Exam 1 Flashcards
Rule of law
- Idea that laws apply to everyone in society in the same way. The law also applies to the lawmakers. People in power are subject to the same rules as regular citizens. And citizens are subject to the same rules and afforded the same rights.
- This is the ideal we work toward in a democratic society. There are obstacles – e.g. special interest groups, not always the case that people are treated equally before the law (and certainly has not been so historically).
- “Rule of law” is a cornerstone of economic health for free trade. If the justice system is not fair and transparent, can’t hold people to their word (contracts), can’t prevent bad or abusive behavior (crim/torts), and can’t protect property interests from confiscation by other people or by government (property).
Formalism
An act is either right or wrong, always and in every situation. Ethical systems based on an absolute morality.
*focuses on individual rights
Consequentialism
An act is right or wrong not based on the act itself, but on the consequences of it for everyone involved
*focuses on the common good
Relationship between law and ethics
Society’s values often drive legislation; legislation can drive society’s values.
- Values drive legislation: Price-gouging after Katrina
- Legislation drives values: When civil rights act was passed in 1964, there were lots of people who were (to say the least) not concerned about sex discrimination in employment. Opponents of the Civil Rights Act inserted the prohibition against sex discrimination in employment as a way of trying to get votes AGAINST the bill. It passed anyway, and over the years, society has come around to the view (mostly) that women should not be discriminated against in employment
Common law system / civil (code) law system
- Common law: Emphasizes the role of judges and prior cases
- – The United Kingdom, the United States, Canada, Jamaica, India, Nigeria, New Zealand, and a few other countries follow common law
- Civil (code) law: Relies more heavily on legislation (codes)
- — World’s nations not colonized by England generally observe civil law legal systems
Public law / private law
Public law: relationship of people (or businesses) to society/government
- Constitutional law: interpretation and application of federal or state constitutions
- Criminal law: specifies various offenses against the proper order of the state
- Administrative law: covers legal principles that apply to government agencies, bureaus, and commissions
- ** A government official represents the society and is responsible for seeking justice to achieve the ends of society in issues
Private law: relationships among people (or businesses)
- Property law: recognition of exclusive right in tangible and intangible resources
- Contract law: rules of how owners transfer resources by exchanging them
- Tort law: rules for compensation when an owner’s legal boundaries are wrongfully crossed by another
Civil case / criminal case
Civil cases: between people (including businesses)
- Breach of contract or tort cases
- If you lose…pay damages to the other party
- – Maybe even “punitive damages” if it is a tort case
- – Occasionally some other kind of relief (order to do/not do something)
Criminal cases: between government and person (or business)
- Government proves person/business committed wrong against society
- If you lose…punishment (jail or fine paid to government)
- you can have both at the same time
Constitution (state and federal)
- Structure of the government
Separation of powers (e.g. Congress enacts; President/executive branch implements; Judicial branch interprets)
— Federalism: Federal government has powers in certain areas; states have powers in others - Limits on the government’s power
- Structure of the government
— US Constitution has articles related to the Executive, Legislative, and Judicial branches of the government)
Establishes federalism – federal government has power in some areas; states in others - Limit the government’s power
— Bill of Rights – limits on the kinds of laws that can be enacted
Treaties
made by the president with foreign governments and approved by 2/3 of the Senate become the “supreme law of the land” per the Constitution
Statute (state and federal)
Laws passed by legislatures
Local ordinances
enactments by counties and municipalities – e.g. zoning. Generally to “promote the safety and general welfare” of the community
Substantive law
The laws about how we interact with each other and the government.
- Substantive rules of law define rights and duties
Procedural law
Laws about how the cases proceed through courts or about how laws are made
- Procedural rules of law provide the machinery for enforcing those rights and duties
Sources of Law
Constitutions Statutes Common law Regulatory law Treaties Local ordinances Executive Orders
Common law (stare decisis)
“Let the decision stand.” Courts are generally bound to follow their own precedents and the precedents of the highest court in their jurisdiction.
Conflicts among sources of law and how those are resolved
- Federal law defeats state law
- Constitution defeats statute or common law
- Statute defeats administrative regulation
- Statute defeats common law…
…but the courts (common law) then interpret the statute and determine whether it violates the Constitution.
Sources of Law
Constitutions Statutes Common law Regulatory law Treaties Local ordinances Executive Orders
common law (def)
Cases decided by courts (i.e. judges and justices) on the basis of precedent
Negotiation
a settlement agreement.
- Can use lawyers, or not.
- Informal process.
Meditation (difference between mediation and arbitration)
non-binding use of a neutral to try to facilitate a settlement agreement
- More likely to involve lawyers, but not always
- Sometimes required as part of court process
- Mediators use different techniques (caucus, mediator proposal, facilitative, evaluative)
- Focus groups or mock juries are another (fairly rare) strategy
Arbitration
binding non-court resolution (aka “rent a judge”).
- Parties pay a neutral third person(s)—the arbitrator(s)—to DECIDE the dispute for them.
Arbitrator
neutral third person(s) to DECIDE the dispute for them.
Federal arbitration act
agreements to arbitrate are “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract”
Procedures (how arbitration is different from litigation and mediation)
- Arbitration procedure is often less formal than court (though usually more formal than mediation).
- Parties typically present their positions/arguments/evidence in papers they submit to the arbitrator.
- Rules of evidence may or may not apply.
- Arbitrator may have more expertise in the industry.
- Arbitration is very often confidential (depending on the contract).
- The arbitration process itself is often, though not always, cheaper than litigation.
- At the end of the process, the arbitrator issues an award that resolves the case. Sometimes the award includes findings of facts and reasons; sometimes not
Award
fads
Limits on courts power (standing to sue)
- Can only decide a “genuine case or controversy” – cannot issue an “advisory opinion” when there is no live dispute.
- Plaintiff has to have a real stake in the outcome of the case (“standing to sue”)
Limits on courts power (genuine case or controversy)
Can only decide a “genuine case or controversy”
Limits on courts power (advisory opinion)
cannot issue an “advisory opinion” when there is no live dispute
jurisdiction
A court’s power to hear and decide the case.
Court will review arbitration when:
- When the arbitration is required by statute (rather than agreed to by contract)
- When the plaintiff can prove the award was “procured by corruption, fraud, or other undue means” or the arbitrator is guilty of misconduct
- ** AKA: Almost never
Forms of dispute resolution
- Negotiate a settlement agreement.
- Mediate: non-binding use of a neutral to try to facilitate a settlement agreement (if you do decide sign a settlement agreement, that is an enforceable contract)
- Arbitrate: submit the dispute to a neutral third-party outside the judicial system (the arbitrator) for a binding decision (called an “award”) to resolve the dispute.
- Forget it?? (Just walk away from the dispute?)
…not always an option. - Litigate: Go to court to get a decision that is binding (though subject to appeal on legal grounds)
Personal jurisdiction
is it fair to make these parties litigate in this court?
Minimum contact:
- Does the Defendant essentially live there? (“at home” in that state)
- Did the Plaintiff serve the summons for this lawsuit on the Defendant while the Defendant was in this state?
- Did the Defendant do the conduct related to the suit in that state/cause an injury that occurred in that state?
Subject-matter jurisdiction
is the case the kind of case that this court can hear?
- State Courts: BROAD subject-matter jurisdiction (almost every kind of case)
- Federal Courts: LIMITED subject-matter jurisdiction
1. Federal Question OR
2. Diversity of Citizenship + $75,000
minimum contacts
- Defendant is “at home”; or
- Def. is served with a summons while in that state; or
- Defendant’s conduct relevant to the suit occurred in that state:
- – committed the harm (tort) at issue in the suit in that state, or
- – owns the property at issue in the case in that state, or
- – Entered into the contract or business at issue in the case, in that state
Attorney-Client Privilege:
Not required to disclose to the other side your conversations with your attorney.
BUT:
- If you disclose your attorney/client communications to some third party (who is not the lawyer or the client), then the privilege does not apply.
- Facts do not become privileged just because you tell them to your attorney
Complaint
the Plaintiff’s “short and plain” statement of the basic facts and claims that is filed with the court.
Describes:
- Parties
- Basis for jurisdiction
- Claims of Plaintiff against Defendant
- “Prayer for Relief” – what the Plaintiff wants the Court to do
- Jury Demand (maybe)
Motion to dismiss
Even if everything in the complaint is assumed to be true, there is still no grounds for holding the Defendant liable
“So what?”
Answer
- Defendant files in response to Complaint and:
- Responds, paragraph by paragraph, to each allegation in the Plaintiff’s complaint.
- Asserts any Affirmative Defenses
- Asserts any counter-claims (claims against the Plaintiff) or cross claims (claims against other Defendants)
Civil procedure – the basic steps
- Hire a lawyer
- Summons and complaint
- Motion to dismiss (sometimes)
- Answer (and maybe counterclaim ? or cross-claim ? )
- Reply to counterclaim / cross-claim ?
- Disclosures
- Discovery
- Motion for summary judgement (?)
- Trial
- Verdict
- Appeal to Court of Appeals
- Petition for Certiorari to state or federal Supreme Court (discretionary).
What if you don’t answer after service of the summons and complaint?
Default Judgment will be entered against you.
– (you lose)
What if you don’t answer after service of the summons and complaint?
Default Judgment will be entered against you.
– (you lose)
Reply:
If there are counter-claims, cross-claims, or third-party claims, those parties will then need to “reply” to those claims
Disclosures
Most systems require that parties make disclosures without waiting for the other party to make requests
Must tell the other party about:
- People who know facts about the case
- Documents (or kinds of documents) relevant to the case
- Insurance policies that apply
Disclosures
Most systems require that parties make disclosures without waiting for the other party to make requests
Must tell the other party about:
- People who know facts about the case
- Documents (or kinds of documents) relevant to the case
- Insurance policies that apply
Legal Hold
should be entered in most cases before litigation even commences. Instructs everyone in the organization not to destroy evidence
Key cost-saving
work with counsel to gather and organize these documents
Discovery:
Either party can require production of any documents, witnesses, materials, examinations, etc. that could lead to the discovery of admissible evidence
Discovery: 5 main types
- Interrogatories – written questions that the other side has to answer
- Requests for Admission – key facts the other side must either admit or deny
- Requests for Production of Documents
- Requests for inspection of property or for mental or physical exam
- Depositions
Depositions
- Under oath
- Usually not in a courtroom
- Attorneys ask questions
- Used to discover the facts and to set up later examinations.
What should you do if you are the deponent?
- Tell the TRUTH!
- Answer only the question that is asked.
- Remember that EVERY WORD is being written down and maybe videotaped. Polite and pleasant…
- Breathe, think, speak.
- It is not a conversation.
Motion for Summary Judgment:
Court can decide the claims without a trial if there is no genuine issue of material fact and the law as applied to the facts means that one party wins
Voir Dire
Jurors may be struck for cause, or by peremptory strikes
Trial steps
- Voir Dire
- Opening Statements
- Plaintiff’s case (direct examinations, cross-examinations, re-direct)
- Defendant’s case (same thing, but for Defense side)
- Closing Statements
- Jury Instructions
- Jury and/or judge deliberates
- Verdict and Judgment
Kinds of Witnesses
- Eyewitnesses
- Expert witnesses
Kinds of Witnesses
- Eyewitnesses
- Expert witnesses
Contract:
Legally enforceable promise or set of promises.
Freedom of Contract:
Rationale for state enforcement of private contracts – state should enforce contracts that people enter of their own free will.
Contracts – 3 aspects
- Contract Formation (creating the contract)
- Contract Performance (executing the contract)
- Remedies for Breach of Contract (what happens if a party does not perform)
Contracts - 5 Elements necessary
- Offer
- Acceptance
- Consideration
- Capacity
- Legality
Categories of Contracts
- Bilateral contract vs. Unilateral contract
- Void vs. Voidable
- Express Contract vs. Implied Contract
- Executed contract vs. Executory contract
Bilateral Contract:
A promise for a promise
Unilateral Contracts:
A promise for an act
Voidable:
- One of the parties was harmed by the way that the contract was made (example: induced to enter the contract by fraud).
- The harmed party (the one that was duped, but not the other one) can either go forward with the contract or cancel it.
Void:
The contract was never enforceable by any party from the start – usually because it was made for an illegal purpose
Express:
Agreement terms have been stated directly by the parties either in oral or written words
Implied-in-fact:
Agreement is implied from the surrounding facts and circumstances.
Executed contract:
Everyone has done what they said they would do in the contract. (All parties have performed all of their contractual duties.)
Executory contract:
Something still needs to be done to finish performing the contract. We’ve agreed to do things, so we have a contract…but one or both of us has not done all of those things yet
Offer
Courts usually find that an offer to contract has been made when there is evidence:
- That the offeror had a present intent to contract when s/he made the offer – judged objectively;
- That the terms of a deal had some specificity or definiteness; AND
- That the offeror communicated the offer to the offeree.
Are ads offers?
generally not, they are just “invitations to deal”
Are rewards offers?
YES!
REWARDS (e.g. Reward: $100 to the person who returns my lost dog) ARE enforceable contracts because they are limited (e.g. limited to to the person who shows up with the lost dog).
An offer terminates when:
- The terms of the offer say the offer would terminate
- –(e.g. “You must accept by high noon on Sept. 7.”) - A reasonable time expires (if the offer did not specifically address termination).
- –Standard: How long would a reasonable person in offeree’s position believe she could wait to accept the offer? - . The offeror revokes the offer.
- –In most (but not all) cases, the offeror can revoke even if he said earlier he would hold the offer open for a longer period of time.
- –Key exceptions: Option contracts; unilateral contracts that someone is almost finished performing - . An offeree rejects the offer (either by rejecting outright or by making a counter-offer)
Acceptance – It is really 3 things:
(1) Offeree had a present intent to contract (again, judged by an objective standard based on words and/or conduct);
(2) Offeree accepted on the terms proposed by the offeror; and
(3) Offeree communicated acceptance to the offeror.
When has the offeree accepted on the terms proposed by the offeror?
Traditional Rule: Acceptance must be the mirror image of the offer
- – Offeree can’t accept the offer with changes that the offeree makes.
- – If the offeree tries to accept on different terms, then NO CONTRACT IS CREATED. It may instead be treated as a COUNTER-OFFER.
Modern rule: Some courts find acceptance if there were not changes in the IMPORTANT (material) terms of the deal.
Did the offeree communicate acceptance to the offeror?
General rules:
- The offer can state how and when acceptance must be made.
- If the offer does not say how and when to accept, then the offer can be accepted at any reasonable time and by any reasonable means.
Can silence be acceptance?
General rule: No. Offeror cannot impose a duty on the offeree to affirmatively reject the offer or be bound by its terms
3 Exceptions:
- Offeree can AGREE that he will accept by silence (Ex: “if you don’t hear from me by next week, I accept”)
- Parties with prior dealings or trade practice can establish a situation where silence is acceptance
- An offeree who accepts work done by offeror, knowing what offeror expects in return, is generally held to have accepted the offeror’s terms
consideration is required because …
Law does not enforce “gratuitous” promises (i.e. something for nothing)
Consideration – In exchange for promisor’s promise, the promisee agrees either:
- To do something the promisee is not otherwise obligated to do; or
- Not to do something the promisee otherwise had the legal right to do
What if the consideration is terrible?
As long as there is some consideration, the court will not consider whether the consideration is adequate for the promise.
You are free to make a good deal;
…and you are free to make a bad deal
When does consideration most often come up?
- Past consideration: A promise to do something the promisor has already done
- — is NOT consideration for a new promise - . Preexisting Obligation: A promise to do something the promisor was already obligated to do
- — is NOT consideration for a new promise - Illusory promises: A promise that doesn’t actually bind the promisor to do anything
- — is NOT consideration - Promise to make a Gift: Generally not enforceable because there is…NO consideration
Capacity:
the ability to be bound by a contract
In what situations might a person lack the capacity to enter a contract?
- Infancy
- Insanity
- Intoxication
Infancy
General rule: Minors (generally under 18 years old) have the right to disaffirm a contract
Infancy: What if the contract was already executed or partially executed?
If he disaffirms, the parties generally must return to each other any consideration that was exchanged
- Split of authority on whether minor can disaffirm if he cannot return the consideration
Infancy: What about after the minor becomes an adult?
- A person who made a contract as a minor can disaffirm it for a reasonable period of time even after he becomes an adult…
- So long as he doesn’t ratify the contract by affirming it or accepting its benefits as an adult.
Infancy – EXCEPTION:
- A minor can be bound to a contract for “necessaries” (food, clothes, shelter, medical care)
- Even then, minor only liable for “reasonable value” – not the full contract price
Insanity “Test”
Test: Does the person have sufficient mental capacity to understand the nature and effect of the contract?
-Not every mental illness results in a void or voidable contract
Insanity “Result”
Result: Generally – a contract entered by a person without mental capacity to understand it is voidable by that person.
The disaffirming person must return any consideration in his possession
Intoxication
Intoxication is grounds for disaffirmance only when it is so extreme that the person is unable to understand the nature of the business at hand
Legality “Basic Idea”
Courts won’t enforce contracts for conduct that is illegal or against public policy
Agreements that restrain trade
Courts will refuse to enforce contracts if dong so would work a violation of public policy.
Such as…restraining competition.
What kinds of agreements “restrain competition”?
- To fix prices
- To divide up a market
To be enforceable, a non-compete agreement must:
- Serve a legitimate business purpose.
- Be reasonable in time, geographic area, and scope
- Not impose an undue hardship.
Contract Defenses: reality of consent (No meeting of the minds)
- Misrepresentation or Fraud
- Mistake
- Duress or Undue Influence
- Unconscionability
Fraud:
Contract is voidable, and harmed party may seek damages (including punitive damages) only if ALL 4 of the following are true:
- One party made a misrepresentation – an untrue assertion of fact (or sometimes concealment of an important fact).
- The party making the representation intended to deceive the other party.
- The complaining party justifiably relied on the misrepresentation.
- The complaining party suffered harm from that reliance
Misrepresentation:
Contract is voidable (but no punitive damages) if ALL 4 of the following are true:
- One party made an innocent (unknowing) misrepresentation.
- The misrepresentation was material to the deal.
- The complaining party justifiably relied on the misrepresentation.
- The complaining party suffered harm from that reliance.
***Not required to prove any INTENT to deceive; not entitled to recover punitive damages
Mistake:
(Mistake means misunderstanding of fact; not just a lapse in judgment.)
Mutual Mistake –
Both parties share a misunderstanding.
- Mistake relates to a basic assumption on which the contract was made (mistake of fact; not of value).
- Mistake has a material effect on the agreed-upon exchange (parties would not have contracted had they been aware of the mistake); AND
- BOTH parties make the same mistake
Unilateral Mistake
One party misunderstands a basic fact of the deal.
– Usually cannot get out of contract because only one party is mistaken…unless there is some other problem (duress, fraud).
Duress:
Wrongful coercion that induces a person to enter or modify a contract
2 Requirements to show duress:
- Contract was induced by an improper threat; AND
2. Victim had no reasonable alternative but to enter into the contract.
Undue Influence:
Unfair persuasion affecting a person in a vulnerable position preyed upon by someone in a position of trust
Requirements to show undue influence:
- The relationship between the parties is one of trust or confidence or one in which the person exercising persuasion dominates the person being persuaded; AND
- The persuasion is unfair.
The relationship of trust or confidence:
- Parent/Child
- Lawyer/client
- Trustee/beneficiary
- Elderly person/caretaker
Unfair advantage:
Court looks at circumstances…
- Lack of access to outside advice
- Rushed to enter the contract
- Terms such that it is hard to imagine the person would have agreed to it otherwise
Unconscionable:
For the contract to be unconscionable, need to show both
(1) absence of meaningful choice; AND
(2) terms so unreasonably advantageous to one party that they “shock the conscience” of the court
Contract of Adhesion:
Form contract presented on a take-it-or-leave-it basis (no negotiation possible – if you want the goods or services, you must accept the terms). Person who signs may not know or understand what he is signing.
—STILL VALID unless also dramatically unfair (“shocks conscience”)
Perform:
Parties “perform” a contract by doing what they promised to do
What if a term in the contract is not clear?
- Court will give the term its usual meaning within that industry.
- Court will interpret vague terms in form contracts against the party that drafted the contract.
- Handwritten terms control over > Typed terms, which control over > Pre-Printed Form terms
Discharged:
A party is “discharged” from the contract (free of further obligations) when she has either performed all obligations or been excused from further performance
Breach:
A party who fails to do what he promised to do in the contract has “breached” the agreement
Remedy:
When one party has breached, the other may ask the court to award a “remedy” –
- such as requiring the breaching party to pay money (damages) or
- to perform the contract (specific performance)
Specific performance:
The remedy is that the court makes the non-performing party do something or not do something (i.e. perform what it said it would do).
- Courts usually do NOT give specific performance unless there is no way to just give the other party the benefit of the bargain through an award of money
Damages in contract case –Compensatory Damages
Non-breaching party gets the amount of money that would put the non-breaching party back in the position they would have been in if the deal had been performed
***Gives the “benefit of the bargain”.
Think: Don’t “rewind” the deal to undo it instead “fast forward” to what the party would have had if everyone did what they promised to do in the contract.
The most usual kind of contract damages
Substantial Performance Standard
For most contracts, the parties are required only to substantially perform the obligations of the contract
Material breach:
Deprives the injured party of the benefits that he reasonably expected from the contract. A material breach goes to the essence of the deal
- If you make a material breach, I can cancel the contract altogether and sue you for damages
If the breach is “material”, then the non-breaching party:
- is discharged from further obligations,
- may cancel the contract, and
- may sue for damages for the total breach of the contract
If the breach is “nonmaterial” (a more minor violation), then the non-breaching party:
- can sue only for the damages specifically caused by the minor breach, and
- can only withhold performance until the breach is remedied.
- The non-breaching party cannot cancel the contract
Impossibility:
If it becomes literally impossible (not just extremely difficult or very burdensome) for you or anyone else to complete the contract, then you may be excused for impossibility
Waiver or release:
One party can excuse the other from performing the contract
subject matter jurisdiction in state and federal courts
- STATE court systems – BROAD subject-matter jurisdiction: Can hear almost any kind of case (contracts, torts, etc) about state or federal law
- FEDERAL (United States) court system – LIMITED subject-matter jurisdiction: Can only hear cases that either:
(1) involve question of federal law (“federal question jurisdiction”) OR
(2) have plaintiff/defendant from different states and more than $75K at issue (“diversity jurisdiction”)
Concurrent Subject-matter jurisdiction :
- For diversity cases and most federal question cases, both state courts and federal courts are empowered to hear the case. (concurrent jurisdiction)
- The plaintiff can choose to file in either state or federal court, but a defendant may decide to “remove” a case from state court to federal court if there is federal jurisdiction
Subject-matter jurisdiction – 3 notes on federal court’s diversity jurisdiction:
- Complete diversity is required (not even one defendant can be a citizen of the same state as even one plaintiff)
- A corporation is a “citizen” of both its place of incorporation and its principal place of business (usually where the business is headquartered).
- Even if the case meets the diversity of parties requirement, diversity jurisdiction only exists when there is at least $75,000 at stake in the litigation. (Otherwise, the case stays in state court even though the plaintiff and defendant are from different states.)
federal question jurisdiction
involve question of federal law
diversity jurisdiction
have plaintiff/defendant from different states and more than $75K at issue
standing to sue
Plaintiff has to have a real stake in the outcome of the case
