B102.9 - Business Law |
Law -- "A bunch of words written on paper by people who are generally considered to be liars and theives. So let's try to figure out what's right rather than what is legal" -- Joe Rogan
In my experience I've found the practical application of Business Law to be a mine field of confusion. Somehow, at some point, ethics and common sense got usurped by those in Congress who make laws, and Attorneys have decided to express their relevance in our Business society by writing law, after law after law.
When I started venturing into self employed activities in the mid 1990s, I was shocked at the lack of any single resource that could be used to figure out what laws might or might not apply to my ventures. Heck, just figuring out what corporate structure was appropriate was no small task, as accountants really didn't care and lawyers kept saying it really didn't matter, as they could always dispute a structure.
Below is an outline for this page:
Section 99 is a summary for this topic.
In my experience I've found the practical application of Business Law to be a mine field of confusion. Somehow, at some point, ethics and common sense got usurped by those in Congress who make laws, and Attorneys have decided to express their relevance in our Business society by writing law, after law after law.
When I started venturing into self employed activities in the mid 1990s, I was shocked at the lack of any single resource that could be used to figure out what laws might or might not apply to my ventures. Heck, just figuring out what corporate structure was appropriate was no small task, as accountants really didn't care and lawyers kept saying it really didn't matter, as they could always dispute a structure.
Below is an outline for this page:
- Formal Definition
- Formal Curriculum
- Important Questions for Understanding
- Discussion -- Real Estate, Attorney Ethics and Toilet Paper
- Discussion -- Insulation, Attorney Ethics and Toilet Paper
- Discussion -- Banking, Attorney Ethics and Toilet Paper
- Discussion -- Employment Law and OSHA
- Discussion -- Insurance
- Discussion -- HIPAA
Section 99 is a summary for this topic.
1) Formal Definition
Business Law (aka Commercial Law)
- Commercial Law, also known as Business Law is the body of law that applies to the rights, relations, and conduct of persons engaged in commerce, merchandising, trade and sales. It is often considered to be a branch of civil law and deals with issues of both private law and public law.
ref: https://en.wikipedia.org/wiki/Commercial_law
2) Formal Curriculum
Many educational institutions group Law and Ethics together in one course. In my mind that is like grouping the cookie monster with a jar of savory cookies, but it is the norm. I have split it out in FAMMMIT/Bels for no reason other than to delineate ethics from law in conversation (and in hopes of elevating ethics some, if that is possible).
In any event, the course below from Sayolors is in fact a Law and Ethics course, but as you will see, the Ethics represents less than 10% of the content.
In any event, the course below from Sayolors is in fact a Law and Ethics course, but as you will see, the Ethics represents less than 10% of the content.
Business Law and Ethics
- Nature and Sources of Law
- Litigation vs Alternative Dispute Resolution
- Torts
- Contracts
- Property Law
- Intellectual Property
- Employment Law (Employment at Will, Wage Law, Discrimination, Occupational Saftey and Health Administration, Collective Barginaing, Wrongful Termination)
- Criminal Law and Business
- Business Organizations
- Business Regulations
- Business Ethics
ref: https://learn.saylor.org/course/view.php?id=89
3) Important Questions for Understanding
Business Law
Business Insurance
- Do you know what laws affect your Finance, Accounting, Management, Marketing, Sales, and Operations?
- Do you know Employment Laws to the extent you will stay out of trouble?
- Do you know laws related to sales tax to keep you out of jail?
- Do you have a relationship with a knowledgeable and affordable attorney you could use as a resource if needed?
- Do you realize no one wins in court but Attorneys?
- Do you realize most contracts aren't worth the paper they are written on, but without them, you are typically even worse off?
Business Insurance
- Do you understand the various insurances needed for your business and do you recognize the cost to each business in your industry?
- Do you realize our insurance industry is the second tax man?
- Do you have a knowledgeable and trustworthy agent who will come to your aid at time of a claim if needed?
4) Discussion -- Real Estate Contracts, Attorney Ethics and Toilet Paper
In the early 2000's I entered into a contract to purchase a piece of real estate. The seller had done some shady transactions prior to this one and a judgment had attached to the property I wished to purchase. There was enough money in his proceeds to pay the judgment, but he refused to settle. He told me I could pay the judgement if I wanted to buy the home (it was about $25k).
I sued for "specific performance" as my contract had been specifically written not to allow him out of the transaction for just such a scenario. I hired an incompetent attorney who delayed and messed up the filing. I then hired a competent attorney. The seller allowed the home to go into foreclosure. I tried to buy from the bank in cash, and they refused to sell (it isn't as easy to buy from a bank pre-forclosure as those books might claim). I showed up at the foreclosure auction and bid AGAINST the people I was suing who were being foreclosed on!?!?
I bid up the price and let them win (so they were in fact buying back their own foreclosure) for $50k more than I had contracted with them prior.
I showed up in court one month later. In Chambers in a pre-trial conference, the judge was baffled as to what was going on. He asked the Defense counsel if there was a valid contract, with the understanding that if there was, this was almost worthy of a default judgment. After hemming and hawing and refusing to answer, the Defense Attorney, who had at one point served on the Ethics Committee for the Bar of Maryland and taught Ethics Classes as the local Law School claimed the contract was not a valid contract, asserting a claim contradictory to all testimony given months prior by his clients. His claim of a false contract violated ever rule of discovery and disclosure -- but guess what -- I'd have had to pay money to show the judge he was a lying turd and even then, there would have been no penalty to him for his behavior...
I was $20k into legal fees (enough to have paid the damn judgement to start with), and if I pressed on with legal proceedings, they could easily make me double that, and it became apparent our courts weren't "logical" in which case any and all future investments in this case were deemed too risky. I negotiated to take possession of the property from their auction win at a price $50k higher than my initial offer and thus I was out $75k for this transaction (there was reason I wanted the home well beyond a normal purchase, thus my willingness to lose that much to complete the transaction).
The system is so broken it's stupid. The only people that profit are attorneys. My contract was as useful as toilet paper.
I sued for "specific performance" as my contract had been specifically written not to allow him out of the transaction for just such a scenario. I hired an incompetent attorney who delayed and messed up the filing. I then hired a competent attorney. The seller allowed the home to go into foreclosure. I tried to buy from the bank in cash, and they refused to sell (it isn't as easy to buy from a bank pre-forclosure as those books might claim). I showed up at the foreclosure auction and bid AGAINST the people I was suing who were being foreclosed on!?!?
I bid up the price and let them win (so they were in fact buying back their own foreclosure) for $50k more than I had contracted with them prior.
I showed up in court one month later. In Chambers in a pre-trial conference, the judge was baffled as to what was going on. He asked the Defense counsel if there was a valid contract, with the understanding that if there was, this was almost worthy of a default judgment. After hemming and hawing and refusing to answer, the Defense Attorney, who had at one point served on the Ethics Committee for the Bar of Maryland and taught Ethics Classes as the local Law School claimed the contract was not a valid contract, asserting a claim contradictory to all testimony given months prior by his clients. His claim of a false contract violated ever rule of discovery and disclosure -- but guess what -- I'd have had to pay money to show the judge he was a lying turd and even then, there would have been no penalty to him for his behavior...
I was $20k into legal fees (enough to have paid the damn judgement to start with), and if I pressed on with legal proceedings, they could easily make me double that, and it became apparent our courts weren't "logical" in which case any and all future investments in this case were deemed too risky. I negotiated to take possession of the property from their auction win at a price $50k higher than my initial offer and thus I was out $75k for this transaction (there was reason I wanted the home well beyond a normal purchase, thus my willingness to lose that much to complete the transaction).
The system is so broken it's stupid. The only people that profit are attorneys. My contract was as useful as toilet paper.
5) Discussion -- Insulation, Attorney Ethics and Toilet Paper
In the mid 2000's I contracted with an insulation subcontractor to insulate a row home (which provides a unique situation to really screw things up). The insulation contractor installed the insulation flush to the outer wall, not the inner wall, and this allowed for an air space between the insulation and drywall, which allowed frigid air to get to the backside of drywall and suck heat out of the home.
After 3 years of trouble shooting without invasive measures, a similar mistake was discovered on a sister property leading the discovery of the true problems. A representative from the insulation installation company came to the home inspected the holes cut in the drywall and confirmed the bad install. He offered to correct all the insulation once the drywall was removed. He indicated his company would not pay for the removal of the drywall nor the re-installation.
What should have been an insurance claim for finished services was a dead end because they self-insured for finished goods (which means they carried no insurance for finished services). I made an offer to split the costs in a reasonable manner and that was declined. During a preliminary hearing, the insulation company representative stated that the draft stop that was missing (a fire and safety building code) wasn't a big deal as it really didn't work (contrary to what those in the Building Code business thought when the created the code).
A lawsuit ensued, and the primary defense chosen was that there was no proper way to install insulation. The total estimate for the repairs was $40k. Once I got $20k in, a the key expert witness, someone who wrote insulation installation instruction for the industry claimed there was no proper way to install batted insulation. The insanity just kept pouring out. We captured it all via video taped depositions and then I put my money towards reparations as opposed to an insane court battle with an incomprehensible defense being put on with the support of an Attorney asleep at the wheel of life.
The system is so broken it's stupid. The only people that profit are Attorneys. My contract was as useful as toilet paper.
After 3 years of trouble shooting without invasive measures, a similar mistake was discovered on a sister property leading the discovery of the true problems. A representative from the insulation installation company came to the home inspected the holes cut in the drywall and confirmed the bad install. He offered to correct all the insulation once the drywall was removed. He indicated his company would not pay for the removal of the drywall nor the re-installation.
What should have been an insurance claim for finished services was a dead end because they self-insured for finished goods (which means they carried no insurance for finished services). I made an offer to split the costs in a reasonable manner and that was declined. During a preliminary hearing, the insulation company representative stated that the draft stop that was missing (a fire and safety building code) wasn't a big deal as it really didn't work (contrary to what those in the Building Code business thought when the created the code).
A lawsuit ensued, and the primary defense chosen was that there was no proper way to install insulation. The total estimate for the repairs was $40k. Once I got $20k in, a the key expert witness, someone who wrote insulation installation instruction for the industry claimed there was no proper way to install batted insulation. The insanity just kept pouring out. We captured it all via video taped depositions and then I put my money towards reparations as opposed to an insane court battle with an incomprehensible defense being put on with the support of an Attorney asleep at the wheel of life.
The system is so broken it's stupid. The only people that profit are Attorneys. My contract was as useful as toilet paper.
6) Discussion -- Banking, Attorney Ethics and Toilet Paper
In 2015 I was arbitrarily denied a renewal application process for a Home Equity Line of Credit that had been opened 10 years prior. As a result my $900 monthly payment was to convert to $2600. Prior to the adjustment Bank of America offered an application process that would lower the $2600 payment to $1900 (seemingly out of the goodness of their heart -- but really to cover up a massive national banking scam initiated by Federal Bankers and being executed by Consumer banks). I submitted my documents and magically I was turned down in a fully fraudulent fake denial process. As it turned out the entire application process had been setup as a smoke screen. Bank of America had in fact setup double edged criteria that could be used to deny any and all applicants depending on some math, and they did my math the wrong way to properly deny me.
After the first fraudulent denial, a Bank of America VP committed a second fraudulent denial and claimed the Guidelines used to deny me were OCC (Office of Comptroller of Currency) and out of the control of Bank of America. Knowing that to be a false statement, I gave her 24 hours to reconsider her statement. The following day she admitted to the lie and the fraudulent guidelines (by phone).
I escalated my complaint to Bank of America legal and an Attorney with Bank of America eventually offered me the modification I was fraudulently denied as long as I agreed to sign a non-disclosure agreement. The gist of the offer was "We'll give you the modification we fraudulently denied as long as you don't tell anyone about it.". I eventually declined the offer to go public. I built websites posting that info, I got involved in a CFPB case related to this situation and I initiated direct dialogue with some folks in our Government who should have cared, because this situatoin wasn't just about me... the false denials were happening to 3.3 million people and based on Bank of America reports, about 66,000 people could expect to be foreclosed on due to the scheme. Surprisingly, no Government Officials picked up the case. An attempt to get civil attorneys involved was fruitless. If you don't have a document which states "Let's screw this guy", prior to the screwing, it doesn't constitute fraud, it merely constitutes "negligence", and in Maryland that was worth a $1000 award/penalty.
Attempts were made to reconcile via the Fair Credit Billing Act were fraudulently denied, BUT I was able to eventually get the modification without a non-disclosure with some perseverance (and after I got it, they committed fraud when executing the modification by not giving me back the over payments that had been forced from me during the process).
The system is so broken it's stupid. The only people that profit are Attorneys. My actual loan documents, a bunch of attorneys touted as Consumer Protection Attorneys and our Federal Government servants most tied to banking were less useful than toilet paper and the Bankers are making out with Billions. (about 15 Billion a year in cash constriction from 2014-2018)
After the first fraudulent denial, a Bank of America VP committed a second fraudulent denial and claimed the Guidelines used to deny me were OCC (Office of Comptroller of Currency) and out of the control of Bank of America. Knowing that to be a false statement, I gave her 24 hours to reconsider her statement. The following day she admitted to the lie and the fraudulent guidelines (by phone).
I escalated my complaint to Bank of America legal and an Attorney with Bank of America eventually offered me the modification I was fraudulently denied as long as I agreed to sign a non-disclosure agreement. The gist of the offer was "We'll give you the modification we fraudulently denied as long as you don't tell anyone about it.". I eventually declined the offer to go public. I built websites posting that info, I got involved in a CFPB case related to this situation and I initiated direct dialogue with some folks in our Government who should have cared, because this situatoin wasn't just about me... the false denials were happening to 3.3 million people and based on Bank of America reports, about 66,000 people could expect to be foreclosed on due to the scheme. Surprisingly, no Government Officials picked up the case. An attempt to get civil attorneys involved was fruitless. If you don't have a document which states "Let's screw this guy", prior to the screwing, it doesn't constitute fraud, it merely constitutes "negligence", and in Maryland that was worth a $1000 award/penalty.
Attempts were made to reconcile via the Fair Credit Billing Act were fraudulently denied, BUT I was able to eventually get the modification without a non-disclosure with some perseverance (and after I got it, they committed fraud when executing the modification by not giving me back the over payments that had been forced from me during the process).
The system is so broken it's stupid. The only people that profit are Attorneys. My actual loan documents, a bunch of attorneys touted as Consumer Protection Attorneys and our Federal Government servants most tied to banking were less useful than toilet paper and the Bankers are making out with Billions. (about 15 Billion a year in cash constriction from 2014-2018)
7) Discussion -- Employment Law and OSHA
As a small business person who might employ others, there are very few things that should scare you more than Employment Law and OSHA. If you get tangled up doing something inappropriate, it will likely cost you dearly one way or another. Many employees do NOT realize the power they have over their employers and/or they don't express it until after something transpires that they do not like and if an Attorney decides the transgression might earn them both some money, watch out.
8) Discussion -- Insurance
The majority of insurance is a tax to protect you from Attorneys. It's like a pre-paid bribe to let you run free if you do something that might or might not really be a transgression of some law that may or may not truly be in the best interest of society.
Below is a list of Insurances you may purchase as a small business owner.
Below is a list of Insurance related process you may need to engage in with others or your Insurance Carrier
Not only is having insurance expensive, it can be time consuming too. Our insurance industry is NOT competitive. We do NOT pay appropriate amounts of money for insurance and there is little you as a business owner can do about that.
Workman's compensation is a percentage of an employees wages. It is often 8-15% depending on the activities of the employee. (that is a lot of money that the employee never realizes is being paid on for their sweat).
If we had socialized health care that employment expense would (should) disappear. If we had socialized health care, every employee in the country could see an 8-15% raise without affecting the profits of the business.
Food for thought.
Below is a list of Insurances you may purchase as a small business owner.
- Workman's Comp
- Finished Goods
- Auto
- Personal Property
- Umbrella
Below is a list of Insurance related process you may need to engage in with others or your Insurance Carrier
- Insurance Certs from Others...
- Insurance Audits
Not only is having insurance expensive, it can be time consuming too. Our insurance industry is NOT competitive. We do NOT pay appropriate amounts of money for insurance and there is little you as a business owner can do about that.
Workman's compensation is a percentage of an employees wages. It is often 8-15% depending on the activities of the employee. (that is a lot of money that the employee never realizes is being paid on for their sweat).
If we had socialized health care that employment expense would (should) disappear. If we had socialized health care, every employee in the country could see an 8-15% raise without affecting the profits of the business.
Food for thought.
9) Discussion -- HIPAA and Fax Machines
HIPAA -- Health Insurance Portability and Accountability Act
HIPAA governs the way protected health information is communicated.
Prior to the digital age, fax was the preferred method for digitally sharing information. Here were some guidelines for HIPAA compliant Faxing...
With this system one of the biggest problems is the potential to fax data to the wrong number... and let's not forget the real biggy, ANY PERSON working in an health care providers office can make copies of any documents they want when no one is looking as manila folders don't have locks on them.
Okay... so this HIPAA bar is amazingly high and frankly it does very little for truly protecting patient data, and that is why literally 1000's of hourly employees a year are prosecuted for identity theft related to data that was manually gathered from health care offices.
Given that tantalizing list of stuff, and the one would think the evolution of email would be awesome, right!!
Email
Given this AWESOME solution for privacy, one would think those that create HIPAA guidelines would be ecstatic, right?
Not really. They just upped the bar. The problem now is the the information is stored... and it "could be hacked".
The level of improvement email brought over fax is astounding. Hacking of email accounts doesn't typically happen more than one at a time, but more importantly, anyone wishing to hack personal data is going to go for it in places and ways far easier than hacking email accounts (like by asking an employee of a health care provider to download or printout the patient data from a patient Database).
The insanity related to those who make rules and raise bars knows no end. Everyone wants to be relevant, and the stress created by those folks on millions of others can be astounding.
HIPAA governs the way protected health information is communicated.
Prior to the digital age, fax was the preferred method for digitally sharing information. Here were some guidelines for HIPAA compliant Faxing...
- Never let incoming faxes sit on publicly available fax machines -- When faxing protected documents, never leave the machine until the transmission is complete and call the recipient to ensure that their fax machine is in a protected location and out of the public’s line of sight.
- Always use cover pages - It is a HIPAA requirement that you use a cover sheet with the approved HIPAA statement when transmitting PHI. If your cloud fax provider adheres to HIPAA rules, they will make a cover page a standard part of the workflow when sending a fax.
- Keep an audit trail - If you don’t have an accurate audit trail of every activity that occured with each patient document, then you are susceptible to fines associated with non-compliance. Cloud faxing does this automatically, and a good one will provide access to every document version from inside the application, so you can view all activity.
ref: https://www.scrypt.com/blog/5-tips-for-hipaa-compliant-faxing/
With this system one of the biggest problems is the potential to fax data to the wrong number... and let's not forget the real biggy, ANY PERSON working in an health care providers office can make copies of any documents they want when no one is looking as manila folders don't have locks on them.
Okay... so this HIPAA bar is amazingly high and frankly it does very little for truly protecting patient data, and that is why literally 1000's of hourly employees a year are prosecuted for identity theft related to data that was manually gathered from health care offices.
Given that tantalizing list of stuff, and the one would think the evolution of email would be awesome, right!!
- Email removes the public issues related to not only sending faxes from a public machine but it also eliminates the receipt of faxes in public view
- A signature block is easy to add to all emails with any appropriate language
- Email by default creates an audit trail
- Email by default is private, because no one has an email address that is not password protected
- A simple system of emailing a recipient prior to sending private data eliminates wrong number issues
Given this AWESOME solution for privacy, one would think those that create HIPAA guidelines would be ecstatic, right?
Not really. They just upped the bar. The problem now is the the information is stored... and it "could be hacked".
The level of improvement email brought over fax is astounding. Hacking of email accounts doesn't typically happen more than one at a time, but more importantly, anyone wishing to hack personal data is going to go for it in places and ways far easier than hacking email accounts (like by asking an employee of a health care provider to download or printout the patient data from a patient Database).
The insanity related to those who make rules and raise bars knows no end. Everyone wants to be relevant, and the stress created by those folks on millions of others can be astounding.
99) Summary
Commercial Law has so many laws it's mind blowing.
Commercial Law has so few formal enforcers it feels more like operating in the wild wild west.
People operating nefariously in a business without licenses are occasionally better off (for themselves) than people with licenses because those with licenses usually have to answer to a governing body complaint board. HOWEVER, don't assume the complaint boards are truly there to do what one might think they might. State Bar Review boards, for examle, love to hear black and white cases about Attorneys who manipulate money they were given as retainers, but outside of that, they don't really like to get involved in attorney behavior.
The person with the most money most often wins most battles (or pays off those in the Government or Legal System to win them).
The best advice my attorney ever gave me...generally stated...
I was once naive. I am no longer. Feel free to test out the Business Legal system for yourself if you'd like, but after reading this, you can no longer act surprised when it fails to meet your most basic expectations and costs you an arm and a leg for the experience.
Commercial Law has so few formal enforcers it feels more like operating in the wild wild west.
People operating nefariously in a business without licenses are occasionally better off (for themselves) than people with licenses because those with licenses usually have to answer to a governing body complaint board. HOWEVER, don't assume the complaint boards are truly there to do what one might think they might. State Bar Review boards, for examle, love to hear black and white cases about Attorneys who manipulate money they were given as retainers, but outside of that, they don't really like to get involved in attorney behavior.
The person with the most money most often wins most battles (or pays off those in the Government or Legal System to win them).
The best advice my attorney ever gave me...generally stated...
- "If you can't confidently enter into an agreement with someone on a hand shake or with writing on a napkin, you likely don't want to do business with them. All who enter into agreements that way will typically agree to end them that way too, thus avoiding legal fees"
I was once naive. I am no longer. Feel free to test out the Business Legal system for yourself if you'd like, but after reading this, you can no longer act surprised when it fails to meet your most basic expectations and costs you an arm and a leg for the experience.