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211 Cards in this Set
- Front
- Back
Definition of Personal Property
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Personal property (also referred to as personalty or chattel) includes all property not classified as real property (realty). Personal property can be tangible (such as a TV or a car) or intangible (such as stocks or bonds).
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Property Ownership
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Having the fullest ownership rights in property is called fee simple ownership. There are various ways of co-owning property, including tenancy in common, joint tenancy, tenancy by the entirety,
and community property. |
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Acquiring Ownership of Personal Property ( most common means of acquiring ownership)
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The most common means of acquiring ownership in personal property is by purchasing it (see Chapters 14 through 17). Personal property is also often acquired by will or inheritance (see Chapter 30). The following are additional methods of acquiring personal property:
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Acquiring Ownership of Personal Property: Possession
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Ownership may be acquired by possession if no other person has ownership title (for example, capturing wild animals or finding abandoned property).
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Acquiring Ownership of Personal Property: Production
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Any product or item produced by an individual (with minor exceptions) becomes the property of that individual.
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Acquiring Ownership of Personal Property: Gift
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A gift is effective when the following conditions exist:
a. There is evidence of intent to make a gift of the property in question. b. The gift is delivered (physically or constructively) to the donee. c. The gift is accepted by the donee. |
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Acquiring Ownership of Personal Property: Accession
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When someone adds value to an item of personal property by the use of labor or materials, the added value generally becomes the property of the owner of the original property (includes accessions made in bad faith or wrongfully). Good faith accessions that substantially increase the property’s value or change the identity of the property may cause title to pass to the improver.
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Acquiring Ownership of Personal Property: Confusion
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If a person wrongfully and willfully commingles fungible goods with those of another in order to render them indistinguishable, the innocent party acquires title to the whole. Otherwise, the owners become tenants in common of the commingled goods.
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Mislaid property
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Property that is placed somewhere voluntarily by the owner and then inadvertently forgotten. A finder of mislaid property will not acquire title to the goods, and the owner of the place where the property was mislaid becomes a caretaker of the mislaid property.
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Lost property
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Property that is involuntarily left and forgotten. A finder of lost property can claim title to the property against the whole world except the true owner.
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Abandoned property
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Property that has been discarded by the true owner, who has no intention of claiming title to the property in the future. A finder of abandoned property can claim title to it against the whole world, including the original owner.
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Elements of a Bailment: Personal property
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Bailments involve only personal property.
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Elements of a Bailment: Delivery of possession
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For an effective bailment to exist, the bailee (the one receiving the property) must be given exclusive possession and control over the property, and in a voluntary bailment, the bailee must knowingly accept the personal property.
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Elements of a Bailment: The bailment agreement
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Expressly or impliedly provides for the return of the bailed property to the bailor or a third party, or for the disposal of the bailed property by the bailee.
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Types of bailments
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a. Bailment for the sole benefit of the bailor—A gratuitous bailment undertaken for the sole
benefit of the bailor (for example, as a favor to the bailor). b. Bailment for the sole benefit of the bailee—A gratuitous loan of an article to a person (the bailee) solely for the bailee’s benefit. c. Mutual-benefit (contractual) bailment—The most common kind of bailment; involves compensation between the bailee and bailor for the service provided. |
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Rights of a bailee (duties of a bailor)—
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a. The right of possession—Allows actions against third persons who damage or convert the
bailed property and allows actions against the bailor for wrongful breach of the bailment. b. The right to be compensated and reimbursed for expenses—In the event of nonpayment, the bailee has the right to place a possessory (bailee’s) lien on the bailed property. c. The right to limit liability—An ordinary bailee can limit his or her liability for loss or damage, provided proper notice is given and the limitation is not against public policy. In special bailments, limitations on liability for negligence or on types of losses usually are not allowed, but limitations on the monetary amount of liability are permitted. |
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Duties of a bailee (rights of a bailor)—
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a. A bailee must exercise appropriate care over property entrusted to her or him. What constitutes appropriate care normally depends on the nature and circumstances of the bailment.
b. Bailed goods in a bailee’s possession must be either returned to the bailor or disposed of according to the bailor’s directions. A bailee’s failure to return the bailed property creates a presumption of negligence and constitutes a breach of contract or the tort of conversion of goods. |
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Special Types of Bailments: Common carriers
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Carriers that are publicly licensed to provide transportation services to the general public. A common carrier is held to a standard of care based on strict liability unless the bailed property is lost or destroyed due to (a) an act of God, (b) an act of a public enemy, (c) an order of a public authority, (d) an act of the shipper, or (e) the inherent nature of the goods.
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Special Types of Bailments: Warehouse companies
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Professional bailees that differ from ordinary bailees in that they
(a) can issue documents of title (warehouse receipts) and (b) are subject to state and federal statutes, including Article 7 of the UCC (as are common carriers). They must exercise a high degree of care over the bailed property and are liable for loss of or damage to property if they fail to do so. |
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Special Types of Bailments: Innkeepers (hotel operators)
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Those who provide lodging to the public for compensation as a regular business. The common law strict liability standard to which innkeepers were once held is limited today by state statutes, which vary from state to state.
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The Nature Real Property
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Real property (also called real estate or realty) is immovable. It includes land, subsurface and airspace rights, plant life and vegetation, and fixtures.
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Ownership Interests in Real Property: 1. Fee simple absolute
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The most complete form of ownership.
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Ownership Interests in Real Property: 2. Life estate
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An estate that lasts for the life of a specified individual, during which time the individual is entitled to possess, use, and benefit from the estate; the life tenant’s ownership rights in the life estate cease to exist on her or his death.
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Ownership Interests in Real Property: 3. Nonpossessory interest
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An interest that involves the right to use real property but not to possess it. Easements, profits, and licenses are nonpossessory interests.
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Transfer of Ownership: 1. By deed
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When real property is sold or transferred as a gift, title to the property is conveyed by means of a deed. A deed must meet specific legal requirements. A warranty deed warrants the most extensive protection against defects of title. A quitclaim deed conveys to the grantee only whatever interest the grantor had in the property. A deed may be recorded in the manner prescribed by recording statutes in the appropriate jurisdiction to give third parties notice of the owner’s interest.
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Transfer of Ownership: 2. By will or inheritance
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If the owner dies after having made a valid will, the land passes as specified in the will. If the owner dies without having made a will, the heirs inherit according to state inheritance statutes.
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Transfer of Ownership: 3. By adverse possession
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When a person possesses the property of another for a statutory period of time (three to thirty years, with ten years being the most common), that person acquires title to the property, provided the possession is actual and exclusive, open and visible, continuous and peaceable, and hostile and adverse (without the permission of the owner).
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Transfer of Ownership: 4. By eminent domain
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The government can take land for public use, with just compensation, when the public interest requires the taking.
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Leasehold Estates
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A leasehold estate is an interest in real property that is held for only a limited period of time, as specified in the lease agreement.
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Types of tenancies relating to leased property: 1. Fixed-term tenancy
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Tenancy for a period of time stated by express contract.
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Types of tenancies relating to leased property: 2. Periodic tenancy
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Tenancy for a period determined by the frequency of rent payments; automatically renewed unless proper notice is given.
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Types of tenancies relating to leased property: 3. Tenancy at will
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Tenancy for as long as both parties agree; no notice of termination is required.
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Types of tenancies relating to leased property: 4. Tenancy at sufferance
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Possession of land without legal right.
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Landlord-Tenant Relationships: 1. Lease agreement
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The landlord-tenant relationship is created by a lease agreement. State or local laws may dictate whether the lease must be in writing and what lease terms are permissible.
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Landlord-Tenant Relationships: 2. Rights and duties
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The rights and duties that arise under a lease agreement generally pertain to the following areas:
a. Possession—The tenant has an exclusive right to possess the leased premises, which must be available to the tenant at the agreed-on time. Under the covenant of quiet enjoyment, the landlord promises that during the lease term neither the landlord nor anyone having superior title to the property will disturb the tenant’s use and enjoyment of the property. b. Use and maintenance of the premises—Unless the parties agree otherwise, the tenant may make any legal use of the property. The tenant is responsible for any damage that he or she causes. The landlord must comply with laws that set specific standards for the maintenance of real property. The implied warranty of habitability requires that a landlord furnish and maintain residential premises in a habitable condition (that is, in a condition safe and suitable for human life). c. Rent—The tenant must pay the rent as long as the lease is in force, unless the tenant justifiably refuses to occupy the property or withholds the rent because of the landlord’s failure to maintain the premises properly. |
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Landlord-Tenant Relationships: 3. Transferring rights to leased property
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a. If the landlord transfers complete title to the leased property, the tenant becomes the tenant of the new owner. The new owner may then collect the rent but must abide by the existing lease.
b. Generally, in the absence of an agreement to the contrary, tenants may assign their rights (but not their duties) under a lease contract to a third person. Tenants may also sublease leased property to a third person, but the original tenant is not relieved of any obligations to the landlord under the lease. In either situation, the landlord’s consent may be required, but statutes may prohibit the landlord from unreasonably withholding such consent. |
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Insurance: Accident
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Covers expenses, losses, and suffering incurred by the insured because of accidents causing physical injury and any consequent disability; sometimes includes a specified payment to heirs of the insured if death results from an
accident. |
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Insurance: All-risk
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Covers all losses that the insured may incur except those that are specifically excluded. Typical exclusions are war, pollution, earthquakes, and floods.
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Insurance: Automobile
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May cover damage to automobiles resulting from specified hazards or occurrences (such as fire, vandalism, theft, or collision); normally provides protection against liability for personal injuries and property damage resulting
from the operation of the vehicle. |
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Insurance: Casualty
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Protects against losses incurred by the insured as a result of being held liable for personal injuries or property damage sustained by others.
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Insurance: Credit
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Pays to a creditor the balance of a debt on the disability, death, insolvency, or bankruptcy of the debtor; often offered by lending institutions.
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Insurance: Decreasing-term life
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Provides life insurance; requires uniform payments over the life (term) of the policy, but with a decreasing face value (amount of coverage).
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Insurance: Employer’s liability
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Insures employers against liability for injuries or losses sustained by employees during the course of their employment; covers claims not covered under workers’ compensation insurance.
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Insurance: Fidelity or guaranty
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Provides indemnity against losses in trade or losses caused by the dishonesty of employees, the insolvency of debtors, or breaches of contract.
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Insurance: Floater
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Covers movable property, as long as the property is within the territorial boundaries specified in the contract.
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Insurance: Group
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Provides individual life, medical, or disability insurance coverage but is obtainable through a group of persons, usually employees. The policy premium is paid either entirely by the employer or partially by the employer and
partially by the employee. |
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Insurance: Health
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Covers expenses incurred by the insured as a result of physical injury or illness and other expenses relating to health and life maintenance.
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Insurance: Homeowners’
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Protects homeowners against some or all risks of loss to their residences and the residences’ contents or liability arising from the use of the property.
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Insurance: Key-person
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Protects a business in the event of the death or disability of a key employee.
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Insurance: Liability
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Protects against liability imposed on the insured as a result of injuries to the person or property of another.
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Insurance: Life
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Covers the death of the policyholder. On the death of the insured, the insurer pays the amount specified in the policy to the insured’s beneficiary.
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Insurance: Major medical
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Protects the insured against major hospital, medical, or surgical expenses.
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Insurance: Malpractice
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Protects professionals (physicians, lawyers, and others) against malpractice claims brought against them by their patients or clients; a form of liability insurance.
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Insurance: Marine
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Covers movable property (including ships, freight, and cargo) against certain perils or navigation risks during a specific voyage or time period.
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Insurance: Mortgage
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Covers a mortgage loan. The insurer pays the balance of the mortgage to the creditor on the death or disability of the debtor.
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Insurance: No-fault auto
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Covers personal injuries and (sometimes) property damage resulting from automobile accidents. The insured submits his or her claims to his or her own insurance company, regardless of who was at fault. A person may sue
the party at fault or that party’s insurer only when an accident results in serious medical injury and consequent high medical costs. Governed by state “no-fault” statutes. |
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Insurance: Term life
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Provides life insurance for a specified period of time (term) with no cash surrender value; usually renewable.
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Insurance: Title
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Protects against any defects in title to real property and any losses incurred as a result of existing claims against or liens on the property at the time of purchase.
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1. Policy
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The insurance contract.
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2. Premium
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The consideration paid to the insurer for a policy.
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3. Underwriter
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The insurance company.
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4. Parties
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Include the insurer (the insurance company), the insured (the person covered by insurance), an agent (a representative of the insurance company) or a broker (ordinarily an independent contractor), and a beneficiary (a person to receive proceeds under the policy).
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Insurable Interest
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An insurable interest exists whenever an individual or entity benefits from the preservation of the health or life of the insured or the property to be insured. For life insurance, an insurable interest
must exist at the time the policy is issued. For property insurance, an insurable interest must exist at the time of the loss. |
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The Insurance Contract: 1. Laws governing
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The general principles of contract law are applied; the insurance industry is also heavily regulated by the states.
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The Insurance Contract: 2. Application
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An insurance applicant is bound by any false statements that appear in the application (subject to certain exceptions), which is part of the insurance contract. Misstatements or misrepresentations may be grounds for voiding the policy.
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The Insurance Contract: 3. Effective date
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Coverage on an insurance policy can begin when a binder (a written memorandum indicating that a formal policy is pending and stating its essential terms) is written; when the policy is issued; at the time of contract formation; or depending on the terms of the contract, when certain conditions are met.
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The Insurance Contract: 4. Provisions and clauses
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See Exhibit 30–2 on page 626. Words will be given their ordinary meanings, and any ambiguity in the policy will be interpreted against the insurance company.
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The Insurance Contract: 5. Defenses against payment to the insured
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Defenses include misrepresentation or fraud by the applicant.
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1. Intestate
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One who dies without a valid will.
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2. Testator
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A person who makes out a will.
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3. Personal representative
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A person appointed in a will or by a court to settle the affairs of a decedent. A personal representative named in the will is an executor; a personal representative appointed by the court for an intestate decedent is an administrator.
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4. Devise
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A gift of real estate by will; may be general or specific. The recipient of a devise is a devisee.
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5. Bequest, or legacy
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A gift of personal property by will; may be general or specific. The recipient of a bequest (legacy) is a legatee.
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Requirements for a Valid Will
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1. The testator must have testamentary capacity (be of legal age and sound mind at the time the will is made).
2. A will must be in writing (except for nuncupative wills). A holographic will is completely in the handwriting of the testator. 3. A will must be signed by the testator; what constitutes a signature varies from jurisdiction to jurisdiction. 4. A nonholographic will (an attested will) must be witnessed in the manner prescribed by state statute. 5. A will may have to be published—that is, the testator may be required to announce to witnesses that this is his or her “last will and testament”; not required under the Uniform Probate Code. |
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Revocation of Wills: 1. By physical act of the maker
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Tearing up, canceling, obliterating, or deliberately destroying part or all of a will.
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Revocation of Wills: 2. By subsequent writing
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a. Codicil—A formal, separate document to amend or revoke an existing will.
b. Second will or new will—A new, properly executed will expressly revoking the existing will. |
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Revocation of Wills: 3. By operation of law
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a. Marriage—Generally revokes part of a will written before the marriage.
b. Divorce or annulment—Revokes dispositions of property made under a will to a former spouse. c. Subsequently born child—It is implied that the child is entitled to receive the portion of the estate granted under intestacy distribution laws. |
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Probate Procedures
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To probate a will means to establish its validity and to carry the administration of the estate through a court process. Probate laws vary from state to state. Probate procedures may be
informal or formal, depending on the size of the estate and other factors, such as whether a guardian for minor children must be appointed. |
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Intestacy Laws
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1. Intestacy laws vary widely from state to state. Usually, the law provides that the surviving spouse and children inherit the property of the decedent (after the decedent’s debts are paid). The spouse usually inherits the entire estate if there are no children, one-half of the estate if there is one child, and one-third of the estate if there are two or more children.
2. If there is no surviving spouse or child, then, in order, lineal descendants (grandchildren, brothers and sisters, and—in some states—parents of the decedent) inherit. If there are no lineal descendants, then collateral heirs (nieces, nephews, aunts, and uncles of the decedent) inherit. |
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TRUSTS
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A trust is any arrangement through which property is transferred from one person to a trustee to be administered for another party’s benefit. The essential elements of a trust are (1) a designated beneficiary, (2) a designated trustee, (3) a fund sufficiently identified to enable title to pass to the trustee, and (4) actual delivery to the trustee with the intention of passing title.
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Express Trusts: 1. Living (inter vivos) trust
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A trust created by a grantor during her or his lifetime.
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Express Trusts: 2. Testamentary trust
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A trust that is created by will and comes into existence on the death of the grantor.
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Express Trusts: 3. Charitable trust
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A trust designed for the benefit of a public group or the public in general.
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Express Trusts: 4. Spendthrift trust
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A trust created to provide for the maintenance of a beneficiary and to protect him or her from spending all the funds to which he or she is entitled. The beneficiary is allowed to withdraw only a certain amount at any one time.
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Express Trusts: 5. Totten trust
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A trust created when one person deposits funds in his or her own name as a trustee for another.
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Express Trusts are usually ...
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created by explicit terms, usually in writing
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Implied Trusts
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Implied trusts, which are imposed by law in the interests of fairness and justice
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Implied Trusts: 1. Resulting trust
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Arises from the conduct of the parties when an apparent intention to create a trust is present.
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Implied Trusts: 2. Constructive trust
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Arises by operation of law when a person wrongfully takes title to property. A court may require the owner to hold the property in trust for those who, in equity, are entitled to enjoy its benefits.
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The Food, Drug, and Cosmetic Act, enforced by the FDA, imposes
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liability on companies and persons involved in the production and distribution of food and drug products.
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The Food, Drug, and Cosmetic Act, enforced by the FDA, primary concern
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The primary concern for food is safety.
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The FDA is helped by the ___ in food sanitation inspection.
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U.S. Department of Agriculture
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Food additives must be approved by the ___ before being sold to the public.
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FDA
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Nutrition labels on processed foods must list by _____
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standard consumer portions fat, carbohydrates, cholesterol, and other nutrients, as well as certain vitamins and minerals and total calories.
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The FDA determines when drugs are
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safe and effective for sale and whether drugs will be sold by prescription only or over the counter.
Food, drugs, cosmetics, and medical devices that the FDA determines to be unsafe may be ordered off the market or seized. |
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The FTC has broad authority to
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attack unfair or deceptive business practices.
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The consumer protection mission includes
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the advertising substantiation program, which requires adverti- sers to be able to demonstrate the truth of product claims.
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The FTC issues trade regulation rules to govern
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business practices that have raised problems. The rules set standards that businesses must meet. That makes prosecution for rule viola- tions straightforward.
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The attorney general of a state has the author- ity to sue sellers involved in
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deceptive business practices.
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Most states have statutes that give consumers broad rights to sue for
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unfair and deceptive business practices. These statutes can provide legal rights beyond those provided by contract.
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The Truth-in-Lending Act, which applies to most consumer loans, requires that lenders
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meet requirements on how the details of loan amounts, interest charges, and other items are calculated and stated to the borrower. There is no defense for certain violations of this statute.
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The Consumer Leasing Act sets similar stan- dards for
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consumer leases.
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The Fair Credit Billing Act details the
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rights of consumers to resolve billing errors.
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(The Fair Credit Billing Act) Creditors must follow requirements on how long they have to
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respond to the consumer and what they must do to resolve the dispute.
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As under other parts of the credit statutes, violations mean
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double damages, plus attorney’s fees, for the plaintiff.
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Credit bureaus sell
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lenders the credit history about consumers seeking credit.
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The Fair Credit Reporting Act specifies
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consumers’ rights to challenge the accuracy of reports is- sued by these bureaus. Credit bureaus must re- spond to inquiries from consumers about errors in credit reports.
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Under the Equal Credit Opportunity Act,
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cred- itors may not consider the following factors in determining who will be granted credit: race, sex, age, color, religion, national origin, marital status, receipt of public benefits, or the exer- cise of legal rights. Specific regulations govern how lenders must comply with this statute.
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Debt collectors may not
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abuse the rights of debtors granted by the Fair Debt Collection Practices Act. They may not make abusive phone calls, threats, or claims of legal action not actually underway or use other forms of harassment.
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A debt collector informed by any debtor that no further contact is desired
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may not contact the debtor except for notice of legal action.
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Consumer rights and responsibilities for credit cards and ATM cards that have been stolen are spelled out in the law. To limit liability for un- authorized charges, the consumer must
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notify the card issuer of the theft of the card.
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The international market is characterized by additional financial, political, and regulatory risks in addition to those present in domestic markets. Those risks arise from
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differences among countries in currencies, language, busi- ness customs, legal and social philosophies, and national economic goals.
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The principal sources of international trade law are the
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laws of individual countries, the laws arising from trade agreements between countries, and the rules enacted by worldwide or regional trade organizations.
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To reduce trade barriers, most nations partici- pated in
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General Agreement on Tariffs and Trade (GATT), which resulted in the World Trade Organization, which now oversees some trade disputes.
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Most countries have import and export regula- tions. Import restrictions include
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import licensing requirements, import quotas, safety standards, government procurement policies, and customs procedures. To standardize tariff schedules and their application, most countries have adopted
the harmonized tariff schedule to classify goods. |
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The United States imposes prohibitions on the export of certain technologies that could be used by
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hostile nations or terrorists. The expor- tation of weapons and computers is monitored
by the government. |
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The most common international business arrangements are
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wholly-owned subsidiaries, joint ventures, licensing agreements, franchise agreements, and contract manufacturing.
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The choice of business organization is influenced by
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the laws of a country, the purposes of the commercial venture, the financial resources of
the parties, and the degree of managerial con- trol desired by the company. |
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The Foreign Corrupt Practices Act (FCPA) pro-
hibits |
U.S. companies and their agents from bribing foreign officials. The FCPA makes the bribery of foreign officials a criminal offense
and requires U.S. companies to establish inter- • nal accounting mechanisms to prevent such bribery. It is a criminal offense to make pay- ments to foreign officials for the purpose of gaining business favor in a foreign country. |
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To create an effective international contract, a business should consider differences in busi- ness customs, attitudes toward the contractual relationship, and languages. Specific clauses ininternational contracts worthy of special con- sideration are the
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payment, choice of lan- guage, force majeure, and forum selection and choice-of-law clauses.
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Business in foreign countries may face special risks. Currency exchange controls may limit the ability to repatriate profits. Political uphea- vals, unstable monetary systems, dramatic changes in laws, and other problems associated with doing business with a developing country must be considered. Losses may occur through
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nationalization, expropriation, or confiscation of the foreign investment.
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Although most international trade occurs with- out incident, disputes sometimes arise concern- ing contract performance. Various national and international institutions may assist a busi- ness in effective dispute resolution. Those insti- tutions include
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judicial litigation in court systems and arbitration. The doctrine of sover- eign immunity may create bars to recovery of losses through the judicial system.
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Before passage of federal environmental laws, en- vironmental protection relied on
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common-law remedies, including private and public nuisance actions, trespass, negligence, strict liability for hazardous activities, and riparian water rights.
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Ac- tions could result in
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damages or an injunction ordering the offender to cease damaging activi- ties.
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The EPA is the key
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regulator of the environ- ment. It works with environmental agencies in all states to enforce federal requirements.
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The Clean Air Act
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sets air quality standards for several major pollutants: sulfur dioxide, particu- lates, ozone, carbon monoxide, nitrogen oxide, and lead. These standards are constantly tight- ened. New polluters must use the best pollution control technology available. In some areas, if a business is to produce any new air pollution, it must buy pollution rights from existing pollu- ters, who are paid either to quit polluting or to install better pollution-control equipment.
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The Clean Water Act
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focuses on point source pollution, which comes out of pipes from facto-
ries or sewer systems. Point sources must have • permits that allow them to discharge certain amounts of pollution into water bodies. States must declare what standards all bodies of water in the state will meet according to the use (e.g., drinking versus swimming quality). Nonpoint source pollution—runoff from farms, streets, construction sites, mining, and logging—is just beginning to be addressed. |
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Wetlands are lands
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saturated with water at least part of the year. Prior to building on or disturb- ing a wetland, developers must obtain a permit from the Army Corps of Engineers. The EPA has final say on wetlands use.
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The Toxic Substances Control Act and the Federal Insecticide, Fungicide, and Rodenticide
Act require |
EPA review and approval of toxic substances before they are sold. The EPA may restrict product usage and keep track of evi- dence of harm from such products.
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The Resource Conservation and Recovery Act requires
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comprehensive paperwork, called manifests, to follow the production, distribution, and disposal of hazardous substances. Hazard- ous waste treatment, storage, and disposal facilities are subject to strict licensing and reg- ulatory control.
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The Superfund program provides
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federal sup- port to clean up abandoned hazardous waste sites. Any parties that contributed to the disposal of the wastes, even if legal at the time, may be held liable for part or all of the cleanup costs. Land purchasers should consider an environ- mental audit to check for possibilities of hazard- ous wastes, wetlands, or endangered species.
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The Endangered Species Act can block any economic activity, without compromise, if the activity can
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harm the habitat of an endangered species. Compromises that demonstrate habitat protection may allow a project to go forward as approved by the Fish and Wildlife Service.
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Some environmental controls are imposed by international agreements. The Montreal Proto- col required the production of chlorofluoro- carbons (CFCs) and Halon—chemicals used in refrigeration systems, plastics production, and firefighting chemicals—to be eliminated.
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Protection of biological diversity and reduction of greenhouse gases are other international is- sues that require the United States and other advanced nations to pay for environmental protection in poor nations.
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antidumping duty
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a tariff to equalize the difference between the price at which the product is sold in the exporting country and the price at which the importer will sell the product in the importing country; designed to prevent foreign businesses from artificially lowering their prices and gaining unfair advantages outside their home market.
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choice-of-language clause
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in international contracts especially, a clause that specifies the language that will apply to the contract between parties in the event of a dispute, so that there will be an official version in one language only.
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choice-of-law clause
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a common provision in a contract that specified what law must be used to resolve a dispute that arises between the parties to a contract.
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Commodity Control List
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a list maintained by the Department of Commerce that classifies restrictions on the exportation of certain goods to certain nations.
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confiscation
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the act whereby a sovereign takes private property without a proper public purpose or just compensation.
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countervailing measures
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the WTO Agreement on Subsidies and Countervailing Measures restricts the use of subsidies and regulates the actions countries can take to counter the effects of subsidies. A country can use the WTO’s process to seek the withdrawal of a subsidy, or a country can charge extra duties (“countervailing duty”) on subsidized imports that hurt domestic producers.
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dumping
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when a seller provides a large quantity of goods at less than fair market value or less than the cost of production; selling goods in another country for less than the market price at home.
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duty-free ports
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a special economic zone in a nation where goods may be imported or exported without being subject to usual tariffs; often done for transshipment of goods or to encourage processing in a country.
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expropriation
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the taking of a privately-owned property by a government. Governments are required to, but at times do not, pay compensation for such takings.
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force majeure
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a common clause in contracts that essentially frees both parties from liability or obligation when an extraordinary event beyond the control of the parties, such as a war, strike, riot, crime, or “act of God” (flooding, earthquake, volcanic eruption), prevents one or both parties from fulfilling obligations under the contract.
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foreign exchange controls
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restrictions imposed by a government on the purchase/sale of foreign currencies by residents or on the purchase/sale of local currency by nonresidents.
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foreign trade zones
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designed areas that provide special customs procedures to plants engaged in international trade-related activities. Duty-free treatment is accorded items that are processed in FTZs and then reexported.
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forum selection clause
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a contractual provision in which the parties establish the place—such as the country, state, or type of court—for specified litigation or arbitration in the event of a dispute.
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harmonized tariff schedule
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a set of definitions to classify goods; adopted by many countries so that they share common terminology when setting tariffs.
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joint venture
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the participation of two companies jointly in a third enterprise. Generally, both companies contribute assets and share risks.
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letter of credit
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a written document in which the party issuing the document—usually a bank—promises to pay third parties in accordance with the terms of the document.
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licensing agreement
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a contract whereby one firm, the licensor, grants another firm, the licensee, the right to exploit certain assets of the licensor, such as a patent or trademark.
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nationalization
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the act of bringing an industry under governmental control or ownership; often this is applied to foreign-owned firms.
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payment clause
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the portion of a contract that specifies how and when payment is to be made and, important in international business, what currency will be used.
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repatriation
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the process used to transfer assets or earnings from a host nation to another nation.
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sovereign immunity
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the doctrine under which a nonsovereign party is precluded from engaging in a legal action against a sovereign party, unless the sovereign gives its consent.
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subsidies
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a government monetary grant to a favored industry.
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tariff
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a tax imposed on imported goods by the government to encourage domestic industry or to raise revenues. See Excise tax.
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transfer pricing
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the setting, documentation, and adjustment of charges made between related parties for good, services, or use of property. Transfer prices among parts of a business may be used to reflect allocation of resources across components, or for other purposes; the prices are often artificial, not real market prices.
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wholly-owned subsidiary
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a business, often in another country, that is organized as a legal entity but is completely owned by another company, the “parent” firm, or by a government.
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advertising substantiation program
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a policy of the Federal Trade Commission to review advertisements for content to ensure they are not deceitful.
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Code of Federal Regulations
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the codification of the general and permanent rules and regulations (administrative law) published in the Federal Register by the executive departments and agencies of the federal government.
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consent decree
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a judgment entered by consent of the parties and approval of a court, whereby the defendant agrees to stop alleged illegal activity without admitting guilt or wrongdoing. Often used to settle complaints by regulatory agencies.
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credit reports
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a report made by a consumer reporting agency concerning the financial condition and credit character of a person or business.
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debt collection agency
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a business that is paid to or buys the right to collect the debts owed by consumers to a business.
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deception
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in consumer protection law, a claim, practice, or omission likely to mislead a reasonable consumer and cause the consumer to suffer a loss.
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Delaney Clause
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the portion of the Food, Drug, and Cosmetic Act that any food additive that is found to cause cancer in animals may not be marketed.
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electronic fund transfer (EFT)
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monetary transactions made electronically, usually by telephone or computer.
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garnish
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a legal process by which a creditor appropriates a debtor’s wages or property in the hands of a third party.
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Kefauver Amendment
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the portion of the Food, Drug, and Cosmetic Act that requires the Food and Drug Administration to approve drugs only after their safety and effectiveness have been established.
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Lanham Act
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provides a private cause of action for a party injured by misappropriation of trademark and for one injured by false advertising that injures the sale of a competitor’s product.
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Latent defect
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see Unknown hazard.
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learned intermediary doctrine
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the rule that a physician or other qualified medical professional will be held liable for misapplication of a prescription medication if ordered for a use not recommended by the producer, who is relieved of liability in such instances when a patient is injured by the medicine.
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nutrition labeling
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by statute, nutritional facts labels must list the percentage supplied required in one day of human nutrients based on the average 2000 calorie a day diet.
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prescription drugs
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a medicine licensed by the Food and Drug Administration that should be dispensed to consumers only with permission of a physician or other qualified medical personnel.
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Regulation Z
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a rule issued by the Federal Reserve Board to implement the Truth-in-Lending Act requiring systematic disclosure of the costs associated with credit transactions.
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trade regulation rules
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administrative rulings by the Federal Trade Commission or other agencies that hold certain practices to be illegal or create standards that must be met by sellers of certain products or services.
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unfairness
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in a consumer protection law, a charge under Section 5 of the Federal Trade Commission Act that a business practice causes harm that consumers cannot reasonably avoid.
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abnormally dangerous activities
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see Ultrahazardous activity.
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attainment areas
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under the Clean Air Act, areas that meet federal standards for major pollutants; they are designated “prevention of significant deterioration areas,” because they are not allowed to become more polluted.
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brownfields
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in environmental law, real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant.
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citizen suits or citizen-suit provisions
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in regulatory law, a right provided by Congress for private citizens to bring a suit before a federal court to force compliance with a law passed by Congress; in some instances, the cost of the suit is borne by the government or the defendant if the private party wins the case.
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discharge monitoring reports (DMRs)
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under the Clean Water Act, firms with pollution permits must file these reports with the EPA and have them available for public inspection to show the level of emissions actually dumped into bodies of water or treatment facilities.
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discharge permit
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under the Clean Water Act, the EPA controls many effluent sources by limiting, through a permit program, dumping into any body of water.
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effluent
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liquid waste (pollution under the Clean Water Act) that is discharged into a river, lake, or other body of water.
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emission offset
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under the Clean Air Act, a requirement that for a polluting facility to be built or expanded, the owner must reduce certain pollutants by as much or more than the new pollution to be generated; this may be done by paying other polluters to reduce emissions.
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endangered species
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in environmental law, a list of animals and plants declared by the government to be in danger of becoming extinct; violators may be prosecuted for killing endangered animals or plants or injuring their habitat.
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habitat
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an ecological or environmental area inhabited by a particular species of animal, plant or other type of organism; taken into consideration in designing protection programs for endangered or threatened species.
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hazardous waste
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a substance that may cause or contribute to an increase in mortality or pose a hazard to human health or the environment when improperly treated.
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manifest system
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in environmental and occupational safety law, the requirement that certain chemicals have documentation concerning their production, distribution, and disposal to ensure proper handling and disposal of toxic substances.
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mobile sources
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under the Clean Air Act, a pollution source such as automobiles, trucks, and airplanes.
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National Ambient Air Quality Standards (NAAQS)
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federal standards under the Clean Air Act that set the maximum concentration levels in the atmosphere for several air pollutants.
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National Pollution Discharge Elimination System (NPDES)
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federal standards under the Clean Water Act that set the water pollution effluent standards for every industry that discharges liquid wastes into the nation’s waterways.
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National Priority List (NPL)
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contaminated sites, as determined by the Environmental Protection Agency under the Superfund law, that must be cleaned up and returned to nearly original condition.
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New Source Performance Standards (NSPS)
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under the Clean Water Act set the level of allowable wastewater discharges from new industrial facilities. The EPA determines the best available demonstrated control technology for each industrial category.
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nonattainment areas
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under the Clean Air Act, an area in which the air quality for certain pollutants fails to meet the National Ambient Air Quality Standards.
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nonpoint source pollutionor nonpoint sources
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under the Clean Water Act, sources of pollution that are diverse, such as urban and agricultural runoff from rainstorms.
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point source pollution or point source
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under the Clean Water Act, any definitive place of discharge of a water pollutant, such as pipes, ditches, or channels.
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pollution
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the release of substances into the air, water, or land that cause physical change.
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potentially responsible parties (PRPs)
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a possible polluter who may be held liable under CERCLA for contributing to the contamination or misuse of a particular property or resource.
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prevention of significant deterioration (PSD) areas
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under the Clean Air Act, an area where the air quality is better than required by the national ambient air standards, such as national parks and wilderness areas. Air quality is not allowed to fall.
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private nuisance
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in tort law, when an activity reduces the right of one person, or a small number of persons, to enjoy property without unreasonable interference.
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public nuisance
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in tort law, when an activity reduces the right of the public in general to enjoy property without unreasonable interference.
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publicly owned treatment works (POTWs)
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under the Clean Water Act, a heavily funded federal program to bring local water treatment facilities up to federal standards, usually the best conventional technology level.
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riparian water law
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at common law, relating to the bank of a river or stream; the owner of land bounded by a river or body of water has the right to reasonably use the water next to the land or that passes over the land.
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State Implementation Plan (SIP)
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under the Clean Air Act, a requirement that each state prepare, under Environmental Protection Agency supervision, a plan to control certain air pollutants by certain dates to meet national air quality standards.
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Superfund
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in environmental law, the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA); it concerns requirements about when hazardous waste sites must be cleaned up and who is liable for the costs.
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treatment storage and disposal (TSD) sites
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under the Resource Conservation and Recovery Act, a requirement that producers, transporters, and disposers of hazardous wastes keep records (manifests) and meet federal standards in all phases of such operations.
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trespass
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an unauthorized intrusion upon the property rights of another.
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wetlands
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in environmental law, land covered by water at least part of the year; exact coverage by various environmental statutes is still unresolved.
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abandoned property
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Property with which the owner has voluntarily parted, with no intention of recovering it.
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accession
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Occurs when an individual adds value to personal property by the use of either labor or materials. In some situations, a person may acquire ownership rights in another's property through accession.
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bailee
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One to whom goods are entrusted by a bailor.
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