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BL300 EXAM STUDY SET WITH
COMPLETE SOLUTION
5 forces determine industry attractiveness - Answer buyer power, supplier power, competitive threat by current rivals, availability of substitutes, threat of new entrants
legal astuteness - Answer ability of managers to communicate. effectively + work w/ counsel
3 sources of law - Answer constitution, statute, regulation
regulations - Answer provisions issued by federal gov to state administrative agencies and executive departments to interpret + implement statutes enacted by legislature
common law + doctrine of stare decisis "abide by decided cases" - Answer legal rules made by judges when they decide a case where no constitution, statute, regulation exists to resolve dispute
supreme court - Answer overrules previous decisions
splits in circut - Answer when diff courts of appeal (in each state) disagree on interpretation of legal issue
restatements - Answer rules originating as common law now compiled formally
federal/state courts - Answer diff subject matter jurisdiction (hear diff cases)
federal jurisdiction - 3 sources of power to hear civil cases - Answer 1) diversity jurisdiction - citizens of 2 diff states AND $75,000+, 2) federal question jurisdiction when dispute concerns fed law, 3) when US constitution is a party
citizenship of corporation - Answer dual citizenship 1) state in which its incorporated, 2) state where it has headquarters
3 tiered system - Answer 1) district court, 2) court of appeals, 3) federal court
court of appeals - Answer 1) review decisions of final courts w/i territory, 2) review decisions of administrative agencies, 3) issue writs (orders) to lower courts/litigants
vacate - Answer nullify
remand - Answer send back to lower court for reccomendation
supreme court "discretionary review" - Answer decides which cases in jurisdiction to see
writ of certiorari - Answer orders lower court to send record of proceedings
state courts - Answer create state laws, state trial courts, state appellate courts, state supreme court
must have "standing" to sue - Answer 1) proper party to advance litigation, 2) personal interest in outcome, 3) will benefit from favorable ruling
personal jurisdiction - Answer court has legal authority over parties to the lawsuit (based on residence or location of property usually) (which states have power to hear MY claim)
ethics focus on - Answer consequences, 1st principles (rules), virtue, care
litigation process - Answer 1) plantiff files complaint, 2) parties conduct discovery, 3) court conducts trials or other hearing, 4) after evidence presented, winner decided, 5) losing party can appeal
source of law - Answer what is the legal claim?
state subject matter jurisdiction - Answer when its a state law or federal law allows it (so its not overwhelmed)
federal court jurisdiction - Answer over federal laws
sources of law - Answer federal + state law (most - corporate, contract, torts, etc)
4 ways to get personal jurisdiction - Answer 1) citizenship of defendant, 2) consent, 3) service of process (served w papers), 4) long-arm statue (prove minimum context in state (property) + case happened in the state, then call to state
subject matter jurisdiciton - Answer which court system (fed, state, both) can hear this kind of claim
federal subject matter jurisdiction - Answer its a federal law case or diversity jurisdiction applies (1) only on state law claims (2) $75,000+ case based on what plantiff claims (3) all parties in lawsuit citizens of diff states
class action - Answer affects numerous persons in common way, commonality needs to be established among members [court can w/ 1 single decision solve dispute for every plaintiff, degree of injury doesn't impact commonality], binds present + future complaints ex) smoking tobacco
class action fairness act - Answer bring any class action to federal court
civil procedure - Answer methods/processes/practices that govern processing of a civil lawsuit from start to finish (1) plaintiff's complaint w facts, legal reason, prayer (request for relief), (2) summons - officially notifies defendant, (3) answer and counterclaim or affirmative defense (not a full admission), (4) default judgement
pleadings - Answer plaintiff's complaint + defendants answer
express authority - Answer w/ actual words or action showing consent is given
implied authority - Answer do whatever is reasonable to complete task (after express authority is given)
usual authority - Answer authority that agent was allowed to exercise in the past
customary authority - Answer authority that normal agents would posses
ratification (affirmation) - Answer principle can bind itself to an agent's unauthorized acts
express ratification - Answer principal through words/behavior manifests intent to be bound by an agent's act
implied ratification - Answer principal by silence/failure to refuse agents act get it
undisclosed principal - Answer hide identity from 3rd party, principal bound to agents agreements/representation - (if you act w apparent authority, principal is not responsible (no visible 3rd party, blame/liability transferred to agent), only bound when agent has actual authority)
respondeat superior - Answer agents employer liable for injuries/damages to property of other that agent causes while acting in scope of employment (applies only to employees NOT to independent contractors)
constituting employment (when they aren't liable for tort) - Answer 1) employee's act authorized by employer, 2) extent to which employee interests were advanced by act, 3) whether employer furnished the instrumentality, 4) whether employer had reason to know employee would do it
sole proprietorship - Answer one individual own all assets + is personally liable (simplest, most prevalent, name must be registered w state) [flexible, least costly, one level of income tax, all profits received by 1 person]
general partnership - Answer 2+ people as co-owners (all must share profits + agree), becomes partnership property if 1) person acquiring is a partner, 2) there is existence of a partnership [allows for profit sharing arrangements, only 1 level of tax]
partnership - Answer pass through entity
limited liability partnership (LLP) - Answer retain pass through taxation treatment, insulates partners from vicarious liability for obligations (usually have unlimited liability for own malpractice but NOT others)
limited partnership - Answer 1+ partners and limited partners
general partners - Answer remain jointly/severally liable for partnership obligations
limited partnership - Answer must have written proof, but name of limited partnership doesn't appear in name of partnership, no liability assumed for partnership debts beyond amount of capital they contributed [liability of limited partner < amount of capital contributed] (+ ability to attract investors but difficult to create)
corporation - Answer organization authorized by state law to act as separate legal entity from its owners, owned by shareholders + board of directors (voted by shareholders) has decision authority [+ liability of shareholders limited to investments, easy to gain capital] [- subject to 2 forms of taxation (corporate + shareholder)]
C-corporation - Answer pays tax on income generated by business + shareholders pay tax on same income when distributed as dividends
S-corporation - Answer 1) <100 shareholders, all US citizens or residents, 2) only one class of stock, 3) must be domestic, 4) must file timely election signed by all shareholders, 5) must not be an ineligible corporation *(automatically corporation if not ALL of these)
benefit corporation - Answer for-profit corporation using power of business to solve social and environmental problems (+ gives shareholders annual benefit reports ab the performance, no duty to maximize shareholder revenue)
limited liability company (LLC) - Answer have certificate of formation, include LLC in name, have "members," operating agreement laying out rights, managers selected by
alter ego theory (to pierce the corporate veil - also applies to LLCs) - Answer owners of corporation mingled own affairs with corporation 1) domination by a controlling shareholder (who? all decision making?), 2) failure to formalize the investment, 3) failure to follow corporate formalities (decisions include regulatory + recorded) --- if prove 2 or 3 then can hold shareholders liable for debts of company
undercapitalization theory (to pierce the corporate veil) - Answer when corporation is a separate entity but a deliberate lack of adequate capital allows it to start potential liabilities
directors - Answer overall managers (guardians of corp)
shareholders - Answer don't participate directly in management - elect directors + approve certain major transactions
officers - Answer manage day-to-day operations (board members can be officers too - inside director) director who is not an officer is outside director/independent director (chosen by the board, agent of corp)
plurality standard - Answer director can be elected as long as he/she received plurality of votes cast for any nominee (no matter # of votes)
majority voting - Answer director must receive majority of shares voted to be elected
cumulative voting [{formlua = [(# of seats u want to control)(# of voting shares)] / [(#of seats up for vote) + 1]} + 1] - Answer shareholder may cast all votes for one nominee (pool votes) or allocate them, use formula to determine how many shares needed to elect one nominee to BOD (guaranteed to get 1)
straight voting - Answer one vote for each share shareholder has, (50% <) gives majority voting rights, have to vote all shares for one individual nominee
class voting - Answer requires one class of stock to approve a given proposal using separately from holders of other classes of stocs
proxy access - Answer ability of certain significant long term shareholders to nominate candidates for board + solicit proxies, found in by laws
citizens unites supreme court decision - Answer expanding corps ability to directly fund political ads/indirectly support individual candidates (enhances disclosure of boards policies + procedures for spending corporate funds on electioneering)
right of inspection - Answer limited by requirement that inspection be conducted
proxy contests "proper purpose" - Answer any shareholder propose their own slate for entire BOD to overthrow the board
shareholders have right to sue individually - Answer if suing for corporate mismanagement leading to harm to corporation as a whole, must sue in name of corporation (shareholder derivative action)
Initial public offering (IPO) - Answer company sells shares to raise capital 1) investors should have full info prior to investing, 2) corporate insiders not allowed to use nonpublic info concerning their company for own financial advantage, 3) misled investors should receive adequate relief even in absence of common-law fraud [+ more shares, grow faster rate, - public scrutiny/regulation, disclose info, time consuming, expensive)
1933 Act - Answer requires investors must have all material facts before investing $ + creates private rights of action for certain violations of provisions (created policy of continuous disclosure)
security - Answer (stocks + bonds of private companies) note/stock/treasury stock/security feature/evidence of indebtedness, subscription, etc. (snap selling shares of stock = security, loaning $ and u sign a promissory note to repay loan = NO)
best efforts underwriting - Answer underwriters don't agree to purchase securities offered instead agree to use best efforts to find buyers unagreed upon price (leaves risks of offering entirely w issuer)
due dilligence - Answer review info ab company in registration statement, back up every claim + have reasonable basis for belief
waiting/quiet period - Answer effective 20 days after filing w SEC, subject to review
red-herring prospectus - Answer inflate value of startup by issuing cheap stocks/warrants in exchange for orders, so to go public @ high evaluation
free writing prospectus - Answer doesn't meet statutory requirements but offers securities
gun jumping prospectus - Answer conditioning market to create interest in IPO w/ news/press - doesn't violate as long as 1) no mention of securities offering, 2) communication made by or on behalf of issuer, 3) issuers takes reasonable steps w/i control to prevent further info spread
accredited investor - Answer so financially sophisticated don't need protections afforded by securities laws
crowdfunding - Answer fundraising to raise limited $ from any # of unaccredited investors over internet
elements of liability - Answer prove contained false info/misleading statement, committed material fact required in registration doc
material fact - Answer reasonable investor would likely consider important info to buy/sell
vertical commonality - Answer can price discriminate based on value of unit
investors - Answer sharing risk + reward w/ seller of unit, prove investor had hope of getting return on investment primarily under the efforts of others (no involvement in operations) or [1) investment of $, 2) w/i a common enterprise (horizontal or vertical) 3) w/ the profits, 4) to come primarily from efforts of others]
506 b) of Reg D - Answer sell to unlimited # of accredited investors, no ads or general solicitation (must have preexisting relationship w investor - often use investment banks to get clients w formed relationships), limited financial statement requirements, no registration fee but must file form w SEC
Reg (CF) crowdfunding - Answer 1) audited financial statement/tax returns, 2) intended use of profits, 3) annual report filed w/ SEC (cheaper, no hiring investment bank)
tort - Answer civil wrong-suit resulting in injury to a person/property
plaintiff prove intentional tort - Answer 1) actual/implied intent, 2) voluntary act by defendant, 3) causation, 4) injury/harm
intent - Answer subjective desire to cause consequences of an act (could lead to 1+ torts)
actual intent - Answer shown by evidence that defendant intended specific consequence to a specific individual
implied intent - Answer defendant knew consequences of an act were certain/substantially certain to occur even if not actually intend consequence
degree of certainty of event goes down as defendants conduct loses character of intent
- Answer becomes recklessness, even less certain - becomes negligence
whether it was false, public officials/figures cant prevail in defamation case against a media defendant unless they can show the defendant acted w/ this
negligence theory - Answer plaintiff can recover in defamation case vs. media defendant if defendant acted w/ knowledge, acted in reckless disregard of facts, or negligent in failing to ascertain facts), BUT must prove actual damages (if malice is proved, damages presumed already)
statutory defenses - Answer acts can protect speakers too
invasion of privacy - Answer violation of rights to keep personal matters to oneself
intrusion - Answer objectionable prying (eavesdropping, unauthorized file searching, etc), must be expectation of privacy (doesnt require publication of information)
public disclosure of private facts - Answer requires publication of non-newsworthy private facts (truth is not a defense), even if a person doesn't intend to make private facts public, (social security # ex) still may be liable for negligence if failed to take reasonable steps to keep info confidential
appropriation of person's name or likeness - Answer fictitious ad testimonial
confidentiality agreement - Answer prohibits employees talk ab famous employers even after employment is terminated
negligence - Answer doesn't require intent, focus on reasonableness of defendant's conduct, failure to use such care as a reasonably prudent/careful person would use under similar circumstances (performance or failure to act) - prove 1) defendant owed duty to the plantiff to act reasonably under the circumstances, 2) defendant breached that duty by failing to conform to the standard, 3) a reasonably close causal relationship exists between plantiff injury and defendants breach, 4) plantiff suffered actual loss or injury (harm)
legal duty to another - Answer required to act reasonably under the circumstances to avoid harming the other person (drivers drive defensively, anticipate possibility of disasters/emergencies)
duty to rescue (no general rule in US) - Answer bystanders not required to help, once undertakes rescue tho person attempting rescue has duty to act as a reasonable person would + may not abandon rescue effort unreasonably - special relationship between two people changes this, also duty to rescue someone who has been placed in peril by you
landloard - Answer provide adequate security to protect tenants from foreseeable crime of 3rd party 1) property in hgih crime area, 2) had been earlier criminal acts, 3) failure to maintain certain locks, 4) landlord had knowledge of prior criminal acts
landowner + tenant legal duty to keep property reasonably safe from harm - Answer (ex water from cooling tower spills on highway, snow from roof falls on road, sparks from train start fire on property) general duty to inspect/repair property
premises liability - Answer associated w/ injury on premises of another
no duty to tresspassers - Answer but once discovered (know of presence) duty exists
attractive nuisance - Answer liability for physical injury to a child
licensees - Answer anyone (social gues) who is on the land of another person + possesses expressed or implied content (enter for own purposes) - duty to refrain from gross negligence (only actual knowledge of risk)
invitees - Answer a business visitor (customer) entering premises for purposes of possessors business, must protect invitees vs. known dangers + also vs dangers that possessor might discover w reasonable care (warning isnt enough, must try to protect)
resipsa loquitur "the thing speaks for itself" - Answer allows plantiff to prove breach of duty and causation indirectly, applies when an accident occurred + its obvious (no
tort damages - Answer attempt to restore plaintiff to same position before tort
actual (compensatory) damages - Answer measure cost to repair/replace them or decrease in market value caused by tort
punitive (exemplary) damage - Answer awarded to punish defendant + deter others from engaging in similar conduct
equitable relief - Answer when monetary award not adequate compensation for plaintiffs loss (to prohibit continuing certain actions) force someone to change behavior
joint and several liability - Answer multiple defendants collectively and individually liable
criminal law - Answer severe wrong enforced by state on behalf of society
tort law - Answer interpersonal wrongs for which injured party can decide to hold his tortfeasor accountable (not every harm is a wrong, not every wrong is a tort)
fact - Answer can be proven true or false (doesnt matter how hard this might be)
product liability - Answer legal liability of manufacturers/sellers for defective products that cause injury to purchasers/users/bystanders/property (anyone in chain of distribution including wholesalers + retailers)
warranty action - Answer whether quality, characteristics, and safety of product were consistent w the implied/express representations made by the seller
common law breach of warranty - Answer based on principles of contract law, must be in contractual relationship w injured person/seller, "privity of contract" excludes bystanders
express warrant - Answer affirmation made by seller relating to quality of goods sold
implied warranty - Answer created by law + guarantees merchantability of goods sold, and under some circumstances, their fitness for a particular purpose
negligence (in products case) - Answer must show defendant didnt use reasonable care when designing/manufacturing product or provide adequate warnings
subsequent remedial measures - Answer taken by defendant after an injury to improve a product (improve safety)
strict liability in tort (only applies to tangible products) - Answer allows those injured by an unreasonably dangerous product to recover damages from the manufacturer/seller of the product. even in absence of contract or negligent conduct on manufacturer/sellers part, easier to prove than negligence/breadth of warranty; rationale: 1) law should protect consumers against unsafe products, 2) cost of injury should be borne by parties best able to prevent/detect/eliminate/insure against product defects, 3) imposing strict liability encourages manufacturers to go extra mile to produce safe products + improve existing products, 4) law should give sellers incentive to deal w reputable manufacturers
defendant held strictly liable when - Answer 1) product harmed plaintiff or plaintiff's property, 2) injury was caused by defect in product, 3) defect existed @ time the product left the defendant + didnt substancially change
proof of negligence - Answer often stirs emotions of jury, leads to higher damages/awards/punitive damages
proof of defect in product - Answer 1) product defective when left hands of manufacturer or seller, 2) defect made product unreasonably dangerous (risk > utility)
warning defect - Answer when defendant fails to adequately warn of risks for products foreseeable use
