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LEGL 2700 (77)
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Lecture 2

LEGL 2700 Lecture 2: Legal 2700 Test 2
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Department
Legal Studies
Course
LEGL 2700
Professor
Hackleman
Semester
Spring

Description
1 Legal Test 2 February 19, 2016 Chapter 13 Criminal Law and Business Crimes • Certain crimes are inherently bad and are universally recognized as being wrongful- Malum In Se o Ex- drunk driving • Decide it’s wrong and decide to regulate act because legislature says it’s wrong- Malum Prohibitum o Ex- Driving over speed limit, hunting without a permit o “Malum prohibitum is prohibited by legislature” • Wrongs against society o Criminal law punishes wrongdoers who affect the ownership of property o Federal and state penal codes define criminal acts and omissions • White-collar Crime: Any illegal offence that occurs in a business or professional setting o Committed to harm the business or for personal gains o Can fine businesses, but can fine and imprison an individual o Examples: Accounting fraud, bankruptcy fraud, bribery, counterfeiting, embezzlement, forgery, income tax evasion, mail fraud, money laundering, obstruction of justice, price fixing, wire fraud, etc. Classification of Crime • Classification based on the punishment imposed if the person is convicted of the alleged crime • Felonies: Punishable by fine or imprisonment in a penitentiary for a period of one year or more o Tend to be more severe crimes o Imprisonment for one year or more o Usually started by a government getting and indictment o Commenced by a grand jury indictment • Misdemeanors: Punishable by a fine or jail sentence of less than one year o Usually results in jail time of less than one year o The government files an information to start it offs Grand Jury 2 • Fifth Amendment to the U.S. Constitution o Before a trial for capital or infamous crime, there must be presentment or an indictment by a grand jury • Comprised of 23 citizens who live within the jurisdiction of the court that would try one accused of a crime o 16 people must be present for a vote to happen and a majority of the grand jury must find that a crime has been committed. This is called probable cause • Serves as an investigative body o Do not decide if they are guilty or innocent, but decide if there is enough evidence to indict the person • Presumption of innocence: Presuming that an indicted person is innocent until found guilty by a petit jury • A person subpoenaed to testify before the grand jury is entitled to invoke their fifth amendment right against self-incrimination and refuse to answer questions o Grand Juries can issue subpoena’s to people/businesses to force them to supply certain evidence ▪ Don’t have to tell them why they need the evidence because it has to be kept secret • The disclosure of a grand jury transcript is appropriate only in those cases where the need for it outweighs the public interest in secrecy Basic Concepts • You need to show the intent of some level of willingly or knowingly performing a crime • If you are dumb, or whatever, then it’s probably not enough to convince someone of intent. However, if you just turned a blind eye to it then it is intent • Public officials bring these trials to court. o AKA District attorney, US Prosecutors, US Attorneys Pleas in Criminal Cases • Guilty • Not Guilty • Nolo Contendere (“No Contest”) o Treated for sentencing as though they plead guilty, but cannot be brought to civil court as though having plead guilty. Saves time and money because then there is no trial • Criminal conviction may be basis for civil damages suit • 3 Fourth Amendment • Protects individuals and corporations from unreasonable searches and seizures by the government o Requires the police to obtain a search warrant ▪ They have to get a search warrant by going to a court and saying why they need it o Our rights to our car trunk have decreased significantly o Building inspectors do not have the right to inspect for building code violations without a warrant if the owner of the premises objects o Does not prohibit drug testing in most workplaces • Expectation of Privacy o Warrantless inspection: ▪ A highly regulated business and receiving federal aid • Ex- a nursing home ▪ When you are arrested they are allowed to pat you down to protect police • Also includes the immediate premises • To protect police officers, courts have held that officers making an arrest do not need a search warrant to search that person and the immediate area around that person for weapons ▪ Many business places do not have an expectation of privacy ▪ Presenting oneself at an airport checkpoint • You have voluntarily placed yourself there so you automatically give consent to be searched ▪ Extensive circumstances • Ex- Drug dealer’s house smells like weed from outside, then police knock and hear “destruction of evidence” so they knock in door and that evidence is allowed Riley vs. California • Expired plate and drives on suspended license • When they pat him down to arrest him and they find a smart phone • One of the officers goes through the phone and sees that he is part of a gang and connected with several shootings • His attorney in trial says that the police needed a search warrant to look through a phone • The court ruled that this is correct and that the evidence from the phone could not be used 4 o If public safety is a concern or future evidence could be deleted then you can search a phone without a warrant Fifth Amendment • Protects the accused from being compelled to testify against himself o Protects against self incrimination • Does not protect: o Against being required to produce physical evidence ▪ You do not have to talk against yourself but you are required to still produce any evidence including what could prove you guilty ▪ Finger prints count o A person who is required to produce business records o Corporations ▪ A corporation as a whole cannot be called upon to testify but they can call on individuals from the corporation to testify ▪ Exception- sole proprietorship business do get to use th the protection of the 5 amendment because it is one person running a business and therefore they have the rights of a single individual • Miranda Rights o If you are taken into custody they have to read you and make sure you understand them o Can be counterintuitive o If you want to invoke your Miranda rights you have to actually tell them that you are invoking your Miranda rights, that you want a lawyer and that you are going to remain silent • The other half of the 5 amendment is: o Individuals cannot be tried twice by the same governmental entity for the same crime “double jeopardy” ▪ It doesn’t violate double jeopardy if you are tried in the state and then federal, or criminal court and then civil. Sixth Amendment • Provides multiple protections in a criminal case that offer the right to: o Speedy and public trial o Trail by jury ▪ The right to a trial by jury does not extend to state juvenile court delinquency proceedings because they are not criminal prosecutions o Be informed of the charge against oneself o Confront the accuser 5 o Subpoena witness in one’s favor ▪ U.S. department of Justice rule allows government lawyers to contact workers who are not “high level” in a company without going through the company’s legal department o Have the assistance of an attorney ▪ You do not get a lawyer unless you are going to be incarcerated and your liberty is at stake. 6 February 22, 2016 Specific Crimes • Fraud o Can be a defense to a contract and can also form the basis of a civil tort action. The same frauds can also create criminal liability o Intent means knowingly and willingly with the specific intent to deceive someone: ▪ Falsified, conceals, or covers up any trick, scheme or device a material (important) fact ▪ Makes any materially false, fictitious, or fraudulent statement or representation ▪ Makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry can face fines and/or imprisonment o Federal law outlaws fraud in many specific contexts, including mail and wire transactions, securities transactions, health care, use of counterfeiting devices, and bankruptcy. ▪ Mail and wire fraud: Penalties include: • Fines set by judges and imprisonment up to 20 years • If the fraud impacts a financial institution, the fine may be as high as 1 million dollars or 30 years in imprisonment o A prosecutor must establish the presence of a scheme to defraud: a plan or program designed to take from a person the tangible right of honest services o Evidence that establishes only that a person made a mistake in judgment or an error in management or was careless does not establish fraudulent intent o The burden of proof is not on the defendant to prove good faith or honesty, because he or she had no burden to prove anything. The government must establish beyond reasonable doubt that the defendant acted with specific intent to defraud • Securities Fraud o Covers fraud in the purchase or sale of a security o Many of the prosecutions stem from accounting fraud based on false financial statements. The defendants are typically corporate officers responsible for the financial statements furnished to the investing public • Health Care Fraud 7 o Such as: ▪ Billing for services not actually performed ▪ Falsifying a patient’s diagnosis to justify tests, surgery, or other procedures that were not medically necessary ▪ Accepting kickbacks for patient referrals • Counterfeiting o Federal law outlaws the use of counterfeit access devices, including bank cards, plates, codes, account numbers, or other means of account to initiate a transfer of funds. o The counterfeit or unauthorized access device used must result in at least $1,000 being fraudulently obtained within a one-year period • Bankruptcy Fraud o It is a crime for the bankrupt debtor to falsify the information filed in the bankruptcy proceedings. • Conspiracy o An agreement or a “kind of partnership” for criminal purposes o A formal agreement is not required, and all members of the conspiracy need not plan all the details of the scheme o Evidence must show beyond reasonable doubt that: ▪ Two or more persons, in some way or manner, came to a mutual understanding to try to accomplish a common and unlawful plan ▪ The defendant willfully became a member of such conspiracy ▪ During the existence of the conspiracy, one of the conspirators knowingly committed at least one of the overt acts described in the indictment ▪ Such overt act was knowingly committed in an effort to carry out or accomplish some object of the conspiracy o Overt Act: any transaction or event knowingly committed by a conspirator in an effort to accomplish some object of the conspiracy. On it’s own, the act may be innocent but since it was in accomplice with the conspiracy you are now linked to the entire scheme • Obstruction of Justice o Occurs when an individual commits an act with the intent to obstruct the legislative process or a judicial process. o This law is worded very broadly so that in encompasses a wide range of acts • False Statement to a Bank o These statements intent to supply information to the bank so it can make its decision on the loan request 8 o It is a federal crime for anyone to willfully make a false statement to a federally insured financial institution o To prove the crime of a false statement to a bank, the prosecutor must prove beyond a reasonable doubt that the false statement or report was made with the intent to influence the action of the insured financial institution ▪ There is no requirement that the institution was actually influenced or misled • False Statement to a Federal Agency o The U.S. Code makes it a federal crime for anyone to willfully and knowingly make a false or fraudulent statement to a department or agency of the U.S. o It is not required to show that the government agency was actually tricked o The maximum punishment is 5 years in prison and a $10,000 fine o Seven federal courts have recognized exculpatory no exception for simple denials made in response to government questioning as part of a criminal investigation ▪ Protects an individual from prosecution for making a false statement when the person’s statement simply denies criminal wrongdoing ▪ Takes place when someone has to chose between 3 undesirable choices: • Self-incrimination by telling the truth • Remaining silent and raising even greater suspicions • Denying guilt by making a false statement to the government official • Larceny o The unlawful taking of personal property with the intent to deprive the rightful owner of it permanently ▪ Commonly theft or stealing o Larceny by violence or threat is robbery o Breaking into a building with the intent to commit a felony is burglary o Embezzlement occurs when a person entrusted with another’s money or property fraudulently appropriates it o If there is no intent to pay back a loan the business gave you at little or no interest, it is larceny as well as conspiracy to commit larceny 9 o Money laundering is falsely reporting income that is obtained through criminal “dirty” activity as income obtained through a legitimate “clean” business enterprise • RICO o Racketeer Influenced and Corrupt Organizations o This law imposes criminal and civil liability upon those businesspersons who engage in certain prohibited activities and who engage in interstate commerce. o Racketeering is defined to mean “any act or threat involving” specific state law crimes, any “act” indictable under various specified federal statutes, and certain federal “offenses.” o Only requires 2 acts of racketeering within 10 year span o Used by the feds to take down bigger fish and catch them for bigger crimes by accusing them of this o Provides both criminal penalties and civil remedies o Person must hold some kind of management or operational position in the company • Cyber Crime o Aka hacking o Most experts agree that cyber crime is more difficult to detect than other crimes o Electronic crime is most often committed by employees • Endangering Workers o Corporate officials have a duty to protect their employees o If your workplace has a life-threatening hazard and you do not warn your employees or take the precautions to correct it you may be criminally liable • Aiding and Abetting o If a person acts under the direction of someone accused of criminal activities, this person may be held responsible o A person does not have to be a part of the whole picture but rather just a small part of the crime to be charged with this o Often used closely with charging people with conspiracy o Accessory is the state level charge of the federal charge for aiding and abetting ▪ Accessories before the crime are usually punished the same as the person who committed the actual crime. ▪ Accessories after the fact are usually subject to specific penalties for their actions as determined by the laws of the various states. • Bribery and Kickbacks o Accepting bribes can cause a conflict of interest which can compromise a person’s ability to act without undue interest 10 o Kickbacks are payments made to a person who has facilitates a transaction 11 February 24, 2016 Chapter 8 Contract Formation Contracts • Promises that are enforceable with predictable consequences for performance failures • Enable buyers and sellers to account for future risks or have confidence in exchanging valuables • Contracts need not be a formal, written document and those who make such an agreement do not have to use the word contract or recognize that they have made a legally enforceable promise • Contract law enables private agreements to be legally enforceable • UCC2 covers the sale of goods!! If the contract does not cover the sale of goods it is a different classification • Enforceability of agreements is desirable because it gives people the certainty they need to rely on promises contained in agreements • Contract law provides: o Flexibility in that you can agree (or require agreement) to literally anything that is not illegal or against public policy o Precision in that with careful thinking you can make another agree to exactly the requirements that accomplish even a very complex business purpose Classification of Contracts • Bilateral and Unilateral contracts 12 o Bilateral exchanges are a promise for a promise. There are promises going both ways ▪ Most business contracts take the bilateral form o Unilateral exist when a promise is made in exchange for performance ▪ One person is making an offer seeking some kind of performance and if the other party doesn’t perform then there is no breach of contract. But if the other party does perform then the offering party is obliged to pay. ▪ Such as if Mom offers son $600 to get straight A’s for a semester. If he doesn’t perform than she doesn’t owe him and he can’t be sued for a breach of contract. But if he does get straight A’s then she owes him • Express and implied-in-fact contracts o Many contracts arise form interactions in which parties actually discuss the promised terms of their contract. This is called and express contract. o Implied-in-fact contracts arise from the conduct of the parties rather than from words ▪ If you sit next to a lawyer at a dinner party and they answer your questions and such then you technically walked into contract with them o In most business contracts, conflicts and disputes could mostly be avoided if the parties take the time work out all the details first instead of rushing through ▪ Courts try to fill in the gaps when the parties fail to expressly state • Implied-in-law aka quasi-contracts o Implied-in-law contract: When one party is unjustly enriched at the expense of another, the law may imply a duty on the first party to pay the second even though there was no contract between the two. ▪ Since there are no technical contracts, we use the phrase quasi-contracts o Over the years, courts have come to apply quasi-contract in a fairly limited number of cases based on unjust enrichment. More often, it is applied when parties clearly intended a contract, but that contract is not valid or is unenforceable for some reason. Contractual Enforcement Terminology 13 • Enforceable- when courts uphold the validity of a promise to perform • Unenforceable- If a nonperforming party had a justifiable reason for noncompliance with a promise • Valid- Going to be enforceable in court • Void- Unenforceable in court o Typically has something to do with illegal activities • Voidable- A party to a contract has a right to withdraw from the agreement or continue on without any legal liability o These agreements are enforceable in court until a party with the legal right to do so decides to void the contract, thereby making the agreement unenforceable Contractual Performance Terminology • Executed Contract o Parties have performed their promises and the contract is over • Executory Contract o Parties have not yet performed their agreement o The seller has executed their part of the contract but the buyer still hasn’t paid (they are still executor). 14 February 26, 2016 Requirements for an enforceable contract • Offer to enter into Contract o Before an agreement can become a legally binding contract, someone must make a specific promise to another and also a specific demand of that person. o The offeror makes the offer o The offeree is the person to whom the offer is made o The offer cannot be indefinite meaning that you, for example, cannot agree to purchase a house “for a reasonable price.” There must be a specific price set o When an offer terminates, the offeree’s legal power to bind the offeror ends. The following terminate an offer: ▪ Revocation: When the offeror retracts the offer before the acceptance ▪ Rejection: When the offeree rejects the offer ▪ Counteroffer: When the offeree makes a counterproposal. ▪ Lapse of time: When the offeree fails to accept by a deadline defines in the offer or after a reasonable period of time o There are circumstances in which contract law automatically dictates that an offer has expired. This must occur before the acceptance: ▪ Subject matter destruction: When the object of the contract is destroyed or legally eliminated ▪ Offeror death or insanity: When the offeror no longer has the capacity to make the offer ▪ Subject matter illegality: When a change in the law renders the agreement illegal, acceptance is not longer possible • Acceptance of the offer o It is necessary to create a valid, enforceable contract o For an acceptance to create a binding contract, standard contract law requires that the acceptance must “mirror” the offer, that is, must match it exactly. This is the mirror image rule. If the acceptance changes the terms of the offer or adds new terms, it is not really an acceptance but a counteroffer and negotiation continues o Silence is not an acceptance to a contract ▪ Exceptions: if the two parties have been in contract in the past or if you use an app or service and engage with it then you agree to their terms and conditions 15 o Acceptance becomes legally binding when the accepter puts the signed contract in the mail thanks to the mailbox rule or deposited acceptance rule ▪ The importance of the mailbox rule is that the offeror cannot revoke the offer once the offeree has accepted it and placed it in the mail. An added significance is that an offeror’s revocation is not effective until the offeree actually receives it • Consideration for each promise o There must be some incentive or inducement for a person’s promise or it is not binding o In bilateral contracts, the binding promises are the consideration. In a unilateral contract, the consideration of one party is a promise; the consideration of the other party is performance of an action o Valid consideration can include any promise to do something one has no obligation to do, refrain from doing something one has the right to do, or in the case of a unilateral contract, a performance when there is no obligation to do so o When reasonable ground for a lawsuit exist, an agreement not to sue is consideration to support a promise o Checks are legal instruments: they are little legal contracts ▪ Paid in full place on a check offered in settlement of a disputed amount acts as an accord and satisfaction is the check is cashed or deposited o Prior consideration: is not covered under contract law because you did the work hoping for a gift but you were not contracted to do the extra work and therefore the people do own you compensation for the extra work o Preexisting obligation: such as if you hire someone to paint your house for $6000 and he decides at the end that he’s going to charge $8000. He would lose in court ▪ This does not apply to the sale of goods under UCC law o Promise to make a gift: The promise to give something to another is not binding as a contract because no bargained-for consideration supports the promise ▪ Promissory estoppel often is used to prevent a party who has made a unilateral offer from withdrawing the offer after the requested word has begun. o A promise to keep an offer open for a certain time period must be supported by the offeree’s consideration. Such an agreement to not revoke an offer is called an option • Capacity of each party to enter into a binding agreement 16 o Refers to a person’s ability to be bound by a contract o Typically, the following are considered to lack the capacity to enter into a contract: ▪ Minors: • Minors cannot be legally bound to contractual promises unless those promises involve necessaries of life such as food, clothing, shelter, medical care, and education • The minor can disaffirm the contract and legally recover any consideration given to the other party; even if the minor cannot return the consideration he or she received. • The adult is bound by the contract unless the minor elects to disaffirm it ▪ Intoxicated or mentally incompetent person • In most cases involving adult capacity to contract, courts measure capacity by whether the adult was capable of understanding the nature and purpose of the contract. • The more complex the contract, the harder it would be for said person to understand and it is more likely to be considered invalid • Beware of signs that an elderly person may have difficulty understanding the nature of the contractual agreement • Legality of subject matter (lawful purpose) o Courts ill generally take no action on a void contract, and they will leave the partied to a contract where they have put themselves o If a contract has both legal and illegal elements, the courts will often enforce the legal provisions and refuse to enforce the illegal ones o Courts will often allow an innocent party to recover payment made to a party who knows (or should know) that a contract is illegal o Recovery may be allowed when an otherwise qualified professional lets his or her license expire and provides services to a client before renewing the license o Contracts that restrain trade are often illegal and void ▪ They include contracts to monopolize, to fix prices between competitors, and to divide up markets 17 ▪ Covenants not to compete are important in protecting employers from having the employees they train leave them and compete against them. Some of these noncompeting contracts are illegal if they are not reasonable. Typically a court finds it reasonable if it is for 4-5 years Defenses to Contract Enforcement • Improper form when a writing is required o When contracts are of significant importance or the dollars involved are lander than typical day-to-day transactions or it is important to have a record of the precise agreement, writing and signing a contract is best o Oral contracts generally are valid and enforceable. Certain types of contracts must be evidenced by a writing that is signed by the party to be bound: ▪ Contracts involving an interest in land • Interests in land include contracts for mortgages, mining rights, and easements. • A contract to insure land or to erect a building is not an interest in land ▪ Collateral contracts to pay the debt of another person • A collateral promise is a secondary or conditional promise ▪ Contracts that cannot be performed within one year from the date of the agreement • Courts usually interpret the one-year requirement to mean that the contract must specify a period of performance longer than one year • A contract to be completed “by” a certain date is enforceable. It can be completely within one year, even if it takes longer than that to perform ▪ Contracts for the sale of goods $500 or more • Under the UCC, the statute of frauds covers sales of goods over $500 o The law requiring that certain contracts be in writing is known as the Statute of Frauds ▪ The role of these statues requiring certain writing contracts is to minimize confusion in court whenever a party claims a contract is breached • No true meeting of the minds due to fraud or mistake 18 o Contracts based on fraud or misrepresentations are important examples of agreements in which a mutual understanding is lacking. o Fraud involves intentional misstatement of fact that induces another to enter into a contract to which they would not have otherwise agreed. ▪ Fraud requires specific elements to be demonstrated: • Misrepresentation of fact • An intent to deceive • Justified reliance on the misstatement by the innocent party • Injury resulting from the reliance ▪ Silence does not constitute fraud. However, failing to disclose a material fact that creates a dangerous condition may rise to that level. o If it is clear that there has been a mutual mistake, rescission by either party is appropriate. The test of materiality is whether the parties would have contracted has they been aware of the mistake o Duress or undue influence: ▪ Duress means force or threat of force ▪ It cannot be based on one’s assertion of legitimate business consequences; it must rise to the level of tort ▪ Undue influence occurs when one is taken advantage of unfairly through a contract by a party who misuses a position of relationship or legal confidence 19 February 29, 2016 Lawful Purpose • Contracts that require commission of a crime or tort or violate accepted standards of behavior are void • Courts typically do not take action on such contracts • As long as these are reasonable to time and area they are considered reasonable and enforceable When a “meeting of the minds” is lacking • Mutual consent by both parties to make sure everyone is on the same path • Fraud o Misrepresentation with intention o The intentional misstatement of fact to trick a party into entering a contract that they wouldn’t have otherwise entered into o Justifiable rely on the misstatement by the innocent party o Must be hurt by the contract • Mistake o Mutual Mistake ▪ Would the parties have agreed to the contract if they had known that the contract included the mistake? ▪ If they assumes the value and did not have someone check the value of the item then they cannot void the contract. If they have someone tell them the value and then find out it’s a different value from a more appropriate source then they can void the contract. o Unilateral Mistake • Duress o Trying to use emotional or economic position to work a party into a contract • Undue Influence o Anyone who is compromised by some kind of mental illness, age, etc. o Occurs when someone tries to take advantage of another person through a legal source (contract) ▪ See frequently with wills Chapter 9 20 Contract Performance and Breach Rules of interpretation • Handwritten terms (top) • Typed terms • Pre-printed terms/forms • The meaning of a contract is a question of law, which means a judge makes the final determination. However, depending on the circumstances and issues, that determination may require factual information from the parties or other witnesses • Common words are given their usual meaning o If the meaning of the word is clear on the face of the contract, courts will usually reject a party’s attempt to reinterpret it later. However, if there is evidence that a word has a particular trade usage, courts will give it that meaning • Courts interpret handwritten terms to control typed terms and typed terms to control printed ones. The written warrant will be enforced since the writing is the best evidence of the party’s true intention • When only one of the parties drafts a contract, the court will interpret ambiguous or vague terms against the party that drafts them. They give the non-drafting party the benefit of the doubt when deciding the meaning of a confusing term or phrase Parol evidence rule • This rule states that parties to a complete and final written contract cannot introduce oral evidence in court that changes the intended meaning of the written terms • Prohibits testimony about oral negotiation that results in a written contract • Appl
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