Download - Business Law Final Project
Business Law - Final Project Keishauna Gentry
Ethics Ethics: deciding what is a right or wrong
action in a reasoned, impartial manner Morality: involves the values that govern
society’s attitude toward right and wrong Ethics are based around the following basics:
Feelings and Opinions The Greatest Good The Golden Rule Consequential Reasoning Rule-based reasoning
Feelings and Opinions Ethics are viewed as how a person feels
about a certain situation Ethics may also be based on what
opinions are expressed about certain situations
The Greatest Good The idea is that must people will base their
opinion of ethics based on how a certain situation affects the greatest amount of people
The more good that result, the more ethical the action taken
The more bad the result, the less ethical the action taken
The Golden Rule Do unto others as you would have them
do unto you The heart of the golden rule is empathy Empathy: putting yourself in the other
person’s position
Consequential Reasoning Takes a look at the consequences of the
action before making a decision on what way to act
Looks at alternative actions and it gives the final outcome of each action
Rule-based reasoning Makes a decision based on majority vote Sometimes it is not the most ethical
decision Based around the U.S. Constitution
U.S. Legal Systems The U.S. Legal System is based upon the Constitution,
where laws are created and amended. The basis for the Constitution is to protect human rights.
Our legal system is based upon three levels of government: Judicial: Led by the Supreme Court. The Supreme Court
decides if the law being made is constitutionally correct. Legislative: Led by Congress. Congress is made up of the
Senate and the House of Representatives. The Senate consists of two members from every state. The House of Representatives consists of members based on their population.
Executive: Led by the President. Elected by vote of the people
Sources of American Law Common Law Law of Precedent Statutory Law Federal and State Constitutions Administrative Law
Common Law Adopted by US legal system Common law developed into a legal
system modeled by nations around the world
Colonists brought English Common Law doctrines with them to America.
Primary basis of American legal system
Law of Precedent Evolved from sharing common law Judge researches a similar previous court
case. Judge applies that decision to new case. Also called Case law Also called the Doctrine of stare decisis
– Latin for “Let the decision stand”
Statutory Law Statutory law is enacted (passed,
created, ratified) by a governing body for a specific purpose. – Federal legislature Creates statutes, acts
State legislature Creates statutes
Municipal (city/town) government Creates local ordinances and by-laws
Constitutional Law
Balance of powers between the three branches Legislative –Article 1 Executive – Article 2 Judicial – Article 3
Administrative Law Administrative law is the regulations,
orders, rules and decisions of administrative agencies.
Legislators create an administrative or regulatory agency.
Purpose is to regulate certain activities for the benefit of the public
4 Punishments for a Crime? Imprisonment Fine Probation Community Service Combination of the above
Types of Crimes Crimes Against People Social Crimes Crimes Against Property Business crimes (White Collar)
Crimes Against People Murder
Malice aforethought? 1st degree—aggravated
(premeditated, cruelty, torture, rape, robbery, kidnapping)
2nd degree—non of the above conditions apply
Manslaughter Voluntary?
Intentional Involuntary
Occurs while committing an unlawful or reckless act
Assault - Attempt (pointing or shooting at someone) Aggravated (Usually
felony)-using deadly weapon with intent
Simple (misdemeanor) Battery
Hitting Kidnapping
Unlawful removal against person’s will
Sex offenses Statutory rape Date rape (acquaintance
rape)
What is a tort? One person’s interference with another
person’s rights, either through intent,
Based on 4 rights: Right to:
Be free of bodily harm Enjoy a good reputation Conduct business without interference Have property free from damage or
trespass
Intentional vs. Unintentional Intentional
know and desire the consequences of your act
Unintentional – lacks the determination of mind.
Requirements of Acceptance Unconditional Acceptance
Mirror Image Rule (IMPORTANT) Acceptance must “mirror” offer • Any
change means there is no acceptance Counteroffer
Offeree makes an offer Offeror becomes offeree
Methods of Acceptance Contract accepted when sent, if same
method of communication used Contract accepted when received, if
different method of communication is used If method is stated in offer, it MUST be used Action=Acceptance Silence cannot be a method of acceptance
Termination of Offer Revocation – Taking back of an offer by
offeror Rejection – Refusal by the offeree Counteroffer – Any change in the terms of
the offer Expiration of Time – If the offer puts a time
limit on the offer and it has passed Death – Offeror dies Insanity – Offeror is declared insane
Capacity to Contract Capacity – legal ability to enter a contract Majority – age of legal adulthood Minor – not yet reached legal age (minority) NC Age of Majority = 18 years old Voidable Contracts – minors may disaffirm or
avoid their contracts if they so choose Infancy = minority = minor = under 18 yrs old
Returning Merchandise – must be returned if disaffirming a contract
Tender – offer to return Misrepresenting Age – fraud
if contract disaffirmed, you may be sued for fraud
Consideration Exchange of benefits and detriments by
the parties to an agreements Benefits
Something that a party was not previously entitled to receive
Detriments Any loss suffered
Types of Detriments Give up or promise to give up something
you are entitled to receive Doing or promising to do something you
have a legal right to do Forbearance
Not doing something you have a legal right to do
6 Elements Genuine Agreement
if a valid offer is met by a valid acceptance then a genuine agreement exists
Can be destroyed by fraud, misrepresentation,duress, or undue influence
Offer Proposal by one party to
another with intent to create a legal binding agreement
Acceptance an unqualified willingness to
go along with the offer
Consideration Must exchange
something of value in order to create a bond
Legality Must be permitted by
law Courts will not enforce
an illegal contract Capacity
Legal ability to enter into a contract
Ex Minor, mentally ill, drunk, drugs
3 Requirements of an Offer Serious Intent
Must intend to make the offer Advertisements? No serious intent Known as an invitation to negotiate
Definite and Certain Must use definite words
Communicate to the Offeree Phone, fax, Internet, letter, etc
AGENCY Relationship in which one person, called
an agent, represents another person, called a principal, in some sort of business transaction with a third party. In most cases a binding contractual agreement is formed.
Principal -> Agent -> Third Party Example: You picked up and paid for a
pizza ordered by a family member.
TYPES OF AGENTS General Agent-given authority to perform
any act within the scope of a business. Special Agent-employed to accomplish a
specific purpose or to do a particular job. Subagents-appointed by another agent. Agent’s Agent-has no power to appoint a
subagent but does so anyway. Coagents-two ore more agents hired by
the principal.
RELATIONSHIPS ARE CREATED By agreement (contract) By law (circumstantial or specific) By statute (special interest of a state)
AGENCY RELATIONSHIPS Gratuitous Agent: agent
works for free (no contract) Master: has the right to
control the conduct of his or her servant
Independent Contractor: agent is hired by the other party, but not controlled
Partially Disclosed Agent: principal’s existence but not identity is known to the third party.
Fiduciary: relationship is based on trust.
Actual Authority: real power the principal gives to an agent to act on his or her behalf
Apparent Authority: agency by estoppel
Third Party: must be notified if an agency has been terminated
Consensual: both parties of a principal/agent relationship agree or consent to relationship
TYPES OF AUTHORITY Actual-real power given to agent Express-all orders, commands, or
directions given to agent when relationship created
Implied-understood acts or powers implied from express terms
AGENT’S DUTIES TO PRINCIPAL Obedience-obey reasonable orders Good faith-deal honestly Loyalty-faithfulness or acting in best
interest Duty to account-accountable for all
money entrusted to him/her
PRINCIPAL’S DUTIES TO AGENT Compensation-payment for services Reimbursement-repayment for own
money spent Indemnification-repayment for amount
lost Cooperation-working together
TERMINATION OF RELATIONSHIP By operation of law
Death of principal or agent
Bankruptcy Impossibility of
performance Agent’s objective
becomes illegal
Notice to third parties Credit has been given
to principal. Cash business has been
done. No notice when third
party never heard of agency relationship.
Termination of acts Performance Mutual agreement Agent’s withdrawal
Agent’s discharge
North Carolina Regulations and Laws
NC Department of Environment and Natural Resources (DENR)
Prevents and protects North Carolina’s natural resources
Protects air, water, and publics health
DENR helps business, farmers, and local government, and public keep the area safe
North Carolina Division of Waste Management
Controls disposal of solid waste, harmful waste, underground storage tanks, and needed cleanups
Works to reduce wastes Consists of a Solid Waste
Section, Underground Storage Tank Section, Hazardous Waste
Section, Superfund Section (controls waste risks
and cleanups
Unions To certify, must have a unanimous vote
(50 %) If lose certification vote, must wait one
year for another vote.
Collective Bargaining Contract negotiated by the employer
and representative of the labor union.
Employment at Will Employment is not for a stated amount of
time. Employer, without being liable for breach
of contract, could fire the employee and pay him or her for services rendered up to the time of the firing (employee can quit).
Unjust Dismissal Employees have legal grounds against
employers who have treated them unfairly.
Grievance Procedure Sets up a series of steps employees must
take to appeal an employer’s decision that they feel violates just cause.
Due Process is a grievance procedure for government employees.
Restrictive Employment Covenants Agreement not compete Restrict:
Type of work prohibited Length of work Extent of geographic area
Laws Wagner Act (National Labor Relations Act)
First federal law dealing with collective bargaining Encourage collective bargaining, discouraged
unfair labor practices Taft-Hartley
Prevents labor union from requiring an employer to retain employees who are no longer need
Fair Labor Standards Act of 1938 Restricted child labor
Landrum-Griffin Act Unions must register with Sec. of Labor and submit
year financial reports.
Relationships between Employer-Employee Professional contracts are generated by
professional or executives who negotiate their own contracts
Labor-Management-unions formed to in best interest of employee. Collective bargaining agreement-labor
agreement between an employer and the union.
Grievance procedure-steps to resolve disputes.
Terminating the Relationship Employment-at-will occurs with the
termination of the job by the employee or the employer.
Labor Laws Fair Labor Standards
Act: Restricted child labor Minimum wage Time and a half
overtime Equal Pay Act: equal
pay for equal work
Social Security: contributions by employee and employer
Work Compensation Laws: provides income if injured on the job (employer bears cost of compensation)
Civil Rights Acts Civil Rights Act of 1964:
Prohibits discrimination Complain to the Equal Employment Opportunity
Commission (EEOC)
Civil Rights Act of 1991: new law that states in disparate impact cases, the employer has the burden of proving the existence of business necessity. (employee eligible for unemployment if discharged not for a “cause”)
Types of Shops Agency- receive union benefits without
belonging to union Closed- must join prior to employment Union- must join with 1 year of
employment
Employment Acts Age Discrimination
Employment Act: Forbids discrimination
against any person age 40 or older in hiring, firing, promoting, or other aspects of employment
Older Workers’ Benefit Protection Plan: forbids discrimination
against older workers in handling their employee
benefit and retirement plans
Americans With Disabilities Act: Forbids
discrimination on the basis of a physical or mental disability if disabled individual can perform “essential function” of the job despite the disability.
Statutory Rights of Employees Submit worker’s compensation claim Engage in legal union activities Participate in state or federal military
service OSHA whistleblower protection Answer jury duty call or serve as trial
witness
Rights Relating to the Marriage Contract The right to support, either emotional or
financial, by one’s spouse when necessary The right to inheritance from one’s deceased
spouse The right to property if the marriage fails The right to file a joint income tax return The right to compensation to continue one’s
standard of living, if the marriage ends. The right to the division of community
property
Duties Relating to the Marriage Contract The duty of faithfulness to one’s spouse The duty to provide support, either
emotional or financial, to one’s spouse when necessary
The duty to refrain from bodily harm to those with whom they live
The duty to support their children, if there are any
Premarital Agreements A premarital agreement is an agreement
between two people considering marriage Each party in the agreement must be honest
about every aspect of the agreement Not every marriage contract includes a
premarital agreement A premarital agreement must be in writing
and signed by each party Also called prenuptial agreement
Ceremonial Marriages Ceremonial marriages are typically used
to make a marriage official (solemnize) Ceremonial marriages must be
administered by someone who has authority (judge, ordained minister, sea captain, and in some states notary public)
Common Law Marriages Common Law marriages require no witnesses
or ceremony by anyone authorized Common Law marriages do not require a
ceremony but is typically considered when a man and a woman share common residence for an extended period of time (different by state, typically 10 years)
Under Common Law, a published notice of an upcoming marriage was called a marriage band
Proxy Marriages One or both of the parties to a marriage
are absent and are represented by an agent who acts on their behalf
Absent due to military duty or serious illness
Historically due to travel and distance issues on arranged marriages
Prohibited Marriages Prohibited marriages include, in most states,
marriage between close relatives, marriage between those related by blood (consanguinity), or marriages related by marriage (affinity)
The Uniform Marriage and Divorce Act prohibits marriage between parent/grandparent, child/grandchild, brother/sister, uncle/niece, or aunt/nephew
Bigamy (two spouses at one time) and Polygamy (more than two spouses at one time) are prohibited
Divorce The grounds for divorce vary from state-to-state but
can include: No-fault (the breakdown of the domestic relationship) Adultery Physical or mental cruelty Desertion Alcoholism or drug addiction Nonsupport Conviction of a felony A few states have allowed for divorce based on
incompatibility Impotency
Support and Custody of Children The welfare of the child is the
main concern of the courts Many factors are considered
when determining custody: Parents’ wishes Childs’ wishes Child’s relationship with
parents, siblings, and any other person who may affect the child’s welfare
Child’s adjustment to home, school, and community
Physical and mental health of all involved
Joint custody may be awarded
If one parent receives custody, the court will then set child support payments for the other parent.
If child support is not paid, a parent locator service is then used to help collect the unpaid child support payments
Nature of Insurance The concept of insurance involves risk
pooling or spreading losses over a greater number of people.
An insurance company collects and pools premiums from many individuals or businesses for the payment of future claims.
Risk Management All people take risks every day. Risk management is the process of
managing one’s exposure to risk. Examples
Using a seat belt Installing smoke detectors Driving a vehicle Playing sports Purchasing an insurance policy
Bodily Injury Liability Coverage Bodily Injury Liability protects the insured
person from liability claims for injury to: People in other cars Passengers riding with the insured person – DOES NOT cover the insured person (driver)
Property Damage Liability Property Damage Liability protects the insured
person from liability claims for damage to property of others, such as: Personal property including vehicles, animals Business property including telephone poles and
other utility structures Government property such as bridges and other
road structures Real property
Does NOT cover the insured person’s property
Collision Claim Payments Insurance company may pay either the
Cost to repair insured vehicle less deductible, or Actual cash value, market value or NADA
Bluebook value of a total loss vehicle less deductible
The insurance company does not consider the loan balance when settling a claim! The loan balance is an issue for the owner. Loan balance may be more than a vehicle’s value!
No Fault Insurance The insurer of each party involved in
accident pays the insured loss regardless of fault
Not required to prove fault of one party over the other Reduces time delays for claim settlement
especially in bodily injury lawsuit cases Reduces money spent to resolve the claim
NC is NOT a no fault insurance state.
Cost of Insurance Insurance companies legally discriminate by
using: Relevant statistical data and Risk factors related to the insurance type
Underwriters at companies “rate” to determine the premium cost for the coverage requested. Standard premiums may be rated up for
hazards Points for tickets or accidents on auto insurance Health issues on life/health insurance
Life Insurance Provides income to dependents or other
named beneficiaries in the event of the insured person’s death.
Face value- the amount of protection stated in the policy Example: Marla buys a $100,000 face value
life insurance policy. Marla dies. Marla’ s beneficiaries will get $100,000 in proceeds.
Beneficiaries The policyholder names a beneficiary Can be an individual or business Beneficiary receives proceeds from a life
insurance claim. Proceeds is the money paid to a survivor
by a life insurance policy. Contingent beneficiaries named in the
policy are second in line if the beneficiary is deceased.
Life Insurance Advantages Face amount is paid as proceeds to
beneficiary Proceeds are NOT taxable by income,
estate or inheritance tax laws. Proceeds are paid direct to beneficiaries. Proceeds avoid probate.
Term Life Insurance Term life is temporary insurance.
Only pays if insured dies during policy period
Purchased for a specific term (one year or multiple years)
Usually renewable for another term Least expensive premium for most
coverage Pure insurance, no savings add up
Whole Life Insurance Permanent insurance for lifetime of
insured. Premium is more. Excess premium creates savings called
cash value. Cash value can be:
Withdrawn by policyholder as loan Used to buy more paid up insurance Used to pay current premium
Other Types of Life Insurance Supplemental Information Limited pay life - stop paying after a
specified # of years without lapse Universal life - blend of term and whole Endowment - lump sum paid in advance Variable life - cash value builds in
investment chosen by policyholder Accidental death & dismemberment - for
deaths due to accident or loss of limb
Cost Factors for Life Insurance Type of insurance Age of insured Health of insured Gender (sex) of insured Face amount – Dollar amount of
coverage provided by the life policy Company
Property/Casualty Insurance Types of policies :
Fire policies Renter’s policies Homeowner’s policies *Supplemental - marine insurance
Property and Casualty Insurance Covers both individual and business
property such as: Real Property: Houses, apartments, condos,
office buildings and other structures Personal property: Jewelry, furniture,
clothing, equipment, artwork and other valuables
Fire Policy A very basic policy
covering loss resulting directly or proximately from an unfriendly fire.
Unfriendly or hostile fire is uncontrollable or has escaped from the place where it should be.
A friendly fire is a bonfire, furnace fire, fire in a fireplace unless it gets out of control.
Owner of property rented to others protects investment in structure with a fire policy. Owner has insurable interest in the property, but not in tenant’s property.
Examples: – Apartment – Condo – Office building
Renter’s Insurance Covered under
Homeowner’s 4 Form Person who rents real
estate from another but has personal contents on premise carries renter’s insurance to insure: personal contents against liability risk
Insurable Interest law applies. A person can only insure his own property, not another’s property.
Protection includes: Personal contents of tenant
in an apartment, condo, mobile home or house
Personal liability if others sue tenant for injuries
Examples: Lightning strikes and
damages TV owned by tenant
Neighbor breaks leg when he steps on child’s skate left on steps and sues tenant for negligence
Homeowner’s Policy Provides coverage for:
Home - Primary structure Personal property -
Contents Related structures –
Outbuildings, if any Loss of Use - Living
expenses if insured can not live there due to covered damage
Premise personal liability – for injuries to others who were on your property
Must own home to carry policy forms: HO-1 Basic - covers
limited perils HO-2 Broad – covers
extended perils HO-3 Special - covers
most perils with specified exclusions
HO-6 Condominium Owners – coverage like an HO-3, but for homes with common walls
Peril – a cause of loss
Co-insurance Homeowners policies require the insured
to carry a minimum of 80% of the value of the home (called co-insurance) to get full reimbursement for a claim made. Most claims are partial losses leading
policyholders to insure a home for less than value since risk of total loss is low.
Cost Factors of Property Insurance Limit of coverage for property Location of property – fire district, city,
county, state Structural material - brick, block, frame Previous claims filed Company
FLOOD & EARTHQUAKE NOT COVERED UNDER HO POLICY
Must buy separate flood insurance coverage
Must buy separate earthquake coverage
Co-Insurance Clause * Supplemental* In property insurance, there is a high
probability of a partial loss claim. The insurance policy requires actual value of property be insured.
Co-insurance requires an insured to cover a minimum of 80% of the value of the property
If less than 80%, the claim amount is reduced at the time of payment.
Bailment An agreement created by the
temporary delivery of personal property by the owner to someone who is not the owner for a specific purpose.
Both parties agree that the property will be returned to the bailor.
Bailee - has in their temporary possession property that belongs to someone else.
Bailor – owner of property who gives up possession to someone else temporarily.
Examples of Bailments
Leather jacket left at a dry cleaners Vehicle delivered to parking valet Goods transported by common
carrier Truck taken to dealership for service
check Diamond ring taken to jeweler for
cleaning or repair Leaving your clothes in dressing
room while trying on new sweater Goods delivered to a consignment
shop
Mutual Benefit Bailments Invokes the duty of ordinary care on the
bailee Results from a contract (for service, repair,
storage, rental) with consideration exchanged
Both bailor and bailee receive benefit A pledge as security for a loan is also a
mutual benefit bailment Most bailments are mutual benefit
Bailment by Necessity Implied by law, a customer must give up
possession of property. Example: When you rent skates and leave
your own shoes while you skate Example: When you leave your clothes
temporarily in the dressing room while you try on a new outfit
Other Bailments Gratuitous Bailment
Free of charge (lend something to a friend). Only one party benefits
Extraordinary bailment A common carrier or hotel is strictly liable for
damage to bailed goods
Rights and Duties of Bailee Rights:
To hold a Mechanic’s Lien -the right to retain property of another, if not paid for service rendered
To expect payment for services rendered Duties:
Of reasonable care and protection of goods while in custody of bailee
To comply with terms of bailment
Rights and Duties of Bailor Rights
to have goods protected to receive service as agreed upon to have goods returned in timely manner
Duties to pay for service provided to warn of dangers or special care required
to pick up goods in a reasonable time
Tortious Bailee What is a tortious bailee?
A party who wrongfully retains lost property or stolen property
A party who wrongfully uses a bailed article for a purpose other than that agreed upon by the parties
Examples: Student who finds necklace and knows who it
belongs to but does not return it to the rightful owner
Parking valet who takes your hot car on a joy ride Dry cleaner’s employee who wears your leather
jacket
Real Property Land and anything permanently
attached, including: Buildings, structures, fixtures Water, water rights Minerals on and below the surface of the
earth. Trees & crops Air space above the surface
Personal Property Anything other than real property, including:
Clothing, jewelry, furniture, appliances in a home
Automobiles, ATVs, lawnmowers Equipment & machinery used in business Copyrights, patents, trademarks Software, stocks, loans, mutual funds Must be delivered in order to transfer ownership. May be tangible or intangible
Rights of Ownership Possess, use and enjoy the property Dispose of, sell, consume, modify, insure or
destroy the property Give the property away by will after
death Lease the property to a tenant
Intellectual Property Includes copyrights, patents, trademarks and
trade secrets Is an original work fixed in a tangible medium
of expression. Examples: literature, computer software,
musical scores and lyrics, choreography, dramatic works, unique product or process, symbols or word that identify a product, commercially valuable information that is kept secret
Methods to Acquire Property Purchase contract – earn money and use it to
buy Gift – includes intent, delivery and
acceptance Intellectual labor – creation of property Inheritance – wills and trusts Accession – farm animals naturally increase Found property – lost or mislaid Occupancy – possession of property that
belongs to no one else
Real Property Transfers Grantor - conveys a deed to real property Grantee – receives the deed
Types of Deed Quitclaim
Transfers a seller’s interest in a property but doesn’t warrant that the seller owns any interest
General Warranty Deed Warrants the title Most desirable for the buyer
Bargain and Sale Deed Transfers title to property without giving
warranties
Personal Property Transfers Transfer of title (ownership) to property Not all transfers require written titles
Purchases of goods from a retail store Certain transfers have formal titles-Vehicles
Are registered with the state MUST BE NOTARIZED Require odometer reading disclosure
statements Require damage disclosure statements
Limits on Use of Property Police powers by government Nuisance ordinances enacted by cities Zoning ordinances enacted by cities to
regulate Health and public safety issues Certain physical rights Eminant domain Deed restrictions Easements
Rights and Duties: Covenants of the Contract Covenant = Promise • Affect both the landlord and the tenant • May be express or implied • Number and type vary depending on
type of property