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Business Law Notes
Chapter 1- Introduction to the Law
What is Law?
- Law is enforceable rules governing individuals and their society.
Sources of American Law
1. U.S. Constitution (and State Constitutions)
2. Statutes (including uniform laws – Uniform Commercial Code, et al. )- the laws enacted by Congress and the state
legislatures.
3. Regulations (Administrative Law)- consists of the regulations created by administrative agencies.
4. Caselaw (decisions of Courts)
5. Treaties
6. Executive Orders
Common Law - The body of law developed from custom or judicial decisions in English and U.S. courts.
- Precedent- a court decision that guides subsequent decisions Case Law - rules of law announced in court decisions Civil Law System - A system of law derived from that of the Roman Empire and based on a code rather than case law. Civil Law - The branch of law dealing with the definition and enforcement of all private and public rights, as opposed to criminal matters. Criminal Law - Law that governs and defines those actions that are crimes and that subject the convicted offender to punishment imposed by the government.
How a Bill becomes law:
- Introduced in one house of the legislature. Can be introduced by a member of the house, or may be from the executive branch.
- Generally assigned to a committee(s) having jurisdiction over the area(s) the legislation would affect.
- Possible committee hearings, redrafting and amending.
- Passed by the one house.
- Goes to the other. The other may have even passed a bill of their own on the same topic.
- The two houses must pass identical bills (conference committees, if needed).
- Goes to Executive for signature or veto. If signed, bill is law.
- If veto, 2/3 of each house of Legislature may vote to overturn the veto and the bill then becomes law.
- Executive Orders may not repeal legislation/laws. Only an act of the Legislature (or the order of a Court finding the law unconstitutional) may invalidate a law. The Executive may choose not to enforce the law, but the Executive cannot unilaterally do away with laws that the Executive does not agree with.
- Executive Orders may not amend or repeal Constitutional provisions. The Constitution of the United States and those of the States provide for how they may be amended. Executive Orders must be Constitutional. If they are not, the Courts may strike them. The Constitution is the Supreme Law of the Land.
Branches of the United States Government (All Co-Equal)
- Legislature – Congress (House of Representatives and Senate). Article I.
- 435 voting members of the House, as set by law, based on population of each State. (Also 5 non-voting Delegates - D.C., Virgin Islands, Guam, American Samoa, Commonwealth of the Northern Mariana Islands. Resident Commissioner represents Puerto Rico).
- 100 Senators (2 from each State regardless of population).
- House – 2 year terms (all up for election at once); Senate – 6 year terms (staggered, 1/3 every 2 years) (used to be elected by the State legislatures until the 17th^ Amendment). No term limits unless set by the legislature of the States from which they are elected.
- Executive – President (and includes Cabinet, Executive Agencies, U.S. Attorneys). Article II.
- President – Elected by the Electoral College, membership determined by the outcomes of the general elections in each State. Not directly elected by the popular vote of the People.
- 4 year term. May be re-elected only once (22nd^ Amendment). May serve up to 2 years of another’s term if Vice President, and then be elected to 2 terms. If serve more than 2 years of another’s term, may only be elected to one term thereafter).
- May be removed by Impeachment (House) and Conviction (Senate) for High Crimes and Misdemeanors. When President impeached, Chief Justice presides over the Senate trial.
- Judicial – U.S. Supreme Court, Courts of Appeals, District Courts, other Federal Courts. Article III.
- Article III Judges (Supreme, Appeals, District, International Trade) appointed by the President, confirmed by the Senate, for lifetime tenure (“to hold office during good behavior”). May be removed by Impeachment and Conviction.
- Article I Judges (Magistrate Judges, Bankruptcy Judges, Tax Court, Federal Claims) appointed by other means, for terms of office ranging from 8 to 15 years. They may be re-appointed.
- Ensures that the actions of the other two branches remain in check, and remain constitutional. The rulings on the law and under the law, by the co-equal Judicial Branch (often referred to as the “Third Branch”), protect the rights of the People of our Nation, and preserve the Constitution and its protections for all.
The Branches of the Government of New York State
- Legislative – State Legislature – Assembly and Senate.
- Assembly – 150 members, each representing equal districts with populations of approximately 128,652.
- Senate – 63 members, also representing districts within the State.
- Assembly Members and Senators serve 2-year terms, with no term limits. All up for election at same time.
- Executive – Governor (including Executive Agencies). District Attorneys (equivalent of U.S. Attorneys) and Attorney General are separately elected Constitutional Officials. - Governor holds office for 4 years, with no term limits.
- Judicial – Court of Appeals, Appellate Divisions of Supreme Court, Supreme Court, County Courts, Other Specialized Courts. - (^) Court of Appeals appointed by Governor with Confirmation by State Senate, following selection from a list by the Commission on Judicial Nomination. Serve 14 year terms, may be re-appointed until age 70, when they must step- down on December 31 of the year they reach 70. May step down to Supreme Court, where they may be “certificated” to serve as a Justice until age 76. - Appellate Division Justices elevated by Governor from the Supreme Court, with no confirmation required by the State Senate. Serve their same Supreme Court terms, must run for re-election to Supreme Court, may serve until age 70 or if certificated until age 76. - Supreme Court serves 14 year terms. Elected by the People within the judicial districts in which they serve, but have Statewide authority. We are in the Ninth Judicial District (Dutchess, Orange, Putnam, Rockland, Westchester). May serve until age 70 or if certificated until age 76.
Standing to Sue/Standing - You may hear corporate counsel speak of this when your company is either a plaintiff or defendant. “The requirement that an individual have a sufficient stake in a controversy before he or she can bring a lawsuit.” Precedent - “A court decision that furnishes an example or authority for deciding subsequent cases involving identical or similar facts.”
- (^) Binding Authority: When issued by a court of higher appellate authority in your jurisdiction, the lower courts must follow the decision previously issued on the same facts and circumstances, and the same law, unless the present case may be distinguished from that prior authority.
- Stare Decisis- “A doctrine of the courts under which judges are obligated to follow the precedents established within their jurisdictions.”
- (^) Persuasive Authority: Not binding, but issued by another court or judge outside of the jurisdiction that is highly respected, or given in a decision that is well-reasoned and referred to as guiding authority. Discovery : “A method by which opposing parties obtain information [and documentation] from each other to prepare for trial.” This will narrow and sharpen the issues for trial, or for disposition of the case on motions for summary judgment before a trial. Our legal system abhors trial by ambush. If parties destroy information (spoliation) or withhold information that is properly requested and related to the lawsuit, the courts will sanction (punish) the offending party – including potential monetary sanctions or loss of the litigation. Deposition : “A generic term that refers to any evidence verified by oath.” Generally, in practice when the term deposition is used, it refers to the oral questioning of a witness by counsel (or an unrepresented party), under oath, before a notary public/court reporter, where a written record is made and the testimony has the same force and effect as if given in court – and may be used later in court. Interrogatory : “A series of written questions for which written answers are prepared and then signed under oath by the plaintiff or the defendant.” E-Discovery : “A type of evidence that consists of all computer-generated or electronically recorded information.” In the last 15 years or so, has expanded greatly. Now includes not only Word and WordPerfect documents, but also PowerPoints, Excel, E-mails, Facebook, MySpace, Twitter, Instagram, SnapChat, voicemails, and text messages. Metadata : “Data that are automatically recorded by electronic devices and provide information about who created a file and its history.” Data about data. Also subject to discovery and disclosure in a lawsuit if properly requested and relevant. Litigation Hold : You will come across this if you are involved in litigation. It is a notice from opposing counsel, or your company’s own counsel, that all paper and electronic information concerning the lawsuit and related issues must be preserved from auto-deletion actions and policies, and preserved in “native format” until further notice. Will apply to documents, as well as to the e-mail accounts and social media accounts and files of the involved person(s). Negotiation: The parties meet amongst themselves and counsel, with no third party, and attempt to reach a resolution. Arbitration: Generally removes the case from court. “The settling of a dispute by submitting it to a disinterested third party who renders a decision.” Usually faster, more controlled discovery, can still be a trial, no jury, the parties determine the rules that govern, and select the arbitrator(s). BINDING. Limited appeal (enforcement or vacate), no substantive appeal. Mediation: “A method of settling disputes outside of court by using a neutral third party who acts as a communicating agent between the parties to help them negotiate a settlement.” The case is not removed from court in this case. At times, another judge of the court who is not involved in hearing the case may serve as a mediator. Other times it is a mediator chosen by the parties, including a retired judge, respected litigator in the community, or a member of JAMS, AAA, et al. NOT BINDING. If resolution not reached, case continues in court. If settlement reached the case is closed, and there is no appeal of course; but the parties may litigate to enforce the agreement if one fails to abide.
Complaint and Answer
- These are types of pleadings in a case. The Complaint is the “pleading made by a plaintiff or a charge made by the state alleging wrongdoing on the part of a defendant.” The Answer is the response of a defendant to the allegations of the plaintiff. May also contain “affirmative defenses” and/or counterclaims of the defendant against the plaintiff.
- The Complaint and Answer are pleadings in a civil lawsuit. In a criminal lawsuit, there may be a criminal information or an indictment against the defendant.
- Summons- Accompanies the complaint, and advises the defendant that they must prepare to answer the complaint and answers in court, and advises what court the complaint was filed in.
Chapter 2- Ethics in Business
Ethics : Moral principles and values applied to social behavior. Business Ethics : A consensus of what constitutes right or wrong behavior in the world of business and how moral principles are applied by businesspersons.
Ethical Tone:
- It will fall to you as a business owner, manager or leader to set the tone in your workplace concerning ethical decision- making. Sometimes the unethical decision will be easier, less costly, less time-consuming, or more profitable. BUT, that does not make it right, it could lead to losses in the long-term, could cost your business, and could lead to criminal sanctions if the unethical choice is also illegal.
- When an unethical decision is made, a conscious choice is made to harm one stakeholder for the benefit of another without an attempt being made to mitigate the harm and make the least harmful decision.
- YOU will set the tone for an ethical workplace.
- Others will observe how their corporate leaders behave, and understand that to be the accepted practice in the company. You may decide to put an ethical code of conduct in place as part of the company’s documents provided to employees, in the handbook or posted elsewhere.
But also, remember…
- There may be no decision that can be made that is 100% “correct”, or which does not have drawbacks.
- Maybe there are several ways to pursue an opportunity or correct a
- problem.
- Business ethics is a standard of conduct, not necessarily a result of a set of “correct” decisions.
- Do as I say, not as I do does not work under ethics. Employees will always see the decisions you make and will follow.
Ethics Govern Exchanges in Business
- Contract law expectations.
- Do not just look at maximizing profits or productivity in the short- run to the exclusion of all else.
- You could do that utilizing child labor and 18-hour workdays paying workers $1.00/hour. But, we have laws. And, we have, or should have, ethical restraints on our actions. Moral Minimum – “The minimum degree of ethical behavior expected of a business firm.”
Corporate Social Responsibility Theory, what ethic method can we follow?
- Duty to Stakeholders, Not Just Owners.
- Corporate Citizenship – Promote goals that society deems worthwhile.
- A Way of Doing Business – Do not treat social responsibility as some special item. Treat it as a way of doing business each day.
Who’s the Stakeholders?
Stakeholder - those who are affected or impacted by business decisions
- Employees
- Shareholders/Owners
- Officers/Directors
- Suppliers
- Creditors
- Consumers/Customers
- Community at Large/Environmental Impacts
- Future Generations
Ethical Decision-Making: Duty vs. Outcome-Based
- Religion or Philosophy based. Derived from “revealed truths” or “philosophical reasoning”. Get the “Golden Rule” theory here. - Categorical Imperative : An ethical framework in which an action is evaluated in terms of what would happen if everybody else in the same situation, or category, acted in the same way. - Principle of Rights : The principle that human beings have certain fundamental rights. A key factor in determining whether an action is ethical is how it affects others’ rights.”
- (2) the one registering, trafficking in, or using the domain name has a “bad faith intent” to profit. The ACPA provides damages available for successful plaintiff companies.
- Typosquatting - “A form of cybersquatting that relies of mistakes, such as typographical errors, made by Internet users when inputting information into a Web browser.”
- (^) If an Internet user types in a Web address incorrectly, but it is what a Typosquatter has established as their website, then the user is taken there. If the spelling is not close enough, could create costly problems for a legitimate company to fix because it may be difficult to prove an ACPA violation.
- Social Media - “Forms of communication through which users create and share information, ideas, messages, and other content via the Internet.”
- (^) Workplace Social Media Policies & Company Social Media Networks:
- Media Policy : Guidelines provided by employers for what is and is not appropriate use and activity both at work and on employer-owned and provided equipment. Can be stand-alone, or in the employee handbook.
- Social Media Network : Internal social media network at a company, different from public social media posts, more businesslike.
- Cyber Tort- “A tort committed via the Internet.”
- But, when it comes to re-publishing for say defamation, an internet service provider is not considered a publisher or speaker in cases of online defamation on social media sites, etc.
- Privacy - The Electronic Communications Privacy Act amended federal wiretapping laws to cover electronic communications. Prohibits intentional interception of wire, oral and electronic communications, and disclosure of material intercepted.
- BUT, note recent Congressional action that repealed a yet-to-take-effect law (FCC Rule) that was to prohibit Internet Service Providers from selling consumer data without consumer permission and consent. This is expected to be signed into law by President Trump, and is considered a loss of Internet security and privacy for consumers.
- Cookie - “A small file sent from a Web site and stored in a user’s Web browser to track the user’s Web-browsing activities.”
- (^) This is a way, for example, that retailers are able to “recommend” items similar to others purchased when you visit their websites, or target advertisements to your past Internet searches or purchases.
Chapter 5- Tort Law
Tort - A civil wrong not arising from a breach of contract.
- An injury or wrong to a person or property. Society compensates those who have suffered injuries as a result of the wrongs of others.
- Jury selection statements – compensation, not payment. There is a difference.
- Torts are civil claims, between a plaintiff and defendant.
- Crimes are criminal wrongs, prosecuted by the government in criminal courts.
- Sometimes, a single action can be both tortious (a civil wrong) and criminal (a crime/violation of criminal law).
- Intentional assault
- Hazardous workplace Tortfeasor - one who commits a tort
Tort Reform
- Measures taken by the federal government or in various states to limit damages, attorneys’ fees, and fee-shifting.
- The purpose is to reduce fear that induces professionals and others to take extra, costly steps to protect themselves in case of a lawsuit – even if those steps are unnecessary or duplicative. Remittitur - a ruling by a judge (usually upon motion to reduce or throw out a jury verdict) lowering the amount of damages granted by a jury in a civil case. Usually, this is because the amount awarded exceeded the amount demanded.
Class-Action Lawsuit
- A suit in which a number of persons join together to bring an action. Multiple torts.
- Federal and state court rules govern certification or non-certification by judges.
- Need certain factors:
- Numerosity
- Typicality
- Commonality
- Adequacy of representation
- That separate adjudications might lead to a risk of different results, or another justification as enumerated in the rules. Liability - The state of being legally responsible for something, such as a debt or an obligation Intentional Tort - An intentional bad act. “A wrongful act knowingly committed.”
- It is assumed that individuals intent the normal consequences of their actions. If injury occurs, even if the action done jokingly, could be tort.
- Accidents, however, can also fall into tort litigation.
- Some categories may include:
- Torts against persons
- Torts against property
- Torts against economic interests
■ Example Torts:
■ Assault
■ Battery
■ False Imprisonment
■ Defamation
■ Fraudulent Misrepresentation
■ Business Tort of Wrongful Interference
Assault : “Any word or action intended to make another person fearful of immediate physical harm.”
- Assault is when a person puts another in fear or apprehension of immediate, offensive bodily contact or injury.
- So, for example, if you are walking along the street, and someone comes up to you and says buy this stereo from me now, or I am going to stab you, that is an assault.
slander do not act in a way that hurts the victim’s business and cause damage, there is no damage to compensate under tort law.
- Slander is defamation that is oral, but not on television, radio, etc.
- Slander per se – Some defamation by slander is so injurious and hurtful, however, that there is an exception to having to prove special damages, and general damages are presumed. Slander per se varies by state. But, the categories have included: (1) claims that the plaintiff has a loathsome disease that is communicable (historically venereal disease or leprosy); (2) claims that the plaintiff has committed a crime and may face imprisonment; (3) claims that the plaintiff is professionally incompetent; and (4) in some states that a woman is unchaste.
- Defamation must damage someone’s reputation.
Elements of Defamation
✓ Defendant made a false statement of fact. Negative alone not enough. Opinion not sufficient.
✓ Statement was understood to be about plaintiff and tended to harm plaintiff’s reputation.
✓ Statement was published to at one person other than plaintiff.
✓ If the plaintiff is a public figure , she or he must prove actual malice.
Defamation can be against:
- A person
- Person’s Product
- Business
- Title to Property
Defenses to Defamation
- Usually truth is an absolute defense.
- Privilege. Attorneys and Judges may not be held liable for anything said during a trial. Members of Congress are privileged in their statements given on the Floor of their respective Houses ( see Constitution).
- Public Figures. Have access to television and radio. Can defend selves. Has to be actual malice – statement made with either knowledge of the falsity or reckless disregard for truth. High standard.
Tort of Fraudulent Misrepresentation
“Any misrepresentation, either by misstatement or by omission of a material fact, knowingly made with the intention of deceiving another and on which a reasonable person would and does rely to his or her detriment.” More than mere puffery or sales talk must exist. Puffery is “[a] salesperson’s claims concerning the quality of property offered for sale. Such claims involve opinions rather than facts and are not legally binding promises or warranties.”
Elements of Fraudulent Misrepresentation
✓ A misrepresentation of facts or conditions with knowledge that they are false or with reckless disregard for truth.
✓ Intent to induce another to rely.
✓ Justifiable reliance on the misrepresentation by the deceived party.
✓ Injuries suffered as a result of the reliance.
✓ Cause – a causal connection between the misrepresentation and the injury.
Business Tort of Wrongful Interference with a Contract – Tortious Interference with a Contract
✓ A valid, enforceable contract must exist between two parties (must be valid – we will discuss more in contracts section).
✓ A third party must k about the existence of the contract.
✓ A third party must intentionally cause either of the parties to break the contract.
Business Tort – Wrongful Interference with a Business Relationship
- Businesspersons cannot interfere unreasonably in another business in attempts to gain a share of the market
- Defenses? Legitimate competitive behavior – even if that results in a contract being broken (see the earlier elements). Perhaps one business just offers such a better deal, that it pays for a customer to break a contract with another supplier and go with the new company.
Tort of Trespass
Trespass to Realty: Trespass. When a person:
1. enters (steps on) the land of another without permission
2. causes an object to be placed on the land of another without permission of the landowner
3. stays on the land of another after being asked to leave
4. refuses to remove something placed on the landowner’s property when asked by the landowner.
NOTE: One cannot have a claim of trespass against another if the other is invited onto the property. The landowner must first ask them to leave and have them refuse. There is no defense that a person thought they had the right to be on the property, or that they thought it was the property of another, not the landowner in question. HOWEVER , there is the doctrine of adverse possession. The subject of property law, but briefly it is the operation of law where a person can obtain the right/title to the property of another if they utilize the property or a portion of it, under claim of right, openly, notoriously and exclusively, for a period of 10 years or more. Example: A neighbor builds a garage that extends over the property line, but the neighbor believes that the garage is entirely on their rightfully owned property. No one else can use the same piece of land the garage is on for something else. The garage is open and notorious, not hidden from site. In this situation, if the other landowner does not either grant permission for the garage to remain, making a claim to the land that is theirs, or bring an action to remove the garage from the parcel, the neighbor can end up taking title to the piece of extra property on which the garage sits. KNOW YOUR PROPERTY LINES. You also cannot get adverse possession against a government/municipality for its property.
Tort of Trespass to Personal Property
When someone temporarily exerts control over the personal property of another or interferes with their use of it. If, for example, I take your car keys from your house while I am visiting, and “borrow” your car for a week without asking, that is a tort. If I bring the car back with a dent in the door, I have to pay for that damage. If you could not get to work that week because you had no transportation, I have to compensate you. Complete defense? The trespass was necessary. The emergency shelter doctrine. If you are hiking and caught in a severe snowstorm for example, but you happen upon a cabin in the woods, you can enter that cabin for shelter, make a fire, eat food that is found, etc. But when the emergency passes, the owner must be compensated for whatever was taken and any damage done (i.e. if you had to break a window or door lock).
Tort of Conversion (Larceny on the civil side)
When a person permanently takes personal property from the owner’s use and control. Damages can be the full value of the item plus any other damages from the loss. There is no defense that a person believes they had a legal claim to those personal goods. If goods are purchased by a bona fide purchaser, but are ultimately shown to be stolen goods, the purchaser is liable to the original, rightful owner – usually have to return the goods, and may not receive back the monies paid.
Tort of Disparagement
Similar to defamation. Making a false statement. However, this tort protects a property interest (interest in a business or business’ good will), as opposed to defamation claims that seek to protect a person’s reputation. Often in settlement agreements in the employment law field, as we will see in a few weeks, there will be an agreement of non-disparagement – meaning that the former employee will not say or do anything to disparage the former employer’s business. Slander of Quality (if spoken) or Trade Libel (if printed): Criticisms of the honesty, quality or reputation of a business. If the slander involves or concerns the ownership of property, it is a tort of Slander of Title. Negligence - “Failure to exercise the standard of care that a reasonable person would exercise” in similar circumstances.
Elements of a Civil Claim of Negligence in Tort
✓ A duty of care owed to plaintiff by defendant. Duty of Care-The duty of all persons, as established by tort law, to exercise a
reasonable amount of care in their dealings with others.
✓ Breach of that legal duty.
✓ Causation by the defendant’s breach (proximate causation)
✓ Injury suffered by plaintiff resulting from defendant’s breach of the duty of care.
In torts
We use the Reasonable Person Standard. How would a reasonable person have acted in the same circumstances? Not how a particular person would act. Rather, society’s judgment about how people should act. Would they be careful, honest, etc.? Can vary with the case. NOTE : In most jurisdictions, the law does not require an uninvolved, innocent bystander, who happens upon an incident, to put themselves into a dangerous situation to save or help another. If a person is drowning in a lake, but the passerby cannot swim, there is no legal requirement that the passerby help the victim, and there is no liability on the passerby if the victim does drown. Whether there is a moral obligation to at least try to call for others to help is a separate question. NOTE : Good Samaritan law – in most jurisdictions, if a person acts in good faith, and attempts to help another in need, the person who provides the assistance is not liable for any injury or damages that stem directly from their efforts to assist. However, if the Good Samaritan goes beyond their abilities, they may be liable. For instance, if a Good Samaritan happens upon a choking
4.1. A risk of serious harm to persons or property is involved
4.2. It is so inherently dangerous that that it cannot ever be safely undertaken
4.3. It is not usually performed in the community.
The law does not necessarily ban the activities, but what it does is hold a defendant responsible for any harm that results from the activities.
Damages
“Money sought as a remedy for a breach of contract or for a tortious (wrongful) act.” I. Compensatory : Compensates the plaintiff victim for all harm suffered. Can include lost wages, medical bills, out-of-pocket expenses, pain and suffering, and cost of repair to property. These are measurable damages, although a valuation expert may be needed. NOTE : Attorneys’ fees are not separately compensated. Contingency fee arrangement. II. Nominal Damages : If a plaintiff does not really suffer compensable damages, but the defendant is found to have nevertheless committed a tort, a small amount of money is awarded, called nominal damages. These damages can be as little as $1.00. Nominal damages could also result if the Plaintiff did suffer compensable damages but is just not able to prove them. NOTE : Nominal damages can be important. In cases where statutes provide for attorneys’ fees shifting (payment by party that is not the prevailing party), an award of nominal damages and finding that the defendant committed a tort could lead to payment of plaintiff’s fees and costs. III. Punitive Damages : Also known as exemplary damages. An award of damages that is purely to punish the defendant for the actions taken, and to send a message to/deter the relevant community of potential tortfeasors. Generally the award is based on the wealth of the tortfeasor and how serious the wrongful act was. Punitive damages can be awarded by a jury, or by the Court/Judge in a bench trial. Some groups, including some legislation, have been attempting to limit punitive damage recoveries with caps, believing compensatory damages and the expense thereof will deter future bad acts, and correct action. Usually, but not always a multiple of compensatory damages. In fact, the U.S. Supreme Court in State Farm v. Campbell, 123 S. Ct. 1513 (2003), held that punitives generally should be a single digit multiplier of compensatory damages, or else they may be violative of due process. Other courts, though, have since recognized State Farm, but then affirmed much larger punitive damages multipliers because of what was found to be extreme reprehensibility. In State Farm, compensatories were $1 million, and punitives were $145 million.
Chapter 6- Intellectual Property
Intellectual Property: “Property resulting from intellectual, creative processes.”
Trademark
“A word, symbol, sound, or design that has become sufficiently associated with a good or has been registered with a government agency.” ( 8 th^ edition )
- Distinctive.
- A trademark used in interstate commerce is protected under the Lanham Act.
- Trademark Infringement: “Occurs when one who does not own a trademark copies it to a substantial degree or uses it in its entirety.” Confusion.
- Dilution: When a trademark is used without permission in a way that diminishes the quality of the mark. Does not require confusion, like infringement does.
- With the United States Patent & Trademark Office. To be protected interstate. If registered, to renew must do so between fifth and sixth year. After initial renewal, every 10 years.
- Registration assists in enforcement, and also provides additional damages that can be sought in the case of infringement.
- If registered and then infringed, money damages and/or an injunction can be sought. If not registered, only an injunction is an available remedy. (Injunction is a court order that directs a party to either do something or to cease doing something – in this case, to stop using the protected mark).
Service Marks and Trade Names
Service Mark : “A mark used in the sale or advertising of services to distinguish the services of one person or company from the services of others.” Trade Name : “A name used in commercial activity to designate a particular business.”
Copyright
“The exclusive right of an author to publish, print, or sell an intellectual production for a statutory period of time.” Can be registered with the U.S. Copyright Office. If registered, do not need © or ® on the document. Otherwise, place there to advise of claim of copyright. If created by someone, likely is copyrighted in some form under law. Length of protection:
✓ After January 1, 1978 – Life of the author plus 70 years.
✓ If owned by publishing houses – 95 years from date of publication, or 120 years from date of creation, whichever is first.
✓ Multiple authors – 70 years after the death of the last surviving author.
Categories Protected Under Copyright Act
1. Literary works
2. Musical works
3. Dramatic works
4. Pantomimes and choreographic works
5. Pictorial, graphic and sculptural works
6. Motion pictures and audiovisual works
7. Sound recordings
8. Computer software
“The work must be fixed in a durable medium from which it can be perceived, reproduced, or communicated.” Again, protection is automatic upon creation. While the work can be registered, it does not have to be. Fair Use Use that is not infringement. To be Fair Use, the Courts look at:
✓ The purpose of the use.
✓ The nature of the copyrighted work.
✓ How much of the original is copied.
✓ The effect of the use on the market for the copyrighted work.
Educational use is one Fair Use. A portion of copyrighted work may be reproduced for purposes of reporting, teaching, scholarship, and research.
Chapter 7- Business Crimes
Crime- A wrong against society proclaimed in a statute and punishable by society through fines, imprisonment, or death
- The government files charges. The victim is not a party, but rather a key witness. In civil cases, remember, the plaintiff is a party – goes back to our discussion about standing to sue. In criminal cases, the government entity bringing the charges must have the jurisdiction to do so (extradition cases, etc.).
Two Elements of Crime Must be Establish
1. Actus Reus – The guilty act, the wrongful behavior.
2. Mens Rea – The guilty mind, wrongful state of mind.
The government proves the non-mental actions causing harm, and then that the defendant acted with purpose, knowledge, reckless or negligence, depending on what the law requires. Some crimes do not require mens rea. Strict Liability crimes. Regardless of the thought or care taken, the action is specifically prohibited. Ex.: selling cigarettes or alcohol to minors.
Burden of Proof
- Civil Cases :
- Generally Preponderance of the Evidence – just more in favor of one side. Ex.: Ballgame with 10-9 score.
- Clear and Convincing Evidence , ex.: ballgame with 10-5 score.
- Criminal Cases:
- Almost always Proof Beyond a Reasonable Doubt. Ex.: Ballgame with 10-1 score.
- Also, in criminal cases jury verdict usually must be unanimous. (In civil cases, there are times when one juror can dissent from the majority.)
Classes of Crimes
- Felony – “A crime that carries the most severe sanctions, usually ranging from one year in prison to death.” (highest level of crime)
- Misdemeanor – “A lesser crime than a felony, usually punishable by a fine or imprisonment for up to one year.”
- Petty Offenses – Less than 6 months in jail, potentially, or a fine. Ex.: Zoning violations, etc.
- There may also be violations or non-criminal violations, such as parking tickets, etc.
Constitutional Protections
- Fourth Amendment warrant requirements.
- Fifth Amendment due process clause.
- Fifth Amendment right to silence. (Miranda rights-must be read correctly and read every time [incuding repeat offenders])
- Terrorists acts and other emergencies, rights may not be read.
- Must be in custody on order to still be arrested and still get information.
- Sixth Amendment right to speedy trial, trial by jury, right to representation by an attorney. (Miranda rights)
- Eighth Amendment protections against excessive bail, and against cruel and unusual punishments.
Search and Seizure
In order for the government to search and seize private property, a search warrant is required.
- Search Warrant : “An order from a judge… that authorizes a search or seizure of particular property.”
- Probable Cause : “Reasonable grounds for believing that a search will reveal a specific illegality.” The officers seeking the warrant must describe what is to be searched, why, and what is likely to be found. The premises must also be identified.
Exclusionary Rule
- “Evidence obtained in violation of rights under the Fourth, Fifth, and Sixth Amendments – and evidence derived from illegally obtained evidence [“fruit of the poisonous tree”] – is not admissible in court.”
- The criminal court will have hearings on this issue, usually on motion by defense counsel, and may strike evidence and preclude it from being used against a defendant.
- The government must follow proper channels.
Crimes Affecting Business
- White Collar Crime: “Non-violent crime committed by individuals or corporations to obtain a personal or business advantage.” - Ex.: Insider Trading, Fraud, Bribery (see FCPA), Mail Fraud, Extortion.
- Remember, as will be discussed later in the course, corporations (since they are legal entities) can be criminally prosecuted. They cannot serve time in prison, however. Corporations can be fined as a penalty. Individuals who may have committed the criminal acts on behalf of the company may also be fined, or they may be imprisoned upon conviction
Other Crimes
- Forgery : “The fraudulent making or altering of any writing in a way that changes the legal rights and liabilities of another.” Ex.: Forged checks.
- Robbery : “The act of forcefully and unlawfully taking personal property of any value from another.” [Note: If no force or fear, generally theft/larceny, not robbery.] For example, if they had a weapon and take property.
- Larceny : “The wrongful taking and carrying away of another person’s personal property with the intent to permanently deprive the owner of the property.” No fear. Say bumping into someone and pickpocketing their wallet.
- Embezzlement : “The fraudulent appropriation of money or other property by a person to whom the money or property has been entrusted.” [Note: Key difference – larceny, not already entrusted to or held by the taker.]
- Mail & Wire Fraud : Use of mail or communication wires to defraud others.
Cyber Crime- Crime in the Virtual World
- Cyber Fraud : “Any misrepresentation knowingly made over the Internet with the intention of deceiving another for the purpose of obtaining property or funds.”
- Identity Theft : “The act of stealing another’s identifying information and using that information to access the victim’s financial resources.”
- Hacking : Using a computer to break into another’s computer, website, social media, e-mail, etc. Can include the installation of malware.
- Cyberterrorism : exploiting computers to create a serious impact. Hackers who do this are cyberterrorists. Computer viruses, malware, hostage-ware (where the cyberterrorists freeze your website, computer, etc., and refuse to provide the key to unlock until a ransom is paid. If not timely paid, the lock remains forever.
Defenses to Allegations of Crime
- Mistakes of Fact – Honest and reasonable, negates the criminal mind element. Ex.: Leaving a crowded party with another’s coat because it looks exactly like yours. [Note: Mistake of Law, ignorance, no defense usually.]
- (^) Insanity – Suffering from a mental illness such that defendant is not responsible for the actions committed. Different jurisdictions have different tests. May not be released into the public though. Depending on the mental condition, may be confined to a hospital.
- Entrapment – “A claim that a defendant was induced by a police officer or another public official to commit a crime that he or she would not otherwise have committed.” [Note: Key is would not otherwise have committed. Can’t be predisposed to commit the crime. Have to be induced or forced into.]
- Immunity – A person cannot be compelled to give information to the government (Fifth Amendment). The government can grant immunity as an incentive though – “Queen for a Day”. No prosecution (or prosecution for a lesser crime) for anything disclosed at that time, or stemming from it.
- Infancy (depends)
- (^) Necessity- life or death situation
- Justifiable Use of Force/Self-Defense- (attacking with fists, don’t use a gun)
Appeal? (apply to a higher court for a reversal of the decision of a lower court)
If the defendant is acquitted – generally no appeal. If the defendant is convicted – generally both the prosecution and the defense can appeal.
- “A meeting of two or more minds in regard to the terms of a contract.”
- Offer : “A promise or commitment to perform or refrain from performing some specified act in the future.”
■ The offeror must have serious intention to be bound by the offer, and that intention must be objectively
ascertainable (readily recognizable by others).
■ The terms of the offer must be reasonably certain or definite so that the parties and the court (if necessary)
can determine the terms of that contract.
■ The offer must be communicated to the offeree.
- Definite Terms The offer must have certain fixed terms.
■ Names of the parties
■ Quantity(s) of items
■ How the work will be performed
■ Payment details
■ Generally, under contract law, offers remain open until accepted or revoked, and they can be revoked,
generally, at any time up until acceptance. A merchant’s firm offer, however, is different for sales and lease contracts. This is a provision that has been affected by an exception in the UCC.
■ Applies only to offers made by a merchant.
■ If the merchant gives an assurance in a signed writing that the offer will remain open, the firm offer is
irrevocable for that period of time. No consideration is needed. The period of time provided by the merchant, or if no definite period is stated by the merchant in the writing then the period of time otherwise provided, is to be for a “reasonable period of time.” Shall not exceed 3 months in either case.
- Acceptance : “A voluntary act by the offeree that shows assent, or agreement, to the terms of an offer.”
■ Must be by the offeree, not another party. The identities of the parties are part of the definiteness of terms
in most situations.
■ Acceptance must be unequivocal (see mirror image rule). No hedging, no waffling on terms.
■ In most cases, acceptance must be communicated effectively to the offeror. In unilateral contracts, for
example, an action is done in return for the promise. If the action is undertaken, that is communication of acceptance of the offer/contract, and formal communication of acceptance may not be needed.
■ Mailbox Rule
- A rule providing that an acceptance of an offer becomes effective on dispatch.
- Acceptance of the offer by placing the acceptance in a mailbox, entrusting it to the postal service. Once it is deposited in the mailbox or post office, it is effective, even if offeror attempts to revoke thereafter, before receiving it.
- “Upon dispatch” – can also be when deposited with UPS, FedEx, etc., if that is what the offer requires. Note, though, that if the offer contains the specific method by which it must be accepted, then that method must be used. So if the offer states acceptance must be by e-mail received by September 10, only an e-mail acceptance by September 10 will be effective, even if the acceptance is also mailed. And, note the offer said e-mail received – thus, a delivery and read receipt should be placed on the outgoing e-mail, so that proof is in the hands of the offeree concerning when the acceptance was received by offeror. Note another exception – if the offer requires FedEx delivery, but offeree uses UPS, the acceptance will be effective, but upon receipt by offeror. This is the substitute method of acceptance, and in this circumstance, the acceptance is not effective on dispatch (when given to UPS), but rather on receipt because the required delivery was not used.
- (^) An offer can be revoked.
■ Revocation : “In contract law, the withdrawal of an offer by an offeror. Unless the offer is irrevocable, it
can be revoked at any time before acceptance without liability.”
■ The revocation can be express, or can be by actions inconsistent with the offer.
■ Irrevocable Offers : Some offers are irrevocable. The offeror gives up the right to revoke for a specific
period of time, usually in exchange for separate consideration.
■ Rejection : The offer can simply be rejected by the offeree. That terminates the offer. Rejection, just like an
offer, is effective usually when received by offeror or offeror’s agent.
■ Counteroffer : “An offeree’s response to an offer in which the offeree rejects the original offer and at the
same time makes a new offer.” Because the counteroffer changes terms in the offer, the counteroffer acts to terminate the offeror’s offer. The offeree’s counteroffer is the new offer. The original offeror is now the offeree of the counteroffer.
■ Mirror Image Rule : “A common law rule that requires, for a valid contractual agreement, that the terms of
the offeree’s acceptance adhere exactly to the terms of the offeror’s offer.” In other words, what is agreed to must match what is offered.
- Commercial Contracts sometimes utilize different form contracts. The mirror image rule under the common law can create a problem.
- Therefore, the UCC does away with the Mirror Image Rule for sales contracts. If the offeree makes a definite expression of acceptance (signing the contract, for example), then a contract is formed, even if there are new terms or modified terms added by the offeree. • What happens to those new terms? Well…. Are the Parties Merchants? - If one or both of the parties are non-merchants, then the contract is formed according to the terms as offered by the original offer/offeror. The modified or new terms have no effect. - But, if both of the parties are Merchants, the modified or additional terms become part of the contract automatically, unless:
■ the original offer expressly required acceptance of its terms
■ the new or changed terms materially alter the contract
■ the offeror rejects the new or changed terms within a reasonable period of time.
- But, regardless of status, if the term requires consent by the offeror, then it does not automatically become part of the contract until agreed to.
- Offeror : “A person who makes an offer.”
- Offeree : “A person to whom an offer is made.”
- -or versus –ee. The –or is generally the person making or doing something, while the –ee is the person generally receiving or to whom something is presented.
- (^) According to the terms of the offer.
■ If not specified, then by any means of communication reasonable under the circumstances.
■ But, the UCC also allows for acceptance of an offer to buy goods for current or prompt shipment by the
promise to ship or the prompt shipment of the goods to the buyer.
■ What if the seller just ships goods, but they are not conforming with the specifications of the buyer
(different color, or size)? In that case, there is both acceptance and a breach of contract. Unless, the seller sends in a reasonable period of time (seasonably), a notice of nonconforming shipment. That notice tells the buyer that the shipment is offered as an accommodation or a favor. Has to be clear the shipment was not an acceptance. Then, the shipment becomes the new offer, that must be accepted by the buyer
- Consideration – Something of value promised or received in order to convince a person to make the deal/contract.
- “The value given in return for a promise or performance in a contractual agreement.”
- Something of legally sufficient value must be given in exchange for the promise.
- There has to be a bargained-for exchange. Distinguishes a contract from a gift. There is an exchange of the consideration for the promise, performance or promise to perform of the offeree.
- However, do not confuse legally sufficient value with adequacy of the consideration. Generally, there is freedom of contract. Courts will not usually re-evaluate the consideration in the face of the promise exchanged. Parties cannot sue for entering into unwise, although legal and valid, contracts. If the consideration is $10, that is the consideration, even if it is unwise.
- Pre-Existing Duty Rule For consideration, there generally must be a legal detriment or benefit undertaken for the contract. If one already has a duty to act or do something, then that cannot be sufficient consideration for the new contract or agreement. That could include consideration for a previous, still existing contract, which cannot then be consideration for the new contract. But, there are two potential exceptions:
