Four types of law Private Law Public Law

Four types of law • • Private Law Public Law International Law National Law – Public International Law – Private International Law – Public National Law – Private National Law

Law versus Equity • Law courts look to the black letter rule, formalistic, legalistic – they do not look at substantive justice. Only remedy at law is money damages. • Equity courts arose as an exceptional remedy to unfair outcomes at law. Equity looks to substantive justice, not form. If you seek any remedy other than $ then it is equity.

Legal versus Equitable Ownership • Equitable title is actual posession. Legal title is the right to posession. • I buy a house – a bank lends me money to buy it. The loan is secured with a lien on the house. I clearly have equitable title: I am in posession. I am paying down the mortgage, generating „equity“ in the house. The bank usually retains legal title. I obtain legal title to the house only when I pay the entire mortgage.

Equity • You have no „right“ to equity: it is like begging the court for mercy. Equitable remedies are discretionary: the court does not have to grant them, and only does so „in the interests of justice“.

Equitable Maxims: Preconditions • „He who seeks equity must do equity“; The person who wants an equitably remedy must not have been unjust. • „Equity rewards the vigilant, not those who sleep on their rights“. You must seek your equitable remedy promptly. • „Equity follows the law“ – equitable remedies are only granted as an exception to legal remedies and even then must not be unlawful.

Fiduciary • duty of care • duty of loyalty - Not Arms Length. Must affirmatively consider the interests of the other party. • equitable – Thus, in addition to damages - a remedy in common law - fiduciaries must account for illgotten profits even if their entrustors suffered no injury

Bona Fides – Good Faith and Fair Dealing • The law requires all persons in their transactions to act with good faith and a contract where a party has not acted bona fide may be avoided by the innocent party.

Elements of a Contract • Intent to contract • +Offer (Reasonably Certain Terms) • +Acceptance • +Consideration ------------- • = Contract

What is a Contract? A contract is an agreement between two parties that creates an obligation to perform (or not perform) a particular duty. A legally enforceable contract requires: 1. An Offer (I’ll mow your lawn this weekend, if you pay me $30) 2. An Acceptance (You’ve got a deal) 3. Consideration (The value received and given – the money and the lawn mowed)

Establishing Offer and Acceptance: “A Meeting of the Minds” • • A legally recognized offer and an acceptance creates a “meeting of the minds’, or mutual assent, between the parties. Mutual Assent requires the presence of the following factors: 1. Both parties must exhibit a “contractual intent” [words spoken in jest or frustration will lack the requisite intent]; 2. The terms of the offer must be clear and definite; 3. The acceptance must be clearly communicated.

The Requirement for Clear and Definite Terms • Required Clarity: For terms to be legally • Four primary areas in determining definite terms: valid, a reasonable person must be capable of readily understanding them. 1. the parties; 2. time for performance (term or service schedule); 3. the price; and 4. the subject matter or scope of service.

Consideration: The Importance of the “Bargained Exchange. ” • Consideration must be mutual. Both parties must receive something of value. • Involvement of money is not required. • Contracts vs. Gifts

Offer or Invitation to Treat? • An offer once accepted creates an agreement • An offer can be contrasted with an invitation to treat • An invitation to treat is an invitation to enter negotiations • The “acceptance” of an invitation to treat does NOT create an agreement • It is not always easy to distinguish between an offer and an invitation to treat

Offer or Invitation to Treat? In certain types of standard transactions (e. g. display of goods, advertisements) there are some general rules that apply as to whether or not an offer has been made (can be rebutted)

Advertisements • Generally these are Invitations to Treat NOT offers • If an advert in the paper was an offer the person who placed the advertisement would be required to contract with anyone/everyone who wanted to purchase the goods at the price stated

Defences To Contract • Vice – fraud (misrepresentation of a material fact made with knowledge of falsehood intended to induce reliance which does induce reliance) – duress (e. g. , threat of violence) – Illegality – Incapacity • drunk • insane • infirm (elderly, in hospital)

Void versus Voidable • Illegal contracts are void and completely unenforceable. • Other vice ridden contracts may be merely voidable and can be enforced by the party who has the right to avoid the contract. – Children‘s contracts

Witnesses? Signature? • Not required but a very good idea. • Statute of frauds: a contract for an interest in land or for value over $500 must have a memorial signed in writing by the party against whom it is to be enforced in order to be enforceable

Liquidated Damages • Contractually determind damages • Must be reasonably related to actual damages.

Corporations • • De Jure Incorporation De Facto Incorporation Corporation by Estoppel Piercing the Corporate Veil=Lifting the Corporate Veil

Piercing/Lifting the Corporate Veil • Multi-Factor Test Looking at a variety of factors in the totality of circumstances Commingling of assets – – – – – 100% ownership Accounting Irregularities Fraud Failing to hold annual meetings Failing to keep corporate records Interlocking Boards/Commonality of Personnel Tax filings Undercapitalized (thin capitalization) Any other plausible reason you can think of!