Business law

FBLABUSINESS LAWMaster Study NotesNLC 2025–2026  |  All 9 Knowledge Areas  |  100-Question Test  |  50 Minutes⭐ TEST FORMAT: 100 multiple-choice questions | 50 minutes | Online, on-site | No reference materials | No penalty for wrong answers🏆 SCORING: 1 pt per correct answer. Tiebreaker: (1) 10 preselected questions, (2) 20 preselected questions, (3) Fastest finisher. Top 10 places recognized.🔥 HIGHEST PRIORITY TOPICS: Contracts & Sales (~18-20 q) → Business Organization → Agency & Employment → Legal Systems. Focus here first!A. Legal SystemsCourts • Sources of Law • Criminal vs. Civil • Torts • Dispute ResolutionSources of LawConstitutional Law: Highest law of the land; all other laws must conform to itStatutory Law: Written laws passed by Congress or state legislatures (statutes/codes)Common Law (Case Law): Judge-made law from court decisions; used in absence of statutory lawAdministrative Law: Rules and regulations made by government agencies (FTC, OSHA, SEC, EPA)Ordinances: Local laws enacted by cities or municipalities; lowest level of government lawStare Decisis: Legal doctrine requiring lower courts to follow precedent of prior higher court decisionsCriminal vs. Civil LawFeatureCriminal LawCivil LawWrong AgainstSociety / StateIndividual or BusinessPlaintiff IsGovernment / ProsecutorPrivate partyBurden of ProofBeyond a reasonable doubtPreponderance of evidence (more likely than not)OutcomeFine and/or imprisonmentMoney damages or injunctionConsentRarely a defenseUsually a defenseDamages RequiredNoYes — plaintiff must show actual harmIntentRequired in most crimesIntentional torts only (negligence has no intent)Federal Court SystemU.S. District Courts (94 total): Trial courts — original jurisdiction; first to hear federal casesU.S. Courts of Appeals (12 geographic circuits + Federal Circuit in D.C.): Review district court decisions; 3-judge panels; no new evidenceU.S. Supreme Court: Highest court; 9 justices; primarily appellate jurisdiction; grants certiorari to review lower court casesSpecialized Federal Courts: Bankruptcy Court, U.S. Tax Court, Court of International Trade, Court of Federal ClaimsFederal Diversity Jurisdiction: Parties from different states AND amount in controversy exceeds $75,000State Court SystemTrial Courts (circuit/superior/district courts): Original jurisdiction; courts of record; fact-finding; jury trialsIntermediate Courts of Appeals: Review trial court decisions; 3-judge panels; no new evidence introducedState Supreme Court: Final state authority; further appeal only to U.S. Supreme Court on federal/constitutional questionsAssociate Circuit Courts / County Courts: Minor criminal cases, traffic, small civil matters (up to $25,000)Municipal / City Courts: Enforce city ordinances; two divisions (traffic + other violations); NOT criminal courtsSmall Claims Courts: Handles disputes up to ~$2,500; no attorney required; informal rules of evidenceJuvenile Courts: Persons over 13 and under 18; emphasize rehabilitation over punishment; confidential proceedingsProbate Courts: Handle estates of deceased persons (wills, intestacy, guardianships)Jurisdiction TypesOriginal Jurisdiction: Power to hear a case for the first time (trial courts have this)Appellate Jurisdiction: Power to review decisions of lower courtsSubject-Matter Jurisdiction: Court's authority over the TYPE of case (e.g., federal vs. state matter)Personal (In Personam) Jurisdiction: Court's authority over the parties involvedLong-Arm Statutes: State laws allowing courts to reach out-of-state defendants with sufficient ties to the stateVenue: Geographic location/county where case is tried (can be changed if fair trial is impossible)Dispute Resolution (ADR — Alternative Dispute Resolution)Negotiation: Parties resolve dispute directly between themselves — cheapest, fastest, most privateMediation: Neutral mediator helps parties reach a mutually acceptable solution — NOT binding; advisory onlyArbitration: Neutral arbitrator holds informal hearing and issues a BINDING decision — enforceable by court orderArbitration clauses in contracts are generally enforceable; parties agree in advance to arbitrate disputesLitigation: Formal court process — most expensive, most public, most time-consumingTorts (Civil Wrongs)Tort: Private civil wrong (not a crime) against a person or business, giving rise to legal liability and damagesIntentional Tort: Deliberate harmful act (assault, battery, defamation, fraud, trespass, conversion)Negligence Elements (DBCD): Duty of care → Breach of duty → Causation (actual + proximate) → DamagesProximate Cause: Defendant's act must be the direct, foreseeable legal cause of plaintiff's injuryContributory Negligence: Plaintiff's own fault completely bars recovery (strict, older rule used in few states)Comparative Negligence: Plaintiff's damages reduced proportionally by their own percentage of fault (modern rule)Assumption of Risk: Plaintiff voluntarily knew of and accepted the risk — can bar or reduce recoveryStrict / Absolute Liability: Defendant liable regardless of fault for abnormally dangerous activities (no negligence needed)Respondeat Superior: 'Let the superior respond' — employer vicariously liable for employee torts in scope of employmentCriminal Law BasicsFelony: Serious crime; prison sentence exceeding 1 year (murder, robbery, grand larceny, fraud)Misdemeanor: Less serious; jail up to 1 year or fines (petty theft, minor assault)Criminal Act Requires: Actus reus (guilty act) + Mens rea (guilty intent/mind)4th Amendment: Protects against unreasonable search and seizure; requires warrants5th Amendment: Right against self-incrimination; double jeopardy (cannot be tried twice for same crime); due process6th Amendment: Right to speedy public trial; right to counsel; right to confront witnessesMiranda Rights: Must be read upon arrest; right to remain silent, right to attorneyGrand Jury: Reviews evidence to decide whether to indict (formally charge) a defendantArraignment: Defendant enters plea (guilty, not guilty, no contest) after being charged🔑 KEY TEST FACTS: Court of record = keeps exact transcript of trial. Small claims courts are NOT courts of record. Jury decides FACTS; judge decides LAW. Mediator = NOT binding. Arbitrator = BINDING. Stare decisis = follow precedent.B. Business OrganizationSole Proprietorships • Partnerships • Corporations • LLCs • SEC • AntitrustBusiness Forms — Master Comparison TableFeatureSole ProprietorshipGeneral PartnershipCorporationLLCFormationNone requiredAgreement (UPA governs)State charter requiredArticles of Organization filed with stateLegal StatusOwner = Business (not separate)Not a separate entity in most statesSeparate legal entity ('artificial person')Separate legal entityLiabilityUnlimited personal liabilityALL partners: unlimited personal liabilityLimited to amount of investmentLimited to amount of investmentManagementOwner decides everythingEqual say unless agreed otherwiseDirectors (elected by shareholders) set policy; Officers run day-to-dayMembers or appointed managersTaxationPass-through (owner's personal taxes)Pass-through (partnership taxes)Double taxation: corp pays corporate tax, shareholders pay on dividendsPass-through (partnership taxes)Duration/LifeEnds with owner's decision or deathEnds with partner death, withdrawal, or bankruptcyPerpetual life (can last forever)Generally perpetualCapital RaisingPoorModerateExcellent — can sell stock publiclyGoodEasiest to FormYes — just start itModerateHardest — legal counsel neededModeratePartnership DetailsUniform Partnership Act (UPA): Governs general partnerships in most statesPartners share profits and losses equally unless the partnership agreement states otherwiseEach general partner has unlimited personal liability for ALL partnership debts — even caused by another partnerGeneral Partner: Full management rights + unlimited personal liabilityLimited Partner: Liability limited to investment only; CANNOT participate in managementSilent Partner: Has financial interest; publicly known; not actively managingSecret Partner: Actively manages; NOT publicly known to be a partnerDormant Partner: NOT publicly known AND NOT actively managingNominal Partner: Name used in business but has NO actual financial interestJoint Venture: Partnership for a single specific project or limited time periodDissolution: Legal ending of a partnership's existence; winding-up follows to settle affairsCorporation DetailsCorporation: Legal entity treated as an 'artificial person' separate and distinct from its ownersCreated by obtaining a charter from the state governmentStructure: Shareholders (own) → Board of Directors (set policy) → Officers (run operations) → EmployeesShareholders have LIMITED liability — they risk only the amount they investedS-Corporation: Up to 100 shareholders; U.S. citizens only; one class of stock; pass-through taxationC-Corporation: Unlimited shareholders; subject to double taxation (corporate tax + dividend tax)Merger: Two companies combine into one surviving companyConsolidation: Two companies combine to form an entirely NEW company (both cease to exist)Conglomerate: Parent company owns multiple unrelated businessesFranchise: License to operate a business using another company's established brand and systemsPiercing the Corporate Veil: Courts hold shareholders personally liable when they ignore corporate formalities or use corp to commit fraudLLC (Limited Liability Company)Formed by filing Articles of Organization with the state's Secretary of State officeOwners called 'members'; their liability is limited to their investment amountTaxed as a partnership (pass-through) by default — IRS ruled this in 1988, fueling LLC growthOperating Agreement: Governs the LLC (similar to bylaws but broader); recommended even for single-member LLCsFirst appeared in Wyoming (1977); by 1997, all 50 states had LLC statutesBest of both worlds: Corporation's limited liability + Partnership's pass-through taxationSEC & Key Regulatory LawsSEC (Securities & Exchange Commission): Regulates stocks, bonds, securities markets, and public companiesSEC violations: Both civil penalties AND criminal prosecution are possibleSherman Antitrust Act (1890): Prohibits monopolies and unreasonable restraint of tradeClayton Act (1914): Prohibits price discrimination, exclusive dealing, and mergers that substantially reduce competitionFederal Trade Commission Act (1914): Created FTC; prohibits unfair methods of competitionFTC (Federal Trade Commission): Enforces antitrust laws AND consumer protection lawsOSHA: Sets and enforces workplace safety standards; employers must keep injury recordsEEOC (Equal Employment Opportunity Commission): Enforces federal anti-discrimination employment laws🧠 Business Forms — SPCASole prop = Simplest | Partnership = Passthrough + Unlimited liability | Corp = Charter + limited liability + perpetual | LLC = Combines best of Corp (limited liability) + Partnership (pass-through tax)🔑 KEY TEST FACTS: Which form: simplest to form = SOLE PROP; limited liability = CORPORATION or LLC; taxed only once = SOLE PROP, PARTNERSHIP, or LLC; perpetual life = CORPORATION; governed by UPA = PARTNERSHIP; requires charter = CORPORATION.C. Contracts & SalesHIGHEST-WEIGHTED SECTION — ~18-20 Questions | Master Every Detail!🔥 CRITICAL: Contracts is consistently the heaviest topic on the FBLA Business Law test. Know all 6 elements, all defects, the Statute of Frauds, breach remedies, and UCC rules cold.The 6 Elements of a Valid Contract1. OFFERProposal by offeror to offeree; must be definite, intentional, and communicated to the offeree2. ACCEPTANCEUnconditional agreement to ALL terms of the offer; mirror image rule — no changes allowed3. GENUINE AGREEMENT (ASSENT)True 'meeting of the minds'; no fraud, duress, mistake, or undue influence present4. CONSIDERATIONSomething of value exchanged by BOTH parties (quid pro quo); money, property, promise, or forbearance5. CAPACITYLegal ability to enter a contract; minors, insane persons, and intoxicated persons may lack capacity6. LEGALITYThe purpose and subject matter must be legal; contracts for illegal acts are void🧠 Remember ALL 6 Elements: 'Only Adults Get Contracts Correctly Legalized'O = Offer | A = Acceptance | G = Genuine Agreement | C = Consideration | C = Capacity | L = LegalityOffer RequirementsMust show INTENT: Offeror must clearly intend to make a contract offerMust be DEFINITE AND CERTAIN: Terms must be clear enough to be enforced by a courtMust be COMMUNICATED: Offeree must actually receive the offerAdvertisements are generally NOT offers — they are invitations to negotiate (invitation to make an offer)Auction: Bidder = offeror; Auctioneer = offeree; bid accepted when gavel fallsOfferor: Makes the offer | Offeree: Receives the offerPromisor: Makes a promise | Promisee: Receives the promiseTermination of an OfferRevocation: Offeror withdraws the offer before acceptance (generally allowed anytime before acceptance)Rejection: Offeree says 'no'; offer is terminatedCounteroffer: Offeree proposes different terms — KILLS the original offer and creates a new offerLapse of Time: Offer expires after the stated time period or after a 'reasonable time' if no period givenDeath or Insanity: Of either party generally terminates the offerIllegality: If the subject matter becomes illegal after the offer is made, the offer terminatesOption Contract: EXCEPTION — offeror cannot revoke during the option period; consideration paid to keep offer openAcceptance RulesAcceptance must be UNCONDITIONAL — changing any term makes it a counteroffer, not acceptanceMailbox Rule: Acceptance is EFFECTIVE when mailed/sent (not when received by offeror)Revocation is effective when RECEIVED by offereeSilence is generally NOT acceptance — three exceptions: (1) prior dealings between parties, (2) parties agree silence = acceptance, (3) offeree acts in response to offerBilateral Contract: Exchange of promises (promise for a promise)Unilateral Contract: Promise in exchange for a specific act (promise for an act); can only be accepted by performing the actConsiderationDefinition: Something of value (legally sufficient) exchanged by BOTH parties to a contractForms of valid consideration: money, property, a promise, a right, or forbearance (giving up a legal right)Courts do NOT evaluate adequacy of consideration — even $1 for a $1 million house can be valid if freely agreedPast Consideration: Something already done BEFORE the contract — NOT valid considerationPre-existing Duty Rule: Promising to do something you are already legally required to do is NOT valid considerationPromissory Estoppel: Substitute for consideration when one party REASONABLY RELIED on another's promise to their detrimentCharitable subscriptions are often enforced under promissory estoppel principlesDefects Destroying Genuine AgreementFRAUD: Intentional false statement of a MATERIAL fact, with intent to deceive; victim can void contract and sue for damagesMISREPRESENTATION: Innocent (non-intentional) false statement of material fact; makes contract voidable (no punitive damages)NONDISCLOSURE: Intentional concealment of material facts when there is a duty to disclose — treated like fraudMISTAKE: Mutual mistake (both parties wrong about same material fact) = contract voidable; Unilateral mistake = usually NOT grounds to voidDURESS: Using wrongful threats or force to coerce someone into a contract; makes contract voidableUNDUE INFLUENCE: Unfair persuasion through a relationship of trust or confidence; makes contract voidable🧠 Defects in Genuine Agreement — 'FANDOM'F = Fraud | A = Absent meeting of minds | N = Nondisclosure | D = Duress | O = (undue influence) | M = MistakeMinors and Contractual CapacityMinor: Person under 18 in most states (the age of majority)Minors can DISAFFIRM (cancel) most contracts — even if the contract has already been fully performedDisaffirmance must occur before reaching majority OR within a reasonable time after reaching majorityNECESSARIES EXCEPTION: Minors ARE liable for the reasonable value of necessaries (food, clothing, shelter, medical care, education)Ratification: After reaching 18, if minor affirms (expressly or by conduct) the contract, it becomes fully bindingMinors ARE liable for their own torts and crimes — capacity only affects contractsMentally incompetent persons: Contracts are VOIDABLE if adjudicated incompetent; void if judicially declared incompetentIntoxicated persons: Contracts may be voidable if other party knew of intoxicationContract ClassificationsVALID: All 6 elements present; fully enforceable by both parties in courtVOID: No legal effect whatsoever; cannot be enforced by anyone (e.g., contract to commit a crime)VOIDABLE: One aggrieved party may choose to enforce or cancel (e.g., minor's contract, contract induced by fraud)UNENFORCEABLE: Would be valid but cannot be enforced due to a technical legal defect (e.g., required to be in writing but isn't)EXPRESS: Terms are stated explicitly in words — oral or writtenIMPLIED-IN-FACT: Created by conduct of the parties rather than words (e.g., getting into a taxi implies agreement to pay fare)QUASI-CONTRACT: Not a true contract; imposed by law to prevent unjust enrichment when no actual contract existsEXECUTORY: Contract not yet fully performed by one or both partiesEXECUTED: Contract that has been fully performed by all partiesStatute of Frauds (Contracts That MUST Be in Writing)MARRIAGE: Contracts in consideration of marriage (prenuptial agreements)YEAR: Contracts that CANNOT be performed within one year from the date of makingLAND: Any contract for the sale or transfer of real property (land, buildings)EXECUTOR: Executor's promise to pay estate debts personally out of their own fundsGOODS: Sale of goods valued at $500 or more (UCC rule — Article 2)SURETY: Promise to pay another person's debt if they fail to pay🧠 Statute of Frauds Mnemonic — 'MY LEGS'M = Marriage | Y = Year (over one year) | L = Land/Real Property | E = Executor's personal promise | G = Goods over $500 | S = Surety (guaranty of another's debt)Failure to comply with Statute of Frauds: Contract is UNENFORCEABLE (not void) — it exists but a court won't enforce itBreach of Contract and RemediesBreach of Contract: Failure to perform a contractual obligation without a legally valid excuseMaterial Breach: So significant that the non-breaching party is excused from their own performance obligationsCompensatory Damages: Amount to put the injured party in the position they would have been in had the contract been performedConsequential (Special) Damages: Foreseeable losses flowing from the breach; must have been foreseeable at contract formationLiquidated Damages: Amount agreed to IN ADVANCE in the contract as compensation for breach; must be reasonable estimateNominal Damages: Very small award when breach is proven but no actual damages resultedPunitive (Exemplary) Damages: Awarded to punish; NOT usually available in contract cases (more common in tort)Specific Performance: Court orders the breaching party to perform; used only for UNIQUE items (land, one-of-a-kind goods)Rescission: Contract is cancelled; both parties restored to their original pre-contract positionsRestitution: Return of any benefit (money or property) the breaching party receivedInjunction: Court order to stop doing something; equitable remedyMitigation of Damages: Non-breaching party has a DUTY to take reasonable steps to minimize their lossesUCC and Sales ContractsUCC (Uniform Commercial Code): Governs the sale of GOODS (not services); adopted by all 50 statesSale of Goods: Transfer of title from seller to buyer in exchange for a priceGoods: Tangible, movable personal property (cars, furniture, clothing) — does NOT include real property or servicesMerchant: Person who regularly deals in that type of good, or holds themselves out as having special knowledgeFOB Shipping Point: Title (and risk of loss) transfers to BUYER when goods delivered to carrier — buyer bears risk during shippingFOB Destination: Title (and risk of loss) transfers to BUYER when goods arrive at buyer's location — seller bears risk during shippingUCC Writing Requirement: Contracts for goods $500+ must be in writing (Statute of Frauds under UCC)Performance Obligations: Seller must deliver conforming goods; Buyer must accept conforming goods and payPerfect Tender Rule: Seller must deliver goods that EXACTLY conform to contract specificationsImplied Warranty of Merchantability: Goods are fit for the ORDINARY purpose — automatic for merchants🔑 KEY TEST DISTINCTIONS: VOID vs. VOIDABLE: Void = nobody can enforce it (illegal contract). Voidable = aggrieved party CHOOSES to enforce or cancel. | Offer vs. Invitation: Ads and price lists are NOT offers. | Counteroffer KILLS the original offer. | Mailbox Rule: Acceptance effective WHEN SENT.D. Agency & Employment LawAgency Relationships • Employee Rights • Anti-Discrimination Laws • Labor RelationsAgency FundamentalsAgency: A legal relationship where one person (agent) acts on behalf of another (principal)Principal: Person who authorizes the agent to act; bound by agent's authorized actsAgent: Person authorized to act for the principal; owes fiduciary duties to principalFiduciary Duty: Agent must act with utmost loyalty, care, obedience, and accounting to principalAttorney-in-Fact: Agent authorized by a power of attorney document (NOT a lawyer; any person can be)Power of Attorney: Written legal document granting authority to an agent; insanity of principal = voidCommingling: PROHIBITED — agent must NEVER mix their own funds with the principal's fundsAgency is CONSENSUAL — created by agreement; no consideration strictly requiredTypes of AuthorityActual Authority: Directly granted by principal to agentExpress Actual Authority: Clearly stated in words, oral or writtenImplied Actual Authority: Reasonably necessary to carry out express authority (implied by situation)Apparent Authority: Principal's words or conduct lead a reasonable 3rd party to BELIEVE agent has authority — even without actual authority; principal is boundRatification: Principal approves an agent's previously unauthorized act — makes it fully binding as if authorized from the startLingering Apparent Authority: Former agent's authority may appear to continue if principal doesn't properly notify 3rd parties of terminationPrincipal's Liability for Agent's TortsDIRECT LIABILITY: Principal is directly at fault — gave improper instructions, negligently hired agent, or failed to superviseINDIRECT (VICARIOUS) LIABILITY — Respondeat Superior: 'Let the superior respond'Employer liable for employee's torts committed WITHIN the scope of employmentTest 1: Was the act the TYPE of work the agent was employed to perform?Test 2: Did the act occur at an AUTHORIZED time and place of employment?Test 3: Was the act motivated at least partly by service to the PRINCIPAL (not purely personal)?Test 4: Could the PRINCIPAL have ANTICIPATED this type of conduct?ALL 4 tests must be YES for respondeat superior to applyIndependent Contractor: NOT an employee; principal is generally NOT vicariously liable for their tortsDisclosed Principal: Agent has NO personal liability on contracts made for a fully disclosed principalUndisclosed Principal: Agent IS personally liable on contracts (3rd party didn't know who they were really dealing with)Termination of AgencyBy Acts of the Parties: Mutual agreement, revocation by principal (has power, not necessarily the right), renunciation by agentIf agency created for a specific time or purpose: terminates automatically when time passes or purpose achievedBy Operation of Law: Death of principal or agent, insanity of principal, bankruptcy of principal, illegality, destruction of subject matterTo eliminate lingering apparent authority: Principal must give ACTUAL NOTICE to parties who previously dealt with agent; newspaper announcement sufficient for all others (constructive notice)Key Employment LawsOSHA (Occupational Safety & Health Act, 1970): Requires employers to provide safe workplace; employers must keep records of injuries and illnessesWorkers' Compensation: State no-fault insurance; pays medical bills and lost wages for workplace injuries regardless of fault; bars employees from suing employer in most casesUnemployment Compensation: Benefits for workers who lose jobs involuntarily (not fired for cause)Fair Labor Standards Act (FLSA): Sets federal minimum wage; requires overtime pay (1.5x regular rate for 40+ hours/week); child labor restrictionsFamily and Medical Leave Act (FMLA): Employers with 50+ employees must provide up to 12 weeks unpaid leave for family/medical needsEmployment at Will: Either employer or employee can terminate employment at any time for any LAWFUL reason (most U.S. employment is at-will)Anti-Discrimination LawsLawProtected ClassesCoverageEnforcerTitle VII — Civil Rights Act 1964Race, color, religion, sex, national originEmployers with 15+ employeesEEOCAge Discrimination in Employment Act (ADEA)Workers age 40 and olderEmployers with 20+ employeesEEOCAmericans with Disabilities Act (ADA)Qualified persons with disabilitiesEmployers with 15+ employeesEEOCEqual Pay Act (1963)Protects against pay discrimination based on sexAll employersEEOC / DOLPregnancy Discrimination ActPregnancy, childbirth, related conditionsEmployers with 15+ employeesEEOCSexual Harassment (under Title VII): Two types: (1) Quid pro quo — job benefit conditioned on sex; (2) Hostile work environment — severe/pervasive conduct creating abusive workplaceReasonable Accommodation (ADA): Employer must make reasonable changes to allow qualified disabled person to work, unless it causes 'undue hardship'Labor RelationsNational Labor Relations Act (NLRA/Wagner Act, 1935): Guarantees workers' rights to organize, join unions, and bargain collectivelyNLRB (National Labor Relations Board): Federal agency enforcing the NLRA; oversees union electionsCollective Bargaining: Good-faith negotiations between employer and union representative regarding wages, hours, working conditionsTaft-Hartley Act (1947): Limits union powers; prohibits closed shops (requiring union membership to be hired); allows states to enact right-to-work lawsStrike: Workers refuse to work; legal when properly conducted and following proper proceduresCollective Bargaining Agreement (CBA): Formal written contract between employer and unionEmployee vs. Independent ContractorFeatureEmployee / AgentIndependent ContractorControlEmployer controls HOW work is doneControls own methods and toolsTax WithholdingEmployer withholds income tax, FICAPays own self-employment taxesBenefitsEntitled to employer benefitsNo employer-provided benefitsEmployer LiabilityEmployer vicariously liable for torts (respondeat superior)Principal generally NOT liable for tortsWorkers' CompCovered by employer's workers' compGenerally must provide own coverage🔑 RESPONDEAT SUPERIOR TEST: Was the act: (1) the TYPE of work the agent was hired to do? (2) At AUTHORIZED time and place? (3) At least partly motivated by serving the PRINCIPAL? (4) Could the principal have ANTICIPATED it? All 4 YES = employer is vicariously liable.E. Consumer Protection & Product LiabilityFTC • Warranties • Unfair Practices • Product Liability • CPSCFTC and Consumer Protection LawsFTC (Federal Trade Commission): Created in 1914; dual mission — antitrust enforcement AND consumer protectionSection 5(a) of FTC Act: Prohibits 'unfair or deceptive acts or practices in or affecting commerce'Wheeler-Lea Act (1938): Expanded FTC power to combat false advertising for food, drugs, medical devices, and cosmeticsThree Bureaus: Consumer Protection (unfair/deceptive practices), Competition (antitrust), Economics (analysis)FTC manages the National Do Not Call RegistryTruth in Lending Act (TILA / Regulation Z): Requires full disclosure of credit terms including APR, finance charges, payment scheduleFair Debt Collection Practices Act: Bans harassment, false statements, and abusive tactics by third-party debt collectorsFair Credit Reporting Act: Governs credit reporting agencies; consumers have right to see and dispute their credit reportsEqual Credit Opportunity Act: Prohibits discrimination in credit decisions based on race, sex, religion, age, or national originUnfair Trade PracticesBait and Switch: Advertise a low-price item ('bait') to lure customers into the store, then push them to buy a higher-priced item ('switch') — ILLEGALFalse Advertising: Misrepresentation of product quality, price, or service — misleading or deceptiveUsury: Charging interest above the legally permitted maximum rate — illegalIdentity Theft: Using another person's personal information without permission to commit fraud — federal crimeDeceptive Testimonials/Endorsements: FTC requires that endorsers actually USE the product; false endorsements are illegalUnordered Merchandise: Recipient has ABSOLUTELY NO obligation to pay for or return items they never orderedDoor-to-Door Sales Rule: Buyer has 3 business days to cancel purchases of $25 or more — required cooling-off periodWord 'New': Can ONLY be used to describe products less than 6 months oldMisleading Price Information: Fake 'sale' prices, 'going out of business' when no plans to close, false 'limited time' offersFailing to Disclose: Merchants must disclose information that would reasonably influence a consumer's purchase decisionWarrantiesWARRANTY: A seller's promise or guarantee about the quality, condition, or performance of goodsEXPRESS WARRANTY: Explicit promise made in words (written or oral) about the product — 'This battery lasts 5 years'PUFFING: Sales exaggeration or opinion ('greatest product ever!') — NOT a legally enforceable warrantyFULL WARRANTY: Defective product will be repaired or replaced FREE within a reasonable time; consumer may get refund if not fixed promptlyLIMITED WARRANTY: Falls short of full warranty standards in some respect; must clearly state limitationsIMPLIED WARRANTY OF MERCHANTABILITY: Automatic guarantee that goods are fit for their ORDINARY intended purpose; applies to all merchant salesIMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE: Created when seller KNOWS buyer's specific purpose and recommends goods for itDISCLAIMER: 'AS IS' clause — may eliminate implied warranties if properly communicated; must be conspicuousPRIVITY OF CONTRACT: Traditional rule requiring direct buyer-seller relationship to sue for warranty; now relaxed in most statesProduct LiabilityProduct Liability: Legal action by consumer against company for physical/financial harm caused by a defective productNEGLIGENCE THEORY: Manufacturer/seller failed to exercise reasonable care in design, manufacturing, or warningsSTRICT LIABILITY: Manufacturer liable for unreasonably dangerous defective products regardless of fault or care exercised; all parties in distribution chain can be liableManufacturer → Wholesaler → Retailer — ALL potentially strictly liableBREACH OF WARRANTY THEORY: Product failed to live up to express or implied warranty promisesRes Ipsa Loquitur: 'The thing speaks for itself' — defect under defendant's control + wouldn't normally happen without negligence = negligence presumedCaveat Emptor: 'Let the buyer beware' — old common law doctrine; now largely replaced by consumer protection laws and warrantiesCPSC (Consumer Product Safety Commission): Federal agency that sets safety standards and can order recalls of unsafe consumer productsCPSC regulates: toys, household appliances, sporting goods, clothingCPSC does NOT regulate: drugs (FDA), firearms (ATF), automobiles (NHTSA), food (FDA/USDA), cosmetics (FDA)🔑 KEY FACTS: Warranty of Merchantability = food must be fit for human consumption. If a product is unreasonably dangerous, ALL parties in the distribution chain (manufacturer → wholesaler → retailer) can be held strictly liable under strict liability theory. Puffing is NOT a warranty — it's sales talk/opinion.F. Negotiable Instruments, Insurance, Secured Transactions & BankruptcyCommercial Paper • Endorsements • Bankruptcy Chapters • Insurance Types • UCC Art. 9Negotiable Instruments — BasicsNegotiable Instrument: Unconditional written promise or ORDER to pay a definite sum of moneyGoverned by UCC Article 3 (commercial paper)Requirements to be negotiable: (1) Written, (2) Signed by maker/drawer, (3) Unconditional promise or order, (4) Fixed amount of money, (5) Payable on demand or at a definite time, (6) Payable to order or to bearerInstrumentDefinitionPartiesPromissory NoteWritten PROMISE to pay a specific sumMaker (promises) → Payee (receives payment)Draft / Bill of ExchangeWritten ORDER directing someone to payDrawer (orders) → Drawee (pays) → Payee (receives)CheckDraft drawn on a bank, payable on demandDrawer (account holder) → Drawee (bank) → PayeeCashier's CheckBank's own check; bank is BOTH drawer and draweeBank → Payee (most secure form of check)Certificate of Deposit (CD)Bank acknowledges receipt of funds; promises to repay at definite future time with interestBank → DepositorMoney OrderPurchased instrument; similar to cashier's checkPurchased by payer → Paid to payeeEndorsements and PartiesPRIMARY PARTIES: Unconditionally liable — maker of a promissory note, acceptor of a draft; must pay when instrument is dueSECONDARY PARTIES: Conditionally liable — drawers and endorsers; liable only if primary party doesn't pay AND proper notice givenBlank Endorsement: Just the endorser's signature on the back — creates bearer paper; MOST RISKY if lost or stolenSpecial Endorsement: 'Pay to [specific name]' — limits who can cash the instrument; most secure transferRestrictive Endorsement: 'For deposit only' — limits HOW instrument can be usedQualified Endorsement: 'Without recourse' — endorser disclaims their secondary liabilityHolder in Due Course (HDC): Takes instrument for value, in good faith, without notice of defects — has SUPERIOR rights, free from most defensesPresentment: Act of presenting instrument to maker/drawee for payment or acceptanceDishonor: Refusal or failure to pay when properly presented — triggers liability of secondary partiesSecured Transactions (UCC Article 9)Secured Transaction: Any transaction where debtor gives creditor a SECURITY INTEREST in personal property or fixtures as collateralSecurity Agreement: Written agreement describing the collateral, signed by the debtor — creates the security interestATTACHMENT: Security interest becomes enforceable between the debtor and creditor; requires: (1) written security agreement + debtor's signature, (2) creditor gives value to debtor, (3) debtor has rights in the collateralPERFECTION: Makes security interest valid against third parties (other creditors, trustees in bankruptcy); most common method = filing a Financing Statement (Form UCC-1) with stateAlternative Perfection Methods: Possession or control of the collateralPriority Rule: First party to PERFECT their security interest has priority if multiple creditors claim same collateralMortgage: Security interest in REAL PROPERTY; foreclosure if debtor defaultsMechanic's Lien: Against property for unpaid construction, repair, or improvement workGarnishment: Court order requiring employer or bank to pay debtor's wages/funds directly to creditor to satisfy judgmentWrit of Execution: Court order authorizing sheriff to seize debtor's property to satisfy a judgmentBankruptcyGoverned ENTIRELY by FEDERAL LAW (U.S. Bankruptcy Code); U.S. Constitution requires uniform bankruptcy lawsTest for Bankruptcy: Can the debtor pay debts as they become due?Automatic Stay: Filing a bankruptcy petition IMMEDIATELY stops most creditor collection actions, lawsuits, and foreclosuresTrustee: Court-appointed person who manages the debtor's estate and distributes assets to creditorsChapterCommon NameWho Can FileWhat HappensChapter 7Liquidation / Straight BankruptcyIndividuals and businesses (voluntary OR involuntary)Trustee sells all non-exempt assets; proceeds distributed to creditors; debts DISCHARGEDChapter 11Business ReorganizationBusinesses primarily (voluntary OR involuntary)Business continues operating; restructures debt under court-approved reorganization planChapter 12Family Farmer/FishermanFamily farmers and commercial fishermenStructured repayment plan tailored to seasonal income patternsChapter 13Individual Repayment PlanIndividuals with regular income ONLY (voluntary only)3-5 year repayment plan; no liquidation of assets; upon completion, most debts dischargedVoluntary Bankruptcy: Filed by the DEBTOR; available for Chapters 7, 11, 12, and 13Involuntary Bankruptcy: Filed by CREDITORS against debtor; available for Chapters 7 and 11 ONLY (not 12 or 13)Non-Dischargeable Debts (debts that SURVIVE bankruptcy): student loans, alimony, child support, recent taxes (3 years prior), criminal fines, debts from fraud, recent credit card luxury purchasesExempt Property (cannot be taken): Home equity (up to state limit), car (up to limit), clothes, household goods, tools of trade, pension/retirement funds, Social Security benefitsChapter 13 Requirements: Must have regular income; unsecured debts under $336,900; secured debts under $1,010,650🧠 Bankruptcy Chapters — 7-11-13Ch. 7 = LIQUIDATION (everything sold, start fresh) | Ch. 11 = REORGANIZATION (business restructures debts) | Ch. 12 = FARMER/FISHERMAN | Ch. 13 = INDIVIDUAL REPAYMENT PLAN (3-5 years, keep assets)InsuranceInsurable Interest: The insured must have a financial stake in what is insured; must exist AT TIME POLICY IS TAKEN OUT (prevents gambling/moral hazard)LIFE INSURANCE: Pays designated beneficiary upon insured's death; types: term (temporary), whole life (permanent with cash value), universal lifePROPERTY INSURANCE: Covers damage to real or personal property from covered perils (fire, theft, weather)CASUALTY INSURANCE: Covers accidents, theft, disability, and liability — broad categoryLIABILITY INSURANCE: Pays damages you legally owe to third parties who are injured by your actions or propertyCOLLISION INSURANCE: Covers damage to YOUR OWN vehicle in an automobile accident regardless of faultCOMPREHENSIVE INSURANCE: Covers non-collision damage to your vehicle (theft, weather, vandalism, animals)FIDELITY INSURANCE (BOND): Covers employer losses from employee dishonesty, embezzlement, or theftHEALTH INSURANCE: Covers medical expenses; regulated jointly by federal and state lawsSubrogation: After paying a claim, insurer takes over insured's legal rights to sue the responsible party to recover paymentCo-insurance Clause: Owner must insure property to at least 80% of its value or bear proportional share of any loss themselves🔑 KEY BANKRUPTCY FACTS: Chapter 7 = LIQUIDATION (sell assets, discharge debts). Chapter 11 = REORGANIZATION (keep operating, restructure). Chapter 13 = INDIVIDUAL REPAYMENT (3-5 year plan). Involuntary bankruptcy: ONLY Ch. 7 and Ch. 11 (not 12 or 13). Non-dischargeable = student loans, child support, alimony, recent taxes.G. Property LawsReal Property • Personal Property • IP Rights • Leases • Bailment • ZoningTypes of PropertyPROPERTY: Collection of rights and interests recognized by society and protected by lawREAL PROPERTY (Realty): Land + surface water + minerals below + airspace above + buildings + anything permanently attached (fixtures)PERSONAL PROPERTY (Personalty): All property that is NOT real property; movable; can be tangible or intangibleFIXTURE: An item originally personal property that has been permanently attached to real property and becomes real property (built-in appliances, heating systems)TANGIBLE Personal Property: Has physical form; can be touched and moved (car, furniture, jewelry)INTANGIBLE Personal Property: Rights without physical substance (stocks, bonds, copyrights, goodwill, accounts receivable)Intellectual Property — Comparison TableTypeWhat Is ProtectedDurationRegistrationPATENTNovel, useful, and non-obvious inventions, designs, and processes20 years from filing (no renewal)Required — USPTO; must apply before public disclosureCOPYRIGHTOriginal creative expression fixed in tangible form (books, music, art, software, films)Author's life + 70 yearsRecommended but automatic at creation; needed for federal lawsuitTRADEMARKDistinctive words, logos, symbols, or slogans identifying productsIndefinite — as long as used + renewed every 10 yearsNot required but strongly recommended — USPTOSERVICE MARKLike trademark but identifies SERVICES (not products)Indefinite — same as trademarkSame as trademarkTRADE SECRETConfidential commercial information (formulas, methods, customer lists)As long as kept secret — no time limitCannot be registered; protected by confidentialityFair Use: Limited use of copyrighted material WITHOUT permission — allowed for education, criticism, commentary, news, parodyInfringement: Using protected intellectual property without authorization — both civil and criminal penaltiesReverse Engineering: Legally permitted if the product was acquired fairly (e.g., purchased); can break trade secret protectionAcquiring Property — MethodsContract (Purchase): Most common method; requires offer, acceptance, considerationGift: Intent to give + actual delivery + acceptance by donee — all three required; cannot be revoked after deliveryInheritance: Through a will (testate succession) or intestate succession (state law if no valid will)Accession: You own improvements added to your property by another (e.g., crops grown on your land)Adverse Possession (Squatter's Rights): Acquiring ownership of real property by open, hostile, actual, continuous, and exclusive use for the statutory periodEminent Domain: Government's power to take PRIVATE property for PUBLIC USE upon payment of just (fair market) compensation — 5th AmendmentDedication: Owner voluntarily gives land to the public for a public purposeOccupancy: Acquiring ownership of abandoned or previously unowned personal property by taking possessionLOST property: Owner accidentally misplaced it; finder has right to possession EXCEPT against true ownerMISLAID property: Intentionally placed somewhere and then forgotten; property OWNER (where found) holds it temporarily for true ownerABANDONED property: Owner voluntarily gave up all ownership rights; FINDER can claim ownershipCo-Ownership of PropertyTypeWho Can HoldRight of SurvivorshipTransferNotesTenancy in CommonAny two or more personsNO — share passes to heirs, NOT co-ownersEach can sell/will their share freelyMost common form of co-ownership; each has undivided interestJoint TenancyAny two or more personsYES — survivor inherits automaticallyALL joint tenants must agree to sell (severs joint tenancy)Must have equal shares; right of survivorship is key featureTenancy by the EntiretiesMARRIED couples ONLYYES — survivor inheritsBOTH spouses must agree to any transferCannot be reached by one spouse's creditors aloneCommunity PropertyMarried couples in community property statesVaries by stateBoth spouses typically must agreeProperty acquired during marriage = 50/50 ownershipSeveraltyOne person onlyN/A — sole ownerOwner can transfer freelySimplest form of ownership🧠 Co-Ownership Memory TrickJT has RS, TIC does NOT | Joint Tenancy (JT) = RIGHT OF SURVIVORSHIP (RS) | Tenancy in Common (TIC) = NO right of survivorship; share can go to heirs | Tenancy by Entireties = Married couples only + survivorshipReal Estate TransactionsDEED: Legal document that transfers title (ownership) of real property; must be written, signed by grantor, delivered to grantee, and acceptedWARRANTY DEED: Grantor guarantees clear title and will defend against any future title claims — best for buyerQUITCLAIM DEED: Transfers only WHATEVER interest the grantor happens to have — no guarantees; used between family members or to clear title defectsTitle Search: Examination of public records to uncover any claims, liens, or encumbrances on propertyAbstract of Title: Complete summary of all recorded instruments affecting the propertyTitle Insurance: Protects buyer and lender against undiscovered title defectsMORTGAGE: Loan secured by real property; lender holds security interest; borrower retains possessionFORECLOSURE: Legal process by which lender forces sale of mortgaged property when borrower defaultsLIEN: Legal charge/claim against property as security for payment of a debtEASEMENT: Right to use another person's land for a specific limited purpose (utility lines, driveway access) — runs with the landLICENSE: Permission to use another's property for a specific purpose — REVOCABLE at will (unlike easement)ZONING: Government regulations that divide land into districts with permitted uses (residential, commercial, industrial, agricultural)Lease LawLEASE: Contract giving tenant the right to possession and use of property for a specified period in exchange for rentLANDLORD (Lessor): Property owner who transfers possession and use rights to the tenantTENANT (Lessee): Person who pays rent in exchange for the right to possess and use the propertyTenancy for Years: Fixed beginning and end dates; terminates automatically without noticePeriodic Tenancy: Renews automatically for successive equal periods (month-to-month, year-to-year)Tenancy at Will: No fixed period; either party can terminate with proper noticeLandlord's duty: Maintain habitable premises; respect tenant's quiet enjoyment; make necessary repairsTenant's duty: Pay rent on time; not damage property beyond normal wear; not disturb neighborsSUBLEASE: Tenant leases to a third party; original tenant remains liable to landlord unless novation occursBailmentBAILMENT: Temporary transfer of possession (but NOT ownership) of personal property to another for a specific purposeBAILOR: The owner who gives up possessionBAILEE: The party who receives possession; must return property or dispose of it as directedBailment TypeStandard of CareExamplesFor bailor's sole benefit (bailee borrows for free)SLIGHT care required from baileeBorrowing a friend's car; borrowing neighbor's toolsFor mutual benefit (commercial bailment)ORDINARY reasonable carePaid parking, laundry, car repair, shipping, hotel coat checkFor bailee's sole benefit (gratuitous loan)GREAT/EXTRAORDINARY care requiredHotel lending an umbrella free; gratuitous storage by friend🔑 KEY PROPERTY DISTINCTIONS: Joint Tenancy = RIGHT OF SURVIVORSHIP. Tenancy in Common = NO survivorship (heirs inherit). Patent = 20 years. Copyright = Life + 70 years. Trademark = Indefinite (renewed). Trade Secret = No registration, no time limit. Eminent domain requires JUST COMPENSATION.H. Computer LawCybercrime • Software Piracy • E-Commerce • Privacy LawsComputer CrimesComputer Fraud and Abuse Act (CFAA, 1984 / amended): Primary federal law criminalizing hacking and unauthorized access to computer systemsComputer Hacking: Unauthorized access to computer systems; federal crime — penalties include fines and imprisonmentComputer Virus: Malicious program designed to replicate and cause damage; deliberate introduction = tort (like battery/trespass) and often a crimeIdentity Theft: Using another's personal information (SSN, credit cards) to commit financial fraud; federal crimePhishing: Fraudulent emails or websites tricking users into revealing personal/financial informationRansomware: Malicious software that encrypts victim's data and demands payment for decryption keyCyberstalking: Using electronic communication to harass or threaten another person; criminal in most statesTime Bomb / Drop Dead Device: Secret program that disables a system at a predetermined time; used in extortion or fraudCounterfeit Access Device and Computer Fraud and Abuse Act: Specifically prohibits unauthorized access to government and financial institution computer systemsSoftware and Intellectual Property in Digital WorldSoftware Piracy: Unauthorized copying, distribution, or use of software — constitutes copyright infringement; civil and criminal penaltiesSoftware License: Legal agreement granting permission to use software under specific terms and conditionsSource Code: The underlying programming code; protected by BOTH copyright law AND potentially trade secret lawShrink-Wrap License: Terms inside sealed software package purportedly agreed to by opening package — enforceability is controversialClick-Wrap Agreement: Online terms accepted by clicking 'I Agree' button — generally enforceableDigital Millennium Copyright Act (DMCA, 1998): Prohibits circumventing technological protection measures (DRM) on copyrighted digital works; criminalizes digital copyright infringementReverse Engineering: Permitted if the product was legally acquired (e.g., purchased on open market); can legally defeat trade secret protectionE-Commerce LawElectronic Signatures in Global and National Commerce Act (E-Sign Act): Electronic signatures are legally equivalent to handwritten signatures in interstate and foreign commerceUETA (Uniform Electronic Transactions Act): State-level law giving electronic signatures and records the same legal effect as paper equivalentsJurisdiction Issues: Internet transactions can involve parties in multiple states/countries; courts generally use 'minimum contacts' to determine jurisdictionCAN-SPAM Act: Regulates commercial email; requires: honest subject lines, physical mailing address, easy opt-out optionCOPPA (Children's Online Privacy Protection Act): Websites must obtain verifiable PARENTAL CONSENT before collecting personal information from children under 13Privacy LawsPrivacy Act (1974): Limits federal government's collection, use, and disclosure of personal information about citizensHIPAA (Health Insurance Portability and Accountability Act): Protects confidentiality and security of patients' medical records and health informationGramm-Leach-Bliley Act: Financial institutions must protect customers' nonpublic personal financial information and disclose their privacy policiesElectronic Communications Privacy Act: Prohibits unauthorized interception of wire, oral, and electronic communicationsStored Communications Act (part of ECPA): Restricts access to electronic communications stored by service providersState Privacy Laws: Many states have enacted their own laws (e.g., California CCPA) providing additional consumer privacy protectionsJurisdiction Challenges: Global nature of internet makes enforcement of computer crimes extremely difficult across borders🔑 KEY COMPUTER LAW FACTS: CFAA = main federal anti-hacking law. DMCA = protects digital copyright + prohibits circumventing copy protection. E-Sign Act = electronic signatures valid nationwide. COPPA = parental consent for children under 13. HIPAA = medical records privacy. Software piracy = copyright infringement.I. Domestic / Personal LawMarriage • Divorce • Minors' Rights • Wills • Trusts • Estate PlanningMarriageMarriage: A civil contract between two persons creating legal rights, duties, and obligationsLegal Requirements for Marriage: (1) Legal age (18 in most states; 16-17 with parental consent), (2) Capacity (sound mind), (3) No existing undissolved marriage (bigamy = void), (4) Not closely related (incest laws), (5) Mutual consentCOMMON LAW MARRIAGE: Recognized in some states — couple lives together as husband and wife with intent to be married; no ceremony requiredCEREMONIAL MARRIAGE: Requires marriage license + ceremony officiated by authorized person (judge, clergy)PRENUPTIAL (ANTENUPTIAL) AGREEMENT: Contract signed BEFORE marriage specifying property rights and financial arrangements; must be in WRITING (Statute of Frauds)VOID MARRIAGES (never legally existed): Same close family members (incest), bigamy (already married to another)VOIDABLE MARRIAGES (can be annulled): Underage without consent, fraud, duress, mental incompetence at time of ceremonyAnnulment and DivorceANNULMENT: Court declaration that the marriage was VOID or VOIDABLE from the beginning — marriage treated as if it never existedGrounds for Annulment: Fraud, duress, mental incompetence at time of ceremony, close family relation, prior undissolved marriageDIVORCE (DISSOLUTION): Legal termination of a VALID existing marriage; parties return to single statusNo-Fault Divorce: Irreconcilable differences; incompatibility; breakdown of marriage — NO wrongdoing required; available in all statesFault-Based Grounds (traditional): Adultery, abandonment/desertion, physical cruelty, mental cruelty, imprisonmentPROPERTY DIVISION: Community property states (9 states): 50/50 split of marital property | Other states: Equitable distribution (fair, not necessarily equal)ALIMONY / SPOUSAL SUPPORT: Periodic payments from one spouse to the other post-divorce; can be permanent, rehabilitative, or temporaryCHILD CUSTODY: Physical custody (where child lives) AND Legal custody (who makes major decisions for child)Child Support: Non-custodial parent must pay for child's financial support until child reaches majorityBest Interests of the Child: The governing legal standard for all child custody and support decisionsRights of MinorsMinor: Person under 18 in most states (some states use different ages for different purposes)Minors ARE legally liable for their own torts and crimesMinors generally CANNOT be held to contracts (except necessaries); may disaffirm most contractsEMANCIPATION: Legal process by which a minor is freed from parental control and gains adult legal rightsMethods of emancipation: Marriage, military service, court orderEmancipated minor CAN enter binding contractsPARENTAL DUTIES: Provide food, clothing, shelter, education, and medical care for minor childrenParents generally NOT liable for children's independent torts (exception: if parent was negligent in supervision)JUVENILE COURTS: Handle cases involving persons generally between ages 13-18; emphasize rehabilitation not punishment; proceedings are generally confidentialWills and Estate PlanningWILL (TESTAMENT): Legal document stating how a person wants their property distributed after deathTESTATOR: Person who makes and signs a will (male or gender-neutral term)TESTATRIX: Female person who makes a will (traditional term)TESTAMENTARY CAPACITY: Must be (1) at least 18 years old, (2) of sound mind, (3) acting free of undue influenceTESTAMENTARY INTENT: Clear intention to make a willREQUIREMENTS FOR A VALID WILL: (1) Must be in WRITING, (2) Signed by testator, (3) Witnessed and signed by at least 2 adult witnesses who are NOT beneficiaries, (4) Testator must have testamentary capacityHOLOGRAPHIC WILL: Entirely handwritten AND signed by the testator; no witnesses required in many statesCODICIL: Written amendment or addition to an existing will; must meet same formal requirements as the will itselfREVOKING A WILL: Physical destruction (burning, tearing), creating a new will (expressly or by implication), marriage in many states, divorce in many statesEstate Administration and Intestate SuccessionPROBATE: Court-supervised process of validating a will, paying debts, and distributing assets to beneficiariesEXECUTOR (male) / EXECUTRIX (female): Person named IN THE WILL to carry out its terms and administer the estateADMINISTRATOR (male) / ADMINISTRATRIX (female): Court-appointed person to administer estate when there is NO valid willINTESTATE: Dying without a valid will — state intestacy laws determine how property is distributedINTESTATE SUCCESSION ORDER: Typically: surviving spouse and/or children first → then parents → then siblings → then more distant relativesHEIR: Person who inherits through intestate succession (by operation of law)LEGATEE / BENEFICIARY: Person named in a will to receive specific propertyPROBATE COURT: Specialized court handling wills, estates, guardianships, and conservatorshipsAdvanced Estate Planning ToolsTRUST: Legal arrangement where a trustee holds and manages property for the benefit of designated beneficiariesLIVING TRUST (Inter Vivos Trust): Created during the grantor's lifetime; assets pass to beneficiaries WITHOUT going through probate — private and fasterTESTAMENTARY TRUST: Created by provisions in a will; takes effect at death; must go through probatePOWER OF ATTORNEY: Written authorization for an agent to make legal and/or financial decisions on behalf of the grantorDURABLE POWER OF ATTORNEY: Remains valid and effective even if the grantor later becomes incapacitated — critical for elder law planningLIVING WILL / ADVANCE DIRECTIVE: Written instructions specifying what medical treatment the person wants (or does not want) if incapacitatedHEALTH CARE PROXY / MEDICAL POWER OF ATTORNEY: Designates a specific person to make medical decisions if incapacitatedGUARDIAN: Court-appointed person with responsibility for the personal care of a minor or incompetent adultCONSERVATOR: Court-appointed person with authority to manage the financial affairs of an incapacitated adult🔑 KEY ESTATE FACTS: WILL = goes through PROBATE (public). LIVING TRUST = avoids probate (private). Administrator = no will (court-appointed). Executor = named in will. WILL requires 2 adult witnesses who are NOT beneficiaries. Student loans, alimony, and child support survive bankruptcy. Non-fault divorce available in all states.High-Frequency Test Questions — Quick-Fire ReviewThe 40 Most Commonly Tested Facts | Review Daily Before the TestQuestionAnswerWho makes an offer?The OFFERORWhat is the Statute of Frauds?Law requiring certain contracts to be in WRITING (MY LEGS mnemonic)What does the UCC govern?Sale of GOODS (not services, not real estate)What does stare decisis mean?Courts must follow PRECEDENT of prior decisions ('let the decision stand')Who is liable for an agent's torts?The PRINCIPAL (respondeat superior doctrine)Can a minor disaffirm a contract?YES — except for NECESSARIES (food, clothing, shelter, medical care)What is Chapter 7 bankruptcy?LIQUIDATION — trustee sells non-exempt assets; debts dischargedWhat is Chapter 11 bankruptcy?REORGANIZATION — business restructures and continues operatingWhat is Chapter 13 bankruptcy?INDIVIDUAL REPAYMENT PLAN — 3-5 years; keep assetsIs bankruptcy governed by federal or state law?FEDERAL LAW exclusively (U.S. Bankruptcy Code)What is bait and switch?Advertising low price to attract customers, then switching them to higher-priced itemDoor-to-door cancellation period?3 BUSINESS DAYS (for purchases of $25 or more)How long does a patent last?20 YEARS from filing dateHow long does copyright last?Author's LIFE + 70 YEARSHow long does a trademark last?INDEFINITELY as long as used and renewed every 10 yearsWhat is respondeat superior?'Let the superior respond' — employer vicariously liable for employee's torts in scope of employmentVoid vs. voidable contract?Void = NOBODY can enforce it. Voidable = AGGRIEVED PARTY can choose to enforce or cancelWhat is promissory estoppel?Enforcing a promise WITHOUT consideration when other party reasonably relied on it to their detrimentWhat is the mailbox rule?Acceptance is effective WHEN MAILED (sent), not when receivedUCC writing requirement?Contracts for goods valued at $500 or MORE must be in writingWhat is eminent domain?Government's power to take private property for PUBLIC USE upon paying JUST (fair market) compensationWhat does Title VII protect?Race, color, religion, sex, and national origin (employment discrimination)ADA: employer minimum size?15 or more employeesADEA: employer minimum size?20 or more employees; protects workers age 40 and olderWhat is joint tenancy?Co-ownership with RIGHT OF SURVIVORSHIP — survivor inherits deceased co-owner's shareWhat is tenancy in common?Co-ownership WITHOUT right of survivorship — each can will their share to heirsWhat is a warranty of merchantability?Implied guarantee that goods are fit for their ORDINARY intended purpose (automatic for merchants)Who executes a promissory note?The MAKER (primary party — unconditionally liable)What is perfection of a security interest?Filing a financing statement (UCC-1) to make security interest valid against third partiesWhat is respondeat superior test element 1?Was the act the TYPE of work the employee was hired to perform?Which court hears small claims?SMALL CLAIMS COURT ($2,500 limit; no attorney required; not a court of record)What is adverse possession?Acquiring real property by open, hostile, continuous, exclusive use for statutory periodWhat is an easement?RIGHT to use another's land for a specific purpose (runs with the land; not revocable)Executor vs. administrator?EXECUTOR = named in will. ADMINISTRATOR = appointed by court when no willWhat is a holographic will?Entirely handwritten and signed by testator; no witnesses needed in many statesWhat happens in a merger?Two companies combine into ONE surviving entityWhat governs partnerships in most states?Uniform Partnership Act (UPA)What is commingling in agency law?Mixing agent's personal funds with principal's funds — PROHIBITEDWhat is puffing in sales?Sales exaggeration or opinion — NOT a legally binding warrantyWhat is caveat emptor?'Let the buyer beware' — old doctrine largely replaced by consumer protection lawsAll Mnemonics & Memory Tricks — Summary PageKeep This Page for Last-Minute Review!🧠 Contract Elements — 'Only Adults Get Contracts Correctly Legalized'O = Offer | A = Acceptance | G = Genuine Agreement | C = Consideration | C = Capacity | L = Legality🧠 Statute of Frauds — 'MY LEGS'M = Marriage | Y = Year (over one year to perform) | L = Land/Real Property | E = Executor's personal promise | G = Goods over $500 | S = Surety (guaranty of another's debt)🧠 Negligence Elements — 'DBCD'D = Duty of care | B = Breach of that duty | C = Causation (actual + proximate) | D = Damages resulting🧠 Contract Defects — 'FANDOM'F = Fraud | A = Absent meeting of minds | N = Nondisclosure | D = Duress | O = (undue influence) | M = Mistake🧠 Business Forms — 'SPCA'S = Sole Proprietorship (Simplest) | P = Partnership (Pass-through + unlimited liability) | C = Corporation (Charter + limited liability + perpetual) | A (LLC) = All the best features🧠 Bankruptcy ChaptersCh. 7 = LIQUIDATION (start over) | Ch. 11 = REORGANIZATION (business restructures) | Ch. 12 = FAMILY FARMER/FISHERMAN | Ch. 13 = INDIVIDUAL REPAYMENT (3-5 year plan, keep assets)🧠 Co-Ownership — 'JT has RS, TIC does NOT'JT = Joint Tenancy = RIGHT OF SURVIVORSHIP | TIC = Tenancy in Common = NO survivorship | TE = Tenancy by Entireties = Married couples + survivorship🧠 IP Duration Quick ReferencePatent = 20 years | Copyright = Life + 70 years | Trademark = Indefinite (renewed every 10 years) | Trade Secret = As long as kept secret🧠 Respondeat Superior — All 4 Tests Required(1) TYPE of work hired to do | (2) AUTHORIZED time and place | (3) Motivated at least partly by SERVING THE PRINCIPAL | (4) ANTICIPATED by employer — ALL 4 must be YES🧠 Warranty TypesEXPRESS = stated promise (words or writing) | IMPLIED MERCHANTABILITY = fit for ORDINARY use (auto for merchants) | IMPLIED FITNESS = seller knows SPECIFIC purpose + recommends goods🧠 Court Tiers (bottom to top)Trial Court (original jurisdiction) → Intermediate Court of Appeals → Supreme Court | FEDERAL: District Court → Circuit Court → U.S. Supreme CourtGOOD LUCK AT THE NLC!Study smart. Contracts first. No penalty for guessing — answer every question!