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All Notes from Lowell's Intro to Business Law Class

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Business Law
BSLW 1021

Intro to Business Law Law and the Constitution Law- principle of conduct enforceable by a government entity and is derived from four sources 1. Constitution 2. Legislature (federal or state)- passes laws/statutes 3. Court cases- “case law” 4. Common law- laws brought over from England Types of Law  Substantive- “don’t do this…”  Procedural- procedures for enforcing substantive law- “if you do this…then this will happen as a punishment…” Point of the Law  To resolve conflicts of interest  Laws are passed by representative majority in the legislature Constitution- document that deals with the nature and organization of federal government  US Constitution is the oldest written constitution still in effect  Goal was to create a new nation  Writers of Constitution were highly educated men who based the Constitution of their studies of the Roman Empire, Greek Empire, etc.  History behind the Constitution o East coast of America was colonized by British  Different countries who colonized the new world was representative of the divisions throughout Europe  England itself was divided into landowning aristocrats (“cavaliers”) who supported monarchies, and the Puritan Protestants (“roundheads”) who believed in Republicanism (representative government)  “Roundheads” won British Civil War and established a “Quasi-Republic”  Upon moving to America, “roundheads” inhabited northern land and “cavaliers” inhabited southern land o French and British conflict in America led to the French and Indian War, in which the British won o British claimed that they were “protecting” the American colonists and as a result, demanded taxes from the colonists  This was problematic because the colonists were British citizens, yet they were being taxed without representation in Parliament o Colonists protested for a vote in Parliament  Boston Tea Party- boycotted tea coming in through Boston Harbor- colonists dressed as Native Americans and dumped barrels of tea into the harbor o Britain imposed the Intolerable Acts  Closed Boston Harbor  Banned town meetings in New England  Local town leaders were now to be appointed from Britain  Any colonist who was a suspect of a killing would be tried in Britain o 1774= 1 Continental Congress- discussed Intolerable Acts  Wanted rights as British citizens nd o 1775= 2 Continental Congress- again, discussed Intolerable Acts o 1776=Continental Congress wants independence from Britain  Signed Declaration of Independence  Created 13 individual entities  Colonists didn’t want a strong central government, which was different than situation in Britain  Drafted the Articles of Confederation  Precursor to the Constitution  Created one weak governing body (Congress)- had limited power  No federal government or judicial branch  Each state had one vote in Congress  Each state could ask for money from other states and had no power to tax  Articles of Confederation gave power to declare war, but not the power of a military draft  Each state printed their own money Constitution  General outline of power and limits of government  Bill of Rights o Limits of the government with regard to peoples’ rights Articles of Confederation  Written during Revolutionary War  1783= war ends  1785= states had no money o George Washington- “new Union would be no more than a rope of sand and would be easily broken” o States were divided on issue of strong or weak central government o Shay’s Rebellion- in Massachusetts  Former soldiers who became farmers were not making money off their farms so the government began to shut them down  MA government was almost overthrown by rebellious farmers  NY and wealthy MA citizens were able to suppress revolt by giving MA government money to use  Showed the need of a central government  1787= convention formed to revise Articles of Confederation o headed by James Madison and Alexander Hamilton o “Constitutional Convention” o convention drafted the Constitution without approval from individual states  done behind closed doors  threw out Articles of Confederation  no individual state representation at Constitutional Convention  ironic because one key issue on drafting the Constitution was the representation of each state o this was also part of the Articles of Confederation  Federalist vs. Anti-Federalist Debate o Federalists= Franklin, Washington, Hamilton, Adams  Wanted a strong central government o Anti-Federalists= Martin, Jefferson, Sherman, Henry  Wanted a weak central government o Issues Debated on for Inclusion in Constitution  States Representation  Should it be based on population, or should it be equal representation for each state?  Dealing with slaves as population  Whether or not there should be a President  Anti-Federalists wanted more than one President  How Congress should be set up  Length of representative in office  Number of representatives total, and per state  Who the representatives should be and how would people vote for them  Wealthy representatives or representatives for the entire population  Only the wealthy landowners vote, or the entire population votes  Powers given to the states  Whether individuals’ rights will be written down or not  Anti-Federalists demanded written rights  Federalists objected because with a list, they didn’t want to have the issue of people thinking that rights that were written down were the only rights Hamilton and Adams Quotes  Wanted elite, wealthy and educated to govern o Felt that people with lots of property had something to lose, so they would be more invested in the nation’s prosperity  The people without land and property had nothing to lose if they had governing roles Franklin Quote  If you are young and unwise, but own property, you can vote  However, if when you become older, you lose your property, you lose your right to vote even if you are wiser  Believes that principle of property=right to vote is not right Virginia Plan (Federalists)  1 executive (president)  Legislative branch with two houses o One house would have a constant number of representatives for each state o One house would have representatives based on their state’s population  One judicial branch New Jersey Plan (Anti-Federalists)  Congress has power to raise taxes  Equal number of representatives for each state  3 presidents Great Compromise  Combined both plans  With the Articles of Confederation, states must vote unanimously to amend the Articles  Once the new Constitution written, it was sent out to all of the states, but many didn’t like it and didn’t want to ratify it  1788=11 out of the 13 states ratified the Constitution o Federalism became nationalism  Constitution is not a blueprint because it is so general and doesn’t have a lot of details  Article I- heavy focus on Congress because framers believed Congress would have the most power o Section 8- lays out the powers of Congress  Clause 3- interstate commerce (commerce between states)- Congress has the authority to regulate any interstate commerce  Article II- powers of President o Smaller than Article I because framers didn’t think executive branch would have much power  Article III- powers of Judicial Branch o Very small because framers didn’t think judicial branch would have much power  Article VII- last article-no mention of individuals’ rights to this point  Constitution did not originally contain the Bill of Rights Bill of Rights  Was added one year after the ratification of the Constitution  Listed limits of federal government in regards to rights-nothing about state governments  By the early 20 century, the Bill of Rights was applied to all states  Amendment 9-favored Federalists because they were afraid people would think that the Bill of Rights were the only rights given to people o Says that Bill of Rights are not exclusive  Amendment 10- favored Anti-Federalists because they favored states’ rights o Congress can only pass laws based on powers given to them in the Constitution o States/people have powers not given to Federal government  Implicitly stated= reference to something  Explicitly stated= specifically stated  Federal government can not make state laws  States are not allowed to pass laws that: o Conflict with Federal laws  However, the can pass parallel laws so that court cases regarding a law can happen at the state, not federal level o Are preempted  Preempted=government states that states can not pass laws in a specific area o Ex. Bankruptcy, war, federal communications, printing money  All of these are dealt with at the federal level  Can amend the Constitution if: o The wording is too vague (ex. “cruel and unusual punishment”) o The wording is incomplete (ex. Nothing in the Constitution stated how many times a person can be elected President) o There is something wrong with the language ( 3/5 of “other persons” are counted as population- this implies slaves)  Is the Constitution implicitly saying that slavery is okay?  Article V-laws have to be ratified by the appropriate percentage of states  Ways to amend the Constitution: o Article V (formal means) o By practice o Judicial Interpretation Court System Federal Court System District Courts  At least one per state  Decide issues of law and issues of fact  Have judges o Can request for a jury o Judges decide issues of law o Juries decide issues of fact  If a party is unhappy with the result of the trial, they can appeal to Appellate Court Appellate Court  Not one in every state  12 in entire country o 1 for the New England region  For the most part, Appellate Courts only review issues of law o Can only appeal the ruling in terms of the law, not in terms of the facts  There are many judges who will hear a case at the same time and vote on which way to decide the case, almost like a jury Federal Court  Can appeal a case to the Supreme Court if a party is unhappy with Appellate Court’s ruling o Supreme Court only takes certain cases  Such as certified questions from the Appellate Courts  Writ of Certiorari- when a party is unhappy with the Appellate Court’s ruling and the issue is important to the nation o In order to have case taken by the Supreme Court, one must convince the Court of the case’s importance  Most important cases taken by the Supreme Court deal with Constitutional Rights State Court System  Similar to Federal Court System  Courts of general jurisdiction are analogous to District Courts because that is where the case originates  State Appellate and Supreme Courts are similar to Appellate and Supreme Court because they only decide issues of law o Some State Appellate and Supreme Courts will decide issues of fact as well  This varies by state Rankings of Law 1. US Constitution 2. Acts of Congress and federal treaties passed pursuant to the terms of the Constitution 3. State Constitutions 4. Acts of state legislatures 5. Town, city, or township ordinances 6. Case law Roles of Courts 1. Apply the law, as well as statutes passed by legislature 2. Make law when law doesn’t exist- this is subject to legislature’s opinions/votes 3. Interpret incomplete/ambiguous/conflicting language of Constitution/statutes/prior cases Types of Constitutional Interpretation 1. Bedrock- interpret the Constitution the way the founders would have a. Problem with this is that there was more than one founder and many founders had different views 2. Living Document- keeping the Bedrock view in mind, but also considering what the ultimate goal of the Constitution was and how it would apply in today’s world Tools Used for Interpreting Constitution/Statutes/Cases in Order of Precedence 1. Words 2. Intent of Lawmakers 3. Prior Case Law 4. Historical Context 5. Custom in the Industry 6. Common Sense  Example: ofthncomplete wording o 4 amendment originally applied to only Federal government, but now it applies to state governments too (search and seizure amendment)  Although the amendment does not explicitly state it, it was ruled that in this amendment, a right to privacy is implied  This came about through judicial interpretation  Example: of ambiguous wording o Americans with Disabilities Act forbids discrimination against those with disabilities  A school teacher was fired because she had tuberculosis  She sued under the Americans with Disabilities Act  Used the tool of “intent of lawmakers” to discover that in passing the law, one lawmaker said that “myths about disease are as debilitating as physical impairment”  Teacher won lawsuit Judicial Interpretation- power of the court to interpret the meaning of the words in the Constitution/state legislatures/statutes/prior cases Judicial Review- power to review actions of branches of government and all other courts  Checks to see if actions are Constitutional  Utilizes judicial interpretation to do this McCulloch vs. Maryland  Decided in 1819  At the time, the country was divided between the Federalists and Anti-Federalists  Federalist court at the time o Wanted Federal government to have power  The Federal government formed a bank o Maryland banks did not want competition from this national bank o Maryland imposed a tax on bank notes that were not from Maryland banks  Question: did the Federal government have the power to establish a bank? o “Elastic”/Necessary and Proper Clause made it okay  used Judicial Review o Federalist court interpreted bank was “necessary”  In order to raise, collect, and keep track of taxes, pay for an army, etc.  Ruling was made through Judicial Interpretation  Interpreted “necessary” to mean not absolutely necessary, but still a good idea to have o This interpretation amended the Constitution and its meaning US vs. Morrison  Decided in 2000  Anti-Federalist court at the time o Means narrow interpretation of Constitution  Plaintiff sued under Violence Against Women Act o Led to someone being prosecuted o Argument was that Congress did not have power to pass Violence Against Women Act, therefore you can not prosecute someone under it  Violence Against Women Act was passed under Commerce Clause o Act and original ruling were overturned by court because violence against women isn’t considered interstate commerce Legal vs. Equitable Remedies  Legal=money  Equitable= remedy other than money (typically in a civil case) o You can get an equitable remedy when:  Money won’t solve the problem  It is not a personalized service o Equitable remedies include: 1. Injunction (no contract involved)=order to do or not do something 2. Specific Performance (contract involved)= same as an injunction, but with a contract 3. Rescission (contract involved)= putting things back to status quo a. Had the contract never occurred, what would you have had? Jurisdiction- powers of the court to hear a case; must have:  Subject matter: 1. Original (court where case is originally brought) vs. Appellate (court for appeals) 2. Limited (special type of court) vs. General (everything else) 3. Federal (hears Federal/Constitutional matters) vs. State (hears state matters) AND  Personal 1. Tie to forum/court a. Some connection to state/district where court will be held  Can bring a case to Federal court if: o Matter is a Federal issue OR o Damages owed are $75,000 or more AND opposing parties are from different states  With this large amount of damages required, it eliminates people with smaller amounts trying to bring their case to Federal court (weed out some of the smaller cases)  With the citizens having to be from different states, this avoids bias in the event the case would be tried in a state in which one of the parties is a citizen Stare Decisis- courts are bound by prior case law  General rule  Exceptions: 1. There is a major shift in the thinking of society a. Ex. Plessy vs. Ferguson- separate but equal 2. Prior case law is technically incorrect 3. Facts are distinguishable from prior cases Court Procedure  Plaintiff- the one who brings the charges/case to court  Defendant- the one who the charges are brought against  Attorney-Client Privilege- right of an individual to have discussions with his/her attorney kept private and confidential  Jury- a body of citizens sworn by a court to determine a verdict of issues of fact submitted to them o Not entitled to a jury in every case- most often, juries are only in criminal cases o If you are entitled to a jury, your attorney must ask for one  Steps of a Lawsuit 1. Complaint 2. Complaint is delivered to defendant a. Defendant can answer i. Typically in a yes/no manner whether what is contained in complaint is true or false b. Defendant can not answer and file a motion to dismiss i. Motion to Dismiss- a pleading that may be filed to attack the adverse party’s pleading as not stating a cause of action or defense 1. Even if everything in the complaint is true, there is no legal violation or grounds for legal action Discovery Process- both sides try to find out as much information as possible (prior to trial) about other side’s case 1. Deposition-can ask almost any question -person being asked question is under oath -answers to questions can be brought into court of law -can be used for impeachment 2. Interrogatories-send a person the questions you want answered 3. Request for production of documents Motion for Summary Judgment- no facts in dispute, only an issue of law, in trial after case has been presented Trial  Pretrial o Voir dire- jury examination  Can challenge juror and have them removed  “for cause”- done to eliminate bias against a client  Preemptory Challenge- removal of juror for any reason except race, even if it is irrelevant  Trial o Opening Statements o Call Witnesses o Direct Examination= no leading questions that call for yes/no answer o Cross Examination o Motion for Directed Verdict=similar to motion to dismiss o Summations o Jury instructions=judge lays out what needs to be met for defendant to be guilty  Jury decides if factors are all met  If not, then defendant is not guilty  Post Trial o When the prevailing party is awarded costs, the costs don’t usually include attorney’s fees unless the statute permits it, or the claim is a breach of contract and recovery of attorney’s fees is in the contract o Alternative Dispute Resolution= facts are presented and arbitrator determines a resolution  If arbitrator’s decision is binding  It can not be appealed  If arbitrator’s decision is not binding  The decision isn’t final and it can be appealed o Mediation  Neutral person acts as a messenger between opposing sides of a dispute, carrying the latest settlement offers  Mediators can make dispute resolution suggestions, but can not make decisions, and their suggestion is never final Crimes Crime- prohibited act that is punishable by the government  A public wrong which violates, in most cases, statutes, and results in prosecution by a governing body  Possibility of imprisonment and/or monetary fine  Government HAS to prosecute o Government has burden of proof  “Beyond a reasonable doubt”-standard is higher in criminal matter than in civil matter because the resulting penalties are much more serious  Implied by judicial interpretation  MUST PROVE: 1. The act was committed by the defendant 2. Mental state-don’t need to prove that defendant knew that his action was illegal, just the fact that the action he committed is illegal  Misdemeanor=punishable by less than one year in prison  Felony=punishable by more than 1 year in prison Liabilities  Corporations-can be liable, but not always o Not liable if punishment can’t be applied to them  Ex. Imprisonment o Not liable if the crime has specific intent  Can’t be liable for murder because there is intent involved; can be liable for manslaughter because there is no intent involved o Corporations are responsible for their employees’ actions only in the course of the employees’ duties  Board Members/Directors-can be personally liable  Intoxicated persons-an intoxicated person is liable for their actions because they have drank to the point where they don’t know what they are doing-they are responsible for whatever happens as a result of their actions US vs. Park  Question: did the lower court give Park the appropriate charge? (which answered the question of: when is an officer liable? And Did park have the responsibility to make sure his facilities were rodent free?) o Answer was yes he had the responsibility and Supreme Court upheld this – he was criminally liable Larceny/Robbery/Embezzlement  Larceny-wrongful taking of something; simply taking something, but not by force or fear  Robbery-wrongful taking of something; done through force or reasonable fear  Embezzlement-initial taking is rightful (something was given to you) Ethics Ethics- ethics of professional businesses of how it does business in society; certain industries determine ethics/standards through regulations Milton Friedman View- as long as you are acting within the law, you must do whatever you need to do to make a profit; focus only on the shareholders; people should do good things on their own time  Many people who believe in Friedman’s theory want a laizes-faire policy Anita Roddick View- take into account the shareholders; balance the stakeholders’ and shareholders’ wants Shareholder=those who own stock in a corporations Stakeholder=those affected by a businesses decisions  Ex. Community, employees, etc. Corporations Forms of Business  Proprietorship-one person owns the business by themselves o Advantages:  No organizational fees  Total control of company  Only one level of taxes o Disadvantages:  Can be sued individually- sue for owners’ personal assets  Personally liable  Limited resources for expansion  Passing on of business is difficult  Partnership-pool assets with someone else o Advantages:  No formal filing (organizational) fees  Pooling of resources  Only one level of taxes o Disadvantages:  Unlimited liability  Jointly responsible for debt of all partners  Company automatically dissolves when one partner dies  Corporation-inanimate entities, separate from government o Some civil and criminal statutes may apply o Shareholder=people who invest and own stock in company, similar to citizens of a country; vote for the directors  Have to have at least 1 annual meeting for company to be recognized as corporation, which shields shareholders, directors from having any personal liabilities  Indirectly determine company policy  Since shareholders vote for directors, they are voting for the ones who will ultimately determine company policy  Sometimes get a share of company profits; this is set forth in the bylaws  Shareholders (and company directors) have to comply with legal responsibilities of corporations to maintain shield from liability; “pierce corporate veil” if this isn’t met  When they put money in the company, if the company does poorly, they can only lose what money they put in, not their personal assets  Only the company can be sued, not the shareholders personally  Benefits received by shareholders are set forth in the bylaws of the corporation  Bylaws=rules and regulations enacted by a corporation to govern the affairs of the corporation and its shareholders, directors, and officers o Similar to Constitution o Advantages:  Shielded from liability  Easy to pass on company o Disadvantage:  Company must file with state every year o Board of Directors=determine company policy  Supervise and manage general business of corporation  Liability: when a director is making business decisions, even if they are harmful, the director typically can’t be sued personally  Directors can be sued personally if they are acting outside of their authorization or not acting in good faith (violating the Business Judgment Rule)  Their power is set forth in the bylaws  Quorum=minimum number of directors needed at meeting of board members for business to be conducted o Officers=deal with the day to day running of business  Implement board and shareholders’ decisions  Work as agents for the company/corporation  Authority to act on behalf of the corporation pending board’s vote  Similar liability as directors-can only be sued personally if they act outside of their authorization or they violate the Business Judgment Rule (not acting in good faith)  Their authority is set forth in bylaws Securities Security-any instrument that might be sold as an investment, such as stocks, bonds, and investment contracts  An investment contract exists if there is: 1. An investment of money 2. Common enterprise 3. Expectation of future profits from the efforts of others Subsidiary- fictitious entity owned by a corporation. That original corporation is the sole shareholder State Regulations  Congress preempted state regulation of the following securities 1. Securities offered by mutual funds a. Mutual Funds=group of securities owned by a group of investors 2. Stocks listed on NYSE, American Stock Exchange, NASDAQ, National Market System, and other stock exchanges listed by the SEC  States are allowed to investigate fraud  State regulations on securities that are not preempted are called blue sky laws Federal Regulations 1. Security Act of 1933-deals with initial distribution of stock a. Prohibits offer or sale in interstate commerce securities to public without filing a registration statement with SEC i. Document containing information about the security, issuer, and the underwriter ii. Seller must provide prospectus to each potential purchaser 1. Prospectus contains key information b. Regulation D-certain private and limited offerings are exempt from registration i. Usually involve sophisticated investors who need less protection, or issuances involving small group of investors ii. Examples: 1. Offerings of any amounts of securities made solely to accredited investors (those who meet certain educational or financial requirements-banks/insurance companies) 2. Offerings of securities restricted to residents of the state in which the issuing corporation is organized and doing business 3. Rule 505 offerings of less than $5,000,000 to fewer than 35 non accredited purchasers over 12 month period 4. Rule 506 offerings to fewer than 35 non accredited purchasers  Issuers, sellers, and aiders and abettors are subject to criminal and civil penalties for violation of the 1933 Act 2. Security Act of 1934-deals with secondary distribution -resale of securities in national markets o Purpose: prevent fraudulent and manipulative practices in security exchanges and over the counter markets by means such as government supervision of: 1. Exchangers, brokers, and dealers of securities 2. Corporations which issue the stock via methods such as reporting requirements 3. Regulations of purchases of securities and use of information by insiders and tippees of corporations o Registration  Exchangers, brokers, and dealers who deal in securities traded in interstate commerce or any national security exchange must register with the SEC unless they are exempted  Companies whose securities are listed on a national securities exchange and unlisted companies with assets in excess of $10,000,000 and with 500 or more shareholders are subject to reporting requirements to the SEC  Corporate directors and officers owning equity securities (stock) in their corporation, and any shareholder owning more than 10% of any class of the corporation’s equity securities are defined as insiders and must file with the SEC a disclosure statement regarding such ownership, and all regulated transactions o Anti-Fraud Regulation  Section 10b of the 1934 Act makes it unlawful for any person to use any manipulative or deceptive device in contravention of SEC rules  Trading on insider information is an example of fraudulent activity  Trading and Securities Fraud Enforcement Act of 1988 gave SEC authority to bring civil action against an individual purchasing or selling securities while in possession of insider information  Sarbanes-Oxley Act allows criminal prosecution for these actions  Civil penalties up to three times the profit gained or loss avoided can be incurred for violations  Insiders, temporary insiders, tippees, and misappropriators are liable persons who aid and abet these individuals are also liable  Insiders-include directors or employees  Temporary insiders-are individuals retained by the corporation for professional services  Tippes-individuals who received information from an insider or a temporary insider. They are viewed to have liability when insider breaches duty by disclosing info to them and they knew or should have known of this breach AND insider benefits from this breach  Misappropriators-individuals who misappropriate or steal valuable nonpublic information in a breach of fiduciary duty to their employer. They will be liable for insider trading if the use such information o Short Term Profits-Section 16 of the 1934 Act is designed to prevent the unfair use of information by corporate insiders. Directors and officers owning equity securities in their corporations and shareholders owning more than 10% of any class of such stock must register with the SEC  Section 16 prohibits corporate insiders from participating in short term trading in their corporation’s securities  Short Term Trading=when an insider sells, at a profit, any of the corporation’s securities less than 6 months after insider purchased them  Accountants, lawyers, and consultants who prepare any statement, opinion, or any other legal statement filed with the SEC are deemed to be participating before the SEC  SEC may suspend or disbar those who are unqualified or unethical or who have violated federal securities laws or SEC rules  A cash tender offer exists when a corporation or group of investors seek to acquire control of another corporation by making a general offer to all shareholder of target corporation  Must file forms with info about background and identity of person filing, source of funds for purchase, etc. Dirks vs. SEC  Dirks was an investment analyst who received information that one company’s assets were overstated because of fraud  Dirks was a tippee who learned the information from an insider  Dirks passed along the information  The company’s stock went down  Question: is the tippee reliable for spreading information? o Court ruled no:  Insider must have breached their fiduciary duty- the information that was given out is not public information  Tippee must be aware of the breach  Insider must benefit directly or indirectly Investment Bank- financial institution that assists banks and governments in order to raise capital-are successful by underwriting  Mortgage can be viewed as a security because: o Mortgages are an investment of money o Selling/purchasing of mortgages are a common enterprise o Buying mortgages is done for future profits from the efforts of others Government Regulations of Business  Based on Federal law  Done to regulate businesses to advance economic interest of nation o Must involve interstate commerce (Commerce Clause)  States can pass interstate commerce laws as long as they: o Don’t conflict with Federal laws o They are not preemptive  Economic beliefs of those in Congress (the ones who pass the laws) control laws and policies implemented  Congress and Administrative Agencies (which are controlled by the Executive branch) control policies and laws implemented o Examples: false advertising, regulation of pharmaceutical safety, laws regulating workplace safety/standards, laws that encourage competition and prohibit unfair competition  Government Regulation of Unfair Competition o Congress has passed laws against unfair competition under Federal Trade Commission Act  Congress passes broad rules against unfair methods of competition preventing deceptive acts and practices  Unfair competition controlled strictly by creation of Federal Trade Commission  Done through Enabling Act o Actions/violations are brought up by Justice Department  Controlled by Executive branch, which determines how policies are implemented  Anti-Trust-deals with unfair competition and business practices o Sherman Act  Created in 1890  Deals with price fixing  Types if price fixing 1. Horizontal-companies all on same level of business decide they won’t set the price of their similar products below a certain amount- per se illegal (no defense against it; illegal in all instances) 2. Vertical-company who creates product sets price for sellers to sell the product act- per se illegal until 2007; not illegal if you can prove no one is being hurt by vertical price fixing 3. Tying-in order to buy a product you want, you must also buy some additional product you don’t want-per se illegal  Deals with monopolies achieved through market power  Can get a monopoly by achieving market power (being able to control prices and exclude competitors)  Monopoly is acceptable if the monopoly power is achieved through: 1. Superior Product 2. Consumer preference o Clayton Act  Created in 1914  Deals with price discrimination (giving different prices to different buyers)  It is allowable to price discriminate on grounds of: 1. Difference in grade, quality, or quantity 2. Cost of transportation is included in performing the contract 3. A good faith effort to meet competition 4. Differences in methods or quantities, i.e. marginal cost dif
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