people(Members of Society). 4. Rooted in English and early colonial law. “If it makes sense,it must be good law.”Constitutional Law - written document containing fundamental principles of government. Power and duties of a government. Guarantees Rights of the people - first 10 amendments of the constitution. “Law of the land.” Example: Federal and individual state constitutions
common law
enacted by legislative bodies.
statutory law
Legislative bodies include Federal, State and Local Governments
statutes
enacted by the U. S. Congress
federal statutes
enacted by individual state legislatures
state statutes
inherent power of every government to make reasonable laws to protect the safety, health, morals, and general welfare of its citizens. Example: Mortuary law Licensure Health standards Business operations
police power
Body of law created by federal and state administrative agencies to implement their powers and duties in the form of rules, regulations, orders, and decisions. Example: OSHA regulations FTC funeral rule State board rules and regulations
administrative law
Appointed governmental body charged with the implementing particular legislation.Examples: Occupational Safety and Health Administration (OSHA)Federal Trade Commission (FTC)Texas Funeral Service Commission (TFSC)
administrative agencies
Laws enacted by local municipalities, villages, towns or city.Example: City of Houston has parking ordinances / No Smoking In Public Buildings.
ordinances
Court decisions that establish precedent principles. Laws based on a court’s interpretation of federal, state, and local laws. Determines “constitutionality” of a law.
case law
Principle that decisions of a court should serve as guide or precedent and control the decision of a similar case in the future. Reliance on authority of established law “like cases are decided in like manner”. Applicable to mortuary law and court cases.
Stare Decisis (Decision Stands)
authority of a court to hear a case. Related to the subject matter and person(s) involved in a court case. Function of the courts – to interpret & apply law to a given situation.
jurisdiction
Have exclusive jurisdiction over – bankruptcy, claims against USA, Patent & Copy Right Cases.
federal courts
Trial courts of the federal court system. Largest class of federal courts / Deal only with criminal cases involving violation of federal law. Or civil suits that meet specified criteria. Cases brought by US Govt., Cases arising under U.S. Constitution / Federal Laws/Treaties
federal district courts
Offense which is injurious to society as a whole / punishable offense against society.
Crime
Deliberate and intentional action to cause harm
Intentional
There are 12 federal judicial districts. Courts that hear appeals in the federal court system. Hears appeals from cases originating in federal district courts. Hears appeals from federal administrative agencies and departments within its circuit. Decision have precedence over lower courts.
Federal Circuit Court of Appeals
o Highest court in the United States.o Court of original jurisdiction in cases involving ambassadors, public ministers, consuls, and cases in which a state is a party.o As well as cases appealed from federal courts of appeal.Supreme decision over all lower courts
U.S. Supreme Court
issued by Supreme Courto Order to produce the record of a case.o Only such cases will be heard by the U. S. Supreme Court
Writ of Certiorari
Federal trial courts with limited jurisdiction. Limited by laws of Congress creating them. Examples: Bankruptcy Court / Tax Court / Court of International Trade U.S. Court of Federal Claims (against the courts).
Special Courts
Inferior courts - Courts of original general jurisdiction - Appellate courts - Special courts (State & City)
State Courts
Trial courts that hear only cases involving minor criminal offenses and disputes between citizens.Examples: District, Magistrate, County ,Municipal (city) ,Small claims, Justice, and Tax Courts.
Inferior Courts
Court in which a case is first heard. Maintain an official record of all proceedings. Broad jurisdiction over disputes between two or more parties. Criminal offenses against the state. This Court: Hear witnesses Receive evidence Try a case Examples: Trial Court, Court of Record, Circuit Court, District Court, and Superior Court
Court of Original General Jurisdiction (State)
usually in larger cities.Courts hearing cases appealed from lower state courtsExamples: Court of Appeals State Supreme Court
Appellate Courts (State)
Courts with limited jurisdictionExamples: Probate Court Juvenile Courts Domestic Court
Special Courts (State)
Laws specifying how actions are filed & that trial procedure to follow
. Procedural Laws
Person Licensed to represent others in court.
attorney/ lawyer
written request initiating a civil suit
complaint or petition
a notice of complaint given to a defendant defining the complaint and a time frame in which a response, or answer, must be filed. Serves the purpose of conferring personal jurisdiction over defendant. Also known as a process
summons
The response of the defendant to a complaint. Also known as a motion.
answer
The decision of the court. Favor of the Plaintiff or Defendant
judgement
Carrying out of completion of some task
execution
Individual who initiates a civil action
plaintiff
Person against whom legal action is brought
defendant
agreement between two or more competent persons (parties) which is enforceable by law.
contract
Classifications of contracts: Based on:
formation / performance / enforceability
parties express their intentions, either orally or in writing, at the time of the agreement.
express contract
terms of the contract are implied by acts or conducts of the parties.In fact - example: “first call.”
implied contractsalso called contract implied in fact
those with a special form or produced in a certain way.Contract “under seal.”Today most contracts are these kindExample: Real Estate ContractsNegotiable InstrumentsFuneral Contract
formal contracts
- any contract which is not a formal contract
simple contract
- calls for an act in consideration for a promise.One promise is given in exchange for an act.you find my lost dog; I pay you $100
unilateral contract
mutual exchange of promises.Exchange a promise for a promise.You agree to buy my car for $5,000. Car is yours when you give me the money.Most contracts are bilateral contracts.
bilateral contract
terms of the contract have not been completely executed or fulfilled by the parties.
executory contracts
- terms have been fulfilled by the parties
executed contracts
contract enforceable by court.
valid contract
Agreement with no legal effect. Example: contract to rob a bank.
void agreementalso called a void contract
Contract which would be an enforcement agreement, but due to circumstances, may be set aside by one of the parties. Example: party to a contract is declared “mentally incompetent” / party contracts with a minor / minor contracts with anotherminor
voidable contract
Agreement which is not in the form required by law, but can be made so by the parties.- a contract that is not currently binding Example: simple contract made into a formal contract.
unenforceable contract
Legal objectives of written contracts
legal purpose and execution, as long as elements of a contract are legal (Mutual Agreements,competent parties and Consideration) terms of contract should be executed. Illegality renders a contract void.
expression of willingness of the offeror to enter a contractual agreement.
offer
person or party who initiates or makes and offer
offeror
person or party to whom an offer is made
offeree
requirements of a valid offer
Must be Definiteo Basis for agreemento Seriously intendedo Not a joke / Nor offered in jest, fear, or anger.o Communicated from offeror to offeree.o Both parties must be cognizant of the agreement.
Offer vs. invitation to deal
o Is it truly an offer?o Or an invitation to deal and make a subsequent offer?
invitation to deal
• Advertisement • Price list and quotations• Bids • Estimates• Not valid offers • May lead to an offer.
termination of an offer
o By revocation - annulment or cancellation of an instrument, act, promise by one doing or making it.o Communicated by offeror to offeree prior to acceptance.By terms of the offer:o If terms are not met, there is no contract.o By lapse of “reasonable” period of time.o Depends on type of offer.o By death or insanity of offeror.By rejection.o Refusal to accept.o By counter offer - intended acceptance which changes or qualifies the offer, and is a rejection of the original offer.o By intervening illegality.(Legal situation interfering with an offer and agreement. Example:Making a contract to kill someone.)
person afflicted with a serious mental disorder impairing ability to function.
insane
intended acceptance which changes or qualifies the offer, and is a rejection of the original offer
counter offer
o Legal situation interfering with an offer and agreement.
intervening illegalityexample: making a contract to kill someone
o Agreement to an offer resulting in a contract.o Communicated by offeree to offeror.o Oral or written.o Including mail or telegram.
acceptance
o Justifiable reliance by offeree.o Offeree believes what offeror says is true.o No reason to believe otherwise.o Without this, contract is voidable.
reality of consent
False statement of a matter of fact.
misrepresentation
False statement made in the belief it is true.
innocent misrepresentation
Intentional or reckless false statement of a material fact, upon which the injured party relied, which induced the injured party to enter into a contract, at his/her detriment.
fraud
manner of committing fraud
o By expressed misrepresentation.o Oral or written.o By concealment. (attempting to hide information)o By silence when one has a duty to speak.(Not sharing information when asked or requested.)
• Improper influence that is asserted by one dominant person over another, without threat or harm.o Often with a fiduciary relationship.
undue influence
Person in a relationship of trust or confidence
fiduciary Examples• Family relationship.• Attorney and client.• Physician and patient.• Funeral director and family.
Means of removing one’s free will. Obtaining consent by threat to do harm to the person, his/her family, or property.o Element of coercion or force.Can be physical, emotional and financial.
duress
Mistake by one party to a contracto Mistake as to quality, value or price.o Mistake as to terms of contract.o Generally will not render agreement defective.
unilateral mistake
Mistake by both parties to a contract.o Mistake as to nature of transaction.o Mistake as to identity or existence of subject matter.o Generally render agreement defective
mutual mistake
classes of illegal agreement
agreements to commit a crime or torts. Agreements prohibited by statute. Agreements contrary to public policy
injurious to individuals and society at large
agreements to commit crimes of torts
What type of agreements fall under the category of agreements prohibited by statute?
unsuriousrestraint of tradefix pricesinfluence fiduciaries defraud creditorsobstruct justicerelieve liability for willful negligence
exceeding maximum rate of interest which may be charged on loans or consumer credit accounts
usurious
charging a higher rate of interest than the law allows
unsury
highest legal rate of interest
maximum contract rate
interest rate applied when no rate is specified
legal rate
laws which seek to promote competition among business
antitrust law
what are the advantages of antitrust laws or why were they set up?
to prevent creation of a monopolyprohibits contracts not to competefix prices of goods and servicesunfair competitive practices
Legislation intended to promote competition among business by prohibiting restraint of trade.
Sherman Antitrust Law
Person or persons in a relationship of trust or confidence
Fiduciaries
Agreement in which someone else “takes the blame.”
Agreements to relieve liability for willful negligence:
Regarding payment of a debt. Money owed.
Agreements to defraud creditors
o Contracts limiting freedom of marriage.o Contracts injurious to public service of the “public good.”
Agreements contrary to public policy:
Statute of Frauds
• Originally enacted by the English Parliament (1677).• Present in some form in all states.• Lists certain types of contracts which can only be enforced if it is in written form.
Types of contracts in writing:
Contracts to transfer an interest in real property. Real estate - Land Real property - Objects attached to land.
cannot be completed within one year from date of making. Ensures parties do not forget contract terms Example: purchase of real estate with long term loan contract/mortgage.
Executory bilateral contracts
Obligation to pay money or goods
debt
Non-performance of a duty or obligation
default
Rather than paying debts from decedent’s estate. Agreement to pay debts of another.
Contracts made by executor or administrators to pay debts of an estate out of his/her personal funds.
Promises made in consideration of marriage.
Prenuptial agreements.
- movable, tangible, personal property.
goods
Termination of a contract by performance, agreement, impossibility, acceptance of breach, or operation law.
Discharge of contracts
When all terms of the contract have been fulfilled, the contract is discharged by performance
Performance
• Satisfactory or complete performance.• Contract that has been performed in a manner that would “satisfy” an ordinary, reasonable person.
Nature of performance:
Fulfilling major terms of the contract. Contract can be discharged. Less any damages that might occur for minor breaches of contract
Substantial performance
• Mutual agreement to cancel the contract.• Entering into a contract is a mutual agreement.• Parties can also mutually agree to cancel the contract.
Discharge by Agreement
document drawn in a special form which can be transferred from person to person as a substitute for money or as an instrument of credit. Also called negotiable instrument
commercial paper
classifications of commercial paper ??????
promises to payorders to pay???????
Unconditional promise in writing made by one party to another, signed by the maker engaging to pay on demand or at a particular time, a particular sum of money to order or to bearer This is one example of commercial paper
PROMISSORY NOTE
acknowledgement by a bank of receipt of money with an agreement of repayment
CERTIFICATE OF DEPOSIT (CD)
here is an example of a CD
$1,000 CD with maturity date of 01/05 and interest of 6% at maturity date, bank will pay principle, plus interest
person who executes promissory note (person who MAKES promise, a bank or person getting loan)
maker
party to whom any negotiable instrument is made payable
payee
written order signed by one person requiring the person to whom it is addressed to pay a particular sum of money, to order or bearer; on demand at a certain time. Second example of commercial paper
draft
types of orders to pay
Certified checkCashier’s check Bank draftVoucher check Traveler’s check
ordinary check which an official of a bank has accepted by writing across the face of the check the word “certified” and signed. • This makes the bank liable for the payment. • The drawer is released from liability
certified check
• Check drawn on a bank’s own funds • Signed by a responsible bank official or a cashier • Bank may use to pay its own obligation • May be used by someone in lieu of their own personal check
cashier’s check
• Check drawn by one bank or another • Banks will keep a portion of their funds in other banks • Bank can draw a check on these funds at will
bank draft
• Checks with voucher attached • Voucher lists items of an invoice being paid by check
voucher checks
• Similar to cashier’s checks • Required signature and countersignature by purchaser
traveler’s checks
person who executes any draft or check
drawer
person, company or financial institution ordered to pay a draft or check
drawee
party to whom any negotiable instruments is made payable. Person that gets the money
payee
REQUIREMENTS FOR NEGOTIABILITY
• Must be in writing and signed by the maker • Contain an unconditional order or promise to pay a certain sum in money • Payable on demand at a definite time • Payable to “order” or to “bearer” • Order paper or Bearer paper
• A commercial paper made payable “the order of” some named party • Word “order” or its equivalent must be used • may be paid only to the person to whom it has been properly endorsed
order paper
• A commercial paper made payable to any person in possession of it • “Payable to bearer”
bearer paper
act of transferring ownership of a negotiable instrument to another party
negotiation
person who has possession of a delivered negotiable instrument
holder
the signature or statement of purpose by the owner on the back of a negotiable instrument, which indicates future control of the instrument
ENDORSEMENT or INDORSEMENT
the “payee” of a note or draft transferring the instrument to another party
ENDORSER or INDORSER
person who becomes the “holder” of a negotiable instrument by endorsement which names him/her as the person to whom the instrument is negotiated
ENDORSEE or INDORSEE
a type of endorsement having no words other than signature of endorser
blank endorsement
endorsement which designates the particular person to whom payment is to be made (i.e. – pay to the order of)
special endorsement
an endorsement which prevents the use of the instrument for anything except stated use (i.e. – for deposit only)
restrictive endorsement
limits liability of endorser. Endorser signs the bill or promissory notes and adds; “without recourse”. This limits the endorser’s liability and endorsee accepts the liability
qualified endorsement
person in possession of a negotiable instrument who accepts the negotiable instrument in good faith and for value; “innocent purchaser”
holder in due course
What are the requirements of the holder in due course?
The Holder: • Must take instrument in good faith and for value • Must have no notice that instrument is overdue or has been dishonored • At time of negotiation, no notice of any defense against or adverse claim to the instrument
What are the rights of the holder in due course?
• Right to collect amount due • Right to be free from defense of no consideration
liability for payment of negotiable instruments
• Requirements to qualify as a holder in due course • Rights of a holder in due course
transferor’s warranties
• Transfer of commercial paper • Warrants existence of certain facts • Specified by UCC • Transferor entitled to enforce the instrument • All signatures genuine or authorized • Instrument has not been altered • Instrument not subject to defense or claim of any party • Transferor has no knowledge or insolvency proceedings with maker, acceptor, or drawer of unaccepted draft
transfer of possessions, but not title of personal property by one party to another, under agreement EXAMPLE:Leaving a car with garage for repairStoring furniture in a warehouseStudent borrowing a tuxedo
bailment
party who gives up possession, but not title or property
bailor
party who acquires possession, but not title of personal property
bailee
those held to “normal” standard of care for bailed property
ordinary bailment
those held to higher than normal standard of care for bailed property Such as:• Common carriers • Hotel keepers • Funeral directors
extraordinary bailment
conditions of bailment
• Bailor delivers property to bailee • Bailee accepts property from bailor • Both parties agree that property will be returned to bailor
types of bailment
• Sole benefit of bailor • Sole benefit of bailee • Mutual benefit
• Bailment benefits only property owner • Bailee must exercise “slight care” • Liable only for gross negligence
sole benefit of bailor
occurs when borrowing someone’s property Bailee must exercise “great care”
sole benefit of bailee
• Bailee renders a service • Charges for the service • Bailee must exercise “reasonable care under the circumstances”
mutual benefit
Transports under special arrangements for a fee • Moving van • Delivery services • Funeral home A transports body for funeral home B
private carriers
one that undertakes transport without discrimination for all who apply for service • Airline • Bus • Train
public carriers
one who ships goods by a common carrier, (i.e. - forwarding funeral home).
consignor
one to whom goods are shipped to by a common carrier
consignee
contract between consignor and carrier Is receipt and contract existing between consignor and carrier?Is documentary evidence of title of goods?
bill of lading
• Describing the freight for ID • States the name of the consignor • The terms of the contract for carriage • Directing location of delivery
elements of bill of lading
person in possession of a COMMERCIAL check
bearer
public carrier is the same as…
common carrier
person in possession of an INSTRUMENT
holder
specialized business relationship between one party known as the “principal” and another known as the “agent.”
agency
Party who appoints a second party to serve as an agent
principal
Party appointed by a principal to enter into a contract with a third party on the principal’s behalf.
agent
From principal to agent. Act in good faith on behalf of principal’s interest. Enter into contracts on principal’s behalf
delegation of powers
authorized to carry out particular kind of business or all business at a location. Example: FDIC funeral Director in charge. Responsible for the funeral home
general agent
authorized to transact specific act or act(s).
special agent
three types of agent’s authority
Express authorityImplied authorityApparent authority
Stated in agreement creating agency. Authority by appointment. Example: Written power of attorney
express authority
