Business Law Final

What type of Business entity must be filed with the Tennessee Secretary of State and Register of Deeds

Corporation, LLC, limited partnerships, and limited liability partnerships

How is a corporate signature supposed to look

Tony's Pizze, Inc.

By: Tony Saunders

President

What officers must a corporation have?

President and Secretary

Sole Proprietorship

Single person business that is liable for everything

- There is no separate entity to tax

- Ceases to exist when the individual dies or goes out of business

-

General Partnership

Multiple people all of which are jointly and severally liable for the debts of the partnership

- managed by all partners

- individuals are taxed not partnership

- it ceases to exist when any partner dies

Limited Partnership

Multiple partners managing the business, and one more limited partners who act as investors who don't have an active role in management

- general partners are jointly and severally liable for the debts of the partnership

- The partnership itself is not taxed

- Certificate of LimitedPartnership must be filed with the Tennessee Secretary ofState and the Register of Deeds. It must also file an annual report with theSecretary of State

Corporation

A separate legal entity owned by shareholders, managed by aboard of directors, and operated on a day to day basis by officers

- the shareholders, officers and directors are not liable for the business debts

- Managed by a boardof directors

- double taxation

- A charter must be filed with the Tennessee Secretary ofState and Register of Deeds

Limited Liability Company

hybrid between a corporation and a general partnership

- Usually, taxation as an S corporation

- it must file Articles of Organization with the Tennessee Secretary of State and the Register of Deeds

- Managed by members or managers, or a board of directors.

What is a franchise?

a company that offers similar products or services in many locations

Duty of Loyalty

can't have conflicts of interest

Duty of Care

business Judgement rule, when you're the manger you are supposed to do a good job

Duties of Management

Duty of care and loyalty

Promoter's Liability

personal liability that may be faced by someone purporting to act on behalf of an entity that is not yet properly formed.

Designation of a Registered Agent

a person designated to receive mail and can be served with any lawsuit

Name requirements for each entity

Inc., Co. or Corp = or a corp.

LLC, L.L.C. or a Limited Liability Company

Corporate Veil and Piercing the Corporate Veil

Corporate Veil: ensures that individuals that are involved in the corp. are not personally liable for companys debts or legal obligations

Piercing Corp. Veil: Holds shareholders and directors personally liable for company's actions

What is Authorized Stock

Maximum number of shares the corporation can sell

Two ways Shareholders can vote?

Straight Voting: a common way of voting

Cumulative Voting: gives them an advantage

What is Cumulative Voting

Each shareholder gets as many votes per share as there are director seats being contested. The shareholders can spend them anyway they want (eg all for one candidate) Candidates getting the most votes win.

Business Judgment Rule

A rule under which courts will not hold corporate officers and directors liable for honest mistakes of judgment and bad business decisions that were made in good faith.

Corporate Opportunity Doctrine

Corporate officers, directors, and agents cannot take advantage of an opportunity that should have belonged to the corporation

Three ways you can sell a corporation?

Asset Sale= company is not buying its debts

Merger= takes on all liabilities

Stock Sale = Buying the shareholders

Three types of Bankruptcy:

ch 7- liquidation

ch 11- reorganization for businesses (they continue working)

ch 13- reorganization for individual wage earners

Securities Act of 1933

regulates the initial issuance of "securities", prevents fraud

Securities Exchange Act of 1934

regulations the subsequent buying and selling of previously issued

Securities (prohibited something)

Elements of a valid contract

Agreement (Offer & Acceptance) Consideration

Legality

Capacity

Consent

** Sometimes writing but not all have to be in writing

Sources of Contract Law??

Contract law stems from Common Law

What is Universal Commercial Code??

Deals with contracts of sale of goods

Alternative Equitable Theories:

promissory estoppel and quasi contract

Promissory Estoppel

a possible remedy for an injured Plaintiff in a case with no valid contract when the plaintiff can show a promise reasonable reliance, & injustice

Quasi Contract

possible remedy for an injured Plaintiff in a case with NO valid contract, when the plaintiff can show benefit to the defendant

Is a price quote considered an offer??

NO, price quotes, letters of intent, and advertisements are not Offers

** offers must be very specific

Types of Acceptance offers??

Mirror Image: when one excepts the offer exactly as it is and nothing is changes

Mailbox Rule: acceptance occurs when the payment hits the mail, offer can't be taken back

Contract Consideration:

exchange of promises (both parties have to give something)

- Doesn't matter how much the promises are worth (Peppercorn Theory)

Preexisting Duty

is not consideration for a new promise

Legality of Contracts

All contracts are invalid if there is any criminal activity

or

Licensing statutes = an agreement with an unlicensed individual is unenforceable by the party who should have obtained the license; the contract is voidable

Restraint of Trade

Non-compete agreements (an employer requires that an employee sign as a condition of employment) - are for the most part unenforceable after the recent Federal Trade Commission Ruling.

Exculpatory Clauses

a contract clause that attempts to pre-release a party from any future liability to the other party

- the law disfavors pre-waivers of liability

- Exception - "bailment relationships" (i.e., you leave your clothes in alocker at the gym)

Capacity of Contracts: At what age can you partake in a valid contract??

Age 18 and at age 40 you are protected from age discrimination

Mentally Impaired Persons & Intoxication

if a person is not able to understand the nature of the agreement they are making then the contract is voidable.

What contract must be in writing?

Contracts involving land, sale of goods(worth $500 or more), can't be performed w/in a year, contracts to pay the debt of another

** required by the Statute of Frauds)

What is Parole Evidence Rule in written contracts??

prohibits either of the parties from introducing other

evidence at a trial to contradict or add to the written terms of the contract

What is third party beneficiary?

** In order to have the right to sue for the enforcement of a contract that you are not a party to, one must be

a "third party beneficiary" to the contract

- must have been contemplated as a third

party beneficiary

- benefit from a contract

example: subcontractors

Assigning rights under contracts

Law says you can if the contract allows

Assign your rights and give duties

Condition Precedent

arising at the outset of a contract (a real estate purchase agreement with the

condition of buyer financing), if one doesn't get a financing can they buy the house? NO

Substantial Performance

For most contracts, substantial performance(using an objective standard) is sufficient to entitle a party to partial compensation under a contract for the performance accomplished to date, subject to the remaining items of performance.

Time of the Essence Clauses

provides that deadlines in a contract are to beconstrued strictly and if missed by one party discharges the other party fromperformance (i.e., if your rent payment is one day late the landlord may bedischarged from the duty to continue leasing the apartment to you)

Anticipatory Breach as a defense to performance

informing your boss that you are leaving the company

Remedies: Types of Damages

Direct Damages= flow directly from the contract and must be reasonably certain

Consequential Damages= result from the unique circumstances of the injured party in question, Damages must be foreseeable

Incidental Damages = out of pocket costs resulting from the breach

Intellectual Property

Patents, copyrights, trademarks, and trade secrets. Federal and state laws protect intellectual property rights from misappropriation and infringement.

Three types of patents

utility, design, plant

**Volkswagon beetle example would be a form of Design Patent.

- Patents must be filed in order to obtain it

- Plant and Utility have a longer time of protection

- in order to get a patent you must invent something, not discover

Copyright:

Owns the particular tangible expression of an idea (not the idea itself).

-The term generally covers the life of the creator plus 70 years, as to individual creators of copyrighted material)

-You get protection before filing with the office

First Sale Doctrine

allows the lawful owner of a copyrighted item to resell, lend, or otherwise distribute that specific copy without needing permission from the copyright holder.

Fair Use Exception to copyright and Parody

criticism, research, teaching, etc.

Digital Millennium Copyright Act

- protects copyrighted things on the Internet

Trademarks

Words or symbols that a business uses to identify or distinguish its products. Registration allows use the trademark symbol and ease in prosecuting trademark claims. TM or R

Employment at Will Doctrine

common law doctrine which states that in the absence of an employment contract, an employee can be hired and fired at will, without the necessity of showing cause. However, there are many exceptions to the doctrine.

Wrongful Discharge

a discharge, or termination, of an employee that is illegal

Intentional Infliction of Emotional Distress

a tort for work-place bullying

NLRB laws

allows workers to form unions and a company can't do anything about it or prohibit it

Family and Medical Leave Act

Allows for up to 12 weeks of maternity leave and any medical conditions

OSHA

workplace safety, think hard hats

FLSA

addresses minimum wages, overtime and child labor restrictions

COBRA

maintaining health insurance for 18 months after termination of employment, at the employee's expense

Social Security Act

an entitlement program providing benefits at retirement age or if temporarily unemployed, etc.

Constitutional Protections

14th Amendment prohibits the government from discriminating in the workplace - to do so would violate the equal protection clause.

Equal Pay Act of 1963

a federal statute requiring equal pay for comparable work irrespective of the sex of the employee

Title VII of the Civil Rights Act of 1964:

prohibits all employers with 15 or more employees from discriminating on the basis of race, color, religion, sex or national origin.

Religion in Workforce

cannot discriminate based on an employee's religious beliefs,and the employer must make reasonable accommodations for the exercise of those beliefs.

Sexual Harassment - prohibited by Title III

There are 2 types

quid quo pro = authority figure (e.g., a manager) demands a sexual favor in exchange for job benefits, such as a promotion, raise, or avoiding disciplinary action

hostile work environment = Involves pervasive or severe behavior (e.g., jokes, comments, gestures) that creates an intimidating or offensive atmosphere, but not necessarily linked to specific benefits or consequences

Americans with Disabilities Act

federal law requiring employers to make reasonable accommodations for disabilities. They cannot refuse to hire, nor can they fire, an employee just because of a disability if a reasonable accommodation would allow the employee to perform their job

Affirmative Action

make workplace more diverse

Reverse Discrimination

actions taken to address historical inequalities or promote diversity result in perceived unfair treatment of individuals who belong to a historically dominant or majority group

Genetic Information Nondiscrimination Act

protects employees against the use by employers of genetic information in employment decisions

"Real Property" includes:

surface of land, subsurface rights, permanent buildings, air space to some level, plant life, and fixtures

What is the most complete way you can own land??

Fee Simple Absolute

Joint Ownership in Land

-Joint Tenancy with Right of Survivorship= when one partner dies the land goes to the other

- Tenants in Common= if one dies then the land goes to their heirs

-Tenants by the Entireties=

Easement

the right to use land for a specific and limited purpose

Utility Easement

a land definition that grants certain utility companies or other entities the right to use land for a specific purpose

Profits

right to enter someone else's land to get to mineral rights

License

right to be on someone else's property for a limited period of time,such as with an event)

Adverse Possession

if you do not actually own the property but act as if you do for about 7 years, then the law proclaims you to be the owner

The commercial type of lease:

Triple net Lease

- Tents have to pay these three:

#1 Property taxes

#2 Property Insurance

#3 Utilities

Preexisting Duty

is not consideration for a new promise