11/24/2015

Learning Objectives
Legal and Regulatory • Distinguish between criminal law and civil law
Environment of Business • Define a tort, explain tort law, discuss an
intentional tort
• Define a negligence tort and its components
• Explain a contract and discuss the
requirements of an enforceable contract

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Learning Objectives
• Define product liability and discuss the three
grounds, or “theories of recovery”, for a claim of
product liability
• Discuss the three forms of manufacturer’s
negligence that may be claimed in a product-
liability case
• Define strict liability and explain the doctrine of
strict liability in tort
Learning Objectives
• Define a warranty and distinguish between
express warranties and implied warranties
• Identify the primary goal of tort law and
distinguish between compensatory damages
and punitive damages
• Identify the purposes and conditions of
patents, copyrights, and trademarks

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Learning Objectives Areas of Law

• Summarize laws regulating competition and • Criminal Law
protecting consumers in the US (Antitrust law) • Civil Law
• Distinguish various types of bankruptcy

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Criminal Law Civil Law

• Prohibits and punishes wrongful conduct:
Assault Fraud • Governs disputes between private parties
Battery Murder (individuals, organizations)
Extortion Robbery • Marriage
• Punishment
• Personal injury
– Fine
– Imprison • …
– Both

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Civil Law vs. Criminal Law
Civil Law
Parties Individual or corporate plaintiff vs.
individual or corporate defendant
Purpose Compensation or deterrence
Burden of proof Preponderance of the evidence
Trial by jury/jury vote Yes (in most cases)/ specific number
of votes for judgement in favor of
plaintiff
Sanctions/penalties Monetary damages/equitable
remedies (e.g. injunction, specific
performance)
The Goals of Tort Law
“...restoring victims to the conditions
that they would have been in had
their injuries never taken place.”
Criminal Law
Local, state, or federal
prosecutor vs. individual or
corporate defendant
Punishment/deterrence/rehab
ilitation
Beyond a reasonable doubt
Yes/unanimous vote for
conviction of defendant
Probation/fine/imprisonment/
capital punishment
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Tort law
• A tort is a wrongful act causing injury to
someone’s body, property or reputation
• Types of tort
– Intentional torts – act posing harm to another
person’s body or property
– Negligence torts – result from carelessness
– Strict liability – not have to prove negligence
Intentional Torts
• Intentional torts are divided to 3 categories:
– Intentional tort against individual mental and
physical peace
– Intentional tort against property
– Intentional tort against economic interest
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Negligence Torts
• Results from carelessness, not from intentional
wrongdoing
• Elements
– Defendant owed a duty of care to the plaintiff
– Defendant breached his duty of care
– Defendant’s breach caused injury to the plaintiff or
his property
– Defendant’s action cause the injury in question
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Product Liability
Product Liability
• Claim of injury suffered because of a defective • Grounds of Negligence: 3 forms
product
– Negligent failure to warn
• 3 grounds for a claim of product liability
– Negligent design
– Negligence
– Negligence per se
– Strict liability
– Breach of warranty

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Product Liability
• Grounds of Strict Liability
– People are put at risk of injury no matter how
much care is taken to prevent injury
– Consumers injured while using the
manufacturer’s products can seek compensation
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Product Liability
• Grounds of breach of warranty
– Express warranty – created when a seller affirms
by describing the product, making a promise
about or providing sample/model of the product
– Implied warranty – arising automatically out of a
transaction
Damages in Tort Law
• Compensatory damage - monetary award to
restore the victim to the condition he/she
would have been in if the injury had never
occurred
• Punitive damage - monetary award to tort
victim, in order to deter similar injurious
conduct in the future
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Contract
Breach of Contract
• Is an exchange of promises or an exchange of
a promise for an act • Minor breach – substantial performance –
• Involves at least 2 parties violates nearly all the terms of the contract
• 4 requirements • Material breach – inferior performance –
– Agreement destroys the value of the contract
– Consideration
– Contractual capacity
– Lawful object
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Remedies for Breach

Damages in Contract Law
• Compensatory damage – paid by the
breaching party to compensate for losses
suffered by the nonbreaching party
• Punitive damage – typically not for breach of
contract, but may be considered if intentional
tort exists

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Intellectual Property
• Patent – grants the inventor exclusive rights to
his/her invention within 20 years
• Copyright – protects a creator’s rights to
materials (books, articles, photos, paintings,
cartoons)
• Trademark – a legally protected name, symbol,
design that identifies the owner’s
goods/services from competitors
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Antitrust Law
• The Clayton Act of 1914 prohibits
– Exclusive dealing, tying contracts and interlocking
directorates
– Buying large amounts of stock in competing
corporations
• The Federal Trade Commission Act of 1914
prohibits unfair methods of competition
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Antitrust Law
• To maintain competition atmosphere among
businesses and promote fair business practices
• Sherman Antitrust Act 1890 forbids
– Contracts, combinations, or conspiracies to restrain
trade
– The creation of actual monopolies or attempts to
monopolize any part of trade or commerce
Antitrust Law
• The Robinson-Patman Act of 1936 prohibits
price discrimination
– Applies to both sellers and buyers who knowingly
induce or receive price discrimination
– Price-cutting types can be criminal offenses and
punished by fine and imprisonment
– Applies to B2B transactions, not B2C
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Consumer Protection Laws

Bankruptcy Laws
• Bankruptcy – Legal process by which a person,
business or government entity, unable to
meet financial obligations, is relieved of those
debts by a court
• Court divides any of the debtor’s assets
among creditors

Bankruptcy Laws
Bankruptcy Laws
• Voluntary bankruptcy – the debtor applies for
bankruptcy
• Involuntary bankruptcy – the creditors start
legal action against the debtor

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Bankruptcy Laws
Statutory Law vs. Common Law
• The sale of nonexempt assets
• Statutory law – written law
• Cash allocation
• Common law – unwritten law
– Debtor
– Creditors with secured claims
– Creditors with unsecured claims: Bankruptcy costs;
business costs; wages, salaries or commissions
owed; contributions to employee benefit plans;
refunds to consumers; taxes
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