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Business Law

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An overview on: Contracts - Non-Profit Organizations - Business Litigation


Contracts are promises that the law will enforce. The law provides remedies if a promise is breached or recognizes the performance of a promise as a duty. Contracts arise when a duty does or may come into existence, because of a promise made by one of the parties. To be legally binding as a contract, a promise must be exchanged for adequate consideration.

Adequate consideration is a benefit or detriment which a party receives which reasonably and fairly induces them to make the promise/contract . For example, promises that are purely gifts are not considered enforceable because the personal satisfaction the grantor of the promise may receive from the act of giving is normally not considered adequate consideration. Certain promises that are not considered contracts may, in limited circumstances, be enforced if one party has relied to his detriment on the assurances of the other party.

Contracts are mainly governed by state statutory and common (judge-made) law and private law. Private law principally includes the terms of the agreement between the parties who are exchanging promises. This private law may override many of the rules otherwise established by state law.

Statutory law may require some contracts be put in writing and executed with particular formalities. Otherwise, the parties may enter into a binding agreement without signing a formal written document. See § 110 of The Restatement. Most of the principles of the common law of contracts are outlined in the Restatement Second of The Law of Contracts published by the American Law Institute. See Restatement (Second) of Contracts. The Uniform Commercial Code, whose original Articles have been adopted in nearly every state, represents a body of statutory law that governs important categories of contracts. The main Articles that deal with the law of contracts are Article 1 (General Provisions) and Article 2 (Sales).

Sections of Article 9 (Secured Transactions) governs contracts assigning the rights to payment in security interest agreements. Contracts related to particular activities or business sectors may be highly regulated by state and/or federal law.See Law Relating To Other Topics Dealing with Particular Activities or Business Sectors.

In 1988, the United States joined the United Nations Convention on Contracts for the International Sale of Goods which now governs contracts within its scope.


A non-profit organization is a group organized for purposes other than generating profit and in which no part of the organization's income is distributed to its members, directors, or officers. Non-profit corporations are often termed "non-stock corporations." They can take the form of a corporation, an individual enterprise (for example, individual charitable contributions), unincorporated association, partnership, foundation (distinguished by its endowment by a founder, it takes the form of a trusteeship), or condominium (joint ownership of common areas by owners of adjacent individual units incorporated under state condominium acts).

Non-profit organizations must be designated as nonprofit when created and may only pursue purposes permitted by statutes for non-profit organizations. Non-profit organizations include churches, public schools, public charities, public clinics and hospitals, political organizations, legal aid societies, volunteer services organizations, labor unions, professional associations, research institutes, museums, and some governmental agencies.

Non-profit entities are organized under state law. For Non-profit corporations, some states have adopted the Revised Model Non-Profit Corporation Act (1986) (See South Carolina's Act). For Non-profit associations, a few states have adopted the Uniform Unincorporated Non-Profit Association Act (See Colorado §§ 7-30-101 to 7-30-119). Some states exempt non-profit organizations from state tax and state employment programs such as unemployment compensation contribution.

Some states give non-profit organizations immunity from tort liability (see Massachusetts law giving immunity to a narrow group of non-profit organizations) and other states limit tort liability by enacting a damage cap (see South Carolina law). State law also governs solicitation privileges and accreditations requirements such as licenses and permits. Each state defines non-profit differently. Some states make distinctions between organizations not operated for profit without charitable goals (like a sports or professional association) and charitable associations in order to determine what legal privileges the respective organizations will be given.

For federal tax purposes, an organization is exempt from taxation if it is organized and operated exclusively for religious, charitable, scientific, public safety, literary, educational, prevention of cruelty to children or animals, and/or to develop national or international sports. Social security tax is also currently optional although 80 percent of the organizations elect to participate.


Legislation refers to the preparation and enactment of laws by a legislative body through its lawmaking process. The legislative process includes evaluating, amending, and voting on proposed laws and is concerned with the words used in the bill to communicate the values, judgments, and purposes of the proposal. An idea becomes an item of legislative business when it is written as a bill. A bill is a draft, or tentative version, of what might become part of the written law. A bill that is enacted is called an act or statute.

Ideas for legislation can come from legislators who have experience in a particular field, or legislators can copy legislation because an idea that works well in one jurisdiction can be useful to its neighbors. Legislators also receive proposals from the National Conference of Commissioners on Uniform State Laws; a conference of 250 lawyers appointed by governors to represent the states. The Council of State Governments, the American Law Institute, the American Bar Association, and numerous other organizations all produce model acts for legislatures. Protection and promotion of social and economic interests of particular groups also motivate legislation. Interests groups usually become involved in the legislative process through lobbyists.

The general procedure of enactment of legislation is governed by the relevant constitution. When a bill is first introduced by a sponsor it is referred to a committee. If the bill must go through more than one committee, the first committee must refer it to the second. To accommodate interested and affected groups and to eliminate technical defects a bill can be amended. If the committee recommends that the bill be passed, the bill is placed on the agenda for action by the full legislative body, or floor action. After a lengthy and complex procedure of deliberation and debates, legislators vote on the final passage of the bill. In bicameral legislatures (legislatures that are divided into to two bodies as Senate and House in the United States government) the bill must be passed through both houses in exactly the same form to become the law. When the two houses cannot agree on a final form for the bill, a complex procedure of compromise is attempted. Once the bill is approved by both houses and is put into final form, it must be signed by the executive. An executive can refuse to sign a bill and can return it to the legislature with a veto message explaining why. If the executive signs the bill, it is filed and becomes law.

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