Business law definitions

Business law definitions Business Law Assignment Common law and stare decisis Common law is all that law that is made by judges. It is initiated by citizens when they file cases in courts. Stare decisis is a term used in the common law to mean that decisions made in court cases should be based on previous decisions. It simply means that the decision should stand. It therefore means that in business, this is a principle that can assure a business person of the ruling of a case that is similar to the previous. Rulings in business cases are hence made predictable. Bailment It is where a person delivers his personals to someone else for safety keeping. Bailor is the one delivering property while the one receiving is the bailee. It involves delivery of goods to somebody else in trust creating a contract either express or implied. The bailee must be willing to possess the property physically but is not entitled to use it. In business transactions, the bailee has both the duty of care and responsibility to re-deliver the property. Statute of frauds This is a requirement that certain contracts like sale of goods that exceeds a certain value, land sale or a guarantee of debt be made in writing and then signed to prevent perjury and fraud. Two sophisticated business corporations may enter into a joint venture say of about 10 years. There are different negotiations that they engage in and one party promises that it will join the negotiations in time. In case the party fails to honor the negotiations, the second party (business partner in the venture) can use statute of frauds in a court case as an affirmative defense in breach of an agreed contract. Civil law versus criminal law Civil law deals with disputes between organizations, individuals and between these two where compensation is given to the victim. Criminal law/penal law is a body of common and statutory law and generally deals with crime and punishment of criminal offenses. Civil law is mainly applied in business when there are property disputes like real estates and landlord/tenant disputes. Criminal law in business mainly affects those who engage in alcohol intoxication and trafficking in controlled substances. A civil liability arises out of the relations that a business has with the individuals it deals with. Federal and state courts Federal courts are the courts established under U.S. constitution to deal with disputes arising out of constitution and laws that are initiated by congress. On the other hand state courts are established by states and normally have a broader jurisdiction. State courts are entitled to grant corporations a merit of limited liability. Since the time of Sherman Act, federal courts have been increasingly regulating the businesses. 1970s saw creation of three bodies by the federal government. These include Consumer Protection Agency, Environmental Protection Agency (EPA) and Occupational Safety and Health Administration (OSHA). Personal jurisdiction, subject matter jurisdiction and venue Personal jurisdiction refers to the requirement for a court to hear a case over the right parties involved in that case. Subject matter of the case is what has made rise to the case and this is what the court should deal with. On top of this, a roper venue should be selected to hear the case. Federal courts have limited SMJ. A business in dispute with another can only file a case and state the specific party in it and the main reason as to why they are filing the case is a requirement from the courts. In such a case, the case can only be heard in the appropriate federal district. Garnishment and execution Garnishment is a legal process through which property or money owed to a debtor or held by garnishee for the debtor is taken in order to pay the judgment. The most garnished properties are banks and wages accounts. Execution of judgment is enforcing a judgment legally through sale and seizing of debtors property. Just in case the garnishee is a bank, loan, savings or credit union, the creditor is supposed to produce a blank notice of right to claim exemptions. A business that wants to garnish wages for its employees must first obtain a judgment for the debts. This is because only a certain percentage of wages can be garnished. Garnishment of wages and execution of the same judgment is possible if the debtor in question is above poverty line. Mediation, arbitration and accord and satisfaction Assisted communications in any agreement is mediation. Arbitration is the legal process of resolving disputes outside the courts where the parties involved have agreed on it. It is mostly used in international commercial transactions where business disputes have risen. The third party chosen by the two parties is a neutral one. Accord and satisfaction refers to any purchase to be released from a debt obligation. Payment in such a case will normally be less than owed amount. Satisfaction is the consideration. An example is if a contractor is supposed to construct a building worth $6,000. The owner of the house after construction claims that inferior work lead to a building that did not match the pay to the constructor. A mutual settlement agreement of $4,000 is paid as full payment. This is a new contract created through offer, acceptance and consideration. Consideration is $2,000. Intentional torts, negligence and strict liability in tort A tort is a civil wrong. An intentional tort is a wrong that a defendant should have known or even knew that it would occur through their inactions and actions. Negligence torts will occur where the actions of a defendant are termed reasonable unsafe. Strict liability torts occur when an action causes damage, like in cases where a proprietor manufactures and sells a defective product. State law provides for the employer to compensate an employee injured in the job (strict liability). Intentional torts have damages that are broader than those in negligent torts. In business transactions, a difference arises between the intentional and negligent tort because the plaintiff must prove that defendant acted with intent. Requirements for an enforceable contract For a contract to be valid in a court of law whether its verbal or in writing, it has several requirements. An enforceable contract must have an offer, consideration and acceptance. Other requirements for an enforceable contract may also include consent, competence and legality. In any business contract, there must be a proposed deal which may remain open until the day the other party rejects, accepts or retracts it. A contract is voidable if it has got no acknowledgement and a bargained benefit. There are many business agreements but all those that bear no consideration or any of the requirements as outlined in business law are not contracts. The purpose of the uniform commercial code and its application to contract law The uniform commercial code is a body of legislation enacted so that the sale of goods and interstate commercial transactions can be facilitated in U.S. its essential elements normally address commercial transactions. This is usually in a single uniform code. Different states may apply UCC differently. It does apply to contracts in the sale of goods in different manners. In any commercial setting, any sale of movable goods requires the application of UCC. Sale of goods that require application of UCC usually involves a merchant. Click-Wrap Agreements and the electronic signatures in global and national commerce act Click-Wrap agreement is a common form of agreement that allows any user to go through the terms of agreements before acceptance. An electronic signature is any electronic sound, process or symbol associated and attached to a contract or record and is generally accepted and executed by those with intentions to sign the given record. In most bank transactions, PIN and passwords have been used to access an ATM or when one is purchasing merchandise on-line. E-sign is commonly used to permit parties in a contract take advantage of efficiencies in the digital world. Sole proprietorship, partnership, corporation and Limited Liability Company Sole proprietorship is a form of business owned and operated by one person called a sole proprietor. He has unlimited liability for all the business debts. He incurs all the losses alone and enjoys all the profits. A partnership is a form of business formed by a minimum of two and a maximum of 20 persons. It may be either general or limited. In a limited partnership, all general partners have unlimited liabilities but limited partners have limited liability for the debts while in a general partnership, all partners have unlimited liabilities (myownbusiness.org, 2003). A corporation is normally a form of business unit started and operated by the government. All investors in a corporation have limited liability. Limited liability companies are normally state run entities where all the members have limited liability. For income tax purposes, its taken as a partnership. Fee simple and life estate Fee simple estate is the absolute property ownership that entitles the owner to all the rights of that property. This applies to all property restricted by the private and law restrictions like covenants and zone ordinances. In this case, death of the owner results in the ownership transfer to the heirs (thismatter.com, 2005). Life estate, a freehold estate is where ownership of the estate is limited only to duration of a persons lifetime. This may be the life tenant or another designated individual. The owner of this estate has most of the benefits since he enjoys most of the ownership rights by possessing it, leasing it but this will automatically end whenever the life estate ends. Contrary to fee simple, a life tenant cannot pass the rights of ownership to the heirs. Warranty Deed and Quitclaim deed A warranty deed is a deed which states that the seller owns the given property and no liens in the property may be transferred over in case its old. It sets the record straight that the property is owned legally. Its a deed that ensures the buyer that he is dealing with the rightful owner of the property and thus no post purchase surprises. Its normally used in majority of property sales. In cases where another person claims the same property, the new buyer is entitled to compensation by the original owner. A quit claim deed is presented to the buyer by the person who holds responsibility of the property but not the owner. Such cases occur when death occurs and this property is passed on as inheritance. A buyer of the property is not given much protection by obtaining this deed like when he is provided with the warranty deed (fsboamerica.org, 2009). Adverse possession This is principle in real estate law which states that a person who may possess the land of another person in a given extended duration of time may be in a position to claim the title of that land. Where a business has been in possession of a given piece of land, they can prove adverse possession by showing that the possession was actual, hostile, exclusive, notorious, hostile, open, and continuous for the statutory period and under cover of claim. It is now commonly governed by statute and law. Its however stated that lands owned by the government are exempted from this principle. Where the land owner granted permission to the claimant in use of property the adverse possession claim is not deemed hostile and will thus fail. Employment at will versus TitleVII of the civil rights act of 1964 Title VII of the civil rights act of 1964 is an act that was passed so that it can protect people from being employment discrimination on the basis of religion, race, sex, color and national origin. This is a law that has been protecting job applicants and company employees. It applies to all companies that have 15 or more employees. Promotion s in companies cannot be decided on basis of race, color sex national origin or sex. All business are required to pay their employees in the same job group a uniform pay despite their different origins nationally, race, sex, religion or color. Employment at will means that the employer does not need a good cause to fire an employee. An employee employed at-will can be fired any time. Such an employee has limited legal rights to fight that termination. Most states except Montana have adopted have adopted policies that enable them to employ at will. The purpose of the securities act of 1993 and the purpose of the securities and exchange act of 1934 Securities act of 1933 was a federal legislation regarding sale of securities. Securities act of 1933 was enacted in order to provide more information about and within securities markets. Its a legislation that addressed for better disclosure where companies are expected to register with Securities and Exchange Commission. Its main purpose is thus to make sure that investors are receiving significant and material information about securities in public sale and prohibiting deceit fraud and other misrepresentations in sale of securities to public. Securities exchange act of 1934 created the SEC and it outlaws abusive and manipulative practices in securities issuance, required registration of brokers, stock exchanges listed securities and dealers and disclosure of certain financial information. Sarbanes-Oxley act This is a legislation that was enacted in 2002 in response to Enron and WorldCom financial scandals. Its manly used to protect the general public and shareholders from fraudulent practices and accounting errors. Its administered by the Securities and Exchange Commission (SEC). Common law legal system versus the civil law legal system In civil law system, legislation is the primary law source. As a result courts will usually base rulings on provisions of statutes and codes. When hearing business cases, courts normally reason merely on basis of general principles and rules in codes. On the other hand common law system use cases as the primary law source and statutes are taken as incursions and interpretations are narrow. Each an every state has a specific definition on doing business according to the common law. Foreign corrupt practices act Its provisions prohibit bribery of foreign officials of other governments by U.S. nationals prescribing record keeping practices and accounting. Any U.S. company that violates FCPA are fined up to $2million whereas individuals like directors and of companies and officers pay a fine of $100,000 and face imprisonment of 5 years or even both. In such cases there is imposition of civil penalties. References Fsboamerica.org. (2009). Warranty Deed vs. Quit Claim Deed. Retrieved from http://www.fsboamerica.org/Warranty-Deed-vs-Quit-Claim-Deed.cfm FMyownbusiness.org. (2003). Business Organization. Retrieved from http://www.myownbusiness.org/s4/ FThismatter.com. (2005). Estates in Land. Retrieved from http://thismatter.com/money/real-estate/estates-in-land.htm