Final Exam Flashcards
1
Q
How does the law define a corporation?
A
- Legal entity
- Existence is dependent on the state
- Shareholders enjoy limited liability
- Sharers of stock are transferrable
- Exist indefinitely
- Centralized form of management
- May be considered a “person” or “citizen”
2
Q
Public Corporations
A
Created to administer a unit of municipal government (ex. Michigan Business Development Corporation)
3
Q
Private Corporations
A
- Founded by a private individual
- Typically with the intent to create a profit
4
Q
For-Profit Corporations
A
- Purpose is to create a profit
- Distribute dividends to stockholders
5
Q
Not-For-Profit Corporations
A
May make a profit-BUT
- Profit may NOT be distributed to shareholders or other member of the corporation
- Profits are distributed to charitable, scientific, or education purposes
- EX-B Corps
6
Q
Publicly Traded/Publicly Held
A
- Ownership is vast amongst a wide audience of people
- Tie in to a financial stock exchange (NYSE, NASDAQ)
- Must register under the Federal Securities and Exchange Act
7
Q
Closely Held
A
- Shares of stock are held by a small number of people
- Make up the majority of corporate entities in the US
- Account for a small fraction of corporate revenue
8
Q
Subchapter S aka S-Corporations
A
Corporations that elect to be taxed as a partnership
9
Q
Profesional Corporations (P.C)
A
- Corporation intended for licensed professionals
- E.g. physician offices, law firms, accounting firms, etc
10
Q
Characters Needed to Form a Corporation
A
- Promoter
- Subscriber
- The State of Incorporation
- The Board of Directors
- The Executive Committee aka C-Suite
11
Q
Promoter
A
- The “mother” of the corporation
- Person who lays the foundation for a corporation to be built
- Activities:
a. Capital financing arrangements
b. Assembling necessary assets
c. Engaging in HR Matters (talent recruitment and planning)
d. Negotiating in land/sale agreements
e. All other duties pertaining to the legal formation of the corporation - 9 out of 10 times will be an attorney
12
Q
Promoter Contract
A
Agreement detailing the scope & duties of the promoter
-Promoter incurs liability for actions, unless contrary to provision in the pre-incorporation contract
13
Q
Duties of a Promoter
A
Fiduciary Duties owed to the corporation itself, any subscribers, and initial shareholders
- Good Faith
- Fair Dealing
- Full disclosure to an independent board of directors
14
Q
State of Incorporation
A
Generally the state of incorporation is the same as the state where the corporation will have:
-Based its principal place of business
-Majority of operations engaged in
Not a requirement but more of a typically
15
Q
Advantages of Delaware
A
Business laws are much more lax
- You can have one person serve as CEO, Promoter, shareholder, etc.
- Most knowledgable jury, competent judge
16
Q
Corporations Names
A
First step in incorporating is the name. Must have some extra words that identify the organization as a corporation:
-Corporation, company, incorporated, limited, corp., co., Inc., Ltd.
17
Q
Incorporators
A
The individuals who sign the articles of incorporation and file with the Secretary of State-for the state of incorporation
-Thus a corporation is formed!
18
Q
Articles of Incorporation
A
Document that evidences the creation and existence of a corporation
Typical components include:
-Name of the company
-Number of authorized shares
-Street address of the registered office and the agent’s contact information
-Name and address of each incorporator
- Additions can be at the corporation’s discretion
- First step of incorporation
19
Q
Organizational Meeting
A
- Inaugural meeting to kickoff the corporation
- Key foundational tasks are conducted at this meeting
a. Adopt and approve bylaws
b. Appoint corporate executive officers
c. Appoint a board of directors
d. Authorize the issuance of shares - Second step of incorporation
20
Q
Corporate By-Laws
A
The rules, poles and approved practices for executive management of the corporation
-Once a corporation files articles of incorporation, adopts and establishes bylaws, appoints a board of directors who appoint executive officers, and issue shares (if desired)- a corporation is effective
21
Q
Liability of Corporations
A
- The board of directors and shareholders enjoy limited personal financial liability for the actions of the corporation
a. AKA- Corporate separateness- the shareholders and the corporation are two independent entities
-In extreme cases, the courts will disregard corporate entity and subject shareholders to liability. Typically occurs when the corporation is subject to extreme indebtedness
22
Q
Piercing the Corporate Veil
A
The actions of the court to hold shareholders personally liable for business debts
- Corporation is used to commit a wrongdoing
- Corporation is used to protect/cover up fraud
- Corporation is used to circumvent the law
Generally most applied to:
- CLOSELY HELD Corporations*
- Parent subsidiary corporations (the parent company should know what is going on)
23
Q
Corporate Powers
A
Broadly defined to include:
- Perpetual succession
- To sues, be sued in the corporation name (corporate personhood)
- Make/amend bylaws
- Own, vote, dispose of stock
- Lend money and reinvest funds
- Conduct business inside/outside the state of incorporation
- Elect directors, appoint officers, fix compensation, and lend money
- Make donations for the public good (CSR)
Corporate power is limited and enumerated in scope and authority
24
Q
Ultra Vires Act
A
When OCE exceed acts as directed by the bylaws
-Historically, the courts used i as a shield. Now, they do not recognize ultra Vires acts as a valid option to limit liability.
The law provides 2 options to remedy a Ultra Vires Act
1) Allow a shareholder to initiate a proceeding against the corporation for injunctive relief
2) Shareholder derivative suit: A shareholder or the corporation itself sues the leadership of the corporation for exceeding their authority
3) State AG may dissolve the corporation
25
Harris v. Looney
Take Home:
1) Imposing liability on an incorporator is proper only when:
- person was acting as an agent of the corporation
- No incorporation pursuant to the RMCA took place
26
Management Structure of Corporations
Pyramid:
Top: Executive Office
Middle: Board of Directors
Bottom: Shareholders
27
Shareholder Duties
Two main roles:
1) Collect dividends
2) Appoint a board of directors via vote
May vote on extraordinary matters pertaining to the corporation
28
Voting Right of Shareholders
- General Rule is 1 stock = 1 vote
- Votes take place at annual meetings
Special meetings may be initiated by:
- Board of directors
- Shareholders with at least 10% ownership stake
- By anyone else with the power to do so as per the By Laws
- Subject to written notice to the parties
29
Shareholder Voting Basics
- Quorum: the minimum number of shareholders must be present for a vote to be valid
- can get a quorum present by attendance or proxy
- Once quorum is present, it is in effect for the entire meeting
30
Election of New Board Members
- Straight voting: 1 vote per share
- Cumulative voting:
- Shareholders may multiply their votes by the number of directors for they are entitled to vote
- Advantage for minority shareholders
- A formula is used to tell us how many shares are needed to elect a given number of directors
31
Removal of Directors
- Shareholders may remove a director (or the entire board) via majority vote
- With or without cause
32
Approval of Fundamental Changes for a Corporation
- Amending the articles of incorporation
- Sale or leases of all or substantially all corporate assets
- Mergers, acquisitions, consolidations and dissolutions
33
Shareholder voting Arrangements
-Written arrangements amongst shareholders to vote in a certain manner (make association like in survivor)
34
Shareholder Rights
- Right to access information
| - Right to engage in legal resources on behalf of or against the corporation
35
Right to Inspect Books & Records
- Shareholders have the right to inspect for a proper purpose, any books or financial records
- Generally limited to shareholders who hold at least a 5% ownership stake
- Proper purpose=broadly defined
36
Shareholders Rights to Legal Resources
-Direct Suits: A shareholder suing to enforce a claim against the corporation (e.g. actions to compel unfulfilled promises to pay dividends)
- Derivative Suits: A shareholder or a group of shareholders suing on behalf of the corporation against the board of directors
- -Causes of action to pertain to enforcing rights that belong to the corporation
a. Another instance of corporate personhood
b. The BOD is not the same legal entity as the corporation
37
What does the board of directors do?
- Exercise VERY high level management of the corporation
- Do not typically engage in day-to-day executive management
- Incur fiduciary duties to the corporation and shareholders
38
Selecting Officers of a Corporation
- Board of Directors is typically responsible for choosing corporate officers
- Board may also remove officers at any time
39
Capital Structure & Financial Policy Making
Conducted by the board of directors
- Fix selling price of newly issued shares
- Determine the value of consideration the company receives in exchange of shares
- Purchase, redeem or acquire shares of the corporation's equity securities (corporately held stock)
- Incur debt and issue debt securities
- Sell, lease, or exchange assets of the corporation
- Declare the amount and type of dividends
- Set the compensation of management and executives
- Vote on board vacancies
40
Director Functions
Actions of the board bind he corporation (typically related to strategic planning)
-BOD may create and appoint committees to perform some board functions
41
Corporate Executive Officers
Generally those holding roles with the word "Chief" in their title...some are more traditional than others
- CEO
- CLO
- Chief Knowledge Officer and more
42
Agency Capacity of Corporate Executive Officers
- Corporate officers are agents of the corporation
- The rules of authority apply as with a typical principal/agent relationship
a. Actual express authority
b. Actual implied authority
c. Apparent authority
43
Duties of Directors and Officers
Corporate director and member sod the board incur fiduciary duties- similar to partnerships
- Duty of Obedience
- Duty of Diligence
- Duty of Loyalty
44
Business Judgement Rule
- Preclude liability for officers and directors for their actions if made with due care, in good faith and in a manner to believed to be in the best interests of the company
- "honest mistake" catchall
45
Trade Secrets
Any commercially valuable information that is outside general knowledge.
Examples: KFC, Coca Cola, Manufacturing process
46
MIsappropriation of Trade Secrets
Essentially anyone wrongfully using a trade secret
Method one: Acquisition by improper means
-steal it, corporate espionage
Method Two: Disclosure without consent
Employees with access to a trade secret have a duty of loyalty not to disclose it.
-breach of this duty is a business tort
47
Ed Nowogrowski Insurance v Rucker
Take Home Points
- Employees who leave their employer are allowed to compete and use any general skill, experience or knowledge to compete
- Employees have a duty not to use or disclose trade secrets (even in lieu of agreement)
- Factors for determination
- -Effort & expertise in developing the trade secrets
- -Did the plaintiff intend the information to be a trade secret
- Trade secret designation will not apply to any information that is readily or easily ascertainable
- Trade secret protection is not dependant on the manner of infringement- here memory is recognized as a valid infringement
48
Remedies for misappropriation
Monetary damages
- equal to the financial loss caused to the plaintiff
- Equal to the gain the defendant received
Injunctive Relief
-Return or not use the trade secret
Economic Espionage Act of 1996
- Criminal penalties for misappropriation of trade secrets
- Fines and imprisonment
49
Lanham Act aka Federal Trademark Act
```
Prohibits use of taking credit for another's goods/services (protects individuals for an original idea)
Remedies available:
-Injunctive relief
-Accounting for profits
-Damages
-Destruction of infringing articles
-Court costs
-Attorney fees
```
50
Trademarks
- Symbol, mark, word, name, device, letter, number, design, picture or combination of any
- KEY: Distinctive nature
- Used to identify GOODS or that which is related to gods
Example: nike swoosh, mcdonald's arch
51
Service Marks
Used to identify one person's SERVICES from that of another
Example: Hotels such as Holiday Inn, Hyatt, etc.
52
Certfication Marks
Used to certify characteristics or qualities of good/ service/entity
- Certified Organic
- Certified Gluten Free
53
Requirements of Lanham Act
Mark must be inherently distinctive
- Reasonable purchasers are likely to have an association with product/service/entity
- Nike swoosh instantly equals nike
Mark must have Distinction via Secondary meaning
- A number of purchasers identify the designation with its product or services
- walmart smiley face (how do the majority of people perceive the question)
Classes of Distinction: generic, descriptive, suggestive, arbitrary, fanciful
54
Requirements of Lanham Act (continued)
-Marks that are immoral, deceptive, or scadalous are not afforded protection
Time issues
- Protection is granted in 10-year increments
- Unlimited renewal
- Must be registered with the US Patent & Trademark office
Practical Requirements
- Used the mark in commerce or
- Demonstrate a bona fide intent to use in commerce and
- Actually use within 6 months
- Actually have a practical intention
55
Trade Names
A name used to identify a business, vocation or occupation
Certain names may gain trade name status by secondary meaning--similar to trademarks
Examples: google, starbucks, frappuccino
No registration is required under the Lanham Act but infringement is still prohibited
56
Copyright
Form of protection of intellectual property
Afforded to authors/creators of original works
-Ex: musicians, artists, literary authors, architects
57
Digital Millennium Copyright Act of 1998 (DMCA)
- Consolidation of international copyright laws to be applicable to US
- Prohibits circumventing technological safeguards to access protected work
- -E.G.-Napster & Limewire peer to peer
- Creating technologies to circumvent or access copyrighted works is prohibited
- Creating technologies to defeat protections designed to prohibit copying
LImitations
- General ideas, themes, procedures, processes, M.O's
- LImited to original expression of idea
58
Copyright Procedures
- Copyright protection begins as soon as a work is on a fixed medium --by operation of law
- Petitioners must file with the Register of Copyrights in Washington, DC
- -Registration is not necessary, but to be legally enforceable, generally needs to be
- -Registration activates defenses and remedies to infringement
59
Copyright Limitation
Compulsory Licenses
-Allowance of certain limited use of copyrighted materials in exchange for payment of royalties
Fair Use Privilege
- Allowance of a certain limited use of copyrighted materials for criticism, comments, press, education use or research
- Factors for consideration
a. purpose and character of the use (commercial or non-profit)
b. Nature of the copyrighted work
c. The amount & substance of the work used in relation to the whole
d. The effect of the use on the work's fair market value
60
Patents
- Form of protection for original works/ideas related to inventions
- Grants an inventor the exclusive monopolistic rights to use, create, or sell an invention during the patent's life (limited time)
- General idea:
a. There must be some level of human intervention, action or modification
b. Newly discovered surgical element is not patentable, but if you find a new use for a surgical tool that would be patentable
61
Criteria for Patentability
Novelty: Invention must not conflict with an already existing or pending patent
Utility: Invention must have specific and substantive utility
Non-Obviousness: The invention in light of prior work must not be obvious to a person skilled in such prior art
-not obvious to a typical customer
62
Types of Patents
Utility patents--Inventions
-20 year lifetime
Plant Patents-exclusive right to breed a unique breed of plant
-20 year lifetime
Design Patent-New, original, ornamental design
-14 year lifetime
63
Biliski v Kappos
4 independent categories of inventions/categories that are protected:
- process
- machines
- manufacturers
- compositions of matter (ex E=mc)
Machine or transformation test
-is a thing tied to a particular machine or apparatus and does it transform a particular thing into something different?
64
The Sherman Act
General idea:
Section 1: Law prohibits restraint of trade
Section 2: Prohibits monopolies and attempts to create monopolies
65
The Sherman Act 1
Types of restraints:
Horizontal restraints: restraints against competitors
Vertical restraints: agreements between other entities in distribution chain that restrain trade
66
Price Fixing
An agreement that attempts to set prices at a certain level
-invisible hand has no effect
-horizontal agreements = illegal
vertical agreements = balance anti-competitive acts against pro-competitive effects
Market Allocations
- Another form of price flexing
- competitors in the same industry agree not to compete with each other in certain market secrets
- -Market sectors can be defined by geography, customer type, product or class
67
The SHerman Act-Section 2
The economic argument against monopolies
- A monopolistic competitor will aim to limit production while simultaneously increase prices
- The consumer/the market suffers
General idea:
- monopolies = bad
- -power to control prices or exclude competitors unilaterally
- Practical implications
- -defining and identifying a monopoly power can be difficult
- -general standard: a company with market share of 75% or greater is presumed to be a monopoly
Attempts to Monopolize
-Section 2 prohibits any firm from attempting to create a monopoly
-Test for attempt:
a- Profit of specific intent to monopolize
b-A dangerous probability of success
Issue: the test does not tell how to evidence specific intent
68
The Clayton Act
Supplemental/supporting to the SHerman Act
-Sherman Act had weaknesses in preventing monopolies
Clayton Act was designed as a proactive measure to stop trade practices before they could become a monopoly or other unlawful restraint of trade
Applies to: Tying agreements, exclusive dealing and corporate mergers
69
Tying Agreements
Any agreement that prevents purchasers from accessing a seller's competitors (makes a directive)
70
Exclusive Dealing
Seller of a product conditions sale upon the buyer not to deal with a competitor
-provides incentives and is therefore friendlier
71
Mergers
Horizontal Mergers: mergers between competitors
-subject to greater scrutiny
Vertical Mergers: Mergers between entities within the distribution chain
-less likely to be challenged
72
The Scope of title 7
Prohibits discrimination
-race, color, religion, sex, national origin
Applies to employers, labor unions and employment agency
Actions Regulation: hiring, terminating, promoting, compensation
73
Illegal Employment Actions
Include:
Failing or hiring to hire, terminating or any adverse employment action (compensation, terms & conditions of employment)
Protected Basis (Categories):
- Race
- Color
- Religion
- Sex
- National Origin
74
Intentional Discrimination
AKA-Disparate discrimination
Subjecting employees to different treatment because of a protected class
--courts will give deference to the employer, not plaintiff
75
Class
historically/politically section of people that have faced adversity and judgment
76
Title 7 Protects
Title 7 is subject to very narrow exceptions
Employers may discriminate on the basis of
-sex
-religion
-national origina
-NEVER RACE OR COLOR
But, employers must prove a "business necessity"
- Occupational safety and efficiency impossibility
- High burden of proof
EX: We hired men only because if we had women, our business model WILL fail (must be inevitable)
77
Unintentional Discrimination
AKA-Disparate Impact
- Facially neutral and non-discriminatory actions or standards
- Have the unintentional effect of discrimination on a protected basis
- Discrimination disproportionately impacts employees/candidates based on title 7 protects
78
How do you prove Disparate Impact
See Image on Phone for diagram to memorize shift of burden
80% rule example: yogurt manufacturers (30 ppl are white; 5 hispanic)
-Out of the 35
hire 20/30 whites (66%)
Hire 1/5 hispanic (20%), which is less than 80% therefore you have a case for disparate impact
79
Person first Language
- Disabled person vs. person with a disability/person who is disabled
- Person first language
- -primary focus is on the person- not the disability
- -Identify someone as a person not by their abilities
80
Sex as a BFOQ
Sex as a Bona fide occupational qualification
- Community morality standard exception
- Narrowly construed
a. females working in female dressing rooms
b. male attendees work as men's bathroom
81
How do we define disability
- A physical or mental impairment that substantially limits one or more of the major life activities
- A record of such an impairment
- OR being regarded as having such an impairment
82
Who is protected under ADAA
-Qualified individual with a disability
1-Person who can perform the essential function of the job
a) with or without a reasonable accommodation
83
Define Physical or Mental Impairment
Any physiological disorder, condition, cosmetic disfigurement, or anatomical loss that affects one or more of the following body systems:
- neurological
- Speech organs
- Musculoskeletal
- Cardiovascular
- Hemic (AIDS/Sickle cell)
- Special Sense organs (Auditory/olfactory)
- Lymphatic (Lupus)
- Respiratory
- Skin
- Endocrine (hormonal)
84
Define Substantially Limits
2 definitions
1) unable to perform a major life activity that the average person can perform;
2) Significantly restricted as to the condition, manner, or duration in which an individual can perform a major life activity
Facts to consider
- Nature and severity of the impairment
- Duration or expected duration of the impairment
- Permanent or long-term impact
85
Define Major Life Activity (old definition)
- Caring for one's self
- performing manual tasks
- walking
- sleeping
- hearing
- seeing
- speaking
- breathing
- learning
- working
86
Define major Life Activity (under ADAA)
- Functions of the immune system
- Normal cell growth
- digestive
- bowel
- bladder
- neurological
- -brain
- respiratory
- circulatory
- endocrine
- reproductive function
87
Defining regarded as having such an impairment
- Has a physical or mental impairment that does not substantially limit a major life activity
- -BUT: is treated by an employer as if they do
- Has a physical or mental impairment that does limit a major life activity ONLY as a result of the attitudes of others towards the impairment
- sever disfigurement
-Does not have an impairment but is treated by an employer as having such an impairment
88
American with Disabilities Amendments Act
- Amendment to the ADA in 2009
- Greatly expanded the definition of "disability"
- -Disability includes infectious or contagious diseases
- --exception: direct threat to health/safety of others and cannot be eliminated by reasonable accommodation
-Episodic or conditions in remission are covered
- Courts are not allowed to take into consideration any mitigating steps to lessen the disability
- -Exception: glasses or contacts
89
What is a Nuisance?
anything that bothers/destroys a person or there property
90
Private Nuisance
Has a smaller scope
- A private individual's right to quiet enjoyment of their land is interfered with:
- Burden of proof:
- --defendant has SUBSTANTIALLY and UNREASONABLY INTERFERED with the USE and ENJOYMENT of another's land
91
Public Nuisance
Has a larger scope
-Some event, object, or occurrence unreasonably and substantially interferes with the health, safety, or comfort of the public
92
Trespass to land
-Any physical invasion that interferes with one's right to exclusive possession of land
Requirement: Must be a physical invasion
93
National Environmental Policy Act
Primary goal is to implement environmental protection as federal policy
Governing body: Council on environmental quality
- Advisory board to the executive branch on environmental issues
- has the limited ability to issue binding regulation
- not to be confused with the EPA
94
The Clean Air Act
Each state is required to develop a state implementation plan (SIP)
-identifies how each state will further comply with established standards
Primary goal=reduce air pollution
- two areas of focus
a. already existing sources of air pollution
b. new stationary sources
National ambient air quality standards
- regulate acceptable pollutant in the air
- Primary standards: protect public health
- Secondary standards:
a. protect elements relation to public health
b. Livestock, plants, architectural structures
95
The Clean Water Act
General Purpose: identify and limit pollution in public water sources
Sources of pollution
- point source
- -any discernible and concrete place where pollutants are discharged
- -Easier to manager and implement standards limit
Non-Point Source
- Water pollutants emanating from land use
- E.g. dredging, mining, runoff from agricultural operations
96
Federal Insecticide, Fungicide and Rodenticide Act (FIFRA)
Regulates the sale and distribution of toxic chemical agents interstate commerce
97
Toxic Substances control Act
Regulates the manufacturing, production, and implementation of toxic substances
98
Resource Conservation and recovery Act
Imposes standards and safety protocols pertaining to solid waste (bodily functions) products
99
Montreal Protocol
- Pertains to the regulation and reduction of harmful substances which deplete the ozone layer
- Pledge signatories agree to reduce production of CFC's by 50 percent
100
Kyoto Protocol
- Set of binding targets by which nation signatories agree to meet
- Pertain specifically to greenhouse gasses (including CFC's)
- US has not signed on to the Kyoto Protocol
a. July 2005 "beyond Kyoto"
b. promotion of alternative and nuclear power sources
101
Types of Property
Law recognizes and classifies property into four distinct groups:
- Tangible Property
- Intangible property
- Real property
- Personal Property
-Not mutually exclusive--can be transferred from one to another
102
Fixtures
-Personal property that becomes real property...
Any personal property that becomes attached to real-property effectively merges with the home. (merger theory)
103
Factors for determining whether something is a fixture
- The PHYSICAL RELATIONSHIP between the item and the land/building
- The INTENT of the person who attached the item
- The PURPOSE the item serves in relation to the land
- The INTEREST of said person in the land or building at the time of attachment
104
Freeman v Barrs
Fixtures are things which have been so fixed to the land that they effectively become part of the land
3-part test
a. The annexation to the reality
b. The adaptation to the use to which the reality is devoted
c. The intent that the object become a permanent part of the land
Adaptation and intent are most critical in determining fixture status
105
Title v Possession
Title: Legally own it (my textbook)
Possession: Have control of it but not legally own it (someone hiding textbook)
106
Methods of transfer and Acquisition
```
Sale: pay or earn money
Gift: Receive it with no condition
Inheritance: legal transfer by way of succession
Accession:
Confusion:
Possession:
```
107
Sale of personal property
Legal title of the property transfers from one to another
- dependent on the parties' intent to pass title
- Physical transfer of possession is not required
- In exchange for $
108
What is a gift?
- Transfer of title to property from one person to another
- No consideration required
Requisite components
- delivery
- intent
109
Delivery requirements of a gift
Can be actual physical transfer of the property
Constructive delivery
-When item's nature makes physical delivery difficult/impossible (focused on the notice)
Symbolic delivery
-When delivery is symbolized by the physical delivery of something else (ex. keys to a car)
110
Requirement of Intent of a gift
Intent to give
-The gift giver must actually intend to make a gift
Gifts cannot be confidential
- any conditions to receiving a gift serve as consideration
- Exception: gifts in consideration of marriage
- -engagement ring or dowry
- -may be revoked/returned if the condition is not fulfilled
111
Types of gifts
Inter vivos: those gifts made during the gift giver's lifetime
Gift Causa Morta: gifts made in contemplation of one's imminent death
112
When personal property "begets" additional property
-The begotten property becomes owned by owner of the adult.
Ex. mother dog has puppies, puppies are the owners of the mother
113
Confusion to require personal property
Situation involving numerous pieces of identical property owned by numerous owners
- The pieces of property become "commingled" or mixed with others
- Situation where owners are unable to differentiate whose property belongs to whom
The Law's Solution
- If the goods can be divided, they will divided to each owner who can prove their share of the whole
- Risk of loss for the lack of proof
114
Acquiring personal property for possession
Abandoned property
-Finders of abandoned property (intentionally disposed of) get title
Lost Property
- The finder of lost property has superior right in title against all-but for true owner
- Finder has a duty to give possession of the property to the police
a. If no owner comes forth within a reasonable time-finder acquires title
b. exception-mineral rights
Mislaid Property
- Property that has been unintentionally abandoned
- Rule: The owner of the land on which the property was mislaid has superior rights to the finder
Lost property
can be abandoned (intentional) or mislaid (accidentally left)
115
Treasure Trove
(acquiring property through possession)
- Any items of currency that are intentionally concealed by the true owner
- Property must have been in hiding
- Reasonable presumption that the true owner is likely dead (time length)
- Finders of treasure troves are true owners
Do not confuse with shipwrecks:
- Finders of shipwrecks are afforded a finder's fee
- Treasure is the property of the country who's flag the ship was flying
116
Bailment
-When you give someone your property so that they can do something involving/regarding the property. Afterwards, they required to give it back.
Bailor: owner of the property
Bailee: person taking the possession
117
Examples of bailment
- leaving your car with a parking valet
- renting out storage lockers
- taking a suit to the dry cleaners
118
Types of bailments
1) For the bailor's sole benefit
- leaving personal property to another for services rendered
- No compensation exchanged
2) For the bailee's sole benefit
- lending personal property to another
3) For the mutual benefit of the bailor and bailee
- both parties receive a benefit
- AKA-commercial bailment
119
Duties/rights/liabilities of Bailments
-The bailee has a duty to exercise reasonable care in the course of bailment
-Property that is lost, damaged, or destroyed during the bailment- the law presumes the bailee was at fault
--Bailor burden of proof
A. Property was delivered to bailee
B. Property was not returned to he bailor
Bailee's are absolutely liable to return property
-If bailee exercises level of care necessary in light of the property's damage/loss/destruction--the bailee is not liable
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Leasehold Estate
A lease is a contract between two parties for the use of land
Landlord: person who owns the land
Tenant: person whose occupying the land
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Types of leases
- Term of years tenancy
- Periodic tenancy
- Tenancy-at-will
- Tenancy-at-sufferance
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Term of Years Tenancy
- Landlord/tenant arrangement is set for a definite time period
- Years, months, weeks
- Most common type of tenancy
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Periodic Tenancy
- Lease of indefinite length
- Typically set periods of time with renewal options
- Month-to-month with option renew
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Tenancy at Will
- Leases that contain a provision that either landlord or tenant may terminate the tenancy without penalty
- Reasonable notice is typical
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Tenancy at sufferance
- When a tenant stays on beyond the expired lease term
| - "Hold Over" tenant
126
Assignment or Sublease
General rule: Absent an anti-assignment or anti-sublease covenant in the lease, a tenant may transfer their interests in the tenancy to another
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Assignment v sublease
Difference is the scope of time and rights
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Assignments
- Tenant transfers all of his/her interest to the tenancy to another
- The duties to pay rent transfer to the assignee (new tenant)
What if the new tenant doesn't pay rent?
- The original tenant(assignor) has the duty to pay rent if the new tenant does not
- The original tenant may seek an action for reimbursement from the new tenant
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Subleases
- The original tenant transfers LESS THAN ALL of their interest in the tenancy to another
- Original tenant has the right to reclaim their interest from the subletting tenant
The subleasee has not legal obligation to pay rent
-only duty is to pay the original tenant the rent
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Duties of the Landlord
Law imposes duties on landlord in their capacity as landlords
- Quiet enjoyment
- Quality of the premises
- Standard repairs and maintenance
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Quiet Enjoyment
- During the tenancy-the tenant has temporary dominion of the land
- Landlord may not interrupt the tenant's right to quiet enjoyment aka wrongfully evict the tenant
- Constructive eviction: any act by the landlord which substantially interferes with a tenant's right to quiet enjoyment
- -Tenant may abandon the premises and terminate the lease unilaterally
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Quality of the Premises
- The landlord is legally bound to provide a premises that is fit for human habitation
- Adequate weatherproofing, heat, water, electricity, sanitation and structural integrity
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Standard Repairs and Maintenance
- Landlords are responsible for the maintenance and repair of common areas on the premises
- Generally-landlors do not have any duty for repairs to the premises (aside from common areas and external issues)
- Contemporaneously, most landlords have repair covenants in the lease agreement
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Tenancy in Common
- Two or more individuals jointly own a property interest
| - No right of survivorship-deceased owners may pass their interest in the land to their descendants
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Joint Tenancy
Same thing as a tenancy in common BUT
- There is a right of survivorship-when one owner dies, their interest pass to the surviving owner(s)
- -supersedes any estate succession or intestate succession
136
Requirements of Joint Tenancy
All four unities must exist at sometime for all tenants
- Time: interests of all parties vest at the same time
- Title-All tenants acquire title via same instrument
- Interest: All tenant's interest are identical in scope and duration
- Possession: All tenant's share equal ownership and enjoyment rights
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Tenancy by the entirety
- Created only by a conveyance of land to legal spouses
- Neither party may convey their interest during their lifetime
a. EXCEPTION: Other party consents
- Assume right of survivorship exists
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Non-possessory interests in land
Easements:
-Limited rights to use another's land for a specific purpose
- Appurtenant easements
a. The rights and duties of the easement pertain to and run with the land of the owner of the easement
b. Open to all
c. e.g. Bike paths or crossings across private party
Easements in Gross
-Rights and duties of the easement are restricted to specific individuals
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Creating an easement
- By express or implied grants
- By necessity
a. the owner to enter/leave property is dependent on crossing another's land
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Ways to transfer real property
- By deed
- By will or by the law of succession at death
- By adverse possession
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Marketable Real Estate Title
- Title over personal property=ownership
- Title over real property = a bit tricker to define
Marketable title
- free from any encumbrances
- free from any defects in the chain of title
- free from any event or occurrence that would inhibit the seller from transferring title (ex. not paying taxes, divorce, )
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Seller's exceptions to Marketable title
- Zoning restriction preexisting
| - Public rights-of-way and public easements (lakeshore on lake mi)
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Deed
Formal document that transfers land interests
-evidences ownership
Types:
-Warranty
-Special warranty deed
Quitclaim deed
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Warranty
- Highest level of protection to the buyer
- Seller attests to have valid title to the land
- Liable to the buyer for any damages incurred if the legal title fails to transfer
- can guarantee seller has sole right to this transfer
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Special Warranty Deed
- Second highest level of protection to the buyer
- Guarantee that the land is free from any encumbrances
- Title is not defective as a result of seller's action
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Quitclaim Deed
- Lowest level of protection for the buyer
- No guarantees of marketable title
- Purely a conveying instrument
- --a device transfer
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Real Estate Deeds Requirements
-Description of the land
-Quantity of the estate (how long do you have it and physical typography)
-Covenants of Title: specific promises (ex. no jews)
-Execution: notary public authenticates legal documents
Delivery
Recording
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Recording of deeds
- Not a requirement for transfer of property
- Puts the world on notice that YOU own the property as of X date
- Failure to record a deed could result in loss of title
- -subsequent good faith purchasers
149
Notice Jurisdiction
Subsequent purchasers without notice may get title over unrecorded land deeds
150
Race Jurisdiction
Unrecorded deeds are invalid against any other deeds recorded before it
151
Race Notice Jurisdictions
Unrecorded deeds are invalid against any new purchasers who lack notice and record before the first
152
Terms of Art (deeds)
Life estate: has it for life: I give condo to Dustin until the end of his life
Fee simple absolute: becomes official owner. I give condo to Dustin and it becomes his
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Adverse Possession
Method of acquiring title over real property
When someone occupies someone else's land, with the intent to own it, and the owner knows (or should've known) and didn't kick them out--the trespasser becomes the new owner
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Eminent Domain
When the state is taking an individual's real property
-must be for public use
Benefit to the public outweighs the benefit to the private owner
-broadly interpreted
Effect of eminent domain can be delegated to a quasi state actors:
-railroad, utility, college/universities
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What do private owners of the property get?
State is required to pay "Just Compensation" aka fair market value
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Zoning
- the state/city/township exercising authority can't use at land
- May divide land by usage (residential, commercial, industrial)
- May pertain to building characteristics (height, ability to an extent aesthetics)
157
Variances
-Private individual and corporations may appeal to their township board/zoning board for an exception to the zoning ordinances.
