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JOSH DE LEON Review Magazine


PUNISHMENT •

Fines-payment of specified amount of money as penalty for committing crime. Imprisonment –indefinite or indeterminate sentences Mandatory Sentencing What is the only thing a judge cannot do? Not allow you to see a family member.


GOAL ONE


ETHICS •

: deciding what is a right or wrong action in a reasoned, impartial manner Morality: involves the values that govern society’s attitude toward right and wrong Ethics are based around the following basics: Feelings and Opinions The Greatest Good The Golden Rule Consequential Reasoning


FEELINGS AND OPINIONS •

Ethics are viewed as how a person feels about a certain situation


THE GREATEST GOOD •

The idea is that must people will base their opinion of ethics based on how a certain situation affects the greatest amount of people


THE GOLDEN RULE •

Do unto others as you would have them do unto you The heart of the golden rule is empathy Empathy: putting yourself in the other person’s position


•

Consequential Reasoning

•

Takes a look at the consequences of the action before making a decision on what way to act


RULE-BASED REASONING •

Makes a decision based on majority vote Sometimes it is not the most ethical decision Based around the U.S. Constitution


U.S. LEGAL SYSTEMS •

The U.S. Legal System is based upon the Constitution, where laws are created and amended. The basis for the Constitution is to protect human rights. Our legal system is based upon three levels of government: Judicial: Led by the Supreme Court. The Supreme Court decides if the law being made is constitutionally correct. Legislative: Led by Congress. Congress is made up of the Senate and the House of Representatives.


INTERNATIONAL LEGAL SYSTEMS •

The Adversarial System (each side to a dispute presents its arguments for and against the issues involved, and victory goes to the party that persuades the judge or jury to their side) is one legal focus of the American people


A LEGAL TIMELINE: •

• Code of Hammurabi • Circa 1750 BC • Oldest known written code of laws • Sumerian King Hammurabi • Civil and Criminal Laws and Penalties


Judeo-Christian Influences – Circa 1200 BC until 1st century AD – The Ten Commandments • Set of Jewish laws – The Bible • Old and New Testament religious rules of conduct – Christianity influenced American law


EVOLUTION OF AMERICAN LAW •

• Laws are rules of conduct established by the government of a society to maintain stability and justice in that society


ROMAN EMPIRE •

• 560 AD • Emperor Justinian • “Corpus Juris Civilis” means body of civil law • Laws applied to Holy Roman Empire which spread over Western Europe


PART 3 OF GOAL ONE DIDN’T WORK


GOAL 2


CRIMINAL LAW •

Opening Statements: Attorneys

•

Take a pretest on the objective to measure what you know or think you know about the subject matter. Discuss results with teacher. Review PowerPoint presentation. Ask questions and discuss issues regarding topics on criminal law


ESSENTIAL QUESTIONS •

What is crime? What are the possible punishments for a crime? Who are the participants of a trial? What are the classifications of a crime? What are the elements of a crime?


CRIME •

An act against the public good


4 PUNISHMENTS FOR A CRIME? •

Imprisonment Fine Probation Community Service Combination of the above


PARTICIPANTS OF A TRIAL •

Plaintiff? (2) Government Prosecutor Defendant (1) Person accused of the crime


ELEMENTS OF A CRIME •

Criminal Act Must violate a statute Required state of mind Depends on crimes definition Motive is NOT required


TYPES OF CRIMES •

Crimes Against People Social Crimes Crimes Against Property Business crimes (White Collar)


CRIMES AGAINST PEOPLE •

Murder Malice aforethought? 1st degree—aggravated (premeditated, cruelty, torture, rape, robbery, kidnapping) 2nd degree—non of the above conditions apply Manslaughter Voluntary? Intentional Involuntary Occurs while committing an unlawful or reckless act


CRIMES AGAINST PEOPLE-CONTINUED •

Assault - Attempt (pointing or shooting at someone) Aggravated (Usually felony)-using deadly weapon with intent Simple (misdemeanor) Battery Hitting Kidnapping Unlawful removal against person’s will Sex offenses Statutory rape


SOCIAL CRIMES •

Federal/State governments have the right to regulate health, safety, welfare, and morals of the people. Drug Use illegal and harmful substances Addiction-inability to function normally Alcohol Use Domestic Violence


CRIMES AGAINST BUSINESS •

Characteristics of “White Collar Crimes” Usually involve fraud Usually non-violent Larceny by False Pretenses- Intended to mislead or defraud Induce victim to rely on them Example: con artists Forgery False making or changing of a writing with intent to fraud.


DEFENSES TO A CRIME •

Insanity Must prove the M’Naughten Rule ―At the time of the crime, was the defendant suffering from a mental disease so serious that he or she did not know what they were doing was wrong‖ If not guilty, what happens? Must serve time in a mental institution until determined to be stable.


DEFENSES TO A CRIME, CONTINUED • •

Entrapment Induced into breaking the law by a law enforcement officer


PUNISHMENT, CONTINUED •

Death Penalty Three (3) Phases Jury determines guilt or innocence Pre-sentence Hearing (Judge/jury listens to arguments, examines evidence) Appeal to the Highest Court


COMPUTER CRIMES •

Illegally using hardware and software by misuse of equipment, copying, and/or taking data from web sites for personal use without prior permission. Research information regarding The Melissa virus. Provide details on who, what, when, where, why and how. Discuss the three documents relating to this virus. Piracy Hacking


TELECOMMUNICATION LAW OR CYBER LAW •

Telecommunication law or Cyber law governs the legal issues of cyberspace. These terms are not restricted to the Internet. The terms include: computers computer networks the Internet data software etc


FEDERAL COURT SYSTEM •

Derives from Article III of US Constitution Governs over cases concerning federal matters Governs over cases concerning diversity of citizenship There are 13 judicial courts There are 95 federal district courts


FEDERAL JURISDICTION •

Actions in which the U.S. is a party Cases that raise a federal question Diversity of Citizenship – Disputes that exceeds $75,000 and involve persons of different states Admiralty, Patents, Copyrights, and Bankruptcy Cases


FEDERAL COURT SYSTEM •

US Supreme Court Highest court Has both Original and Appellate Jurisdiction Original jurisdiction Ambassadors, public ministers, cases in which the state is a party Appellate jurisdiction Vote of four out of nine justices


•

US Court of Appeals Appellate jurisdiction Authority of court to review a decision of a lower court or administrative agency Appellate Courts have a panel of 3 judges that are responsible for making a decision on the cases Appellate courts decide whether the lower courts relevant to the law in the case Hears Case from the US District Court


STATE COURT SYSTEM •

Each state has its own system Local Trial Courts Limited jurisdiction Authority of a court to hear only one particular type of case, minor matters Misdemeanors Civil actions with small amounts of money Small claims of property damage Petty cash crimes Traffic, police, and municipal courts Juvenile and family disputes


CIVIL TRIAL PROCEDURES •

Civil Trial Pleadings Plaintiff files complaint Clerk issues summons Defendant must answer within time limit Answer is a formal written document admitting or denying complaint


TERMS •

Alternative Dispute Resolution - different tools used by parties to help them settle their disputes without having to go to court Arrest – Action take when a person is deprived of his or her freedom Bail – Money or property that is left with the court to assure the court that the person will return to stand a trial. Money is forfeited if person does not appear in court Contempt of Court – An action that hinders the administration of justice in the court Diversity of Citizenship – When a resident in one state sues a resident in another state for more than $50,000


TERMS CONT •

Ex Parte Injunction – An injunction issued by a judge after hearing only one side of an argument Indictment – Written accusation issued by the grand jury charging the individual or individuals named in it with a certain crime Grand Jury – A jury of Inquiry Precedent – When judge is required to follow an earlier court decision when deciding a case with similar circumstances Prosecutor – Party that accuses the person of a crime Statutes – Laws enacted by state or federal legislatures Statue of Limitations – State laws setting time limit for bringing a lawsuit


WHAT IS A TORT? •

One person’s interference with another person’s rights, either through intent, negligence, or strict liability


BASED ON 4 RIGHTS: •

Right to: – Be free of bodily harm – Enjoy a good reputation – Conduct business without interference – Have property free from damage or trespass


INTENTIONAL VS. UNINTENTIONAL •

Intentional – know and desire the consequences of your act Unintentional – lacks the determination of mind.


REQUIRED ELEMENTS: •

1. Duty of Care – Defendant owed the plaintiff a duty of care (based on the concept of their rights - stated previously). 2. Breach of Duty – Did the defendant exercise the same degree of care that a reasonable person would have.


ELEMENTS CONTINUED •

3. Proximate Cause – something that produces a result, without it the result would no have occurred. – Foreseeability Test Was the injury to the plaintiff foreseeable at the time the defendant engaged in the unreasonable conduct? 4. Actual Harm – must show harm


DEFENSES TO NEGLIGENCE •

Contributory: – Negligence on the part of the plaintiff assisted in causing his or her injuries. Comparative: – Determine % at fault and pay that % Assumption of Risk: – Plaintiff knew the risk and still participated in the activity


STRICT LIABILITY •

Ultrahazardous activities are so dangerous that the laws of negligence do NOT apply to them. Examples: – Wild Animals – Toxic Chemicals – Explosives


REMEDIES •

Compensation – Money Injunction – Ordering a person to do or not to do something


GOAL 3


Warm Up

• What is serious intent?

• Then open up your book and read pages 89-

93. Be ready to answer the section

assessment questions.


Acceptance

Unqualified willingness to go along

with the offer


Requirements of Acceptance

• Unconditional Acceptance

– Mirror Image Rule (IMPORTANT)

• Acceptance must “mirror” offer

• Any change means there is no acceptance

– Counteroffer

• Offeree makes an offer

• Offeror becomes offeree


Methods of Acceptance

• Contract accepted when sent, if same

method of communication used

• Contract accepted when received, if

different method of communication is used

• If method is stated in offer, it MUST be

used

• Action=Acceptance

• Silence cannot be a method of acceptance


Termination of Offer

• Revocation – Taking back of an offer by offeror

• Rejection – Refusal by the offeree

• Counteroffer – Any change in the terms of the

offer

• Expiration of Time – If the offer puts a time limit

on the offer and it has passed

• Death – Offeror dies

• Insanity – Offeror is declared insane


Capacity – legal ability to enter a contract

Majority – age of legal adulthood

Minor – not yet reached legal age

(minority)

NC Age of Majority = 18 years old

Voidable Contracts – minors may disaffirm

or avoid their contracts if they so choose

Infancy = minority = minor = under 18 yrs

old


Returning Merchandise – must be returned

if disaffirming a contract

Tender – offer to return

Misrepresenting Age – fraud

- if contract disaffirmed, you may be sued

for fraud


Disaffirming the Whole Contract - can’t

disaffirm parts of a contract

-- must disaffirm all or none

Disaffirming Contracts made with Minors

– both can disaffirm contact


Ratification of Contracts with

Minors

Ratify – approve contract

- after reaching majority age, a minor can ratify a

contract made while he or she was a minor

- ratification ends all rights given to a minor

Contracts for Necessaries – necessities – food,

clothing, shelter, and medical care

- responsible for the fair value of item


Ratification of Contracts with

Minors

Special Statutory Rules – minors have

capacity to buy car/life insurance

- married = adult

- limited capacity if you own a business

- renting apartment is a necessity


Other Contractual Capacity

Rules

Mentally impaired persons – if declared insane:

Prior to guardian being appointed – Contract is

voidable

After guardian appointed - all contracts are void

Intoxicated person – must not understand the

purpose, nature, or effect of the transaction

- fair value of necessities


Other Capacity Limitations

Convicts have certain limitations

Aliens – people who live in U.S. but own

allegiance to a different country

- limited capacity

ex: war


Capacity – legal ability to enter a contract

Majority – age of legal adulthood

Minor – not yet reached legal age

(minority)

NC Age of Majority = 18 years old

Voidable Contracts – minors may disaffirm

or avoid their contracts if they so choose

Infancy = minority = minor = under 18 yrs

old


Capacity to Contract

Returning Merchandise – must be returned

if disaffirming a contract

Tender – offer to return

Misrepresenting Age – fraud

- if contract disaffirmed, you may be sued

for fraud


Capacity to Contract

Disaffirming the Whole Contract - can’t

disaffirm parts of a contract

-- must disaffirm all or none

Disaffirming Contracts made with

Minors

– both can disaffirm contact


Ratification of Contracts with

Minors

Ratify – approve contract

- after reaching majority age, a minor can ratify a

contract made while he or she was a minor

- ratification ends all rights given to a minor

Contracts for Necessaries – necessities – food,

clothing, shelter, and medical care

- responsible for the fair value of item


Ratification of Contracts with

Minors

Special Statutory Rules – minors have

capacity to buy car/life insurance

- married = adult

- limited capacity if you own a business

- renting apartment is a necessity


Other Contractual Capacity

Rules

Mentally impaired persons – if declared insane:

– Prior to guardian being appointed – Contract is

voidable

– After guardian appointed - all contracts are void

Intoxicated person – must not understand the

purpose, nature, or effect of the transaction

- fair value of necessities


Other Capacity Limitations

Convicts have certain limitations

Aliens – people who live in U.S. but own

allegiance to a different country

- limited capacity

ex: war


Give up or promise to give up something you

are entitled to receive

Doing or promising to do something you have

a legal right to do

Forbearance

Not doing something you have a legal right to

do


t

Agreements without

ConsiderationPromise to make a gift

Gifts have no consideration

Cannot be enforced

Gift that has been given?

Doesn’t have to be returned

Donor – Gives the gift

Donee – Accepts the gift


Past Consideration

Consideration cannot already have been

completed

Promise to attend a social agreement

No consideration

However, in some instances (prom) there may

be grounds for a lawsuit You must show a loss

Exception: Prom


Courts don’t look at adequacy or value of an

agreement unless it is unconscionable

Unconscionable?

So lopsided that the average person would not

agree to terms


Pledges and subscriptions

Promissory Estoppel

Rely on what a person said

Elements:

Promise must bring action or forbearance

One who gave no consideration must have relied

on the promise

Injustice can be avoided only enforcing the

promise


• Unilateral Mistake

• An error on the part of one of the parties

• Cannot get out of contract

• Types:

• Nature of the Agreement

• Signing a contract you don’t understand or have not read

• This applies to signing a contract in a language you don’t

understand

• Identity of a Party

• Bound by contract with face to face meetings

• May be able to void a contract made NOT face to face


Bilateral Mistake (Mutual Mistake)

• Both parties are mistaken

• Types:

• Possibility of Performance

• Contract is impossible to perform Either party can void

contract

• Subject Matter

• Either party can void contract


• Deliberate deception for an unfair or unlawful

gain

• Define each word in bold


Deliberate: Done with or marked by full

consciousness of the nature and effects;

intentional

• Deception: The fact or state of being

deceived

• Gain: To secure as profit or reward

• In order to prove fraud, you must prove the

above 3 definitions


Proving Fraud:

1. False Representation of Fact

1. Must be a material (important) fact

2. Concealment (nondisclosure) may be considered

false representation

2. Representation Known to be False

3. False Representation Intended to be Relied Upon

4. False Representation Actually Relied Upon

5. Resulting Loss


INNOCENT MISREPRESENTATION

• Make an innocent statement of supposed fact

that turns out to be false

• Injured party has the right to rescind (take back)

the offer No rights to damages


Overcoming a person’s will by use of force

or by threat of force or bodily harm

• Economic Duress

• Threats to a person’s business or income

• Actual physical harm will void the contract

• Threat of physical harm will make contract

voidable

• A threat of exercising one’s legal right is

NOT duress Ex Threatening to sue

someone and you have right to sue, is NOT

duress


Civil & Criminal Statutes

– Agreements to commit a crime/tort are illegal

• Usury Statutes

– State sets a max interest rate

• Interest

– Fee the borrower pays to the lender for using the

money

• Usury

– Charging too high of an interest rate


Truth in Lending Act

– Lender is required to make clear the annual

percentage rate (APR).

• Gambling Statutes

– Discuss state laws

• Lottery vs Poker

• Sunday Statutes

– Illegal to perform certain contracts on Sunday


License - legal document stating that the

holder has permission from the proper

authorities to carry a certain trade or

profession

• (Example) - If license is only to raise

revenue (not to show competence) contracts

made are valid not void (Person w/out

license subject to arrest )


Agreements Contrary to Public

Policy

1) Outright contracts not to compete - seller

of a business may sign a restrictive

covenant which would be upheld by the

court

• Restrictive covenant - agreement not to

compete in a region for a period of time

*Only legal for a short period of time and

small geographic region


Agreements Contrary to Public

Policy

2) Price Fixing - competitors agree on certain

price ranges within which they will sell

their on prices

• Competitors may agree to sell a product at a

particular price

• Manufacturers may set a price at which a

product must be sold

• Price fixing is NOT enforced by the court


Agreements Contrary to Public

Policy

3) Agreements to defeat competitive bidding

• Bid - offer to buy or sell goods or services

at a stated price

• Law often requires govt to contract public

works or buy goods or services through

competitive bidding

• Agreement to bid above a certain price is

illegal


Effect of Illegality

• If the legal part can be separated from

illegal part, the court will separate

• If the legal part can’t be separated from

illegal part, the contract is void


6 Elements

❚ Offer

❙ Proposal by one party to another with

intent to create a legal binding

agreement

❚ Acceptance

❙ an unqualified willingness to go along

with the offer


GOAL 5


❚ Consideration

❙ Must exchange something of value in

order to create a bond

❚ Legality

❙ Must be permitted by law

❙ Courts will not enforce an illegal

contract


Serious Intent

❙ Must intend to make the offer

❙ Advertisements?

❘ No serious intent

❘ Known as an invitation to negotiate

❚ Definite and Certain

❙ Must use definite words

❚ Communicate to the Offeree

❙ Phone, fax, Internet, letter, etc


Complete

• All terms have been carried out properly and completely.

• Time

• Court will honor time request, if it is deemed “of the essence.”

• If not mentioned in contract, then a reasonable time will be

assumed.


Satisfactory

• Law requires that services be completed in a satisfactory manner.

• Reasonable person test

• Would a reasonable consider the work to done in satisfactory

manner?

• Substantial

• Slightly less than full performance

• Must meet the following rules:

• Acted in Good Faith

• Completed Major Components of Contract

• Only Minor Details Incomplete.


Mutual Release

• Each side releases the other side from the contract.

• Accord and Satisfaction

• Substitute one contract for another.


Discharge By

Impossibility of Performance

• Death or Illness in a Personal Service Contract

• Only allowed in Personal service contracts.

• What is personal service?

• Photographer

• Artist

• Any other contract must be completed.


Discharge by Operation of

Law

• Wrongful Alteration

• Any altering or changing of a contract will discharge parties to

the agreement.

• Statute of Limitations

• Individual states have a time limit on lawsuits to be filed.

• What is the only crime/tort that doesn’t have a time limit?


Legally transferring your RIGHTS in a contract.

• Assignor – party who transfers the right.

• Assignee – party to whom the right is transferred.

• No consideration needed.

• Must not change the obligations in the contract.

• Must be a RIGHT not a DUTY.

• Assignor is responsible for contract fulfillment.


Transfer a duty.

• Delegating party is still responsible for the contract being

fulfilled.

• Contracts that CANNOT be delegated:

• Promise to perform service personally.

• Exercise of personal skill or judgment.

• Contract prohibiting delegation.


Breach of Contract

• Wrongful failure to perform one or more promises in a

contract.

• Anticipatory Breach

• Notified that a party to the contract will not fulfill their part of

the contract prior to the required time of fulfillment.

• Lawsuit may be filed early in this case. Exception to the rules:

Refusal to pay money owed at a future date.


Money Damages

• Actual – Damages DIRECTLY related to breach.

• Compensatory – Award only for injuries suffered

nothing more.

• Consequential – Damages that DO NOT flow directly

from breach.

• Incidental – Reasonable expenses that INDIRECTLY from

breach of contract.

• Liquidated – Anticipated damages agreed prior to

contract being signed.

• Nominal – Award to proved legal injury but no actual

damages caused.

• Punitive – Damages in excess of losses suffered in order

to punish party for breach.

• Speculative – Damages awarded not on fact but on

expectations from contract fulfillment.


• Valid

– Legally good

• Void

– No legal force

• Voidable

– Not void, but may be voided by one party

• Unenforceable

– Some rule of law can not be enforced by the court.


Express

– Stated in words

– Written or spoken

• Implied

– Based on actions (not words)


Oral vs.. Written

• Oral

– Spoken words

• Written

– Write out exact terms


GOAL 5 •

What is the definition of a sole proprietorship.

● What is the definition of a partnership.

● What is the definition of a corporation


Requirements for Organizing - none

● Legal Status – owner is the business and it is

not a separate entity.

● Liability - unlimited

● Management – owner makes the decisions


Characteristics of Sole Proprietorship

● Dissolution – owner decides and the business

terminates upon the owner’s death

● Ease of formation – just do it!

● Duration – death or disinterest of owner

● Ability to attract professional managers - poor


am conducted out of

my home.

● I am conducted in my

basement.

● I am conducted in my

car.

● I need three or four

employees.

● I must have a computer.


● Requirements for Organizing – agreement of

the parties.

● Legal Status – not a separate entity in many

states

● Liability – unlimited liability (except limited

partnership

● Management – partners have equal say in

management unless otherwise specified in

agreement


Dissolution – terminates by agreement of

partners or

upon a partner’s death, withdrawal, bankruptcy.

● Ease of Formation – moderately difficult

● Duration – death, bankruptcy, or withdrawal of

any partner

● Ability to attract professional managers –

moderate.


There are more than 42 inclusions for a partnership

Agreement. Make certain that it includes the following

information:

● Parties to the agreement

● Specific nature, scope, and limits of the business

● Planned duration of the business

● Amount of each partner’s original investment and procedures

for future investments

● Provisions regarding salaries, withdrawal of funds, and the

division of profits; and

● Terms under which a partner may withdraw from the

partnership.


● Requirements for Organizing –

state charter, organizational fees

● Legal Status – separate entity from owners

● Liability – limited liability of shareholders

● Management – directors (elected by shareholders) set

policy and appoint officers

● Dissolution – ends when charter terminated

● Ease of Formation – assistance of legal counsel required

● Duration – can be perpetual

● Ability to attract professional managers - excellent


GOAL 6


■ Signature on the back of a negotiable instrument

■ Allow payee to cash, deposit or transfer payment

of the check to someone else

■ Proof that the payee cashed or transferred

payment of the check to someone else

■ Endorser is responsible for payment of the check

if the new owner cannot collect payment

■ Endorse should sign the check the way it is on the

front of the check and if the name is misspelled,

correct the signature directly up under the first

endorsement


Restrictive Endorsements

■ Limits use of check

■ Safest type of

endorsement

■ Can not be cashed by

someone who has

stolen the check

■ Safest way to send a

check through the

mail


Disclosure of Terms

Full disclosure of interest and finance charges

Does not limit percentage amount

True annual percentage rate (APR)

Does not apply to first mortgages


Challenging Unconscionable Contracts

Unfair and oppressive

Judge decides if conscionable

Refuse to enforce contract

Remove unfair clause and enforce contract

Limit clause’s application so no longer unfair


Prohibiting Abuse in the Credit System

Federal Equal Credit Opportunity Act

May not refuse due to sex or marital status

May not ask marital status if applying for

• • • •

• •

unsecured separate account May not prohibit a married female from opening/maintaining account in maiden name May not request information about birth control

practices or intentions Married persons with joint accounts have right

to have credit information reported in both

names


• • • •

Federal Fair Credit Billing Act Creditors must mail bills at least 14 days before due date Creditors must acknowledge billing inquiries within

30 days

Creditors must settle complaints within 90 days

Creditors may not send repeated letters demanding

payment until disputes over billing are settled

Credit cardholders may withhold payment for items

defective without being liable for entire amount owed

(purchases of $50 or more and 100 miles from home)


File the following with the court:

a. List of all creditors and amounts owed

b. List of all property owned

c. Statement about financial affairs

d. List of current income and expenses

2. Trustee is selected

3. Assets liquidated

4. Proceeds used to pay creditors

5. Money left over returned to debtor


Credit Cards and Charge Accounts

Unsecured form of credit

Interest Calculations

Adjusted Balance – Finance charges added after subtracting

• • •

payment Previous Balance – Finance charges are figured as if no payment was made

Average Daily Balance – Finance charges figured by adding

balances for each day in billing period and then divide by the

number of days in the billing period

Simple Interest = Principal * Rate * Time


Installment Plans

Secured – Collateral used to secure loan

Pledge – Creditor obtains possession of collateral by

written or oral agreement

Security agreement – Contract where debtor retains

possession of collateral under a written contract

Repossession – Taking back of items used to secure

loan when payment is not made

Unsecured – No collateral used


Closed end credit – Credit given for a specific

amount of money and payments are made.

Open end credit – Credit that can be increased by

debtor up to a limit set by creditor, a line of credit is

given.


Adjusted Balance = Previous Balance – Payments

Adjusted Balance * Interest = Finance Charge

Michael’s credit card has a balance of $150.00 and he makes a

payment of $50.00. The credit card company charges 7.75%

interest per month. What is the interest using the adjusted

balance method?

Adjusted Balance = $100.00

Previous Balance = $150.00

Payment = $50.00

Interest = 7.75%

Finance Charge = $7.75

$150.00-$50=$100.00

$100.00 * 7.75% =$7.75


1. Collateral – Property that is the subject of the loan

2. Cosigner – Helps protect a loan when a borrower’s

credit rating is poor

3. Secured Party – Lender or seller who holds

secured interest

4. Repossession – Property is returned because of

non-payment


No Collateral

2. Creditors make sure that debtor is reliable and

able to pay back loan

3. Example (Credit Cards)


1. Actual cost of finance charge must be known

2. Annual percentage rate

3. Liable for $50 unauthorized credit card purchases

made prior to notification


Loan Application

• Consideration

– Reputation for paying bills

– Source of regular income

– Competency

– Number of dependants

– Use of loan and for how long


Rules

• Cannot ask sex, race, national origin, or religion

• Cannot refuse on basis of sex or marital status

• Marital status may/may not be asked

• Do not have to disclose income from alimony or

child support unless relying on income

• May not be prohibited from using given names

(birth)


Interview

• Reference and credit check

– Request for credit

– Inaccuracy of credit report

♦ Acceptance/Rejection

• Must inform client within 30 days

• If denied, must provide, upon request, reasons for

denial within 60 days

• Cannot close account due to change in marital

status, unless person unwilling/unable to pay


GOAL 7 •

Relationship in which one person,

called an agent, represents another

person, called a principal, in some sort

of business transaction with a third

party. In most cases a binding

contractual agreement is formed.

Principal -> Agent -> Third Party

– Example: You picked up and paid for a

pizza ordered by a family member.


• • • •

TYPES OF AGENTS General Agent-given authority to perform any act within the scope of a business. Special Agent-employed to accomplish a

specific purpose or to do a particular job.

Subagents-appointed by another agent.

Agent’s Agent-has no power to appoint a

• • •

subagent but does so anyway. Coagents-two ore more agents hired by the principal.


RELATIONSHIPS ARE

CREATED

By agreement (contract)

By law (circumstantial or specific)

By statute (special interest of a state)


• • • •

• •

AGENCY RELATIONSHIPS Gratuitous Agent: agent works for free (no contract) Master: has the right to control the

conduct of his or her servant Independent Contractor: agent is

hired by the other party, but not

controlled


Continued

Partially Disclosed Agent: principal’s

existence but not identity is known to

the third party.

• • •

Fiduciary: relationship is based on trust. Actual Authority: real power the

principal gives to an agent to act on

his or her behalf


• •

Actual-real power given to agent Express-all orders, commands, or

directions given to agent when

relationship created

• •

Implied-understood acts or powers implied from express terms


Obedience-obey reasonable orders

Good faith-deal honestly

Loyalty-faithfulness or acting in best

• •

interest

Duty to account-accountable for all money entrusted to him/her


PRINCIPAL’S DUTIES TO

AGENT

Compensation-payment for services

Reimbursement-repayment for own

• • •

money spent Indemnification-repayment for amount lost

Cooperation-working together


TERMINATION OF

RELATIONSHIP continued

Notice to third parties

– Credit has been given to principal.

– Cash business has been done.

– No notice when third party never heard of

agency relationship.


Manages the wholesale price of natural

gas and electricity sold for interstate

commerce use.

Answers questions about increase in prices

State Utility agencies regulate prices

Manages transportation of electricity and

• •

natural gas

Ensures that regulated energy companies are following guidelines set by the law


• • •

Protects National Security Applies advanced science and nuclear technology

Protects economic security

Promotes supply and delivery of

reliable, affordable, and

environmentally sound energy


Responsible for environmental

protection

• •

Implements the Environmental Policy Act

Governs the environmental laws for

air, water, solid waste, toxic

substances, and noise pollution

Controls executive orders


• • •

Manages all federal antipollution programs Handles air, solid waste, toxic substances, and pesticides

Sets guidelines for program

Monitors programs

Establishes grants to help eliminate

• • •

pollution

Researches and sets national standards for programs Issues permits


Consists of a five member commission

One member is appointed by the President

Generates safety policies and regulations for nuclear

reactors and materials and allows the Executive

Director for Operations (EDO) to handle policies and

decisions of the commission

Issues licenses

Handles legal matters

Directs the activities of the program

EDO ensures safety of commercial use of nuclear

• • •

materials in the US Offices handle inspections, enforcement of laws, and emergency response programs licensees


Protects water quality

Does not handle ground water

Helps to reduce pollution in

waterways, wastewater treatment

plants, and control runoff pollution

Protects the fish, shell fish, and

wildlife in water


Tracks industrial chemicals

produced and imported into the US

Handled by the EPA

Screens, tests, and reports

chemicals that pose a threat to the

environment

EPA can prohibit the manufacture or

import of chemicals thought to be

hazardous


North Carolina Inactive Hazardous

Sites Response Act

• Protects NC from uncontrollable and

unregulated harmful wastes


NC Department of Environment and Natural

Resources (DENR)

• Prevents and protects North Carolina’s natural resources

• Protects air, water, and publics health

• DENR helps business, farmers, and local government,

and public keep the area safe


North Carolina Division of Waste

Management

• Controls disposal of solid waste, harmful waste,

underground storage tanks, and needed cleanups

• Works to reduce wastes

• Consists of a Solid Waste Section, Underground Storage

Tank Section, Hazardous Waste Section, Superfund

Section (controls waste risks and cleanups


Contract negotiated by the

employer and representative

of the labor union.


To certify, must have a

unanimous vote (50 %)

If lose certification vote, must

wait one year for another

vote


Employment is not for a stated amount of

time.

Employer, without being liable for breach

of contract, could fire the employee and

pay him or her for services rendered up

to the time of the firing (employee can

quit).

Unjust Dismissal

Employees have legal grounds against

employers who have treated them unfairly


Sets up a series of steps employees

must take to appeal an employer’s

decision that they feel violates just

cause.

• •

Due Process is a grievance procedure for government employees.


Wagner Act (National Labor Relations Act)

First federal law dealing with collective bargaining

Encourage collective bargaining, discouraged

unfair labor practices

Taft-Hartley

Prevents labor union from requiring an employer

to retain employees who are no longer need

Fair Labor Standards Act of 1938

Restricted child labor

Landrum-Griffin Act

Unions must register with Sec. of Labor and

submit year financial reports.


Relationships between

Employer-Employee

Labor-Management-unions formed to

in best interest of employee.

Collective bargaining agreement-labor

agreement between an employer and

the union.

Grievance procedure-steps to resolve

disputes


Relationships between

Employer-Employee continued

Professional contracts are generated

by professional or executives who

negotiate their own contracts


Terminating the Relationship

Employment-at-will occurs with the

termination of the job by the

employee or the employer


Fair Labor Standards Act:

Restricted child labor

Minimum wage

Time and a half overtime

Equal Pay Act: equal pay for equal

work


Labor Laws

Social Security: contributions by

employee and employer

Work Compensation Laws: provides

income if injured on the job (employer

bears cost of compensation)


Civil Rights Acts

Civil Rights Act of 1964:

Prohibits discrimination

Complain to the Equal Employment

Opportunity Commission (EEOC)

Civil Rights Act of 1991: new law that states

in disparate impact cases, the employer

has the burden of proving the existence of

business necessity. (employee eligible for

unemployment if discharged not for a

“cause”)


Types of Shops

Agency- receive union benefits

without belonging to union

Closed- must join prior to

employment

Union- must join with 1 year of

employment


Employment Acts

Age Discrimination Employment Act:

Forbids discrimination against any

person age 40 or older in hiring, firing,

promoting, or other aspects of

employment

Older Workers’ Benefit Protection Plan:

forbids discrimination against older

workers in handling their employee

benefit and retirement plans


Employment Acts

Americans With Disabilities Act:

Forbids discrimination on the basis of

a physical or mental disability if

disabled individual can perform

“essential function” of the job despite

the disability.


Statutory Rights of

Employees

Submit worker’s compensation

claim

Engage in legal union activities

Participate in state or federal

military service

OSHA whistleblower protection

Answer jury duty call or serve as

trial witness


Hazardous Occupations Not Available

To Minors:

Mining

Manufacturing explosives, brick, or

tile

Operating power-driven hoists

Logging and saw milling

Driving motor vehicles or acting as

an outside helper on such vehicles

(except for incidental, occasional,

and school bus driving)


GOAL 8


• •

The right to support, either emotional or financial, by one’s spouse when necessary

The right to inheritance from one’s deceased spouse

The right to property if the marriage fails

The right to file a joint income tax return

The right to compensation to continue one’s standard

of living, if the marriage ends.

The right to the division of community property


• • • •

• •

The duty of faithfulness to one’s spouse The duty to provide support, either emotional or financial, to one’s spouse when necessary The duty to refrain from bodily harm to those with

whom they live The duty to support their children, if there are any


• • • •

• • •

• •

A premarital agreement is an agreement between two people considering marriage Each party in the agreement must be honest about every aspect of the agreement

Not every marriage contract includes a premarital agreement A premarital agreement must be in writing and

signed by each party Also called prenuptial agreement


• • •

Common Law marriages require no witnesses or ceremony by anyone authorized Common Law marriages do not require a

ceremony but is typically considered when a man

and a woman share common residence for an

extended period of time (different by state,

typically 10 years)

Under Common Law, a published notice of an

upcoming marriage was called a marriage bann


One or both of the parties to a

marriage are absent and are

represented by an agent who acts

on their behalf

• • •

Absent due to military duty or serious illness Historically due to travel and

distance issues on arranged

marriages


The grounds for divorce vary from stateto-state but can include:

No-fault (the breakdown of the domestic relationship)

Adultery

Physical or mental cruelty

Desertion

Alcoholism or drug addiction

Nonsupport

Conviction of a felony

A few states have allowed for divorce based on

incompatibility

Impotency


The welfare of the child is the main concern of the

courts

• •

Many factors are considered when determining custody:

Parents’ wishes

Childs’ wishes

Child’s relationship with parents, siblings, and any other

person who may affect the child’s welfare

Child’s adjustment to home, school, and community

Physical and mental health of all involved


Nature of Insurance

• The concept of insurance involves risk

pooling or spreading losses over a greater

number of people.

• An insurance company collects and pools

premiums from many individuals or

businesses for the payment of future

claims.


Options for people to manage risk include

– Transfer part of risk of financial loss to an insurance

company

• Auto, life, health, disability, property insurances

– Retain (keep) the risk of financial loss using high

deductible

– Abstain or choose not to participate in risky activities

• Do not drive car, buy home, play sports, etc.

• People make decisions about insurance based

on their individual situation and risk tolerance.


Planned protection provided by sharing

economic losses

• Insurance does NOT stop the loss from

happening

• Insurance companies provide a risk

management service to consumers

• Insurance does indemnify or financially repay

the insured a portion of the loss

• All insurance policies have a specified limit of

coverage


nsurance is a highly regulated business activity

governed by the laws of each state

• NC Department of Insurance (NCDOI) handles:

– Consumer complaints

– Fraud investigations and prosecution

– Approval of requested rate increases/decreases

– Regulation of agent licensing requirements

– Censuring unethical/illegal actions of agents

• Head of NCDOI is the insurance commissioner


Make smart health care decisions

Research different health care providers

Be honest on applications

Be certain you understand all exclusions and conditions

Be aware of expiration dates, cancellation terms, and

• •

renewal policies Power of attorney: court document naming someone who

has permission to act on the person’s behalf in case of

illness or inability to perform their normal duties


Basic health insurance – a limited

medical insurance covering

hospital, surgical and medical

expenses. Limited by:

–Numerous exclusions

– Low maximum benefits

–Waiting periods


A broad medical policy covering

– Inpatient and outpatient hospital care

– Long term hospitalization

– Home nursing care

– Prescription drugs

– Physician visits

– Surgery

– Laboratory tests


Group plan through optional employer benefits

– Employer pays a portion of employee’s premium

– Employee has option to pay extra and include

dependents on the plan

– Insurer usually offers lower premium due to large

group (large risk pool spreads expenses so rates are

lowered)

– May also include vision and dental insurance

• •

Individual plan – Insured must choose plan and pay all costs


May require patient to pay :

–Annual deductible before insurer

pays anything

–A flat co-pay for doctor visits

–A %(10-30%) of the remaining

balance due

–A maximum out of pocket expense

each plan year


Health Maintenance Organization (HMO)

– Requires co-pays

– Patient chooses from list of approved service

providers

– Designed for preventive medical service

Preferred Provider Organization (PPO)

– Patient chooses from list of approved service

providers


Vision - coverage for care of eyes

Dental -coverage for care of teeth

Cancer-coverage for treatment of

• •

cancer

Hospital Indemnity - pays insured when in hospital


Medicare: Provides health coverage for

most people over age 65 and some

disabled persons, provides medical and

hospital insurance

• •

Medicaid: Covers certain individuals who need public assistance


• • •

The Americans with Disabilities Act Employers cannot discriminate against individuals with disabilities

The ADA defines a disabled individual as an individual who

has a physical or mental impairment that substantially limits

one or more of the major life activities

Indirect discrimination: includes using a qualification for

hiring that is not related to job performance, but is used to

exclude the disabled individual

• •

Direct discrimination: includes not hiring an individual simply due to their disability


Purpose: To protect the individual against

risk of losing income from regular

occupation due to illness or injury causing

disability.

Insured may buy a policy from a private

company.

Indemnifies for wages lost

– Proceeds (benefits paid) are not taxable

– Proceeds are 65% of normal wage


For private disability insurance, the

insured chooses:

– Short term or long term policy

– Total or partial disability options

– Elimination period - number of weeks

before claim is payable


– Elimination period or waiting period is the

number of days or weeks that the insured waits

before the insurer pays disability claim

– Form of risk retention

– Comparable to a deductible

– Cause and effect similar to a deductible:

Longer elimination period=lower premium

Shorter elimination period=higher premium


Benefits by an employer to provide retirement funds

to their employees

– Examples: 401K, SEP, Profit Sharing

Offered as a benefit, not required by law

Employers have the option to fund the plan by

themselves or require the employee to contribute

• • •

Vesting: act of giving a worker a guaranteed right to

receive a future pension Portability: ability to transfer pension benefits from one job to another


Can be set up by self-employed individuals,

or individuals who do not receive private

pension plans from their employers

Individual Retirement Accounts (IRA’s):

individual pension plans where a portion of

their income is saved each year

• •

• • • •

Only a certain amount of income is allowed to be placed in an IRA

The interest on the IRA is not taxed until the money is withdrawn Keogh Plans: set up by individuals who are sole-proprietors or in a partnership


• • •

Unemployment Insurance Social Security Act provides for joint federal and state unemployment system

Federal Unemployment Tax Act (FUTA)

State Unemployment Tax Act (SUTA)

– Both FUTA and SUTA taxes are paid completely by

employer

Monies are paid into a special fund for workers who

have been discharged without cause (lost their jobs

through no fault of their own)


• •

Unemployment Insurance Reasons workers are NOT covered:

– Violating a contractual employment obligation or

other discharges “for cause”

– Striking employees

– Quit voluntarily

– Refuse to accept similar replacement work


Worker’s Compensation

A government-regulated program that

provides medical benefits and income to

employees who are injured or who develop a

disability or disease as a result of their job

Indemnifies (pays) employee for their loss

Job related illness or injury

Coverage is no fault

Insurance is paid for by employer


• •

Worker’s Compensation Worker’s compensation indemnifies

employee for:

– Rehabilitation

– Related medical expenses

– Time lost from work

– Permanent damage from injury or illness


The at fault driver of a vehicle that

damages other property or injures other

people is liable for the cost of repairs.

• North Carolina financial responsibility laws

mandate that drivers carry bodily injury

and property liability insurance coverage


Bodily Injury Liability Coverage

– Bodily Injury Liability protects the insured

person from liability claims for injury to:

• People in other cars

• Passengers riding with the insured person

– DOES NOT cover the insured person (driver)


Property Damage Liability

– Property Damage Liability protects the insured

person from liability claims for damage to

property of others, such as:

• Personal property including vehicles, animals

• Business property including telephone poles and

other utility structures

• Government property such as bridges and other

road structures

• Real property

– Does NOT cover the insured person’s

property


al Auto CoverageCollision

• Although not required by financial responsibility

law, collision is

– Usually required by a lienholder if loan on vehicle is

not paid in full

• A lienholder is a bank, individual or loan

company who holds a secured interest in the

property until the loan is paid in full.

• Example: If car catches fire and loan is still

outstanding, the claim dollars are paid to insured

and lienholder.


• Insurance company may pay either the

– Cost to repair insured vehicle less deductible, or

– Actual cash value, market value or NADA

Bluebook value of a total loss vehicle less deductible

• The insurance company does not consider the

loan balance when settling a claim! The loan

balance is an issue for the owner. Loan balance

may be more than a vehicle’s value!


Comprehensive Auto Insurance

• Protects the insured vehicle against damage

from almost all damages except collision

– Fire

– Theft

– Vandalism

– Hail

– Windstorm

– Windshield damages

– Collision with wild animal including fowls

• Does NOT charge points when claim is filed


Medical payments - Covers anyone in

vehicle or hurt by vehicle, even if not

moving

– Ex: Broken finger by closing finger in door or

trunk, pedestrians

• Towing Expense - Pays tow fees

• Rental Reimbursement - Covers cost of

rental when vehicle being repaired due to

accident


Factors Affecting Cost of

Auto Insurance

– Type of coverage

– $ Limit of coverage

– Risk retention -Deductible amount

– Experience rating – how long driver has been

licensed (AGE IS NOT A FACTOR!!)

– At fault Accidents (Points)

– Tickets (Points)

– Type of Vehicle - Value, reparability, engine size,

style

– Geographic area- Urban, suburban, rural

– Use of Vehicle - Distance driven and purpose

– Company


Provides income to dependents or other

named beneficiaries in the event of the

insured person’s death.

• Face value- the amount of protection

stated in the policy

– Example: Marla buys a $100,000 face value

life insurance policy. Marla dies. Marla’ s

beneficiaries will get $100,000 in proceeds.


The policyholder names a beneficiary

• Can be an individual or business

• Beneficiary receives proceeds from a life

insurance claim.

• Proceeds is the money paid to a survivor

by a life insurance policy.

• Contingent beneficiaries named in the

policy are second in line if the

beneficiary is deceased.


Life Insurance Advantages

• Face amount is paid as proceeds to

beneficiary

• Proceeds are NOT taxable by income,

estate or inheritance tax laws.

• Proceeds are paid direct to beneficiaries.

• Proceeds avoid probate.


Term life is temporary insurance.

– Only pays if insured dies during policy

period

– Purchased for a specific term (one year or

multiple years)

– Usually renewable for another term

– Least expensive premium for most coverage

– Pure insurance, no savings add u


• Permanent insurance for lifetime of

insured.

• Premium is more.

• Excess premium creates savings called

cash value.

• Cash value can be:

– Withdrawn by policyholder as loan

– Used to buy more paid up insurance

– Used to pay current premium


Other Types of Life Insurance

Supplemental Information

• Limited pay life - stop paying after a

specified # of years without lapse

• Universal life - blend of term and whole

• Endowment - lump sum paid in advance

• Variable life - cash value builds in

investment chosen by policyholder

• Accidental death & dismemberment - for

deaths due to accident or loss of limb


Types of policies :

– Fire policies

– Renter’s policies

– Homeowner’s policies

– *Supplemental - marine insurance


Property and Casualty

Insurance

• Covers both individual and business

property such as:

– Real Property: Houses, apartments, condos,

office buildings and other structures

– Personal property: Jewelry, furniture, clothing,

equipment, artwork and other valuables


Fire Policy

• A very basic policy covering loss resulting

directly or proximately from an unfriendly

fire.

– Unfriendly or hostile fire is uncontrollable or

has escaped from the place where it should

be.

– A friendly fire is a bonfire, furnace fire, fire in a

fireplace unless it gets out of contro


Fire Policy

• Owner of property rented to others

protects investment in structure with a fire

policy. Owner has insurable interest in the

property, but not in tenant’s property.

• Examples:

– Apartment

– Condo

– Office building


Renter’s Insurance

• Covered under Homeowner’s 4 Form

• Person who rents real estate from another

but has personal contents on premise

carries renter’s insurance to insure:

– personal contents

– against liability risk

• Insurable Interest law applies. A person

can only insure his own property, not

another’s property.


• Provides coverage for:

– Home - Primary structure

– Personal property - Contents

– Related structures – Outbuildings, if any

– Loss of Use - Living expenses if insured can

not live there due to covered damage

– Premise personal liability – for injuries to

others who were on your property


Riders may extend policy for additional

coverage for items such as:

• Boats

• Jewelry

• Furs

• Artworks

• Antiques

• And other special collectibles owned by a

homeowner


• Must own home to carry policy forms:

– HO-1 Basic - covers limited perils

– HO-2 Broad – covers extended perils

– HO-3 Special - covers most perils with

specified exclusions

– HO-6 Condominium Owners – coverage like

an HO-3, but for homes with common walls

• Peril – a cause of loss


Homeowners policies require the insured

to carry a minimum of 80% of the value of

the home (called co-insurance) to get full

reimbursement for a claim made.

– Most claims are partial losses leading

policyholders to insure a home for less than

value since risk of total loss is low.


• In property insurance, there is a high probability

of a partial loss claim. The insurance policy

requires actual value of property be insured.

• Co-insurance requires an insured to cover a

minimum of 80% of the value of the property

• If less than 80%, the claim amount is reduced at

the time of payment


Marine Insurance

*Supplemental*

• Covers property exposed to perils of sea

transport:

– The vessel

– The cargo

– Other property

– Liability for the vessel

• One of first types of insurance covering ancient

traders in the Mediterranean Sea.

• The term “underwriter” coined from the process

of insuring the ships and cargo.


Inland Marine

*Supplemental*

• Covers personal property that is being

transport over land

• Transportation methods include:

– TRUCK

– TRAIN

– AIRPLANE

• Also covers property such as jewelry, furs,

fine arts, musical instrument etc wherever

located and during their transport.


Fidelity and Surety Bonds

*Supplemental*

• An insurance policy against a financial

loss due to dishonesty

– Pays the employer money in the case of theft

by employees

– Guarantees the honesty of employees who:

• Handle large sums of money

• Have access to customers money or assets


Lloyd’s of London

*Supplemental*

• An insurance company that covers unique

property and liability risks that are difficult

to insure.


GOAL 9 •

Bailment

• An agreement created by the temporary delivery

of personal property by the owner to someone

who is not the owner for a specific purpose.

• Both parties agree that the property will be

returned to the bailor.

• Bailee - has in their temporary possession

property that belongs to someone else.

• Bailor – owner of property who gives up

possession to someone else temporarily.


Examples of Bailments

• Leather jacket left at a dry cleaners

• Vehicle delivered to parking valet

• Goods transported by common carrier

• Truck taken to dealership for service check

• Diamond ring taken to jeweler for cleaning or

repair

• Leaving your clothes in dressing room while

trying on new sweater

• Goods delivered to a consignment shop


Mutual Benefit Bailments

• Invokes the duty of ordinary care on the bailee

• Results from a contract (for service, repair,

storage, rental) with consideration exchanged

• Both bailor and bailee receive benefit

• A pledge as security for a loan is also a mutual

benefit bailment

• Most bailments are mutual benefit


Bailment by Necessity

• Implied by law, a customer must give up

possession of property.

– Example: When you rent skates and leave

your own shoes while you skate

– Example: When you leave your clothes

temporarily in the dressing room while you try

on a new outfit


Other Bailments

• Gratuitous Bailment

– Free of charge (lend something to a friend).

– Only one party benefits

• Extraordinary bailment

– A common carrier or hotel is strictly liable for

damage to bailed goods


Rights and Duties of Bailee

• Rights:

– To hold a Mechanic’s Lien -the right to retain

property of another, if not paid for service

rendered

– To expect payment for services rendered

• Duties:

– Of reasonable care and protection of goods

while in custody of bailee

– To comply with terms of bailment


Rights and Duties of Bailor

• Rights

– to have goods protected

– to receive service as agreed upon

– to have goods returned in timely manner

• Duties

– to pay for service provided

– to warn of dangers or special care required

– to pick up goods in a reasonable time


Real Property

• Land and anything permanently attached,

including:

– Buildings, structures, fixtures

– Water, water rights

– Minerals on and below the surface of the earth.

– Trees & crops

– Air space above the surface


Rights of Ownership

• Possess, use and enjoy the property

• Dispose of, sell, consume, modify, insure or

destroy the property

• Give the property away by will after death

• Lease the property to a tenant


Property Rights

• Physical rights apply to:

– Surface (the right to occupy the land, and

develop it with buildings, etc.)

– Subterranean Minerals or Water (rights to

remove or conserve)

– Air (right extends into upper atmosphere-but

cannot exclude aircraft from flying over

property)


Price

• Consideration in sales contract. Items

used for consideration include:

– Money

– Services

– Other goods (barter)

– Real estate


Cash and Carry

• Sale where the buyer pays for the goods

and takes ownership of the goods upon

payment.

• Ownership transfers at the time of the

transaction.

• Risk of loss attaches upon receipt of

goods.

• Risk of loss- the responsibility for loss or

damage to goods


Is the seller a merchant or

casual seller?

• Seller (Vendor)

– Merchant- a seller who deals regularly in a

particular type of goods or who claims special

knowledge in a certain type of sales

transaction

• Why is a merchant held to a higher standard of

accountability than a casual seller?

– Casual Seller- any seller who does not meet

the definition of a merchant


Seller Comparison

• Merchant vs.

– Car dealership selling

new cars

– Clothing store at mall

selling new clothes

• Casual Seller

– Individual selling used

car after purchasing a

new one

– Person selling clothes

at a garage/yard sale


Price

• Consideration in sales contract. Items

used for consideration include:

– Money

– Services

– Other goods (barter)

– Real estate


Cash and Carry

• Sale where the buyer pays for the goods

and takes ownership of the goods upon

payment.

• Ownership transfers at the time of the

transaction.

• Risk of loss attaches upon receipt of

goods.

• Risk of loss- the responsibility for loss or

damage to goods


Rights and Duties:

Covenants of the Contract

• Covenant = Promise

• Affect both the landlord and the tenant

• May be express or implied

• Number and type vary depending on type of property


Renewals of Lease

• Tenancy ends at the expiration of stated

time

• Lease may have renewal clause making

provisions for renewal by the parties to

contract

• Agreement usually requires either party to

give advance notice of their intent to nonrenew the lease


Buisness Law Final Project Josh de Leon