Final Project Trey Manibusan Business Law Period 3A
Goal 1
Ethics and Structure • • • • • •
Ethics: 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: 1. Feelings and Opinions 2.The Greatest Good 3.The Golden Rule 4.Consequential Reasoning 5.Rule-based reasoning
Feelings and Opinions • Ethics are viewed as how a person feels about a certain situation • Ethics may also be based on what opinions are expressed about certain situations
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 more good that result, the more ethical the action taken The more bad the result, the less ethical the action taken
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 • Looks at alternative actions and it gives the final outcome of each action
Rule-based Reasoning • Makes a decision based on majority vote • Sometimes it is not the most ethical decision • Based around the U.S. Constitution
Legal Systems • U.S. 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. • International 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. This system is not shared by other countries. In other countries, many in Western Europe, support the fact-finding approach (victory is the primary objective).
Basics of the 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. • American law, like its people, is a blending of changing ideas and diverse cultures.
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
• • • • •
Greek Legal System • Philosophers debated ideals of justice • Circa 620 BC Draco, the Greek lawgiver, classified law into four areas: tort, family, public and procedural laws • “Rule of Law” should govern man, not other men • First legal system using a jury Included laws of commerce and property
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
Napoleonic Law • • • • •
Influenced by Roman Civil Law Established by Emperor Napoleon of France Transported to French Colonies Quebec Province, Canada Louisiana, USA
Common Law • Unwritten laws • Based on customs and traditions of people in a society
English Common Law • The King’s court of judges traveled in circuits around the countryside deciding cases. • Decisions were based on local customs and traditions. • The judges shared decisions with other judges so justice was served equally or “in common.”
Law of Precedent • Judges referred to decisions in previous common law cases. • Judges applied that decision to a new but similar case. • Thus, Law of Precedent established
Statutory Law • Common law was eventually written down • Legislative bodies adopted common laws • Common law became statutes.
Statutory Law • Statutory law is enacted (passed, created, ratified) by a governing body for a specific purpose. • Federal legislature • Creates statutes, acts • State legislature • Creates statutes • Municipal (city/town) government • Creates local ordinances and by-laws
Judicial Review • Precedent set by Marbury vs. Madison, 1803, gave court system the right to: • Review Lower Court Decisions • Review Statutory laws • Review Executive Branch
Constitutional Law • The US Constitution is the supreme law of land. – Any state or local law that conflicts with the US • Constitution is unconstitutional. – If unconstitutional, then law is null and void. • The Supremacy Clause, US Constitution Article VI
Who has supremacy? • A higher court prevails over any lower court decisions. • A federal law prevails over state laws. • State law prevails over municipal (town or city) ordinances. • Supreme Court determines questions of constitutionality.
Administrative Law • Administrative law is the regulations, orders, rules and decisions of administrative agencies. • Legislators create an administrative or regulatory agency. • Purpose is to regulate certain activities for the benefit of the public
Administrative Agencies • Are set up when expert knowledge is needed • Have a limited scope of power • Are subject to judicial review by the court system
•Goal 2
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.
Classifying a Crime • • • • • • •
According to Seriousness What is the most serious? Felony Imprisonment or death What is less serious? Misdemeanor Fine and/or probation
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 • Date rape (acquaintance rape)
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.
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
• • • •
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
Criminal Trial Procedures • • • • • • • •
Arrest of Defendant Rights of Defendant Miranda - constitutional right Bail - Lose money if you don’t appear Search and Seizure Must have warrant or permission Allowed limited search (frisk) Police can search or impound property if they have reason to believe (probable cause) that something illegal is in the car
Court 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
Court Terms • 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
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
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 acceptanc
Capacity to Contract • • • • • • •
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
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
Capacity to Contract 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
Consideration • Exchange of benefits and detriments by the parties to an agreements • Benefits • Something that a party was not previously entitled to receive • Detriments • Any loss suffered
Promises Enforceable Without Consideration 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
• • • • • •
DURESS • 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
Agreements that Violate Statutes • 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
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
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
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
4) Agreements to obstruct justice - any agreement to interfere with administration of justice (Example - protect someone from arrest; giving false testimony; bribing)
5) Agreements Inducing Breach of Duty or • Fraud - contracts that try to influence public officials 6) Agreements Interfering with Marriage contracts that discourage, harm, or interfere with good family relations
Goal 4
Discharge by Performance • 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.
• Tender of Performance • Tender – Offer to Perform • Must make tender even if you know the other party will not perform their part of the contact.
Assignment • • • • • • •
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.
Delegation • 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.
Characteristics of a Contract • 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 vs. Implied • Express – Stated in words – Written or spoken • Implied – Based on actions (not words)
Bilateral vs.. Unilateral • Bilateral – Contains two promises • Unilateral – Contains one promise
Goal 5
Characteristics of Sole Proprietorship • Requirements for Organizing - none • Legal Status – owner is the business and it is not a separate entity. • Liability - unlimited • Management – owner makes the decisions
• 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
• 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.
Principal Form of Business Organization - Corporation • 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
Endorsements • 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
Blank Endorsements • Signed with endorser’s name only • Can be cashed by anyone who has a check with a blank endorsement
Special Or Full Endorsements • Transfer payment to someone else • Can make a payment on a debt with this endorsement • Payee signs the check over to another person to receive payment
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
Laws Protecting Debtors • Setting maximum interest rates • Usually apply to loans of money • Some states govern charges imposed on credit purchases of goods/services “on time”
Laws Protecting Debtors • • • • •
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
Laws Protecting Debtors • 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
Laws Protecting Debtors 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 • • • •
Laws Protecting Debtors • • • • • • •
Federal Fair Debt Collection Practices Act Prohibits: Harassment of debtors Abusive and profane language Threats of violence Contract with 3rd parties Communication with the debtor at work
Chapter 7 Bankruptcy Procedure • 1.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
Drafts • Draft - An order by one person to another person to pay money to the order of a third person • Three parties to a draft: • A. Drawer – Orders the money to be paid • B. Drawee – One ordered to pay the money • C. Payee – One who is to receive the money • Acceptor - A drawee who has written “accepted” on the document and signed his/her name
• Types of Drafts: Sight Draft – A draft payable as soon as it is presented to drawee for payment Time Draft – Not payable until the lapse of a particular time period stated on a draft • Trade Acceptance – Used by a seller of goods to receive payment or to extend credit • Check – Draft drawn on a bank and payable on demand, can be called a demand draft • Honor – Pay when due • Dishonor – Refuse to pay when due • Stop Payment – Instruction for bank not to pay check
• Types of Checks Certified Check – A personal check that has been accepted by a bank before payment • Cashier’s Check – A check the bank draws on itself • Money Order – Draft issued by a post office, bank, express company, or telegraph company for use in paying or transferring funds for the purchaser • Traveler’s Checks – Draft drawn by a well-known financial institution on itself or its agent, used when traveling • Teller’s Check – Draft drawn by a bank on funds that it has on deposit at another bank
Negotiability Requirements • Must abide by UCC regulations • Must be in writing • Maker (party agreeing to pay money to another person) or drawer (party that orders the drawee to pay money to the payee) has to sign • There must be a definite amount money and time of payment known • Must have words such as “to the order of” or “to bearer”.
Competitive Banking Act • Funds from the following must be available on day after deposit – Checks drawn on US Treasury, State, or Local • Government – Bank Drafts – Cashier’s Check – Postal Money Order Funds from these must be available within 3 business days following deposit – Checks drawn on banks within same district Funds from checks drawn on banks in different districts must be available within 7 days
Types of Loans • Secured Loan • Creditors obtain an interest in something of value • 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
Types of Loans • Unsecured • Creditors obtain no collateral for loan 1. No Collateral • 2. Creditors make sure that debtor is reliable and able to pay back loan • 3. Example (Credit Cards)
Types of Loans • Single Payment Loan • Debtor pays off loan in one payment 1. Promissory Note - Written promise to repay with interest • Installment Loan - Paid in regular payments
Types of Loan Regulations • Truth in Lending Act Regulation Z • 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
Procedures for Borrowing Money 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) • • • • •
Procedures for Borrowing Money • 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
AGENCY • 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.
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
AGENCY RELATIONSHIPS, 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
AGENCY RELATIONSHIPS, Continued • Apparent Authority: agency by estoppel • Third Party: must be notified if an agency has been terminated • Consensual: both parties of a principal/agent relationship agree or consent to relationship
AGENCY RELATIONSHIPS, Continued • Agent is obligated to act in good faith (within the scope of the principal’s needs and wants). Therefore, a principal is not liable for criminal acts. • When an agency is created by statute (law), the agent is known as a statutory agent.
TYPES OF AUTHORITY • 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
Federal Energy Regulatory Commission (FERC) • 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
U.S. Department of Energy • Protects National Security • Applies advanced science and nuclear technology • Protects economic security • Promotes supply and delivery of reliable, affordable, and environmentally sound energy
Energy Reorganization Act • Energy Reorganization Act created the NRC • Controls licensing, constructing, and creation of nuclear reactors • Manages possession, use, transportation, and disposal of nuclear material • Controls all nuclear activities
Environmental Protection Agency (EPA) 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
• • • •
Clean Air Act • Established to protect public health and the environment • Was created by the US Environmental • Protection Agency to authorize the • National Ambient Air Quality Standards • (NAAQS) to assist in the creations of law to protect the environment • Handles problems such as acid rain, ground-level ozone, and air toxics
Clean Water Act • 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
Toxic Substance Control Act • 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 Regulations and Laws • North Carolina Inactive Hazardous • Sites Response Act • Protects NC from uncontrollable and unregulated harmful wastes
North Carolina Regulations and Laws • 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 Regulations and Laws • 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
Collective Bargaining • Contract negotiated by the employer and representative of the labor union.
Unions • To certify, must have a unanimous vote (50 %) • If lose certification vote, must wait one year for another vote.
Restrictive Employment Covenants • • • • •
Agreement not compete Restrict: Type of work prohibited Length of work Extent of geographic area
Laws • 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.
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”)
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.
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) Loading...MORE… Slaughtering or meat packing Operating circular saws, band saws, or guillotine shears Wrecking or demolishing buildings or ships Roofing excavating
Goal 8
Rights Relating to the Marriage Contract • 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
Premarital Agreements • 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 • 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
Prohibited Marriages • Prohibited marriages include, in most states, marriage between close relatives, marriage between those related by blood (consanguinity), or marriages related by marriage (affinity) • The Uniform Marriage and Divorce Act prohibits marriage between parent/grandparent, child/grandchild, brother/sister, uncle/niece, or aunt/nephew • Bigamy (two spouses at one time) and Polygamy (more than two spouses at one time) are prohibited
Health Care Issues 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 • • • • •
Types of consent • General consent: permission given for tests and treatments, the moment the patient enters the hospital • Informed consent: procedure which requires physicians to tell patients in advance of any risks involved in forthcoming treatment; must be in writing
Cost factors for Health Insurance • Type of policy – Limits and exclusions of coverage – Deductible/Co-pays –Group or individual plan – Age – Health – Company
Medicare and Medicaid • 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
Disability Insurance • 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
Disability Insurance • 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
Government Pension Plans • Can receive a percentage of social security by age 62, but the individual can receive full benefits at either age 65 or 67. • A person can receive social security benefits if their spouse dies. • Disability is considered a social security benefit. • Medicare is also considered a social security benefit • Railroad pensions • Military pensions • Civil service pensions
Social Security Disability • The D in RSDHI of Social Security benefits • Replaces income when a severe long lasting disability prevents eligible person from doing “any substantial work”. • Employer and employee match contribution into social security fund. • File claim through Social Security Administration • Six month required elimination (waiting) period • Only long term disability or terminal illness • Periodic review of status to continue benefits
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
Auto Claims • 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)
Collision Claim Payments • 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
Uninsured/Underinsured Motorist Coverage • Protects policyholder against drivers – Without insurance insurance to cover the loss suffered – Without enough insurance to cover the loss suffered • Examples: – Hit and run drivers – Drivers who let insurance policy lapse – Drivers involved in serious accidents who carry low $ liability limits of coverage
Cost of Insurance • Insurance companies legally discriminate by using: – Relevant statistical data and – Risk factors related to the insurance type • Underwriters at companies “rate” to determine the premium cost for the coverage requested. – Standard premiums may be rated up for hazards • Points for tickets or accidents on auto insurance • Health issues on life/health insurance
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
Property/Casualty Insurance • 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 control.
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
Homeowner’s Policy • 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
Homeowner’s (HO) Policy • • • • • • • •
Riders may extend policy for additional coverage for items such as: Boats Jewelry Furs Artworks Antiques And other special collectibles owned by a homeowner
Co-insurance • 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.
Cost Factors of Property Insurance • Limit of coverage for property • Location of property – fire district, city, county, state • Structural material - brick, block, frame • Previous claims filed • Company
Co-Insurance Clause * Supplemental* • 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. • Example: Insuring a $100,000 home for • $50,000 because the premium is cheaper and chances are there will ever be a total loss.
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 – Example: A company that cleans offices after hours might have a fidelity bond.
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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
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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
Tortious Bailee • What is a tortious bailee? – A party who wrongfully retains lost property or stolen property – A party who wrongfully uses a bailed article for a purpose other than that agreed upon by the parties • Examples: – Student who finds necklace and knows who it belongs to but does not return it to the rightful owner – Parking valet who takes your hot car on a joy ride – Dry cleaner’s employee who wears your leather jacket
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
Personal Property • Anything other than real property, including: – Clothing, jewelry, furniture, appliances in a home – Automobiles, ATVs, lawnmowers – Equipment & machinery used in business – Copyrights, patents, trademarks – Software, stocks, loans, mutual funds • Must be delivered in order to transfer ownership. • May be tangible or intangible.
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
Methods to Acquire Property • • • • • • •
Purchase contract – earn money and use it to buy Gift – includes intent, delivery and acceptance Intellectual labor – creation of property Inheritance – wills and trusts Accession – farm animals naturally increase Found property – lost or mislaid Occupancy – possession of property that belongs to no one else
Types of Deed • Quitclaim – Transfers a seller’s interest in a property but doesn’t warrant that the seller owns any interest • General Warranty Deed – Warrants the title – Most desirable for the buyer • Bargain and Sale Deed – Transfers title to property without giving warranties
Personal Property Transfers • Transfer of title (ownership) to property • Not all transfers require written titles – Purchases of goods from a retail store • Certain transfers have formal titles-Vehicles – Are registered with the state – MUST BE NOTARIZED – Require odometer reading disclosure statements – Require damage disclosure statements
Limits on Use of Property • • • • • • • •
Police powers by government Nuisance ordinances enacted by cities Zoning ordinances enacted by cities to regulate Health and public safety issues Certain physical rights Eminant domain Deed restrictions Easements
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)
Eminent Domain • Right to make private property into public if it is for the public good. • When highways are widened, private property is taken by eminent domain. • Owners are paid the fair market value of the property, but they cannot refuse to release property.
Limits on Use of Property • Restrictive Covenants – Deed restrictions – Example- a homeowners association restricts parking cars in the street • Easements for limited use – Example- Gas lines end at my driveway but a neighbor wants to build a new home on an adjacent lot. I can sign an easement release so the utility company can continue the line to his new home by crossing my property.
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
Price • Consideration in sales contract. Items used for consideration include: – Money – Services – Other goods (barter) – Real estate
Sale on Credit • Similar to cash and carry • EXCEPT payment is made at a later date by agreement of the parties. • Examples: – Appliances, furniture, vehicles – Usually bigger ticket items
Collect on Delivery (COD) • When price is paid at delivery: – Risk transfers to new owner – Ownership transfers to new owner • Until goods are delivered and price is paid, no transfer of risk or ownership.
Sales on Credit-Consumer • A sale that by agreement of the parties, calls for payment of the goods at a later date. • When a consumer buys goods on credit, but pays for them at a later date. – Examples: • When furniture, cars, appliances are bought on an installment credit plan • Any credit card or charge card purchase made by a consumer
Sales on Credit-Businesses • A business uses trade accounts to buy goods from another business with an agreement to pay for them at a later date – Example: • One business sends an invoice to another business, with whom they regularly trade with terms for payment. • Office Depot buys printers and supplies from Hewlitt Packard but does not pay before the goods are shipped to them. HP will send an invoice for the amount due and the terms of payment.
Sales on Credit-Businesses • Invoices- the bill for goods shipped • Terms- the statement of a due date of payment and any allowable discounts or late fees charged • Due date- the time the payment is due to the invoicing company • Discounts- a % reduction on the invoice price if the bill is paid within a specified time • Net – when 100% of an invoice is due, no discounting allowed • Late fees- a % add on to the invoice price if not paid on time
Transfer of Ownership • People who own goods have title to the goods. • Title is the right of ownership of goods. • True owners or titleholders may transfer goods. – If the seller of goods is a thief, the seller’s title is void. • Authorized persons or agents of the owner may transfer goods. (Examples: Merchant in a consignment sale or an auctioneer)
What are title documents? • A document of title is a written document giving the person who possesses it the right to receive the goods named in the document. – Bill of lading is a receipt for shipment of goods given by a transportation company to a shipper when the carrier accepts the goods for shipment – Warehouse receipt is given by a warehouse to a customer whose goods are stored in the warehouse. – Bill of sale is given to a buyer as evidence of ownership. (Property tax collectors may require a bill of sale to remove a sold vehicle from your tax bill. License tag offices may require bill of sale to transfer a vehicle title and issue a tag.)
Relationship between Landlords and Tenants • Parties to the contract to lease or rent – Lessor/Landlord – Lessee/Tenant • Tenant - Wants possession and occupancy free from interference or annoyance • Landlord – Wants rent money and property in good condition at the end of rental term
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
Security Deposits • A money deposit as security for payment of rent due or repairs for damages done by the tenant • Most landlords require one or two month’s rent in advance as security deposit • When lease expires, if all rent is paid in full and there is no waste, the security deposit is returned to tenant by landlord.
Payment of Rent • A critical issue to both parties. Be sure contract is clear on: – What is cost of monthly rent/lease? – When is payment due? – Is there a late fee if payment is late? – What constitutes “late”? – Is late payment grounds for breach of contract and termination of tenant rights?
Termination of Lease • If the contract has a specified term, it is a tenancy for years. • Leases can be terminated prior to the end of the term by either party, but penalty clauses may apply. • Breach of contract exists if the tenant chooses to vacate and the property cannot be leased to new tenant in a timely manner. • Landlord may sue for monetary damages. • Landlord must attempt to lease property and mitigate any damages from loss of rents.
Tort Liability • Applies to both landlord and tenant • May require responsibility for injuries occurring on the premise • Landlord is usually responsible for common areas where landlord is in control • Tenant is usually responsible for injury caused by defects in the portion of the premise over which he/she has control.
Breach of Lease and Remedies • Eviction – The landlord has the right to deprive the tenant of physical possession of the premises but landlord – Must obtain a court order allowing removal of tenant – Must provide just cause, such as: • Nonpayment of rent • Damage to property • Violations of lease provision • Lien may also be attached to tenant’s property to pay back rent or costs of repair due to waste
Breach of Lease and Remedies • Constructive eviction – When the landlord breaches his or her duties of the lease covenant, the tenant may consider the lease terminated, leave premise and cease rent payment • Example: Landlord deprives tenant of gas, electricity, or other fundamental service