Exam 3 Flashcards
Credit
transactions in which goods are sold, services are rendered, or money is loaned in exchange for a promise to repay the debt at some future date
Unsecured Credit
a service was rendered or good sold and the consumer or debtor promises to pay for the service or good later (upon receiving a bill)
garnishment
make employer pay creditor part of debtor’s wages
attachment
seize debtor’s stuff – assets, bank accounts
A debt is “secured” if it is backed either:
by a pledge of another person (in addition to the debtor) to pay or
by a contract giving the creditor an interest in property (collateral) that helps ensure financial confidence
Security Devices:
- Surety or Guarantor
- Lien
- Mortgage
Surety/Guarantor
a person who agrees to be liable for the debt of someone else. (i.e. ththe guarantor will pay the debt if the debtor fails to pay it)
Sureties and guaranty contracts must be
written (not oral).
Artisan’s lien (also called a “possessory lien”)
Basic idea – if you fixed something for a customer, and your customer didn’t pay the bill, you can hold onto that thing you fixed until the customer pays.
Two essential elements of Artisan’s lien (also called a “possessory lien”):
- possession by improver/provider of services of goods that they improved/provided services concerning; and
- a debt created by the improvement to goods or provision of services concerning the goods
lien
is a security interest in personal property available to businesses and individuals by statute and common law
–Statutes provide a procedure for foreclosing the lien (foreclosure), to allow the lienholder to sell the collateral after a period of time if the debtor fails to pay
Security interest
an interest in personal property obtained by a creditor to secure payment or performance of an obligation (i.e. a property interest in the collateral)
Collateral
the property that secures the loan.
What might be collateral for a loan?
Anything the debtor owns that has value…goods, stock, patents, stocks, bank accounts, accounts receivable, inventory…anything
Lien on personal property: 2 steps
- Attachment: So the lien is enforceable against the debtor
- Perfection: So the lien gets in line ahead of other creditors who may take an interest in the collateral
Step 1 – Attachment:
So the lien is enforceable against the debtor
Attachment Requires:
- An agreement signed by debtor that grants the debtor a security interest in the collateral (must describe the collateral),
- Value from the creditor to the debtor, and
- Debtor owns the collateral
Step 2 – Perfection:
So the lien gets in line ahead of other creditors who may take an interest in the collateral.
–Special rule for security interest in cars – in most states, the lien must be noted on the title
Mechanics’ Liens
Statutory systems permit one who furnishes labor or materials to improve real estate to claim a lien on the real estate until they are paid.
Mortgage:
A mortgage is a security interest in real property given by the owner (mortgagor) as security for a debt owed to the creditor (mortgagee).
Example: bank loans you $ to buy your house, and you give bank a mortgage on your house.
— A lien on land
— Must be written
If the debtor does not pay, the bank can use a judicial process to foreclose on the property and sell it to satisfy the debt
Mortgage: If the debtor does not pay, what can the bank do?
- the bank can use a process (usually through the courts) to foreclose on the property (cut off the debtor’s property rights in the property)
- and then sell the property to satisfy the debt
- In most places, if the sale doesn’t cover the whole debt, the debtor still owes the bank for the remaining amount (the deficiency).
- Usually, the debtor has a “right of redemption” – can pay the full amount of the debt/interests/costs within a certain period of time to get the property back.
- – Sometimes even after a new buyer has bought it.
right of redemption
Usually, the debtor has a “right of redemption” – can pay the full amount of the debt/interests/costs within a certain period of time to get the property back.
— Sometimes even after a new buyer has bought it.
What is bankruptcy?
An organized judicial procedure for insolvent debtors and their creditors to sort things out.
– There are various versions: Creditors are usually going to end up getting less than the debtor owes them.
Why do we allow bankruptcy?
The Constitution provides for it
–The bankruptcy laws are contained in federal statute, commonly called the Bankruptcy Code.
Chapter 7 bankruptcy
is liquidation
gather up assets, sell them, use them to pay debts owed to creditors
Chapter 11 bankruptcy
is reorganization (get a court-endorsed plan of reorganization for how much and when creditors will be paid by a debtor business going forward)
Types of Bankruptcy
- Straight bankruptcy (liquidations)
- Reorganizations
- Family farms and commercial fishing operations
- Consumer debt adjustments
Who starts a bankruptcy proceeding?
the debtor or the debtor’s the creditors
Petition:
All bankruptcy proceedings begin by filing a petition, either voluntary (filed by the debtor) or involuntary (filed by the debtor’s creditors, if certain requirements are met)
A voluntary petition
Filed by an individual person, partnership, or corporation to start that person or entity’s bankruptcy.
An involuntary petition
may be filed by creditors of a debtor in an attempt to reach debtor’s assets in lieu of payment on debts
- But no involuntary petition against ranchers, farmers, nonprofits, municipalities, banks, insurance companies
- And for anyone with more than 12 creditors, three of the creditors have to agree to petition for involuntary bankruptcy
Automatic Stay:
Filing a bankruptcy petition operates as an automatic stay, halting creditor action against a debtor or property.
– once the bankruptcy has been filed, the creditors are required by law to leave the debtor alone and let the bankruptcy process take its course
Automatic Stay: Once bankruptcy is filed, creditors must not:
Begin or continue judicial proceedings against the debtor
Act to repossess the debtor’s property;
Act to create, perfect, or enforce a lien against the debtor’s property;
Make dunning calls or
Send bills to the debtor
Chapter 7 Bankruptcy Overview of the Process:
- Petition (voluntary and involuntary)
- Automatic Stay
- Bankruptcy estate and exemptions
- Claims and Distribution
- Discharge
What is the purpose of a Constitution?
- Set up the structure of the government
2. Limit the government’s power
- Set up the structure of the government – Framers made 2 key structural decisions:
- Checks and Balances – 3 branches – each checks the power of the other two
- – Legislative – Art I, Executive – Art II, Judicial – Art III
- – Slows and weakens government - Federalism – distinction between federal government and separate state governments, and the relationship between them
- Limit the government’s power
- Balance federal government power versus state government power
- — Federalism
- Limit federal government power over individuals
- — Individual rights»_space;> Bill of rights
What is a “test case”?
A suit brought specifically for the establishment of an important legal right or principle.
- –The termtest casedescribes acasethatteststhe validity of a particular law
- —Test casesestablish legal rights or principles and thereby serve as precedent for future similarcases. –Stare Decisi
There are 2 big problems to wrestle with in setting up a government…
- Tyranny by the Minority: Some small number of people control the lives of everyone else.
(An inherent problem of monarchy.) - Tyranny by the Majority: The laws created by the majority of people extinguish key freedoms of some smaller group of people
(An inherent problem of democracy – which is why there are some structural safeguards against it.)
Tyranny by the majority:
Potential problem with majority rule – those with majority opinion could dominate and mistreat those with minority views
—Colonists had experienced this as well – particularly sensitive to the problem of tyranny against a religious minority
Tyranny by the majority: Framers made some structural decisions to combat it:
- Bicameral legislature with Senate (2 senators per state) and House (number of reps based on number of people).
- Electoral college (meant to ensure representation from less populated areas and smaller states).
- And…test cases, combined with the Bill of Rights and relative difficulty of amending the federal Constitution, are significant brake on tyranny of the majority
Commerce Clause –
Congress has the power “To regulate Commerce with foreign nations, and among the several states.”
Foreign Commerce (business with foreign nations):
Federal government has the EXCLUSIVE power to regulate foreign commerce (trade embargoes, tariffs, etc.)
Interstate Commerce (business between states)
- State governments cannot pass regulations that interfere with commerce that crosses state lines.
Federal government can regulate commerce that passes between states - “Affectation doctrine” – Federal government can regulate any activity that affects interstate commerce – not just those persons engaged in interstate commerce.
Commerce clause –Application:
Wickard v. Filburn (1942)
- Facts: Federal regulation of wheat production to stabilize wheat prices during WWII. Small farmer challenged it on grounds his crop was not placed in interstate commerce at all (consumed on the farm).
- Question: Is the regulation a permissible exercise of federal legislative power?
- Rule/Result: Regulation is permissible under Commerce Clause as regulating commerce among the states. Regulation upheld.
- Analysis: Rationale was that the farmer’s use of part of his own crop as feed then freed another part of the crop to be used in interstate commerce.
CONSTITUTIONAL LAW: BILL OF RIGHTS – 4 points from your book:
- Basic constitutional rights are not absolute
- Limitation tends to depend on the nature of the competing right or policy
- Part of the point is protection from tyranny by the majority
- They are interpreted over and over in court cases to apply in various contexts
What does the First Amendment protect?
5 freedoms…
- Speech
- Press
- Religion
- Assembly
- Petition
Freedom of Speech
- includes protection of expressive conduct or actions – symbolic speech
- Expression in art is protected.
- protects minority viewpoint from being silenced by majority
- – very often protects speech that expresses view to which many are opposed.
First Amendment Limitations:
Protection has never been afforded to certain classes of speech
- False, lewd, obscene, profane, libelous speech is not always protected
- – “Obscene” judged by “average person, applying contemporary community standards”.
- – FCC limits times when “indecent” or “profane” language can be aired.
- “Fighting words” – words that “inflict injury or tend to incite an immediate breach of the peace” are not protected by First Amendment.
- *Level of protection depends on kind of speech**
Fighting words
words that “inflict injury or tend to incite an immediate breach of the peace” are not protected by First Amendment.
Strict Scrutiny Test (first amendment)
a law that restricts political or noncommercial speech is constitutional only if the restriction is necessary to fulfillment of a compelling government purpose and is the least restrictive means available to achieve that purpose
Citizens united v FEC
- Very important and controversial case from 2009 about political speech by corporations.
- Before the case: corporations could speak politically only through political action committees (PACs) which were limited and subject to regulation.
- After the case (spoiler alert)…corporations are permitted to use unlimited treasury funds for political ads, and may spend unlimited amounts on “independent expenditures” – i.e. spending that is (at least nominally) independent of the candidate
Commercial speech
speech that proposes a commercial transaction (e.g. ads)
- If the commercial speech is misleading or seeks to promote illegal activity, then it gets no First Amendment protection
- – Regulation is ok if it advances a substantial government interest, and is no more restrictive than necessary.
Is it permissible for a news outlet to publish “leaked” top-secret information?
Yes! Pentagon Papers case – NY Times v. US (1971)
Second Amendment:
A well regulated Militia, being necessary to the security for a free State, the right of the people to keep and bear Arms, shall not be infringed
Fifth Amendment – takings clause
nor shall private property be taken for public use, without just compensation
Eminent Domain
the government can take private property for public use if it pays “just compensation”
14th Amendment – Due Process and Equal Protection
“…nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.”
14th Amendment – 2 Aspects:
- Restricts government (including state governments) from infringing those rights
- Authorizes Congress to create legislation to enforce those rights
Due Process
Protects people from being “deprived of life, liberty, or property without due process of law”
Equal Protection
Everyone is entitled to “equal protection of the laws”
- This does not actually mean that all laws must treat people exactly the same.
- Instead: Laws that do not treat people the same have to be based on reasonable distinctions. Analysis depends on what kind of distinction the law makes
3 Levels of Scrutiny, depending on what is at issue:
- “Rational Basis” (lowest level)
- “Strict Scrutiny” (highest level)
- “Quasi Strict Scrutiny Test” (in-between)
Rational Basis
Applied when the law is neither differentiating based on a suspect class nor affecting a fundamental right - Test: Law is permissible (does not violate 14th A) so long as the differential treatment is reasonable and related to a legitimate government purpose
Under rational basis test:
A law is Constitutional so long as the differential treatment is reasonable and related to a legitimate government purpose
Strict Scrutiny Test (14th amendment)
• Applied when the challenged law differentiates based on a “suspect class” – which means race, religion, national origin OR involve a fundamental right (such as voting, ability to travel, marriage).
• Test: The law is permissible (does not violate 14th A) only if the differential treatment is as narrow as possible and necessary to achieve a compelling government interest
- Government has burden to show the law is Constitutional
Under strict scrutiny test
differential treatment must be as narrow as possible and necessary to achieve a compelling government interest
Quasi Strict Scrutiny Test
- Applied when the challenged law differentiates based on sex, age, or geography
- Test: Law is permissible (does not violate 14th A) only if it the law is substantially related to achieving an important government goal (not as high a bar as strict scrutiny, but more than rational basis)
- Government has burden to show the law is Constitutional
Under quasi strict scrutiny test
law must be substantially related to achieving an important government goal (not the strict scrutiny, but more than merely a rational basis is required)
Crime
A public wrong; conduct prohibited by state or federal government through statutes
Who are the parties in a CRIMINAL lawsuit?
Government (“The People” or “United States” or “State of Kansas”) v. Defendant (Private person or business)
Who are the parties in a CIVIL lawsuit?
Plaintiff (e.g. person or business) v. Defendant (usually a person or business)
Criminal: Proceedings started by…
Prosecutor – a.k.a. “District Attorney” / “U.S. Attorney” / “County Attorney”
Civil: Proceedings started by…
Plaintiff (private person or business, often through their attorney)
Civil: Defendant Responds by…
Filing an Answer or Moving to Dismiss
Criminal: Defendant Responds by…
Entering a plea (not guilty, guilty, or nolo contendere)
Civil: Standard of Proof
Plaintiff must prove Defendant is liable by a “preponderance of the evidence.”
Criminal: Standard of Proof
Government must prove defendant is guilty “beyond a reasonable doubt”. Defendant is entitled to the presumption of innocence
Civil: If Defendant Loses
Damages (pay $ to the plaintiff) or (less often) injunction (court order)
Criminal: If Defendant Loses
Jail/Prison and/or Fine paid to the government
Felony
serious crimes (e.g. murder, arson, sexual assault…).
Felony Consequences:
long prison sentence (more than a year), fines, sometimes disenfranchisement.
Misdemeanor
Less serious crimes (e.g. disorderly conduct, battery, sometimes traffic offenses).
Misdemeanor Consequences:
fines, shorter jail terms
What must the government prove to convict?
- Show that the alleged acts violate a criminal statute;
- – There has to be a statute prohibiting the conduct
- – No “ex post facto” enforcement
- – A statute that is too vague can be declared “void for vagueness” - Prove beyond a reasonable doubt that the defendant committed those acts (must overcome the presumption of innocence); AND
- Prove that the defendant had the required criminal intent for the crime (e.g. committed the act willfully, or knowingly, or in some cases recklessly – depending on the elements of the crime).
Fourth Amendment
Protection against unreasonable search and seizure
– Protects public’s legitimate expectation of privacy
Exclusionary rule:
If police find evidence in an unlawful search/seizure, that evidence is not admissible at the trial. Nor is any evidence they found as a result (“fruit of the poisonous tree” doctrine)
5th Amendment
Privilege against Self-Incrimination
– cannot be compelled to testify against yourself
– does not extend to corporations, partnerships, or other “collective entities” because the privilege is “personal.”
Double jeopardy
Miranda warning
- can refuse to answer questions.
- Prosecutors generally not allowed to comment on that silence at trial – usually.
- If you are going to invoke it – say so
Double Jeopardy
No “person [shall] be subject for the same offense to be twice put in jeopardy of life or limb.”
- Same individual cannot be tried twice by the same governmental entity for the same crime.
- But…Civil/Criminal trials ok; State/Federal criminal trials ok.
- Same concept in civil litigation – res judicata.
6th Amendment provides a criminal defendant the rights to:
- A “speedy and public” trial
- Trial by jury
- Informed of the charge against you
- Confront your accuser
- Subpoena witnesses in your favor
- Have the assistance of an attorney
8th Amendment
“Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted.”
4 Principles to determine whether punishment is “cruel and unusual”:
- So severe it degrades human dignity
- Inflicted in an arbitrary manner
- The form of punishment is largely rejected by society
- The punishment is patently unnecessary
Larceny
unlawful taking of personal property with intent to deprive the owner of it permanently (i.e. theft)
Types of Larceny
By violence or threat with a gun – robbery
By breaking into a building – burglary
By an employee taking employer’s funds for his own use – embezzlement
Generally – Fraud happens when a person:
- Knowingly and willfully (or in some cases with reckless indifference to the truth or falsity)
- Falsifies, conceals, covers up any trick, scheme, material fact; or
- Makes a materially false statement or representation; or
- Uses a false writing or document knowing it contains false information
Mail and Wire Fraud
– any other kind of fraud done through mail or by electronic means across state lines. Makes the fraud punishable by up to 20 years in prison
Securities Fraud
– Often based on false financial statements provided to the public
Health Care Fraud
– e.g. billing for services not actually performed, “upcoding,” accepting kickbacks for patient referrals
Bankruptcy Fraud
– Falsify information in bankruptcy proceedings by either the debtor or a creditor, or concealing property of the bankruptcy estate
Tax Fraud
– willful evasion of taxes, e.g. by willfully filing false tax returns
Computer Fraud and Abuse Act
imposes criminal and civil liability on a person who “knowingly, and with intent to defraud, accesses a protected computer without authorization . . . [and] obtains anything of value.”
Respondeat Superior:
Under modern rule, a company may be liable for criminal offenses committed by employees who acted within the scope of their employment and for the benefit of the corporation
–Punishment: Fines
Obstruction of Justice
An act with intent to obstruct the judicial process.
– Very broad – false testimony, destruction of evidence, threatening witnesses, falsification of evidence…
Sarbanes-Oxley Act violations
Example: Knowingly altering documents or business records with the intent to impede a government investigation
Foreign Corrupt Practices Act (FCPA)
Prohibits US citizens and companies from making payments to foreign officials for the purpose of obtaining business, except in some limited circumstances
- FCPA includes accounting requirements re keeping records that accurately reflect how transactions and dispositions of assets.
- Fines may be imposed on business and/or on individuals.
- Fines imposed on individuals MAY NOT be paid by their employers
Conspiracy
A “derivative” crime – has to be a conspiracy to do something illegal
– Essentially a criminal partnership.
Elements to prove conspiracy:
- 2 or more persons came to a mutual understanding to try to accomplish an unlawful plan
- Defendant willfully became a member of the conspiracy
- During the existence of the conspiracy, one of the conspirators knowingly committed at least one overt act to try to carry out the goal of the conspiracy
* ** Makes ALL the conspirators liable for all the acts of the conspiracy – even those the defendant did not personally commit
What’s a “tort”?
A civil wrong that is not a breach of contract
Intentional Torts
defendant intended to commit an act, that act caused harm to another, and the harm that resulted from that act was reasonably forseeable
Negligence
Defendant breached a duty to the plaintiff (usually either the duty to act with reasonable care, or some professional duty), and the plaintiff suffered harm that was the a natural and foreseeable result of defendant’s conduct
What is the burden of proof? (i.e. to what level must the plaintiff prove the tort?)
Plaintiff bears the burden of proof and must prove the tort by a preponderance of the evidence
What is the remedy or consequence of the tort? (i.e. what does the plaintiff get if he wins the suit?)
Plaintiff recovers compensatory damages – to compensate plaintiff for the harms she suffered as a result of defendant‘s wrongful acts
Battery
the intentional and harmful or offensive touching of another without his consent
Assault
Intentionally placing another in immediate apprehension for his or her physical safety (i.e. apprehension of imminent harmful or offensive contact).
False Imprisonment
intentional, unjustified confinement of a nonconsenting person
Intentional Infliction of Emotional Distress (IIED) (battery to the emotions):
Outrageous, intentional conduct that carries a strong probability of causing mental distress to the person at whom it is directed
Conversion
Stealing, withholding, destroying, transferring to some one else something that is not yours
Defamation
Publication of untrue statements about another that hold that person’s character in contempt or ridicule
2 kinds of defamation
- Slander
2. Libel
Libel
written defamation (or defamation published over radio or tv)
Slander
oral defamation
Defenses to Defamation
- Truth is an absolute defense to libel and slander. (But it is the defendant’s burden to prove the truth of the statement in a libel/slander case.)
- News media are not liable for defamatory untruths printed about public officials and public figures …unless the plaintiff can show the untruths were published with malice (deliberate intent to injure) or reckless disregard for the truth
Intentional Interference with Contractual Relations
Most often: Trying to steal employees who have agreed to work for a certain period of time
Intentional Interference with Contractual Relations Elements:
Defendant intentionally
Interferes with an existing contract
between plaintiff and a third party
Invasion of Privacy
interference with a person’s right to be left alone.
Invasion of Privacy 3 kinds
- Public disclosure of private facts, where the disclosure is highly offensive to a reasonable person
- Intrusion upon solitude
- Unauthorized appropriation of name or likeness for commercial purposes
- Intrusion upon solitude
Intentionally intruding on a person’s private life – e.g. illegal searches, wiretapping, continual telephoning…
New frontier…social media. [Ehling case –p. 283]
Does not apply to searching matters of public record
- Public disclosure of private facts
where the disclosure is highly offensive to a reasonable person
BUT:
matters of legitimate public interest may be disclosed, and
public figures/officials have no right of privacy for information related to their public lives.
The truth is no defense
- Unauthorized appropriation of name or likeness for commercial purposes.
Commercial use of someone’s name or likeness, without consent, to imply endorsement of a product or service
Misuse of Legal Proceedings
Don’t use the court system for purposes other than resolving actual legal disputes and prosecuting actual crimes
Misuse of Legal Proceedings (2 Kinds)
- Malicious Prosecution
2. Wrongful use of Civil Proceedings
Malicious Prosecution
Defendant is liable when he:
- causes criminal proceedings to be initiated against the plaintiff;
- without probable cause to believe an offense has been committed;
- for an improper purpose; and
- criminal proceedings eventually terminate in the plaintiff’s favor
Wrongful use of Civil Proceedings
Same as malicious prosecution, but instead of causing a criminal prosecution, the defendant files a baseless civil suit for an improper purpose
Trespass
Any unauthorized intentional intrusion upon another’s real property
Intent required for trespass
Only minimal intent is required to prove trespass – only need to prove that the person intended to be on the land (or intended to cause the land to be invaded) – NOT that they knew they were trespassing
–A person can be liable for trespass even though the trespass resulted from his mistaken belief that his entry was legally permitted
Lots of versions of trespass
- physically entering the plaintiff’s land; or
- causing another person to physically enter the plaintiff‘s land; or
- Remaining on the land after one’s right to remain has ceased; or
- Failing to remove from the land anything one has a duty to remove; or
- Causing an object or other thing to enter the land; or
- Invading the airspace above the land or the subsurface beneath it (provided that property law does not give the plaintiff rights to be there)
Fraud– Elements for tort claim based on fraud
False, material misrepresentation of fact that;
- the defendant either knows to be false or recklessly makes knowing that the information is incomplete; when
- the defendant intends that plaintiff rely on the misrepresentation; and
- the plaintiff does in fact justifiably rely on the representation; and
- the plaintiff is damaged as a result
“Affectation doctrine”
Federal government can regulate any activity that affects interstate commerce – not just those persons engaged in interstate commerce.
Obscene
judged by “average person, applying contemporary community standards”.
DC v Heller case – US Supreme Court 2008 – held
- 2nd Am “protects an individual right to possess a firearm” (and so is not limited to use of firearms for military/state militias), and protects the individual’s right “to use that arm for traditionally lawful purposes, such as self-defense within the home.”
- Some restrictions on the right to bear arms are Constitutionally permissible – for instance “prohibitions on the possession of firearms by felons and the mentally ill, or laws forbidding the carrying of firearms in sensitive places such as schools and government buildings, or laws imposing conditions and qualifications on the commercial sale of arms” and prohibitions on the “carrying of ‘dangerous and unusual weapons’” may be permissible
Some restrictions on the right to bear arms are Constitutionally permissible
for instance “prohibitions on the possession of firearms by felons and the mentally ill, or laws forbidding the carrying of firearms in sensitive places such as schools and government buildings, or laws imposing conditions and qualifications on the commercial sale of arms” and prohibitions on the “carrying of ‘dangerous and unusual weapons’” may be permissible
Can a business restrict carrying of firearms on the property of the business?
Generally, yes, except as restricted by state law. State laws, however, vary. Kansas requires that the business post a particular state-approved sign, and the person carrying the gun is not liable unless he/she refuses to leave the premises after a representative of the business asks him/her to leave
False Statement to a Federal Agency
Crime to willfully and knowingly make a false or fraudulent statement to a department or agency of the United States
Doctrine of transferred intent
if you mean to hit Arthur, but miss Arthur but instead miss and hit Bobby, you are still liable for Bobby’s injury even though you did not intend to hit Bobby
