Who Can Claim Copyright Protection

Tuesday, August 2nd, 2016 | Category: Legal
31. Who can claim copyright protection? Only the creator of the work (or individual contracting for the creation of the work) may secure copyright protection. The copyright may later be licensed or assigned, but the original creator must originally secure those rights. Companies can be authors under copyright law. The read more »

Contributors to this Text

Tuesday, July 26th, 2016 | Category: Legal
Contributors to this Text Prof. Jason M. Gordon, JD, MBA, LLM – Founding author and director of Business Professor, Inc. (TheBusinessProfessor.com). Prof. Jennifer Chapman, JD, MAcc – Editing and proofreading of Topic 10: Contract Law. Prof. Benjamin Akins, JD, LLM – Editing and proofreading of Topic 12: Business Entities. Ms. read more »

Introduction to Text

Tuesday, July 26th, 2016 | Category: Legal
Dear Students, If you are reading this introduction, you are either interested in or forced to learn about the legal environment of business practice. It is our hope that this text makes your learning path easier to navigate. This text is for you. We welcome your comments and feedback in read more »

How to Use This Text

Tuesday, July 26th, 2016 | Category: Legal
Overview Access to Text – All of this material in this text is available in desktop and mobile browser or PDF format at TheBusinessProfessor.com. •    Note: This PDF document allows you to expand the Table of Contents on the left-hand side of the page. You can easily search, bookmark, highlight, read more »

What are Blue Sky Laws?

Tuesday, July 26th, 2016 | Category: Legal
BLUE-SKY LAWS “Blue-sky laws” are state laws regulating the sale of securities within that state. These laws are so named from early laws passed in Kansas and in the Midwest to protect investors from undertaking investments that had no more substance than the blue sky. Issuers of securities must comply read more »

Other Economic Development Organizations

Tuesday, July 26th, 2016 | Category: All Posts,Legal
Other Economic Development Organizations •    Organization for Economic Cooperation and Development (OECD) – The OECD is an international organization of 35 countries with the propose of fostering economic development and international trade. The objective of the organization is to develop common policies and understanding with regard to international trade practices. read more »

Trademark Symbol

Tuesday, July 26th, 2016 | Category: All Posts,Legal
21. What are common trademark designations used to indicate a claim of trademark rights in a mark? The traditional trademark designation is (“TM”) or ™. Anyone who uses a distinctive mark may employ this symbol to put others on notice of the trademark claim. If a trademark is registered with read more »

Major Federal Antitrust Laws

Thursday, July 21st, 2016 | Category: Legal
2. What are the major antitrust laws in the United States? Since the inception of antitrust law, the Federal Government has passed three sweeping antitrust laws: •    The Sherman Act of 1890, •    The Clayton Act of 1914, and •    The Federal Trade Commission Act of 1914. These acts still read more »

Major Federal Labor Laws

Tuesday, July 19th, 2016 | Category: All Posts,Legal
    16. What are the major federal labor laws? •    Norris-LaGuardia Act – This law prevents courts from issuing injunctions (stop orders) to individuals or groups of striking employees. •    National Labor Relations Act (or Wagner Act) – This law takes affirmative steps to allow unionization of employees. •   read more »

What are Labor Laws?

Tuesday, July 19th, 2016 | Category: Legal
  15. What are “labor laws”? Labor laws control the relationship between employers and employees with regard to such things as benefits, obligations, and bargaining rights. Labor law is generally grouped together with all employment laws, but it is frequently used to refer to the group of laws affecting collective read more »

Securities Registration Post Effective Period

Thursday, July 14th, 2016 | Category: Legal
16. What is an issuer allowed to do during the “Post-Effective Period”? During the Post-Effective Period, the issuer can begin selling securities. The issuer must still deliver a statutorily prescribed prospectus to offerees. Additional rules benefiting WKSIs exist during this stage that allow for an automatic “shelf registration”. Shelf registration read more »

Causes of Corporate Governance Issues

Thursday, July 14th, 2016 | Category: Legal
32. What are some of the major causes of corporate governance issues? The primary characteristics of the corporate governance regime that causes issues or conflicts between shareholders and the corporation are as follows: •    Access to Information •    Decision-Making Procedure •    Competition for Authority •    Interest and Benefit Misalignment Each read more »

Methods of Resolving Breach of Contract

Wednesday, July 13th, 2016 | Category: Legal
29. What methods exist for resolving a breach of a contract? There are several remedies or solutions available for a breach of contract: •    Negotiated Settlement – The parties may work out a satisfactory solution to most breaches of contract is resolved by the parties themselves through voluntary negotiated settlements. read more »

Article I Federal Courts

Thursday, June 30th, 2016 | Category: All Posts,Legal
Article I Federal Courts Article I federal courts include “legislative courts” & “administrative courts”. Legislative courts are those created by Congress pursuant to authority granted under Article II to handle special jurisdictional matters. Administrative courts are those created to adjudicate disputes of a particular administrative agency. Note: Examples of legislative read more »

Options Contract and Firm Offers – Exception to Consideration Requirement

Thursday, June 30th, 2016 | Category: All Posts,Legal
Other Exceptions to Consideration Requirement There are two very broad, common exceptions to the requirement that a contract be supported by consideration. ⁃    Option Contracts – An option contract is an agreement between parties that allows one party a specific period of time to purchase a particular asset at a read more »

Intentional Interference with Economic Relations

Thursday, June 30th, 2016 | Category: All Posts,Legal
12. What is the “intentional interference with economic relations”? This is a tort based in common law rather than statute. There are several categories of conduct that may violate common law rights of individuals: •    Disparagement – This is an untrue statement about someone’s business acumen, product, or service. This read more »

Class Action – Procedural Requirements

Thursday, June 30th, 2016 | Category: All Posts,Legal
Procedural Requirements for a Class Action • Notice to Opt-Out – Once certified, the lead plaintiff must give notice of the litigation to all prospective members of the class who can be found through reasonable efforts. Once identified, the prospective members are then given the option of opting out of read more »

Class Action Lawsuit – Certify a Class

Thursday, June 30th, 2016 | Category: All Posts,Legal
Requirements for a Class Action – Certifying a Class The requirements for a plaintiff to bring a class action against a defendant are as follows: •    Certify the Class – The primary hurdle for the plaintiff is to “certify” all potential plaintiffs as a class. To certify a class, the read more »

What is a Class Action Lawsuit?

Thursday, June 30th, 2016 | Category: All Posts,Legal
5. What is a “class action” lawsuit? A class action is a special type of lawsuit in which one or more plaintiffs file suit on their own behalf and on behalf of all other persons who have a similar claim against the defendant. The individuals represented by the lead plaintiff(s) read more »

Shareholder Direct and Derivative Actions

Tuesday, June 14th, 2016 | Category: All Posts,Legal
12. How can shareholders enforce their rights? Shareholders may generally enforce their rights against the corporation (or its officers and directors) in one of two ways. Direct Actions – A shareholder may directly sue the corporation, an officer, or director if one of these individuals takes actions that result in read more »

Consumer Protection Law (Intro)

Saturday, May 21st, 2016 | Category: All Posts,Legal
Overview Consumer protection law concerns the body of statutes and regulations protecting consumers against deceptive practices by merchants or service providers. This chapter introduces the concept of consumer protection and its purpose. It then introduces the numerous federal statutes that protect consumers in specific situations. While these are the primary read more »

Control within Business Entity

Friday, May 13th, 2016 | Category: Legal
10. What is “control” over a business entity? This questions concerns who has control over operations or authority to act on behalf of the business. Each business entity type has a default control structure and level of authority vested in individuals in those roles. In many cases the owners and read more »

Counsel and Expenses

Friday, April 24th, 2015 | Category: All Posts,Finance
Counsel & Expenses The venture funding process often requires extensive legal services. An attorney serves the role of helping each party: Understanding the important considerations, Negotiate the funding deal (often with the other party’s counsel), Conduct or facilitate examination of the target company (due diligence), and Memorialize the transaction through read more »

Special Employee Provisions

Friday, April 24th, 2015 | Category: All Posts,Finance
Special Employee Provisions The parties often negotiate numerous employee-related provisions into the term sheet. These provisions serve as control mechanisms to either incentivize current management or allocate control over management to the investor. As discussed throughout, the control provisions employed by the investor seek to wrest away control of aspects read more »

Management and Information Rights

Friday, April 24th, 2015 | Category: All Posts,Finance
Management and Information Rights Information rights require the company to provide investors with a certain level of information. State corporate law requires a certain level of disclosure (e.g., the articles and bylaws), but investors may require a higher level of record maintenance and disclosure. The rights are generally assured in read more »

Board Observer Rights

Friday, April 24th, 2015 | Category: All Posts,Finance
Board Observer Rights Board observer rights, as the name states, allows investors to observe board meetings. This allows non-directors to be a part and presence in the corporate meetings. This includes taking part in discussions and committee meetings. The limitation is when attorney-client privilege is required. These rights are often read more »

Registration Rights

Friday, April 24th, 2015 | Category: All Posts,Finance
Registration Rights Registration rights are control provisions that allow an investor to force the business to file a registration statement with the Securities and Exchange Commission (SEC) and state regulators. The Securities Act of 1933 regulates the transfer or sale of securities. Specifically, it requires that securities be registered prior read more »

Drag Along Rights

Friday, April 24th, 2015 | Category: All Posts,Finance
Drag-Along Rights Drag-along rights, on the other hand, are control provisions that can protect against minority shareholders holding up a deal for the sale of the company. Specifically, it requires a stockholder to vote in favor of sale if the transaction is approved by a certain percentage of stockholders and/or read more »

Protective Provisions

Friday, April 24th, 2015 | Category: All Posts,Finance
Protective Provisions Another common investor control provision, known as “protective rights”, requires voting approval (either majority or unanimous vote) by a class of preferred shareholder for certain events, such as pursuing an exit event. These rights allow the preferred shareholder the ability to thwart or hold up certain corporate action. read more »

Investor Voting Rights

Friday, April 24th, 2015 | Category: All Posts,Finance
Voting Rights “Voting rights” generally refers to the right granted to preferred shareholders to participate in voting along-side common shareholders. This is an important power, as the ability to vote on corporate affairs is often a primary characteristic separating preferred and common shareholders. The articles may allow for special voting read more »

Preemptive Rights

Friday, April 24th, 2015 | Category: All Posts,Finance
Preemptive Right of First Offer Rights of first offer grant shareholders the right to purchase new shares issued by the corporation before others have the opportunity to purchase. The primary purpose of the provision is to allow current shareholders to avoid dilution of ownership by participating as purchasers of any read more »

Carveouts to Antidilution Protection

Friday, April 24th, 2015 | Category: All Posts,Finance,Legal
Carveouts to Anti-Dilution Triggering anti-dilution protection can be detrimental to common shareholders, who are subject to dilution. As such, the common shareholder may attempt to negotiate barriers to triggering an anti-dilution provision (i.e., a change in the anti-dilution conversion ratio).  Below are common carveouts to corporate actions that that will read more »

Broad Based & Narrow Based Calculation

Friday, April 24th, 2015 | Category: All Posts,Finance,Legal
Broad-Based vs. Narrow-Based Weighted Averaged Calculation There are two primary variations of the weighted average formula depending on what constitutes “common outstanding” in the above formula. The first, and more common, is referred to as “broad-based, weighted average” while the second is referred to as “narrow-based, weighted average.” The broad-based read more »

Weighted Average Antidilution Protection

Friday, April 24th, 2015 | Category: All Posts,Finance
Weighted Average Dilution The most common anti-dilution protection is called “weighted-average,” anti-dilution protection. This approach employs a formula to adjust the rate at which preferred stock converts into common stock based upon: the amount of money previously raised by the company, the price per share at which it was raised, the amount read more »

Full Ratchet Antidilution Protection

Friday, April 24th, 2015 | Category: All Posts,Finance,Legal
Full Ratchet Anti-Dilution Protection Full-ratchet, anti-dilution protection prevents an investor from being diluted at all from subsequent investment. Basically, the conversion price of the preferred stock (the price at which the preferred stock is converted to common stock) is reduced to allow the investor to convert the preferred shares into read more »

Anti-Dilution Protection

Friday, April 24th, 2015 | Category: All Posts,Finance,Legal
Dilution & Anti-Dilution Protection Dilution is the reduction in the percentage ownership interest of an existing investor when a company issues new equity or the number of outstanding shares otherwise increases (exercising options, warrants, stock split, etc.). Anti-dilution provisions protect early investors from the risk of dilution by later rounds read more »

Conversion Rights

Friday, April 24th, 2015 | Category: All Posts,Finance,Legal
Conversion Rights Conversion rights refers to the shareholder’s ability to convert the preferred shares into common shares. Conversion rights are important as they affect the calculation of other rights of shareholders. Most calculations use the number of outstanding shares “on an as-converted basis”.  This means that the total number of read more »

Redemption Rights

Friday, April 24th, 2015 | Category: All Posts,Finance,Legal
Stock Redemption Rights Redemption occurs when the company repurchases shares from the company’s equity holders. Redemption rights are the rights of the shareholder to force the company to repurchase shares. Redemption rights are generally either mandatory or optional. Example: Unless prohibited by Delaware law governing distributions to stockholders, the Series read more »

Liquidation Preference in Follow On Rounds

Friday, April 24th, 2015 | Category: All Posts,Finance,Legal
Liquidation Preference in Series B Rounds Preferred shares with a liquidation preference in a seed or series A round will generally be the only preferred class of shares issued. The liquidation preference and its priority may become an issue with later rounds of investment. Series B investors will want priority read more »

Participation Rights

Friday, April 24th, 2015 | Category: All Posts,Finance,Legal
Participation Rights & Caps In some cases, the investor will negotiate for the ability to participate with common shareholders in the distribution of proceeds after receiving the liquidation preference. That is, the investor is paid the full liquidation preference, then they participate with common shareholders in receiving a percentage of read more »

Liquidation Preference

Friday, April 24th, 2015 | Category: All Posts,Finance,Legal
Liquidation Preference Investors in a startup venture want to make certain that they will receive a return of their money invested before the entrepreneur receives any funds for the sale of the business venture, merger, liquidation, or public offering. Investors achieve this desire by incorporating an liquidation preference into the read more »

Dividend Rights

Friday, April 24th, 2015 | Category: All Posts,Finance,Legal
Dividend Rights Dividend rights are a common attribute of preferred stock and are detailed in the . Early stage investors are rarely concerned with dividends; nonetheless, the parties will address dividend rights as a method of controlling the decision to issue a dividend. Dividend rights may be structured in a read more »

Term Sheet Overview

Friday, April 24th, 2015 | Category: All Posts,Finance,Legal
Overview of the Term Sheet At this point during the negotiation process the entrepreneur and investor discuss the major issues surrounding the transaction. The term sheet is the result of initial negotiation and agreement between the parties regarding the funding transaction. Term sheet negotiations begin once the investor and entrepreneur read more »

Are Uber Drivers Employees? My Analysis

Saturday, April 11th, 2015 | Category: All Posts,Legal
Issue: The specific legal issue with Uber centers on whether the drivers should be ICs or Employees. The change affects the legal requirements on the company under state law and federal laws. Specifically, Uber would be required to meet state and federal minimum wage standards (FLSA), reimburse for costs incurred read more »

Funding Transaction Costs

Monday, April 6th, 2015 | Category: All Posts,Finance,Legal
Legal Fees in a Funding Transaction Legal counsel plays and important role in funding transaction. The process can be quite complicated and the counsel helps negotiate the deal as well as draft the applicable documents. The startup venture will always have counsel. In a seed round it is not common read more »

Rolling Closing Dates

Monday, April 6th, 2015 | Category: All Posts,Finance,Legal
Rolling Closing Date In seed rounds it is common to have a rolling closing date. This means that investors will join the round and provide funding before all investors necessary to meet the target amount have committed. The startup cannot wait to close the seek round until all investors commit, read more »

Company Legal Opinion

Monday, April 6th, 2015 | Category: All Posts,Finance,Legal
Company Legal Opinion As part of the funding process (particularly the due diligence process), investors will require that the attorney for the startup venture deliver a legal opinion concerning certain organization and governance requirements. This opinion letter allows for counsel to make certifications regarding aspects that may or may not read more »

Stock Purchase Agreement Structure

Monday, April 6th, 2015 | Category: All Posts,Legal
The Stock Purchase Agreement The stock purchase agreement is the central contract between the parties where the business agrees to exchange as specific number of shares of the business venture for the agreed upon funding. The stock purchase agreement is made up of the following elements: Preamble  –  This provision read more »

Due Diligence

Monday, April 6th, 2015 | Category: All Posts,Finance,Legal
Due Diligence The due diligence process is where investors (mainly through there representatives) do a thorough inspection of the startup venture. The purpose is to verify the information supplied by the entrepreneurs and to identify any points of risk in investing in the firm.  The extent of diligence varies depending read more »

Board and Stockholder Approval

Monday, April 6th, 2015 | Category: All Posts,Finance,Legal
Board and Stockholder Approval The investment process generally requires significant board and shareholder approval. First, in drafting the standard documents, the board of directors will need to initiate an amendment of the articles of incorporation (and potentially the bylaws) to accommodate the issuance of a preferred share of stock with read more »

Standard Equity Financing Documents

Monday, April 6th, 2015 | Category: All Posts,Finance,Legal
Equity Financing Documents There are several standards documents employed in the equity funding transaction. Many of these documents surround the formation of a new business entity (or modification of the existing entity), governance procedure, and the actual purchase and transfer of an ownership interest. Below are brief explanations of the read more »

Series A Funding

Monday, April 6th, 2015 | Category: All Posts,Finance,Legal
Overview of Series Funding Following the seed or startup funds stage of financing, startup ventures seek to raise funds through specific rounds of financing. A financing round will have a target amount of money to raise at a given valuation. Sometimes the early round is structured as debt (rather than read more »

Funding Deal Process

Monday, April 6th, 2015 | Category: All Posts,Finance,Legal
Funding Deal Process The process for arranging financing will vary depending on the stage of investment and nature of the business. A common model of steps in a venture capital funding transaction includes: Review of the business plan by the potential investor; Note: The business plan review step may be read more »

Overview of Funding Stages

Monday, April 6th, 2015 | Category: All Posts,Finance,Legal
Overview of Funding Stages The defining characteristic that distinguishes a startup venture from a lifestyle (or small business) business is the growth-based nature of the venture. Both ventures generally begin with personal, friend, or family financing. A non-growth-based venture must achieve sustainability within the confines of personal funds and debt read more »

Vesting Schedule and Follow On Financing

Saturday, April 4th, 2015 | Category: All Posts,Finance,Legal
Vesting Schedule & Follow-On Financing As discussed in prior lectures, investors will seek to use a fully diluted capitalization calculation when investing in a startup. This includes the shares issued but not fully invested in founders. As such, the founders may want all unvested shares to vest at the time read more »

Stock Vesting Schedule

Saturday, April 4th, 2015 | Category: All Posts,Finance
Stock Vesting Schedule Early business ventures typically reorganize into corporations. The purpose of reorganizing is to establish a formal business ownership and management structure, as well as establish classes of ownership interest that can be efficiently transferred. As previously discussed, founders generally reserve some form of founder’s stock for themselves. read more »

Class FF Stock

Saturday, April 4th, 2015 | Category: All Posts,Finance
Class FF Stock Series FF stock is yet another variation of founder’s stock that has characteristics similar to a preferred class of share. The FF stock was originated with the Founders Fund, as part of their investment deals. As with most startup ventures, the FF class has been employed in read more »

Class F Stock

Saturday, April 4th, 2015 | Category: All Posts,Finance,Legal
Class F Common Stock Class F stock is founders stock that is a unique class of common stock, which was generated by the Funded Founder Institute. This type of stock has become sufficiently common that I feel the need to explain it as part of this general venture financing lecture read more »

Founders Stock

Saturday, April 4th, 2015 | Category: All Posts,Finance,Legal
Founder’s Stock Founder’s stock is simply the common stock of the corporation issued to founders at the time of formation. At the time of formation, founders issue the stock at a very low valuation (e.g., .01 or .001). This is permissible, as the company is simply a shell at the read more »

Issues Contributing IP for Equity

Saturday, April 4th, 2015 | Category: All Posts,Finance,Legal
Early Creators of IP as Founders or Equity Holders Often, intellectual property is the most valuable assets a company has. For an extreme example, think of the music industry. At Michael Jackson’s death his portfolio of music masters was worth more than $1 Billion. In many cases, early founders will read more »

Cofounder Equity Split

Saturday, April 4th, 2015 | Category: All Posts,Finance,Legal
Equity Split Between Co-Founders As discussed in previous lecture, the founders of the business provide the initial infusion of assets to fund the business. Allocating the shares of ownership interest in the business between founders can be difficult. Allocation of ownership is based on any number of factors, but it read more »

Equity Distribution to Founders

Saturday, April 4th, 2015 | Category: All Posts,Finance,Legal
Startup Founders and Equity Funding At the beginning of the life of any business venture, the business has no resources. It is, in fact, a legal shell that must be filled. Founders are generally the sole source of assets in a startup venture. That is, the founders undertake the task read more »

Options Pools and Capitalization

Friday, March 27th, 2015 | Category: All Posts,Finance,Legal
Option Pools When seeking equity investment, the investor will generally require that a pool of stock (generally common stock) be set aside from the authorized shares to compensate new and current employees. More specifically, the shares are used as a method to attract new talent that are are only interested read more »

Capitalization and How to Calculate It

Friday, March 27th, 2015 | Category: All Posts,Finance,Legal
Capitalization – An How to Investors Calculate It Capitalization refers to the value of the outstanding shares. As such, the calculation of outstanding shares is relevant to determining the percentage of ownership. As mentioned a separate lecture, the number of outstanding shares may be calculated as: issued shares only; issued read more »

Issued Outstanding and Fully Diluted Shares

Friday, March 27th, 2015 | Category: All Posts,Finance,Legal
Issued and Outstanding Shares  As previously discussed, authorized shares are the number of shares (of any class) that are listed in the articles of incorporation. Issued shares are shares that are actually distributed to shareholders. Outstanding shares may have a little more broad of a definition. It may include all read more »

Participating Convertible Preferred Shares

Friday, March 27th, 2015 | Category: All Posts,Finance,Legal
Participating Convertible Preferred Shares The class of equity demanded by investors in most venture capital financings is preferred convertible participating shares (PCP). As discussed in prior lectures, this class of shares has conversion rights to common stock. The shares will have both voluntary and mandatory conversion provisions. It also grants read more »

Participating Preferred Shares

Friday, March 27th, 2015 | Category: All Posts,Finance,Legal
Participating Preferred Participation rights give the shareholder the right to participate, along with other shareholders (the entrepreneur), in receiving any distributions from the sale of the business or other exit event. The participating stockholder receives a percentage of the funds distributed that is equal to her percentage of equity ownership read more »

Preferred Shares Liquidation Preference

Friday, March 27th, 2015 | Category: All Posts,Finance,Legal
Preferred Share Liquidation Preference A liquidation preference for preferred shares allows the investor priority in recuperating her investment if the company is sold or undergoes some other exit event. A liquidation preference is a security measure to mitigate the investor’s risk of financial loss as compared to other shareholders (the read more »

Preferred Convertible Stock

Friday, March 27th, 2015 | Category: All Posts,Finance,Legal
Preferred Convertible Stock Voluntary Conversion Provisions Equity investors often demand preferred shares from the corporation. The most common characteristic of preferred shares issued to equity investors is the ability to convert the preferred shares into common shares. Investors often negotiate for a liquidation preference upon the sale of the company. read more »

Common and Preferred Shares

Friday, March 27th, 2015 | Category: All Posts,Finance,Legal
Common Shares Common shares of stock are the basic unit of ownership for every corporation. Every corporation must have a class of common stock. A common share represents one unit of all of the authorized units (authorized shares) of ownership of the corporation. It entitles the holder to one vote read more »

Authorized Shares

Friday, March 27th, 2015 | Category: All Posts,Finance,Legal
Concept of “Authorized Shares” A business is capitalized by capital contributions from shareholders and retained earnings from operations. Shareholders receive shares of the corporation (representing an ownership interest in the corporation) in return for their contributions. To distribute shares, the corporation must “authorize” those shares. This is done in the read more »

Employee and Intellectual Property Matters

Saturday, March 14th, 2015 | Category: All Posts,Finance
Employee and Contractor Matters At-Will Employment Offer Letter: The at-will employment letter will outline the rights of employer and employee to end the employment relationship. Note: State law differs with regard to the extent to which an employee is at-will. Proprietary Information and Inventions Agreement: Employees will often develop intellectual read more »

Capitalization Matters

Saturday, March 14th, 2015 | Category: All Posts,Finance
Capitalization Matters Capitalization is the funding of the business venture. A startup will be capitalized by contributions from founders. In exchange for contributed value (funds or assets) the founders will receive shares of the corporation. The corporation should follow the following steps regarding capitalization: Subscription Agreements: A subscription agreement (or read more »

Initial Board Actions

Saturday, March 14th, 2015 | Category: All Posts,Finance
Initial Board Actions The initial board is charged with establishing the operations of the corporation. This begins with resolutions approving and authorizing certain corporate actions. Approving or setting these actions in motion are the core responsibilities of the board. They will take the following organization and corporate governance matters through read more »

Incorporation and Organization Documents

Saturday, March 14th, 2015 | Category: All Posts,Finance
Incorporation and Organization Documents Incorporating and organizing a startup generally requires the following steps: Reservation of Corporate Name: Prior to filing the articles of incorporation, you should research to see if the desired corporate name is available. If the name is already registered in the state, then it will be read more »

Overview of Startup Package of Documents

Saturday, March 14th, 2015 | Category: All Posts,Finance
Startup Package of Documents A startup venture will inevitably become a corporation. The corporate entity form provide the structure necessary to effectively manage and fund the venture. For example, corporations allow for the established roles of shareholder, directors, and managers. It further allows for the distribution of preferred ownership interests. read more »

Venture Capital Investment

Saturday, March 14th, 2015 | Category: All Posts,Finance
What are Venture Capitalist and Capital Funds? Venture capital funds are pools of funding used to purchase equity interests in growth-based, startup ventures. The venture capitalist is the fund manager who raises funds (raises a fund) from investors seeking to allocate a portion of their investment portfolio to investing in read more »

Angel Investment

Saturday, March 14th, 2015 | Category: All Posts,Finance
What is an Angel Investors? Angel investors are high-net-worth individuals who seek to invest personal funds in early or startup-stage companies. Generally, these investments represent a given percentage of the angel investor’s overall personal wealth investment strategy. Startup companies provide a source of high-risk and high-potential-return investments within the Angel’s read more »

Overview of Angel and Venture Capital Investment

Saturday, March 14th, 2015 | Category: All Posts,Finance
What Angel and Venture Capital Investors Angel investors and venture capitalist are equity investors in startup ventures. These individuals (or funds) provide much-needed capital at various stages of the startup’s lifecycle. Angel investors and venture capital funds are discussed in detail in subsequent lectures. Before doing so, however, it is read more »

Business Plan for Equity

Thursday, March 12th, 2015 | Category: All Posts,Finance
Equity Investors and the Business Plan Equity investors come in a number of forms. For purposes of this lecture, let’s look at angel investors and venture capitalists. These investors have similar interests and expectations with regard to the business. See our Business Planning resources for a detailed analysis of what read more »

Business Plans for Loans

Thursday, March 12th, 2015 | Category: All Posts,Finance
Using a Business Plan The business plan describes the current activities, aims and objectives, and how they are going to be achieved over a set period of time. The primary sections of the business plan are: Concept Marketing Management and Operations Financials The basic premise is to show: Who you read more »

Others Forms of Business Funding

Thursday, March 12th, 2015 | Category: Finance
Other Methods of Financing Business Operations Specific types of business operations may allow for unique ways to finance operations outside of the traditional debt or equity relationships. Several of these approaches are discussed below: Contractual Business Sales In the event you are purchasing an existing business, rather than starting a read more »

Debt vs Equity in the Startup Venture

Thursday, March 12th, 2015 | Category: All Posts,Finance
Debt versus Equity in the Startup Venture Both debt and equity funding have significant advantages for the startup venture. The primary advantages (and disadvantages) of each and the are discussed below: Debt Capital – Liability or obligation owned to another person or institution and legally required to be paid by read more »

Funding from Equity Investors

Thursday, March 12th, 2015 | Category: Finance
Equity Financing Equity financing means investing money in a business organization in exchange for an ownership interest in the business. Selling equity to private investors in a business is commonly called a “private placement”. Early equity financing may come from the founder(s), friends, and family. That is, these individuals capitalize read more »

Using Promissory Notes

Thursday, March 12th, 2015 | Category: Finance
What is a Promissory Notes Any commercial loan will require a debt instrument (known as a promissory note) evidencing the debt and outlining the obligations of the borrower to repay the funds. These documents will generally include all relevant terms of the lending relationship, including interest rate and repayment schedule. read more »

Business Commercial Loans

Thursday, March 12th, 2015 | Category: Finance
Loans from Lending Institutions Micro-loans – These are small seed capital loans (the average is $13,000) made to qualifying businesses by financial institutions or non-profits. Often these loans will be backed or secured by a particular state or federal governmental program. Small Business Loans – The US Government via the read more »

Funding from Friends Family and Fools

Thursday, March 12th, 2015 | Category: Finance
Friends, Family and Fools Friends and family members may want to support your business venture by lending or gifting funds to you. In some cases friends or family may want to invest or purchase an ownership interest in the business venture. This is the most basic form of crowdsourcing the read more »

Funding from Personal Contributions of Founders

Thursday, March 12th, 2015 | Category: Finance
Personal Funds Seed funds for a startup business ventures generally come from a combination of personal savings and bootstrapping by the founders. Entrepreneurs will use personal assets and may incur personal debt to fund the early stage venture. Personal guarantees of commercial debt are covered in a separate lecture. Common read more »

Funding a Business with Company Revenue

Thursday, March 12th, 2015 | Category: Finance
Funding a New Venture with Company Revenue Some startup ventures are fortunate enough to fund various stages of business development and growth with funds generated by the business activity. For example, at the seed stage a services firm may be able to take on client work that provides the revenue read more »

Overview of Financing a Business Venture

Thursday, March 12th, 2015 | Category: Finance
Overview of Financing a Business Venture Obtaining funds to establish, operate, and grow a business is an essential component of entrepreneurship. Surveys indicate that one of the greatest hurdles to entrepreneurs undertaking a business venture is the availability of funds. It may surprise you to know that of the 500 read more »

Strategic Considerations in Valuation

Tuesday, March 10th, 2015 | Category: All Posts,Finance
Strategic Considerations in Valuation  Subjective factors are routinely used to either discount or justify a premium valuation. For example, a specific company may derive a valuation for a firm based upon strategic considerations that are unique to that entity. Strategic considerations when valuing a business include the synergies that will read more »

First Chicago Valuation Method

Tuesday, March 10th, 2015 | Category: All Posts,Finance
The First Chicago Method of Business Valuation  The First Chicago Method is a hybrid approach that employs multiples to derive a terminal value and discounts future cash flows to arrive at a present valuation. Notable about this method is that it requires three projections based upon company performance. A “best read more »

Venture Capital Method

Tuesday, March 10th, 2015 | Category: All Posts,Finance
Venture Capital Method   The venture capital method (VC Method), as the name implies, is most commonly used in the venture capital industry and for valuing startup ventures.    As discussed in separate lectures, investors seek to capitalize on their investment via an exit at some future date in the read more »

Angel Investor Methods

Tuesday, March 10th, 2015 | Category: All Posts,Finance
Angel Investor Methods Investors have developed multiple valuation strategies to account for the difficulty in assessing the value of early-stage, growth-based startups in the technology space. Two well-known methods are the “Berkus Method” and the “Scorecard Method”. Berkus Method The Berkus method was developed by a well-known angel investor named read more »

PreMoney and Post Money Calculations

Tuesday, March 10th, 2015 | Category: All Posts,Finance
Overview of Pre-Money and Post-Money Calculations The value of a business in a funding transaction begins with determining the pre-money and post money valuation. This valuation will be used to determine how many shares are issued to the investor and what percentage of ownership all owners will have following the read more »

Value of Dividends Method

Tuesday, March 10th, 2015 | Category: All Posts,Finance
Value of Dividends Method This method relies on the idea that a stock is only worth what it will provide to investors in future dividends. If a business does not currently distribute dividends, the value of the stock will appreciate under apprehension of future dividend distributions. As such, the firm read more »

Economic Value Added

Tuesday, March 10th, 2015 | Category: All Posts,Finance
Economic Value Added (EVA)   This methodology focuses on the return on investment expected from the company above the relative cost of capital.  Take the amount of requested or required investment. Determine the cost of obtaining that capital. That is, what will investors require as a return (dividend or capital read more »

Excess Earnings Method

Tuesday, March 10th, 2015 | Category: All Posts,Finance
Excess Earnings Method   Another earnings-based method is excess earnings. This method discounts company earnings based on two capitalization rates: a rate of return on tangible assets and a rate attributable to company goodwill. The method is often described as a hybrid method because it takes into account the company’s read more »

Discount Future Cash Flows Method

Tuesday, March 10th, 2015 | Category: All Posts,Finance
Discount Future Cash Flow Method The Discounted Cash Flow (DCF) method uses the projected future cash flows of the business after subtracting the operating expenses, taxes, changes in working capital, and capital expenditures. This figure is known as the free cash flow of the business because it accurately represents the read more »

Build Up Method

Tuesday, March 10th, 2015 | Category: All Posts,Finance
Build-Up Method of Valuation In the “buildup method” valuation begins with the risk-free rate. The individual valuing the firm then makes the subjective determination of what percentage to add to the risk-free rate. The amount added depends upon the amount of risk associated with the business’ earnings. The value of read more »

Earnings Capitalization Method

Tuesday, March 10th, 2015 | Category: All Posts,Finance
Earnings Capitalization Model   The earnings capitalization model values the company based upon the company earnings. To determine normalized earnings, you calculate a weighted average of earnings over a period of years. The earnings reported on financial statements or tax returns are normalized through several steps. These modifications include the read more »

Income Based Valuation Approaches

Tuesday, March 10th, 2015 | Category: All Posts,Finance
Overview of Income-Based Approaches  Income based approaches value a business based upon the past, current, or expected future cash flows of the business and the risk that the business will not produce the desired return. Estimating and valuing flows of income is done through a process called capitalization. Capitalizing the read more »

Issues with Market Based Methods

Tuesday, March 10th, 2015 | Category: All Posts,Finance
Issues Associated with Market-Based Valuation Methods As will all valuation methods, market-based valuation methods have negative aspects – particularly when they are used to value startup ventures. Some of the notable issues with market-based approaches are discussed below. Comparable Companies, Transactions, Industries The primary difficulty associated with using market-based, comparables read more »

Characteristic Based Ratios

Tuesday, March 10th, 2015 | Category: All Posts,Finance
Common Characteristic-Based Ratios or Multiples  The following subsections contain a non-exclusive list of characteristic-based ratios used to value a business. These ratios are derived from a comparable transaction, firm, or industry. Sometimes, multiple ratios are used to derive a single valuation for a target business. Price/Earnings Ratio (P/E Ratio)  The read more »

Types of Comparables

Tuesday, March 10th, 2015 | Category: All Posts,Finance
Types of Comparables  A company may be valued using any number of characteristics about the business. In general, the price of that company’s total equity is compared to some value characteristic of the company, such as the before or after-tax earnings, cash flow, or revenue of the company. This ratio read more »

Overview of Market Based Approaches

Tuesday, March 10th, 2015 | Category: All Posts,Finance
Overview of Market-based Approaches Market-based approaches value the business based upon the productive characteristics of the business in a given market. These methods focus on comparisons of like businesses, transactions, or industries (known as comparables or comps). Most of these methods focus on identifying a value-based, characteristic of the comparable and read more »

Liquidation Value

Tuesday, March 10th, 2015 | Category: All Posts,Finance
Liquidation Value  Liquidation value is an asset-based method based upon the value that the business would immediately receive upon selling the asset on the open market. Immediately means selling the asset within a six to twelve month period. This method takes into consideration the age, wear, and technological innovations associated read more »

Replacement Value

Tuesday, March 10th, 2015 | Category: All Posts,Finance
Replacement Value (or Substantial Value) of Assets  A second, asset-based valuation method looks at the operating assets of a business and assigns a value based on what it would cost to replace them. This approach evaluates the cost of replacing the assets to achieve a commensurate output given the current read more »

Book Value and Adjusted Book Value Methods

Tuesday, March 10th, 2015 | Category: All Posts,Finance
Book Value (and “Adjusted Book Value”)  The book value represents the value that the company based upon the internal financial statements. Specifically, book value concerns the total value of company assets minus the total value of company liabilities. This amount will equal the owner’s equity in the firm and, likewise, read more »

Asset Based or Cost Based Valuation Methods

Tuesday, March 10th, 2015 | Category: Finance
Overview of Asset-Based (or Cost-Based) Methods The asset-based approach focuses on the valuation of the firm’s assets or, in some instances, the cost of replacing those assets. This approach puts emphasis on the total assets and liabilities of the firm.  It therefor reflects a whole-firm valuation, rather than simply an read more »

Overview of Valuation Methods

Tuesday, March 10th, 2015 | Category: Finance
Overview of Valuation Methods Valuation methods are particularly important in startup ventures, as valuation affects the interest of potential investors and reflects the expectations of the firm’s future performance.  Equity investors in startup ventures seek a return on their investment via a future exit event.  Examples of exit events include read more »

Security Interest Priority in Consents and Disclaimers

Tuesday, March 10th, 2015 | Category: Legal
Priority Based Upon Consent, Disclaimer, or Right to Remove § 9-334(f) states that a security interest in a fixture (whether perfected or no) has priority over a conflicting security interest in real property if the owner of the real property has consented to the security interest or disclaimed an interest read more »

Security Interest in Mobile Homes

Tuesday, March 10th, 2015 | Category: Legal
Security Interests in Manufactured (Mobile) Homes  § 9-334(e)(4) states that a security interest in a manufactured home (arising in a manufactured home transaction) that is perfected pursuant  to a certificate of title statute, it will have priority over a conflicting real property interest. A manufactured home is a structure of read more »

Conflicting Judicial Liens

Tuesday, March 10th, 2015 | Category: Legal
Conflicting Judicial Liens  Per § 9-334(e)(3), a security interest in a fixture that is perfected by any valid method has priority over a legal or equitable lien arising later. This provision serves to protect secured parties in fixtures from subordination in the event the debtor files for bankruptcy. Under the read more »

Readily Removable Fixtures

Tuesday, March 10th, 2015 | Category: Legal
Readily Removable Fixtures  § 9-334(e)(2) states that a secured party holding a security interest in a fixture can gain priority over  security interests in real property if the fixture is readily removable. The secured party must perfect the security interest in the fixture by any valid method prior to the read more »

Purchase Money Priority in Fixtures

Tuesday, March 10th, 2015 | Category: Legal
Purchase-Money Priority  § 9-334(d) provides for priority for purchase money security interest in fixtures. To establish priority over conflicting security interests in the real estate, the following conditions must be met: The debtor has a record interest in or possession of the real estate; The secured party holds a purchase-money read more »

Fixtures and Priority

Tuesday, March 10th, 2015 | Category: Legal
Overview of Fixtures A fixture is a piece of personal property that is installed or made one with the real estate. The primary characteristic of a fixture is that it is not readily moveable. It has assumed a state of semi-permanence on the real estate. The downside to this situation read more »

Conflicting Purchase Money Security Interests

Tuesday, March 10th, 2015 | Category: Legal
Conflicting Purchase-Money Security Interests  Often a debtor will acquire property subject to multiple purchase-money security interests. This happens when multiple parties lend money for the purchase (enabling loans) and the seller financing part of the purchase. In such a situation, 9-324(g)(1) provides priority for the individual financing the purchase over read more »

Purchase Money Security Interest in Inventory

Tuesday, March 10th, 2015 | Category: Legal
Purchase-Money Priority in Inventory  § 9-324(b) provides for purchase money security interest in inventory. In order to qualify for PMSI priority in inventory, the secured transaction must meet the following requirements: The PMSI must have been perfected at the time the debtor takes possession of the inventory. This means the read more »

Purchase Money Security Interest in Goods

Tuesday, March 10th, 2015 | Category: Legal
Purchase Money Security Interest in Goods (Other than Inventory and Livestock) Per § 9-324(a) a perfected purchase-money security interest in goods (other than inventory or livestock) has priority over conflicting security interests  if the security interest is perfected within 20 days of the debtor receiving possession of the goods. § read more »

Purchase Money Security Interest Defined

Tuesday, March 10th, 2015 | Category: Legal
Purchase-Money Security Interest Per § 9-103(a)(1) a purchase-money security interest is a security interest in collateral purchased  with the value extended by the creditor.  A seller or lender may acquire a PMSI in goods sold. § 9-103(b)(2) applies a purchase-money security interests to inventory The requirements of Section 9-103(b)(2) are: read more »

Future Advances and Security Interest

Tuesday, March 10th, 2015 | Category: Legal
Future Advances Secured by Prior Security Agreement Section 9-323 contains the priority rules relating to future advances. Generally, the time of perfection establishes priority with respect to future advances. § 9-203, Cmt. 3. Note: There may be an exception to this rule in situations where the security interest is automatically read more »

Proceeds from Sale of Collateral

Tuesday, March 10th, 2015 | Category: Legal
Proceeds from Sale of Collateral A secured party who perfects her security interest in collateral may have a continued security interest in the proceeds from the sale of that collateral. Per § 9-322(b), the date of perfection of the security interest in the collateral is the same as the perfection read more »

Perfected vs Unperfected Security Interests

Tuesday, March 10th, 2015 | Category: Legal
Perfected Security Interest vs. Unperfected Security Interest  Per § 9-322(a)(2) a perfected security interest has priority over an unperfected security interest. This is true even if the unperfected security interest was established well before the perfected security interest. Note: This also bring up issues from temporary automatic perfections situations where read more »

The Shelter Principle

Tuesday, March 10th, 2015 | Category: Legal
The Shelter Principle – Section 2-403(1)  The shelter principles provides the rule that, if a buyer purchases collateral free of the security interest, any subsequent purchaser or transferee of that collateral from the buyer also takes the collateral free and clear of the original security interest. This rule provides a read more »

Priority of Consumers Purchasing from Consumers

Tuesday, March 10th, 2015 | Category: Legal
Protections for Consumers Buying Collateral from Other Consumers Buyer in ordinary course protection does not apply to purchases by consumers from consumers (not sellers of goods of the kind). § 1-201(9). As such,  § 9-315(a)(1) states that the security interest continues and § 9-320(a) says the buyer takes subject to read more »

Protection of Buyers in Ordinary Course

Tuesday, March 10th, 2015 | Category: Legal
Protection of Buyers in the Ordinary Course  A buyer in the ordinary course of business takes collateral free of any security interests created by the seller. § 9-320(a). This is true whether the security interest is perfected or no. As such, the buyer’s knowledge that a security interest exists is read more »

Priority of Buyers of Collateral

Tuesday, March 10th, 2015 | Category: Legal
Priority of Buyers of Collateral The purchaser of collateral may take property either subject to or free of a secured party’s security interest. § 9-315(a)(1) thru 320. Pursuant to § 9-315(a)(1) the buyer of collateral subject to a security interest takes the property subject to the security interest, unless the read more »

Priority of Common Law and Statutory Liens

Tuesday, March 10th, 2015 | Category: Legal
Priority of Common Law and Statutory Liens A possessor lien is a n interest in an asset that: Secures a payment for services or material furnished in the ordinary course of business; Is create pursuant to statute or common law; and The asset is under the control of the lien read more »

Overview of Priority

Tuesday, March 10th, 2015 | Category: Legal
What is Priority? Priority regards a party’s right to payment in the event of default by a debtor. If a debtor defaults a secured party with a security interest in collateral will have a claim of ownership in the collateral. As such, she can repossess the collateral, sell it, and read more »

Perfection of a Security Interest by Filing

Tuesday, March 10th, 2015 | Category: Legal
Perfection of a Security Interest by Filing a Financing Statement Generally, to perfect a security interests a secured party may do so by filing a security agreement in the appropriate government office. § 9-310(a). To be enforceable under § 9-502(a), a financing statement must contain the following information: Debtor’s name; read more »

Perfection of Security Interest by Possession or Control

Tuesday, March 10th, 2015 | Category: Legal
Perfection of a Security Interest by Possession Article 9 allows a secured party to perfect a security interest in goods, instruments, negotiable documents or tangible chattel paper by securing possession of the collateral. § 9-313.  Securing possession can mean personal possession or possession by an agent. If an agent secures read more »

Assignment of Accounts Receivable and Contract Rights

Tuesday, March 10th, 2015 | Category: Legal
Assignments of Accounts Receivable and Contract Rights Generally, the sale or assignment of rights in accounts, payment intangibles, or promissory notes (account) create a security interest in the individual to whom the account is assigned. § 1-201(37). § 9-109(a)(3) of Article 9 requires that an individual file a financing statement read more »

Temporary Automatic Perfection in Proceeds

Tuesday, March 10th, 2015 | Category: Legal
Temporary Automatic Perfection in Proceeds A perfected security interest in collateral automatically extends to the proceeds from the sale of that collateral (with certain exceptions) for 20 days following the sale. § 9-315(c). § 9-315(d) lays out the requirements for the security interest to extend beyond the 20 day period, read more »

Continued Perfection of a Purchase Money Security Interest

Tuesday, March 10th, 2015 | Category: Legal
Continued Perfection of a Purchase Money Security Interests A secured party who takes a PMSI in non-consumer goods must file a financing statement within 20 days of the purchaser receiving the asset. § 9-324(a)  If the secured party files the financing statement, her security interest is perfected as has priority read more »

Purchase Money Security Interest Grace Period

Tuesday, March 10th, 2015 | Category: Legal
Purchase-Money Grace Period  § 9-317(e) provides a grace period for filing a financing statement following the establishment of a purchase money security interest in collateral. This applies to purchase money security interest in collateral other than consumer goods. The secured party has 20 days from the date the security interest read more »

Purchase Money Security Interest in Consumer Goods

Tuesday, March 10th, 2015 | Category: Legal
Purchase Money Security Interests in Consumer Goods  A purchase money security interest (PMSI) arises in certain situations where the secured party provides the funds necessary to purchase the subject collateral. § 9-103. This can arise through a loan for identified collateral or when the secured party sells and then finances read more »

Automatic Perfection of a Security Interest

Tuesday, March 10th, 2015 | Category: Legal
Automatic Perfection In certain types of transactions and collateral a security interest may be perfected without filing a financing statement and without taking possession or control of the collateral. That is, a secured party’s security interest is perfected without any effort on the part of the secured party. This is read more »

Overview of Perfection of a Security Agreement

Tuesday, March 10th, 2015 | Category: Legal
Perfection of a Security Interest A security interest is enforceable against the debtor at the time when it attaches. Secured parties, however, must make certain that the security interest is enforceable against third parties. That is, the secured party wants to have priority of payment above other creditors in the read more »

Extent of a Security Agreement

Tuesday, March 10th, 2015 | Category: Legal
What is the extent of the Security Interest in Collateral? Under § 9-315(a)(2) a security interest continues in any identifiable proceeds from sale or disposition of the collateral (even if proceeds are not mentioned in the security agreement). “Proceeds” under section 9-102(a)(64) includes whatever is received when collateral or proceeds read more »

Attachment of a Security Interest

Tuesday, March 10th, 2015 | Category: Legal
Attachment of a Security Interest Attachment is the point in time when a security interest in collateral vests rights in the secured part. For a security interest to attach to collateral, the following elements must be present: A valid security agreement; The secured party must give value to the debtor; read more »

Establishing a Security Interest

Tuesday, March 10th, 2015 | Category: Legal
Security Agreements A security agreement is the contract that establishes a creditor’s security interest in the collateral of the debtor. Generally, to establish a security interest the security agreement must expressly indicate the intention to create a security interest and be authenticated under § 9-203(b)(3)(A). Section 9-203(b)(3)(A) requires that the read more »

Overview of Security Interests

Tuesday, March 10th, 2015 | Category: Legal
What are Security Interests? A security interest is a type of ownership interest in assets. It arises in a debt relationship between the debtor and creditor. The creditor makes a loan or extension of credit to the debtor. The debtor agrees to repay the debt pursuant to certain terms. To read more »

Applying for Design patent

Thursday, March 5th, 2015 | Category: Legal
Applying for Design Patent Applying for a design patent is very similar to the process for applying for a utility patent. The difference is that there is more emphasis on the form or ornamentation of the patented item in the design application; while the utility patent requires an explanation of read more »

Structure of a Patent

Thursday, March 5th, 2015 | Category: Legal
Filing a Patent Obtaining patent protection for a new creation requires filing an application with the USPTO. Unlike trademark and copyright, there are no common law rights in a patent. Each type of patent application (utility, design, and plant) is broken down into the specifications section and claims section. Each read more »

Patent Search

Thursday, March 5th, 2015 | Category: Legal
Patent Searches The purpose of doing a search for previously filed patents or applications is to determine whether the particular creation exists or has been disclosed to the public. In either event, the previous creation or disclosure of the invention may disrupt the ability to secure patent rights. Patent Search read more »

Design Patents

Thursday, March 5th, 2015 | Category: Legal
Design Patents Design patents apply to “the visual ornamental characteristics embodied in, or applied to, an article of manufacture.”  Specifically, it protects non-functional, purely form (shape or configuration) and ornamental aspects of a patentable subject-matter. The item must still meet the subject-matter requirements for a patent, as the design must read more »

Utility Patents

Thursday, March 5th, 2015 | Category: Legal
Utility Patents A utility patent protects how something is functions or is used. This is in contrast to the design patent that covers the appearance or attributable form/shape of a given invention. The utility patent is available for any of the generally patentable subject-matters: Process – This involves a method read more »

Novel Nonobvious and Useful

Thursday, March 5th, 2015 | Category: Legal
Requirements for a Patent To achieve patent protection, any creation must first be subject-matter that is eligible for a patent. Then that subject-matter must be “novel” and “non-obvious”. Utility patents must also be “useful”. What is Novel? To qualify for patent protection, a creation must be novel. Novelty, in this read more »

Patentable Subject Matter

Thursday, March 5th, 2015 | Category: Legal
What can be Patented? “Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent.” What is Patentable Subject-Matter As stated above, patentable subject-matter is any “process, machine, article of manufacture, or composition of matter.” read more »

Patent Rights

Thursday, March 5th, 2015 | Category: Legal
What Rights are Granted by a Patent? Contrary to popular belief, patent rights do not confer the right to make, use, or sell a patented creation. These rights are subject to any laws, regulations, ordinances, etc., that pertain to this type of creation (such as environmental regulations, licensing, antitrust rules, read more »

What is a Patent

Thursday, March 5th, 2015 | Category: Legal
Overview of Patents A patent is a form of intellectual property rights attached to a product, process, design, or creation. The US Constitution establishes the authority for federally regulated intellectual property rights. The US Patent and Trademark office governs the patent system in the US. As such, patent rights are read more »

Proving Trademark Infringement

Thursday, March 5th, 2015 | Category: Legal
Proving Trademark Infringement Proving trademark infringement requires a showing that the plaintiff has a valid mark and that someone is using a mark that is confusingly similar to the public (i.e., “likelihood of confusion”). In determining whether a mark is confusingly similar, the court will review several aspects of the read more »

Enforcing Trademark Rights

Thursday, March 5th, 2015 | Category: Legal
Enforce Trademark Rights Businesses seek to secure trademark rights to protect their company brand or image that is represented by the mark. They do not want other companies to benefit from their branding efforts by creating customer confusion as to the source of a given good or service. Even if read more »

Cease and Desist Letters

Thursday, March 5th, 2015 | Category: Legal
Halting Trademark Infringement – Cease and Desist A “cease and desist” letter is a communication sent by the owner of a mark to the user of an allegedly conflicting mark demanding the user stop using that conflicting mark or stop using it in the manner currently used. If the user read more »

Rights in Conflicting Marks

Thursday, March 5th, 2015 | Category: Legal
Rights in Conflicting Trademarks A trademark that is very similar to another business’s mark raises a couple of issues. The first question is whether the other business’s trademark is registered with the USPTO. If so, then the mark has national protection. The use of your mark may be subject to read more »

Benefits of Federal Trademark Registration

Thursday, March 5th, 2015 | Category: Legal
Benefits of Federal Trademark Registration Filing for federal trademark protection provides numerous advantages above depending upon state common law. A registered mark enjoys the following advantages: Protection in every jurisdiction across the United States; Ability to register the mark with the US Border and Customs administration to prevent the importation read more »

Likelihood of Confusion Trademark

Thursday, March 5th, 2015 | Category: Legal
Likelihood of Confusion A core concept behind a trademark is that it allows a business to protect it’s mark from copy or imitation by other businesses. Further, the mark protects customers against deception of confusion in the source of a good or service. A proposed mark cannot be so similar read more »

Marks Not Capable of Trademark Registration

Thursday, March 5th, 2015 | Category: Legal
Marks Not Capable of Registration Pursuant to the USPTO examination guide, there are certain characteristics of marks that cannot be registered. The following are a non-exclusive list of several major types of these marks: contain the U.S. Flag; coats of arm; insignia of the United States, any state or municipality, read more »

Drawing a Trademark

Thursday, March 5th, 2015 | Category: Legal
A Drawing of the Mark The USPTO requires applicants for trademark protection to submit a “clear drawing of the mark.” This image is recorded in the USPTO database to put other businesses on notice of the trademark filing. The USPTO has specific requirements in place for the size and shape read more »

Trademark Application

Thursday, March 5th, 2015 | Category: Legal
What is the USPTO application process? The USPTO application for trademark can be completed over the USPTO.gov website, Trademark Electronic Application System (TEAS) system) or via mail. The electronic filing fee is $275 – 325 depending upon the specifics of the application. Mail application filing fees are $375. The following read more »

Trademark Registration Process

Thursday, March 5th, 2015 | Category: Legal
Trademark Registration Process The application for federal trademark protection follows as standard process. The process generally follows the following process: Complete and file the trademark application forms and pay applicable fees. Your application will receive a filing number that allows you to review the status of your application. Attorneys in read more »

Conducting Trademark Search

Thursday, March 5th, 2015 | Category: Legal
Trademark Search USPTO Trademark Search Trademark attorneys at the USPTO will do research prior to granting protection to a proposed mark. The purpose of the research is to make certain that the mark is not currently being used in commerce (“in use”). If so, the mark does not solely belong read more »

Federal Trademark Registration

Thursday, March 5th, 2015 | Category: Legal
What is Federal Registration of a Trademark (Lanham Act)? Federal registration of a trademark is the process for filing for federal protection of a mark representing a business or commercial activity. The federal statutes governing the registration of trademarks is found in 15 U.S.C. Sections 1051-1127. This grouping of laws read more »

Descriptive Trademark and Secondary Meaning

Thursday, March 5th, 2015 | Category: Legal
Determining Secondary Meaning A descriptive mark must acquire a secondary meaning in order to be a valid mark. Fanciful, Arbitrary, and Suggestive terms do not require that the mark have a secondary meaning. The trademark office or a court will use several test to determine whether a mark is descriptive. read more »

Trademark Distinctiveness Requirement

Thursday, March 5th, 2015 | Category: Legal
Distinctiveness of Trademark The chief requirement to qualify as a mark.  When classifying the mark, look at it in relation to the product (Apple is arbitrary for computers, but not for fruit.) The following are degrees of trademark distinctiveness: Fanciful Arbitrary Suggestive Descriptive Generic Arbitrary and Fanciful terms  A trademark read more »

Establish Trademark Rights

Thursday, March 5th, 2015 | Category: Legal
Common Law Trademark Protection Trademark protection arises simply by being the first to use a mark in business or commerce. That is, you employ a mark in an attempt to sell or offer to the public a product or service. The individual or firm using the mark is automatically protected read more »

Trademark Rights

Thursday, March 5th, 2015 | Category: Legal
Trademark Rights Trademark rights allow the holder of the trademark to prohibit or stop others for using the trademark. Further, the holder may proscribe use of any mark that is deceptively similar to the trademark or creates confusion for consumers. The trademark holder must file a court action seeking an read more »

What is a Trademark

Thursday, March 5th, 2015 | Category: Legal
What is a Trademark? A trademark is a is form of intellectual property right dedicated to any sign, logo, or other distinctive mark that represents a business, brand, or commercial activity (sale of product or services). The trademark allows a consumer to identify a business or commercial activity associated with read more »

Defenses to Copyright Infringement

Thursday, March 5th, 2015 | Category: Legal
Defenses to a Copyright Infringement Action The following doctrines or laws provide a defense for an alleged copyright infringer: The owner’s copyright is invalid, Note: This generally arises in the context of the validity or scope of copyright licenses. The alleged infringer has a valid license, Note: This generally arises read more »

Enforcing Copyrights

Thursday, March 5th, 2015 | Category: Legal
Enforcing a Copyright A copyright is enforceable through a federal court action. That is, the copyright holder can bring a federal lawsuit against someone infringing a copyright. Registering Copyright before Enforcement The ability to bring a copyright enforcement action turns on registration of the copyright. While copyrights attached without registration, read more »

Time Period for Copyright Protection

Thursday, March 5th, 2015 | Category: Legal
Time Period for Copyrights The length of protection for a copyright depends upon three factors: When the copyright was created, The length of the author’s life, and Whether the creator was an individual or a firm. Generally, a work created after January 1, 1978 is automatically protected for a period read more »

Copyright Registration

Thursday, March 5th, 2015 | Category: Legal
Registering a Copyright As previously stated, a copyright arises simply by creating a copyrightable work and affixing it to a tangible medium. It does not require any form of registration to establish or preserve the copyright. Copyrights can, however, be registered with the federal government. Advantages of Federal Copyright Registration read more »

Copyright Ownership Rights

Thursday, March 5th, 2015 | Category: Legal
Rights Afforded the Copyright Holder Copyrights, as with other forms of intellectual property, allow the holder to exclude others from using or copying your work. A copyright holder has exclusive rights to the following: Reproduction of the work, Ex. Licensing of work for reproduction in any format. Preparation of derivative read more »

Who Owns a Copyright

Thursday, March 5th, 2015 | Category: Legal
Copyright Ownership The owner of the copyright is generally the creator of the work. When more than one creator takes part in the creation of the work, there is a presumption that each party owns the work (and attached copyright) equally. Of course, the parties can enter into a contract read more »

Work Not Capable of Copyright

Thursday, March 5th, 2015 | Category: Legal
Work that Cannot be Copyrighted Many expressions are not susceptible to copyright, including: names of individuals; Note: You may adopt a business name or pseudonym that is capable of trademark protection when used in conjunction with your business activity. professional titles; Note: May also be combined with a trade or read more »

How to Secure Copyrights?

Thursday, March 5th, 2015 | Category: Legal
How to Secure Copyrights? Copyrights attach to a work when a copyrightable work is created and affixed to a tangible medium. There is no need to file or register the copyright. Federal registration of the copyright is available and does offer unique advantages to the holder of the copyright. Note: read more »

What is a Copyright

Thursday, March 5th, 2015 | Category: Legal
What is a copyright? Copyright is a form of intellectual property rights protection applicable to original expressions by the creator of the expression that are affixed to a tangible medium. Common forms of copyrighted expressions include: literature, music, musical performance, choreography, art, photography, graphic images, sculpture, architectural designs, computer programs, read more »

Elements of Operational Plan

Tuesday, February 24th, 2015 | Category: Legal

Ethics and Morality

Friday, January 30th, 2015 | Category: Legal
What is the role or effect of morality on ethics? Morality – is the collection of values that guides our behavior. It involves an understanding (of a societies view) of what is right and wrong and for justifying moral decisions. Businesses promote shared moral values to support social cooperation and read more »

Ethics and Society

Friday, January 30th, 2015 | Category: Legal
What is the role or effect of society on ethics? Cultural pluralism and diversity hinder the development of a common system of personal ethics. Sociological factors lead to ethical concerns for society. Economic interdependence is a driving concern over business ethics. News coverage Note the Economic Recession of 2008 read more »

Ethics & Government

Friday, January 30th, 2015 | Category: Legal
What is the role of government in ethical rules and considerations? Government often steps in when businesses act unethically. Pass laws and regulations to control conduct where ethics does not. Fear of government regulation has prompted much of the business concern over ethics. read more »

Ethics & Law

Friday, January 30th, 2015 | Category: Legal
What is the role of ethics in law? Both ethics and law deal with right and wrong and foster social cooperation. Society’s ethical values become law through legislation and we often associate complying with the law as ethically correct. That the state enforces law but that personal ethics are voluntarily read more »

Formalism and Consequentialism in Ethics

Friday, January 30th, 2015 | Category: Legal
What are two dominant theoretical approaches to ethics? Formalism and Consequentialism. –Theories in the study of ethics. They are not mutually exclusive and people adopt elements of both systems in making ethical choices.   What is Formalism? A particular act is, in itself, either right or wrong (it is not read more »

Legal Regulation in Ethics

Friday, January 30th, 2015 | Category: Legal
What is the role or effect of legal regulation on ethics? That ethical values frequently become law and that legal regulation reflects ethical values.  Ex. Civil Rights Act of 1964 Legal regulation is a significant source of values for business. At least five major ethical rules can be drawn from read more »

Professional Codes of Ethics

Friday, January 30th, 2015 | Category: Legal
What are the professional codes of ethics? That recent years have revealed extensive development of group standards for ethical conduct. –GAAP –ABA Code of Professional Ethics Unethical conduct can lead to additional regulation such as Sarbanes-Oxley and can greatly hinder a huge thriving company. What are organizational codes of ethics? read more »

Ethics and Individual Values

Friday, January 30th, 2015 | Category: Legal
What is the role of individual values in the development of ethical standards? Ethics ultimately boils down to the individual values one applies in decision-making. Individual values can be explored by asking five important questions in situations of decision-making: Have I thought about whether the action I may take is read more »

Achieving Ethics in Business

Friday, January 30th, 2015 | Category: Legal
What are the obstacles to ethical business practice? There are obstacles to ethical corporate behavior that deserve serious consideration. –The emphasis on profit, “the bottom line,” can promote unethical behavior within a large business organization, especially when senior executives order line managers to produce profit or else. –Another obstacle is read more »

Rewards of Business Ethics

Friday, January 30th, 2015 | Category: Legal
What are the benefits to business in pursuing ethical business practices? Effect: Note the enormous size of the world’s largest companies. Profits and business ethics are not contradictory. That unethical behavior is a business liability. If ethical self-regulation does not guide business behavior sufficiently, legal regulation often follows quickly. read more »

Morality of Property

Friday, January 30th, 2015 | Category: All Posts
What views characterize the debate surrounding the morality of property ownership? The primary criticism of private property is that it allows some people to possess more than they need while others have need. The moral defense of property is that it produces a greater common good than other systems for read more »

Key considerations for terms of private international agreements

Sunday, January 25th, 2015 | Category: All Posts,Legal
14. How do parties determine the rules, location, and method of resolving a dispute under an international agreement? Parties to an international agreement generally employ various provisions to reduce uncertainty in the relationship and add a degree of confidence that a party will be able to enforce her rights. Below read more »

How are private international agreements enforced?

Sunday, January 25th, 2015 | Category: All Posts,Legal
13. How are private international business agreements generally enforced? The first method of enforcing one’s rights pursuant to an international agreement is through a lawsuit or judicial action. When a dispute involves multiple parties from multiple countries, it becomes an issue as to how and where to handle the dispute. read more »

What are limitations on importing goods into the US for resale?

Sunday, January 25th, 2015 | Category: All Posts,Legal
12. What are the limitations on importing goods into the United States for sale? Below are the primary laws governing the importation of commercial goods. •    The Customs Modernization Act (CMA) – The CMA, a part of NAFTA, requires importers to declare attributes of imported goods with the Customs and read more »

What laws apply to the export of goods from the US?

Sunday, January 25th, 2015 | Category: All Posts,Legal
11. What regulations apply to exports from the United States? US Export Administrative Regulations (EAR) cover the export and re-export of most commercial items, including some civilian and military grade items. An export includes any item transported outside of the country, whether temporary or permanent and whether sold, gifted, or read more »

What US laws prohibit business practices in foreign countries?

Sunday, January 25th, 2015 | Category: All Posts,Legal
10. What US laws apply to limit specific business practices in all foreign countries? Numerous US laws limit specific types of conduct or business activity in foreign countries. Major limitations under US law include: •    Antiterrorism and Effective Death Penalty Act of 1996 – This act prohibits doing business with read more »

What is the significance of Boycotts on International Law?

Sunday, January 25th, 2015 | Category: All Posts,Legal
9. What is the significance of boycotts between foreign countries? The US issues restrictions on international business relationships through embargoes and targeted business sanctions. The US is not currently a part of an official boycott of countries or individuals. In fact, the US recognizes two prohibitions against US companies taking read more »

When is foreign business prohibited under US law?

Sunday, January 25th, 2015 | Category: All Posts,Legal
8. When is carrying on business in a foreign country prohibited under US Law? Embargoes are prohibitions against carrying on business transactions with certain countries. The Office of Foreign Assets Control (OFAC), a division of the US Department of Treasury, is charged with carrying out embargoes and “targeted sanctions” against read more »

Types of International Agreement Affecting US Trade

Sunday, January 25th, 2015 | Category: All Posts,Legal
7. What major international agreements affect international trade? The United States has entered into two types of treaty with multiple countries regarding the trade and shipment of goods. These treaties allow individuals from the US and the host country to sell and ship goods to the other country without special read more »

Legal Risks and Considerations in International Business

Sunday, January 25th, 2015 | Category: All Posts,Legal
6. What are the legal risks associated with carrying on international business? The competitive risks associated with carrying on business in a foreign market are numerous. For example, understanding the foreign market, communicating in a foreign language, and understanding the competitive environment can be extremely difficult. Important for this chapter, read more »

Methods of Carrying on International Businesss

Sunday, January 25th, 2015 | Category: All Posts,Legal
5. What are the methods of carrying on international business? US companies intending to carry on international business can do so in three separate manners: •    International Sales – A US company can carry out international sales by either selling directly to customers, selling to retailers, or selling to distributors read more »

What are the International Courts and their Function?

Sunday, January 25th, 2015 | Category: All Posts,Legal
4. What international courts exist and what are their functions? International courts exist as a result of agreement between nations as to their formation and authority. The authority of the court over a country or its citizens may result from that country becoming a member of an international organization or read more »

What is the European Union?

Sunday, January 25th, 2015 | Category: All Posts,Legal
The European Union  (EU) The EU is a group of 27 European countries banded together the promote economic and social prosperity among the nations. Most notably, the EU has a pseudo-governmental body made up of representatives of member countries. The EU provides a standardized legal system governing trade and commerce read more »

What is the World Trade Organization?

Sunday, January 25th, 2015 | Category: All Posts,Legal
World Trade Organization (WTO) At the end of WWII, a large block of countries signed a treaty known as the General Agreement on Tariffs and Trade (GATT). The purpose of the treaty was to demonstrate an intent to foster trade among the countries of the world. In 1995, 123 countries read more »

What is the World Bank?

Sunday, January 25th, 2015 | Category: All Posts,Legal
The World Bank The World Bank is a financial institution that promotes economic development in developing countries with the purpose of fostering economic strength and reducing poverty through increased foreign investment and international trade. The World Bank is a division of the World Bank Group, which is an affiliate of read more »

What is the International Monetary Fund

Sunday, January 25th, 2015 | Category: All Posts,Legal
International Monetary Fund (IMF) The IMF is similar to an international bank with the underlying purpose of fostering global monetary policy, commerce, and trade. The intended result is to increase employment levels, drive economic growth, and reduce poverty. The IMF makes loans to developing countries, provides stable exchange rates between read more »

What is the North Atlantic Treaty Organization (NATO)

Sunday, January 25th, 2015 | Category: All Posts,Legal
The North Atlantic Treaty Organization (NATO) NATO is a military alliance among 28 member countries. Numerous other countries also participate in NATO programs to promote peace and international dialogue. Member nations agree to provide collective support to member nations in the event of attack by non-member nations. NATO also provides read more »

What is the United Nations Conference on Trade and Development

Sunday, January 25th, 2015 | Category: All Posts,Legal
United Nations Conference on Trade and Development (UNCTD) UNCTD is another UN affiliate organization that addresses matters of international trade reform. More specifically, it seeks to foster international trade globally with the purpose of providing trade benefits among developing countries.   read more »

What is the United Nations Commission on International Trade Law

Sunday, January 25th, 2015 | Category: All Posts,Legal
United Nations Commission on International Trade Law (UNCITRAL) UNCITRAL is a affiliate organization to the UN made up of business and legal professionals. This group develops model standards and procedures for dealing with issues affecting international business. Perhaps most notably, UNCITRAL promulgated the Convention on International Sale of Goods (CISG). read more »

What is the United Nations and how does it affect international law?

Sunday, January 25th, 2015 | Category: All Posts,Legal
3. What are the major international inter-governmental organizations? Much public international law derives from treaty or agreement between individual nations and the law elected by private parties to govern their agreements. Other sources of international law are the numerous international organizations which develop standards for conduct among member nations or read more »

What is public and private international law?

Sunday, January 25th, 2015 | Category: All Posts,Legal
2. What are the types of international law? International law is commonly divided into two categories: •    Public International Law – Public international law examines relationships between nations and the rules that are binding upon countries in the international community. It also governs the relationship between states and international entities. read more »

What is International Law?

Sunday, January 25th, 2015 | Category: All Posts,Legal
1. What is “international law”? International law includes all of the generally accepted rules that govern the relations between nations or countries and their citizens. The concept of international law is much broader than domestic law, which is generally attributed to statutory authority vested by a federal, state, or local read more »

Requirements for Cancelling an Insurance Contract

Saturday, January 24th, 2015 | Category: All Posts,Legal
10. What is required for termination of an insurance contract? An insured may terminate an insurance policy at any time. Generally, it requires that the insured express intent to cancel the policy. This may include notifying the insurer in writing or discontinuing payment of premiums. If the insured stops paying read more »

Common Legal Disputes over Insurance Agreement

Saturday, January 24th, 2015 | Category: All Posts,Legal
9. What are the common provisions in an insurance contract subject to legal dispute? State law requires that insurance contracts contain certain provisions protecting the rights of the insured against the insurer. These provisions are commonly the subjects of litigation. An insurer that fails to pay an insurance claim for read more »

General Structure of an Insurance Contract

Saturday, January 24th, 2015 | Category: All Posts,Legal
8. What is the general structure of an insurance contract? •    Declarations – The declarations section of an insurance contract identifies the parties to the contract and dictates that the following provisions constitute an insurance contract. It will generally state the intentions of the parties with regard to the subject-matter read more »

Primary Obligations of an Insured

Saturday, January 24th, 2015 | Category: All Posts,Legal
7. What are the primary obligations of the insured? The primary duties of an insured in an insurance contract are as follows: •    Duty to Disclose Information – The insured must inform the insurer of any events relevant to the contingent risk transferred to the insurer. This includes disclosing information read more »

Duties of an Insurer

Saturday, January 24th, 2015 | Category: All Posts,Legal
6. What are the primary obligations of the insurer? The primary duties of an insurer in an insurance contract are as follows: •    Payment for Losses – An insured is responsible for indemnifying the policyholder or paying for the losses suffered by the insured or a third party as a read more »

Common Types of Business Insurance

Saturday, January 24th, 2015 | Category: All Posts,Legal
Common Types of Business Insurance •    Business Liability Insurance: Business liability insurance can have any number of property and liability protections. The most common form of business liability insurance is a “comprehensive general liability” (CGL) policy. These policies will insure any number of risks commonly faced by businesses, such as read more »

Insurance Policies Relevant to Real Property ( Land )

Saturday, January 24th, 2015 | Category: All Posts,Legal
Homeowner’s & Renter’s Insurance Homeowner and renter’s insurance are combination policies that protects property as well as individuals present on the property. The primary characteristics of a homeowner and renter’s policies are as follows: ⁃    Property Coverage – The homeowner or renter’s policy will generally insure the subject property against read more »

Characteristics of Life Insurance Policies

Saturday, January 24th, 2015 | Category: All Posts,Legal
What is Life Insurance? Life insurance provides financial benefits in the event a covered individual passes away. The beneficiaries of the policy are generally third parties rather than the insured or the insured’s estate. An insured must provide permission or consent for a third-party to purchase a policy covering her. read more »

What is Disability Insurance

Saturday, January 24th, 2015 | Category: All Posts,Legal
What is Disability Insurance? Disability insurance provides financial benefits to someone who becomes disabled and is unable to continue working in a given profession or function. Disability insurance coverage is generally divided into short-term and long-term disability. ⁃    Note: Long-term disability insurance is generally in addition to any benefits provided read more »

Common Health Insurance Plan Characteristics

Saturday, January 24th, 2015 | Category: All Posts,Legal
Health Insurance Plan Characteristics Health insurance pays the medical expenses incurred by an individual pursuant to treatment of covered health risks. Health plans may include medical, pharmaceutical, dental, and vision services by health providers. A health insurer will often disclaim or limit coverage for known conditions of the insured present read more »

What is Automobile Insurance

Saturday, January 24th, 2015 | Category: All Posts,Legal
5. What are the common types of insurance coverage? Individuals may purchase insurance coverage for nearly any foreseeable risk. The following are common types of insurance policies: •    Automobile Insurance – Vehicle insurance covers damages suffered by either the individual or automobile pursuant to any number of risks. Common risks read more »

Common Characterizations of Insurance

Saturday, January 24th, 2015 | Category: All Posts,Legal
4. What are the common categorizations of insurance? An insurance policy may have any of the following characteristics: •    Individual vs Group – Insurance policies may cover individuals or groups of individuals for identified risk(s). ⁃    Example: Ralph purchases a life insurance policy to cover him individually. Sam purchases a read more »

What is an Insurable Interest

Saturday, January 24th, 2015 | Category: All Posts,Legal
3. What is an “insurable interest”? For a party to seek insurance against a potential loss, the insured must have some form of interest in the insured property or be subject to a particular loss from an occurrence or event affecting the insured property or individual. This is known as read more »

What is an Insurance Contract or Policy

Saturday, January 24th, 2015 | Category: All Posts,Legal
2. What is an “insurance contract”? An insurance contract, or “insurance policy”, establishes the legal relationship between the insurer and the insured. A potential insured makes an offer to the insurer to purchase the insurer’s services. In the application, the insurer will reveal all information relevant to the insurance relationship. read more »

What is Insurance

Saturday, January 24th, 2015 | Category: All Posts,Legal
1. What is “insurance”? Insurance is a risk management and mitigation relationship between an insurer and the insured party. The primary participants and characteristics of the relationship are as follows: •    Insured – The insured allocates the contingent risk of loss in a particular situation to an insurer. •    Insurer read more »

Insurance Law (Intro)

Saturday, January 24th, 2015 | Category: All Posts,Legal
Overview of Insurance Law Insurance is a method of mitigating the risk associated with a particular situation or transaction. This chapter introduces the concept of insurance and its importance to individuals and businesses. It explains the mechanics for establishing insurance coverage for specific occurrences. It outlines the rights and obligations read more »

International Protection of Intellectual Property

Friday, January 23rd, 2015 | Category: All Posts,Legal
36. What international protections exist for intellectual property rights? International intellectual property law is the subject of treaties between nations throughout the world. The United States is a signatory to numerous international agreements respecting intellectual property rights. Some of the primary agreements are as follows: •    Trade-Related Aspects of Intellectual read more »

What is the First Sale Doctrine

Friday, January 23rd, 2015 | Category: All Posts,Legal
35. What is the “First Sale Doctrine”? Section 109 of the Copyright Act provides a purchaser of a copyrighted item the ability to sell or otherwise dispose of the item without the permission of the copyright holder. This is known as the “first-sale doctrine”. It stands for the proposition that read more »

What is Fair Use of a Copyright?

Friday, January 23rd, 2015 | Category: All Posts,Legal
34. How does a court determine if use of a copyright constitutes “Fair Use”? The most disputed affirmative defense to copyright infringement is likely the “fair use” of the copyrighted work. To constitute fair use, the use of the work generally must not be extensive and not cause a negative read more »

Defenses to a Claim of Copyright Infringement

Friday, January 23rd, 2015 | Category: All Posts,Legal
33. What defenses are available to a copyright infringement action? The following doctrines or laws provide a defense for an alleged copyright infringer: •    Invalidity – The defendant may show that the owner’s copyright is invalid. ⁃    Note: This generally arises in the context of the validity or scope of read more »

What is the Process for Enforcing a Copyright?

Friday, January 23rd, 2015 | Category: All Posts,Legal
32. What is infringement and how does one enforce a copyright against infringement? Copyright infringement occurs when a copyrighted work or some portion of the work is reproduced, distributed, performed, or displayed without authority. Authority must be obtained from the copyright holder. A copyright is enforceable through a federal court read more »

Process for Registering a Copyright

Friday, January 23rd, 2015 | Category: All Posts,Legal
30. What is the process for registering a copyright? Copyright registration is done through the US Copyright Office (USCO). It can be completed either electronically or through the mail. The process requires the completion of the specific forms applicable to the type or category of copyrightable work. These forms lay read more »

Time Period for Copyright Protection

Friday, January 23rd, 2015 | Category: All Posts,Legal
29. How long does a copyright last? The length of time of copyright protection depends upon three factors: •    When the copyright was created, •    The length of the author’s life, and •    Whether the creator was an individual or a firm. Generally, a work created after January 1, 1978 read more »

Elements of a Copyright

Friday, January 23rd, 2015 | Category: All Posts,Legal
28. What are the requirements for establishing copyrights? Federal law governs the creation of copyrights. Unlike some other forms of intellectual property, there is no need to file or register the copyright. Copyright protection arises when an expression meets the following requirements: •    Original Work – The expression must be read more »

Rights of Holder of a Copyright

Friday, January 23rd, 2015 | Category: All Posts,Legal
27. What are the rights of the holder of a copyright? Copyrights, as do other forms of intellectual property, allow the holder to exclude others from using or copying the protected work. A copyright holder has exclusive rights to the following: •    Reproduce – The holder of a copyright has read more »

Overview of Copyrights

Friday, January 23rd, 2015 | Category: All Posts,Legal
26. What is a “copyright”? Copyright is a form of intellectual property protection applicable to original expressions by the creator. The primary federal law governing copyrights is the Copyright Act of 1976. An “original expression”, for purposes of copyright law, is a very broad term. Section 102 of the Copyright read more »

Infringing Upon a Protected Trademark

Friday, January 23rd, 2015 | Category: All Posts,Legal
25. How does a trademark holder demonstrate infringement of its trademark? Proving trademark infringement requires a showing that the plaintiff has valid trademark rights and that someone is using another mark that is confusingly similar to the public. That is, the business claiming infringement must show that the other business’s read more »

Enforcing Trademark Rights

Friday, January 23rd, 2015 | Category: All Posts,Legal
24. How does an individual enforce Trademark Rights? If a claimed trademark (that is in commercial use) conflicts with another, the method or ability to enforce the trademark will vary depending on the rights associated with the mark. •    State Law Rights – States that allow for trademark registration often read more »

What is Trademark Infringement

Friday, January 23rd, 2015 | Category: All Posts,Legal
23. What is trademark infringement? Trademark infringement involves the unauthorized use of the protected mark or a similar mark to represent a business, brand, goods, or services, other than those of the trademark holder. The use of the mark must create a strong likelihood of confusion for consumers as to read more »

Process for Filing a Federal Trademark

Friday, January 23rd, 2015 | Category: All Posts,Legal
22. What is the process for filing a federal trademark protection? The application for federal trademark protection follows a standard process. The following information is required for every trademark application: •    Petitioner Information – Name of applicant; address for correspondence (may be name and address of agent). •    Mark – read more »

What are the common trademark designations?

Friday, January 23rd, 2015 | Category: Legal
21. What are common trademark designations used to indicate a claim of trademark rights in a mark? The traditional trademark designation is (“TM”) or ™. Anyone who uses a distinctive mark may employ this symbol to put others on notice of the trademark claim. If a trademark is registered with read more »

Reasons for Rejecting a Trademark

Friday, January 23rd, 2015 | Category: All Posts,Legal
20. What are the primary reasons for denying claims of trademark rights? Whether pursuant to common law, state or federal registration, there are several common reasons for denying trademark protection of a prospective mark. Some of the more common reasons are as follows: •    the mark is the same or read more »

State Protection for Trademarks

Friday, January 23rd, 2015 | Category: All Posts,Legal
19. What is trademark protection under state law? States often pass statutes or provide administrative procedures allowing the public to file or register trademarks that are used in commerce within the state. These states will also provide statutory protections and causes of action against those who infringe upon an individual’s read more »

Federal Registration of a Trademark

Friday, January 23rd, 2015 | Category: All Posts,Legal
18. What is Federal Registration of a Trademark (Lanham Act)? Federal registration of a trademark is the process for filing for federal protection of a mark representing a business or commercial activity. The federal statutes governing the registration of trademarks are found in 15 USC, sections 1051-1127. This group of read more »

Secondary Meaning for Descriptive Marks

Friday, January 23rd, 2015 | Category: All Posts,Legal
17. What is the process for determining whether a descriptive mark is sufficiently distinctive? A descriptive mark must acquire a secondary meaning in order to be sufficiently distinctive to be protected by trademark law. Arbitrary, fanciful, and suggestive terms do not require that the mark have a secondary meaning, as read more »

Distinctiveness Requirement for Trademark

Friday, January 23rd, 2015 | Category: All Posts,Legal
16. What is the “distinctiveness” requirement for trademark rights? A proposed trademark must be “distinctive”. This means that the mark cannot be so similar to another mark that it causes consumers to confuse the brand or entity associated with that mark. If it is confusing to the consumer, the USPTO read more »

Capturing Trademark Rights

Friday, January 23rd, 2015 | Category: All Posts,Legal
15. What is required to secure trademark protection? Trademark law requires that a mark be “used in commerce” and “distinctive” from other marks. If a mark is used in commerce and sufficiently distinctive, there are two primary methods of securing trademark protection. The first method is “state-law protection”. State-law protection read more »

Types of Trademark

Friday, January 23rd, 2015 | Category: All Posts,Legal
14. What are the types of trademarks? The term trademark is commonly used to refer to a broad range of protected marks, including: •    Trademark – Any mark, word, picture, or design that attaches to goods to indicate their source. •    Service Mark – A mark associated with a service. read more »

Overview of Trademarks

Friday, January 23rd, 2015 | Category: All Posts,Legal
13. What is a Trademark? A trademark is a form of intellectual property right dedicated to any word, phrase, sign, symbol, logo, color, sound, design, shape, decor, or other distinctive element (collectively known as a “mark”) that represents a business, brand, or commercial activity (sale of the product or services). read more »

Process for Enforcing Patent Rights

Friday, January 23rd, 2015 | Category: All Posts,Legal
12. What is the process for enforcing one’s patent rights? If anyone infringes upon a patent holder’s valid patent, the holder may bring a federal lawsuit to prevent further use and to seek recovery of damages suffered as a result of the infringement. The patent holder must file a legal read more »

What is a Provisional Patent

Friday, January 23rd, 2015 | Category: All Posts,Legal
11. What is a provisional patent application? A provisional patent is a utility patent filing that does not necessarily include any claims. Pursuant to patent law, the filer can file a complete provisional patent within one year of the first public use or offer for sale of the invention. This read more »

Process for filing for patent protection

Friday, January 23rd, 2015 | Category: All Posts,Legal
10. What is the process and information necessary for securing patent rights? Obtaining a patent requires submitting a patent application and filing fee to the USPTO. There are no common law or state patent protections. A patent attorney at the USPTO will review the application to make certain that the read more »

Patentable Subject Matter for a Utility Patent

Friday, January 23rd, 2015 | Category: All Posts,Legal
9. What are the specific requirements for a creation to receive utility patent protection? A utility patent protects how something functions or the method in which it is employed. The subject matter of a utility patent is any new and useful process, machine, manufacture, or composition of matter, or any read more »

Requirements for a Design Patent

Friday, January 23rd, 2015 | Category: All Posts,Legal
8. What are the specific requirements for a creation to receive design patent protection? Design patents apply to “the visual ornamental characteristics embodied in, or applied to, an article of manufacture.” So, the subject matter of a design patent application must be the ornamental characteristics applied to a physical item. read more »

Requirements of a Valid Patent

Friday, January 23rd, 2015 | Category: All Posts,Legal
7. What are the general requirements for an invention or discovery to be capable of patent protection? The subject of a claimed patent must be eligible for patent protection. Eligible subject matter varies slightly depending upon the type of patent. That is, a design patent must attach to some physical read more »

What are the types of patent?

Friday, January 23rd, 2015 | Category: All Posts,Legal
6. What are the primary types of patents? There are three categories of patent, as follows: •    Utility Patents – This generally covers the creation of a new composition of matter, function, or process. This includes machines, procedures, and chemical compounds. These creations must be a novel (new), non-obvious, and read more »

Overview of Patents

Friday, January 23rd, 2015 | Category: All Posts,Legal
5. What are patents or patent rights? A patent is a form of intellectual property protection that covers products, processes, designs, and other creations (collectively “invention”). A patent conveys a right to exclude others from making, using, selling, or importing the covered invention. Patent rights are basically rights to exclude read more »

What are Trade Secrets

Friday, January 23rd, 2015 | Category: All Posts,Legal
4. What are trade secrets? A trade secret is a form of intellectual property specific to individuals or businesses involved in a trade or industry. More specifically, it is any form of knowledge or information that: •    has economic value from not being generally known to, or readily ascertainable by read more »

Capturing or Securing Intellectual Property Rights

Friday, January 23rd, 2015 | Category: All Posts,Legal
3. What does an individual have to do to capture intellectual property rights? The requirements for securing intellectual property rights vary depending upon the type. For example, some types of intellectual property may require filing with a government agency. Failure to file or meet a filing deadline could forfeit one’s read more »

Justification for Intellectual Property Rights

Friday, January 23rd, 2015 | Category: All Posts,Legal
2. What is the purpose behind granting ownership rights in intellectual property? Like other forms of tangible property, the rights associated with intellectual property incentivize individual productivity. The exclusive right to use or control property also incentivizes creativity. This belief is captured in Article 1, Section 8 of the US read more »

What is Intellectual Property?

Friday, January 23rd, 2015 | Category: Legal
What is Intellectual Property? Intellectual property is an intangible (not touchable) form of a property or right. The rights afforded individuals in intellectual property includes: Trade Secrets – Intra-firm information that has economic value, is not commonly known, and is subject to internal measures to protect the information from disclosure. read more »

Intellectual Property (Intro)

Friday, January 23rd, 2015 | Category: All Posts,Legal
Overview of Intellectual Property Intellectual property, as the name implies, is an intangible form of property right. It establishes rights that extend beyond the possession of a physical item and protects and individual’s ideas, plans, procedures, information, creations (function and design), etc. This chapter introduces the concept of intellectual property, read more »

Comprehensive Environmental Response Compensation and Liability Act ( CERCLA )

Thursday, January 22nd, 2015 | Category: All Posts,Legal
12. What is the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)? In 1980, Congress passed the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) to address cleanup cost of unsafe hazardous waste dumps or spills. CERCLA allocates billions of dollars under a congressional authorization for environmental cleanup of dangerous read more »

Toxic Substance Control Act of 1976

Thursday, January 22nd, 2015 | Category: All Posts,Legal
11. What is the Toxic Substance Control Act of 1976? The Toxic Substance Control Act (TSCA) regulates the introduction of new and existing chemical substances into the market. The TSCA defines a chemical substance as “any organic or inorganic substance of a particular molecular identity, including any combination of these read more »

Solid Waste Disposal Act

Thursday, January 22nd, 2015 | Category: All Posts,Legal
10. What laws govern solid waste disposal? The Solid Waste Disposal Act (SWDA) was the first major federal law directed at waste disposal. It recognizes the potentially negative health and environmental consequences associated with certain waste disposal practices. The SWDA provides waste management standards for municipal and industrial waste, promotes read more »

Primary Federal Laws Governing Pesticides

Thursday, January 22nd, 2015 | Category: All Posts,Legal
9. What federal laws control pesticides? There are two primary federal pesticide acts: •    the Federal Insecticide, Fungicide, and Rodenticide Act of 1947, and •    the Federal Environmental Pesticide Control Act of 1972. Both of these acts require registration and labeling of agricultural pesticides. The EPA is directed to register read more »

Endangered Species Act

Thursday, January 22nd, 2015 | Category: All Posts,Legal
8. What is the Endangered Species Act of 1973? The Endangered Species Act (ESA) protects animals and plants that the Secretary of Interior or marine species that the Secretary of Commerce lists as “threatened” or “endangered”. The Fish and Wildlife Services (FWS) and National Marine Fisheries Services administer (NMFSA) administer read more »

Clean Water Act – Exceptions or Variances

Thursday, January 22nd, 2015 | Category: All Posts,Legal
Clean Water Act – Variances The CWA allows for variances from its requirements when circumstances justify exemption. There are two main exemptions available to existing sources: •    Economic Justification – If a party cannot afford the BAT requirements, it must show that the technology employed to prevent discharge of pollution read more »

What is the Clean Water Act

Thursday, January 22nd, 2015 | Category: All Posts,Legal
7. What is The Clean Water Act? The Clean Water Act (CWA) is made up of several water pollution control acts including, the Federal Water Pollution Control Act, the Clean Water Act, and the Water Quality Act. The CWA protects society from the harmful effects of discharge of pollutants into read more »

Clean Air Act – Enforcement Provisions

Thursday, January 22nd, 2015 | Category: All Posts,Legal
Clean Air Act – Enforcement The EPA can initiate or take part in enforcement actions for violations of the CAA. This includes seeking administrative orders, civil sanctions, or participating in criminal actions through the Justice Department. The CAA authorizes fines of up to $25,000 per day for emissions violations. Criminal read more »

Clean Air Act – Interstate Pollution

Thursday, January 22nd, 2015 | Category: All Posts,Legal
Clean Air Act – Interstate Pollution The CAA statutes are poorly designed to address interstate externalities, as no programs require consideration of the effects in other states of the placement or number of new pollution sources. The EPA addresses this concern by conditioning SIP approval on a states’ plan not read more »

Clean Air Act – Non-Attainment Areas

Thursday, January 22nd, 2015 | Category: All Posts,Legal
Non-Attainment -Clean Air Act Congress amended CAA in 1977 to add Part D for “non-attainment” areas. Under these new provisions, states unable to achieve NAAQS must comply with Part D. Part D imposes construction and operating permit requirements on new and modified sources of pollution in these areas. Before issuing read more »

Clean Air Act – Prevention of Significant Deterioration

Thursday, January 22nd, 2015 | Category: All Posts,Legal
Prevention of Significant Deterioration (PSD) Amendments to the CAA in 1997 established a PSD structure which requires permits for areas that have achieved better air quality standards than required under NAAQS. These areas are known as “attainment areas”. The state administers this permitting process with EPA approval. This system includes read more »

Clean Air Act – New Source Performance Standards and New Source Review

Thursday, January 22nd, 2015 | Category: All Posts,Legal
New Source Performance Standards (NSPS) and New Source Review (NSR) This is a federal set of uniform technology-based standards for new and modified sources of air pollution. These rules envision a best available technology (BAT) for categories of stationary air pollution sources. Standards can vary within each category according to read more »

State Implementation Plan – Clean Air Act

Thursday, January 22nd, 2015 | Category: All Posts,Legal
The primary components of the CAA State Implementation Plans (SIPs)  – States bear the burden of implementing a plan to comply with national air quality standards (NAAQS). The NAAQS provide a maximum concentration level for certain pollutants in the air. A state has a great deal of latitude in developing read more »

What is the Clean Air Act?

Thursday, January 22nd, 2015 | Category: All Posts,Legal
6. What is the Clean Air Act? Clean Air Act (CAA), along with numerous amendments, was passed with the purpose of developing and achieving air quality standards throughout the US. It gave rise to the National Ambient Air Quality Standards (NAAQS), which limit the amount of certain air pollutants discharged read more »

Environmental Impact Statement – NEPA

Thursday, January 22nd, 2015 | Category: All Posts,Legal
5. What is an Environmental Impact Statement – National Environmental Policy Act? An environmental impact statement is a detailed document that estimates the environmental impact of the proposed action. NEPA requires that an impact statement include the following: •    environmental impact (direct and indirect; beneficial and detrimental), •    any adverse read more »

National Environmental Protection Act

Thursday, January 22nd, 2015 | Category: All Posts,Legal
5. What is the National Environmental Policy Act of 1970? The National Environmental Policy Act of 1970 (NEPA) was first major federal environmental statute. It lays out broad goals and steps for federal agencies to incorporate environmental considerations into decision-making. NEPA has been held to not be a substantive act; read more »

Enforcement of Environmental Protection Law

Thursday, January 22nd, 2015 | Category: All Posts,Legal
4. How are the environmental laws enforced? The EPA is charged with enforcement of federal environmental law, while state administrative agencies are similarly charged with enforcing violations of state environmental law. These agencies may cross-enforce the other’s law in conjunction with enforcing their own provisions. Enforcement actions may be administrative, read more »

Environmental Protection Agency

Thursday, January 22nd, 2015 | Category: All Posts,Legal
3. What is the Environmental Protection Agency? The Environmental Protection Agency (EPA) is a federal agency created to protect the environment by policing activities that have a negative impact upon the environment. Specifically, the EPA is charged with enforcement of the various federal environmental statutes, writing regulations, conducting environmental assessments, read more »

What is the Structure of Environmental Protection Laws

Thursday, January 22nd, 2015 | Category: All Posts,Legal
2. What is the structure of environmental protection law? The Federal Government has promulgated numerous laws that provide a national framework for environmental protection and management. Under these frameworks, states have the ability (and sometimes requirement) to pass state standards for environmental protection. These regulations govern public and private conduct read more »

What are Environmental Laws

Thursday, January 22nd, 2015 | Category: All Posts,Legal
1. What are “environmental laws”? Environmental law is a combination of state and federal laws aimed at protecting individuals from the negative consequences of environmental degradation. More specifically, environment law addresses pollution, natural resource management (including forests, minerals, and wildlife), and the environmental impact of human activity. •    Discussion: How read more »

Environmental Law (Intro)

Thursday, January 22nd, 2015 | Category: All Posts,Legal
Overview of Environmental Law Environmental laws include federal and state statutes and regulations that govern the conduct of individuals and businesses that have an impact on the natural habitat or resources. This chapter introduces the concept and purpose of environmental law. It introduces the major federal environmental laws and the read more »

Discharge of Debtor in Bankruptcy

Wednesday, January 21st, 2015 | Category: All Posts,Legal
18. To what extent does the bankruptcy process relieve a debtor’s debts? Unless otherwise stated, confirmation of the debtor in possession’s (DIP’s) plan of reorganization discharges the debtor from any debt that arose before the date of the plan’s final confirmation. The plan will specifically identify any post-petition debts that read more »

Cramdown of Chapter 11 Bankruptcy Plan

Wednesday, January 21st, 2015 | Category: All Posts,Legal
17. What is “cramdown” of a reorganization plan? The plan of reorganization must be approved by at least one class of impaired creditor, excluding votes cast by corporate insiders. If any class of impaired creditor has not accepted the plan, the court, on request of the proponent of the plan, read more »

Bankruptcy Plan of Reorganization

Wednesday, January 21st, 2015 | Category: All Posts,Legal
16. What is a plan of reorganization? The debtor in possession (DIB) has an exclusive 120-day period to file plan of reorganization. The court may enlarge or reduce the exclusivity period “for cause”. The DIB has exclusive control over the case early on and may take a first stab at read more »

Appointment of Trustee or Examiner in Chapter 11 Bankruptcy

Wednesday, January 21st, 2015 | Category: All Posts,Legal
15. What is appointment of a trustee or examiner? In certain circumstances, the bankruptcy court will appoint a bankruptcy trustee to supervise the actions or conduct of the debtor in possession (DIP). Generally, however, there is a strong presumption against appointment of a trustee. To overcome this presumption, creditors must read more »

Authority of Debtor in Possession to Secure Post Petition Financing

Wednesday, January 21st, 2015 | Category: All Posts,Legal
14. What is the authority of the debtor in possession? Post-Petition Financing – The DIP may establish unsecured credit (incur debts) in the ordinary course of business following the filing of bankruptcy. This practice creates new obligations for the bankruptcy estate that are often superior or have priority over payment read more »

Authority of Debtor in Possession to Use Business Assets

Wednesday, January 21st, 2015 | Category: All Posts,Legal
14. What is the authority of the debtor in possession? Use of Business Assets – The DIP may use assets of the business in on-going operations. This includes the use of business cash in the “ordinary course of business”. This authority also includes using, selling, or leasing the business’s assets. read more »

Automatic Stay of Proceedings in Bankruptcy

Wednesday, January 21st, 2015 | Category: All Posts,Legal
14. What is the authority of the debtor in possession? Stay of Proceedings – The DIP may enforce or employ the Section 362 stay of proceeding provisions against existing debtors. This broad authority gives the DIP power to continue operations with existing creditors without being subjected to debt-collection practices that read more »

Avoiding Powers of Debtor in Possession

Wednesday, January 21st, 2015 | Category: All Posts,Legal
14. What is the authority of the debtor in possession? Avoiding Powers – The DIP exercises the avoiding powers of a bankruptcy trustee. This is known as the “strong-arm” powers. The strong-arm authority allows the DIP to: ⁃    Avoid Preferential Conveyances – The DIP may seek to undo any preferential read more »

Debtor in Possession Authority to Accept or Reject Contracts

Wednesday, January 21st, 2015 | Category: All Posts,Legal
14. What is the authority of the debtor in possession? The authority of the debtor in possession (DIP) is similar to that of a bankruptcy trustee. The objective of the DIP is to guard the interests of creditors by reshaping the bankruptcy estate to allow the business to continue operations. read more »

Chapter 11 Bankruptcy Process

Wednesday, January 21st, 2015 | Category: All Posts,Legal
13. What is the Chapter 11 bankruptcy process? Chapter 11 bankruptcy (Chapter 11) seeks to reorganize or restructure the debts of the debtor without liquidating all of the debtor’s assets (as under Chapter 7). The objective is to allow the business to continue operations in an attempt to maximize the read more »

Chapter 7 Bankruptcy Process

Wednesday, January 21st, 2015 | Category: All Posts,Legal
12. What is the “Chapter 7” bankruptcy process? The Chapter 7 bankruptcy process is fairly straightforward. It involves the following steps: •    Filing – The debtor files a voluntary petition or is the subject of an involuntary petition. •   Bankruptcy Estate – Initiating the bankruptcy process creates the bankruptcy read more »

Voluntary and Involuntary Bankruptcy Requirements

Wednesday, January 21st, 2015 | Category: All Posts,Legal
11. What is voluntary and involuntary bankruptcy? A bankruptcy case begins when either a debtor voluntarily files for bankruptcy or creditors petition to subject a business debtor to bankruptcy. •    Voluntary Bankruptcy – Any business may voluntarily file for a liquidation or reorganization bankruptcy at any time. While a liquidation read more »

Proof of Claims in Bankruptcy Case

Wednesday, January 21st, 2015 | Category: All Posts,Legal
10. What is a claim by creditors of the bankruptcy estate? A claim is a notice to the trustee of the debtor’s estate that the debtor owes a fixed amount to the claimant. Claimants are creditors of the estate. For liquidation bankruptcies and personal reorganization bankruptcies, creditors of the estate read more »

Section 362 Automatic Stay in Bankruptcy

Wednesday, January 21st, 2015 | Category: All Posts,Legal
9. What is the automatic stay in bankruptcy? The automatic stay under Section 362 of the Bankruptcy Code protects debtors from ongoing collection efforts (during the pendency of the bankruptcy case) against property included in the bankruptcy estate. Specifically, creditors are prohibited from the following conduct: •    efforts to collect, read more »

What Assets are Included in the Bankruptcy Estate

Wednesday, January 21st, 2015 | Category: All Posts,Legal
8. What assets of the debtor are included in the bankruptcy estate? The assets of the bankruptcy estate include all legal and equitable interests of the debtor in property at the commencement of the bankruptcy case. A legal interest means any legal right to the exclusive use and enjoyment of read more »

Role of Trustee in Bankruptcy

Wednesday, January 21st, 2015 | Category: All Posts,Legal
7. What is the authority of the trustee (debtor in possession) in bankruptcy? As previously discussed, the trustee in bankruptcy plays an important role in the administration of a bankruptcy case. The general authority of the trustee includes: •    affirming or disaffirm contracts with the debtor which are yet to read more »

What is the Authority of the Bankruptcy Court

Wednesday, January 21st, 2015 | Category: All Posts,Legal
6. What is the authority of the bankruptcy court? The bankruptcy court has authority to hear any case arising under the bankruptcy system. Generally, the role of the court is simply to approve a plan of liquidation or reorganization. The court’s role expands when there is some level of dispute read more »

What Rules Govern the Bankruptcy Process?

Wednesday, January 21st, 2015 | Category: Legal
5. What rules govern the bankruptcy process? The rules governing the bankruptcy process are contained in Title 11 of the US Code of Statutes. The relevant sections of the bankruptcy code are organized as follows: •    Chapter 1 – General Provisions – Definitions, Powers of Court •    Chapter 3 – read more »

Key Concepts to Understand Bankruptcy Process

Wednesday, January 21st, 2015 | Category: All Posts,Legal
4. What key concepts are necessary to understand the bankruptcy process? Below are some key concepts and definitions to understand prior to continuing with this chapter. •    Filing for Bankruptcy – Filing for bankruptcy means submitting a bankruptcy petition along with all supporting documents to the bankruptcy court. For individuals, read more »

Primary Participants in Bankruptcy Process

Wednesday, January 21st, 2015 | Category: All Posts,Legal
3. Who are the primary participants in the bankruptcy process? The primary participants in the bankruptcy process are as follows: •   Debtor – The debtor is the individual or business entity seeking or filing for bankruptcy protection. •    Creditor – A creditor is any individual owed a debt or obligation read more »

Types of Bankruptcy

Wednesday, January 21st, 2015 | Category: All Posts,Legal
2. What are the types of business bankruptcy? The primary classifications for bankruptcy are as follows: •    Liquidation – Liquidation bankruptcy is the process by which the assets of an individual or business are liquidated or sold in an effort to generate funds to pay creditors. Any debts owed to read more »

What is Bankruptcy

Wednesday, January 21st, 2015 | Category: All Posts,Legal
1. What is “bankruptcy”? Bankruptcy is both a status and system of laws aimed at protecting individuals and businesses (collectively, “individual”). An individual is bankrupt when she is insolvent or the value of her debts exceeds the value of her assets. The bankruptcy system is a body of laws that read more »

Bankruptcy Law (Intro)

Wednesday, January 21st, 2015 | Category: All Posts,Legal
Overview of Bankruptcy Bankruptcy is a federal body of law concerning the relationship between a debtor and creditors. Specifically, bankruptcy law provides several methods for a debtor to recover from financial situations that are overwhelming to the individual’s continued well-being or existence. The bankruptcy process differs for individuals and businesses. read more »

Discharge of Warranties of Negotiable Instrument

Tuesday, January 20th, 2015 | Category: Legal
42. When are the warranties of a negotiable instrument discharged? Transferor, indorser, and presenter liability is discharged by any manner that would effectively discharge a party’s obligation on a contract at common law. These provisions may relieve the obligation of a payor or payee, but could still subject transferors or read more »

Warranty Liability Negotiable Instrument – Time Limitations

Tuesday, January 20th, 2015 | Category: All Posts,Legal
41. Is there a time limitation for exercising warranties on negotiable instruments? The holder of an instrument must make a warranty claim to a warrantor within 30 days of notice of dishonor of the instrument. Failure to give this notice within 30 days may relieve the warrantor from liability for read more »

Warrantor Liability on Negotiable Instrument – Damages

Tuesday, January 20th, 2015 | Category: All Posts,Legal
40. To what extent is a warrantor liable for damages suffered by a holder of a dishonored note or draft? An individual presenting a draft or note for payment that is dishonored may recover damages from a prior warrantor of the instrument. That is, a person receiving an instrument in read more »

Presentment Warranty of a Negotiable Instrument

Tuesday, January 20th, 2015 | Category: All Posts,Legal
39. What is “presentment warranty” of a negotiable instrument? Presentment warranty applies when a person entitled to payment of an instrument presents it to a maker or drawee for payment. The presenter warrants to a good faith payor the following: •    Enforceability – She is entitled to enforce the instrument, read more »

Indorser Liability for Negotiable Instrument

Tuesday, January 20th, 2015 | Category: All Posts,Legal
38. What is “indorser warranty” of a negotiable instrument? An indorser of an instrument makes warranties to the maker or drawer of an instrument and to subsequent holders of the instrument. Assurances to the marker or drawer include: •    Good Title – She has good title to the instrument, •   read more »

Transfer Warranty of Negotiable Instrument

Tuesday, January 20th, 2015 | Category: All Posts,Legal
37. What is “transferor warranty” of a negotiable instrument? A transferor of a negotiable instrument warrants the following to the recipient of the instrument: •    Good Title – The transferor has good title to the instrument; •    Enforceability – The transferor is entitled to enforce the instrument; •    Authorization – read more »

Drawer or Maker Liability to Pay Negotiable Instrument

Tuesday, January 20th, 2015 | Category: All Posts,Legal
36. What is “drawer or maker liability” for a negotiable instrument? A drawer of a draft orders that at third-party drawee pay a specific amount to a payee who presents the instrument. The drawer, as creator of the instrument, is liable if the drawee dishonors (refused to pay) the draft. read more »

Liability for Warranties of Negotiable Instrument

Tuesday, January 20th, 2015 | Category: All Posts,Legal
LIABILITY AND WARRANTIES FOR NEGOTIABLE INSTRUMENTS There are two main types of liability on a negotiable instrument – primary and secondary liability. The maker of a note and drawee of a draft are primarily liable to pay the instrument. Parties who later sign, transfer, or present an instrument may be read more »

Negotiable Instrument Accord and Satisfaction

Tuesday, January 20th, 2015 | Category: All Posts,Legal
35. What is an “accord and satisfaction”? An accord and satisfaction is a resolution of a contested debt. For example, the payor and holder of a negotiable instrument may have a dispute as to the amount and duty of payment of the instrument. Often a payor of the debt will read more »

Guarantor or Surety of a Negotiable Instrument

Tuesday, January 20th, 2015 | Category: All Posts,Legal
34. What is the role of a guarantor or surety of a negotiable instrument? A guarantor (also known as a surety or co-signor) serves to add certainty of payment of a negotiable instrument. A guarantor of a note or draft is an “accommodation party” who signs the instrument as an read more »

Stolen Negotiable Instrument and Holder Status

Tuesday, January 20th, 2015 | Category: All Posts,Legal
33. What is the result if a negotiable instrument is stolen? A negotiable instrument made out to a specific individual is order paper. If the instrument is stolen, the thief can only transfer it by altering or forging the payee’s signature. As such, a transferee of stolen, forged order paper read more »

Forged Negotiable Instrument and Holder Status

Tuesday, January 20th, 2015 | Category: All Posts,Legal
32. What is the result if a negotiable instrument is forged? A forged negotiable instrument is not enforceable against the party whose name was forged. The forged instrument is, however, enforceable against the forger. Basically, the instrument is treated as though the forger signed her own signature. Also, a forged read more »

Holder in Due Course – Consumer Transactions

Tuesday, January 20th, 2015 | Category: All Posts,Legal
31. What are the rights of a holder in due course if the underlying transaction is a consumer transaction? There is a broad exception to the heightened rights afforded a holder in due course if the instrument is issued pursuant to a consumer transaction. This situation generally arises when a read more »

Claim in Recoupment Applicable to Negotiable Instrument

Tuesday, January 20th, 2015 | Category: All Posts,Legal
30. What is a “claim in recoupment”? A claim in recoupment is similar to a personal defense. It allows a payor to offset any claim that she has against the claimant or the original issuee. •    Note: A claim in recoupment applies against a holder, but not a holder in read more »

Personal Defenses to Negotiable Instrument

Tuesday, January 20th, 2015 | Category: All Posts,Legal
29. Does a payor have any defenses to paying an instrument that is presented for payment by a holder in due course? A holder in due course (HDC) has greater rights to enforce an instrument against the payor than does a mere holder of the instrument. The HDC is shielded read more »

Real Defenses to Payment of Negotiable Instrument

Tuesday, January 20th, 2015 | Category: All Posts,Legal
29. Does a payor have any defenses to paying an instrument that is presented for payment by a holder in due course? Real Defenses – Real defenses apply against any holder, including a holder in due course. Common real defenses are as follows: •    Forgery – The forger of an read more »

Limit Holder in Due Course Status

Tuesday, January 20th, 2015 | Category: All Posts,Legal
28. Can you limit holder in due course status? In some situations, it is possible for the issuer of a note to limit the ability of anyone to whom the note is transferred to become a holder in due course. The Federal Trade Commission allows such a limitation for notes read more »

Shelter Principle and Negotiable Instruments

Tuesday, January 20th, 2015 | Category: All Posts,Legal
27. What is the “Shelter Rule”? Status as a holder in due course (HDC) may strengthen the rights of a holder to receive payment on a negotiable instrument. When a holder may not qualify as a HDC, the “shelter rule” is a separate principle that may protect her rights. Pursuant read more »

Holder in Due Course Discharge of Underlying Obligation

Tuesday, January 20th, 2015 | Category: All Posts,Legal
26. How does discharge of the underlying obligation affect a holder in due course? Negotiable instruments are generally created as consideration in a contract between two parties. That is, there is a contractual relationship (known as the underlying agreement) between the original creator (issuer) and recipient (issuee and holder) of read more »

Holder in Due Course Notice of Valid Defense

Tuesday, January 20th, 2015 | Category: All Posts,Legal
25. What does it mean to receive an instrument without notice of a valid defense to enforcement? A recipient of a negotiable instrument cannot become a holder in due course if she is aware (or has “reason to know”) that there are some valid defenses that the payor may assert read more »

Holder in Due Course Receive Instrument in Good Faith

Tuesday, January 20th, 2015 | Category: All Posts,Legal
24. What does it mean to receive an instrument in good faith? Receiving an instrument in good faith means acting in accordance with reasonable commercial standards and honesty in fact (no fraudulent intent in receiving the instrument). A holder must meet two tests to determine if good faith is present: read more »

Holder in Due Course Receive Instrument for Value

Tuesday, January 20th, 2015 | Category: All Posts,Legal
23. What does it mean to receive an instrument for value? The holder must provide some form of value, such as assets, services, or money in exchange for the instrument. Receiving the instrument as a gift is not “for value”. Value may also mean taking the instrument as payment of read more »

Requirements for Holder in Due Course Status

Tuesday, January 20th, 2015 | Category: All Posts,Legal
22. What are the requirements for a holder of an instrument to become a holder in due course? To qualify as a HDC, the holder of the commercial paper must meet the following requirements: •    Value – The holder must take the instrument for value. This means that the holder read more »

What is a Holder in Due Course

Tuesday, January 20th, 2015 | Category: All Posts,Legal
21. What is a “holder in due course” and what are the benefits? If certain conditions are met, a holder of a negotiable instrument may further elevate her rights to enforcement (receive payment) of the negotiable instrument. That is, the holder of a negotiable instrument is elevated to a higher read more »

Negotiable Instrument Effect on Underlying Contract

Tuesday, January 20th, 2015 | Category: All Posts,Legal
20. What effect does a negotiable instrument have on the underlying obligation? Most negotiable instruments arise pursuant to an underlying agreement, contract, or obligation. A maker or drawer creates the instrument and issues it to the holder in satisfaction of her obligation under an underlying agreement. For “ordinary instruments” the read more »

Overdue Payment of Negotiable Instrument

Tuesday, January 20th, 2015 | Category: All Posts,Legal
19. When is payment on a negotiable instrument overdue? An instrument is overdue when the obligation to pay arises (upon presentment), but it has not been paid. An overdue instrument may give rise to a cause of action against a maker or drawee for failure to pay; also, it may read more »

Lost Negotiable Instruments

Tuesday, January 20th, 2015 | Category: All Posts,Legal
18. What rules apply if a holder of a negotiable instrument loses the instrument? An obligor is generally only obligated to pay the instrument upon presentment. If an instrument is lost and has not been presented to the obligor for payment, the obligor may pay the instrument when the party read more »

Liability for Negotiable Instrument Signed by Agent

Tuesday, January 20th, 2015 | Category: All Posts,Legal
17. When is an individual (including businesses) liable for a representative signing a negotiable instrument? If a representative (an agent) signs a commercial instrument on behalf of a the represented person or business (the principal), the principal is bound and made liable by the representative signing either the principal’s name read more »

Liability to Pay a Negotiable Instrument

Tuesday, January 20th, 2015 | Category: All Posts,Legal
16. Who is potentially liable on (obligated to pay) a negotiable instrument? The maker of a note or drawee of a draft is “primarily obligated” to pay the instrument. If the maker or drawee pays the note or draft, it is satisfied. If, however, the maker or drawee fails to read more »

Presenting a Negotiable Instrument for Payment

Tuesday, January 20th, 2015 | Category: All Posts,Legal
15. How does a holder of commercial paper receive payment of the instrument? A negotiable instrument may be traded for value up until the time of payment. If there is no specified payment time, there is no limit on how long or how many times it can be negotiated to read more »

Types of Indorsement of a Negotiable Instrument

Tuesday, January 20th, 2015 | Category: All Posts,Legal
14. What are the various types of indorsement of a negotiable instrument? Indorsement is the signature of an individual on the commercial instrument. There are several common types of endorsement, each of which has a different effect upon the instrument: •    Blank Indorsement – This means signing the instrument without read more »

Indorsement of a Negotiable Instrument

Tuesday, January 20th, 2015 | Category: All Posts,Legal
13. What is “indorsement” of a negotiable instrument? Indorsement of an instrument means signing it. The indorsement signifies that the individual signing the instrument certifies certain things about it to the primary parties liable on the instrument (maker or drawer) and to any subsequent holder of the document. •    Note: read more »

Transfer of a Negotiable Instrument

Tuesday, January 20th, 2015 | Category: All Posts,Legal
12. What is the “transfer” of commercial paper? An instrument is transferred when it is delivered by a person (other than its issuer) with the purpose of bestowing the right to enforce the instrument pursuant to its terms. Transfer vests in the transferee the rights of the transferor to enforce read more »

How is Negotiable Instrument Negotiated

Tuesday, January 20th, 2015 | Category: All Posts,Legal
11. How is commercial paper negotiated to a holder? “Negotiation” means that an instrument has been transferred (either voluntarily or involuntarily) to the holder by someone other than the issuer. If an individual acquires paper by a method other than negotiation, she is a “transferee” and not a “holder” of read more »

Negotiable Instrument – General Rules of Interpretation

Tuesday, January 20th, 2015 | Category: All Posts,Legal
10. What rules does the court apply when determining negotiability? The UCC favors negotiability of commercial instruments. It contains a number of rules to resolve any uncertainty as to the terms of the instrument and to supply missing terms. The following rules apply to situations where terms in a negotiable read more »

Negotiable Instrument – How is Payee Identified

Tuesday, January 20th, 2015 | Category: All Posts,Legal
9. How is a payee identified on the negotiable instrument? A negotiable instrument is payable to the holder of the instrument. A holder may either be an individual named in the instrument (order paper) or an individual in possession of the instrument (bearer paper). An instrument that names a payee read more »

Negotiable Instruments – Order or Bearer Paper

Tuesday, January 20th, 2015 | Category: All Posts,Legal
8. What is “order paper” and “bearer paper”? To constitute a negotiable instrument (both notes and drafts), an instrument must be either order paper or bearer paper. •    Order Paper – Order paper must include the words “pay to the order of (identified person)” or “to (identified person) or order”. read more »

Negotiable Instruments – Payable On Time or On Demand

Tuesday, January 20th, 2015 | Category: All Posts,Legal
7. What is “payable on demand” paper and “payable on time” paper? A negotiable instrument must either be payable on demand or payment on time. An on-time instrument is payable at a specific time and date. The date must be able to be determined at the time the instrument is read more »

Unconditional Promise to Pay

Tuesday, January 20th, 2015 | Category: All Posts,Legal
6. When does commercial paper contain an “unconditional promise to pay”? Any condition placed on the payment makes the instrument non-negotiable. A condition is any requirement that a circumstance come to fruition or that the holder undertake any additional actions in order to receive payment upon presentation of the instrument. read more »

Requirements for Commercial Paper to be Negotiable

Tuesday, January 20th, 2015 | Category: All Posts,Legal
5. What is required for commercial paper to be “negotiable”? An instrument is negotiable if it meets the following qualifications: •    Writing – The instrument must be in writing, ⁃    Note: The writing must be permanent in nature and must be moveable. ⁃    Example: Drawing the terms of an instrument read more »

Negotiability of a Commercial Instrument

Tuesday, January 20th, 2015 | Category: All Posts,Legal
4. What is “negotiability” and why is it important? Negotiation is the transfer of negotiable paper from one holder to another. To be a substitute for money, commercial paper must be freely transferable in the marketplace. That is, the paper must be “negotiable”. Negotiability concerns the rights of the holder read more »

Who is a Holder of a Negotiable Instrument

Tuesday, January 20th, 2015 | Category: All Posts,Legal
3. Who is a “holder” of commercial paper? A holder is one who has possession of and is entitled to enforce the instrument. So, a person who is named as payee and possesses an instrument is a holder. If the commercial paper is not payable to a particular person (i.e., read more »

Types of Commercial Paper

Tuesday, January 20th, 2015 | Category: All Posts,Legal
2. What are common types of commercial paper? When examining the attributes of commercial paper, it is important to differentiate between the most common types of instrument. The types of commercial instrument include: •    Note – This is a promise to pay money. It involves two parties. The maker of the read more »

What is Commercial Paper

Tuesday, January 20th, 2015 | Category: All Posts,Legal
1. What is “Commercial Paper”? Commercial paper is a broad categorization of financial instruments (also referred to as an “instrument”) promising to pay or ordering payment to a person legally entitled to enforce the instrument. Because it has value for the individual in possession or holding the instrument, it is read more »

Commercial Paper (Intro)

Tuesday, January 20th, 2015 | Category: All Posts,Legal
Overview of Commercial Paper Commercial paper is a document that promises to pay a sum of money to the holder or possessor of the instrument. It is very common to use commercial paper as consideration in a business transactions rather than cash. This chapter introduces commercial paper. It identifies the read more »

Priority of Fixture Filer vs Mortgage Holder

Monday, January 19th, 2015 | Category: All Posts,Legal
39. What is the scope of fixture priority rules? The following rules govern the priority as between secured parties with security interests in fixtures and persons who claim in interest in real property to which the fixture attaches. Purchase-Money Priority in Fixtures – The UCC provides for priority for purchase read more »

Priority of Security Interest in Fixtures

Monday, January 19th, 2015 | Category: All Posts,Legal
38. What is the priority of security interests in fixtures? A fixture is a piece of personal property that is installed on and made one with real estate. The primary characteristic of a fixture is that it is not readily moveable. It has assumed a state of semi-permanence on the read more »

Priority of Multiple Purchase Money Security Interest

Monday, January 19th, 2015 | Category: All Posts,Legal
37. What is the priority of conflicting purchase-money security interests? Often a debtor will acquire property subject to multiple purchase-money security interests. This happens when multiple parties lend money for the purchase (enabling loans) and the seller of the good finances part of the purchase. In such a situation, the read more »

Purchase Money Security Interest in Inventory

Monday, January 19th, 2015 | Category: All Posts,Legal
36. What is the priority of a purchase-money security interest in inventory? Special rules apply to purchase money security interests in inventory. In order to qualify for PMSI priority in inventory, the secured transaction must meet the following requirements: •    Perfection at Time of Possession – The PMSI must have read more »

Priority of Purchase Money Security Interest in Collateral

Monday, January 19th, 2015 | Category: All Posts,Legal
35. What is the priority of a purchase-money security interest in goods (other than inventory and livestock)? A purchase-money security interest (PMSI) is a security interest in collateral purchased with the value extended by the creditor. A seller or lender may also acquire a PMSI in goods sold if it read more »

Secured Party Priority in Future Advances to Debtor

Monday, January 19th, 2015 | Category: All Posts,Legal
34. What is a secured party’s priority in “future advances” of funds to the debtor? Future advances of funds are funds provided to a debtor based upon an existing lending agreement. This is common when a debtor establishes a line of credit with a lender. The lender will advance funds read more »

Special Priority Rules for Proceeds from Sale of Collateral

Monday, January 19th, 2015 | Category: All Posts,Legal
33. Who has “priority in proceeds” from the sale of collateral? A secured party who perfects her security interest in collateral may have a continued security interest in the proceeds from the sale of that collateral. Thus, a secured party with priority in collateral will also maintain priority in the read more »

Priority Rules for Conflicting Security Interests

Monday, January 19th, 2015 | Category: All Posts,Legal
32. What are the general “priority rules” for security interests? The following are the general priority rules for security interests: •    Perfected vs Unperfected Security Interests – A perfected security interest has priority over an unperfected security interest. This is true even if the unperfected security interest was established well read more »

The Shelter Principle and Buyers of Collateral

Monday, January 19th, 2015 | Category: All Posts,Legal
31. What is the “Shelter Principle” – Section 2-403(1)? The shelter principle offers additional protections for buyers of collateral from other consumers. Basically, this equitable principle states that a good faith purchaser of property acquires all of the rights that the transferor of that property. The shelter rule will provide read more »

Security Interests in Goods purchased from one consumer by another

Monday, January 19th, 2015 | Category: All Posts,Legal
30. What statutory provision protects individuals purchasing goods from a buyer in the ordinary course? The buyer-in-the-ordinary course protection does not apply to subsequent purchases from a buyer in the ordinary course because the seller is not a seller of goods of the kind. So, if a BYOC subsequently sells read more »

Protections of a Buyer in the Ordinary Course of Business

Monday, January 19th, 2015 | Category: All Posts,Legal
29. What is required to be a buyer in the “ordinary course of business”? A buyer in the ordinary course of business must meet the following characteristics: •    Good Faith – The purchaser of the collateral must buy it in good faith and without the intent to defraud or deceive; read more »

Priority of a Secured Party vs a Buyer of Collateral

Monday, January 19th, 2015 | Category: All Posts,Legal
28. What is the “priority of buyers of collateral” that is subject to a security interest? Generally, a buyer of collateral subject to a security interest takes the property subject to that security interest. That is, if a debtor sells collateral that is subject to a security interest, the security read more »

Priority of Parties Holding Statutory and Common Law Liens

Monday, January 19th, 2015 | Category: All Posts,Legal
27. What is the priority of parties secured by “common law and statutory liens”? Possessory Liens – A possessory lien is a common law or statutory interest in an asset that: •    secures a payment for services or material furnished in the ordinary course of business; •    is create pursuant read more »

Priority Regarding Conflicts in Security Interests

Monday, January 19th, 2015 | Category: All Posts,Legal
26. What are the common types of conflicts regarding the priority of security interests? The following types of security interest are often in conflict: •    Lien Creditors vs. Security Interest – A lien creditor who establishes an interest in a debtor’s property prior to perfection by another secured party has read more »

Perfection and Priority of a Security Interest

Monday, January 19th, 2015 | Category: All Posts,Legal
25. What role does perfection play in establishing the priority of a secured party? A secured creditor must perfect her security interest to establish the priority of her security interest with relation to all other creditors. The first secure party to perfect a security interest in the collateral generally gives read more »

What is Priority of a Security Interest

Monday, January 19th, 2015 | Category: All Posts,Legal
24. What is “priority” of a security interest? The priority of a secured party regards the party’s right to payment in the event of default by a debtor. If a debtor defaults, a secured party with a security interest in collateral will have a claim of ownership in the collateral. read more »

Appropriate Office to File a Financing Statement

Monday, January 19th, 2015 | Category: All Posts,Legal
23. Where is the appropriate office to file a financing statement? Financing statements covering goods are generally filed or processed through the state secretary of state’s office. Some states, however, require that the financing statement be physically filed at the local courthouse where the debtor is located. If the debtor read more »

Authorization Required to File Financing Statement

Monday, January 19th, 2015 | Category: All Posts,Legal
22. What authorization is required to file a financing statement? A secured party must be authorized to file a financing statement against the assets of the debtor. If the debtor is bound by a security agreement, authorization to file a financing statement is implied. If the debtor is not bound read more »

Perfection of Security Interest by Filing Financing Statement

Monday, January 19th, 2015 | Category: All Posts,Legal
21. What information is required in a “financing statement” filing? Generally, to perfect a security interest, a secured party may file a security agreement in the appropriate government office. To be enforceable under the UCC, a financing statement must contain the following information: •    Debtor’s Name – Generally this requires read more »

Perfection of a Security Interest by Control

Monday, January 19th, 2015 | Category: All Posts,Legal
20. How does one perfect a security interest by “control” of the collateral? Article 9 allows for perfection of a security interest in certain types of collateral by control. These types of assets include deposit accounts, investment properties, letter-of-credit rights, and electronic chattel paper. Control is related to possession and read more »

Perfection of a Security Interest by Possession

Monday, January 19th, 2015 | Category: All Posts,Legal
19. How does one perfect a security interest by “possession “of the collateral? Article 9 allows a secured party to perfect a security interest in goods, instruments, negotiable documents or tangible chattel paper by securing possession of the collateral. Securing possession can mean personal possession or possession by an agent. read more »

Security Interest in Assignment of Accounts Receivable or Contract Rights

Monday, January 19th, 2015 | Category: All Posts,Legal
18. How is a security interest created through the “assignment of accounts receivable” and “contract rights”? Generally, the sale or assignment of rights in accounts, payment intangibles, or promissory notes (account) creates a security interest for the individual to whom the account is assigned. This attaches the security interest to read more »

Temporary Automatic Perfection in Proceeds from Sale of Goods

Monday, January 19th, 2015 | Category: All Posts,Legal
17. What is “temporary automatic perfection” in “proceeds” from the sale of goods? Proceeds is the money, assets, or value received in exchange for selling or transferring something. A perfected security interest in collateral automatically extends to the proceeds from the sale of that collateral (with certain exceptions) for 20 read more »

Permanent Perfection of Purchase Money Security Interest

Monday, January 19th, 2015 | Category: All Posts,Legal
16. How does one continue perfection of or permanently perfect a purchase money security interest in non-consumer goods? A secured party who takes a PMSI in non-consumer goods has a grace period to file her financing statement. To establish permanent perfection beyond the temporary grace period, she must file the read more »

Purchase Money Grace Period for Secured Parties

Monday, January 19th, 2015 | Category: All Posts,Legal
15. What is a “purchase-money grace period” for a purchase-money security interest in non-consumer goods? Sellers of non-consumer goods receive temporary automatic perfection of an attached PMSI in the collateral sold. As the name applies, the security interest is temporary in nature. The seller has a 20-day grace period for read more »

Purchase Money Security Interest in Consumer Goods

Monday, January 19th, 2015 | Category: All Posts,Legal
14. What is a “purchase money security interest” (PMSI) in consumer goods? A purchase money security interest (PMSI) arises in situations where the secured party provides the funds necessary to purchase the subject collateral. This can arise through a loan for identified collateral or when the secured party sells and read more »

Automatic Perfection of a Security Interest in Goods

Monday, January 19th, 2015 | Category: All Posts,Legal
13. What is “automatic perfection” of a security interest? In certain types of transactions, a secured party’s interest in collateral is automatically perfected without filing a financing statement and without taking possession or control of the collateral. This is known as “automatic perfection”. Depending upon the nature of the collateral, read more »

Establishing a Security Interest in Real Property (Land)

Monday, January 19th, 2015 | Category: All Posts,Legal
12. How does a secured party establish a security interest in real property (land)? Secured parties must perfect a security interests in land by publicly filing notice of the security in accordance with state recording statutes. Generally, mortgages and deeds of trust must be publicly registered in a government office read more »

Methods of Perfecting a Security Interest in Personal Property

Monday, January 19th, 2015 | Category: All Posts,Legal
11. What methods exist for perfecting a security interest in personal property? Establishing or making one’s security interest effective as against third parties is known as “perfection” of the security interest. Perfection takes place when the security interest has attached and the creditor has taken all proper steps required by read more »

Perfection of a Security Interest

Monday, January 19th, 2015 | Category: All Posts,Legal
10. What is “perfection” of a security interest? “Perfection” is the process of putting the entire world on notice that the secured party claims a security interest in the debtor’s collateral. Recall, a security interest is enforceable against the debtor at the time that it attaches. That is, the attached read more »

Attachment of a Security Interest

Monday, January 19th, 2015 | Category: All Posts,Legal
9. How does one establish a security interest in personal property? A security interest in property begins when personal property is identified as collateral for a loan. This is known as “attachment” or “attaching” the property. Attachment takes place when the following conditions are met: •    Security Agreement – The read more »

Secured Transactions – Defined

Monday, January 19th, 2015 | Category: All Posts,Legal
8. What is a security interest in personal property? A security interest in personal property involves using any form of personal property or fixture to secure a debt. A borrower signs a promissory note that identifies the personal property that will serve as collateral to secure the loan. Personal property read more »

Land Sale Contracts – Explained

Monday, January 19th, 2015 | Category: All Posts,Legal
7. What is a “land sale contract”? A land-sale contract is a situation where the owner of land sells it subject to the condition that the seller retain title to the land until the buyer pays the full purchase price. Basically, it is a seller-financing scenario, where the seller retains read more »

Deeds of Trust and Security Deeds

Monday, January 19th, 2015 | Category: All Posts,Legal
6. What is a “deed of trust” or “security deed”? A “deed of trust”, or “security deed”, as it is known is some jurisdictions, is a form of mortgage. A borrower of money signs a promissory note demonstrating the debt owed to the lender. The promissory note will generally recite read more »

Mortgage Lender and Benefit of Security Interest

Monday, January 19th, 2015 | Category: All Posts,Legal
5. How does a security interest protect the mortgage holder? If the borrower fails to repay the loan pursuant to the terms of the loan agreement, the mortgage holder may “foreclose” upon the property securing the mortgage loan. •    Foreclosure – Foreclosure is the process by which the mortgage holder read more »

What is a Mortgage

Monday, January 19th, 2015 | Category: All Posts,Legal
4. What is a “mortgage”? A mortgage is a loan that is secured by real property. A borrower acquires a loan and provides a security interest in the real property owned by the borrower to be purchased with the borrowed funds. This is a common method of using “equity” or read more »

Common Security Interests in Land

Monday, January 19th, 2015 | Category: Legal
3. What are the common types of  “security interest in land”? Land or real property is an expensive asset that is often purchased through financing arrangements. As such, purchases of real property are often subject to a security interest. The most common forms of security interest in land include: •   read more »

Benefits of a Security Interest in Collateral

Monday, January 19th, 2015 | Category: All Posts,Legal
2. What are the benefits of a security interest to creditors? Taking a security interest in collateral to secure a debt reduces the risk to the creditor. It dissuades the creditor from defaulting on the loan for fear of losing the collateral. Also, it provides the secured creditor the ability read more »

Security Interest – Defined

Monday, January 19th, 2015 | Category: All Posts,Legal
1. What is a “Security Interest”? A security interest is a form of property interest in real or personal property. It is given by the owner of the property to provide assurance to a third party that the property owner will perform an obligation or pay a debt. Generally a read more »

Security Interests (Intro)

Monday, January 19th, 2015 | Category: All Posts,Legal
Overview Security interests are a cornerstone of finance and lending. Secured lending relates directly with the amount of risk a lender faces when extending credit to a borrower. A secured transaction is one in which a lender or seller acquires an interest in the property sold or purchased with the read more »

Sanctions Under Antitrust Law

Sunday, January 18th, 2015 | Category: All Posts,Legal
18. What sanctions are available under the antitrust laws? Together the Sherman Act, Clayton Act, and FTC Act allows for four legal sanctions: •    Injunctions of Activity – Injunctions order a party not to violate or continue violating antitrust provisions. These can be administrative or judicial. •    Treble (triple) Damages read more »

Federal Trade Commission Act Antitrust Deceptive Practices

Sunday, January 18th, 2015 | Category: All Posts,Legal
17. What is the “Federal Trade Commission Act “and how does it regulate unfair competition? The FTC Act §5 proscribes “unfair or deceptive acts or practices” and “unfair methods of competition.” Violations for the Sherman Act and Clayton Act will also violate the FTC Act, so most challenges are raised read more »

Clayton Act Mergers and Acquisitions

Sunday, January 18th, 2015 | Category: All Posts,Legal
16. How does the Clayton Act regulate “mergers and acquisitions”? The Clayton Act § 7 makes certain mergers and acquisitions illegal. Basically, one company cannot acquire another company’s stock or assets (or otherwise combine with another entity) if the combination is reasonably likely to substantially lessen competition or tend to read more »

Clayton Act Reciprocal Dealing Arrangements

Sunday, January 18th, 2015 | Category: All Posts,Legal
Clayton Act – Reciprocal Dealing Contracts This is an agreement where a buyer offers to buy a seller’s goods under the condition that the seller buy other goods from the original buyer. These agreement are only illegal if there is a distinct anticompetitive objective with a substantial effect on the read more »

Clayton Act Tying Arrangements

Sunday, January 18th, 2015 | Category: All Posts,Legal
Clayton Act – Tying Contract A tying contract is one in which a product is sold or leased only on the condition that the buyer purchase a different product or service from the seller or lessor. A common type of tying, known as “full-line forcing”, is where a seller compels read more »

Clayton Act Section 3 – Exclusive Dealing

Sunday, January 18th, 2015 | Category: All Posts,Legal
15. What are “special arrangements” prohibited by the Clayton Act? Section 3 of the Clayton Act limits the use of certain types of contracts involving goods when the impact of these contracts may substantially lessen competition or tend to create a monopoly. These contracts may be per se illegal if read more »

Clayton Act Price Discrimination

Sunday, January 18th, 2015 | Category: All Posts,Legal
14. What is “Price Discrimination”? Price discrimination under the Clayton Act means charging a different price for a commodity based upon something other than quality, quantity, or cost of selling. The Robinson-Patman Act, an amendment to the Clayton Act § 2, addressed the issue of a seller charging purchasers of read more »

Sherman Act Monopolization

Sunday, January 18th, 2015 | Category: All Posts,Legal
13. What is “monopolization” under the Sherman Act? The Sherman Act § 2 makes illegal the willful acquisition or maintenance of monopoly power in a relevant market when such power is the result of something other than pure competition. Simply possessing monopoly power is fine if such power results from read more »

Sherman Act Vertical Territorial Agreements

Sunday, January 18th, 2015 | Category: All Posts,Legal
Sherman Act – Vertical Territorial Agreements A vertical territorial agreement is an agreement between a manufacturer and a distributor of a product that grants an exclusive territory in which to distribute the product. The manufacturer agrees not to sell to other distributors in that territory in exchange for the dealer read more »

Sherman Act Product Tying

Sunday, January 18th, 2015 | Category: All Posts,Legal
Sherman Act – Tying Under the Sherman Act § 1, as well as § 3 of the Clayton Act, tying the purchase of one product to the purchase of another competitor’s product may be anticompetitive and a restraint of trade. Tying, in its most basic form, is when a seller read more »

Sherman Act Exclusive Dealing Arrangements

Sunday, January 18th, 2015 | Category: All Posts,Legal
Sherman Act – Exclusive Dealing Under the Sherman Act § 1, as well as § 3 of the Clayton Act, exclusive dealing agreements between suppliers and manufacturers can be anticompetitive vertical restraints on trade. In a typical exclusive dealing arrangement, a seller requires that a buyer of a product only read more »

Sherman Act Vertical Price Fixing and Maintenance

Sunday, January 18th, 2015 | Category: All Posts,Legal
12. What are the commonly recognized types of “vertical restraint”? Vertical restraint is an arrangement or agreement between members of a supply chain (such as manufacturers, wholesalers, distributors, or retailers) to fix the price or supply of goods. The following are common types of vertical restraint: •    Resale Restraint (Vertical read more »

Sherman Act Horizontal Price Fixing

Sunday, January 18th, 2015 | Category: All Posts,Legal
Sherman Act – Horizontal Price Fixing Under the Sherman Act § 1, an agreement among competitors to establish a fixed price among all producers or sellers of goods or services is a horizontal restraint of trade. This type of naked restraint on trade is a purely anticompetitive and is per read more »

Sherman Act Territorial Agreement

Sunday, January 18th, 2015 | Category: All Posts,Legal
Sherman Act – Horizontal Territorial Agreements Under the Sherman Act § 1, a territorial agreement that allocates geographical areas among competitors may be a horizontal restraint of trade. In a horizontal territorial agreement, competing businesses enter into an agreement not to compete with or infringe upon another competitor within an read more »

Sherman Act Refusal to Deal

Sunday, January 18th, 2015 | Category: All Posts,Legal
Sherman Act – Refusal to Deal Under the Sherman Act § 1, refusals to deal with or boycotts of market participants can be illegal as horizontal restraints of trade. This may be the case when the refusal has anti-competitive aspects but no pro-competitive justification. If the refusal to deal is read more »

Sherman Act Sharing of Information

Sunday, January 18th, 2015 | Category: Legal
Sherman Act – Sharing of Information A horizontal restraints on trade commonly understood to be illegal. •    Sharing Information – Under the Sherman Act § 1, sharing of information among competitors with the purpose of restraining trade (i.e., a naked restraint of trade) is per se illegal. So, the question read more »

Sherman Act Horizontal Restraint of Trade

Sunday, January 18th, 2015 | Category: All Posts,Legal
11. What are the commonly recognized types of “horizontal restraint”? While there are several established types of horizontal restraint, any situation that meets the following elements may be illegal. •    Agreement – Was there an agreement between or among market participants? •    Restraint – Was there an identifiable restraint of read more »

Exemptions from Antitrust Regulation

Sunday, January 18th, 2015 | Category: All Posts,Legal
10. What businesses are exempt from the provisions of the Sherman Act? Businesses in certain industries may be exempt from some of the antitrust provisions of the Sherman Act. These businesses do not receive a blanket exemption; rather, they receive specific exemptions for certain practices or activities. Examples of exempted read more »

Sherman Act Monopoly

Sunday, January 18th, 2015 | Category: All Posts,Legal
9. What is a “Monopoly”? Section 2 of the Sherman Act regulates monopolies or conspiracies or attempts to monopolize any part of interstate or foreign commerce. It is directed at single firms and does not purport to cover shared monopolies or oligopolies. •    Monopoly – In US v. Grinnel Corp, read more »

Antitrust Rule of Reason and Per Se Illegality

Sunday, January 18th, 2015 | Category: All Posts,Legal
8. What is “per se illegality” and the “rule of reason”? Section 1 of the Sherman Act broadly prohibits actions that in some way restrain trade. If an action is determined to be a restraint of trade, the following standards apply to determine whether the arrangement is illegal: •    Per read more »

Contract Combination Conspiracy in Restraint of Trade

Sunday, January 18th, 2015 | Category: All Posts,Legal
THE SHERMAN ACT The Sherman Act prevents certain contracts, combinations, or conspiracies in restraint of trade or commerce, and industry monopolies and attempts to monopolize. The following are the basic concepts behind the Sherman Act. 7. What is a “contract, combination, or conspiracy” in restraint of trade? Section 1 of read more »

What is the Federal Trade Commission Act

Sunday, January 18th, 2015 | Category: All Posts,Legal
6. What is the “Federal Trade Commission Act of 1914”? In 1914, the same year that the Clayton Act passed, Congress passed the Federal Trade Commission Act (FTC Act). This act created the Federal Trade Commission, which is an independent administrative agency charged with consumer protection. The FTC bears primary read more »

What is the Clayton Act

Sunday, January 18th, 2015 | Category: All Posts,Legal
5. What is the “Clayton Act of 1914”? The Clayton Act is an antitrust law passed to protect consumers by providing a means of preventing early-stage anticompetitive practices. It has a specific focus on the sale of commodities. The Clayton Act is more specific in identifying anticompetitive conduct than is read more »

What is the Sherman Act

Sunday, January 18th, 2015 | Category: All Posts,Legal
4. What is the “Sherman Act of 1890”? The Sherman Act was the first major federal law passed with the purpose of ensuring competition across and within industries. At the time of its passage, several large companies had nearly complete control over certain industries (steel, oil, and railway) very important read more »

Federal Trade Commission Enforcing Antitrust Laws

Sunday, January 18th, 2015 | Category: All Posts,Legal
3. What entities are charged with carrying out the federal antitrust laws? The Federal Trade Commission (FTC) is an independent federal agency primarily charged with developing regulations and preventing violations of the federal antitrust laws. The objective of the FTC is to protect consumers by preventing anticompetitive business practices. In read more »

What are the major antitrust laws?

Sunday, January 18th, 2015 | Category: Legal
2. What are the major antitrust laws in the United States? Since the inception of antitrust law, the Federal Government has passed three sweeping antitrust laws: •    The Sherman Act of 1890, •    The Clayton Act of 1914, and •    The Federal Trade Commission Act of 1914. These acts still read more »

What is Antitrust Law

Sunday, January 18th, 2015 | Category: All Posts,Legal
1. What is “antitrust law”? “Antitrust laws” are a combination of federal and state laws that seek to promote competition among businesses (both large and small). Competition among businesses benefits consumers, as businesses compete by providing better or more goods and services at lower prices. In pursuit of growth and read more »

Antitrust Law (Intro)

Sunday, January 18th, 2015 | Category: All Posts,Legal
Overview of Antitrust Antitrust law concerns the regulation of certain business practices that result in lower levels of competition among businesses in the market. A lower level of competition in a given market is generally understood to be detrimental to consumer interests. It can cause higher prices and shortages in read more »

State Consumer Protection Laws

Saturday, January 17th, 2015 | Category: All Posts,Legal
22. What role do states play in consumer protection? States pass and enforce any number of consumer protection laws. These laws sometimes offer protections in addition to those offered by federal law. State laws protecting consumers are generally known as Unfair and Deceptive Practices (UDAP) statutes. Common areas regulated by read more »

Children’s Online Privacy Protection Act

Saturday, January 17th, 2015 | Category: All Posts,Legal
21. What is the “Children’s Online Privacy Protection Act of 1986” (COPPA)? COPPA was passed to protect against the online collection of personal information of children under the age of 13 years. Enforcement of COPPA is charged to the FTC, which issues regulations for its enforcement. The rules regulate commercial read more »

Electronic Communication Privacy Act

Saturday, January 17th, 2015 | Category: All Posts,Legal
20. What is the “Electronic Communication Privacy Act of 1986” (ECPA)? The ECPA protects individuals against unlawful interception of electronic communications by the Federal Government or individuals. Specifically, it restricts the ability to undertake wire taps, computer transmissions, stored electronic communications, and tracing of telephone communications, etc. It is a read more »

Right to Financial Privacy Act

Saturday, January 17th, 2015 | Category: All Posts,Legal
19. What is the “Right to Financial Privacy Act of 1978” (RFPA)? The RFPA places limitations on the ability of the Federal Government to seek financial records about an individual from banks or other financial institutions. The RFPA applies only to the Federal Government. It does not govern requests for read more »

Privacy Act of 1974

Saturday, January 17th, 2015 | Category: All Posts,Legal
18. What is the “Privacy Act of 1974” (Privacy Act)? The Privacy Act restricts the ability of the Federal Government to collect information about individual US citizens. Specifically, it regulates the use, maintenance, and dissemination of collected personally-identifiable information. “Personally-identifiable information” either contains the name or other information that allows read more »

Magnuson Moss Warranty Act

Saturday, January 17th, 2015 | Category: All Posts,Legal
17. What is the “Magnuson-Moss Warranty Act”? The Magnuson-Moss Warranty Act (MMWA) was passed to protect consumers by regulating the use of warranty and disclaimer provisions by merchants. Generally, warranties are the subject of state contract law. The MMWA is a federal law administered by FTC; but it does not read more »

Federal Food Drug and Cosmetics Act

Saturday, January 17th, 2015 | Category: All Posts,Legal
16. What is the Federal Food, Drug, and Cosmetic Act? The Federal Food Drug and Cosmetic Act (FFDCA) was passed for the purpose of ensuring the safety of food, drugs (some medical devices), and cosmetics. The act gave authority to the Food and Drug Administration (FDA) to administer the provisions read more »

Product Labeling Laws

Saturday, January 17th, 2015 | Category: All Posts,Legal
15. What are the applicable labeling laws regulating consumer products? Labeling laws are administered by a combination of federal and state agencies. Federal agencies heavily involved in product labeling laws include the CPSC, FTC, and FDA. Collectively, federal and state laws require manufacturers to place informative labels and warnings on read more »

Consumer Product Safety Act

Saturday, January 17th, 2015 | Category: All Posts,Legal
14. What is the “Consumer Product Safety Act”? The Consumer Product Safety Act (CPSA) was passed for the purpose of protecting consumers against dangerous products. The CPSA encompasses several consumer protection acts, such as the Poison Prevention Packaging Act (PPPA) and the Consumer Product Safety Improvement Act (CPSIA). The CPSA read more »

Electronic Funds Transfer Act

Saturday, January 17th, 2015 | Category: All Posts,Legal
13. What is the “Electronic Funds Transfer Act”? The Electronic Funds Transfer Act (EFTA) was passed with the purpose of regulating the practice of transferring funds electronically. More specifically, the EFTA applies to electronic transfers of money between two separate institutions. It does not apply to automatic account transfers within read more »

Fair Credit Billing Act

Saturday, January 17th, 2015 | Category: All Posts,Legal
12. What is the “Fair Credit Billing Act”? The Fair Credit Billing Act (FCBA) was passed as an amendment to TILA with the purpose of protecting consumers against unfair billing practices. The FCBA is administered by FTC and applies within the consumer’s home state or 100 miles of home. These read more »

Fair Debt Collection Practices Act

Saturday, January 17th, 2015 | Category: All Posts,Legal
11. What is the “Fair Debt Collection Practices Act”? The Fair Debt Collection Practices Act (FDCPA) was passed to protect consumers from abusive practices by debt collectors. It establishes limitations on debt collection practices, provides a method for disputing uncertain debts, and prescribes remedies for violation of the Act. The read more »

Truth in Lending Act

Saturday, January 17th, 2015 | Category: All Posts,Legal
10. What is the “Truth in Lending Act”? The Truth in Lending Act (TILA) was passed with the purpose of protecting individuals from entering into deceptive or confusing credit relationships. The group of regulations implementing the provisions of TILA is known as “Regulation Z”. These regulations contain the bulk of read more »

Fair Credit Reporting Act Enforcement

Saturday, January 17th, 2015 | Category: Legal
Fair Credit Reporting Act – Enforcement The FTC and CFBP enforce the provisions of the FCRA. Further, individuals may bring a cause of action against creditor reporting agencies or credit providers. In a civil action, a creditor may recover actual damages, attorney’s fees, court costs, and punitive damages (if the read more »

Fair Credit Reporting Act – Furnishers of Information

Saturday, January 17th, 2015 | Category: All Posts,Legal
Furnishers of Credit Information The FCRA places obligations upon creditors who furnish a consumer’s credit information to a reporting agency. This may include lenders, retailers, collection agencies, etc., that deal with customer credit and report that information to a reporting agency. The FCRA requires that these creditors: •    provide complete read more »

Fair Credit Reporting Act – Reporting Agencies

Saturday, January 17th, 2015 | Category: All Posts,Legal
Consumer Reporting Agencies   A credit reporting agency is any business that collects information about consumers for the purpose of disseminating that information in connection with credit applications, employment, or other evaluations of the individual’s credit. The largest personal credit reporting agencies in the United States are Transunion, Experian, and read more »

Fair Credit Reporting Act – Users of Information

Saturday, January 17th, 2015 | Category: All Posts,Legal
Requirements on Users of Credit Reports A “credit report” is a collection of a consumer’s credit history. It includes such information as: past payment history, current credit accountings, late payments, credit limits, any debt or bill collection activity, liens, judgments, bankruptcies, etc. A “user” of a credit report is anyone read more »

Fair Credit Reporting Act

Saturday, January 17th, 2015 | Category: All Posts,Legal
9. What is the “Fair Credit Reporting Act”? The Fair Credit Reporting Act protects consumers (not businesses) by regulating the accuracy, fairness, and privacy of consumer information reported to or held by consumer reporting agencies. It protects consumers from the negative consequences associated with inaccurate information in their personal credit read more »

Equal Credit Opportunity Act

Saturday, January 17th, 2015 | Category: All Posts,Legal
8. What is the “Equal Credit Opportunity Act”? The Equal Credit Opportunity Act (ECOA) protects individuals from discrimination in lending money or the extension of credit. It covers financial institutions, retail establishments, credit-card issuers, and other credit-granting firms. The ECOA extended the protections from discrimination under Title VII beyond the read more »

Consumer Financial Protection Act

Saturday, January 17th, 2015 | Category: All Posts,Legal
7. What is the “Consumer Financial Protection Act”? The Consumer Financial Protection Act was passed in 2010 as part of the Dodd-Frank Act with the purpose of establishing the Consumer Financial Protection Bureau (CFPB).The  CFPB and FTC overlap in authority to administer consumer laws. The CFPB has broad authority to read more »

Commercial Practices Prohibited by FTC

Saturday, January 17th, 2015 | Category: All Posts,Legal
6. What type of commercial practices does the FTC prohibit in an effort to protect customers? The FTC prohibits commercial practices that are deceptive to customers. This generally concerns the practices of merchants who market or otherwise represent the quality or characteristics of goods or services to customers. In determining read more »

FTC Remedies for Consumer Protection Violations

Saturday, January 17th, 2015 | Category: All Posts,Legal
5. What administrative penalties and remedies may the FTC seek for violation of FTC regulations? The FTC, through the negotiation of consent orders, has broad powers to fashion appropriate remedies to protect consumers in trade regulation cases, including: •    rescission of contracts (each party must return what has been obtained read more »

FTC Regulatory Enforcement Procedures

Saturday, January 17th, 2015 | Category: All Posts,Legal
4. What are the enforcement procedures of the FTC? Within the FTC, attorneys working in the bureau of consumer protection enforce the federal laws related to consumer affairs and rules promulgated by the FTC. The FTC enforces these rules and laws through the following methods: •    Advisory Opinions & Industry read more »

Federal Trade Commission

Saturday, January 17th, 2015 | Category: All Posts,Legal
3. What is the “Federal Trade Commission”? The Federal Trade Commission (FTC) is the primary federal agency with the mission of protecting consumers. Authorized under the Fair Trade Commission Act, the FTC is an “independent” regulatory agency charged with keeping competition free and fair and with protecting consumers. The President read more »

Overview of Regulatory Agencies

Saturday, January 17th, 2015 | Category: Legal
REGULATORY AGENCIES Individuals affected by a merchant’s conduct may bring a civil action against the merchant. Further, numerous regulations exist that allow injured consumers to report violations of consumer protection laws. In an effort to stop or punish violations of the law, the government may then pursue administrative, civil, or read more »

Major Federal Consumer Protection Laws

Saturday, January 17th, 2015 | Category: Legal
2. What major federal laws protect consumers? Consumer protection laws exist at both the federal, state, and local levels. Also, there are numerous private organizations that seek to promote fairness in consumer and commercial transactions. The following are the major federal consumer protection laws. •    Federal Trade Commission Act •   read more »

Consumer Protection Law

Saturday, January 17th, 2015 | Category: All Posts,Legal
1. What is “consumer protection law”? Consumer protection laws are state and federal laws that serve to protect individual consumers from deception or fraud in the marketplace. A consumer is someone who buys something for personal, family, or household use. These laws promote the accurate disclosure of information, facilitate market read more »

Employment Discrimination Under State Law

Friday, January 16th, 2015 | Category: All Posts,Legal
21. What is the role of state governments with regard to anti-discrimination laws? All states have statutes and regulations administered by state agencies to protect employees from employment discrimination. Often, these state laws will provide additional protections for employees beyond those provided by federal statutes. The EEOC generally works in read more »

Affirmative Action Explained

Friday, January 16th, 2015 | Category: All Posts,Legal
20. What is “affirmative action”? Affirmative action is a federal executive order prescribed to protect federal employees and employees of certain federal contractors. To be covered by this executive order, contractors must have 50 or more employees and hold federal contracts of $50,000 or more. Affirmative action principles require covered read more »

Sexual Orientation Discrimination

Friday, January 16th, 2015 | Category: All Posts,Legal
19. What federal protections exist from discrimination based upon sexual orientation or identity? Sexual orientation or identity discrimination in the employment context means any form of employment discrimination based upon the real or perceived sexual orientation (gay, lesbian, bisexual, or heterosexual) or identity (transgender association) of an employee. There are read more »

Uniform Servicemembers Employment and Reemployment Rights Act

Friday, January 16th, 2015 | Category: All Posts,Legal
18. What anti-discrimination protections exist for employees who are also military service members? The Uniform Services Employment and Reemployment Rights Act (USERRA) protects the rights of service members in the military reserves or state national guards from discrimination based upon their military service obligations. Specifically, the law protects the rights read more »

The Affordable Care Act

Friday, January 16th, 2015 | Category: All Posts,Legal
The Affordable Care Act of 2014 •    Requirements of Individuals & Government – The Affordable Care Act in 2014 (ACA) changes the insurance landscape considerably. The ACA requires that all US citizens purchase health insurance either privately or through their employers. Individuals who fail to purchase health insurance are fined read more »

Health Insurance Portability and Accountability Act

Friday, January 16th, 2015 | Category: All Posts,Legal
17. What laws protect employees from discrimination in receiving health insurance coverage? The Health Insurance Portability Accountability Act of 1996 The Health Insurance Portability and Accountability Act of 1996 (HIPAA) is a primary law protecting the rights of employees with regard to obtaining and continuing health insurance coverage. Specifically, HIPAA read more »

Genetic Information NonDiscrimination Act

Friday, January 16th, 2015 | Category: All Posts,Legal
16. What is the “Genetic Information and Non-Discrimination Act”? The Genetic Information Nondiscrimination Act (GINA) prohibits employers (those covered by Title VII) from discriminating (hiring, firing, refusing to hire, or otherwise discriminating) based upon an employee or perspective employee’s genetic information. Genetic information includes any information acquired through an individual’s read more »

The Rehabilitation Act

Friday, January 16th, 2015 | Category: All Posts
15. What is the “Rehabilitation Act”? The Rehabilitation Act aims to “promote and expand employment opportunities in the public and private sectors for handicapped individuals.” The Rehabilitation Act prohibits the Federal Government and certain federal contractors from discriminating against employees and contractors based upon a medical disability. The Rehabilitation Act read more »

Americans with Disabilities Act

Friday, January 16th, 2015 | Category: All Posts,Legal
14. What is the “Americans with Disabilities Act”? The Americans with Disabilities Act (ADA) is the primary law protecting individuals with disabilities from various forms of discrimination. The ADA specifically prohibits employers from discriminating against job applicants or employees based upon: •    having a disability, •    having a disability in read more »

Age Discrimination in Employment Act

Friday, January 16th, 2015 | Category: All Posts,Legal
13. What is the “Age Discrimination in Employment Act”? The Age Discrimination in Employment Act of 1967 (ADEA) was passed to address discrimination in employment based upon Age. The Civil Rights Act of 1964 and the Equal Employment Opportunity Act do not protect against discrimination based on age, which makes read more »

Civil Rights Act of 1866 (1981 Action)

Friday, January 16th, 2015 | Category: All Posts,Legal
12. What is the “Civil Rights Act of 1866”? The Civil Rights Act of 1866, commonly known as the 1981 Act, was passed at the end of the Civil War in an effort to protect minorities against race-based discrimination. The pertinent provisions of the Act reads, “All persons shall have read more »

Pregnancy Discrimination Under Title VII

Friday, January 16th, 2015 | Category: All Posts,Legal
11. What are the protections under Title VII against discrimination based upon pregnancy? Title VII protects women against discrimination based upon pregnancy or intent to become pregnant. The Pregnancy Discrimination Act of 1978 amended title VII to provide the following specific protections: •    Pregnancy – An employer cannot discriminate against read more »

Equal Pay Act of 1963

Friday, January 16th, 2015 | Category: All Posts,Legal
Equal Pay Act of 1963 The Equal Pay Act of 1963 (Equal Pay Act) was an amendment to the Fair Labor Standards Act and a pre-cursor to the Civil Rights Act. The Equal Pay Act works in conjunction with the Civil Rights Act to prohibit sex-based discrimination in employment compensation. read more »

Sex Discrimination – Sexual Harassment and Hostile Work Environment

Friday, January 16th, 2015 | Category: All Posts,Legal
10. What is “sexual harassment” and “hostile work environment”? Two types of intentional discriminatory conduct based upon the actions or inactions of the employer (or its agents) are “sexual harassment” and “hostile work environment”. ⁃    Note: These types of conduct is that they are not subject to a bona fide read more »

Sex Discrimination – Discriminatory Treatment and Discriminatory Impact

Friday, January 16th, 2015 | Category: All Posts,Legal
9. What is discrimination on the basis of sex under Title VII? Discriminatory Treatment Discrimination based upon sex is slightly more complicated than discrimination based upon other protected classes. Understandably, Title VII prohibits intentional discrimination by an employer, such as hiring, firing, differentiating benefits of work conditions, based upon sex. read more »

Religious Discrimination Under Title VII

Friday, January 16th, 2015 | Category: All Posts,Legal
8. What is discrimination on the basis of religion under Title VII? Religious discrimination is intentional conduct or policies that treat or affect individuals differently based upon their religious beliefs or affiliations. This includes any of the intentional discrimination, such as failing to hire, firing, or allowing different benefits. An read more »

National Origin Discrimination Under Title VII

Friday, January 16th, 2015 | Category: All Posts,Legal
7. What is discrimination on the basis of national origin under Title VII? National origin discrimination is any form of intentional conduct or policy that favors one or more national origins over others. National origin includes the origin or birthplace of the employee or the employee’s ancestors. Examples discriminatory treatment read more »

Race Discrimination Under Title VII

Friday, January 16th, 2015 | Category: All Posts,Legal
6. What is discrimination on the basis of race or color under Title VII? Discrimination on the basis of race or color may be intentional or as a result of policies with a disparate impact. Failing to hire, firing, or compensating individuals differently based upon race are obvious examples of read more »

Retaliation Under Title VII

Friday, January 16th, 2015 | Category: All Posts,Legal
Retaliation Under Title VII Title VII protects employees who report or bear witness to discriminatory conduct. More specifically, employers cannot retaliate by taking disciplinary action against employees for making discrimination charges, making a statement to the EEOC or administrative agency, or giving testimony in a discrimination case. Pursuant to this read more »

Disparate Impact

Friday, January 16th, 2015 | Category: All Posts,Legal
Disparate Impact Disparate impact is a form of discrimination that involves a policy or practice that is not primarily motivated by a discriminatory purpose but has a discriminatory impact on a protected class of individual. Restated, unlike discriminatory treatment actions, the employee does not have to demonstrate an intent to read more »

Disparate Treatment

Friday, January 16th, 2015 | Category: All Posts,Legal
5. What must a plaintiff demonstrate to the court to win a lawsuit under Title VII? To make an actionable claim under Title VII, the effected employee must demonstrate that the employer is covered by Title VII and that actions taken (or inaction) by the employer likely had a discriminatory read more »

Enforcing Title VII Actions through EEOC

Friday, January 16th, 2015 | Category: All Posts,Legal
4. How are employment discrimination actions under the Title VII enforced? The Civil Rights Act of 1964 established the Equal Employment Opportunity Commission (EEOC). The EEOC is charged with interpreting and enforcing the provisions of Title VII and numerous other employment laws (including the ADA, ADEA, Equal Payment Act, and read more »

Employment Discrimination Under Title VII of the Civil Rights Act

Friday, January 16th, 2015 | Category: All Posts,Legal
3. What are the protections against employment discrimination provided by the “Title VII” of the Civil Rights Act of 1964? Title VII makes it unlawful for an employer to “fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his read more »

Overview of Title VII

Friday, January 16th, 2015 | Category: All Posts,Legal
CIVIL RIGHTS ACT OF 1964 The Civil Rights Act of 1964 is the most comprehensive statute dedicated to protecting the civil rights of individuals. For purposes of this chapter, Title VII of the Civil Rights Act (Title VII) is wholly dedicated to eliminating discriminatory employment practices. The Act has been read more »

Major Employment Discrimination Law

Friday, January 16th, 2015 | Category: Legal
2. What are the major employment discrimination laws? The major federal laws and regulations prohibiting employment discrimination were passed as part of several major federal acts and the subsequent amendments thereto. The primary federal acts addressing employment discrimination are as follows: •    The Civil Rights Act of 1964 (Title VII) read more »

What is Employment Discrimination

Friday, January 16th, 2015 | Category: All Posts,Legal
1. What is “employment discrimination”? Employment discrimination is a specific area of employment law that is based upon fundamental rights granted or protections afforded under the US Constitution. Employment discrimination laws prohibit certain types of discrimination by employers against employees or prospective employees based upon their protected characteristics. Various federal read more »

Employment Discrimination (Intro)

Friday, January 16th, 2015 | Category: All Posts,Legal
Overview of Employment Discrimination Employment discrimination is a specific area of employment law. Numerous federal or state statutes provide for “protected classes” of individuals based upon innate characteristics. Employment discrimination law protects employees  who fit into these classes from discrimination by their employer based upon these characteristics. This chapter defines read more »

Labor Management Reporting and Disclosure Act

Thursday, January 15th, 2015 | Category: All Posts,Legal
20. What is the “Labor Management Reporting and Disclosure Act”? The Labor Management Reporting and Disclosure Act of 1959 (LMRDA), also known as the Landrum-Griffin Act, was passed to provide greater protections to individual union members. The prominent provisions of the LMRDA are as follows: •   Section 101(a)(1) – This read more »

Labor Management Relations Act ( Taft Hartley Act )

Thursday, January 15th, 2015 | Category: All Posts,Legal
19. What is the “Taft-Hartley Act”? The Taft-Hartley Act of 1947 is a group of amendments to the NLRA. Since the passage of these amendments, the NLRA is commonly known as the Labor Management Relations Act (LMRA). Though the name is modified, the provisions of the NLRA make up the read more »

National Labor Relations Act of 1935

Thursday, January 15th, 2015 | Category: All Posts,Legal
18. What is the “National Labor Relations Act”? The National Labor Relations Act of 1935 (NLRA), also known as the Wagner Act, was passed in 1935 to strengthen the protections afforded private-sector employees to organize or bargain collectively. The fundamental premise behind the Norris-LaGuardia Act was to allow employers and read more »

Labor Union Laws ( Norris – LaGuardia Act)

Thursday, January 15th, 2015 | Category: All Posts,Legal
17. What is the “Norris-LaGuardia Act”? The Norris-LaGuardia Act of 1932 was the earliest federal law broadly protecting the rights of employees to organize and bargain collectively. Section 2 states the Act’s purpose is to protect the individual worker’s right to organize. More specifically, the Act prohibits certain practices by read more »

What are the Major Labor Laws?

Thursday, January 15th, 2015 | Category: All Posts,Legal
16. What are the major federal labor laws? •    Norris-LaGuardia Act – This law prevents courts from issuing injunctions (stop orders) to individuals or groups of striking employees. •    National Labor Relations Act (or Wagner Act) – This law takes affirmative steps to allow unionization of employees. •    Taft- Hartley read more »

Workplace Privacy Laws

Thursday, January 15th, 2015 | Category: All Posts,Legal
14. What “worker privacy laws” apply to the workplace? Two primary federal acts provide for rights of privacy of employees with regard to their personal communications. •    Electronic Communication Privacy Act (ECPA) – The ECPA prohibits the recording or monitoring of employee’s private conversations without the employee’s knowledge. That is, read more »

Employment Verification Laws

Thursday, January 15th, 2015 | Category: All Posts,Legal
13. What are the “employee verification laws”? The primary employment law concerning employee verification is the Immigration Reform and Control Act of 1986 (IRCA). The IRCA requires that all employers complete and retain Form I-9 Employment Eligibility Verification forms for each individual they hire in the US. These forms seek read more »

Worker’s Compensation Laws

Thursday, January 15th, 2015 | Category: All Posts,Legal
12. What are “Worker’s Compensation” laws? Worker’s Compensation laws are either state or federal statutes designed to protect employees and their families from the risks of accidental injury, death, or disease resulting from their employment. It is a form of insurance for the employee that is paid for by the read more »

Health Insurance Portability and Accountability Act ( HIPAA)

Thursday, January 15th, 2015 | Category: All Posts,Legal
11. What is the “Health Insurance Portability and Accountability Act”? The Health Insurance Portability and Accountability Act (HIPAA) is the primary law governing the protection of health information by employers and healthcare providers. Notably, it prevents providers of health insurance or group health plans from discriminating against individuals who transfer read more »

Consolidated Omnibus Budget Reconciliation Act ( COBRA )

Thursday, January 15th, 2015 | Category: All Posts,Legal
10. What is the Consolidated Omnibus Budget Reconciliation Act? Consolidated Omnibus Budget Reconciliation Act (COBRA) was passed to protect employees from the loss of healthcare coverage in certain situations. Specifically, it allows an employee or an employee’s dependent who is a beneficiary under an employee’s healthcare plan to maintain health read more »

Employee Retirement Income Security Act ( ERISA )

Thursday, January 15th, 2015 | Category: All Posts,Legal
9. What is the “Employee Retirement Income Security Act”? The Employee Retirement Income Security Act (ERISA) was passed to protect employees’ rights with regard to pension, retirement, and other benefit plans offered or provided by employers. Portions of the plan are administered by the Department of Labor, the Internal Revenue read more »

Occupational Safety and Health Act

Thursday, January 15th, 2015 | Category: All Posts,Legal
8. What is the “Occupational Safety and Health Act”? The Occupational Safety and Health Act (OSHA) was passed to regulate safety conditions for employees in the work places of private employers with 20 or more employees. The Occupational Safety and Health Administration is the federal agency charged with overseeing OSHA read more »

Worker Adjustment and Retraining Act

Thursday, January 15th, 2015 | Category: All Posts,Legal
7. What is the “Worker Adjustment and Retraining Act”? The Worker Adjustment and Retraining Act (WARN Act) was passed to protect employee rights and interests in the event of large-scale layoffs as a result of operational closures by businesses (such as plant closure). The law provides that covered employers must read more »

Family Medical Leave Act ( FMLA )

Thursday, January 15th, 2015 | Category: All Posts,Legal
6. What is the “Family Medical Leave Act”? The Family Medical Leave Act (FMLA) was passed to provide covered employees (both male and female) with time away from work in the event of medical necessity. Specifically, covered employees can take up to 12 weeks of unpaid leave from work during read more »

Fair Labor Standards Act ( FLSA )

Thursday, January 15th, 2015 | Category: All Posts,Legal
5. What is the “Fair Labor Standards Act”? The Fair Labor Standards Act (FLSA) is a law administered by the Wage and Hour Division of the Department of Labor. The FLSA places limitations and requirements on the rate and method of pay for public and private employees who are covered read more »

Employer Withholding Requirements

Thursday, January 15th, 2015 | Category: All Posts,Legal
4. What tax and other compensation withholding requirements do the state and federal governments place on employers with regard to employees? Employers are obligated to comply with statutes and IRS regulations regarding the withholding of: •    Income Taxes – Employers have an obligation to withhold income taxes from employee compensation read more »

Major Federal Employment Laws

Thursday, January 15th, 2015 | Category: All Posts,Legal
  3. What are the major employment laws? There are many federal and state employment laws. Federal laws controlling a particular type of employer conduct set minimum standards for conduct. States may pass laws that place additional requirements on employers, so long as these laws do not conflict with or read more »

At Will Employment – State Employment Laws

Thursday, January 15th, 2015 | Category: All Posts,Legal
2. What are the legal obligations regarding the terms of employment between an employer and employee? The terms of an employment relationship will either be determined by the employment agreement between employer and employee or pursuant to the legal duties established under state law. All states in the US, except read more »

How to determine employee status

Thursday, January 15th, 2015 | Category: Legal
    1. What is an “employee”? An employee is a stakeholder and representative agent of a firm. She may also be an owner of the firm, but her role as employee is generally separate from that of owner. For purposes of employment law, it is important to distinguish an read more »

Employment Law (Intro)

Thursday, January 15th, 2015 | Category: All Posts,Legal
Overview of Employment Laws Employment laws concern the federal and state statutes governing the practices of employers and the rights of employees. Labor laws, a subset of employment laws, concern the ability of employees to organize and collective bargain for employment rights and benefits. This chapter identifies the primary employment read more »

Coordinated Registration Under State Securities Law

Wednesday, January 14th, 2015 | Category: All Posts,Legal
52. What types of coordinated registration are available under state laws? There are two primary options for registration by coordination that ease the process of complying with state securities requirements. •    Coordinated Review-Equity – This type of review is designed for use during an IPO that is seeking registration (not read more »

Registration Requirements Under State Law

Wednesday, January 14th, 2015 | Category: All Posts,Legal
51. What are the registration requirements under state law? Registration pursuant to federal law focuses on disclosure of information to offerees and purchasers. States adopt this approach, but also may impose a test to make certain the security being issued meets certain quality standards. This is known as a “merit read more »

Securities Issuances Regulated by State Law

Wednesday, January 14th, 2015 | Category: All Posts,Legal
50. Are all issuers of securities required to comply with state blue sky laws? Generally, no. In 1996, Congress passed the National Securities Markets Improvement Act (NSMIA) with the purpose of simplifying the registration process for issuers of securities. The NSMIA preempted any state regulation of certain “covered securities”. Covered read more »

Criminal Liability – Securities Exchange Act of 1934

Wednesday, January 14th, 2015 | Category: All Posts,Legal
49. What is criminal liability under the 1934 Act? The ’34 Act provides for criminal sanctions for willful violations of its statutes or corresponding regulations. More specifically, it imposes liability for false, material misstatement in applications, reports, documents, and registration statements. Individuals face up to a 25-year sentence and business read more »

Securities Enforcement Remedies Act

Wednesday, January 14th, 2015 | Category: All Posts,Legal
48. What is liability pursuant to the “Securities Enforcement Remedies Act”? The Securities Enforcement Remedies Act provides for additional civil liability for defendants found to have violated the securities laws. A judge may impose fines of up to $500,000 per institution and $100,000 per individual. This can also lead to read more »

Liability Under Section 18 of 1934 Act

Wednesday, January 14th, 2015 | Category: All Posts,Legal
47. What is liability under “Section 18” of the 1934 Act? Section 18 of the ’34 imposes liability on any person “who shall make or cause to be made any false and misleading statement of material fact in any application, report, or document filed under the act”. Section 18 is read more »
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