Business Law Midterm Flashcards
SHV Theory
Informs Delaware Law and grows from profit maximization theory
assumes that each shareholder’s principal wish is to maximize their share value
wish to pay through equity
Agency Theory
shareholders are the owners and principals of the firm
shareholders (principals) impliedly delegate to the executives (their agents) to manage the firm
Rise of CSR Theory resulted in a switch of
shareholders to stakeholders
Litigation
lawsuits, process of filing claims in court
Subject matter jurisdiction
court’s power to hear a case
Jurisdiction
court’s power to hear a care
Long Arm Statue
states claim jurisdiction over someone who does not live in a state
Personal Jurisdiction
court’s legal authority to require defendants to stand trial
Summons
court’s written notice that a lawsuit has been filed against the defendant
International Shoe Company v. State of Washington
The Court held that International Shoe could be subject to jurisdiction in Washington because it had established “minimum contacts” with the state.
Appellant
party filing the appeal
Appellate Courts
3 judges, no jury
generally accept the facts from trial court and review trial record to see if an error was made
Appelle
party opposing
Diversity Cases
the amount needs to exceed $75K AND
plaintiff and defendant are from different states
Most important components of the Pleadings
begins the lawsuit
complaint and answer are the most important part
Primary Trial Courts
are US District Courts
Default Judgement
win without a trial
What is the theory behind civil litigation?
the best outcome is always a negotiated settlement
Summary Judgement
ruling by a court that no trial is necessary
Adversary System
putting witness on stand and letting both lawyers ? them so true comes out
Right to Jury Trial is granted
for money damages
Who has the Burden of Proof?
plantiff has
defendant is not obligated to disprove the allegations
Burden of Proof needs to be
51-49
Preponderance of Evidence
Criminal Burden of Proof
beyond a reasonable doubt
Precedent
earlier decisions by a court that were made
Mediation
fastest growing method
3rd party comes in
Federal Court in a state
will only hear a case only if it involves a federal question or diversity jurisdiction
Trial courts
determine facts and apply the law to the facts
For majority of appellate court cases
can’t introduce new evidence
Diversity Jurisdiction
allows a court to hear cases about wrongful acts (torts) if the defendant has enough connection to the state where the harm occurred. This jurisdiction applies when the defendant’s actions caused harm within the state, making it fair and reasonable to hold them accountable there.
Constitution can be seen as
series of compromises about power
Commerce Clause
congress is authorized to regulate trade between states
Judicial Review
power of federal courts to declare a state or government action unconstitutional
4th Amendment
protects against illegal searches
5th Amendment
ensures due process
6th Amendment
defends fair treatment for defendants
Corporations are viewed as
persons
Due Process
nothing can be taken without due process of law
Procedural Due Process
affected person has the opportunity to oppose the action
Taking Clause
cannot take private property without compensation
Common Law
legal system based on court precedents rather than written statutes
Stare Deisis
let the decision stand
Adjudicate
hold a formal hearing about an issue and decide it
Precedent System
“honor” court’s previous rulings
Enumerated Powers
- Tax
- Spend
- Regulate Commerce
Aggregate Impact
if it impacts interstate commerce -> it can regulate the activity
Article 6 of the Supremacy Clause
Federal Precedence: When federal and state laws conflict, federal law overrides state law, ensuring a unified legal framework across the country.
Binding on Judges: State judges are required to follow federal law, even if it conflicts with state laws or constitutions, maintaining the supremacy of federal rulings.
Oath of Office: Article VI mandates that all state and federal officials take an oath to uphold the Constitution, reinforcing their commitment to the Constitution’s authority over other legal frameworks.
10th Amendment
power not in the Const. go to the state
9th Amendment
right to privacy
14th Amendment - Due Process and Equal Protection
They limit state governments’ powers and ensure that legal protections extend consistently across all states, helping maintain fairness in both public and private sectors
Dormant Commerce Clause states that
states cannot discriminate against out of state producer
Marbury v. Madison
Supreme Court is allowed to declare laws passed by Congress and signed by President unconstitutional
Establishment Clause
no religion can establish a religion
cannot favor a religion
Employ Div. v. Smith
ruled that generally applicable laws not targeting specific religious practices don’t violate Free Exercise Clause
2018 - Masterpiece Ltd v. Colo. Civil Rights Commission
free exercise for making a cake
sort of vacated it in a way despite a slight favor towards the company
2023 - 303 Creative
she can use her free speech - cannot violate religion
Negligence
failure to make proper care in doing something
- Duty of Due Care
- Breach
- Factual Cause
- Proximate Cause
- Damages
Duty of Due Care
the defendant has a legal responsibility to the plaintiff
judge first has to decide yes or no
whether it was foreseeable or reasonable
Factual Cause
defendant’s conduct was the cause of the injury
Proximate Cause
foreseeable that conduct like the defendants might cause this type of harm
Res Ipsa Loquitur
“the thing speaks for itself”
when the court decides this applies the burden of proof switches on to the defendant
Breach of Duty
by failing to behave the way a reasonable person would under similar circumstances
Contributory Negligence vs. Comparative Negligence
contributory - a plaintiff who is even slightly negligent recovers nothing
What is a critical component of product liability?
sellers will be liable if their conduct is not that of a reasonable person
sells will be strictly liable for defective products that reach users without substantial change
What is a Tort?
Civil wrong
committing a tort makes you liable
Essential Elements of Defamation Claim
- Defendant made a statement
- It was false
- Defendant “published” the statement
- Statement injured the plaintiff’s reputation
Foreseeability is
required both the duty element and the proximate cause element
Oregon Defamation
factual statement only kicks in if the statement is a “matter of public concern”
Gibson’s Bakery v. Oberlin College
claiming race after fake id
Elements of a Contract
- Offer
- Acceptance
- Consideration
- Legality
- Capacity
- Consent
- Writing
2 Issues Determine Whether a Statement is an Offer
- Do the words/actions indicate a serious intention to strike a bargain?
- Are the terms of the offer reasonably definite?
What is Definiteness
Identification of parties:
the who
the what
the when
often, the price
Bilateral Contract
most common
formed by a reciprocal exchange of promises to exchange things of value
ex) argument to buy a guitar for $500
Unilateral Contract
can only be formed by the offeree’s actual performance of a requested act
ex) lost dog
it is performance before you bind yourself
Meeting of the Minds
there must be a serious offer that contains definite terms and that the offeree must accept that offer
Offeror
making the offer
Offeree
receiving the offer
Consideration’s 2 Basic Elements
Value: requires exchanging things of objective value
Bargained for Exchange: must have agreed to exchange the things of value
Blackmon v. Iverson
didn’t bargain for the nickname originally
Typical Agreements that Lack Consideration
Preexisiting Duty - you are already legally bound to do
Past Consideration - exchange that has already taken place
Gambino Building abandoning a project
No consideration since both parties need to receive something of value
Promissory Estoppel - Hamer v. Sideway
no drinking or smoking until he turned 21
Quantum Meruit
as much as he deserved
when no valid contract is presented plantiff is able to recover resonable value
Quantum Merit vs. Promissory Estoppel
Quantum meruit requires providing something (a service) of objective (market) value; promissory estoppel does not.
* Promissory estoppel requires reliance on an existing promise; quantum meruit does not.
* With promissory estoppel, you can recover what the other party promised (sue on the contract).
* With quantum meruit, you cannot recover what was promised if it exceeds the fair market value of what you provided.
Promisee
other party
Promisor
one who makes the promise
Creditor Beneficiary
A creditor beneficiary is someone who benefits from a contract because one of the parties owes them a debt or obligation
Donee Beneficiary
A donee beneficiary is someone who benefits from a contract because one of the parties intends to give them a gift or benefit. They do not provide consideration (payment or something of value) for the benefit.
Example: If John buys a life insurance policy and names his spouse Mary as the beneficiary, Mary is a donee beneficiary. John’s contract with the insurance company was made to provide a benefit (the insurance payout) to Mary as a gift.
Delegation
transferring their obligations
Incidental Beneficiary
If a city contracts with a company to build a park, nearby businesses may see an increase in customers due to more foot traffic. However, these businesses are incidental beneficiaries because the contract was not made with the intent of benefiting them. They cannot enforce the contract if something goes wrong.
Ambiguity
when a provision in a contract is accidentally unclear
Scrivener’s Error
typo
will reform if there is clear and convincing evidence
Material Breach
is important enough to defeat an essential purpose of a contract
Sole Discretion
has the right to make any decision on that issue
Force Majeure
unforeseeable events or circumstances that prevent a party from fulfilling their contractual obligations
Material Breach
important enough to defeat essential purpose of contact
Boilerplate
help ensure clarity, fairness, and functionality in legal agreements and can reduce the risk of disputes
Strick Liability
comes down to causation and damages
applies to dangerous cases such as explosives
doesn’t matter how careful they are they are still strictly liable
Expectation Damages
expectation damages would cover the cost
Incidental Damages
ex) have to pay extra shipping fees elsewhere
Consequential Damages
lost profits and more indirect losses that were foreseeable
