Business Law
The FINAL FIVE!
Chapter 18
Buying & Insuring a Car
Objectives:
– Highlight precautions to take when buying cars
from dealers &/or private parties
– Outline legal remedies available when auto is
defective
– Explain importance of Federal Odometer Law
– Recognize advantages & disadvantages of
financing &/or leasing a car
– Describe Principal kinds of auto insurance
Buying & Financing a Car
1st Step - How much can you afford?
Regulation Z - Federal Law - part of
Truth in Lending Act
– Must Disclose Finance Charges (actual
cost of loan in dollars & cents)
– Must Disclose Annual Percentage Rate
(APR)- the true interest rate of a loan
• Allows for easy cost comparison
May be required to buy credit insurance
Deals & Advertisements
May get deals on
– Low financing
– Cash back
bonuses
– Employee Pricing
– Down Payment
Exceptions
Advertisements must
contain:
–
–
–
–
–
Cash price
Down Payment
Number of Payments
APR
Total Cost (after all
payments are made)
Buying a
Used Car
Buyers guide
Required
Buying a Car - New or Used
Must have Written contract of sale for
any goods (car) over $500.00 per UCC
Adhesion Contract - standard form
contract that buyer must sign and
adhere to exactly in order to make the
purchase - some courts disallow as too
harsh
If You Buy a Defective Car
Notify seller immediately of any major
problem (remember reasonable time!)
Seller can be asked to fix or return $$
If car does not conform to contract- may
be able to revoke acceptance
– If defect is serious and could not have been
detected by buyer or if buyer was led to
believe seller would fix defect but then
refuses
State Lemon Law
A lemon is defined as: “a substantially
defective car that has been at dealer’s
three times for the repair of the same
defect or any combination of defects”
Car must be no older than 1 year and
have less than 15,000 miles
Customer must demand, in writing, a
replacement or refund
Motor Vehicle Information and
Cost Savings Act
Authorizes Secretary of Transportation
to establish bumper standards for all
vehicles, foreign & domestic
Establishes fuel economy standards
– Mileage label now required, but does not
create an express or implied warranty
• Example on pg 252
Odometer Protection
It is illegal for a car owner to turn back or
disconnect the odometer (mileage indicator) on
a car
Federal law requires a written mileage
disclosure be given on any car sold unless it is
over 25 years old
If violated - buyer may sue & recover 3 times
amount of damage or $1,500 whichever is
greater
May involve monetary fine & criminal penalties
Theft Prevention
In 1984 Congress passed Theft
Prevention Act – Identification of vehicle & major replacement
parts with serial numbers
– Increased federal penalties for trafficking in
stolen vehicles and parts
– Helped to decrease insurance for car theft
– Reduce opportunities for export & import of
stolen vehicles and mobile equipment
Car Leasing
Really the most expensive way to obtain a car
- but –
–
–
–
Usually have lower down payment
Usually have lower monthly payments
Does not tie up lines of credit for small businesses
Good when have high income but low savings
accumulated
– BUT - when lease is up, you own nothing and
have NO trade in toward next car
More Leasing Info
Must receive written Consumer Leasing
Act statement!
– Get info on: total cost of lease (down
payment, licensing & registration fees, and
any other costs)
– Get info on: warranties, who is responsible
for maintenance & repairs, obligations at
end of lease, mileage limitations, etc.
Car Repair
Some states require licensing &
registration by state of auto repair shops
Some require
– Repair estimates
– Advance disclosure of prices
– Specific training for mechanics
– Bonding of auto repair shops
Yearly inspection law in PA
Automobile Insurance
Bodily Injury Liability - covers injuries to
others if insured is at fault
Property Damage Liability- covers repair
of damage to car or other property of
others if insured is at fault
Collision - covers damage to insured’s
car
Auto Insurance - continued
Comprehensive - Loss or damage to
insured’s car caused by fire, flood, storm,
theft or vandalism
Medical Pmts. - medical expenses incurred
by anyone occupying the insured’s car
Un/underinsured motorist - injuries to insured
if another is at fault& has little or no insurance
or hits and runs
Deductible Clause - In auto insurance,
can have a “deductible” - the insured
would pay the first $200. (or whatever
amount was set at the deductible) of
any loss and then the insurance
company pays balance
No-Fault Insurance
Basic Elements
If accident occurs, injured person collects from
his/her own insurance co for medical & loss of
income regardless of who was at fault Occupant or pedestrian is covered by company
issuing coverage for the car involved
In most states property damage is not covered
under no-fault
Right to sue can be limited to case involving
death or serious or permanent injuries (or if
medical expenses exceed a certain amt)
Chapter 19
Personal Property & Bailments
Tangible Personal Property - Property that
can be touched
– Clothing, books, automobile, etc.
Intangible Personal Property - Property
that has no substance- cannot be touched
– If someone owes you money, the right to
receive that $$ is intangible personal property
Intellectual Property
Patents - an exclusive right granted by fed gov’t
to make, use or sell an invention
Copyrights - a right granted to an author,
composer, photographer, or artist to exclusively
publish and sell an artistic or literary work (such
as book, sheet music)
Trademarks - a distinctive mark, symbol, or
slogan used to identify goods and distinguish
them from products sold by others
Bailments of Personal
Property
Bailment - an agreement created by the
delivery of personal property by the
owner to someone else who is not the
owner (for repair, loan, parking, storage,
cleaning, or as security for a loan)
Chapter 23 - Employment Contracts
and Minors & Employment
Today, employee/employer relationships
are governed by federal and state statutes
These statutes recognize rights of both
employees and employers
Regulate Wages & Hours, prevent
employment discrimination, promote safe
working conditions, provide compensation
for disability and unemployment, and
ensure minimum retirement benefits
Labor & Management
Relations
Collective Bargaining Agreement contract negotiated by the employer &
representatives of the labor union
covering all issues related to employment
(benefits, pay, time, duties)
Grievance procedure - set of steps that
must be taken by employee to appeal a
decision by employer they feel violates the
employment agreement
Professional Employment
Contracts
Professional & Executive employees
also have power to negotiate
employment contracts – Famous entertainers & athletes, top
business executives, individuals with
unique abilities
Terminating EmployerEmployee Relationship
Employment at Will - the right to
terminate employment at any time
without cause by either party
If there is no specific time given in an
employment contract for the length of
time of employment - then it is
considered employment at will
Exceptions to
Employment at Will
Unjust Dismissal - provides grounds for
legal action if employee has been treated
unfairly by employer - three standards to
judge injustice:
– Public Policy - (fired for breaking law)
– Implied Contract (follows 4 rules of estoppel)
– Implied Covenant - (parties will be fair &
honest)
Restrictive Employment
Covenants
Trade Secrets - inside info of a company’s
products, processes, inventions
Restrictive Employment Covenant Employee promises not to work for anyone
else in same field or open a competing
business - limited to:
– 1) the type of work or conduct
– 2) length of time involved in prohibition
– 3) extent of geographic area covered
Legislation Affecting the
Employment Relationship
Federal Labor Laws – Wagner Act - encouraged collective
bargaining - discouraged unfair labor
practices & provided federal assistance to
obtain fair bargaining (favored union)
– Taft-Hartley Act - put in place to equalize
power of labor and management - made
“closed shop” illegal - but union shop is
legal in some states (PA is one)
• Outlaws “featherbedding” (assigning more
employees to a job than are
required/needed)
• Union cannot refuse to enter collective
bargaining
• Act requires advance notice of a strike
Landrum-Griffin Act - Labor Management
Reporting & Disclosure Act
– Primary goal was to stop corruption in
unions
• All unions must register constitutions & bylaws
• Must submit yearly reports on financial condition
– Assets, liabilities, receipts, source of revenue, loans to
members, & any $$ paid out of union treasury
• Guarantees voting rights in union elections, right
to free speech at union mtgs., & right to receive
copies of union’s financial reports
Child Labor Laws
First Child Labor laws were enacted in
1842 -- limited children under age 12
from working over 10 hrs/day!
Many states now have laws that limit
certain type of work that may never be
done by children and limit the hours
they may work
Federal Child Labor Laws
Part of the Fair Labor Standards Act of
1938 – Updated in 1974
Prohibits interstate or foreign trade
shipment of any goods produced in
factories in which “oppressive child
labor” had been used within 30 days.
Oppressive Child Labor: any
employment of minors under 16 in any
of the jobs covered by the act & the
employment of minors under 18 in jobs
declared by Secretary Of Labor as
“especially dangerous”
Exceptions to Minimum Wage
& Maximum Hours Rules
Children working in
agriculture after
school hours
Child Actors
Children working for
parents in jobs other
than manufacturing
Children Delivering
Newspapers
Industry-Education
Cooperation
Work permits are
issued by schools to
allow students to work
Industry restricts child
labor in most
instances, especially in
the United States
Other countries – kids
may not be so lucky!
Chapter 24
Employment Protection
& Equal Opportunity
Laws Regulating Employment
Conditions
– OSHA – Occupational Safety &
Health Administration
• An agency of the federal government
that sets safety &health standards for
most U.S. companies. Employers are
required to provide safe working
conditions
OSHA
Created by the Occupational Safety &
Health Act of 1970
All businesses engaged in interstate
commerce must meet OSHA’s Health &
safety standards
Regulate over 6 million businesses and
more than 80 million employees
OSHA - Continued
Conduct inspections – levy fines for
violations
All businesses in PA must post signage
to let staff know of OSHA rules and how
to report problems
Fair Labor Standards Act
Known as Wage &
Hour Law
Must Pay Minimum
Wage
Must Pay Overtime
for work over 40 hrs
a week
NOT ALL
COVERED BY THIS
Equal Pay Act
Amendment to Fair Labor Standards Act
Equal Pay Rule – Employers engaged
in interstate commerce must pay
women the same amount as men
holding the same type of job
Only for “same work” NOT “comparable
work”
Employment Retirement
Income Security Act - ERISA
Pension Plan – a program, established
by the employer or union that is
designed to provide income to
employees after they retire
This act – of 1974 – was passed to
ensure protection of pension money –
business cannot use money for
business expenses!
Employee Privacy Rights
Two areas of concern:
Employee Drug Testing
Use of Polygraph for hiring & firing
Drug Free Workplace Act
Came to be in 1988- aims to create a
work environment that is free of drug
use
Applies to any company that has
contracts with federal government
Private companies may also test, but
must follow guidelines to protect
employee privacy
Employee Polygraph
Protection Act
Also passed in 1988 - Prohibits
employers from using lie detector tests
either for the screening of employment
applicants or for random testing of
employees.
If there is a good reason to suspect
employee of illegal activity, then it may
be used
Some businesses exempt
Worker’s Benefit Laws
Social Security Act – Social Security is
a government program that provides
continuing, but limited, income to
workers and their dependents –
Provides benefits when employee’s
benefits stop due to retirement,
disability or death (family gets paid)
Social Security
Funds come from
past and present
workers and
employers
SS number follows
you through life
Annual report
showing future
payments
Unemployment Compensation
Laws
Unemployment Compensation –a
system of government payments to
people who are out of work and looking
for a job
Payments made from unemployment
insurance premiums paid by employer
and employee
Requirements & pmts vary by state
Worker’s Compensation Laws
Worker’s compensation – is an
insurance program that provides income
for workers who are injured or who
develop a disability or disease as a
result of their job
Chapter 25
Marriage Formalities
And
Restrictions
The Marriage Contract
Marriage - a personal
relationship between a
man and a woman, arising
out of a civil contract.
– Contract comes into
existence when couple
becomes engaged - at that
time, a bilateral contract
takes place -
All Elements of Contract are present
– Agreement containing consideration
• Promise to give one’s legal right to remain single
– Two parties who have capacity to contract
– Legal Purpose
Return the engagement ring??
– It was a gift continent (dependent) upon
the marriage taking place - if the marriage
does not occur, the gift is not made - there
maybe exceptions and laws that will help
During engagement - contract in
executory stage - once married it is
executed.
Rights & Duties of Legal Marriage
Right to support by one’s spouse when
necessary
Right of inheritance from one’s deceased
spouse
Right to property when the marriage ends
Right to compensation to continue one’s
standard of living if the marriage ends
Right to file a joint income tax return
Additional Rights from Employers
– Can Include - health insurance benefits
and retirement benefits -
Primary duty arising from marriage
contract is duty of faithfulness to one’s
spouse - this duty cannot be
relinquished even by agreement of the
parties
Written Agreements
Premarital Agreement - also called an
antenuptial agreement - an agreement
between perspective spouses made in
contemplation of marriage - must be in
writing and signed by both parties -
Premarital Agreements may
include:
Rights and obligations of the parties in any of
the property of either or both, wherever
acquired
Right to buy, sell, manage and control real &
personal property
The dispensation of real & personal property
upon separation, divorce, death or some
other event
Change or elimination of support
Making of a will
Ownership of & benefits from life insurance
Marriage Formalities
Age Requirements - previously went by
the “age of consent” - 14 for boys and
12 for girls Differs by state - however, when voting
age became 18 - then that was the age
that was considered age of consent for
marriage
Common Law Marriage
Require These Elements
Parties must agree, by words in present
tense, that they are husband & wife
Couple must cohabit in same place as
husband & wife (time varies by state)
Couple must hold themselves out to
public as husband & wife so that public
recognizes their marital status
A divorce would be required to end a
common law marriage
Ceremonial Marriage
Majority of states require a ceremony to
“solemnize” the marriage
“by the power vested in me by the state
of Pennsylvania, I now pronounce you,
Husband & Wife”
Marriage License
Must complete marriage application - with
the following info:
– Name, sex, occupation, address, SS #, date
and place of birth of each party
– Name of former spouse, if any, and date and
place of court where marriage was dissolved
– Name & address of parents or guardians
– If parties and related & how
– Name and date of birth of any children of
either party, born prior to making application
Waiting Period
Used to be required to publish plan to
marry - called “marriage bans” - to allow
for objections to be brought forward
Most states just have waiting period
now - of 24 hrs to 7 days
Some states have no waiting period
– Nevada is probably most popular!
Some additional items
Blood test and physical exam
Proxy Marriage
Use of Maiden Name
Prohibited Marriages
Marriage between relatives
–Consanguinity - related by blood
–Affinity - related by marriage
States have changed some of these laws
-**What about Woody Allen marrying his
wife’s adopted daughter - who was much
younger than he was and had been raised
practically as his daughter
Miscengenation
Marriage between a white person and a
person of another race – Illegal in some states prior to 1967
– That year, supreme court ruled that any of
these types of laws were unconstitutional
– Now legal in all 50 states
Gay Marriage Laws
Several states allow same sex marriage
Several states have “same sex
partnership registries”
Many states have laws disallowing
same sex unions of any kind
Many businesses offer benefits to
domestic partners
Bigamy & Polygamy
Bigamy - act of having 2 spouses at the
same time
Polygamy - act of having more than 2
spouses at the same time
BOTH of these are illegal in all the
states in our country
– Usually practiced in certain religions
Chapter 26
Divorce & Its Legal
Consequences
Ending a Marriage
Marriage ends in any of these 3 ways:
– The death of one of the parties
– Annulment
– Divorce
Annulment - the declaration by the
court that the marriage was never
effective - it was void from the beginning
Divorce - called dissolution of marriage
in California - is a declaration by the
court that a previously valid marriage
has come to an end
Grounds for Annulment
(can differ by state)
Fraud & Duress - such as:
–
–
–
–
–
–
–
Being under the age allowed by state law to marry
Not having the intent to marry (intoxicated)
Secretly intending never to have children
Concealing pregnancy by someone other than husband
Concealing incurable venereal disease
Suffering from mental illness at time of marriage
Being impotent (unable to consummate marriage)
Grounds for Divorce
(Can differ by state)
Most common grounds
for divorce are:
– Breakdown of the
marital relationship
• Commonly called
no-fault
– Adultery
– Physical or mental
cruelty
– Desertion
– Alcoholism or drug
addiction
– Nonsupport
– Conviction of a
felony
– Impotency
No-Fault Divorce
(Called Dissolution in some states)
Common in almost all states Eliminates need to prove that one party
is at fault when seeking divorce
Just must prove that marriage
relationship has broken down
– Irreconcilable Differences
Less traumatic & Less expensive
Adultery - a
voluntary sexual
relationship involving
a married person and
someone other than
his/her spouse
Is a crime in many
states
Cruelty - before nofault this was the most
common ground for
divorce
Must be actual
personal violence that
endangers the life or
health of a spouse &
making living together
unbearable & Unsafe
Desertion - the
unjustified voluntary
separation of one
spouse from the other
Can be one spouse
leaving home - but
can also be the case
of couples living in
same house, but
different rooms and
not living as a couple
Non-support - one
partner has the ability to
provide economic
support & willfully failed
to do so
In past could only be
claimed by wife - but
with women in the
workforce and men
being stay at home
parents - husbands can
claim too
Alcoholism or Drug Addiction habitual intoxication with either drugs or
alcohol is grounds for divorce - habit
must be confirmed, persistent,
voluntary, & excessive
Conviction of a Felony - an infamous
(disgraceful) crime or a crime of moral
turpitude (one that is morally wrong) some states base grounds on number
of years person will be in prison
Domicile & Residence
Requirements
Domicile - a person’s place of abode
(home) - where they have intent on
returning to when they leave\
Person asking for divorce must be
domiciled within the geographic area
over which the court has jurisdiction
Residence - place where a person
actually lives or resides
Out-of-State Divorce
Some go to other states for divorces
due to lack of grounds, length of waiting
periods, etc.
Just like quickie weddings - Nevada
also offers quickie divorces (only 6week wait and less restriction on
grounds)
Alimony - (Latin meaning “sustenance”
or “nourishment”) - is an allowance
made to a divorced person by his or her
former spouse for support and
maintenance. - Previously made to wife
only - but again - this has changed!
Can be in interval payments or lump
sum
No fixed rule for determining alimony dependent on judgment of the court
Marital Property
Most states follow common law:
– Any property brought into the marriage by
a spouse remains the property of the
spouse who originally owned it
– Anything earned, inherited or receive as a
gift during the marriage is the property of
the spouse who received it
Community Property States
Some states, however are community
property states Their laws provide that the wealth
accumulated during marriage generally
belongs equally to both spouses,
regardless of who received it
･Arizona･California･Idaho･Louisiana･
Nevada･New Mexico･Texas･Washington･
Wisconsin
Custody and Support of
Children
Previously - if father did not have
contact or “use” (for working on farm or
in family business) he did not pay
support
Now - parent without custody is
expected to support his children, no
matter where he lives or if he sees them
Welfare of the Child
Considerations by Court
Wishes of the child’s parents as to custody
Wishes of the child as to custody
Relationship of the child with parents, siblings,
and any other person
Child’s adjustment to home, school, and
community.
Mental and physical health of all individuals
involved
Joint Custody - The awarding of
custody of children to both parents
jointly
– Responsibility of raising the children is
more evenly shared
Custodial parent - the parent with
custody
Visitation Guidelines for
Separated Parents
Parent’s behavior has a great influence on
the emotional adjustment of their children
– Children cannot be used to “spy” on one
parent for the other - don’t pump for info
– Keep scheduled visits, be on time, do not
make extravagant promises that cannot be
kept
– After visit must make effort to discuss
problems and agree on ways to solve
Children’s welfare must be foremost in
everyone’s mind All states have enacted Uniform
Reciprocal Enforcement of Support Act
– All states will work to enforce support and
custody orders of another state