laws effecting business

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An Assignment On

Laws Effecting Business

Submitted to:Prof. Dr. Abu Hosain SiddiqueProffessorDepartment of International BusinessFaculty of Business Studies

University of Dhaka

Submitted bySanjeeda HaqueID No. 80117064

Session: Summer, 2011, EMBADepartment of International BusinessFaculty of Business StudiesUniversity of Dhaka

Date of Submission: August 13, 2011


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Introduction to Laws:

A law is a standard or rule established by a society to govern the behavior of its members. Lawshave a direct and substantial impact on how business firm conduct various activities.

Business Law DefinitionBusiness Law (also referred to as Commercial Law) governs the transactions betweenbusinesses. This includes business formation; litigation; contracts; mergers andacquisitions; commercial leasing; and consumer protection. Business law dealsprimarily with the definition of rights and responsibilities, as opposed to theenforcement of laws. Business law and commercial law encompass severaloverlapping issues. The Uniform Commercial Code (UCC) is the primary governingauthority for commercial transactions.

Other specified legal areas have developed that are types of business or commerciallaw. They include Banking, Bankruptcy, Consumer Credit, Contracts, Debtor and

Creditor, Landlord-Tenant, Mortgages, Negotiable Instruments, Real EstateTransactions, Sales and Secured Transactions.

Laws Affecting Business:

Numerous and varied laws regulate the activities of all business and everyone involved in thebusiness, from owner to manager to employee. In this section we discuss a major business lawcategory which involves:

1. The Law of Torts2. The Law of Contract3. The Law of Sales4. The Law of Agency5. The Law of Property6. The Law of Bankruptcy7. The Law of Negotiable Instrument8. The Law of Employment9. The Law of Environmental10. The Law ofInsurance & Liability

This section has information on the legal issues involved in contracts and agreements. To begin,select an item from the list below.

1) The Law of Torts:

A body of rights, obligations, and remedies that is applied by courts in civil proceedings toprovide relief for persons who have suffered harm from the wrongful acts of others. The personwho sustains injury or suffers pecuniary damage as the result of tortious conduct is known asthe plaintiff, and the person who is responsible for inflicting the injury and incurs liability for thedamage is known as the defendant or tortfeasor.
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Three elements must be established in every tort action. First, the plaintiff must establish that thedefendant was under a legal duty to act in a particular fashion. Second, the plaintiff mustdemonstrate that the defendant breached this duty by failing to conform his or her behavioraccordingly. Third, the plaintiff must prove that he suffered injury or loss as a direct result of thedefendant's breach.

The law of torts is derived from a combination of common-law principles and legislativeenactments. Unlike actions for breach of contract, tort actions are not dependent upon anagreement between the parties to a lawsuit. Unlike criminal prosecutions, which are brought by thegovernment, tort actions are brought by private citizens. Remedies for tortious acts include moneydamages and injunctions (court orders compelling or forbidding particular conduct). Tortfeasors aresubject to neither fine nor incarceration in civil court.

The word tortcomes from the Latin term torquere, which means "twisted or wrong." TheEnglish Common Law recognized no separate legal action in tort. Instead, the British legal systemafforded litigants two central avenues of redress: Trespass for direct injuries, and actions "on the

case" for indirect injuries. Gradually, the common law recognized other civil actions,including Defamation, LIBEL, and slander. Most of the American colonies adopted the Englishcommon law in the eighteenth century. During the nineteenth century, the first U.S. legal treatiseswere published in which a portion of the common law was synthesized under the heading of torts.

Over the last century, tort law has touched on nearly every aspect of life in the United States. Ineconomic affairs, tort law provides remedies for businesses that are harmed by the unfair anddeceptive trade practices of a competitor. In the workplace, tort law protects employees from theintentional or negligent infliction of emotional distress. Tort law also helps regulate theenvironment, providing remedies against both individuals and businesses that pollute the air, land,and water to such an extent that it amounts to a Nuisance.

Sometimes tort law governs life's most intimate relations, as when individuals are held liable forknowingly transmitting communicable diseases to their sexual partners. When a loved one is killedby a tortious act, surviving family members may bring a Wrongful Death action to recoverpecuniary loss. Tort law also governs a wide array of behavior in less intimate settings, includingthe operation of motor vehicles on public roadways.

The law of torts serves four objectives. First, it seeks to compensate victims for injuries suffered bythe culpable action or inaction of others. Second, it seeks to shift the cost of such injuries to theperson or persons who are legally responsible for inflicting them. Third, it seeks to discourageinjurious, careless, and risky behavior in the future. Fourth, it seeks to vindicate legal rights andinterests that have been compromised, diminished, or emasculated. In theory these objectives areserved when tort liability is imposed on tortfeasors for intentional wrongdoing, Negligence, and ultrahazardous activities.

Torts, sometimes called delicts, are civil wrongs. To have acted tortuously, one must havebreached a duty to another person, or infringed some pre-existing legal right. A simple examplemight be accidentally hitting someone with a cricket ball.[36]Under the law of negligence, the mostcommon form of tort, the injured party could potentially claim compensation for his injuries from the
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party responsible. The liability for negligence ... is no doubt based upon a general public sentimentof moral wrongdoing for which the offender must pay ... The rule that you are to love your neighborbecomes in law, you must not injure your neighbor; and the lawyer's question, Who is myneighbor? Receives a restricted reply. You must take reasonable care to avoid acts or omissionswhich you can reasonably foresee would be likely to injure your neighbor. Another example of tort

might be a neighbor making excessively loud noises with machinery on his property.

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Undera nuisance claim the noise could be stopped. Torts can also involve intentional acts, suchas assault,battery or trespass. A better known tort is defamation, which occurs, for example, whena newspaper makes unsupportable allegations that damage a politician's reputation. Moreinfamous are economic torts, which form the basis of labor law in some countries by making tradeunions liable for strikes, when statute does not provide immunity.

Consent is a defense to virtually every intentional tort. The law will not compensate persons whoknowingly allow someone to injure them. However, consent must be given freely and voluntarily tobe effective. Consent induced by coercion, duress, Undue Influence, or chicanery is not legallyeffective. Nor is consent legally effective when given by an incompetent person. Consent to

intentional torts involving grievous bodily harm is also deemed ineffective in a number ofjurisdictions.

Negligence

Most injuries that result from tortuous behavior are the product of negligence, not intentionalwrongdoing. Negligence is the term used by tort law to characterize behavior that createsunreasonable risks of harm to persons and property. A person acts negligently when his behaviordeparts from the conduct ordinarily expected of a reasonably prudent person under thecircumstances. In general, the law requires jurors to use their common sense and life experience indetermining the proper degree of care and vigilance with which people must lead their lives to

avoid imperiling the safety of others.

Not every accident producing injury gives rise to liability for negligence. Some accidents cannot beavoided even with the exercise of reasonable care. An accident that results from a defendant'ssudden and unexpected physical ailment, such as a seizure or a blackout, generally relieves thedefendant of liability for harm caused during his period of unconsciousness. However, defendantswho have reason to know of such medical problems are expected to take reasonable precautionsagainst the risks the problems create. In some jurisdictions unavoidable accidents are called ACTSOFGOD.

Assumption of Risk is another defense to negligence actions. This defense prevents plaintiffs fromrecovering for injuries sustained as a result of a relationship or transaction they entered with fullknowledge and acceptance of the risks commonly associated with such undertakings. Assumedrisks include most of those encountered by spectators attending sporting events. However, the lawwill not assume that individuals accept the risk of intentionally inflicted harm or damage, such asinjuries resulting from Assault and Battery.

Strict liability:
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In some cases tort law imposes liability on defendants who are neither negligent nor guilty ofintentional wrongdoing. Known as Strict Liability, or liability without fault, this branch of torts seeksto regulate those activities that are useful and necessary but that create abnormally dangerousrisks to society. These activities include blasting, transporting hazardous materials, storingdangerous substances, and keeping certain wild animals in captivity.

A distinction is sometimes drawn between moral fault and legal fault. Persons who negligently orintentionally cause injury to others are often considered morally blameworthy for having failed tolive up to a minimal threshold of human conduct. On the other hand, legal fault is more of anartificial standard of conduct that is created by government for the protection of society.

Persons who engage in ultra hazardous activities may be morally blameless because no amount ofcare or diligence can make their activities safe for society. However, such persons will nonethelessbe held legally responsible for harm that results from their activities as a means of shifting the costsof injury from potential victims to tortfeasors. As a matter of social policy, then, individuals andentities that engage in abnormally dangerous activities for profit must be willing to ensure the

safety of others as a price of doing business.

Consumers who have been injured by defectively manufactured products also rely on strict liability.Under the doctrine of strict Product Liability, a manufacturer must guarantee that its goods aresuitable for their intended use when they are placed on the market for public consumption. The lawof torts will hold manufacturers strictly liable for any injuries that result from placing unreasonablydangerous products into the stream of commerce, without regard to the amount of care exercisedin preparing the product for sale and distribution and without regard to whether the consumerpurchased the product from, or entered into a contractual relationship with, the manufacturer.

Causation

Causation is an element common to all three branches of torts: strict liability, negligence, andintentional wrongs. Causation has two prongs. First, a tort must be the cause in fact of a particularinjury, which means that a specific act must actually have resulted in injury to another. In itssimplest form, cause in fact is established by evidence that shows that a tortfeasor's act oromission was a necessary antecedent to the plaintiff's injury. Courts analyze this issue bydetermining whether the plaintiff's injury would have occurred "but for" the defendant's conduct. Ifan injury would have occurred independent of the defendant's conduct, cause in fact has not beenestablished, and no tort has been committed. When multiple factors have led to a particular injury,the plaintiff must demonstrate that the tortfeasor's action played a substantial role in causing theinjury.

Second, plaintiffs must establish that a particular tort was the proximate cause of an injury beforeliability will be imposed. The termproximate cause is somewhat misleading because it has little todo with proximity or causation. Proximate cause limits the scope of liability to those injuries thatbear some reasonable relationship to the risk created by the defendant. Proximate cause isevaluated in terms of foresee-ability. If the defendant should have foreseen the tortuous injury, heor she will be held liable for the resulting loss. If a given risk could not have been reasonablyanticipated, proximate cause has not been established, and liability will not be imposed.
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When duty, breach, and proximate cause have been established in a tort action, the plaintiff mayrecover damages for the pecuniary losses sustained. The measure of damages is determined bythe nature of the tort committed and the type of injury suffered. Damages for tortuous actsgenerally fall into one of four categories: damages for injury to person, damages for injuryto Personal Property, damages for injury to real property, and Punitive Damages.

Damages:

Personal injury tort victims must normally recover all their damagespast, present, and futureduring a single lawsuit. Damages may be recovered for physical, psychological, and emotionalinjury. Specifically, these injuries may include permanent disability, pain and suffering,disfigurement, humiliation, embarrassment, distress, impairment of earning capacity, lost wages orprofits, medical costs, and out-of-pocket expenses. Courts typically rely on Expert Testimony totranslate such losses into dollar figures.

Plaintiffs suffering damage to personal property must elect between two methods of recovery. First,

plaintiffs may elect to recover the difference between the value of the property before the tort andthe value of the property after it. Second, plaintiffs may elect to recover the reasonable costs ofrepair for damaged personal property. However, if the property is destroyed, irreparable, oreconomically infeasible to repair, damages are measured by the replacement value of the property.Persons who are temporarily deprived of personality may sue to recover the rental value of theproperty for the period of deprivation.

Damages for injury to real property may be measured by the difference in the realty's value beforeand after the tort. Alternatively, plaintiffs may elect to recover the reasonable costs of restoring theproperty to its original condition. In either case plaintiffs may also recover the rental value of theirproperty if its use and enjoyment has been interrupted by tortuous behavior. Mental, emotional,

and physical harm that is sustained in the process of a tortuous injury to real property iscompensable as well.

Punitive damages, called exemplary damages in some jurisdictions, are recoverable againsttortfeasors whose injurious conduct is sufficiently egregious. Although punitive damages aretypically awarded for injuries suffered from intentional torts, they can also be awarded againsttortfeasors who act with reckless indifference to the safety of others. Because one purpose ofpunitive damages is to punish the defendant, plaintiffs may introduce evidence regarding atortfeasor's wealth to allow the jury to better assess the amount of damages necessary forpunishment. Such evidence is normally deemed irrelevant or prejudicial in almost every other typeof damage claim.

In addition to damages for past tortuous conduct, plaintiffs may seek injunctive relief to preventfuture harm. Manufacturing plants that billow smoke that pollutes the air, companies that dischargechemicals that poison the water, and factories that store chemicals that migrate through the soilcreate risks of injury that are likely to recur over time. In tort law, operations that produce recurringinjuries like these are called nuisances. If the harmfulness of such operations outweighs theirusefulness, plaintiffs may successfully obtain a court order enjoining or restraining them.
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Immunity:

Certain individuals and entities are granted Immunity from both damage awards and assessments

of liability in tort. Immunity is a defense to a legal action where public policy demands specialprotection for an entity or a class of persons participating in a particular field or activity. Historically,immunity from tort litigation has been granted to government units, public officials, charities,educational institutions, spouses, parents, and children.

Government immunity, also known as Sovereign Immunity, insulates federal, state, and localgovernments from liability for torts that an employee commits within the scope of his or her officialduties. Public policy, as reflected by legislation, common-law precedent, and popular opinion, hasrequired courts to protect the government from unnecessary disruptions that invariably result fromcivil litigation. Similarly, educational institutions generally have been immunized from tort actions toprotect students and faculty from distraction.

In a number of states, tortfeasors have been given immunity from liability if they are related to thevictim as husband or wife, or parent or child. These states concluded that family harmony shouldnot be traumatized by the adversarial nature of tort litigation. Charities and other philanthropicorganizations have been given qualified immunity from tort liability as well. This immunity is basedon the fear that donors would stop giving money to charities if the funds were used to pay tortclaims.

Over the last quarter century, nearly every jurisdiction has curtailed tort immunity in some fashion.Several jurisdictions have abolished tort immunity for entire groups and entities. The movement torestrict tort immunity has been based in part on the Rule of Law, which requires all persons,

organizations, and government officials to be treated equally under the law. Despite the efforts ofthis movement, tort immunity persists in various forms at the federal, state, and local levels.

Tort reform Initiatives:

The damages recovered by those injured as a result of a tortuous act of another are often paid forby insurance companies. This is particularly true in Medical Malpractice cases. Doctors must paysignificant medical liability insurance premiums in order to stay in business. When a doctorcommits Malpractice, the patient may receive an award of hundreds of thousands of dollars tomillions of dollars. As insurance companies continue to pay these hefty awards, the rates forinsurance premiums often rise sharply.

The medical profession and medical liability insurance companies have engaged in anationwide campaign to place limitations on the amount of damages that a patient who hasbeen subject to medical malpractice can recover. Under the guise of "tort reform," supportersadvocate placing limitations on the recovery of no economic damages, including pain andsuffering and loss of consortium. In 1975, California enacted the Medical Injury CompensationReform Act, which limits recovery of no economic damages at $250,000 and restricts theamount of fees that may be recovered by lawyers. California's law has served as a model for
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six other states that have adopted similar tort-reform bills. Other state legislatures haveconsidered similar tort-reform initiatives.

2) The Law ofContract

Contract law lies at the heart of our system of laws and serves as the foundation of our entiresociety. This is not an exaggeration. It is a simple observation - one that too often goesunobserved.

Our society depends upon free exchange in the marketplace at every level. Contract law makesthis possible. Exchanges in the marketplace always depend upon voluntary agreements betweenindividuals or other "legal persons". Such voluntary agreements could never work without contractlaw.

Contract law serves to make these agreements "enforceable", which usually means that it allowsone party to a contract to obtain money damages from the other party upon showing that the latter

stands in breach.

Without contract law, these voluntary agreements would instantly become impractical andunworkable. Since such agreements lie at the very heart of our society and economy, and sincethey depend upon contract law, it is no exaggeration to say, as I have just done, that "contract lawlies at the heart of our system of laws and serves as the foundation of our entire society." Thosewere the very words that I used to begin this essay.

Stated more precisely, it is our system of contract law that underpins and makes possible the manyprivate, voluntary agreements by which exchanges of goods and services are accomplished in oursociety at every level. No exchange is exempt from the contract law, which indeed can be rightly

called the cornerstone of marketplace civilization.

What Is Contract?

A contract is a legally enforceable agreement between two or more parties. The core of mostcontracts is a set of mutual promises (in legal terminology, "consideration"). The promises made bythe parties define the rights and obligations of the parties.Contracts are enforceable in the courts. If one party meets its contractual obligations and the otherparty doesn't ("breaches the contract"), the non breaching party is entitled to receive relief throughthe courts.Generally, the no breaching party's remedy for breach of contract is money damages that will put

the no breaching party in the position it would have enjoyed if the contract had been performed.Under special circumstances, a court will order the breaching party to perform its contractualobligations. Because contracts are enforceable, parties who enter into contracts can rely oncontracts in structuring their business relationships.Types of Contracts

The law recognizes contracts that arise in a number of different ways:
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A bilateral contractis the type of agreement most people think of as a traditional contract -- amutual exchange of promises among the parties. In a bilateral contract, each party may beconsidered as both making a promise, and being the beneficiary of a promise.

A unilateral contractis one in which the offer requests performance rather than a promise

from the person accepting the offer. A unilateral contract is formed when the requested act iscomplete. A classic example of a unilateral contract is a "reward" advertisement, offeringpayment of money in exchange for information or the return of something of value.

An express contractis formed by explicit written or spoken language, expressing theagreement and its terms.

Animplied contractis formed by behavior of the parties that clearly shows an intent to enterinto an agreement, even if no obvious offer and/or acceptance were clearly expressed in wordsor writing.

Written contract:A deal done on a handshake - "You do X for me, and I'll pay you Y" - is a contract, because it is alegally enforceable agreement involving an exchange of promises. Most contracts are enforceablewhether they are oral or written. Nonetheless, you should always have written contracts for all yourbusiness relationships.There are several reasons why written contracts are better than oral contracts:

The process of writing down the contract's terms and signing the contract forces bothparties to think about - and be precise about - the obligations they are undertaking. Withan oral contract, it is too easy for both parties to say "yes" and then have secondthoughts.

When the terms of a contract are written down, the parties are likely to create a morecomplete and thorough agreement than they would by oral agreement. A hastily madeoral agreement is likely to have gaps that will have to be resolved later - when therelationship may have deteriorated.

With an oral contact, the parties may have different recollections of what they agreed on(just as two witnesses to a car accident will disagree over what happened). A writtenagreement eliminates disputes over who promised what.

Some types of contracts must be in writing to be enforced. The Copyright Act requires acopyright assignment or exclusive license to be in writing. State law requirements varyfrom state to state, but in most states, a contract for the sale of goods for $500 or moremust be in writing.

If you have to go to court to enforce a contract or get damages, a written contract will

mean fewer disputes about the contract's terms.

Who can enter into a contract?Minors and the mentally incompetent lack the legal capacity to enter into contracts. All othersare generally assumed to have full power to bind them by entering into contracts. In moststates, the legal age for entering into contracts is 18. The test for mental capacity is whetherthe party understood the nature and consequences of the transaction in question.


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Corporations have the power to enter into contracts. They make contracts through the acts oftheir agents, officers, and employees. Whether a particular employee has the power to bindthe corporation to a contract is determined by an area of law called agency law or corporatelaw. If you doubt whether an individual with whom you are dealing has authority to enter into acontract with you, insist that the contract be reviewed and signed by the corporation's

president.A corporation has a separate legal existence from its founders, officers, and employees.Generally, the individuals associated with a corporation are not themselves responsible for thecorporation's debts or liabilities, including liability for breach of contract.

A valid contract typically requires the following four elements:

Voluntary Agreement : Both Parties must accept the terms and condition of theagreement voluntarily, free of coercion, fraud and the like.

Consideration: Consideration is the bargained-for exchange. It is the legal benefitreceived by one person and the legal detriment imposed on the other person. Usuallyconsideration takes the form of money, property or services. An agreement without

consideration is not a contract. Contractual Capacity: Each party must have the legal ability to enter into a building

agreement. Generally minors, persons with mental handicaps, and intoxicatedpersons do not have contractual capacity.

Legality: For a contract to be enforceable, it must involve a legal activity. The lawdoes not enforce contracts based on illegal activity. For example, a winner of a pokergame usually cannot go into court and enforce an IOU in a state in which that type ofgambling is illegal.

"Breach of Contract" and Lawsuits

In a perfect business world, agreements would be entered into, both sides would benefit and bepleased with the outcome, and no disputes would arise. But in the real business world, delayshappen, financial problems can crop up, and other unexpected events can occur to hinder or evenprevent a successful contract from being carried out. Following is a discussion of the legal conceptof "breach of contract," and your options should such a breach occur.

What is a "Breach of Contract"?

A business contract creates certain obligations that are to be fulfilled by the people or companieswho entered into the agreement. In the eyes of the law, a party's failure to fulfill an end of thebargain under a contract is known as a "breach" of the contract. Depending on the specifics of thecontract, a breach can occur when a party fails to perform on time, does not perform in accordance

with the terms of the agreement, or does not perform at all. Accordingly, a breach of contract willusually be categorized as either "material" or "immaterial" for purposes of determining theappropriate legal solution or "remedy" for the breach. [More on legal remedies for breach ofcontract can be found below.]

To illustrate how a breach of contract might happen in the real world, assume that R. Runnercontracts with Acme Anvils for the purchase of some of its products, for delivery by the followingMonday evening. If Acme delivers the Anvils to Runner on the following Tuesday morning, such a


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breach of the contract would likely be deemed immaterial, and R. Runner would likely not beentitled to money damages (unless he could show that he was somehow damaged by the latedelivery). However, assume now that the contract stated clearly and explicitly that "time is of theessence" and the anvils MUST be delivered on Monday. If Acme delivers after Monday, its breachof contract would likely be deemed "material," and R. Runner's damages would be presumed,

making Acme's liability for the breach more severe, and likely relieving Runner of the duty to payfor the anvils under the contract.

What Happens After a Contract is Breached?

When a breach of contract happens (or when a breach is alleged), one or both of the parties maywish to have the contract enforced on its terms, or may try to recover for any financial harm causedby the alleged breach.

If a dispute over a contract arises and informal attempts at resolution fail, the most commonmethod used to resolve contract disputes and enforce contracts is through lawsuits and the courtsystem. If the amount at issue is below a certain dollar figure (usually $3,000 to $7,500 depending

on the state), the parties may be able to use "small claims" court to resolve the issue.

Courts and formal lawsuits are not the only option for people and businesses involved in contractdisputes. The parties can agree to have a mediator review a contract dispute, or may agree tobinding arbitration of a contract dispute. These out-of-court options are two methods of "alternativedispute resolution."

No matter what avenue is chosen to remedy a breach of contract, the non-breaching party willmost likely be entitled to some kind of remedy under the law.

Remedies for a Breach of Contract

When an individual or business breaches a contract, the other party to the agreement is entitled torelief (or a "remedy") under the law. The main remedies for a breach of contract are (1) damages,(2) specific performance, (3) or cancellation and restitution.

Damages

The remedy that is most often used for a breach of contract is the remedy of damages -- paymentin one form or another, made by the breaching party to the non-breaching party. There are manykinds of damages, and generally speaking damages may be very specific to the kind of breach thathas occurred. Following are some guidelines on damages.

Compensatory damages aim to put the non-breaching party in the position that they had been ifthe breach had not occurred.

Punitive damagesare payments that the breaching party must make, above and beyond the pointthat would fully compensate the non-breaching party. Punitive damages are meant to punish awrongful party for particularly wrongful acts, and are rarely awarded in the business contractssetting.


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Nominal damages are token damages awarded when a breach occurred, but no actual moneyloss to the non-breaching party was proven.

Liquidated damagesare specific damages that were previously identified by the parties in thecontract itself, in the event that the contract is breached. Liquidated damages should be a

reasonable estimate of actual damages that might result from a breach.

Specific Performance. If damages are inadequate as a legal remedy, the non-breaching partymay seek an alternative remedy called specific performance . Specific performance is bestdescribed as the breaching party's court-ordered performance of duty under the contract. Specificperformance may be used as a remedy for breach of contract if the subject matter of theagreement is rare or unique, and damages would not suffice to place the non-breaching party in asgood a position as they would have been had the breach not occurred.

Cancellation and Restitution. A non-breaching party may cancelthe contract and suefor restitution if the non-breaching party has given a benefit to the breaching party. "Restitution" asa contract remedy means that the non-breaching party is put back in the position it was in prior to

the breach, while "cancellation" of the contract voids the contract and relieves all parties of anyobligation under the agreement.

Top 10 Reasons to Avoid Breaching a Contract

1) BUSINESS REPUTATION. You could damage your reputation in the business community.

2) BUSINESS RELATIONSHIPS. You could sever your business relationship with the otherparty.

3) LAWSUITS. You could be sued.

4) TIME AWAY FROM YOUR BUSINESS. If sued, you could be forced to spend valuabletime away from your business in order to respond to discovery requests, attenddepositions, and litigate the matter in court.

5) LEGAL FEES. You could incur significant legal fees.

6) SPECIFIC PERFORMANCE. Depending on the nature of the contract, you could beordered by the court to perform your obligations under the contract.

7) CONTEMPT. If you don't obey the court's order, you could be held in contempt, fined,and/or imprisoned.

8) COMPENSATORY AND CONSEQUENTIAL DAMAGES. You could be forced to paymoney damages to the non breaching party, in an amount that puts that party in as good aposition as it would have been in were it not for the breach.

9) PUNITIVE DAMAGES. You could be ordered to pay punitive damages, which are notlimited by the amount of the other party's losses and can be very significant.
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10)LOSE ALL THE WAY AROUND. You could end up spending much more time,

money, and mental and physical energy resolving the breach than you would have

spent performing your obligations under the contract.

3) The Law of Sales:

A transaction for the sale and leasing of goods is governed mainly by sales laws of each state. Thesale of a good, or an item of value, is a transaction designed to benefit both buyer and seller.However, sales transactions can be complex, and they do not always proceed smoothly. Problemscan arise at several phases of a sale, and at least one of the parties may suffer a loss. Inrecognition of these realities and of the basic importance of orderly commerce to society,legislatures and courts create laws governing sales of goods. Goods are defined as all thingsmovable and identified to the contract of the sale. . It does not include secured transactions,leases, money exchanged as the price, or real property (land and property permanently attached toa piece of land). To be identified to the contract, a good must exist and be one of the objects that isor will be exchanged.

Seller's ObligationsGenerally, the seller's primary obligations are to transfer ownership of the goods and deliver thegoods. A seller may agree with the buyer to perform other obligations. For instance, a seller mayagree to package or label the goods in a certain way or service the goods for a specific period oftime.

A seller should convey the title to the goods free from any security interest or other lien or claim,unless the buyer was aware at the time of the sale that other persons had a claim to the goods. Ifthe sales contract does not specify a time of delivery, the seller should deliver the goods within areasonable time after the contract is made. Delivery should occur in one shipment unless the

parties agree otherwise. If the sales agreement does not indicate where the goods are to be turnedover, the delivery of the goods should occur at the seller's place of business. The tender of thegoods should be at a reasonable hour of the day, and the buyer should have the ability to take thegoods away.

If the goods are in the possession of a third party, or bailee, at the time of the sale, the seller mustarrange matters with the bailee so that the buyer may take possession. If the goods are to betransported, there are two ways to handle delivery. The buyer and seller may agree to a shipmentcontract, in which case the seller must arrange for the transportation. In a shipment contract, theseller's duties for delivery are complete as soon as the goods are delivered to the carrier. With adestination contract, the seller's obligation to deliver does not end until the goods are delivered to

the buyer or at a selected location.

Warranties

In the context of the sale of goods, awarranty is concerned with identifying the kind and quality ofthe goods that are tendered by the seller. The two basic types of warranties are express warrantiesand implied warranties.
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An express warranty is any representation or affirmation about the goods made by the seller'swords or conduct. For example, the description of the goods in the sales contract constitutes anexpress warranty that the goods will conform to the description.

Implied warranties are warranties that are imposed on sellers by law. A warranty of

merchantability is implied in every sales contract. This warranty is a promise that the goods passwithout objection in the trade, are adequately packaged, conform to any promises or affirmations offact on the container, and are fit for the ordinary purposes for which such goods are used.The implied warranty of merchantability also includes a promise that multiple goods will be of evenkind and quality.

Another implied warranty recognized by courts is the warranty of fitness for a particular purpose.This warranty requires that goods be fit for an identifiable, particular purpose. It is effective only ifthe seller has reason to know of any particular purpose for which the goods are required and alsoknows that the buyer is relying on the seller's expertise to select suitable goods.

Some sellers attempt to disavow any responsibility for the quality of their merchandise. Sellers maynot disclaim the warranty of merchantability unless they use the word "merchantability" inthe disclaimer, which may be oral or written. If written, the disclaimer clause or term must beconspicuous. The implied warranty of fitness for a particular purpose may be disclaimed in writing,but it cannot be disclaimed orally. In some states, statutes or court decisions prohibit the disclaimerof warranties in consumer sales.

If a seller fails to tender goods, the buyer may choose one of three remedies. First, the buyer mayseek damages from the seller. Damages are the total financial losses resulting from the failure totender. Generally, damages for non-delivery consist of the market price of the goods minus thesale price. Market price is figured by determining the market price at the time the buyer learned of

the breach at the place the tender was to have been made.

Second, the buyer may cover, or purchase similar goods elsewhere, and then recover for lossesresulting from the purchase. If the purchase price of replacement goods is greater than the originalsale price, the buyer may recover the difference from the seller. The buyer must cover in goodfaith, without delay, and on reasonable terms. When a seller is unable to perform a sale as agreed,the buyer should try to minimize her damages by covering the loss. If an aggrieved buyer fails tomake reasonable efforts to cover, a court may reduce any damage award to account for the failure.

Third, a buyer may force the seller to perform by taking the seller to court and obtainingan order for specific performance or maintaining an action for replevin. An action for specific

performance may be ordered if the goods are unique and in other proper circumstances. Goodsmay be considered unique if the buyer is unable to find the goods elsewhere. An action for replevinis a method of recovering goods that is similar to specific performance. Replevin is allowed wherethe goods are specifically identified in the contract and the buyer is unable to cover the goods aftera reasonable effort, or the circumstances indicate that the buyer will be unable to cover. If a buyerhas paid only part of the sale price and the seller becomes financially insolvent within ten days ofthe first payment and is unable to tender the goods, the buyer may pay any remaining balance and
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sue to obtain the goods. This would give the buyer the goods and prevent the seller from using thegoods to pay other debts.

If the buyer elects to collect damages after covering or damages for non-delivery, the buyer maycollect additional damages called incidental damages and consequential damages. Incidental

damages are those resulting from the seller's breach. These include expenses incurred ininspection, receipt, transportation, care, and custody of goods rightfully rejected; any commerciallyreasonable charges or expenses incurred in covering; and any other reasonable expense incidentto a delay in tender of the goods or other breach on the part of the seller. Consequential damagesinclude any loss that results from requirements of which the seller is aware at the time ofcontracting and that could not have been prevented by cover or other method, and foreseeable andavoidable injuries to persons or property resulting from a breach of warranty.

In some cases the buyer and seller may agree in the sales contract to liquidated damages.Generally, a liquidated damages clause is placed into a sales contract to fix damages at a certainamount in case a party is unable to perform. A court may strike down a liquidated damages clause

if it does not bear a reasonable relationship to actual damages or anticipated damages.

If a seller tenders nonconforming goods, or goods that do not meet the specifications in the salescontract, the tender constitutes a breach of the contract. In such a situation, the buyer may eitheraccept or reject the goods. Any recovery by the buyer will depend on whether the buyer accepts orrejects the goods.

A buyer has the right to inspect goods before accepting them. If the goods are nonconforming, thebuyer may accept the goods and recover from the seller the difference between the value of thegoods as warranted and their actual value with the defects.

A buyer may elect to reject nonconforming goods. To reject goods, the buyer must take somepositive action to give the seller notice of the rejection. If the seller can cure the problem, the buyershould tell the seller why he is rejecting the goods or risk a reduction in damages. In transactionsbetween merchants, a buyer should specify the problem to the seller if the seller makes a writtenrequest for a full and final written statement of all defects on which the buyer bases the rejection.

A seller has the right to cure nonconforming goods if he gives notice to the buyer and if conforminggoods can be delivered before the last date for delivery under the sales contract. In any case abuyer may agree to extend the time for delivery of conforming goods. In some cases a buyer mayhave no choice. Under section 2-508(2) of the UCC, if a seller sends nonconforming goods that hereasonably believed would be acceptable, the seller has additional time to deliver conforming

goods if he gives notice of such intent to the buyer.

If a buyer rejects goods, the buyer may not exercise any ownership over the goods. The buyermust hold the goods for a reasonable time and permit the seller to remove them or awaitinstructions from the seller. If the seller issues instructions to the buyer, the buyer should follow anyreasonable requests. For example, if the goods are perishable and the seller has no local agent,the buyer should attempt to sell the goods for the account of the seller. The buyer then could
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recover the difference between the amount that the buyer could have made with the goods and theamount that the buyer actually received.

If the buyer rejects nonconforming, nonperishable goods and the seller has no agent near thebuyer, the buyer should follow instructions from the seller. If the seller issues no instructions, the

buyer may store the goods for the seller's account, reship the goods to the seller, or sell the goodsfor the seller's account. An aggrieved buyer may then recover any losses incurred in storing,shipping, or reselling the goods.

If a buyer rejects nonconforming goods and cannot sell them, the buyer may hold the goods for theseller and recover the difference between the market price of the goods as warranted and thevalue of the goods as delivered. A buyer also may ask for specific performance. If the seller isunable to provide the goods as requested, the buyer may recover any money already paid towardthe sale plus any consequential or incidental damages resulting from the breach.

Buyer's Obligations

A buyer's basic obligations are to accept the goods and pay the sale price. If the goods arenonconforming, the buyer may reject the goods. If the goods conform to the specifications of thesales contract and the buyer wrongfully rejects them, the seller may choose one of four options, ora blend of two or more options.

First, the seller may sue for damages. The amount of damages for a wrongful rejection would bethe sale price minus the market price of the goods, measured at the time and place of the tender.Second, the seller may sue for the price of the goods, but only if the goods cannot be resold in theseller's ordinary course of business, or if circumstances indicate that resale efforts will be fruitless.

Third, the seller could cancel the contract, putting an end to shipments and reserving the right tosue for damages or collect unpaid balances. Fourth, the seller could resell the goods to a thirdparty and recover the difference between the sale price and the resale price plus any incidentaldamages.

The resale of wrongfully rejected goods presents a few special problems. Under section 2-706 ofthe UCC, the sale may be either public or private. A private sale is made personally by the seller,whereas a public sale is made with public notice and carried out by a sheriff or at a publicly heldauction. In either case the sale must be commercially reasonable in method, manner, time, place,and terms. Furthermore, the seller must notify new buyers that the goods are being resold under abreached contract to disclose the potential for legal conflict.

A seller who resells wrongfully rejected goods must inform the original buyer of the resale. Ifwrongfully rejected goods are perishable, the seller need not give notice to the buyer of the timeand place of the resale. If the resale of wrongfully rejected goods is at a public sale, only goodsidentified in the contract may be sold, and the sale must be made at a usual place for public sale,provided such a site is reasonably available. If the goods are not in view of bidders at a public sale,the public notice of the sale must state the place where the goods are located, and the seller mustgive bidders an opportunity to inspect the goods. If the seller resells the goods for a price higher
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than the price in the original sales contract and the extra profit covers costs incident to the resale,the seller has no damages, and the original buyer is not liable to the seller for the wrongfulrejection.

In sales where the buyer pays a deposit and then wrongfully rejects the goods, the seller may keep

the goods and the deposit. However, a seller is not entitled to a deposit that far exceeds her actualor expected damages. Under section 2-718 of the UCC, a buyer is entitled to restitution of anyamount by which the sum of the payments already made exceeds either (1) the amount of anyreasonable liquidated damages clause, or (2) 20 percent of the value of the total performance forwhich the buyer is obligated under the contract, or $500, whichever amount is smaller.

When a buyer accepts a seller's tender of conforming goods, the buyer is obligated to pay the saleprice contained in the contract for sale. In some cases the parties may fail to agree to a price orchoose to leave the price terms open. Under section 2-305 of the UCC, if a price term is left open,the price should be set in good faith at a reasonable market price at the time of delivery. If theparties intend that there is to be no contract unless a price is agreed to or fixed by a particular

market indicator and the parties ultimately are unable to agree to a price term, there is no contract.In such a case the buyer must return any goods received, and the seller must return any moneypaid by the buyer.

Generally, a buyer has the right to pay in any manner observed in the business unless the sellerdemands a particular form of payment. Unless the parties agree otherwise, payment should bemade when the goods are delivered to the buyer. A buyer does not have the right to inspect thegoods if they are delivered cash on delivery or on similar terms, or if the contract provides forpayment before inspection.

4) The Law of Agency:

The law of agency is an area of commercial law dealing with a contractual or quasi-contractual, ornon-contractual set of relationships when a person, called the agent, is authorized to act on behalfof another (called the principal) to create a legal relationship with a third party. Succinctly, it may bereferred to as the relationship between a principal and an agent whereby the principal, expressly orimpliedly, authorizes the agent to work under his control and on his behalf. The agent is, thus,required to negotiate on behalf of the principal or bring him and third parties into contractualrelationship. An agency is a legal relationship whereby one person acts for another. The personthat acts for another is the agent, and the person from whom the agent gets authority is theprincipal. Agency can be created by contract (express or implied, oral or written), by ratification

(assent is given either to an act done by someone who had no previous authority to act or to an actthat exceeded the authority granted to an agent), by estoppel (a person allows another to act forhim/her to such an extent that a third party reasonably believes that an agency relationship exists),or necessity (a person acts for another in an emergency situation without express authority to doso).As a member of BIG there will probably be situations where you act as an agent for yourchapter, region or the National Organization.

This branch of law separates and regulates the relationships between:
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Agents and principals;

Agents and the third parties with whom they deal on their principals' behalf; and Principals and the third parties when the agents purport to deal on their behalf.

The common law principle in operation is usually represented in the Latin phrase, qui facet per

alium, facit per se, i.e. the one who acts through another, acts in his or her own interests and it is aparallel concept to vicarious liability and strict liability in which one person is held liable in criminallaw or tort for the acts or omissions of another.

The reciprocal rights and liabilities between a principal and an agent reflect commercial and legalrealities. A business owner often relies on an employee or another person to conduct a business.In the case of a corporation, since a corporation is a fictitious legal person, it can only act throughhuman agents. The principal is bound by the contract entered into by the agent, so long as theagent performs within the scope of the agency.

A third party may rely in good faith on the representation by a person who identifies himself as anagent for another. It is not always cost effective to check whether someone who is represented as

having the authority to act for another actually has such authority. If it is subsequently found thatthe alleged agent was acting without necessary authority, the agent will generally be held liable.

There are three broad classes of agent

1. Universal agents hold broad authority to act on behalf of the principal, e.g. they may holda power of attorney (also known as a mandate in civil lawjurisdictions) or have aprofessional relationship, say, as lawyer and client.

2. General agents hold a more limited authority to conduct a series of transactions over acontinuous period of time; and

3. Special agents are authorized to conduct either only a single transaction or a

specified series of transactions over a limited period of time.

Unless modified by contract, agents generally owe the following duties to their principals:

Duty to obey instructions provided by the principal;

Duty to act with skill;

Duty of loyalty;

Duty to protect confidential information;

Duty to notify and give information; and

Duty to account for monies spent.

Power of attorney

A power of is a legal document authorizing an agent to act on behalf of the principal. A power ofattorney is an instrument containing an authorization for one to act as the agent of the principal thatterminates at some point in the future either by its terms or by operation of law such as death of theprincipal or agent. They are also called letters of attorney. The person appointed is usually calledan Attorney-in-Fact. A power of attorney which doesn't provide for a successor attorney-in-fact tobe appointed will terminate at the death of the attorney-in-fact. The person making the power of
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attorney appointment is called the principal. A power of attorney can be either general, durable orlimited. Some states have adopted a statutory power of attorney.

5) The Law of Property:

Property law is the area of law that governs the various forms of ownership in real property (land

as distinct from personal or movable possessions) and in personal property, within the commonlaw legal system. In the civil law system, there is a division between movable and immovableproperty. Movable property roughly corresponds to personal property, while immovable propertycorresponds to real estate or real property, and the associated rights and obligations thereon.

The concept, idea or philosophy of property underlies all property law. In somejurisdictions,historically all property was owned by the monarch and it devolved through feudal land tenureorother feudal systems of loyalty and fealty. The wordproperty, in everyday usage, refers to anobject (or objects) owned by a person a car, a book, or a cell phone and the relationship theperson has to it. In law, the concept acquires a more nuanced rendering. Factors to considerinclude the nature of the object, the relationship between the person and the object, therelationship between a numbers of people in relation to the object, and how the object is regarded

within the prevailing political system. Most broadly and concisely, property in the legal sense refersto the rights of people in or over certain objects or things.

The wordproperty, in everyday usage, refers to an object (or objects) owned by a person a car,a book, or a cell phone and the relationship the person has to it. In law, the concept acquires amore nuanced rendering. Factors to consider include the nature of the object, the relationshipbetween the person and the object, the relationship between a numbers of people in relation to theobject, and how the object is regarded within the prevailing political system. Most broadly andconcisely, property in the legal sense refers to the rights of people in or over certain objects orthings.

Real Property, real estate, realty, or immovable property is any subset of land that has been

legally defined and the improvements to it made by human efforts:any buildings,machinery,wells, dams,ponds, mines,canals,roads, various property rights, and soforth.

Tangible personal propertyrefers to any type of property that can generally be moved (i.e., it isnot attached to real property or land), touched or felt. These generally include items such asfurniture, clothing, jewelers, art, writings, or household goods. In some cases, there can be formaltitle documents that show the ownership and transfer rights of that property after a person's death(for example, motor vehicles, boats, etc.) In many cases, however, tangible personal property willnot be "titled" in an owner's name and is presumed to be whatever property he or she was inpossession of at the time of his or her death.

Intangible personal propertyor "intangibles" refers to personal property that cannot actually bemoved, touched or felt, but instead represents something of value such as negotiableinstruments, securities, service (economics), and intangible assets including chose in action.

Accountants also distinguish personal property from real property because personal property canbe depreciated faster than improvements (while land is not depreciable at all). It is an owner's rightto get tax benefits for chattel, and there are businesses that specialize in appraising personalproperty, or chattel.
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A trademark, is a distinctive sign or indicator used by an individual, business organization, orother legal entity to identify that the products or services to consumers with which the trademarkappears originate from a unique source, and to distinguish its products or services from those ofother entities.

A trademark may be designated by the following symbols:

(for an unregistered trade mark, that is, a mark used to promote or brand goods)

(for an unregistered service mark, that is, a mark used to promote or brand services) (for a registered trademark)

A trademark is typically a name, word, phrase, logo, symbol, design, image, or a combination ofthese elements.[2]There is also a range of non-conventional trademarks comprising marks whichdo not fall into these standard categories, such as those based on color, smell, or sound.

The owner of a registered trademark may commence legal proceedings for trademarkinfringement to prevent unauthorized use of that trademark. However, registration is not required.

The owner of a common law trademark may also file suit, but an unregistered mark may be protectable only within the geographical area within which it has been used or in geographical areas intowhich it may be reasonably expected to expand.

A patent is a set of exclusive rights granted by a state (national government) to an inventor ortheir assignee for alimited period of time in exchange for the public disclosure of an invention.

The procedure for granting patents, the requirements placed on the patentee, and the extent of theexclusive rights vary widely between countries according to national laws and internationalagreements. Typically, however, a patent application must include one or more claims defining theinvention which must be new, non-obvious, and useful or industrially applicable. In many countries,certain subject areas are excluded from patents, such as business methods, treatment of thehuman body, and mental acts. The exclusive right granted to a patentee in most countries is theright to prevent others from making, using, selling, or distributing the patented invention withoutpermission. It is just a right to prevent others' use. A patent does not give the proprietor of thepatent the right to use the patented invention, should it fall within the scope of an earlier patent.

A copyrightis a set of exclusive rights granted by a state to the creator of an original work or theirassignee for a limited period of time in exchange for public disclosure of the work. This includes theright to copy, distribute and adapt the work. In most jurisdictions copyright arises upon fixation anddoes not need to be registered. Copyright owners have the exclusive statutory right to exercisecontrol over copying and other exploitation of the works for a specific period of time, after which thework is said to enter the public domain. Uses covered under limitations and exceptions tocopyright, such as fair use, do not require permission from the copyright owner. All other uses

require permission. Copyright owners can license or permanently transfer or assign their exclusiverights to others.

Initially copyright law applied to only the copying of books. Over time other uses such astranslations and derivative workswere made subject to copyright. Copyright now covers a widerange of works, including maps, sheet music, dramatic works,paintings,photographs, drawings,sound, motion pictures and computer programs.
http://en.wikipedia.org/wiki/Sign_(semiotics)http://en.wikipedia.org/wiki/Business_organizationshttp://en.wikipedia.org/wiki/Juristic_personhttp://en.wikipedia.org/wiki/Good_(economics_and_accounting)http://en.wikipedia.org/wiki/Service_(economics)http://en.wikipedia.org/wiki/Consumerhttp://en.wikipedia.org/wiki/Trademark_symbolhttp://en.wikipedia.org/wiki/Unregistered_trade_markhttp://en.wikipedia.org/wiki/Service_mark_symbolhttp://en.wikipedia.org/wiki/Service_mark_symbolhttp://en.wikipedia.org/wiki/Service_markhttp://en.wikipedia.org/wiki/Registered_trademark_symbolhttp://en.wikipedia.org/wiki/Registered_trademark_symbolhttp://en.wikipedia.org/wiki/Logohttp://en.wikipedia.org/wiki/Symbolhttp://en.wikipedia.org/wiki/Trademark#cite_note-Restatement_1995-1http://en.wikipedia.org/wiki/Trademark#cite_note-Restatement_1995-1http://en.wikipedia.org/wiki/Non-conventional_trademarkhttp://en.wikipedia.org/wiki/Lawsuithttp://en.wikipedia.org/wiki/Trademark_infringementhttp://en.wikipedia.org/wiki/Trademark_infringementhttp://en.wikipedia.org/wiki/Exclusive_righthttp://en.wikipedia.org/wiki/State_(polity)http://en.wikipedia.org/wiki/Term_of_patenthttp://en.wikipedia.org/wiki/Inventionhttp://en.wikipedia.org/wiki/Claim_(patent)http://en.wikipedia.org/wiki/Novelty_(patent)http://en.wikipedia.org/wiki/Inventive_step_and_non-obviousnesshttp://en.wikipedia.org/wiki/Utility_(patent)http://en.wikipedia.org/wiki/Industrial_applicabilityhttp://en.wikipedia.org/wiki/Patentable_subject_matterhttp://en.wikipedia.org/wiki/Business_method_patenthttp://en.wikipedia.org/wiki/Exclusive_rightshttp://en.wikipedia.org/wiki/State_(polity)http://en.wikipedia.org/wiki/Public_domainhttp://en.wikipedia.org/wiki/Limitations_and_exceptions_to_copyrighthttp://en.wikipedia.org/wiki/Limitations_and_exceptions_to_copyrighthttp://en.wikipedia.org/wiki/Fair_usehttp://en.wikipedia.org/wiki/Derivative_workshttp://en.wikipedia.org/wiki/Mapshttp://en.wikipedia.org/wiki/Sheet_musichttp://en.wikipedia.org/wiki/Dramahttp://en.wikipedia.org/wiki/Paintinghttp://en.wikipedia.org/wiki/Photographhttp://en.wikipedia.org/wiki/Motion_picturehttp://en.wikipedia.org/wiki/Computer_programhttp://en.wikipedia.org/wiki/Sign_(semiotics)http://en.wikipedia.org/wiki/Business_organizationshttp://en.wikipedia.org/wiki/Juristic_personhttp://en.wikipedia.org/wiki/Good_(economics_and_accounting)http://en.wikipedia.org/wiki/Service_(economics)http://en.wikipedia.org/wiki/Consumerhttp://en.wikipedia.org/wiki/Trademark_symbolhttp://en.wikipedia.org/wiki/Unregistered_trade_markhttp://en.wikipedia.org/wiki/Service_mark_symbolhttp://en.wikipedia.org/wiki/Service_markhttp://en.wikipedia.org/wiki/Registered_trademark_symbolhttp://en.wikipedia.org/wiki/Logohttp://en.wikipedia.org/wiki/Symbolhttp://en.wikipedia.org/wiki/Trademark#cite_note-Restatement_1995-1http://en.wikipedia.org/wiki/Non-conventional_trademarkhttp://en.wikipedia.org/wiki/Lawsuithttp://en.wikipedia.org/wiki/Trademark_infringementhttp://en.wikipedia.org/wiki/Trademark_infringementhttp://en.wikipedia.org/wiki/Exclusive_righthttp://en.wikipedia.org/wiki/State_(polity)http://en.wikipedia.org/wiki/Term_of_patenthttp://en.wikipedia.org/wiki/Inventionhttp://en.wikipedia.org/wiki/Claim_(patent)http://en.wikipedia.org/wiki/Novelty_(patent)http://en.wikipedia.org/wiki/Inventive_step_and_non-obviousnesshttp://en.wikipedia.org/wiki/Utility_(patent)http://en.wikipedia.org/wiki/Industrial_applicabilityhttp://en.wikipedia.org/wiki/Patentable_subject_matterhttp://en.wikipedia.org/wiki/Business_method_patenthttp://en.wikipedia.org/wiki/Exclusive_rightshttp://en.wikipedia.org/wiki/State_(polity)http://en.wikipedia.org/wiki/Public_domainhttp://en.wikipedia.org/wiki/Limitations_and_exceptions_to_copyrighthttp://en.wikipedia.org/wiki/Limitations_and_exceptions_to_copyrighthttp://en.wikipedia.org/wiki/Fair_usehttp://en.wikipedia.org/wiki/Derivative_workshttp://en.wikipedia.org/wiki/Mapshttp://en.wikipedia.org/wiki/Sheet_musichttp://en.wikipedia.org/wiki/Dramahttp://en.wikipedia.org/wiki/Paintinghttp://en.wikipedia.org/wiki/Photographhttp://en.wikipedia.org/wiki/Motion_picturehttp://en.wikipedia.org/wiki/Computer_program


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6) The Law of Bankruptcy:

Bankruptcy or insolvency is a legal status of a person or an organization that cannot repay the

debts it owes to its creditors. Creditors may file a bankruptcy petition against a business orcorporate debtor ("involuntary bankruptcy") in an effort to recoup a portion of what they are owed orinitiate a restructuring. In the majority of cases, however, bankruptcy is initiated by the debtor (a"voluntary bankruptcy" that is filed by the insolvent individual or organization). An involuntarybankruptcy petition may not be filed against an individual consumer debtor who is not engaged inbusiness.

The word bankruptcy is formed from the ancient Latinbancus (a bench or table),and ruptus (broken). A "bank" originally referred to a bench, which the first bankers had in thepublic places, in markets, fairs, etc. on which they tolled their money, wrote their bills of exchange,etc. Hence, when a banker failed, he broke his bank, to advertise to the public that the person to

whom the bank belonged was no longer in a condition to continue his business.There are six types of bankruptcy under the Bankruptcy Code, located at Title 11 of the UnitedStates Code:

Chapter 7: basic liquidation for individuals and businesses; also known as straightbankruptcy; it is the simplest and quickest form of bankruptcy available

Chapter 9: municipal bankruptcy; a federal mechanism for the resolution of municipaldebts

Chapter 11: rehabilitation or reorganization, used primarily by business debtors, butsometimes by individuals with substantial debts and assets; known as corporate bankruptcy, itis a form of corporate financial reorganization which typically allows companies to continue to

function while they follow debt repayment plans Chapter 12: rehabilitation for family farmers and fishermen; Chapter 13: rehabilitation with a payment plan for individuals with a regular source of

income; enables individuals with regular income to develop a plan to repay all or part of theirdebts; also known as Wage Earner Bankruptcy

Chapter 15: ancillary and other international cases; provides a mechanism for dealing withbankruptcy debtors and helps foreign debtors to clear debts.

The most common types of personal bankruptcies for individuals are Chapter 7, which allowsdebtors to wipe out many debts theyve accumulated in exchange for giving up non-exemptproperty to be sold to repay creditors, and Chapter 13, which allows debtors to keep all of their

property and repay all or a portion of their debts over three to five years. Businesses can file forChapter 7 or Chapter 11 bankruptcy. Chapter 11 allows a company to reorganize its debt to stay inbusiness and use business income to pay his or her debts.

7) The Law of Negotiable Instrument:
http://en.wikipedia.org/wiki/Creditorshttp://en.wikipedia.org/wiki/Debtorhttp://en.wikipedia.org/wiki/Restructuringhttp://en.wikipedia.org/wiki/Latinhttp://en.wikipedia.org/wiki/Bankhttp://en.wikipedia.org/wiki/Bankerhttp://en.wikipedia.org/wiki/Negotiable_instrumenthttp://en.wikipedia.org/wiki/Bankruptcy_Codehttp://en.wikipedia.org/wiki/United_States_Codehttp://en.wikipedia.org/wiki/United_States_Codehttp://en.wikipedia.org/wiki/Chapter_7,_Title_11,_United_States_Codehttp://en.wikipedia.org/wiki/Chapter_9,_Title_11,_United_States_Codehttp://en.wikipedia.org/wiki/Chapter_11,_Title_11,_United_States_Codehttp://en.wikipedia.org/wiki/Chapter_12,_Title_11,_United_States_Codehttp://en.wikipedia.org/wiki/Chapter_13,_Title_11,_United_States_Codehttp://en.wikipedia.org/wiki/Chapter_15,_Title_11,_United_States_Codehttp://en.wikipedia.org/wiki/Creditorshttp://en.wikipedia.org/wiki/Debtorhttp://en.wikipedia.org/wiki/Restructuringhttp://en.wikipedia.org/wiki/Latinhttp://en.wikipedia.org/wiki/Bankhttp://en.wikipedia.org/wiki/Bankerhttp://en.wikipedia.org/wiki/Negotiable_instrumenthttp://en.wikipedia.org/wiki/Bankruptcy_Codehttp://en.wikipedia.org/wiki/United_States_Codehttp://en.wikipedia.org/wiki/United_States_Codehttp://en.wikipedia.org/wiki/Chapter_7,_Title_11,_United_States_Codehttp://en.wikipedia.org/wiki/Chapter_9,_Title_11,_United_States_Codehttp://en.wikipedia.org/wiki/Chapter_11,_Title_11,_United_States_Codehttp://en.wikipedia.org/wiki/Chapter_12,_Title_11,_United_States_Codehttp://en.wikipedia.org/wiki/Chapter_13,_Title_11,_United_States_Codehttp://en.wikipedia.org/wiki/Chapter_15,_Title_11,_United_States_Code


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Negotiable means transferable by delivery and instrument means a written document by whicha right is created in favor of some person. Thus, etymologically negotiable instrument is adocument transferable by delivery by which a sort of right is created in favour of some person.Section 13 of the Negotiable Instruments Act, 1881 provides that a negotiable instrument meansa promissory note, bill of exchange or cheque payable either to order or to bearer. But the said

definition does not reflect the true nature of a negotiable instrument. In order to have a concreteidea about negotiable instrument, we may quote the following definition from the Blacks LawDictionary:

Negotiable instrument is a written instrument that-

is signed by the maker or drawer,

includes an unconditional promise or order to pay a specific sum of money,

is payable on demand or at a definite time, and

Is payable to order or to bearer.Negotiable instrument is also termed as negotiable paper or negotiable note.

Negotiable Instruments are regarded as essential elements in the modern business world. Theyare the documents of certain type used in the commercial transactions and monetary dealings.Though in actual practice different types of documents may come within the purview of negotiableinstruments, the Negotiable Instruments Act, 1881 has included in its fold only three types ofinstruments viz.

Bill of Exchange,

Promissory Notes, and

Cheque.Promissory note

A promissory note is an unconditional promise in writing made by one person to another, signed by

the maker, engaging to pay on demand to the payee, or at fixed or determinable future time,certain in money, to order or to bearer. Bank note is frequently referred to as a promissory note, apromissory note made by a bank and payable to bearer on demand.

Bill of exchange

A bill of exchange or "draft" is a written order by the drawerto the draweeto pay money tothepayee. A common type of bill of exchange is the cheque (checkin American English), definedas a bill of exchange drawn on a banker and payable on demand. Bills of exchange are usedprimarily in international trade, and are written orders by one person to his bank to pay the bearer aspecific sum on a specific date. Prior to the advent of paper currency, bills of exchange were acommon means of exchange. They are not used as often today.

A bill of exchange is an unconditional order in writing addressed by one person to another, signedby the person giving it, requiring the person to whom it is addressed to pay on demand or at fixedor determinable future time a sum certain in money to order or to bearer.

ChequeAmong the above-mentioned negotiable instruments, cheque is the latest innovation, which cameinto existence with the introduction of banking business in England in the 17 th century. As perSections 5 & 6 of the Negotiable Instruments Act, 1881, a cheque is an unconditional order inwriting drawn on a banker signed by the drawer, requiring the banker to pay on demand a certain
http://en.wikipedia.org/wiki/Promissory_notehttp://en.wikipedia.org/wiki/Bank_notehttp://en.wikipedia.org/wiki/Chequehttp://en.wikipedia.org/wiki/American_Englishhttp://en.wikipedia.org/wiki/Promissory_notehttp://en.wikipedia.org/wiki/Bank_notehttp://en.wikipedia.org/wiki/Chequehttp://en.wikipedia.org/wiki/American_English


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sum of money to, or to the order of, a specified person or to bearer and which does not order anyact to be done in addition to the payment of money.Dishonor of Cheque means whereany cheque drawn by a person on an account maintained byhim with the Banker for payment of any amount of money to another person from out of thataccount is returned by the Bank unpaid either because of the amount is insufficient to honour the

cheque or for any other reason such as stop payment or that it exceeds the amount arranged to bepaid from that account by an agreement made with Bank, such person shall deemed to havecommitted an offence under this Act.

Any person committed the offence of dishonor of cheque shall be liable to be punished withimprisonment up to one year, or with fine up to thrice the amount of the cheque, or with both.

Endorsement

Persons other than the original obligor and obligee can become parties to a negotiable instrument.The most common manner in which this is done is by placing one's signature on the instrument(endorsement): if the person who signs does so with the intention of obtaining payment of the

instrument or acquiring or transferring rights to the instrument, the signature is calledan endorsement. There are five types of endorsements contemplated by the Code, covered inUCC Article 3, Sections 204206:

An endorsement which purports to transfer the instrument to a specified person isa special endorsement for example, "Pay to the order of Amy";

An endorsement by the payee or holder which does not contain any additional notation(thus purporting to make the instrument payable to bearer) is an endorsement in blankorblank endorsement;

An endorsement which purports to require that the funds be applied in a certain manner(e.g. "for deposit only", "for collection") is a restrictive endorsement; and,

An endorsement purporting to disclaim retroactive liability is called a qualifiedendorsement(through the inscription of the words "without recourse" as part of theendorsement on the instrument or in allonge to the instrument).

An endorsement purporting to add terms and conditions is called a conditionalendorsement for example, "Pay to the order of Amy, if she rakes my lawn next ThursdayNovember 11th, 2007". The UCC states that these conditions may be disregarded. [3]

If a note or draft is negotiated to a person who acquires the instrument

1. in good faith;

2. for value;

3. without notice of any defenses to payment,

The transferee is aholder in due courseand can enforce the instrument withoutbeing subject todefenses which the maker of the instrument would be able to assert against the original payee,except for certain real defenses. These real defenses include (1) forgery of the instrument; (2)fraud as to the nature of the instrument being signed; (3) alteration of the instrument; (4) incapacityof the signer to contract; (5) infancy of the signer; (6) duress; (7) discharge in bankruptcy; and, (8)the running of a statute of limitations as to the validity of the instrument.
http://en.wikipedia.org/wiki/Signaturehttp://www.law.cornell.edu/ucc/3/article3.htm#s3-204http://en.wikipedia.org/wiki/Blank_endorsementhttp://en.wikipedia.org/wiki/Negotiable_instrument#cite_note-2http://en.wikipedia.org/wiki/Good_faithhttp://en.wikipedia.org/wiki/Value_(economics)http://en.wikipedia.org/wiki/Defense_(legal)http://en.wikipedia.org/wiki/Holder_in_due_coursehttp://en.wikipedia.org/wiki/Holder_in_due_coursehttp://en.wikipedia.org/wiki/Holder_in_due_coursehttp://en.wikipedia.org/wiki/Signaturehttp://www.law.cornell.edu/ucc/3/article3.htm#s3-204http://en.wikipedia.org/wiki/Blank_endorsementhttp://en.wikipedia.org/wiki/Negotiable_instrument#cite_note-2http://en.wikipedia.org/wiki/Good_faithhttp://en.wikipedia.org/wiki/Value_(economics)http://en.wikipedia.org/wiki/Defense_(legal)http://en.wikipedia.org/wiki/Holder_in_due_course


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The holder-in-due-course rule is a rebuttable presumption that makes the free transfer ofnegotiable instruments feasible in the modern economy. A person or entity purchasing aninstrument in the ordinary course of business can reasonably expect that it will be paid whenpresented to, and not subject to dishonor by, the maker, without involving itself in a disputebetween the maker and the person to whom the instrument was first issued (this can be contrasted

to the lesser rights and obligations accruing to mere holders). Article 3 of the Uniform CommercialCode as enacted in a particular States law contemplates real defenses available to purportedholders in due course.

The foregoing is the theory and application presuming compliance with the relevant law.Practically, the obligor-payer

laws effecting business

Documents