legal system exam 3

mortgage fraud

intentional misrepresentation to a lender in order to obtain a mortgage

can lenders commit mortgage fraud

yes, by engaging in unethical and deceptive behavior

what economic crisis did mortgage fraud lead to

the 2007/2008 FInancial Crisis

what early 2000s political philosophy lowered lending standards

the right to home ownership

subprime mortgages

loans made to financially weak individuals who do not qualify for prime-rate loans

no-doc loans

loans that do not require documentation to acquire

predatory lending

banks enticing financially weak individuals to take out mortgages they cannot afford

what are examples of predatory lending

excessive interest rates, “ARM” loans (adjustable rate mortgages)

mortgage-backed securities

investing into a portion of a mortgage pool to make percentage of interest

Troubled Asset Relief Program

$700 billion bank bailout by injecting capital into banks

why did banks not worry about loans not being repaid

they were selling the loans to larger investment banks

credit rating agencies

protect consumers by alerting them of risks associated with investment

what does “being underwater” mean

when the asset you own is worth less than you paid for it

purpose of Dodd-Frank

report stability and oversight to the financial system and prevent a repeat of the financial crisis

3 key provisions of Dodd-Frank

regulation of risky derivative investments, elimination of predatory lending, and limitations on how banks can invest

eminent domain

government seizure of property

how is eminent domain legal

authorized in the Takings Clause of the 5th Amendment

what two aspects are needed for eminent domain to occur

compelling government interest and just compensation

examples of compelling government interest

government buildings, road construction, defense related needs

estate

everything one owns at the time of death

executor

person who administers property left behind in will, pursuant to the terms of the will

probate court

part of the regular court system, assigned to handle family probate matters

how are probate courts divided

by county

heirs

someone who property automatically transfers to if no will exists

what is the term for when no will exists and an estate automatically goes to an heir

intestate descent/succession

what is the order of succession

spouse, kids, parents, any other living relatives, back to the state

dying intestate

when someone passes away without a will

contract

an agreement between parties that is enforceable by law

express contract

a written and signed agreement

implied contract

not spoken or agreemen, simply understood between parties

unilateral contract

a party makes a promise to pay something in exchange for the performance of an act

bilateral contract

two or more parties negotiate a contract

what are the six requirements for a contract

offer, agreement, mutual assent, consideration, legal capacity, legality

offer

proposal of a contract

acceptance

all parties must agree to terms

mutual assent

both sides must be genuine in their acceptance of the contract

consideration

both sides must benefit from the contract in some capacity (does not have to be evenly beneficial)

legal capacity

parties must be within their legal ability to enter contract

examples of legal capacity violations

minor, not mentally capable, under threat

legality

contract must have a legal purpose

force majeure

something occurs outside of the control of the parties that prevents the contract from being fulfilled properly

what is force majeure also referred to as

an act of God

parol evidence rule

if a contract is written and signed, the terms and conditions written will control the obligations of the parties

what is the purpose of the parol evidence rule

prevents people from reintroducing new, contradictory evidence that was not present in written document at the time is was signed

what type of contract does the parol evidence rule apply to

express contracts only

what is the exception to the parol evidence rule

if you can prove you were not within legal capacity

Uniform Commercial Code (UCC) (1953)

comprehensive set of laws that governs all commercial transactions within the US

what is the purpose of the UCC

to provide uniformity and consistency within business transactions

what state created the UCC

Pennsylvania

what type of economy does the United States have

a free-market economy

what is the function of a free-market economy

allows for competition between businesses

antitrust

actions by corporations that restrict or impede upon free competition and market fairness

Sherman Antitrust Act (1890)

made it illegal for companies to restrict or impede free competition or market fairness

price fixing

businesses collude with each other to artificially set what the prices will be in an industry

oligopoly

legal process where companies monitor each other and have a near unspoken agreement to stay near each other’s prices

bid rigging

competitors collude to give specific bids for services they would supply in response to a request for bids

price gouging

prices of goods are excessively inflated due to demand

when is price gouging legal

when a nonessential item has its price raised, and consumers willingly pay it

when is price gouging illegal

when an essential item’s price is raised due to need

2023 FTC Amazon Lawsuit

argued that amazon is engaging in exclusionary conduct, preventing competitors from emerging

2023 DOJ Google Lawsuit

alleged that Google was violating the Sherman Antitrust Act by excluding other browser companies

purposes of bankruptcy

fresh start for honest and unfortunate debtor, fair process for creditors to collect debts

where are bankruptcy cases heard

federal bankruptcy court

what is chapter 7 bankruptcy

liquidation

what does liquidation entail

a business (or an individual) closes its doors, all assets are sold and creditors are paid at a percentage determined by the court

what creditors are paid first during liquidation

secured creditors (banks, lien holders, anyone who has an ownership in the assets)

what is chapter 11 bankruptcy

reorganization/rehabilition

how does reorganization work

business remains open, bankruptcy trustee works with business to cut costs and make a plan to succeed

what is chapter 13 bankruptcy

individuals with regular income looking to get back on track

how does chapter 13 bankruptcy work

3-5 year plan to pay debts, protection from lawsuits and garnishment

why is chapter 13 preferable to chapter 7 bankruptcy

allows debtor to keep valuable assets

non-dischargeable debts

debts that cannot be waived or reduced when declaring bankruptcy

examples of non-dischargeable debts

child support, taxes, judgement, restitution, school loans

adversarial legal system

parties are represented by lawyers in court, overseen by judge who follows specific court rules

what is the goal of both sides in the adversarial legal system

win their case

inquisitorial legal system

lawyers assigned to a side, judge has specific judicial training, case is decided by fact-finders

what is the goal of both sides in the inquisitorial legal system

discover truth within the case

judge recusal

ethical obligation of judge to withdraw themselves from a case due to conflict of interest of lack of impartiality

what is required for judge recusal to occur

an appearance of bias

first step in a civil case and what it entails

complaint (comprises of names of parties and allegations)

what is personal service regarding a civil case

both parties must be aware of the lawsuit

how must a civil complaint be served

in person by either the plaintiff or a representative

second step of a civil case and what it entails

responsive pleading (answer or motion to dismiss lawsuit)

what is an answer in a civil procedure

an admission or denial of allegations

what is a motion to dismiss in a civil procedure

motion to throw away lawsuit due to insufficiency of claims on their face

examples of technical legal grounds to dismiss a civil complaint

statute of limitations expiry, no jurisdiction, etc.

examples of factual grounds to dismiss a civil complaint

no true breakage of law based on facts of case

default judgement

if one party chooses not to respond to lawsuit, it is forfeited, and they lose the case

pro se plaintiff

someone representing themselves in court

class action lawsuit

large amount of people suing one party, typically a large corporation

definition of similarly situated

same conduct and same harm (ex. defective product, false advertising)

class representative

person who represents entire class in court during class action lawsuit

class certification motion

judge determines if class members are similarly situated in a class action lawsuit

purpose of the discovery phase

each party discovers wha evidence their opponent possesses

what evidence is included during the discovery phase

documents, witnesses, emails, texts, video, audio recordings, etc.

mandatory disclosure

law stating that after a case is filed, both parties are required to turn over all evidence relevant to the case

discovery requests/requests for production

process of asking other party to disclose evidence

interrogatories

one side asks the other side questions about the case

depositions

sworn testimony under oath in informal setting against other party’s witness

who is present during depositions

lawyers and witnesses (no judge)