Goal 1.0

Evolution of American Law

Laws are rules developed by a society in order to create order and justice.

Code of Hammurabi

• Circa 1750 BC

• Oldest known written code of laws

Judeo- Christian Influences

• The Ten Commandments

• The Bible

International Take on Laws

• In different countries laws are based on the religion of its people.

– Islam

– Hinduism

– Buddhism

Greek Legal System • Philosophers had debates

over the justice that laws should provide.

• Circa 620 BC Drako, the Greek law giver determined laws to be put into four categories: tort, family, public, and procedural.

• “Rule of Law” should govern man, not other men.

• First legal system using a jury.

Twelve Tablets

of Roman Civil Law

• Circa 450 BC

• Romans adapted Greek laws

• Applied to Roman citizens

• Civil Laws

• Civil Obligations

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

The Magna Carta

• 1215 AD

• Established English constitutional liberties

• Basic human rights

• Protection from abuse by government

English Common Law

• Developed in 12th Century England

• Unwritten law based on local customs

Napoleonic Law

• Influenced by Roman Civil Law • Established by Emperor Napoleon of France • Transported to French Colonies – Quebec Province, Canada – Louisiana, USA

Constitutions

• A document which spells out the principles

by which a government rules and the

fundamental laws that govern a society

• American constitutions

– US Constitution (1787)

– Each state has a constitution

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:

Feelings and Opinions The Greatest Good The Golden Rule Consequential Reasoning Rule-based reasoning

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

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. 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). • In many other countries, the court system is tied in with the legislative and executive branches. Many countries use religion as a basis for the law, such is the case in Saudi Arabia, where Muslim and the law are tied together.

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

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)

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

• Physical or mental abuse

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.

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.

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

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

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

Strict Liability

• ■ Ultra hazardous activities are so dangerous that the laws of negligence do NOT apply to them.

• ■ Examples:

• – Wild Animals

• – Toxic Chemicals

• – Explosives

Goal 3.0

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 years 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

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 - 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

MISTAKE

• • 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

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

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

Goal 4.0

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. • Destruction of the Exact Subject Matter • • If the subject matter is essential to the contract then

it will be discharged. • • Illegality • • Any illegal contract is void.

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.

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.

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.

Injunction

• • Court order that prevents a party from performing an act.

• • Temporary or Permanent.

• • Violators are in contempt of court.

Goal 5.0

Principal Form of Business

• Organization-Sole Proprietorship • 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

Principal Form of Business

• Organization-Partnership • ● 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.

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

– Domestic-chartered in a specific state – ● Foreign-chartered in one state but doing business in another state – ● Alien-chartered in another nation but doing business in a state

Goal 6.0

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

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”

• Full disclosure of interest and finance charges

• Does not limit percentage amount

• True annual percentage rate (APR)

• Does not apply to first mortgages

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

Sources of Credit

• 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

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

Single Payment Loan

• Debtor pays off loan in one payment

• 1. Promissory Note - Written promise to repay with interest

• 2. 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

Equal Credit Opportunity Act

• 1. Applying for credit

• 2. Granted only on the ability to repay

• 3. Evaluation of application

• 4. Cannot discriminate based on gender, age, ethnicity, or religion

• 5. Acceptance and rejection

• ♦ Based on income, current debts, or poor credit record

Goal 7.0

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

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

• 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

• 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

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

Employment at Will

• 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.

Goal 8.0

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

Duties Relating to the Marriage Contract

• 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

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

Ceremonial Marriages

• Ceremonial marriages are typically used to make a marriage official (solemnize)

• Ceremonial marriages must be administered by someone who has authority (judge, ordained minister, sea captain, and in some states notary public)

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 ban

Proxy Marriages

• 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

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

Grounds For Ending a Marriage

• Marriages can end either by:

• Death

• Annulment

• Divorce

Life Insurance

• • 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.

Goal 9.0

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.

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

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

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

Implied Covenants

• • Implied warranty of habitability by landlord

• – May be enforced by city housing codes

• – Health and safety of citizens is considered

• – Duty of landlord to provide property free of defective conditions

• • Waste - The landlord expects reasonable wear and tear by tenant, but unreasonable damage is called waste and tenant can be required to pay the cost to repair waste.

Assignment and Subletting

• • Assignment and subletting

• – When a tenant transfers the remaining period of time on a lease to another party

• • May or may not be allowed by landlord

• • May have to get prior approval by landlord