Summer Exam 1 Study Guide

Sources of Law
• Constitution: The foundational legal document of state and federal gov-
ernments.

• Common Law: Includes contracts, torts, and real property.

• Federal and State Laws/Statutes/Rules: Legislative enactments at
different levels of government.

Separation of Powers
Legislative Branch
• Powers from: Article I of the Constitution.
• Represented by: Congress.
• Powers: Tax, spend, regulate interstate commerce (ICC).

• Balance: Makes laws that can overturn executive orders.

Executive Branch
• Powers: Appointment powers, Commander-in-Chief, sign/veto bills, rec-
ommend legislation, pardon/reprieve federal offenders, administrative agen-
cies/executive orders.

Judiciary Branch
• Powers: Final arbiter of law.

Federalism
• Definition: The sharing of power between state and federal governments,
with each having certain autonomous powers. This overlap can lead to
controversy.

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Preemption
• When federal law overrides or preempts state law.

1st Amendment
Free Speech
• Content Restriction: Limits on what can be said.

• TPM Restriction: Time, Place, and Manner restrictions.

• Commercial Speech: Evaluated using the Central Hudson Balancing
Test.

Religion
• Free Exercise Clause: Protects religious practices.
• Establishment Clause: Prohibits government from establishing a reli-
gion.

4th Amendment
• Protection Against Unreasonable Searches and Seizures:
– Warrant Requirement: Police/gov’t need a warrant unless under
exigent circumstances.
– Exclusionary Rule: Illegally obtained evidence cannot be used in
court.
– Knock and Announce Rule: Police must announce their presence
before entering.
– Industries with Low Expectation of Privacy: Certain indus-
tries are subject to less stringent search requirements.

5th Amendment
• No Taking of Life, Liberty, and Property Without Just Com-
pensation:
– Self-Incrimination Protection: Right against self-incrimination
in criminal cases.
– Procedural Due Process: Fair procedures are required before de-
priving someone of life, liberty, or property.

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 – 14th Amendment: Extends due process protections to state gov-
ernments.
– Sole Proprietorships: Can avoid self-incrimination.

Civil Procedure
• Subject Matter Jurisdiction:
– State Jurisdiction: State courts hear cases not under federal juris-
diction.
– Federal Jurisdiction: Federal courts hear cases involving federal
laws.
– Concurrent Jurisdiction: Both federal and state courts can hear
the case.

• Personal Jurisdiction: Court’s power to bring a person into its adju-

dicative process.
• Opportunities for Judges to Decide Cases:
1. Motion to Dismiss.
2. Summary Judgment.
3. Judgment as a Matter of Law.
4. Post-Trial Motions.
• Stages in Lawsuits: Pleadings, discovery, trial.
• Stare Decisis: Principle that courts should follow precedent.

– State Courts’ Sovereignty: State courts are sovereign except

when SCOTUS decides on federal law.
– SCOTUS Jurisdiction: Discretionary except in specific instances.
– Court of Appeals: Do not set precedents for state courts.

Administrative Law
• Enabling Legislation: Laws that create administrative agencies.
• Rulemaking Powers:

– Notice and Comment Rulemaking: Formal, informal, hybrid,

negotiated.
– No Notice and Comment Rulemaking: Some rules can be chal-
lenged in court.

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 • Enforcement Powers: Agencies can take individual enforcement ac-
tions.
– Judicial Review Standards: Arbitrary and Capricious Standard,
De Novo Review.
• Regulatory Flexibility Act: Controls administrative agencies.

Business Organizations
• Method of Creation, Legal Position, Liability, Duration, Man-
agement, Taxation, Transferability of Interest:
– Sole Proprietorship: Owned by one person.
– Partnership: Sharing of profits/losses, joint ownership, equal right
to management.
– Corporation, LP, LLC, LLP: Different legal and tax implications.
• Organizations Law:
– Types of Shares: Authorized, issued, treasury, outstanding.
– Debt Securities: Debentures (long-term, unsecured), bonds (se-
cured by collateral), junk bonds (secured by future earnings).
– Board of Directors (BoD) Rights: Varies depending on the or-
ganization.
– Duty of Care and Loyalty: BoD must exercise these duties.
– Shareholder Lawsuits:
∗ Direct Lawsuit: Personal harm to the shareholder.
∗ Derivative Lawsuit: Harm to the corporation.
– Business Judgment Rule: Defense for BoD and officers.
– Limited Shareholder Liability: Except in cases like watered stock
or piercing the corporate veil.
– Corporate Business Combinations: Consolidation, merger, pur-
chase of controlling interest.
– Hedge Fund Structure: Specific organization and operational guide-
lines.
– Fundraising: Various methods.

Antitrust and Securities Regulations

Sherman Act
• Section 1: Prohibits restrictive trade practices.

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 – Per Se Violation: Automatically illegal.
– Rule of Reason: Considered illegal based on circumstances.
• Section 2: Prohibits monopolization.

– Proof of Violation: Specific criteria required.

– Defenses: Justifications for monopolistic behavior.

Clayton Act
• Section 2: Prohibits price discrimination.
• Section 3: Prohibits tying arrangements.
• Section 7: Addresses mergers and acquisitions creating monopolies.

– Defenses: Various theories like unfair advantage, potential compe-

tition.

Securities Act of 1933

• Howey Test: Determines if an investment contract exists.

• Red Herring: Preliminary prospectus.

Securities Act of 1933 (Cont’d)

• Tombstone Ad: Basic information about the offering.
• Exempt Transactions and Securities:
– Regulation A: Exemptions for small offerings.
– Regulation D: Exemptions based on the type of investors.
∗ Rule 504, 505, 506: Different criteria for exemptions.
• Defenses to False Statements: Legal defenses available.

Securities Exchange Act of 1934

• Section 12 Companies: Companies with $10M+ in assets must be
truthful.
• Section 10(b)-5: Addresses fraud in securities trading.
– Tipper/Tippee Theory: Insider trading liability.
– Misappropriation Theory: Misuse of confidential information.
• Section 16(b): Addresses short-swing profits.

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 • Blue-Sky Law: State securities regulations.
• Private Securities Litigation Reform Act: Limits on securities fraud
lawsuits.

Intellectual Property
Copyright
• Fair Use: Limits on exclusive rights.
• Bono Act: Extension of copyright terms.

• RIAA v. The People: Digital copyright issues.

• Digital Millennium Copyright Act: Addresses digital rights manage-
ment.
• Length of Protection: Varies by type of work.

Trademark Protection
• Protects brands and logos.

Patent
• Protects inventions.

Trade Secrets
• Protects confidential business information.

Cases
• Marbury v. Madison: Established judicial review.

• United States v. Alfonso D. Lopez: Limited Congress’s power under

the Commerce Clause.
• Erie Railroad Co. v. Tompkins: Applied state law in federal courts.
• Wayfair v. South Dakota: Allowed states to tax online sales.