LEGL 2700: Exam 3
77 Cards in this Set
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Tort Law
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any non-criminal, wrongful action other than a breach of contract in which someone gets hurt.
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intentional tort
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intent to do an action that leads to an injury
assault and battery
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intentional infliction of emotional distress
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outrageous intentional conduct that has a strong possibility of causing mental distress
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false imprisonment
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intentional, unjustified confinement of a non-consenting person
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trespass
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entering a person's land without consent or remaining after being asked to leave
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conversion
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civil side of stealing; only regards to personal property
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fraud
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intentional misrepresentation of material facts
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defamation
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rumors about other companies
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injurious falsehood
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untrue statements disparaging another company''s product or company
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intentional interference with contractual relations
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inducing another to breach or fail to fulfill a valid contractual obligation in order to have them enter one with you
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negligence
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50% of all law suits filed in the US
unintentional injury that arises due to the defendant's failure to use reasonable care
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elements of negligence
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(Have to prove all 5)
duty of care
breach of duty
causation in fact
proximate causation
injury
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duty of care
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the defendant has a legal obligation to protect the plaintiff
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breach of duty
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less careful than the average person
take reasonable time to respond to an accident
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causation in fact
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defendant's breach factually caused their injury
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proximate causation
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a foreseeable accident
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injury
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the plaintiff must have a physical injury
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contributory/comparative negligence
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balances how much was each person's fault
person injured was negligent
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assumption of risk
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by agreement
implied by the circumstance
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strict liability torts
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strict products liability
abnormally dangerous activities
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strict products liability
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seller, manufacturer, or distributor of commercial products is responsible for any injury by a defected product
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abnormally dangerous activities
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must be activities that involve a high degree of risk or harm
the risk can't be completely guarded against by the exercise of reasonable care
the activity is not one commonly performed in the area
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compensatory damages
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gives compensation to the plaintiff for injuries suffered
doesn't punish the defendant; just makes it even
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punitive damages
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intended to punish the defendant
goes above the harms to make an example and make sure none does it again
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security
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large statute that list all terms considered securities
answer 'yes' to all of the following:
is the investment in a common business activity?
reasonable expectation of profits?
profits earned through the efforts of someone else?
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Securities & Exchange Commission
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(SEC)
responsible for administering federal securities law
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Securities Act of 1933
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regulates the initial sale of a security
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issuer
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the company who is actually selling the stock
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underwriter
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investment bank or brokerage firm to help the issuer
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controlling person
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the owner officer, or director of the corporation
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seller
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sales person or company
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registration statement
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(application) anyone who has a part in the sell and gives detailed general statements about the company
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prospectus
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contains all financial information such as balance sheets and profit/loss data
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liability
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the issuer can't commit fraud in the registration statement or prospectus, or any other information pertaining to the initial sale
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securities exchange act of 1934
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subsequent resell of a security after the initial del
forbids the resell of a security on a national exchange without an effective registration
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insider transaction
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owner of more than 10% of a security, a director, or an officer of the issuer of the security
disclosure requirements
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short-swing profit
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illegal
can't buy and sell stocks from your company for a profit in a 6 month period
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nonpublic information
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employees may not use inside information to achieve profits in stock transactions regarding stocks so that they can notify the public
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Sarbanes-Oxley Act of 2002
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revitalization of the SEC
accounting reforms
corporate governance
financial statements and controls
securities fraud
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Enron
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7th largest corporation and the largest corporate bankruptcy in the US
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Jeffrey Skilling
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Enron CEO
analysts believed anything he told them
liked guys with "spikes," willing to take risks
convicted on 19 different charges
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Ken Lay
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Enron Founder
ignored all signs of disaster
reassured employees everything was okay
convicted of 11 charges, but died before sentencing and was expunged
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Andy Fastow
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Enron CFO
kept stock prices up by hiding debt
created companies to hide Enron's debt
96 banks invested in Enron
Fired after making $45 million from LPJ
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mark-to-market accounting
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predicting future profits based on the current market price
exaggeration
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Antitrust law
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a series of laws intended to promote abundant, fair competition in the marketplace
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trust
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a big company that owns several smaller companies
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Sherman Act of 1890
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primary antitrust law
2 sections
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Clayton Act of 1914
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fills loopholes of Sherman Act
uses rule of reason to decide
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Sherman Act section 1
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agreements between 2 or more parties
every contract, combination, or conspiracy in restraint of trade is illegal
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price fixing
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2 or more competitors decide to charge the same price
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territory allocation agreements
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can't restrict selling to one specific location
ex. Coke and Pepsi can't agree that Coke will only sell in the South and Pepsi will only sell in the North
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Per se illegality
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certain activities are always illegal no matter what
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Rule of Reason
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agreements are illegal only if the constitute and undue or unreasonable restraint of trade
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horizontal agreements
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agreements between competitors
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vertical agreements
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agreements by a manufacturer with suppliers and distributors
more acceptable
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Sherman Act section 2
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Every person who tries to monopolize shall be charged with a felony
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monopoly power in a relevant market
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Can the company increase prices without the fear of losing sales?
Focuses heavily on the number of actual or potential competitors in the relevant market
What would consumers view as a substitute?
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exclusionary conduct
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doing something to harm the competition
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Price discrimination
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can't sell identical quantities of goods at different prices to different people
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tying contracts
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when you buy one product, you also have to buy another
ex. Nike can't sell one very popular shoe to footlocker and tell them they must buy 10 other less popular ones
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Mergers and Acquisitions
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must file notice with the gov't if the merger is worth more than $65 million
ex. Whole foods couldn't merge with Wild Oats so Whole Foods both out Wild Oats, and then was forced to sell them b/c the court of appeals agreed with the gov't
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ease of creation
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difficulty to set up; includes time, paperwork, and fees
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managerial control
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responsibility as owner of the business; day-to-day business or stockholder, who doesn't make any decisions
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continuity
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lifespan of the business
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liability
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owner personably reliable for the debts of the business
personal assets taken by the bank if company is in debt
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taxation
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different types of businesses taxed in different ways
some taxed once others taxed twice
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sole proprietorship
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no formal documentation required
owner is in total control
if you die or sell the organization the business dissolves
owner personably liable
only taxed once, all income generated is subject to the owner's personal taxes.
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partnership
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owners conduct their affairs in a way to have common interest and shared profits and losses; no significant paperwork unless there is a different name to the business
majority rules in decision making
dissolved with any change in partnership
all partners are personably liable for the e…
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Corporations
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most difficult to establish
biggest benefit is limited liability
taxed twice for all income; pay a percentage to the gov't and shareholders also taxed for any income distributed as a dividend
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closely held
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owned by a relatively small number; buying and selling of ownership is done with direct negotiations
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publicly held
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owned by thousands and traded on the stock exchange
ex. Coke, AT&T
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limited partnerships
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limited partners who are not reliable for debt and don't control the business
general partners run the business and are responsible
file some paperwork with the state
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S corporations
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treated like a partnership for income tax purposes
can only have 75 shareholders
can't be publicly traded
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limited liability corporations
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formed like corporations
managed equally by members via majority vote
members are generally not liable for the LLC's debt
can't be publicly traded
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Article of Incorporation
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must be filed with the state gov't where the headquarters will be
basic charter of a corporation which spells out the name, basic purpose, types of stock, and any special characteristics
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4 parties regulated by the 1933 Securities Act
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issuers, controlling persons, underwriters, sellers
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2 documents required by the 1933 act
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registration statement and prospectus
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Study Guide: Legal Test