Business Law Ch 6-7,10

Spring 2026

Juul Case

$400 million settlement for marketing to minors and agreeing to only produce ads for outlets that market to 85% adult audiences.

Wells Fargo

$3 billion settled for opening millions of accounts without customer authorization (management pressure), illegally accessing fees and interest charges on loans, and overcharged investment accounts with advisory fees.

Felony

Punishable by over a year in prison

Misdemeanor

Less serious crime, punishable by a year or less in prison

Standard for conviction

Beyond a reasonable doubt that the act was illegal and there was necessary intent to commit the crime

Mens Rea

Criminal intent → guilty mind, wrongful purpose, or criminally negligent

Potential defenses for criminal cases

violates constitutional rights, alibi, statue of limitations, affirmative defense, entrapment, or insanity

Counterman v. Colorado

Concerned with the first amendment and the line it draws when handling true threats

John Thompson Case

Sentenced to death after a prosecutor withheld exculpatory evidence

Exculpatory Evidence

Evidence proving the defendant not guilty and must be disclosed to them

Antitrust

Price fixing, monopolization, etc.

Economic Espionage

Theft of valuable business information

Embezzlement

Taking money or property entrusted to one by a business

Fraud

Wrongful deception for personal or financial gain

Insider trading

Public company trading done by someone with non-public stock information

Money laundering

Hiding the origin of money so it can be used without detection of the illegal activity that produced it

Tax evasion

Failure to file a return, report all income, or overstating expenses

PG&E California Camp Fire

A broken clasp from neglected inspections causing a transmission line to fall, setting a 17 day forest fire. It lead to billions in settlements and fines as well as millions in criminal prosecution.

Tort

Breach of due owed to another that causes harm

Rule of tort law

Compensating people to put them back in their original position pre-tort and to deter misconduct

Standard of reasonableness

Due care measured against conduct of a reasonable person

Causation

To be held negligent, the party’s act has to have caused the injury

Res ipsa loquitor

“the thing speaks for itself” → when causation is obvious

Proximate cause

Direct reason for injury or damage, filtering out insignificant far removed causes

Intervening conduct

Independent event breaking the causal effect and relieving the defendant of liability

Danger invites rescue doctrine

Protects the injured party and the rescuer, making the defendant liable for both parties

South Carolina comparative negligence law

A plaintiff 51% or more at fault, isn’t eligible to recover compensation

Assumption of risk

Plaintiffs are unable to recover from injuries they willing fully participated in

Compensatory damages

loss of income, medical bills, pain & suffering, and damage to property are subject to it

Punitive damages

imposed when there’s gross negligence (reckless disregard)

Liability waiver (exculpatory clause)

Legally binding contract waiving tort rights giving a promise not to sue

Intent

Person knowing what they were doing or should have known the possible consequences

Assault

Conduct placing a person in fear of immediate harm or contact

Battery

Intentional physical touching without consent (doesn’t need to cause physical harm)

Privilege

Injuring someone while helping them grants immunity from liability

False imprisonment

Intentional holding, detaining, or confining of a person (verbal or physical)

Defamation

False statements on someone, telling a third party, and causing harm to who the statement is about

Google Maps case

A man was instructed to drive on a road with a destroyed bridge which lead to his death

Privity

Relationship creating an obligation (contract) in intentional misinterpretation or fraud

Interference with prospective advantage

Third party interfering with another company’s attempt to gain business

Ford Pinto case

Ford sold cars knowing the engine ruptured on impact but wanted to release a car to compete with competitors

Product liability

Producers/sellers are responsible for injuries caused by defects in their goods

Strict liability

holds manufacturers liable for injuries caused by the product (regardless of negligence)

Warranty

Assurance a product will meet quality & performance standards

Expressed warranty

Assurance of quality & performance directly from manufacturers

Implied warranty

unexpressed assurance of quality & performance that is automatic by law

Design defect

Injury caused even though a safer product design was possible due to failure to prevent it

Failure to warn

Producers liable in tort for not effectively warning consumers of danger

Joint and several liability

Ability to sue multiple manufacturers when the identity of the actual culprit isn’t clear

Ultrahazardous activity

Activites where risk can’t be eliminated and those who conduct the activity are held liable for damages caused

Statutory and regulatory liability limits

Workers compensation, federal regulations, and state laws

Unkown hazards

Liability for defects unknown when the product was made (unpreventable)

Contract

Legal relationship agreement, upon sufficient consideration, the rights and duties of the parties

Express Contract

Oral or written expression of intent to enter an agreement

Implied Contract

Arises from actions, still legally binding but it is a contract based on expectations of performance/payment

Offer

Promise to do or refrain from doing something → Requires clear intent, clear terms and conditions, and a properly communicated offer

Offer terminations

Offeror withdrawal (revocation), offered rejection, or lapse of time from contract inaction

Option Contract

A promise to keep an offer open for a certain period of time without revoking it

Unilateral Contract

Offer only binding upon performance

Bilateral Contract

Exchange of promises

Counter-offer

Rejecting an offer but proposing a change or addition to the terms

Consideration

Thing of value bargained in a promise/contract (cannot be a gift)

Promissory Estoppel

Doctrine that’s an exception to consideration, allowing enforcement of promises (Ex: Promise to donate to charity)

Capacity

A party’s ability to perform legally valid acts. This excludes minors, intoxicated, intellectually disabled, and people with limited ability

Voidable contract

Valid contract where one party can have the contract voided (Ex: A minor can void a contract if they choose)

Exculpatory Contract

Releases a party from liability for future damages or negligence (Ex: Employer)

Unconscionable Contract

Contract grossly unfair, unjust, and very one-sided

Contract in Restraint of Trade

Agreement where one selling their business commits to not starting a similar business to compete within a certain time period and distance

Duress

Coercing or threatening someone into a contract

Undue Influence

Excessive persuasion, undermining ones free will to agree to a contract

Written only contracts

Contract for real property, performed in longer than a year, debt payment promise, or marriage promise

Parole Evidence

Restricts the use of oral statements to interpret the terms of a contract

Assignment and Delegation

Transferring contract rights to another person

Third-party Beneficiary

Contract proceeds going to a third party and granting them the right to sue

Repudiation

Anticipatory breach from refusal or inability to perform

Material Breach

Defeats the purpose of the contract, depriving the injured party of benefit

Rescission

Both parties agree to terminate the contract

Novation

Discharging a party for a contract with another

Subrogation

Third party standing in place of a party, fulfilling their obligation

Accord and Satisfaction

Agreeing to a performance that differs from the original agreement

Expectancy Damages

Compensation awarded for the loss of what a party reasonably anticipated

Liquidated Damages

Agreeing on an award for damages prior to the contracts finalization (Ex: Cancellation fee)

Celsius

Promised Flo-rida 1% stock, then backed out on him, so he was awarded millions for their contract breach

Restitution

Restoring a person to their original position, prior to the damage

Effective apology

Say sorry, acknowledge the mistake, make no excuses, decline a repeat, and offer to make up for it → This could leave one better off than before

Penn State Case

Class action suit claiming they breached its agreement by failing to provide in-person class or facility access during the pandemic but still charging full tuition and fees