busniess law project
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magazine finalTRANSCRIPT
ETHICS AND STRUCTURE
Objective 1.02
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.
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
NAPOLEONIC LAW
• Influenced by Roman Civil Law
• Established by Emperor Napoleon of
France
• Transported to French Colonies
– Quebec Province, Canada
– Louisiana, USA
• Legal systems following Napoleonic Code
– Modern day Quebec, Canada
– Modern day Louisiana, USA
– Did not accept the entire Uniform Commercial
Code (UCC)
– Louisiana has modified many state laws to
correspond with 49 other states for uniformity
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
SOURCES OF AMERICAN LAW
Common Law
Law of Precedent
Statutory Law
Federal and State Constitutions
Administrative Law
COMMON LAW
• Unwritten laws
• Based on customs and traditions of people in a society
• Colonists brought English Common Law doctrines with them to America.
• Primary basis of American legal system
Adopted by US legal system
• Common law developed into a legal system
modeled by nations around the world
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
STATUTES
• 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
• All statutes-
– Are subject to review by
judicial system
– Must be constitutional -
cannot conflict with the
United States Constitution
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 VIWho has supremacy
RIGHTS OF CITIZENS
• US Constitution guarantees rights to
citizens
– Bill of Rights – Individual rights
– Rights of Representation
– Arrest/Trial Rights
– Suffrage (Voting) Rights
– States Rights
– Right to amend Constitution
DUTIES OF CITIZENS
• Duty of Citizens
– #1 Allegiance to country
• Breach of Duty
– Treason-disloyalty to country
– Expatriation-the act of abandoning one’s
country
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 (REGULATORY)
AGENCIES
• HAVE THE POWER TO: ADMINISTRATIVE AGENCIES
– Make rules
– Enforce rules
– Investigate violations
– Decide guilt or innocence
of violators
– Penalize those convicted
– Order actions to sto
• Are set up when expert
knowledge is
needed
• Have a limited scope of
power
• Are subject to judicial
review by the court
system
GOAL 2.0 NOTES
CRIME
An act against the public good NOTE: Each statute that defines a
crime must specifically explain
the conduct that is forbidden by
that statute.
No act can be considered a
crime unless it is prohibited
by the law of the place where
it is committed and unless the
law provides for the
punishment of offenders.
4 PUNISHMENTS FOR A CRIME?
Imprisonment
Fine
Probation
Community Service
Combination of the above
PARTICIPANTS OF A TRIAL
Plaintiff? (2)
-Government
-Prosecutor
Defendant (1)
-Person accused of the crime
CLASSIFYING A CRIME
ACCORDING TO SERIOUSNESS ELEMENTS OF A CRIME
What is the most serious?
Felony
Imprisonment or death
What is less serious?
Misdemeanor
Fine and/or probation
Criminal Act
-Must violate a statute
Required state of mind
-Depends on crimes definition
Motive is NOT required
TYPES OF CRIMES
Crimes Against People
Social Crimes
Crimes Against Property
Business crimes (White Collar)
CRIMES AGAINST PEOPLE
Murder
Malice aforethought?
1st degree—aggravated (premeditated, cruelty,
torture, rape, robbery, kidnapping)
2nd degree—non of the above conditions apply
Manslaughter
Voluntary?
Intentional
Involuntary
Occurs while committing an unlawful or reckless
act
CRIMES AGAINST PEOPLE-CONTINUED
Assault - Attempt (pointing or shooting at someone)
Aggravated (Usually felony)-using deadly weapon with
intent
Simple (misdemeanor)
Battery
Hitting
Kidnapping
Unlawful removal against person’s will
Sex offenses
Statutory rape
Date rape (acquaintance rape)
SOCIAL CRIMES
Federal/State governments have the right to
regulate health, safety, welfare, and morals of
the people.
Drug Use
illegal and harmful substances
Addiction-inability to function normally
Alcohol Use
Domestic Violence
Physical or mental abuse
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.
ASSIGNMENT FOR THE ATTORNEYS
You are hereby assigned the following
responsibilities:
Write a narrative (1 page minimum)
summarizing what you learned from the unit
on Criminal Law and its impact on your life.
Take a posttest on the objective to measure
what you should know about the subject
matter.
Discuss results with teacher and prepare to
retest if the need occurs.
Court is dismissed!
GOAL 3.0
ACCEPTANCE
Unqualified willingness to go along with the
offer
REQUIREMENTS OF ACCEPTANCE
Unconditional Acceptance
– Mirror Image Rule (IMPORTANT)
• Acceptance must “mirror” offer
• Any change means there is no acceptance
Counteroffer
• Offeree makes an offer
• Offeror becomes offe
METHODS OF ACCEPTANCE
• Contract accepted when sent, if same
method of communication used
• Contract accepted when received, if
different method of communication is used
• If method is stated in offer, it MUST be
used
• Action=Acceptance
• Silence cannot be a method of acceptance
TERMINATION OF OFFER
• Revocation – Taking back of an offer by offeror
• Rejection – Refusal by the offeree
• Counteroffer – Any change in the terms of the
offer
• Expiration of Time – If the offer puts a time limit
on the offer and it has passed
• Death – Offeror dies
• Insanity – Offeror is declared insane
CAPACITY 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
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
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
LICENSING STATUTES
License - legal document stating that the
holder has permission from the proper
authorities to carry a certain trade or
profession
• (Example) - If license is only to raise
revenue (not to show competence) contracts
made are valid not void (Person w/out
license subject to arrest )
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
BILATERAL MISTAKE (MUTUAL MISTAKE)
• Both parties are mistaken
• Types:
• Possibility of Performance
• Contract is impossible to perform Either party can void
contract
• Subject Matter
• Either party can void contract
4.0
METHODS TO
TERMINATE A
CONTRACT
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.
DISCHARGE BY AGREEMENT
Mutual Release
• Each side releases the other side from the
contract.
• Accord and Satisfaction
• Substitute one contract for another.
DISCHARGE BY
IMPOSSIBILITY OF PERFORMANCE
• Death or Illness in a Personal Service Contract
• Only allowed in Personal service contracts.
• What is personal service?
• Photographer
• Artist
• Any other contract must be completed.
DISCHARGE BY OPERATION OF
LAW
• Wrongful Alteration
• Any altering or changing of a contract will discharge parties to
the agreement.
• Statute of Limitations
• Individual states have a time limit on lawsuits to be filed.
• What is the only crime/tort that doesn’t have a time limit?
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 cour
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
ORAL VS.. WRITTEN
• Oral
– Spoken words
• Written
– Write out exact terms
05.01 Understand the Types of Ownership
UNDERSTAND THE TYPES OF OWNERSHIP
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
TYPES OF CORPORATIONS
● 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
6.01
TYPES OF NEGOTIABLE INSTRUMENTS
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
LAWS PROTECTING DEBTORS
SETTING MAXIMUM INTEREST RATES DISCLOSURE OF TERMS
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
LAWS PROTECTING DEBTORS
Creditors must mail bills at least 14 days before due
date
Creditors must acknowledge billing inquiries within
30 days
Creditors must settle complaints within 90 days
Creditors may not send repeated letters demanding
payment until disputes over billing are settled
Credit cardholders may withhold payment for items
defective without being liable for entire amount owed
(purchases of $50 or more and 100 miles from home)
07.01
AGENCY LAW
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
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
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
AGENT’S DUTIES TO
PRINCIPAL
Obedience-obey reasonable orders
Good faith-deal honestly
Loyalty-faithfulness or acting in best
interest
Duty to account-accountable for all
money entrusted to him/her
PRINCIPAL’S DUTIES TO
AGENT
Compensation-payment for services
Reimbursement-repayment for own
money spent
Indemnification-repayment for amount
lost
Cooperation-working together
TERMINATION OF
RELATIONSHIP
By operation of law
– Death of principal or
agent
– Bankruptcy
– Impossibility of
performance
– Agent’s objective
becomes illegal
Termination of acts
– Performance
– Mutual agreement
– Agent’s withdrawal
– Agent’s discharge
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
NATIONAL ENVIRONMENTAL POLICY ACT
(NEPA)
Fights Pollution and cleans the
environment
Explains consequences for environmental
violation
Prevents or eliminates damage to the
environment
Requires federal agencies to integrate
environmental values by creating
Environmental Impact Statements each
week that are posted every Friday on the
website
NUCLEAR REGULATORY COMMISSION
(NRC)
Consists of a five member commission
One member is appointed by the President
Generates safety policies and regulations for nuclear
reactors and materials and allows the Executive
Director for Operations (EDO) to handle policies and
decisions of the commission
Issues licenses
Handles legal matters
Directs the activities of the program
EDO ensures safety of commercial use of nuclear
materials in the US
Offices handle inspections, enforcement of laws, and
emergency response programs licensees
CLEAN AIR ACT
Established to protect public health and
the environment
Was created by the US Environmental
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
Objective 8.01
DOMESTIC RELATIONS LAWS
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 prop
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 bann
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
ANNULMENT
The grounds for annulment include either
spouse lying about:
Pregnancy
Freedom from disease
Willingness to have a child
Past Marriage
Age
DIVORCE
The grounds for divorce vary from stateto-state but can include:
No-fault (the breakdown of the domestic relationship)
Adultery
Physical or mental cruelty
Desertion
Alcoholism or drug addiction
Nonsupport
Conviction of a felony
A few states have allowed for divorce based on incompatibility
Impotency
ALIMONY
An allowance made to a divorced person by his
or her former spouse for support
Set during the court settlement
The judgment of the court
SUPPORT AND CUSTODY OF CHILDREN
The welfare of the child is the main concern of the courts
Many factors are considered when determining custody:
Parents’ wishes
Childs’ wishes
Child’s relationship with parents, siblings, and any other person who may affect the child’s welfare
Child’s adjustment to home, school, and community
Physical and mental health of all involved
Joint custody may be awarded
If one parent receives custody, the court will then set child support payments for the other parent.
If child support is not paid, a parent locator service is then used to help collect the unpaid child support payments
Objective 08.02
INTRODUCTION TO
INSURANCE
NATURE OF INSURANCE
• The concept of insurance involves risk
pooling or spreading losses over a greater
number of people.
• An insurance company collects and pools
premiums from many individuals or
businesses for the payment of future
claims.
RISK MANAGEMENT
• All people take risks every day.
• Risk management is the process of
managing one’s exposure to risk.
– Examples
• Using a seat belt
• Installing smoke detectors
• Driving a vehicle
• Playing sports
• Purchasing an insurance policy
ADHESION CONTRACT
• An adhesion contract is a standard form contract that is written
primarily by one party
• Insurance policies are adhesion contracts
• Policyholder (buyer) cannot usually change:
– Policy language
– Perils covered
• Policyholder can change:
– The dollar limit of coverage
• Example- $200,000 coverage on homeowner’s structure
– Specific items to be covered
• Example- 1 carat diamond ring, valued at $3000
• Some adhesions contracts are found by courts to be
unconscionable if they take advantage of one party
INSURANCE
• Planned protection provided by sharing
economic losses
• Insurance does NOT stop the loss from
happening
• Insurance companies provide a risk
management service to consumers
• Insurance does indemnify or financially repay
the insured a portion of the loss
• All insurance policies have a specified limit of
coverage
INSURABLE INTEREST
A financial interest in property or a
person’s life that permits someone to buy
insurance to protect against the financial
loss of that property or person’s life
• Examples:
– You can insure cars owned or leased by you,
but not a car belonging to another person
– You can purchase life insurance on someone
whose death would be a financial loss to you,
ie spouse, business partner, parent, child
PREMIUM
NON-PAYMENT OF PREMIUM
The amount of money the policyholder
must pay for insurance coverage
• An insurance underwriter determines the
cost of the policy using risk factors and
statistical data
• An agent represents the company to the
consumer
• Equals consideration in the insurance
contract
If the premium is not paid, the policy may
lapse or cancel, voiding the contract
• If claims are made after a lapse, the
claim is denied
• Some policies have a grace period
– Late premiums are received and
– Policies are reinstated
CLAIMS
The request for payment from an
insurance company to cover the financial
losses
• Examples:
– Automobile-car accident
– Medical-doctor’s appointment
– Life-covered person dies
– Disability-out of work for health reasons
– Unemployment-laid off from job
DEDUCTIBLES
Most policies have a self-insured portion of the
cost of the claim that is paid by the insured.
– The insured chooses the amount of risk retained by
choosing the deductible amount
– Deductible
• On auto coverage, the amount the insured pays before the
insurer pays collision or comprehensive damage claims
• On health coverage, the amount the patient pays before the
insurance company pays any covered medical expenses
– The higher the deductible chosen by the insured, the
lower the premium for the coverage.
– 100% self insurance = 100% risk retention
• means no insurance is purchased
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.
PROPERTY DAMAGE LIABILITY
– Property Damage Liability protects the insured
person from liability claims for damage to
property of others, such as:
• Personal property including vehicles, animals
• Business property including telephone poles and
other utility structures
• Government property such as bridges and other
road structures
• Real property
– Does NOT cover the insured person’s
propertyOptional
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
BENEFICIARIES
The policyholder names a beneficiary
• Can be an individual or business
• Beneficiary receives proceeds from a life
insurance claim.
• Proceeds is the money paid to a survivor
by a life insurance policy.
• Contingent beneficiaries named in the
policy are second in line if the
beneficiary is deceased.
LIFE INSURANCE ADVANTAGES
• Face amount is paid as proceeds to
beneficiary
• Proceeds are NOT taxable by income,
estate or inheritance tax laws.
• Proceeds are paid direct to beneficiaries.
• Proceeds avoid probate.
TERM LIFE INSURANCE
• Term life is temporary insurance.
– Only pays if insured dies during policy
period
– Purchased for a specific term (one year or
multiple years)
– Usually renewable for another term
– Least expensive premium for most coverage
– Pure insurance, no savings add up
09.02
REAL AND PERSONAL PROPERTY
BAILMENT
• An agreement created by the
temporary delivery
of personal property by the owner to
someone
who is not the owner for a specific
purpose.
• Both parties agree that the
property will be
returned to the bailor.
• Bailee - has in their temporary
possession
property that belongs to someone
else.
• Bailor – owner of property who
gives up
possession to someone else
temporarily
Examples of Bailments
• Leather jacket left at a dry cleaners
• Vehicle delivered to parking valet
• Goods transported by common carrier
• Truck taken to dealership for service check
• Diamond ring taken to jeweler for cleaning or
repair
• Leaving your clothes in dressing room while
trying on new sweater
• Goods delivered to a consignment shop
MUTUAL BENEFIT BAILMENTS
• Invokes the duty of ordinary care on the bailee
• Results from a contract (for service, repair,
storage, rental) with consideration exchanged
• Both bailor and bailee receive benefit
• A pledge as security for a loan is also a mutual
benefit bailment
Most bailments are mutual benefit
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
INTELLECTUAL PROPERTY
• Includes copyrights, patents, trademarks and trade
secrets
• Is an original work fixed in a tangible medium of
expression.
• Examples: literature, computer software, musical
scores and lyrics, choreography, dramatic works,
unique product or process, symbols or word that
identify a product, commercially valuable
information that is kept secret
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
REAL PROPERTY TRANSFERS
Grantor - conveys a deed to
real property
• Grantee – receives the
deed
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 warrant
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.
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
QUIET ENJOYMENT
• Tenants have a right to:
– expect the undisturbed possession of the
property called quiet enjoyment.
– expect exclusive use of the property free from
interference or annoyances.
• State laws vary and the landlord may or
may not have the right to enter the
premise without prior notice.
– Add covenant to lease to address entry issue
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
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
ANTI-DISCRIMINATION
• Anti-discrimination laws such as the Civil Rights
Act bind landlords in the selection of tenants.
• Special emphasis is given on human rights and
needs.
• Law forbids discrimination on basis of race,
religion, color, national origin, sex, age,
ancestry, marital status, blindness, military
service or future plans to have children.
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
FIXTURES
• Fixtures are items of personal property attached
to real property.
• The addition of fixtures by the tenant causes
problems when tenant prepares to vacate the
premise.
– Who owns fixtures that become real property?
– What damage will be caused if item is removed?
– Will tenant be reimbursed for improvement to
premise?
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