Chapter 8: Crime

Chapter 8: Crime

General Information Why would it be important for you to understand this area of the law?Who can remember the definition of criminal law from the first lecture?Establishes duties, the violation of which is a wrong against the whole communitySo what is a crime?

General Information Any act or omission forbidden by public law in the interest of protecting society and made punishable by the government in a judicial proceeding brought by it.

General Information How can crime affect business?In what areas?What are some examples?Licensing crimesAntitrustSecuritiesInvestment regulationProperty

The Commission of a CrimeElement #1: Wrongful Act

Element #2: Criminal Intent

Actus ReusRefers to all of the non-mental elements of a crimeThe physical actThe consequences of the actThe circumstances under which it must be performed

Mens ReaRefers to the mental element necessary for the commission of a crimePurposefulKnowinglyRecklessly CarelessReckless

The Commission of a CrimeBoth essential elements must be present.If one element is missing, a crime has not been committed.What are some possible scenarios that involve these concepts?

NOW THAT WE KNOW THE DEFINITIONCLASSIFICATIONFELONYMISDEAMEANORAny crime punishable by death or imprisonment in a penitentiary.EXAMPLES: Armed robbery, money laundering, murder, extortion, etc.Any crime punishable by a fine or imprisonment in a local jailEXAMPLES: drug possession (small amount), some traffic violations, public disturbance, etc.

Ok..so who cares?Vicarious Liability

Liability of the Corporation

Liability imposed upon one person for the acts of another.Employers are vicariously liable for any authorized criminal act of their employees if the employer directed, participated in, or approved of the act.

A corporation may be liable for violation of statutes imposing liability without fault.a corporation may be liable where the offense is perpetrated by a high corporate office of the board of directors.EXAMPLES: Arthur Anderson and ENRON, WorldCom., etc.

Criminal ProcedureGeneral Thoughts

Here are some basic ideas to consider about criminal procedure:Evidentiary Matters4th amendment protects you(businesses) from illegal searches and seizures.A warrant is usually necessary to conduct a search must be as specific as possibleProbable Cause:MUST be probably cause to issue a warrantit is likely that evidence of a crime will be found in the place to be searched.Warrantless searchesPlain viewStop and friskEmergenciesAutomobilesLawful ArrestConsentNo Expectation of PrivacyWhat happens to evidence that is gathered without a warrant where there is NO exception?

Crimes that Harm BusinessesLarcenyEmbezzlementFraudArsonFalse PretensesRobberyExtortion and BriberyForgery

Crimes that Harm BusinessesLarcenyEmbezzlementDefinition: The 1. trespassory 2. taking and 3. carrying away of 4. personal property 5. of another 6. with the intent to deprive the victim permanently of the goods

Definition:The fraudulent conversion of anothers property by one who is in lawful possession of it.

Crimes that Harm BusinessesFraudArsonDefinition:The deception of another person for the purpose of obtaining money or property from that person.Fraud in the InducementFraud in the ExecutionExamples: wire fraud, insurance fraud Definition:The malicious use of fire or explosives to damage or destroy any real estate or personal property

Crimes that Harm BusinessesFalse PretensesRobberyThe crime of obtaining title to property of another making materially false representations of an existing fact, with knowledge of their falsity and with the intent to defraud.Examples: mail fraud, wire fraud, etc.

Larceny with the additional elements1. the property is taken directly from the victim or in the immediate presence of the victim2. the act is accomplished either by force or the threat of force

Crimes that Harm BusinessesExtortion & BriberyForgeryExtortion: blackmail the making of threats for the purpose of obtaining money or propertyBribery: the act of offering money or property to a public official to influence the officials decisionDoes not matter whether the bride is accepted or not.

The intentional falsification or false making of a document with the intent to defraud

Crimes Committed by BusinessesWorkplace CrimesHiring Illegal WorkersRICOMoney Laundering

Crimes Committed by BusinessesWorkplace CrimesHiring of Illegal WorkersSafety RequirementsOSHA Occupational Safety and Health Act of 1970Case Study: pg. 196

Employers are required to verify their workers eligibility for employment in the US.

Crimes Committed by BusinessesRICO

Racketeer Influenced and Corrupt Organizations ActPrevents gangsters from taking money they earned illegally and investing it in legitimate businesses.However, presently used more against ordinary businesses.RICO prohibits using two or more racketeering acts to accomplish any of these goals:1. investing in or acquiring legitimate businesses with criminal money;2. maintaining or acquiring businesses through criminal activity; or3. operating businesses through criminal activity

So whats the point?The point is:Businesses can (and are often) be the target of criminal activity.Knowing what the law says can help you in preparing for the worst.Understanding how your business impacts the law can help you better avoid breaking it.Remember, you/your business/your employees are ALL beholden to the law and do well to work within its confines.

YES.ALL OF IT!Chapter 9: INTERNATIONAL LAW

International LaWImportant Preliminary Concepts:This area of law is always changing.There are a great deal of ambiguities that exist within International LawWho makes it?Who enforces it?Where do you bring a claim?All INTL Law is only as good as the willingness of the entities who engage in it.In this chapter we will cover Trade Regulations and Concepts of International Trade, INTL Sales Agreements, and INTL Trade Issues

Trade RegulationThe United States exports goods every day to the far reaches of the world.Agricultural GoodsTextilesVehiclesElectronics: computers, chips, etc.Raw materialsARMS!!!!!Billions of dollars(or other forms of currency) exchange hands every year.So.youd better have some regulation and control around it.

Trade RegulationEXPORT CONTROLAll nations limit what may be exported.The US is no exception.Export Administration Act of 1985: balances free trade with national security.Why would 1985 be important? What was happening?..federal government to restrict exports if they endanger national security, harm foreign policy goals, or drain scarce resources.This is to protect the US economy and integrity.

Controlled Commodities Act:This is a list of items the US government has said meet that definition and therefore MUST be regulated.Any item that falls within the distinctions of the Exp. Admin.Act of 1985 can be traded, but ONLY with a license.In other words, Uncle Sam has to know about it!

Trade RegulationArms Export Control Act:permits the President to create a second list of controlled goods, all related to military weaponry. .no person may export any listed item without a license.Wait.we sell weapons?!?!?!?OH yeah!ATKLockheed MartinArmaLiteBoeingDetonicsTextron SystemsEtc.

These are US based companies that sell weapons domestically as well as internationally.Any problems with this?How many yes?How many no?What about international conflict?Afghan/Soviet Conflict

Trade RegulationOk. Well, we know the government puts restrictions on what we send out.But! What about the things we bring in?If national security interests weigh heavily into things we allow to leave our shores, how important is it to control what we bring in?IMPORT CONTROLSTariffs: ..the most widespread method of limiting what may b e imported into a nation.AKA: dutiesUsed to primarily protect domestic industriesPutting a tax on an incoming good drives the cost of the import up while the domestic product cost remains lower.People are more apt to buy the cheaper good. Is this a good thing?

Trade regulationsTariffs:Higher or lower tariffs depend on the countryFood stuffs are heavily regulatedWhy?They can change and vary depending the subject matter.How about wine vs. oil?US Customs classifies goods depending upon a variety of criteria.Once the classification takes place, they place the appropriate ad valorem duty on it.How could this affect you?

Trade RegulationsDumping

selling merchandise at one price in the domestic market and at a cheaper, unfair price in an international market.The US Commerce Dept. will investigate these claims.If the prices are less than fair, a duty is attached to the items.Textbook only looks at a foreign based company. Interesting!

Trade RegulationsSubsidizing

occurs when a government offers a domestic company a tax break that allows the company to produce their good at a much reduced cost.They then sell these goods to foreign markets with an unfair advantage.US attaches a countervailing duty to these goods.If subsidized company sells product at x and the cost would normally be y, then the US will charge z as a duty (y-x=z).

Trade Regulations: TreatiesRemember: the Executive Branch has the power to create treaties with foreign governments. However, two-thirds of the US Senate MUST approve it.Treaties can be created to deal with military cooperation, issues of peaceful significance, environmental issues, as well as cooperation in trade. Trade will be the focus for this discussion. However, trade can and has influenced the other areas. Likewise, the other areas have and will continue to influence trade.This is only one small reason for business owners to pay attention to areas that may seem to fall outside of the realm of business.

TreatiesGATTWorld Trade OrganizationGeneral Agreement on Tariffs and TradeInternational treaty begun in the 40s in an effort to remove barriers to international tradeGreat division surrounding whether this has been achieved or not.US proponents see the benefits of in buying products at a cheaper price, whereas US opponents say countries with lesser manufacturing standards are taking US jobs away.How?This is an organization to promote commerce AND to resolve disputes.But what resolution do they really provide.Textbook case: US-Import Prohibition of Certain Shrimp and Shrimp Products

TREATIESNAFTAThe European UnionNorth American Free Trade AgreementRegional agreement between US, Canada, Mexico .to eliminate almost all trade barriers between the three (3) nations.Proponents: increased trade, more profits for companiesOpponents: again, US workers have to compete with lower foreign manufacturing standardsone of the worlds most powerful associations, with a population of nearly half a billion people.Removal of trade barrierPromote free movement of people across bordersCollective good in mind dealing with agricultureCommon currencyWhat are some of the problems?

INTERNATIONAL sales agreementsImagine youre a US company looking for a new market half-way around the world. You have a great product.There is a demand for your product!What things must you consider?Where do you begin?

International sales agreementsThings to consider:What law governs?United Nations (CISG)Where do you bring a claim if theres a problem?Forum issuesWhose currency & language do we rely upon?Issues: currency values (projecting valuation to avoid have to pay more or receive less)How do the parties to the agreement strengthen the overall potential for success?Letter of Credit

International Trade IssuesMan.I didnt see that coming!BE AWARE!!!!Issues to be discussed:Repatriation of ProfitsExpropriationSovereign immunityAct of State DoctrineThe Foreign Corrupt Practices Act (FCPA)ExtraterritorialityRepatriation of Profits.occurs when an investing company pulls its earnings out of a foreign country and takes them back home.Some countries limit this process so as to keep more money circulating through its economy.Some countries provide unlimited repatriation to promote international companies investing in their economies. But happens if there is uncertainty?

International trade issuesExpropriationWhen a government takes property owned by foreign investors.Often involves the nationalization of an industry.US government historically has acknowledged that the expropriation of American interests is legal, provided the host government pays the owners promptly and fully, in dollars.Without this phrase, it could amount to confiscation.Sovereign Immunity.holds that the courts of one nation lack the jurisdiction (power) to hear suits against foreign governments.Foreign Sovereign Immunity Act (FSIA)A country can waive its right to sovereign immunityA plaintiff in the US can sue a foreign country engaged in commercial, but not political, activity.A plaintiff in this country may sue a foreign government that has confiscated property in violation of international law, provided that the property either ends up in the US or is involved in commercial activity that affects someone in the US.

International trade issuesForeign Corrupt Practices Actmakes it illegal for an American businessperson to give anything of value to any foreign official to influence a official decision.Done to combat bribery on an international level.\Bribery: cant do it anything of value AND no 3rd party conduitsRecordkeeping: MUST be kept by any company regardless of whether they engage in international trade done to prevent hiding bribesDoes NOT cover grease payments - interestingExtraterritorialitythe power of one nation to impose its laws in other countriesSo..If youre engaged in business that grows to the point you open a shop within China AND your workers are being forced to engage in mandatory health screenings the kind of which would violate US lawwhat happens?

ConclusionInternational law continues to change.It is uncertain and often only voluntary.Oh Yeah! And what army?You may open yourself to great rewards because of markets around the world.However, you MUST also understand the added risk of doing business beyond the borders.What would happen if you had to enforce a judgment against a foreign government?

Chapter 10Welcome to CONTRACT LAW!!!

Introduction to ContractsWhat is a contract?Who can give me examples?EXAMPLES:Student Loan ApplicationsCell Phone AgreementsLeases for ApartmentsUtility ApplicationsWhat about Drive Thru at McDonalds?What about the TERMS and CONDITIONS everyone always ignores with online purchases?

The fact isContracts are everywhere!!!!They affect you whether you know it or not!You cannot avoid them!You need to pay attention!There are many different kinds of contracts.Your responsibilities could change depending upon the type.Your business could be greatly affected depending upon the type.

First, what is the definition of a contract?a binding agreement that the courts will enforcea promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty

a manifestation of the intention to act or refrain from acting in a specified way

We will deal with two worlds of contracts in this class.The Uniform Commercial Code

The Common Law

The BIG book!This deals (mainly) with the sale of goods.

Most contract law is governed by individual state/common law.

So what are the requirements for a contract?The four (4) absolute necessities for a contract!ALL OF THESE MUST BE PRESENT TO FORM A CONTRACTThere are two (2) other characteristics that have an important role in contract lawConsent WritingWell get to these later.

MUTUAL ASSENTCONSIDERATIONCAPACITYLEGALITY OF OBJECTALL OF THESE MUST BE PRESENT TO FORM A CONTRACT

Now that we know what they are.how do we classify them?Contracts can be classified according to the various characteristics, such as method of formation, content, and legal effect.

1. Express or Implied2. Unilateral or Bilateral3. Valid, Void, Voidable or Unenforceable4. Executed or Executory5. Formal or Informal

1. Express or ImpliedExpressImpliedBy the way, ORAL contracts are binding in most places (this includes Mississippi).So, these are contracts in which the parties have manifested their agreement by oral or written language, or both.

This is a contract that is inferred by the parties conduct or action.NOT from spoken or written word

2. Unilateral or BilateralUnilateralBilateralA contract in which only one party has made a promise.Example: If you come and wash my car, I will pay you $50.00

A contract in which promises have been exchanged by at least two (2) parties.Example: I am selling my car for $5,000.00 and you promise to pay $5,000.00

3. Valid, Void, Voidable, and Unenforceable ContractsValid = this contract means that it meets ALL of the requirements for a contractVoid = this contract is not a contract at all it does NOT meet ALL of the requirements for a contractVoidable = this is a contract, but because of the manner in which it was formed or a lack of capacity of a party to it, the law permits one or more of the parties to avoid legal duties the contract createsUnenforceable = a contract, the breach of which, provides no legal remedy

4. Executed or Executory ContractsExecutedExecutoryA fully performed contract.

Where one party has not performed their obligation as of yet OR where both parties have yet to perform their obligations.It is a contract waiting to be performed

Finally..why is this important again?The backbone of business are the relationships built between parties.Contracts are often manifestations of those relationships.It is imperative to understand what goes into a contract in order to understand the responsibilities of each of the parties. Selling, buying, trading, sharing, etc.all have contractual implications. As a consumer you need to know what your rights are as much as the provider.The next chapter will begin to pick apart each element that make up a contract.

CHAPTER 11:MUTUAL ASSENT: Offer & Acceptance

Meeting of the mindsMUTUAL ASSENT:An agreement is a manifestation of mutual assent on the part of two or more parties.The manner in which parties usually show mutual assent is by offer and acceptance.The law applies an objective standard and is, therefore, concerned only with the assent, agreement, or intention of a party as it reasonably appears from his words or actions

MUTUAL ASSENTOfferAcceptanceAn offer is a definite proposal or undertaking made by one person to another which manifests a willingness to enter into a bargain.

Once an acceptance has been given, the contract is formed.It can only be made by the offeree (the person to whom the offer was made).

The Offer

Mutual AssentThe OfferEssentials for an offer:(1) It MUST be communicated to the offeree(2) It MUST manifest an intent to enter into a contract, and(3) It MUST be sufficiently definite and certain.

The OfferWhat does it mean to be communicated?the offeree must have knowledge that an offer was even madethe communication has to be in an intended manner in other words the offeror (the one making the offer) has to know that he/she is making an offerIn other words, both parties have to understand an offer has been made!

THE OFFERIntent: to have legal effect an offer must manifest an intent to enter into a contractThis is determined objectively from the words or conduct of the parties.A promise made under obvious excitement or emotional strain is not an offer. If we live through this, I promise I will..

The offerOther things to keep in mind:Preliminary Negotiations: going back and forth on potential contract terms OR haggling over a price is not in and of itself an offerInvitations to BargainPrice QuotesLetters of IntentIf, however, a communication creates in the mind of a reasonable person in the position of the offeree an expectation that his/her acceptance will conclude a contract, then the communication is an offer.

The offerOther things to keep in mind:Advertisements: if they merely announce the existence of goods for sale, describe the goods, and quote prices; it is NOT an official offer there are too many variables missing it is simply an invitation to the general public to make an offer to purchaseHowever, merchants cannot jack up advertised prices once interest has been garnered.Exception: The first 10 customers

The offer

How long can the offer last?

An offer confers upon the offeree a power of acceptance, which continues until the offer terminates.But when is that?

1. Lapse of Time2. Revocation3. Rejection4. Counteroffer5. Death or Incompetency of the Offeror or Offeree6. Destruction of Contractual Subject Matter7. Subsequent Illegality

Mutual Assent Once acceptance has been given, the contract is formed.If it is late or defective, a contract has NOT been formed. Could be a counteroffer.Bilateral vs. UnilateralAcceptance

AcceptanceCommunication of acceptance:Bilateral Contracts: requires offeree to communicate his/her acceptance to the offerorUnilateral Contracts: generally does not require a notice of acceptanceSilence as Acceptance: an offeree is generally under no legal duty to reply to an offer silence or inaction does NOT indicate acceptance of an offer.EXCEPTION: If that kind of business, trade, or dealing allows for silent acceptance, than its all good.

AcceptanceEffective Moment: an acceptance is effective upon dispatchWhy is this important?Acceptance by word of mouth vs mail!

SHOW ME THE MONEY!CHAPTER 12: Consideration

For your consideration?We have begun to discuss the FOUR (4) necessary elements of a contract.Mutual AssentConsiderationCapacityLegality of ObjectConsideration is the second stop on the list.What does it deal with?

ConsiderationThe inducement to make a promise enforceable.Could be something of valueCould be moneyCould be propertyCould be a promise to do somethingCould simply be a promise not to do somethingCould be a serviceConsideration is simply the value being exchanged between one or more parties which causes those parties to engage in the contract in the first place.

ConsiderationSo what makes up consideration?There are two (2) components (remember to keep your outline running here.)1. Legal Sufficiency2. Bargained for exchangeBoth of these MUST be present to satisfy the requirement of consideration.Well deal with those one by one, but first!

Legal SufficiencyBargained for - ExchangeTo be legally sufficient, the consideration exchanged for the promise MUST be either a legal detriment to the promisee OR a legal benefit to the promisor. In other words, in return for the promise, the promisee MUST give up something of legal value or the promisor MUST receive something of legal value. A performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise.Consideration

Legal SufficiencyThere are two sub-components of legal sufficiency:1. Legal Detriment doing something of which you had no prior obligation to do OR refraining from doing something of which you had no prior obligation to refrain from doing2. Legal Benefit the obtaining by the promisor of that which he had no prior right to obtainIMPORTANT Additional Issue: (Adequacy) the subject matter that the parties agree to exchange does not need to have the same or equal value; rather, the law will regard consideration as adequate if the parties have FREELY agreed to the exchange.

How does legal sufficiency look in different kinds of contractual situations?Unilateral contracts, bilateral contracts, Illusory promises, output/requirement contracts, exclusive dealing contracts, conditional promises, preexisting obligation, modification of a preexisting contract, substituted contracts

Unilateral ContractsBilateral ContractsIn this form of contract there a promise is exchanged for a completed act or a forbearance to actExample: Ryan promises to pay Shirley Cate $40 to mow the yard.In this form of contract both parties exchange promises. Each party is considered BOTH a promisor and a promisee.Example: Ryan promises to pay $20,000 to Erin and Erin promises to sell her car to Ryan.Each promise is consideration for the other promise. (Mutuality of Obligation)Legal Sufficiency

Illusory PromisesOut-put/Requirement ContractsRemember the word Illusory looks like Illusion.This is a promise that looks okay on the surface but actually does not have legal sufficiency.It makes a promise completely optional!Out-put: a sellers agreement to sell her entire production to a particular purchaserThis affords the seller an ensured marketRequirement: a purchasers agreement to buy from a particular seller all the materials of a particular kind he/she needsThis ensure the buyer of a ready source of inventory or suppliesThese are NOT illusory because it does not allow Legal Sufficiency

Conditional PromisesPreexisting ObligationA promise, the performance of which depends upon the happening or nonhappening of an event not certain to occur. A conditional promise is sufficient consideration unless the promisor knows at the time of making the promise that the condition cannot occur.What would be an example of this kind of contractual situation?When there is obligation to perform a promise already in existence, it can NEVER serve as consideration for a new promise.Example: preexisting contractual duty or public dutyLegal Sufficiency

Modification of a Preexisting ContractSubstituted ContractWhen parties to a contract MUTUALLY agree to modify a contract, the modification MUST have new consideration beyond that which has already been promised.With the UCC, there does NOT have to be new consideration as long as both parties agree to the modification.Parties can substitute a contract with a new contract in the following way:1. you must have the original contract, and2. an agreement of rescission, and3. the new contractNew consideration must be present in the new contract.Legal Sufficiency

Bargained for - ExchangeA performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise.In other words, gifts dont count!Smoking CasePast Consideration: when a promise is given for a past transaction, the element of bargained for exchange is absent.A promise made on account of something that the promisee has already done is not enforceable.Third Parties: consideration to support a promise may be given to a person other than the promisor if the promisor bargains for the exchange.Example?

Are they even contracts?What do contracts look like without consideration?

There are ALWAYS exceptions!Certain transactions are enforceable even though they are not supported by consideration.The include:1. promises to perform prior unenforceable obligationsExample: Debt barred by Statute of Limitations or Discharge in Bankruptcy2. promises that induce detrimental reliance (promissory estoppel)

Debt Barred by SOLDebt Discharged by BankruptcyIf the statute of limitations has run on the contract, a debt can be dismissed.However, if you re-promise it.youre on the hook again!Once a debt has been discharged through bankruptcy, you are free from that obligation.However, if you re-promise ityoure on the hook.Exceptions

ExceptionsPromissory Estoppel: if a party has relied upon a promise and put themselves in a detrimental position, courts will enforce non-contractual promises.This occurs where a gratuitous promise was made and the promisee has relied upon this promise and put themselves in a detrimentally different position.The promisor should know that the promisee would put themselves in that detrimental position and will, therefore, be held to the promise.

ConclusionsContracts MUST have some form of consideration.However, what the consideration is, might be different depending upon the contract.Remember, consideration is simply something of value.The parties to a contract decide what that value is.