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Book Notes Test #1 - Summary Business Law Today
Business Law I (University of North Dakota)
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Chapter 1 The Legal Environment
Law- consists of enforceable rules governing relationships among individuals and
between individuals and their society
o The enforceable rules consist of unwritten principles of behavior, or they could
be set forth in ancient or contemporary law codes
o Laws establish rights, duties, and privileges that are consistent with the values
and beliefs of a society or its ruling group
1.1 Business Activities and the Legal Environment
 Liability- the state of being legally responsible (liable) for something, such as a debt or
obligation
1-1a Many Different Laws May Affect a Single Business Transaction
 Think ahead when starting or running a business contract to avoid business disputes.
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1-1c The Role of the Law in a Small Business
 The owner of a small business can play multiple parts- the finance manager, the
accountant, the marketing manager, the human resources manager.
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1.2 Sources of American Law
 Primary Source of Law- a document that establishes the law on a particular issue, such
as a constitution, a statue, an administrative rule, or a court decision.
 Secondary sources of law- books and articles that summarize and clarify the primary
sources of law
o Ex. Legal encyclopedias, compilations, official comments to statues, treatises
1-2a Constitutional Law
 Constitutional law- deals with the fundamental principles by which the government
exercises its authority, is the law as expressed in these constitutions. It’s the body of law
derived from the US constitution and the constitutions of the various states
o U.S. constitution is the basis of all law in the united states
1-2b Statutory Law
 The body of law enacted by legislative bodies (as opposed to constitutional law,
administrative law, or case law).
 When a legislature passes a statue, that statute ultimately is included in the federal code
of laws or the relevant state code of laws.
 Citation- a reference to a publication in which a legal authority- such as a statute or a
court decision- or other source can be found)
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Statutory law also includes local ordinances- regulations passed by municipal or county
governing units to deal with matters not covered by federal or state law.
o Ordinances commonly have to do with city or county land, building and safety
codes, and other matters affecting only the local governing unit
Uniform Laws
 Uniform law- a model law developed by the national conference of commissioners on
uniform state laws for the states to consider enacting into statue
o Helped the problem of difficulties that occurred when businesspersons
conducting trade and commerce among 2 states that had different laws
o Only if the state legislature adopts a uniform law does that law become part of
the statutory law of that state
Uniform Commercial Code
 Created through the joint efforts of the NCCUSL and the American law institute
 It facilitates commerce among the states by providing a uniform, yet flexible, set of rules
governing commercial transactions
1-2c Administrative Law
 Consists of the rules, orders, and decisions of administrative agencies
 An administrative agency is a federal, state, or local government agency established to
perform a specific function
1-2d Case Law and Common Law Doctrines
 Case law- the rules of law announced in court decisions. It interprets statutes,
regulations, constitutional provisions, and other case law.
1.3 Common Law Tradition
1-3a Early English Courts
 Common law- a body of general rules that applied throughout the entire English realm.
Eventually the common law tradition became part of the heritage of all nations that
were once British colonies, including the US.
 Precedent- a court decision that furnished an example or authority for decision
subsequent cases involving identical or similar legal principles or facts
1-3b Stare Decisis
 Stare decisis- a common law doctrine under which judged are obligated to follow the
precedents established in prior decisions
 Binding authority- any source of law that a court must follow when deciding a case
o Includes constitutions, statues, and regulations that govern the issue being
decided, as well as court decisions that are controlling precedents within the
jurisdiction
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Chapter 3- Courts and Alternative Dispute Resolution
3.1- The Judiciary’s Role in American Government
 Laws would be meaningless without the courts to interpret and apply them.
 The essential role of the judiciary in the American governmental system is to interpret
and apply the law.
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3-1a Judicial Review
 The judiciary can decide, among other things, whether the laws or actions of the other
two branches are constitutional.
o This is referred to as judicial review.
o Judicial review enables the judicial branch to act as a check on the other two
branches of government.
3-1b The Origins of Judicial Review in the United States
 The Judicial Review isn’t mentioned in the Constitution.
3-2 Basic Judicial Requirements
 Before a court can hear a lawsuit, there are certain requirements that must be met
relating to jurisdiction, venue, and standing to sue.
3-2a Jurisdiction
 Jurisdiction- the power to speak the law
 Before any court can hear a case, it must have jurisdiction over the person or company
against whom the suit is brought (the defendant) ow over the property involved in the
suit
Jurisdiction over Persons or Property
 A court with jurisdiction over a particular geographic area can exercise personal
jurisdiction over any person or business that resides in that are.
 A states highest court has jurisdiction over all residents of that state.
 Ex.. a dispute arises over the ownership of a boat in dry dock in florida. The boat is
owned by someone from ohio, over whom a florida court normally cannot exercise
personal jurisdiction. The other party to the dispute is a resident of Nebraska. A lawsuit
concerning the boat could be brought in a Florida state court on the bases of the courts
in rem jurisdiction (jurisdiction over a thing).
Long Arm Statutes
 Long arm statue- a state statute that permits a state to exercise jurisdiction over
nonresident defendants. A court can exercise personal jurisdiction over certain out of
state defendants based on activities that took place within the state.
 Before the court exercises long arm jurisdiction over a nonresident, the court must be
convinced that the defendant had sufficient contacts (minimum contacts) with the state
to justify the jurisdiction. So, the defendant must have enough of a connection to the
state for the judge to conclude that it is fair for the state to exercise power over the
defendant.
o Ex. An Xbox game system caught fire in Bonnie’s home in Texas and caused
personal injuries. Bnnie filed a lawsuit in a Texas court against Ji-Haw Industrial
Company, a nonresident company that made the Xbox components.
Corporate Contacts
 Ex. A business is incorporated under the laws of Maine but has a branch office and
manufacturing plant in Georgia. The corporation advertises and sells its products in
Georgia. These activities would likely constitute sufficient contacts with the state of
Georgia to allow a Georgia court to exercise jurisdiction over the corporation.
Jurisdiction over Subject Matter
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Jurisdiction over subject matter is a limitation on the types of cases a court can hear.
There are courts of general jurisdiction and courts of limited jurisdiction.
o Ex. General jurisdiction; a state trial court or a federal district court
o Ex. State court; probate court
 Probate courts- state courts that handle only matters relating to the transfer of a
person’s assets and obligations after that person’s death, including matters relating to
the custody and guardianship of children.
 Bankruptcy courts- handle only bankruptcy proceedings, which are governed by federal
bankruptcy law.
Original and Appellate Jursidction
 Original jurisdiction- courts first time hearing it
 Any court having original jurisdiction is normally knows as a trial court.
 Courts having appellate jurisdiction act as reviewing courts.
Jurisdiction of the Federal Courts
 Federal courts have subject-matter jurisdiction in two situations.
Federal Questions
 Federal question- a question that pertains to the U.S. constitution, an act of congress, or
a treaty and provides a basis for federal jurisdiction in a case.
Diversity of Citizenship
 Diversity of citizenship- a basis for federal court jurisdiction over a lawsuit between
citizens of different states or a lawsuit involving U.S. citizen and a citizen of a different
country.
Exclusive vs. Concurrent Jurisdiction
 Concurrent jurisdiction- jurisdiction that exists when two different courts have the
power to hear a case
 Exclusive jurisdiction- jurisdiction that exist when a case can be heard only in a
particular court or type of court
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3.2 Jurisdiction in Cyberspace
 Today, courts have to decide constitutes sufficient minimum contacts when a
defendant’s only connection to a jurisdiction is through an ad on a Web site
The Sliding Scale Standard
 Identifies 3 types of internet business contacts and outlines the following rules for
jurisdiction:
o 1) when the defendant conducts substantial business over the internet *such as
contracts and sales), jurisdiction is proper. This is true wheter the business is
conducted with traditional computers, smartphones, or other means of Internet
access.
o 2) when there is some interactivity through a Web site, jurisidiction may be
proper, depending on the circumstances. Even a single contact can be sufficient
to satisfy the minimum-contacts required in certain situations.
o 3) when a defendant merely engages in passive advertising on the web,
jurisdiction is never proper.
International Jurisdictional Issues
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 the internet is global in scope, so it raises international jurisdictional issues.
3-2c Venue
 Venue is concerned with the most appropriate physical location for a trial. Two state
courts may have authority to exercise jurisdiction over a case, but it may be more
appropriate or convenient to hear the case in one court than in the other.
3-2d Standing to Sue
 Standing to sue- a sufficient “stake” in the matter to justify seeking relief through the
court system. To have standing, a party must have legally protected and tangible interest
at stake in the litigation.
 The party bringing the lawsuit must have suffered a harm, or have been threatened by a
harm, as a result of the action about which he or she has complained.
 Standing to sue requires that the controversy at issue be a justiciable controversy- a
controversy that is real and substantial, as opposed to hypothetical or academic.
3-3 The State and Federal Court Systems
 Federal courts are not superior to the state courts. They are simply an independent
system of courts.
3-3a The State Court Systems
 Includes several levels of courts
 May include 1) trial courts of limited jurisdiction 2) trial courts of general jurisdiction 3)
appellate courts 4) the state’s highest court
Trial Courts
 Trial courts are courts in which trials are held and testimony taken.
 Trial courts that have general jurisdiction as to subject matter may be called county,
district, superior, or circuit courts.
3-3b The Federal Court System
 A three-tiered model consisting of 1) U.S. district courts and various courts of limited
jurisdiction 2) U.S. courts of appeals and 3) the US supreme court
 Federal court judges are appointed by the president
U.S. district courts
 At the federal level, the equivalent of a state trial court of general jurisdiction is the
district court.
U.S. Courts of Appeals
 In the federal court system, there are 13 U.S. courts of appeals
 These courts of appeals hear appeals from the federal district courts located within their
respective judicial circuits.
 The decisions of the circuit courts of appeals are final in most cases, but appeal to the
United States Supreme Court is possible.
The United States Supreme Court
 The highest level of the 3 tiered model of the federal court system
 Only one national supreme court
 Consists of 9 justices
 Most of its work is as an appeals court
Appeals to the Supreme Court
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Writ of certiorari is an order issued by the supreme court to a lower court requiring that
court to send the record of the case for review.
Rule of four a rule of the supreme court under which the court will not issue a writ of
certiorari unless at least four justices approve of the decision to issue the writ
3-4 Following a State Court Case
 Hypothetical case; involves an automobile accident in which kevin, driving a lexus, struck
lisa, driving a hyundari. The accident occurred at the intersection of Wilshire boulevard
and rodeo drive in californina. Lisa suffered personal injuries and incurred medical and
hospital expenses as a result, as well as lost wages for four months. The two are unable
to agree on a settlement, and Lisa sues Kevin. Lisa is the plaintiff, and Kevin is the
defendant.
3-4a The Pleadings
 The pleadings are the complaint and answer. The statements by the plaintiff and the
defendant that detail the facts, charges, and defenses of a case.
The plaintiff’s complaint
 Lisa Marconi’s suit against Kevin Anderson commences when her lawyer files a
complaint with the appropriate court. The complaint contains statements alleging:
o The facts necessary for the court to take jurisdiction
o A brief summary of the facts necessary to show that the plaintiff is entitled to
relief (a remedy)
o A statement of the remedy the plaintiff is seeking
Service of process
 Before the lawsuit begins, the court must have proof that the defendant was notified of
the lawsuit, called service of process (notifying the defendant of a lawsuit).
 The plaintiff must deliver, or serve, a copy of the complaint and summons (a notice
requiring the defendant to appear in court and answer the complaint to the defendant).
 The summons notifies Anderson that he mmust file an answer to the complaint within a
specified time period or suffer a default judgement.
The Defendant’s Answer
 The defendant’s answer either admits the statements or allegations set forth in the
complaint or denies them and outlines any defenses that the defendant may have.
Motion to Dismiss
 A pleading in which a defendant admits the facts as alleged by the plaintiff but asserts
that the plaintiff’s claim to state a cause of action has no basis on the law.
3-4b Pretrial Motions
 Motion for judgement on the pleadings- a motion by either party to a lawsuit at the
close of the pleadings requesting the court to divide the issue solely on the pleadings
without proceeding to trial. The motion will be granted only if no facts are in dispute.
 Motion for summary judgement- a motion requesting the court to enter a judgment
without proceeding to trial. The motion can be based on evidence outside the pleadings
and will be granted only if no facts are in dispute.
3-4c Discovery
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Each party can gather information and evidence about the case from the other party or
from third parties.
o Discovery
Depositions and Interrogatories
 Deposition- the testimony of a party to a lawsuit or a witness taken under oath before a
trial.
o The person being deposed answers questions asked by the attorneys
 Interrogatories- written questions for which written answers are prepared and then
signed under oath
Requests for Other Information
 Requests for admission saves time at trial because the parties will not have to spend
time proving facts on which they already agree.
Electronic Discovery
 E-evidence: a type of evidence that consist of computer generated or electronically
recorded information
 Metadata: data that are automatically recorded by electronic devices and provide
information about who created a file and when, and who accessed, modified, or
transmitted the file on their hard drives. Can be described as data about data.
3-4d Pretrial Conference
 Either party can request a pretrial conference
 The purpose is to explore the possibility of a settlement without trial and if that’s not
possible, to identify the matters that are in dispute and to plan the course of the trial
3-4e Jury Selection
 The right to trial by jury does not have to be exercised
 Voir dire- the jury selection process
3-4f At the Trial
Opening Arguments and Examination of Witnesses
Closing Arguments and Awards
3-4g Posttrial Motions
 Motion for judgement- a motion requesting the court to grand judgment in favor of the
party making the motion on the ground that the jury’s verdict against him or her was
unreasonable and erroneous.
3-6c Arbitration
 The settling of a dispute by submitting it to a disinterested 3rd party who renders a
decision
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Chapter 4 Tort Law
4-1 The Basis of Tort Law
 Wrongs and compensation serve as the basis of all torts
 Tort law is designed to compensate those who have suffered a loss or injury due to
another person’s wrongful act
 One person or group brings a personal suit against another person or group to obtain
compensation or other relief for the harm suffered
4-1 The Purpose of Tort Law
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To provide remedies for the invasion of various protected interests.
Tort law provides remedies for acts that cause destruction of or damage to property
Damages- a monetary award sought as a remedy for a breach of contract or a tortious
action. Monetary compensation for such harm or injury.
4-1b Damages Available in Tort Actions
Types of damages that plaintiffs seek in tort actions;
Compensatory Damages
 Compensatory damages- compensate or reimburse them for actual losses. A monetary
award equivalent to the actual value of injuries or damage sustained by the aggrieved
party.
 Special damages- in a tort case, an amount awarded to compensate the plaintiff for
quantifiable monetary losses, such as medical expenses, property damage, and lost
wages and beenfits.
 General damages- compensate individuals for the nonmentary aspects of the harm
suffered, such as pain and suffering. An amount awarded to compensate individuals for
the nonmonetary aspects of the harm suffered, such as pain and suffering.
Punitive Damages
 Punitive damages- monetary damages that may be awarded to a plaintiff to punish the
defendant and deter similar conduct in the future
o Punishes the wrongdoers and deter others from similar wrongdoing.
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4-2a Assault and Battery
 Assault- any word or action intended to make another person fearful of immediate
physical harm
 Battery- physical contact with another that is unexcused, harmful or offensive, and
intentionally peformed. The act that created apprehension is completed and results in
ahrm
4-2b False Imprisonment
 The intentional confinement or restraint of another persons activites without
justification.
4-2d Defamation
 Anything published or publicly spoken that causes injury to another’s good name,
reputation, or character.
 Wrongfully hurting a persons good reputation.
 Libel- defamation in writing or another permanent form (digital recording)
 Slander- defamation in oral form
4-4 Unintentional Torts (negligence)
 Ex. Juan walks up to maya and intentionally shoved her. She falls and breaks an arm.
Juan has committed an intentional tort (assault and battery). If juan carelessly bumps
into maya and she breaks her arm, juans action will constitute negligence.
Chapter 9- Business Ethics
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9-1 Business Ethics
 Ethics- the study of what constitutes right or wrong behavior. Branch of philosophy that
focuses on morality and the way in which moral principles are derived and applied to
one’s conduct in daily life.
o Has to do with questions relating to the fairness, justness, rightness, or
wrongness of an action.
 Business ethics- looks at the decisions businesses make and whether those decisions are
right or wrong.
9-1a
 Triple bottom line- a measure that includes a corporation’s profits, its impact on people,
and its impact on the planet
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