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Your project for this course will be to develop a Microsoft PowerPoint Presentation About an Existing Company’s Website
You will be using Microsoft PowerPoint to complete your project. Refer to
1.1 Weekly Overview
for tutorials and additional information about PowerPoint.
Week 2: About Us
As a reminder, each week you will be using the organization you chose in Week 1. This week you will be reviewing the story of the company you chose through the About Us page. The primary purpose of an about us page is to inform the customer about the company and its operations. The goal of an About Us page should be straightforward and help the potential customer feel the spirit of the organization.
Furthermore, the About Us might help inform if the customers should buy from that organization? Conduct some research about your organization. Is the About Us page in line with the research conducted?
Instructions
Create a presentation about your chosen organization’s About Us page. Review the About Us page by including, at minimum the following:
2.2 Case Study: Murdaugh Case Study 2
This case study assignment is designed to have you apply the main topics from the readings and presentations assigned this week. Each week you will review the case and answer the questions posed based on each week’s content.
Before you begin, be sure to review the following resources:
https://ecpi.hosted.panopto.com/Panopto/Pages/View…
Please review the case studies and answer all the questions. Each case study response must be at least one double-spaced page, APA format.
Alex Murdaugh was the benefactor of being born into a South Carolina legal dynasty. For many years, he
rose to local notoriety due to his family’s legacy and his own legal conquests. In fact, Murdaugh was a
partner at the law firm on which his great grandfather founded practicing alongside his father and
brother. From the outside, he had a picture-perfect life – a wife, two sons, a successful career, multiple
homes, wealthy lifestyle, etc.
While there had been many questionable events over the years, the Murdaugh family had remained
unscathed. However, a crack to the foundation of the Murdaugh’s occurred in 2019 which put his family
in the local spotlight, and they faced scrutiny like never before. Murdaugh underage son, Paul, had a
deadly boating crash that occurred while he was heavily intoxicated. Paul was charged criminally, and
the family faced a civil suit for the accident. As a result, the community began to report prior
questionable acts of the family which included an accident that resulted in the death of their maid,
unpaid client settlements of clients, and embezzlement of funds from his law firm.
As the scrutiny heightened and legal proceedings were eminent, Murdaugh’s wife, Maggie, and his son,
Paul, were brutally murdered on the family’s hunting property. As the investigation into the deaths was
initiated, the actions of Murdaugh hit a bizarre level. He plotted his own murder in order to allow his
surviving son, Buster, to collect on a life insurance policy. However, the plot failed miserably, raising
more questions. Murdaugh immediately checked into a rehabilitation facility and admitted to a severe
addiction to opioids. The wheels of justice were in motion for Murdaugh at this point and there was no
stopping the momentum.
Murdaugh was charged, tried and found guilty of the murders of his wife and son. While likely one of
the more publicized cases, this is just one of many legal cases against Murdaugh. In the next five weeks,
we are going to review some of the other cases that are still looming for Murdaugh related to business
law.
Ethics and the law can be intertwined at a minimum standard. Many times, ethics are considered a
higher standard of operating than the law requires. It is a requirement that an organization abide by the
laws, but it is a duty to establish ethical standards in which they, as an entity and their employees, are
held accountable.
During this review of the Alex Murdaugh legal saga, we will look at not only the legal quandary that he
currently faces but also the ethical failures that occurred over time that was not questioned until these
legal woes became too big to turn a blind eye any longer.
When an attorney is sworn into the South Carolina Bar, they take an oath of their responsibilities. Two of
the excerpts of their ethical standards and duties is noted below:
“To my clients, I pledge faithfulness, competence, diligence, good judgment and prompt communication;
and
I will respect and preserve inviolate the confidences of my client, and will accept no compensation in
connection with a client’s business except from the client or with the client’s knowledge and approval;”
Based on this oath, Murdaugh owed a legal and ethical duty to his client. The law firm in which
Murdaugh was associated also had a legal and ethical duty to provide oversight of his actions as he was
an acting fiduciary of the firm. However, both Murdaugh and his law firm failed his clients to ensure
they were represented in an ethical manner. As a result of his ethical violations, Murdaugh has been
disbarred from the South Carolina bar. To mitigate their damages, the law firm in which Murdaugh
worked has sued him for his unethical practices also. Below is a summary of the cases pending against
him.
Alex Murdaugh, the disbarred South Carolina lawyer convicted of murdering his wife and son,
was indicted Wednesday on more than 20 counts of orchestrating financial schemes that
allegedly stole millions of dollars from his clients over 16 years.
Among the charges is that Murdaugh defrauded the estate of Gloria Satterfield, the housekeeper
who died at his property in 2018, out of almost $3.5 million, prosecutors say.
The 22-count indictment unsealed by the U.S. attorney’s office for the District of South Carolina
says that Murdaugh, 54, “engaged in three different schemes to obtain money and property
from his personal injury clients” while he was a practicing attorney in Hampton, S.C.
Murdaugh, who was sentenced to life in prison without parole in March for the 2021 murders of
his wife, Maggie, 52, and son Paul, 22, has been charged with counts of conspiracy to commit
wire fraud and bank fraud, and committing bank fraud, wire fraud and money laundering,
according to prosecutors.
Murdaugh admitted during his murder trial that he had created a web of financial crimes that
bilked millions from vulnerable clients of his law practice, saying: “I believe the people I had stole
money from for all of those years trusted me.” Murdaugh, the patriarch of a South Carolina legal
dynasty whose case drew international attention, apologized several times during his testimony
for swindling clients among whom were teenage girls and a quadriplegic man.
“Trust in our legal system begins with trust in its lawyers,” U.S. Attorney Adair F. Boroughs said
in a news release announcing the charges. “South Carolinians turn to lawyers when they are at
their most vulnerable, and in our state, those who abuse the public’s trust and enrich themselves
by fraud, theft and self-dealing will be prosecuted to the fullest extent of the law.”
Dick Harpootlian and Jim Griffin, Murdaugh’s attorneys, said in a statement to The Washington
Post that their client “has been cooperating with the United States Attorneys’ Office and federal
agencies in their investigation of a broad range of activities.”
“We anticipate that the charges brought today will be quickly resolved without a trial,” the
attorneys said.
If convicted of all of the federal charges, Murdaugh faces up to 150 years added on to his life
sentence and fines up to $4.75 million.
Meanwhile, Murdaugh is expected to be deposed in the wrongful-death lawsuit brought against
him by the family of Mallory Beach, a 19-year-old who was killed in a 2019 drunken-boating
accident involving Murdaugh’s boat and his late son, Paul Murdaugh. A South Carolina judge
filed a consent order Monday “granting leave for parties to conduct the deposition” of Alex
Murdaugh, which could take place virtually or in person. The lawsuit names other parties,
including Murdaugh’s surviving son, Buster.
Prosecutors in South Carolina say Murdaugh engaged in three separate schemes to bilk his
clients of money and property.
In the first, Murdaugh devised “a scheme to defraud and to obtain money by means of false
pretenses” between at least September 2005 and September 2021, according to the indictment.
He allegedly routed and redirected his clients’ settlement funds to personally enrich himself in
several ways, including by sending settlement funds to his accounts without proper disclosure,
and collecting attorney’s fees on fake or nonexistent annuities.
In the second alleged scheme, from around July 2011 until at least October 2021, Murdaugh
conspired with his banker, Russell Laffitte, to commit wire fraud and bank fraud, prosecutors say.
Laffitte collected more than $350,000 in fees in his role as personal representative or conservator
for numerous personal injury clients of Murdaugh’s.
“As part of the scheme, the indictment alleges Murdaugh directed law firm employees to make
settlement checks payable to ‘Palmetto State Bank.’ The checks were then delivered to Laffitte,
whom Murdaugh directed to use the settlement funds for Murdaugh’s benefit,” prosecutors
wrote. “The funds were used to pay off Murdaugh’s personal loans and for personal expenses
and cash withdrawals.”
Lafitte was convicted in November on six federal charges, including conspiracy to commit wire
and bank fraud, and committing bank fraud and wire fraud. He is awaiting sentencing.
In the third alleged scheme, prosecutors say Murdaugh set up a bank account presented as a
legitimate corporation for structuring insurance settlements between May 2017 and July 2021.
The indictment says Murdaugh funneled stolen personal injury settlements through an account
named “fake Forge” to conceal his fraud efforts.
It was during this scheme, prosecutors say, that Murdaugh defrauded Satterfield’s estate and his
insurance carriers after she died. Murdaugh recommended that the housekeeper’s estate hire an
attorney to represent the estate and file a claim against Murdaugh to collect from his
homeowner’s insurance policies. Murdaugh’s insurance companies settled the estate’s claim for
$505,000 and $3.8 million, the indictment says. Then, Murdaugh and the attorney allegedly
“conspired to siphon settlement funds, disguised as ‘prosecution expenses,’ for their own
personal enrichment.”
“The indictment further alleges that Murdaugh directed the Beaufort attorney to draft checks
totaling $3,483,431.95 made payable to ‘Forge,’” prosecutors say. “Murdaugh then deposited
the checks into his ‘fake Forge’ account and used the funds for his own personal enrichment. The
estate did not receive any of the settlement funds.”
Eric S. Bland, the Satterfield family’s attorney, tweeted that the federal charges against
Murdaugh amounted to “a great day for justice in South Carolina.”
“While it is said that Lady Justice is blind, she is not a sucker,” he wrote. “Bottom Line — Cant
run or hide from justice.”
Murdaugh claimed during his trial that bad land deals and an addiction to opiate pills fueled a decadelong cycle of borrowing and spending by him that battered his family’s finances. His attorneys
have framed his alleged financial shadiness in recent court filings as being representative of “a bleak and
dispiriting story of a man brought to his knees by a crippling drug addiction, who also had the financial
means and knowledge to effect great financial harm upon others to feed that addiction.”
Contracts are an important tool in businesses and are the foundation of a lawyer’s relationship with their
clients. Contracts ensure that all parties understand and have confirmation of what they are agreeing to,
and to ensure there is no room for misrepresentation. Additionally, because the terms are outlined
clearly, there is legal accountability if a contract is not performed by one or more of the parties.
Attorneys generally enter into contracts with each of their clients as a representative of their firm.
Additionally, the attorneys also enter into contracts with their firms to agree to the terms of employment
and the expectations of how their cases are to be handled and managed as a member of the firm. This
was no different for Alex Murdaugh; he had a contractual obligation to each of his clients as well as his
firm.
The law firm that the prominent Murdaugh family helped start is now suing Alex Murdaugh.
In court documents filed Tuesday in Colleton County, the PMPED law firm is suing Murdaugh for
actual damages “together with punitive damages in an appropriate amount” after claiming
Murdaugh used money from clients and the firm for his own personal use.
A specific dollar amount was not mentioned.
According to the court filing, Murdaugh was covertly stealing the funds and putting them into a
Bank of America account in the name of “Alexander Murdaugh d/b/a Forge,” which was a
fictitious entity.
The lawsuit alleges Murdaugh put the account in that name to avoid detection, knowing the
longstanding relationship the firm had with Forge Consulting LLC in Columbia.
According to the court documents, the firm began investigating on September 2 after finding a
suspicious check on Murdaugh’s desk.
It was the following day that Murdaugh was confronted with the information PMPED learned,
and he admitted to taking the funds. The lawsuit reads that Murdaugh was asked to resign, and
he submitted his resignation that afternoon.
PMPED says it has reimbursed all client trust accounts who have suffered a loss due to
Murdaugh’s actions. But the firm says it may learn about additional losses.
“As a result of Alex Murdaugh’s conduct in breach of the contract, PMPED has suffered
damages,” the lawsuit reads. “These include but are not limited to monies paid by PMPED to
protect clients’ interests and to fully discover the improper actions of the Defendant as well as
any additional monies that may have to be paid in the future for Alex Murdaugh’s conduct.”
Jim Griffin, one of Alex Murdaugh’s lawyers, responded to the lawsuit on Wednesday.
“This is a very sad development,” he said. “Alex holds every member of the Peters, Murdaugh,
Parker, Eltzroth, Detrick law firm in very high esteem. He has pledged his full cooperation to the
firm.”
As you can see Alex’s firm has now initiated action for his breach of contract to the firm which created
significant liability for them to each of Murdaugh’s defrauded clients.
Peters, Murdaugh, Parker, Eltzroth, and Detrick, PA (PMPED) was the law firm in which Murdaugh was a
partner and his great grandfather founded. The firm was set up a Professional Association (PA) business
structure. A Professional Association is a business entity that is available to organizations offering
professional services like accounting and law firms. Professional Associations have all of the benefits of a
Limited Liability Corporation (LLC), but it is taxed as a corporation.
When a company has employees that act on their behalf or during the normal course of business to
conduct their job duties, the employer becomes a respondeat superior. This doctrine states an
employer is responsible for the actions of its employees performed during the course of their
employment.
This is a key reason for companies (or firms) to develop and implement policies and train employees on
the expectations and requirements. It is unknown what, if any, policies existed at PMPED or if attorneys
or employees received any training.
Referenced Articles:
https://www.washingtonpost.com/nation/2023/05/24/alex-murdaugh-federal-charges-stealing-millions/
https://www.greenvilleonline.com/story/news/2022/07/13/alex-murdaugh-news-officially-disbarred-scsupreme-court/10044376002/
https://www.cnn.com/2021/10/06/us/alex-murdaugh-sued-former-law-firm/index.html
https://www.wjcl.com/article/alex-murdaugh-pmped-lawsuit/37886606
https://abc7chicago.com/alex-murdaugh-fraud-case-news/12938583/
Copyright ©2022 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
11-1
The Legal & Regulatory
Environment of BusinessChapter
19e 11
Intellectual Property
Pagnattaro Cahoy Magid
Shedd
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11-2
Learning Objectives
• To recognize why intellectual property is
important to our economy and explain how it
creates incentives for investment
• To identify the type of information that is
protected by trade secret law and characterize
circumstances that constitute misappropriation
• To list the requirements for a valid patent and
recognize important issues in the enforcement of
patents
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11-3
Learning Objectives, II
• To categorize source indicators as trademark
types and to differentiate between trademark
dilution and infringement
• To define copyright protection and fair use
limitations
• To describe the basic elements of the
international system for protecting intellectual
property rights
Copyright ©2022 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
11-4
Pop Quiz
pop pop pop
QUIZQUIZQUIZ
Intellectual property includes which of the
following?
a. Trademarks and trade secrets
b. Patents
c. Copyrights
d. All of the above
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11-5
Justification for Intellectual Property
• Similar to the private property system
• Exclusive right to intellectual property gives
incentive to new inventions
• U.S. Constitution protects intellectual property
for limited times
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11-6
Intellectual Property and Competition
• Property rights provide exclusivity to firms and
individuals
• Economic return on investment encourages
creation of more information
• Intellectual property is essential to maintain
the growth of creative research and
development (R&D)
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11-7
Capturing Intellectual Property
• Certain steps need to be undertaken to
transform knowledge into valuable intangible
assets
• Strict deadlines are applicable for asserting
rights of some intellectual property
• Failure to follow the rules can position the
product in public domain
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11-8
Trade Secrets
Knowledge
Or Info
Kept Secret
(reasonable
measures
taken)
Economic
Value
Uniform Trade Secrets Act
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11-9
Establishing the Existence of a Trade
Secret
• Conduct a trade secret audit to identify
confidential knowledge-based resources
• Preserve secrecy
– Lock written material
– Secure computer-stored knowledge with firewalls and
encryption
– Impose confidentiality restrictions
– Regulate visitors
– Ask employees, customers, and business partners to
sign nondisclosure agreements
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11-10
Case 11.1 – Trade Secret
• Case
– Al Minor & Associates, Inc. v. Martin
– 881 N.E.2d 850 (Ohio, 2008)
– Court of appeals
• Issue
– AMA filed a lawsuit against Martin, claiming that
he violated Ohio’s Trade Secrets Act by using
confidential client information to solicit clients
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11-11
Demonstrating Misappropriation
• Misappropriation occurs when one improperly
acquires or discloses secret information
• Independent creation and reverse engineering
are exempted
• Employee mobility and trade secrets
– Confidentiality contracts forbid employees from
disclosing the knowledge obtained in workplace
– Employers can enforce agreements not to compete
only when there is a valid business purpose for the
contract
Copyright ©2022 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
11-12
Civil Enforcement of Trade Secrets
• Trade secret owners can acquire injunction
– Injunction: Order by a judge either to do
something or to refrain from doing something
• Owners can obtain damages from people who
misappropriate trade secrets
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11-13
Criminal Enforcement of Trade Secrets
• Economic Espionage Act (EEA)
– Considers stealing trade secrets a crime
– Punishment
• Individuals – Fines and up to 10 years’ imprisonment
• Organizations – Up to $5 million in fines
– Provisions
• Makes one liable for standard trade secret
misappropriation
• Addresses misappropriation to benefit a foreign
government
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11-14
Patent Law
New
invention
Legal
monopoly
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11-15
Figure 11.1 – Types of Utility Patents
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11-16
Obtaining a Patent
1.File application
2.Filing fee
3.Explain invention
4. Show difference
from prior art
5.Describe patentable
aspects
6.Evaluation by the
patent examiner
Patent –
exclusive right
to invention
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11-17
Obtaining a Patent, II
• America Invents Act (2011) revised U.S. patent
law to a first-inventor-to-file system
• Increased the ability of companies to:
– Keep some internal processes a secret
– Avoid infringing another’s patent through prior
user rights
Copyright ©2022 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
11-18
Patentable Subject Matter
• Validity of a patent can be tested by
scrutinizing its subject matter
• Certain categories of subject matter cannot be
patented
– Do not represent true inventions
• Supreme Court’s views on patentable subject
matter refer to concept preemption
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11-19
Case 11.2 – Patentable Subject Matter
• Case
– Alice Corporation Pty. Ltd. v. CLS Bank
International
– 134 S. Ct. 2347 (2014)
– Supreme Court
• Issue
– Plaintiffs filed lawsuit against Alice claiming that
its patents for a system to settle financial
transactions were invalid
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11-20
Characteristics of Patents
Novelty
• Something new and different from the prior art
Nonobviousness
• Ability of an invention to produce surprising or
unexpected results
Utility
• Must do something useful
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11-21
Patent Enforcement
• Purpose of law
– To allow inventions in the public domain after the
limited period of legal property right
• Patent owner can sue against infringement for
injunction and damages
• Inventions can cover methods and articles
that can overlap
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11-22
Figure 11.2 – Overlapping Intellectual Property
Rights
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11-23
Patent Trolls and the Litigation Threat
• Overlapping rights provide an opportunity for
firms to purchase patent rights and sue
companies
• Patent trolls
– Non-producing patent owners who impose high
costs by enforcement
– Do not contribute much to the innovation
environment
– Subject to fines if the assertions of infringement
are vague and unsupported
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11-24
Trademark Law
Marks on what is
produced to represent
the origin of goods &
services
Recognizability or
distinctiveness
Protection against
confusion
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11-25
Marks Protected by the Lanham Act of
1946
Trademark
Service mark
Collective mark
Certification mark
Trade dress
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11-26
Food for thought…
Imagine that you were blindfolded and taken
into a national fast food /restaurant franchise or
a national chain department store. When you
took the blindfold off, would you likely know the
name of the department store chain or national
fast food /restaurant franchise?
That is the power and importance of trade dress.
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11-27
Trademark Registration
• Usage of mark in interstate commerce requires
registration with PTO
– Mark must be distinctive
• PTO places the mark in the Official Gazette
• Registered on the Principal Register if the mark is
acceptable
– Must be renewed every 10 years
• Provision of full trademark status for a name or
descriptive term
– To be listed on the Supplemental Register for five
years and acquire a secondary meaning
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11-28
Trademark Enforcement
• Law protects the owner from unauthorized
use of the mark
– Establishes civil and criminal violation
• Infringement: Civil violation of a trademark
– Remedies include damages and injunctions and
orders to destroy infringing products
• Generic marks cannot be protected
• Manufacturing and trafficking counterfeit
trademarked products is a criminal violation
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11-29
Case 11.3 – Trademark Confusion
• Case
– Kraft Foods Group Brands LLC. v. Cracker Barrel
Old Country Store, Inc.
– 735 F.3d 735 (7th Cir. 2013)
• Issue
– Plaintiff filed a suit against the defendant claiming
that consumers will be confused by the similarity
of the logos and Kraft will be blamed for any
dissatisfaction with CBOCS products
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11-30
Trademark and the Internet
• Relationship between website domain name
and trademark
– People attempt to register domain names
containing well-known trademarks that do not
belong to them
– Anticybersquatting Consumer Protection Act,
1999
• Provides remedy of statutory damages and transfer of
trademark domain name to its owner
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11-31
Trademark Dilution
• Federal Trademark Dilution Act, 1995
– Prohibits the usage of a mark same as or similar to
another’s trademark to dilute its significance,
reputation, and goodwill
• Types
– Blurring – When usage of a mark blurs
distinctiveness of a famous mark
– Tarnishment – When usage of a mark creates a
negative impression about the famous company
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11-32
Copyright Law
Monopoly
Copying and
marketing
Limited
period of
time
Original
expression
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11-33
Copyright Ownership
• Copyright law grants property in certain
creative expressions
– Prohibits others from reproducing it without the
owner’s permission
• Criteria for copyright protection
– Work must be original
– Must be fixed in a tangible medium of expression
– Must show creative expression
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11-34
Copyright Enforcement
• The owner has to establish that defendant
violated his or her exclusive rights of:
– Reproduction
– Creation of derivative works
– Distribution
– Performance
– Display
• Criminal penalties are applicable for willful
infringement
– Piracy: Large-scale copyright infringement
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11-35
Case 11.4 – Copyright Enforcement
• Case
– Skidmore v. Led Zeppelin
– 952 F.3d 1051 (9th Cir. 2020)
• Issue
– Randy California claimed the band Led Zeppelin
copied part of his song, Taurus, in creating the
song Stairway to Heaven
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11-36
Copyright Fair Use
• Copyright Act
– Specifies that fair use of copyrighted materials is not
an infringement of the owner’s property
• Fair use includes copying for criticism, comment, news
reporting, teaching, scholarship, or research
• Factors considered by courts
– Purpose and character of the use
– Nature of work
– Amount and substantiality of the portion used
– Effect of the use upon the potential market
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11-37
Copyright in the Digital Age
• Illegal to produce or assist in the production of
copies that violate the law
– Person is held liable for:
• Contributing to another’s infringement
• Obtaining financial benefit
• Supervising the infringement
• Criminal and civil lawsuits for file sharing
copyrighted material persist in the Internet
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11-38
Digital Millennium Copyright Act
• Prevents the production or sales of a product or
service designed to circumvent technological
protections
• Protects Internet service providers from liability
• Violations of the act permit civil remedies
– Injunction
– Actual and statutory damages
– Up to 10 years’ imprisonment for circumventing for
financial gain
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11-39
Pop Quiz
pop pop pop
QUIZQUIZQUIZ
Copyright gives the owner the _____
right to reproduce, distribute, perform,
and display the protected work.
a. Exclusive
b. Shared
c. Human
d. Limited
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11-40
Think Tank
think think think
TANK TANK TANK
Which is not an allowable fair use of
copyrighted material?
a. Teaching
b. Research
c. Profits
d. Reporting
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11-41
International Intellectual Property Rights
• World Trade Organization (WTO)
– Administers Agreement on Trade-Related Aspects
of Intellectual Property Rights (TRIPS)
• Requires member countries to provide protection for all
forms of intellectual property
• World Intellectual Property Organization
(WIPO) administers:
– Patent Cooperation Treaty (PCT)
– Madrid System for International Registration of
Marks
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11-42
Conclusion
• Intellectual property serves the common good
• Adequate enforcement and social recognition
are essential to provide incentive for private
productive effort
• Enforcement of intellectual property is vital to
nations that are part of the global trading
system
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11-43
Copyright ©2022 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
The Legal & Regulatory
Environment of Business 19e
Chapter 7
The Property System
Pagnattaro Cahoy Magid
Reed Shedd
Copyright ©2022 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
7-2
Learning Objectives
• To distinguish property from other legal rights.
• To understand the legal scope of property.
• To categorize different types of ownership
interests
• To understand how property is legally
acquired
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7-3
Learning Objectives, II
• To organize and apply the rules of security
interests
• To appreciate the limits on property rights
that serve broader societal interests
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7-4
Property
• Legal right to exclude others from resources
that are originally possessed or are acquired
without force, theft, or fraud
• Absolute but not infinite
• Boundaries can be ambiguous
• Foundation of the free market
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7-5
Problem of Limited Resources
• Frameworks to handle limited resources
– State makes major decisions about the production
and distribution of resources
– Private property – State recognizes and enforces
an individual’s rights to acquire, possess, use, and
transfer scarce resources
• Societies have mixed frameworks for dealing
with the reality of limited resources
Copyright ©2022 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
7-6
Property, II
Property is central to society’s
achievement of prosperity
Promotes
incentives
Makes resources
easily divisible
Establishes
conditions for
capital formation
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7-7
Pop Quiz
pop pop pop
QUIZQUIZQUIZ
Property influences the marketplace
in what ways?
a. Promoting incentives
b. Recognizing divisibility of resources.
b. Creating conditions for capital
formation
d.All of the above
Copyright ©2022 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
7-8
Divisions of Property
Real property
Personal
property
Land and
interests in land
All movable
resources
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7-9
Property Boundaries in the Physical World
• Defining land
– Land ownership consists of more than surface of
the property
• Air rights
– Owner of real property possesses the air above
the land to a certain extent
– Can be sold to another for development
Copyright ©2022 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
7-10
Property Boundaries in the Physical World, II
• Subsurface rights
– Landowner owns the rocks and minerals beneath
the land
– Can be separately sold to another
• Fixtures on land
– Object of personal property that becomes an
object of real property
– Manufacturing equipment in a plant
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7-11
Case 7.1 – Subsurface Rights
• Case
– Briggs v. Southwestern Energy Production Co.,
– 224 A.3d 334 (PA 2020)
Issue
– Does the rule of capture allow a party to extract
natural gas from an adjacent property using
hydraulic fracturing?
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7-12
Types of Ownership
• Fee simple: Represents the maximum estate
allowed under law
– Estate: Bundle of rights and powers of land
ownership
– Absolute estate involves no limitations or
conditions attached
– Defeasible can have a condition attached to its
conveyance
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7-13
Types of Ownership, II
• Life estate: Grants an ownership in land for
the lifetime of a specified person
– Land reverts to the original grantor upon death of
the person
• Leasehold estate: Property right granted to
tenants by a landlord
– Land can be leased for a definite duration or an
indefinite duration
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7-14
Types of Ownership, III
• Concurrent ownership – More than one person
can own the same property
– Ownership is undivided
– Applies to personal and real property
– Tenancy in common: Tenants own different shares
of the resource
– Joint tenancy: Tenants have equal ownership
shares
• Right of survivorship
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7-15
Easements
• Right to cross over land
• Use of land behind the exclusive legal fence
• Ways of acquiring
– Buying directly from a titleholder or reserved in a
deed
– Natural easement
– Negative easement
– Easement by prescription
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7-16
Case 7.2 – Easements
• Case
– Case 7.2 Duke Energy Carolinas v. Gray
– 789 S.E.2d 445 (N.C. 2016)2010 Conn. Super. LEXIS
1816
• Issue
– Is an easement entitled to the same legal respect
as other forms of real property, including adverse
possession?
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7-19
Bailments
• Goods placed into another’s possession to be
returned in future
• Bailor: Owner
• Bailee: Possessor of the object
• Categories
– For the sole benefit of the bailor
– For the sole benefit of the bailee
– For the mutual benefit of both parties
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7-17
Bailments, II
• Legal duty of the bailee determines the
potential liability of the bailee
• Duties of care are vital when the parties are
negotiating a settlement
• Bailor has duties to the bailee in a mutual
benefit bailment
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7-18
Acquiring Resources Through Exchange
• Contract rules: Control the way owners make
agreements to exchange resources in the
property-based legal system
– Allow owners to commit legally to future
exchange of resources
– Enable an owner to sue another if agreements in
the future are broken by one of the owners
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7-20
Acquiring Resources Through Possession
• Rule of first possession: First person to reduce
previously unowned things to possession
becomes their owner
• First person to reduce abandoned thing to
possession owns it
• Lost items
– Finder becomes owner by reducing the item to
possession and following a statutory procedure
– Mislaid things must be given to the owner of the
premises where the item was mislaid
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7-21
Adverse Possession
• Provides ownership of land under state
statute when the possession is:
– Open and notorious
– Actual and exclusive
– Continuous
– Wrongful
– For a prescribed period of time
• Encourages land use
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7-22
Acquiring Resources Through Confusion
• Occurs when fungible goods are mixed
together
• Owners hold a proportional share of the
confused goods if the confusion occurs by
honest mistake
• Doctrine of confusion illustrates importance of
boundaries to the concept of property
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7-23
Acquiring Resources Through Accession
• Accession: Something that is added
• Law of accession
– When people apply efforts to any raw materials
and change its nature into finished products, they
own the finished products
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7-24
Acquiring Resources Through Gift
• Donor who owns something gives it to a
donee, who becomes the new owner
• Gift does not take place until the donor:
– Intends to make the gift
– Delivers the gift by physical transfer to the donee
• Testamentary gift – Made through a will
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7-25
Title and Property Registration
• Title: Ownership
– Represented by a physical document registered with
the state for certain resources
• Deed: Document of title that transfers ownership
of land
• Protection against ownership problems
– Warranty deed, special warranty deed
– Quitclaim deed
– Buyers and lenders are protected by registration
statutes
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7-26
Property and Security Interests
• Principal types of security interests
– Mortgages
– Secured transactions
• Security interests are property applications
– Explain why property is the central concept of
capitalism and private markets
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7-27
Security Interests in Land
• Mortgage on homes and land
– Security interest provided by a person to a bank
for borrowing money
• Deeds of trust: Borrower signs a note and
deed of trust
– Grants the lender a security interest in the
building and land
– Trustee – Holds full legal ownership to the land
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7-28
Security Interests in Land, II
• Land sales contract: Owner sells the land by
contract
– Subject to the condition that seller retains title to
the land until buyer pays the purchase price
• Recording statutes
– Mortgages and deeds of trust must be registered
in a recording office
– Provide notice of the security interest to potential
buyers and lenders of the land
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7-29
Security Interests in Land, III
• Foreclosure: Creditor must go through the
court system to ensure that procedures are
properly followed
• Deficiency: Balance owed by the debtor to the
creditor-mortgagee
• Right of redemption: Allows mortgagor to get
back land upon payment of the full amount of
the debt
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7-30
Secured Transactions
• Involves a creditor who has made a loan to a
debtor who agrees to give the creditor a security
interest in a collateral
– Collateral: Valuable object
• Article 9 of the Uniform Commercial Code
– Set of laws that controls security interests
• Attachment: Occurs when:
– Secured party holds given value
– Debtor owns the collateral
– Security agreement is provided
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7-31
Secured Transactions, II
• Perfection: Arises when a security interest is
attached and creditor has taken all proper
steps required by Article 9
• Financing statement: Filed to perfect a
security interest under Article 9
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7-32
Pop Quiz, II
pop pop pop
QUIZQUIZQUIZ
Do secured interests that are recorded
first always take priority over competing
interests recorded later?
a. Yes
b. No
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7-33
Property, Use of Resources, and Equal Right of
Others
• Owners can make use of their resources in
several ways
• Property system protects the equal right of all
to their resources
• Laws prevent owners from using their
resources to injure the resources of others
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7-34
Nuisance and Zoning
• Public nuisance: Arises from use of land that
causes inconvenience or damage to the public
• Private nuisance: Unreasonable use of one’s
property to cause substantial interference
with the use of another’s land
• Zoning ordinances: Laws that divide counties
into use districts designated residential,
commercial, or industrial
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7-35
Case 7.3 – Nuisance
• Case
– Cook v. Sullivan
– 829 A.2d 1059 (N.H. Sup. Ct. 2003)
– Trial court
• Issue
– Plaintiffs sued the defendants alleging they
created a nuisance by filling in wetlands and
constructing a home on their property
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7-36
Duration Limitations on Property
• Patents and copyrights are granted for limited
times
• Rule against perpetuities
– Limits exercise of property over resources to a
duration of lives in being plus twenty-one years
– Prevents an owner from controlling resources
through many future generations
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7-37
Taxation
• Government provides numerous services for
the general welfare and common defense of
the nation
• Federal taxation is a specified power of
Congress
• Taxation of wealth generated by incentives of
property system contributes to common good
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7-38
