Business Law (part 11)

Nature and Classes of Contract

 by

 Charles Lamson

A contract can be defined as a legally enforceable agreement between two or more competent persons. At first glance this seems like a very simple definition. Notice that this definition does not even require a written document. Later posts will be devoted exclusively to explaining and clarifying this definition.

Making contracts is such an everyday occurrence that we often overlook their importance, except when the contracts are of a substantial nature. When one buys a cup of coffee during a coffee break, a contract has been made. When the purchaser agrees to pay $0.50 for the coffee, the seller agrees not only to supply one cup of coffee but also agrees by implication of law that it is safe to drink. If the coffee contains a harmful substance that makes the purchaser ill, a breach-of-contract has occurred that may call for the payment of damages. A breach of contract is the failure of one of the parties to perform the obligations assumed under the contract. 

Business transactions result from agreements. Every time a person makes a purchase, buys a theater ticket, or boards a bus, an agreement is made. Each party to the agreement obtains certain rights and assumes certain duties and obligations. When such an agreement meets all the legal requirements of a contract, the law recognizes it as binding upon all parties. If one of the parties to the contract fails or refuses to perform, the law allows the other party an appropriate action for obtaining damages or enforcing performance by the party breaking the contract.

Contracts are extremely important in business because they form the very foundation upon which all modern business rests. Business consists almost entirely of the making and performing of contracts. A contract that is a sale of goods is governed by the Uniform Commercial Code (covered in a later post).

Requirements for a Contract

A valid contract is an agreement that courts will enforce against all parties. Such a contract must fulfill the following definite requirements:

1. It must be based on a mutual agreement by the parties to do or not to do a specific thing.
2. It must be made by parties who are competent to enter into a contract that will be enforceable against both parties.
3. The promise or obligation of each party must be supported by consideration such as the payment of money, the delivery of goods, or the promise to do or refrain from doing some lawful future act given by each party to the contract.
4. It must be for a lawful purpose; that is, the purpose of the contract must not be illegal, such as the unauthorized buying and selling of narcotics.
5. In some cases, the contract must meet certain formal requirements, such as being in writing or under seal.

You may test the validity of any contract using these five requirements.

Contracts Contrasted with Agreements

A contract must be in agreement, but an agreement need not be a contract. Whenever two or more persons minds meet upon any subject, no matter how trivial, an agreement results. Only when the parties intend to be legally obligated by the terms of the agreement will a contract come into existence. A later post explains how such agreements are formed. Ordinarily, the subject matter of the contract must involve a business transaction as distinguished from a purely social transaction. 

If Mary and John promised to meet at a certain place at 6 p.m. and have dinner together, this is an agreement, not a contract, since neither intends to be legally bound to carry out the terms of the agreement.

If Alice says to David, "I will pay you $25 to be my escort for the Spring Ball," and David replies, "I accept your offer," the agreement results in a contract. David is legally obligated to provide escort service, and Alice is legally bound to pay him $25. 

Classification of Contracts

Classification contracts are classified by many names or terms. Unless you understand these terms, you cannot understand the law of contracts. For example, the law maystate that executory contracts made on Sunday are void. You cannot understand this law unless you understand the words executory and void. Every contract may be placed in one of the following classifications:

1. Valid contracts, void agreements, and voidable contracts
2. Express and implied contracts
3. Formal and simple contracts
4. Executory and executed contracts
5. Unilateral and bilateral contracts

Valid Contract, Void Agreements, and Voidable Contracts

Agreements classified according to their enforceability include valid contracts (defined above), void agreements, and voidable contracts. An agreement with no legal effect is void. An agreement not enforceable in a court of law does not come within the definition of a contract. A void agreement (sometimes referred to as a void contract) must be distinguished from an unenforceable contract. If the law requires a certain contract to be in a particular form, such as a deed to be in writing, and it is not in that form, it is merely unenforceable, not void. It can be made enforceable by changing the form to meet the requirements of the law. An agreement between two parties to perform an illegal act is void. Nothing the parties can do will make this agreement an enforceable contract.

A voidable contract would be an enforceable agreement but, because of circumstances or the capacity of a party, one or both of the parties may set it aside. The distinguishing factor of a voidable contract is the existence of a choice by one party to abide by or to reject the contract. A contract made by an adult with a person not of lawful age (legally known as a minor or infant) is often voidable by the minor. Such a contract is enforceable against the adult but not against the minor. If both parties to an agreement are minors, either one may avoid the agreement. Until the party having the choice to avoid the contract exercises the right to set the contract aside, the contract remains in full force and effect. An agreement that does not meet all five of the requirements for a valid contract might be void or it might be a voidable contract. 

Express and Implied Contract

Contracts classified according to the manner of their formation fall into two groups: expressed and implied contracts. In an express contract, the parties express their Intentions by words, whether in writing or orally, at the time they make the agreement. Both their intention to contract and the terms of the agreement are expressly stated or written. Customary business terms, however, do not need to be stated in an express contract in order to be binding. 

An implied contract (also called a contract implied in fact) is one in which the duties and the obligations that the parties assume are not expressed but are implied by their acts or conduct. The adage "actions speak louder than words" very appropriately describes this class of contracts. The facts of a situation imply that a contract exists. The parties indicate so clearly by their conduct that they have a mutual agreement and what they intend to do that there is no need to express the agreement in words to make it binding.

Formal and Simple Contracts

A formal contract must be in a special form or be created in a certain way. Formal contracts include contracts under seal, recognizances, and negotiable instruments. 

When very few people could write, contracts were signed by means of an impression in wax attached to the paper. As time passed, a small wafer pasted on the contract replaced the use of wax. The wafer seal was in addition to the written signature. This practice is still used occasionally, but the more common practice is to sign a formal contract in one of these ways:

Jane Doe (Seal); Jane Doe [l. S.]

Today it is immaterial whether these substitutes for a seal are printed on the document, typewritten before signing, or the persons signing write them after their respective names. In jurisdictions where the use of the seal has not been abolished, the seal implies consideration.

In some states, the presence of a seal on a contract allows the party a longer time in which to bring suit if the contract is broken. Other states make no distinction between contract under seal and other written contracts. The Uniform Commercial Code abolishes the distinction with respect to contract for the sale of goods.

Recognizances, a second type of formal contract, are obligations entered into before a court whereby persons acknowledged they will do a specific specified act that is required by law. The persons acknowledge that they will be indebted for a specific amount if they do not perform as they agreed, such as the obligation undertaken by a criminal defendant to appear in court on a particular day.

Negotiable instruments, discussed in later posts, are a third type of formal contract. They include checks, notes, drafts, and certificates of deposit.

All contracts other than formal contracts are informal and are called simple contracts. A few of these, such as an agreement to sell land or to be responsible for the debt of another, must be in writing in order to be enforceable; otherwise they need not be prepared in any particular form. Generally speaking, informal or simple contracts may be in writing, may be oral, or may be implied from the conduct of the parties.

A written contract is one in which the terms are set forth in writing rather than expressed orally. An oral contract is one in which the terms are stated in spoken, not written, words. Such a contract is usually enforceable; however, when a contract is oral, disputes may arise between the parties as to the terms of the agreement. No such disputes need arise about the terms of a written contract if the wording is clear, explicit, and complete. For this reason most business people avoid making oral contracts involving matters of very great importance. Some types of contracts are required to be in writing and are discussed in later posts.  

Executory and Executed Contracts

Contracts are classified by the stage of performance as executory contract and executed contract. An executory contract is one in which the terms have not been fully carried out by all parties. If a person agrees to work for another for 1 year and return for a salary of $3,500 a month, the contract is executory from the time it is made until the 12 months expire. Even if the employer should prepay the salary, it would still be an executory contract because the other party has not yet worked the entire year, that is, executed that part of the contract.

An executed contract is one that has been fully performed by all parties to the contract. The Collegiate Shop sells and delivers address to Benson for $105, and Benson pays the purchase price at the time of the sale. This is an executed contract because nothing remains to be done on either side that is, each party has completed performance of each part of the contract.

Unilateral and Bilateral Contracts

When an act is done in consideration for a promise, the contract is a unilateral contract. If Smith offers to pay $100 to anyone who returns her missing dog and Fink Returns the dog, this would be a unilateral contract. It is unilateral (one-sided) in that only one promise is made. A promise is given in exchange for an act. Smith made the only promise, which was to pay anyone for the act of returning the dog. Fink was not obligated to find and return the dog, so only one duty existed.

A bilateral contract consists of a mutual exchange of promises to perform some future acts. One Promise is the consideration for the other promise. If Brown promises to sell a truck to Adams for $5,000, and Adams agreed to pay $5,000 to, then the parties have exchanged a promise for a promise---a bilateral contract. Most contracts are bilateral because the law states a bilateral contract can be formed when performance is started. This is true unless it is clear from the first a promise or the situation that performance must be completed. The test is whether there is only one right and duty or two.

Quasi Contract

One may have rights and obligations imposed by law when no real contract exists. This imposition of rights and obligations is called a quasi contract or implied in law contract. It is not a true contract because the parties have not made an agreement. Rights and obligations will be imposed only when a failure to do so would result in one person unfairly keeping money or otherwise benefiting at the expense of another. This is known as unjust enrichment. For example, suppose a tenant is obligated to pay rent of $300 a month but by mistake hands the landlord $400. The law requires the landlord to return the overpayment of $100. The law creates an agreement for repayment even though no actual agreement exists between the parties. For the landlord to keep the money would mean an unjust enrichment at the expense of the tenant. An unjust enrichment offends our ethical principles, so the law imposes our contractual obligation to right the situation. 

Name	Resources	Web Address
Uniform Commercial Code (UCC)	The LII, maintained by Cornell Law School, provides a hypertext and searchable version of Articles 1-9 of the Uniform Commercial Code. LII maintains links to the UCC as adopted by particular states, as well as proposed revisions.	www.law.cornell.edu/ucc/ucc.table.html
Legal Information Institute (LII)---Contract Law Materials	LII provides an overview of contract law, links to federal government statutes, treaties, and regulations, federal and state judicial decisions regarding contract law (including Supreme Court decisions), state statutes, and other materials.	www.law.cornell.edu/topics/contracts.html
Uniform Commercial Code 2-204	LII provides a hypertext and searchable version of UCC 2-204, Formation in General.	www.law.cornell.edu/ucc/2/2-204.html

*SOURCE: LAW FOR BUSINESS, 15TH ED., 2005, JANET E. ASHCROFT, J.D., PGS. 50-58*

end

Name

Resources

Web Address

Uniform Commercial Code (UCC)

The LII, maintained by Cornell Law School, provides a hypertext and searchable version of Articles 1-9 of the Uniform Commercial Code. LII maintains links to the UCC as adopted by particular states, as well as proposed revisions.

www.law.cornell.edu/ucc/ucc.table.html

Legal Information Institute (LII)---Contract Law Materials

LII provides an overview of contract law, links to federal government statutes, treaties, and regulations, federal and state judicial decisions regarding contract law (including Supreme Court decisions), state statutes, and other materials.

www.law.cornell.edu/topics/contracts.html

Uniform Commercial Code 2-204

LII provides a hypertext and searchable version of UCC 2-204, Formation in General.

www.law.cornell.edu/ucc/2/2-204.html

Business Law (part 10)

Government Regulation of Business

(part B)

 by

 Charles Lamson

 Antitrust

One of the ways government regulates businesses is by means of antitrust laws that seek to promote competition among businesses.

The most important antitrust law, the federal Sherman Antitrust Act, declares that, "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several states, or with foreign nations . . . is illegal." It further provides that anyone who monopolizes or tries to obtain a monopoly in interstate commerce is guilty of a felony.

The Sherman Act applies to commerce or trade between two or more states and to buyers and sellers. Most states also have antitrust laws, very similar to the Sherman Act, which prohibits restraint of trade within their states.

In interpreting the Sherman Act, the federal courts have said it prohibits only those activities that unreasonably restrain trade. The rule of reason approach means that the courts examine and rule on the anticompetitive effect of a particular activity on a case-by-case basis. The effect of the activity, not the activity itself, is the most important element in deciding whether the Sherman Act has been violated.

However, some activities are illegal under the Sherman Act without regard to their effect. Called per se violations, they include price-fixing, group boycotts, and horizontal territorial restraints.

Many activities may lessen competition. Obviously, every business firm seeks to have cooperation within its firm. This is the basis of economic productivity, and this is lawful under the antitrust laws. only when separate businesses make a commitment to a common plan or some type of joint action to restrain trade does an antitrust violation occur.

In addition to the Sherman Act, the federal government has enacted three other important antitrust laws. These include the Clayton Act, the Robinson-Patman Act, and the Federal Trade Commission Act.

The Clayton Act amends the Sherman Act by prohibiting certain practices if their effect may be to substantially lessen competition or to end or to tend to create a monopoly. The Clayton Act prohibits price discrimination to different purchasers where price difference does not result from differences in selling or transportation cost. The Clayton Act also prohibits agreements to sell on the condition that the purchaser shall not use goods of the sellers competitors, ownership of stock or assets in a competing business where the effect may be to substantially lessen competition, and interlocking directorates between boards of directors of competing firms. 

The Robinson-Patman Act, an amendment to the Clayton Act, prohibits price discrimination generally and geographically for the purpose of eliminating competition. It also prohibits sales at unreasonably low prices in order to eliminate competition.

The Federal Trade Commission Act prohibits unfair methods of competition in commerce and unfair or deceptive acts or practices in commerce. In addition, this law prohibits false advertising. To prevent these unfair and deceptive practices, a federal administrative agency, the Federal Trade Commission, was established. 

*SOURCE: LAW FOR BUSINESS, 15TH ED., 2005, JANET E. ASHCROFT, J.D., PGS. 42-43*

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Business Law (part 9)

Government Regulation of Business

(part A)

 by

 Charles Lamson

 Government rules and regulations affect the operation of every business, no matter what type. The areas of business operation affected by government regulation, both state and federal, range from prices and product safety to the relationship of the business to its employees. The next couple of posts discuss some ways in which government regulates the operation of business. 

Purpose of Regulation

Government regulates business in order to eliminate abuses and to control conduct considered to be unreasonable. The goal is to enhance the quality of life for society as a whole by setting the rules under which all businesses compete.

Administrative Agencies

Administrative agencies are governmental boards or commissions with the authority to regulate or implement laws. Most government regulation of business is done by administrative agencies.

Most administrative agency regulation occurs because of the complex nature of the area of regulation. Each administrative agency can become a specialist in its particular area of regulation. Agencies can hire scientists and researchers to study Industries or problems and set standards that businesses must follow. Agencies conduct research on proposed drugs (the Food and Drug Administration), examine the safety of nuclear power facilities (the Nuclear Regulatory Commission), certify the wholesomeness of meat and poultry (the Food Safety and Inspection Service), and set standards for aircraft maintenance (the Federal Aviation Administration). In all these areas, research has been necessary to determine a safe level for the public.

Some agencies investigate industries and propose rules designed to promote fairness to the businesses involved and the public. This occurs in the area of trading in stocks (the Securities and Exchange Commission), the granting of radio and television licenses (the Federal Communications Commission), and the regulation of banks (the Federal Deposit Insurance Corporation). The legislature thus can set up the guidelines and specify the research to be done by specialists in the field.

Structure of Administrative Agencies

Agencies may be run by a single administrator who serves at the pleasure of the executive, either the president of the United States in the case of federal agencies or the governor in the case of state agencies. Alternatively, a commission, the members of which are appointed for staggered terms, frequently of 5 years, may run agencies.

Types of Agencies

The two types of administrative agencies are usually referred to as regulatory and non-regulatory. Regulatory Agencies govern the economic activity of businesses. They prescribe rules stating what should or should not be done in particular situations. They decide whether a law has been violated and then proceed against those violating the law by imposing fines and, in some cases, ordering that the activity be stopped. Regulatory type agencies include agencies such as the Environmental Protection Agency, the Securities and Exchange Commission, and the Federal Trade Commission.

Regulatory agencies also regulate a wide variety of professions that serve the public. Those supervised by governmental agencies in an effort to protect the interests of consumers include barbers, doctors, insurance agents, morticians, cosmetologist, fitters of hearing aids, and restaurateurs. In order to be licensed to practice a regulated profession, an individual must meet the requirements set by the appropriate regulatory agency.

Public utility companies, which are granted monopoly status, are regulated to ensure that they charge fair rates and render adequate service. Such businesses include natural gas, electric, and water companies. A Public Service Commission or Public Utilities Commission regulates these companies and most states.

Nonregulatory agencies, also called social regulatory agencies, dispense benefits for social and economic welfare and issue regulations governing the distribution of benefits. Such agencies include the Railroad Retirement Board, the Farm Credit Administration, and the Department of Health and Human Services.

Powers of Agencies

Different regulatory agencies have different powers. However, the three major areas of regulations include:

1. Licensing power: Allowing a business to enter the field being regulated
2. Rate-making power: Fixing the prices that a business may charge
3. Power over business practices: Determining whether the activity of the entity regulated is acceptable or not

Agencies such as the Federal Communications Commission, the Nuclear Regulatory Commission, and the Securities and Exchange Commission have licensing power. The Civil Aeronautics Board, the Federal Power Commission, and the Interstate Commerce Commission all have rate-making power. The primary powers of the Federal Trade Commission and the National Labor Relations Board are to control business practices.

Rule Making

Administrative agencies primarily set policy through the issuance of rules and regulations. When an agency's rule is challenged, the courts primarily focus on the procedures followed by the agency in exercising its rule-making power. The rule-making procedure followed by state agencies resembles that which must be used by federal agencies.

After investigating a problem, an agency will develop a proposed rule. A federal agency must publish a notice of the proposed rule in the Federal Register. This allows interested parties the opportunity to comment on the proposed rule. The agency might hold formal hearings, but informal notice and comment rule making has been more and more common. When an agency uses notice and comment rule making, it publishes a proposed rule, but does not hold formal hearings. After time for comments, the proposed rule could be published as proposed, changed, or entirely abandoned by the agency. Once a rule or regulation is adopted, it has the force of a statute; however, persons affected by it may challenge it in court. 

State Agencies

Whereas federal administrative agencies affect businesses throughout the country, State administrative agencies affect businesses operated in their state. The most common state agencies include public service commissions, state labor relations boards or commissions, and workers compensation boards. 

*SOURCE: LAW FOR BUSINESS, 15TH ED., 2005, JANET E. ASHCROFT,, J.D., PGS. 39-42*

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Business Law (part 8)

Business Torts and Crimes (part D)

 by

 Charles Lamson

 Computer Crimes.  Computer crimes are crimes committed with the aid of a computer or because computers are involved. Under this definition, computers can be involved in crimes in various ways:

1. They can be the objects of the crimes---such as when a computer is stolen or damaged.
2. They can be the method of committing a crime---such as when a computer is used to make take money from an account.
3. They can represent where the crime is committed--- such as when copyrights are infringed on the internet.

Today, more and more businesses rely on computers, computer systems have become more interconnected, and an increasing number of businesses and private individuals use the Internet and the information on the Internet. As a result, more opportunities exist for criminal behavior. Frequently computer offenses can be successfully prosecuted by using existing criminal laws prohibiting theft, mail fraud, wire fraud, and the transportation of stolen property.

Some courts have refused to apply traditional criminal laws to computer offenses. Both the federal government and the states have responded to the need for laws that clearly apply to computer crimes by enacting specific computer crime legislation.

One federal law is called the Computer Fraud and Abuse Act. This act makes it an offence to, without authorization, access a computer or exceed authorized access of a computer used by or for the U.S. government or a financial institution and to (1) fraudulently obtain anything of value; (2) intentionally and without authorization obtain or destroy information; (3) affect the use of the computer; or (4) cause damage. It is also an offense to (1) deal in computer passwords and thereby affect interstate commerce; (2) knowingly access a computer, obtain national defense information, and disclose, attempt to disclose, or retain that information; and (3) transmit a threat to damage a U.S. government or financial institution computer in order to extort money from anyone. The punishment is a fine and/or up to 10 years imprisonment for the first offense and up to 20 years imprisonment for the second offense.

The federal government has also enacted a law called the Electronic Communications Privacy Act. This law prohibits the interception of computer communications, such as email, or obtaining and divulging without permission data stored electronically. 

The laws enacted by the states vary considerably. However, they generally prohibit alteration of a computer program or intentional, unauthorized access to a computer regardless of the reason for the access and the disclosure of any information gained by such access.

Criminal activity relating to computers can be classified as three types: trespass, fraud, and criminal copyright infringement.

Trespass. As applied to business crime, computer trespass means unauthorized use of or access to a computer. A trespass can range from being harmless to being a threat to national security. Such activities as merely using a computer to play games or prepare personal documents constitute computer trespass. More serious trespasses include learning trade secrets, gaining customer lists, and obtaining classified defense information. Computer trespass has been the focus of state computer crime laws.

A computer trespass may be committed in a number of ways, depending on who gains unauthorized access and the use made of the computer. The access might be by:

1. An employee not authorized to use a computer in the business
2. An employee authorized to use a computer who uses it for non-business purposes
3. An unauthorized outsider who gains access to the businesses computer system---called a hacker

Since all computer trespass involves the use of computer time without permission, all trespass technically can be classified as theft of computer time. However, computer trespass causes even more serious problems. It ties up computers and prevents employees from doing their jobs and may reveal trade secrets, customers' personal financial records, or confidential medical information. Because computers house so much information, it is helpful that the computer crime laws of the majority of jurisdictions protect the confidentiality of all information stored in computers.

One of the most highly publicized methods of trespass involves damaging computer systems by using rogue programs. A rogue program is a set of software instructions that produces abnormal or unexpected behavior in a computer. Various kinds of rogue programs have such colorful names as viruses, bacteria, worms, Trojan horses, and time bombs. They may cause computer users difficulty, inhibit normal use, or impose injury. The programs can be introduced to a computer by being attached to a useful program or even email they spread to other computers through modems, discs, or network connections. Once introduced, a rogue program can alter the operations of a program, destroy data or screen displays, create false information, display a message, or even damage the computer. 

Rogue programs may not show up for some time, so they can spread without alerting operators to their presence and damage all files in a computer system. One large computer software company inadvertently sent out copies of a software program containing a virus. The product had been accidentally infected after being loaded onto a computer that had received the virus from another program. In this case the virus merely caused a message to flash on computer users screens. However, the software company had the expense of recalling thousands of copies of its software program.

Fraud. As applied to computer crime, fraud encompasses larceny and embezzlement. It includes causing bank deposits to be credited to just one individual's account. Such an action might be prosecuted under traditional crime statutes or new computer crime statutes.

The use of the internet has made it possible for a wide variety of frauds to be perpetrated on unsuspecting businesses and individuals. Sometimes the internet provides an easy and inexpensive way to advertise a scam since so many people surf the web. A fraud can be easily advertised on the internet, such as the one in which a fifteen-year-old advertised computer parts for sale. Customers were required to pay cash upon delivery or buy a check on which payment could not be stopped. The box supposedly containing the computer parts would be empty and the perpetrator had the customers money.

Other internet fraud has included a long distance telephone company employee selling more than 50,000 calling card numbers. The employee was convicted and sent to prison. The Federal Trade Commission stopped an illegal pyramid arrangement after it's scam to participants of $6 million.

Computer criminals frequently target businesses, particularly large banks. Citibank lost $10 million, but recovered all but $400,000 when some Russians broke into its computer system and engaged in fraudulent transactions. Businesses frequently suffer losses quietly in preference to advertising to customers, stockholders, and clients that they are vulnerable to hackers, so it is impossible to accurately measure the dollar amount of loss to business from computer fraud. 

Criminal Copyright Infringement. In addition to civil copyright infringement, there exists the crime of criminal copyright infringement. In order to establish the criminal offense, the prosecutor needs to prove that (1) there has been copyright infringement, (2) the infringement was willful, and (3) the infringement was done for business advantage or financial gain.

As anyone who has used the Internet knows, it is relatively easy to copy material found on the net. The most serious problems for business occur when software is copied. Software that is copied illegally is called pirated software. Pirating software is a worldwide industry because the Internet links people all over the world. Software is sometimes copied without the owners knowledge and stored in someone else's computer located anywhere else in the world. Within a relatively short time people all over the world can make numerous illegal copies. If the owner of the computer used for storage finds out, the pirated software can be removed from the computer, but the copying has already taken place. Hundreds or thousands of copies of the pirated software could have already been made.

Finding software pirates can be extremely difficult, if not impossible. They could have used fake identification and nicknames or used an anonymous remailer. An anonymous remailer is a device that permits a person who has access to a computer and an email account to send messages and software to an email address or a group without the recipient knowing the source of the communication. The person who wants to send an anonymous communication sends it to the anonymous remailer. The remailer removes the identity and address of the sender and then sends, or emails, the communication to the address indicated by the sender. The recipient receives the communication with the remailers address on it. Some remailers keep a record showing the sender's identity, some communication can be traced. However, if the sender uses a remailer that does not keep such a record or uses several anonymous remailers, the communication could be impossible to trace. As a result, computer copyright infringement is, in dollar terms, the most serious crime on the internet. It has been estimated to cost copyright holders billions of dollars a year. 

Internet Resources for Business Law

Name	Resources	Web Address
Legal Information Institute (LII)---Torts Law Materials	LII, maintained by Cornell Law School, provides an overview of tort law, including the Federal Tort Claim Act (28 USC 2671-80), recent Supreme Court decisions, and other information.	www.cornell.edu/topics/torts.html
Computer Fraud and Abuse Act of 1986, 47 USC 1030	LII provides a hypertext and searchable variation of 47 USC 1030, Computer Fraud and Abuse Act of 1986.	www.law.cornell.edu/uscode/18/1030.html
Racketeer Influenced and Corrupt Organizations Act (RICO), 18 USC 1961	LII provides a hypertext and searchable version of 18 USC 1961, properly known as the Racketeer Influenced and Corrupt Organizations Act (RICO).	www.law.cornell.edu/uscode/18/1961.html
U.S. Patent and Trademark Office	Patent and Trademark Office (PTO) allows for a patent searches, as well, it provides formed, legal materials, and the PTO Museum.	www.uspto.gov
Intellectual Property Center	This site, maintained by the University of Maryland University College Center for Intellectual Property, includes links to general resources, the Digital Millennium Copyright Act, Fair Use Standards, and International Issues and Resources.	www.umuc.edu/distance/odell/cip/links.html
World Intellectual Property Organization (WIPO)	The World Intellectual Property Organization (WIPO) maintains the Berne Convention, Paris Convention (WIPO) Copyright Treaty, and WIPO Performances, and Phonograms Treaty, among others resources.	www.wipo.org/about-ip/en/copyright.html
Copyright Office, Library of Congress	The Copyright Office provides publications and extensive information on copyright topics, including the basics of copyright law.	www.copyright.gov

*SOURCE: LAW FOR BUSINESS, 15TH ED., 2005, JANET E. ASHCROFT, J.D.,PGS. 28-38*

end

Name 

Resources

Web Address

Legal Information Institute (LII)---Torts Law Materials

LII, maintained by Cornell Law School, provides an overview of tort law, including the Federal Tort Claim Act (28 USC 2671-80), recent Supreme Court decisions, and other information.

www.cornell.edu/topics/torts.html

Computer Fraud and Abuse Act of 1986, 47 USC 1030

LII provides a hypertext and searchable variation of 47 USC 1030, Computer Fraud and Abuse Act of 1986.

www.law.cornell.edu/uscode/18/1030.html

Racketeer Influenced and Corrupt Organizations Act (RICO), 18 USC 1961

LII provides a hypertext and searchable version of 18 USC 1961, properly known as the Racketeer Influenced and Corrupt Organizations Act (RICO).

www.law.cornell.edu/uscode/18/1961.html

U.S. Patent and Trademark Office

Patent and Trademark Office (PTO) allows for a patent searches, as well, it provides formed, legal materials, and the PTO Museum.

www.uspto.gov

Intellectual Property Center

This site, maintained by the University of Maryland University College Center for Intellectual Property, includes links to general resources, the Digital Millennium Copyright Act, Fair Use Standards, and International Issues and Resources. 

www.umuc.edu/distance/odell/cip/links.html

World Intellectual Property Organization (WIPO)

The World Intellectual Property Organization (WIPO) maintains the Berne Convention, Paris Convention (WIPO) Copyright Treaty, and WIPO Performances, and Phonograms Treaty, among others resources.

www.wipo.org/about-ip/en/copyright.html

Copyright Office, Library of Congress

The Copyright Office provides publications and extensive information on copyright topics, including the basics of copyright law.

www.copyright.gov

Business Law (part 7)

Business Torts and Crimes (part C)

 by

 Charles Lamson

Crimes

The news media report on crimes every day so everyone hears about murders, robberies, assaults, and break-ins. Some of these crimes involve businesses or businesspeople.

Business Crimes

Certain criminal offenses, such as arson, forgery, fraudulent conveyances, shoplifting, and embezzlement, closely relate to business activities. Business crimes are crimes committed against a business or in which the perpetrator uses a business to commit the crime.

Types of Business Crimes

The types of crimes committed by and against businesses appear to be limited only by the Ingenuity of the human mind. Many crimes include stealing from the business. In this age of computers, wire transfers, and organized crime, the range of crime has been growing. Today, crimes affecting business include:

1. Theft
2. RICO cases
3. Computer crimes

Theft. Theft is the crime of stealing. It involves taking or appropriating another's property without the owner's consent and with the intention of depriving the owner of it. This definition includes taking and depriving another of property even when the thief initially obtains the property lawfully. 

Some states use different terms to identify the various possible types of theft. As it relates to business, types of theft include such crimes as shoplifting, embezzlement, and larceny. The elements of each of these offences differ somewhat from state to state, but the crimes generally consist of the following:

1. Shoplifting: Taking possession of goods in a store with the intent to use as the takers own without paying the purchase price. In some states, merely concealing unpurchased goods while in a store constitutes shoplifting. The intent required for shoplifting is the intent to use the property as the takers. This crime must be committed in a store by taking store merchandise, so it is always a business crime.
2. Embezzlement: Fraudulent conversion of another's property by someone in lawful possession of the property. Embezzlement requires the intent to defraud the owner of the property. Conversion here means that the defendant handles the property inconsistently with the arrangement by which he or she has possession of it. Since many businesses rely on employees to receive payments and make disbursements, embezzlement is often a crime against the business. 
3. Larceny. Taking and carrying away the property of another without the consent of the person in possession and with the intention of depriving the possessor of the property. The intent to deprive the person in possession of the property must exist at the time the property is taken. For larceny to exist, the taker need not take the property from the owner---merely from the person in possession of it. Larceny can relate to business whenever someone takes any business property, weather inventory, tools, or even office supplies. 

Rico Cases. The Racketeer Influenced and Corrupt Organizations Act, called RICO for short, is a federal law designed to prevent the infiltration of legitimate businesses by organized crime. It prohibits investing income from racketeering to obtain a business, using racketeering to obtain a business (through conspiracy, extortion, and so on), using a business to conduct racketeering, and conspiring to do any of these. The conspirators do not have to do the acts themselves. If they direct the action, they are responsible. The law includes stiff criminal penalties for violation.

However, RICO includes civil sanctions as well as criminal ones. As a result, it has been used by one business against another in cases not involving organized crime. The injured party brings the action under RICO based on the perpetration of criminal activity and requests damages. In criminal cases a government brings the action. To find a business violation of RICO, a plaintiff must show all of the following:

1. Conduct
2. Of an enterprise (at least two people)
3. Through a pattern (at least two acts within 10 years)
4. Of racketeering activity

Racketeering activity means activity labeled criminal under state or federal laws. Examples of such activity include murder, kidnapping, arson, robbery, bribery, extortion, distribution of illegal narcotics, prostitution, and white collar crime such as mail fraud, money laundering, and securities fraud. The defendant does not have to have been convicted; it is enough just to have engaged in activity for which a conviction could be obtained. This makes it easier to win a civil RICO case than a criminal case.

Civil suits under RICO have been very popular because of the liberal damages available. Rather than allowing merely compensatory damages, RICO provides recovery of three times the damages suffered. It also allows the recovery of attorney's fees, which can be a substantial sum.

In addition to the federal RICO, many states have passed so-called Baby RICO laws. Similar to the federal law, these laws apply to activities an intrastate (within a state) commerce. The federal law has jurisdiction over interstate (between states) commerce. 

*SOURCE: LAW FOR BUSINESS, 15TH ED., 2005, JANET E. ASHCROFT, J.D., PGS. 28-31*

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