Selected Business Law Topics
Copyright © 2008 by Robert B. Carton
The Uniform Commercial Code
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Merchants must be familiar with the UCC
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A merchant is anyone that sells a product
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Any sales contract in excess of $500 must be in writing
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The UCC governs aspects of borrowing
• File a UCC-1 form to secure your interest in property
• These filings are public information and show up on credit reports
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Take a business law class to learn more
Copyright © 2008 by Robert B. Carton
Torts
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A wrongful act against an individual
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Action is between individuals, not The People
Burden of proof is based on the preponderance of evidence
• 51% of the jury must be convinced
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Punishment is generally monetary damages
• Not the case in real estate or collectables
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Acts may be willful or as a result of negligence
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Negligence has four conditions
• A duty, the breach of the duty, causation from the breach, and actual injury
• The “reasonable person” standard applies
– Different levels of care are required for invitees, licensees, and trespassers
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A business owner is required to maintain reasonably safe premises
“Use at your own risk” does not always protect you, and almost never with
children
Attractive nuisances
Copyright © 2008 by Robert B. Carton
Types of Torts
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Defamation: A malicious, unfounded attack on
reputation or character
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Slander is verbal while libel is written
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If you can’t say something nice, don’t say anything at all
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Don’t give references on past employees. Just confirm
employment dates.
Assault: communicating threats of bodily harm
Copyright © 2008 by Robert B. Carton
Fraud
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An intent to deceive a person in order to obtain personal
enrichment.
Elements of fraud
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Intent
Misrepresentation of a material fact
The accused knew the representation was false
The accused intended that the plaintiff would act in reliance on the
false fact
The plaintiff actually did rely on the false fact and it was reasonable to
do so.
The plaintiff suffered personal or financial injury and can prove the loss
Perception of the plaintiff is critical and even if you did not
intend to defraud, if your actions reasonably give rise to the
plaintiff’s interpretation, you may be liable.
Copyright © 2008 by Robert B. Carton
Warranties
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Contractually establishes the characteristics and level
of quality a purchaser can expect of goods or services
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Expressed warranties are communicated to the purchaser
• Comments about quality, either quantifiable or relative can be
interpreted as warranties, even if made casually
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Implied warranties are part of the UCC
• Clear title to the transferred property
• Protection from infringement claims by third parties
• Merchantability: the goods are physically fit and safe for the
customary purpose they are being used
• Fitness for purpose: the buyer can rely upon representations of the
seller, as an expert, that the product is fit for their purposes
Copyright © 2008 by Robert B. Carton
Product Liability
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Liability exists even without a warranty
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The goods or services did not meet the “due care” standard
• Product or service was inherently dangerous increases risk
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Get advise from attorneys and insurance protection
Copyright © 2008 by Robert B. Carton
Contract Law
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A legally binding agreement between two or more competent
parties containing promises relating to certain acts of the
parties.
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Offer
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Acceptance
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Consideration
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Capacity of the parties
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Legal to do
• A murder contract is not enforceable in law
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Proper form
• Certain contracts must be in writing
Copyright © 2008 by Robert B. Carton
Agency Law
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An agent represents another person in a business
transaction
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Employees are agents
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An agent has the power to commit the organization
Independent contractors
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Not an agent unless expressly granted agency power
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NOT an independent contractor if:
• Direct the task and the right to control how it is done
• Direct where the work is done
• Direct when the work is done
Copyright © 2008 by Robert B. Carton
Bankruptcy
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Chapter 11
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Chapter 7
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Continue in business but restructure the debts
Liquidation
Can be either voluntary or involuntary
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If more than 12 creditors, three (3) must join to force a filing
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If fewer than 12 creditors, one unsecured creditor owed at least $5,000
may force a filing
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Both may require a receiver or trustee
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You cannot discharge certain debts in bankruptcy
Copyright © 2008 by Robert B. Carton