Jurisprudence IUSD Update!!

Which practice association is the easiest and least expensive to form and why? -ANSWER *The Sole Proprietorship* is the simplest form of business organization and, therefore, the least expensive to maintain. There are normally no formalities required to begin What is a Certificate of Assumed Business Name and how does it pertain to a dental practice? -ANSWER A *Certificate of assumed business Name* is a state form used to identify your business. Does a sole proprietorship limit the owner's personal liability? Why or why not? -ANSWER No All business property and all personal property are subject to the claims of creditors. In other words, this type of business organization provides no protection to the owner's personal assets. Why is a sole proprietorship at a disadvantage compared to other associations when raising working capital? -ANSWER The SP's ability to raise working capital is limited to the amount of money that can be obtained through her own asset base and borrowing power. How is a sole proprietorship taxed? -ANSWER As a sole proprietor you must report all business income or losses on your personal income tax return; the business itself is not taxed separately. (The IRS calls this "pass-through" taxation, because business profits *pass through* the business to be taxed on your personal tax return. Define a partnership -ANSWER Partnership: An association of two or more persons to carry on, as co-owners, a business for profit. *Note the intent is to make a profit*. What is "joint and several" liability? -ANSWER An unlimited liability (including personal assets) of each partner for all debts of the business whether in contract or tort. (from wiki) *Joint and several liability* is when multiple parties can be held liable for the same event or act and be responsible for all restitution required. ... The liable parties would be required to pay the entire damage award, which could be split among multiple parties or could come from just one party. How is a partnership taxed? What does "pass through" taxation mean? -ANSWER Each partner is required to file a personal tax return, but the partnership itself is also required to file an informational return. This return will indicate how income and loss was allocated among the partners. All income and losses flow through to the partners and their returns. Remember, the partnership agreement can state how income and loss is to be allocated among the partners Describe "partnership by estoppel" and why it should be avoided -ANSWER *Partnership by estoppel* = Legally binding partnership that may arise where, in fact, *no formal partnership agreement is in effect* A person who by conduct or words represents, or allows him/herself to be represented, as a partner in a firm is liable for the credit or loans obtained by firm on the basis of such representation. Are partners required to share profits and losses equally? If not, how is it accomplished? -ANSWER No, there should be a clause for that in the partnership contract Each partner in a partnership has _________ authority in regards to making business decisions with third party suppliers -ANSWER Implied Thus all partners are liable for the other partner's business decisions (e.g. I buy a new sign for my practice and cannot pay my debt, thus my partner takes on the debt...not cool) S corp = -ANSWER An S corp is considered a "pass-through entity," which means the business itself isn't taxed. Instead, income is reported on the owners' personal tax returns C corp = -ANSWER A C Corp profits are taxed separately from personal. (Double taxation of appreciated assets on sale or dissolution) How do the limited liability company and the corporation increase an owner's general liability protection? -ANSWER Each owner (shareholder) enjoys limited liability with respect to the corporation. If the corporation incurs a debt that it cannot pay, a shareholder is only liable to the extent of the value of his stock (his share of ownership). His personal assets cannot be reached for payment What is a "close" corporation -ANSWER A close corporation is a corporation that is exempt from a number of the formal rules usually governing corporations, because of the small number of shareholders it has How is the stock associated with a close corporation restricted? -ANSWER The shareholders will have to approve the sale of shares (stock) to someone outside the corportaion and will probably have the "right to first refusal" on said stock...meaning that the shareholders are offered the stock first, and have the right to purchase or refuse to purchase. What fringe benefits does the C Corp allow its owners? -ANSWER The corporation is your employer and you are an employee of the corporation. You may own all of the stock of the corporation but you still are its employee. *An advantage of this arrangement is that many fringe benefits to employees are deductible to the corporation as a business expense*. These include health and accident insurance premiums, group life insurance, death benefits and disability insurance Define: contract -ANSWER A CONTRACT can be defined as the total legal obligation created when you make a bargain. Why are oral contracts discouraged and in some cases unenforceable? -ANSWER Oral contracts, with a few exceptions, are enforceable, but, unlike a writing, oral contract provisions may be difficult to prove. What are the six elements of a contract? -ANSWER Agreement Consideration Contract Capacity Legality Reality of Assent Form What are the six elements of a contract? -ANSWER Agreement Consideration Contract Capacity Legality Reality of Assent Form What are the six elements of a contract? -ANSWER Agreement Consideration Contract Capacity Legality Reality of Assent Form Define *consideration* and why lack of consideration will result in no contract being formed. -ANSWER The agreement needs to be supported by something that has legal value. This could be the value in a promise, money, goods, etc. Each party must have a duty to perform and receive a benefit from that duty. In other words each party to an agreement *must suffer a detriment and receive a benefit.* Why is a *gratuitous promise* not considered consideration? -ANSWER You had no damages when I did not deliver the goods. You are in the same position before the promise and after the broken promise. *You did not have a loss or detriment.* At what age (in Indiana) is one able to enter into an enforceable contract? -ANSWER 18 Other than age, what are ways in which a person can be incompetent to enter into a valid contract? -ANSWER Under the influence of drugs/EtOH Lacks mental capacity/mental illness Provide 4 examples of *illegal contracts* -ANSWER Contract to murder Contract involving illegal gambling debt Contract NOT to marry Contract in restraint of trade All are ILLEGAL contracts Describe and give examples of an *express contract*. -ANSWER A contract that is manifested by words, either oral or written. Examples: a written lease or a phone order to a supply house. What is *implied in fact* and how does it differ from *express contract*? -ANSWER *Implied in fact contract* = consists of obligations arising from a mutual agreement and intent to promise where the agreement and promise have not been expressed in words Based upon the actions and conduct of the parties. What contracts must be in writing and signed by the parties to be enforceable? (6) -ANSWER The promise to marry Contracts that CANNOT be performed within one year Contracts for the sale of land The promise to answer for the debt of another Contracts for the sale of goods over $500 Promise of a medical (dental) cur Guarantor = -ANSWER A *guarantor* is someone who offers *collateral* in the instance the original agreement of the contract cannot be fulfilled. Ex: "Fix my son's teeth, if he doesn't pay for it I will." Surety = -ANSWER A surety makes a direct promise (not a collateral one). Ex: "Fix my son's teeth, I will pay for it" Who is responsible for a child's dental expenses? A spouses dental expenses? -ANSWER The SPOUSE. Primary liability for medical and dental fees lies with the spouse who incurs the debt. If the property of the liable spouse is insufficient to the cover the debt, the financial resources of the marital relationship are secondarily liable. If one spouse has not paid his dental fees to you, I always sue (if necessary) both husband and wife to obtain access to marital assets The CHILD. Either parent is liable for necessary medical expenses. Restorative dentistry is considered a necessary treatment. If parents are divorced, you can send fee statements to the custodial or the noncustodial parent Compensatory damages = -ANSWER This damage calculation compensates for the loss of the bargain. For example, if you refuse to accept delivery of ordered supplies from your dental supplier, the seller may lose the benefit of the bargain, i.e. the profit from the sale. Even though the seller still retains the supplies, he has lost his bargain. So, the court may award to the seller the profit from the lost sale Consequential damages = -ANSWER The damaged party can recover all damages that the breaching party "could have reasonably foreseen as a result of the breach". A vendor may have relied upon the contract to obtain business with other practices. Punitive damages = -ANSWER This means damages that are a penalty to the party who breaches the contract Damages exceeding simple compensation and awarded to *punish the defendant.* Specific performance = -ANSWER A court will enforce the sale, i.e. order the seller to complete the contract. *A court will reason that money damages would not be sufficient* The court will allow specific performance if the subject of the contract is unique enough that money in insufficient. e.g. sale of race horse, property, strands of Wes' hair What is the *assignment* of a contract? -ANSWER A contract (rights and duties) is assigned when one party to the contract is replaced with another. T/F: Dental treatment contracts can be assigned to another dentist -ANSWER False, dental treatment is not assignable *Delegation of Duties* = -ANSWER Delegation does not relieve the party from rights and duties under a contract. It does mean that a party can delegate the performance of duties under the contract to another person. *The one who delegates is still responsible and liable for the performance* T/F: In a dental situation, duties can be legally delegated (to an assistant or hygienist) if judgment and skill are required and the person is not qualified. -ANSWER False Duties cannot be legally delegated (to an assistant or hygienist) if judgment and skill are required unless the person is qualified. Under what circumstances can a dentist be held liable for a promised treatment result? -ANSWER Only if it is in writing and signed by the dentist What is the *right of first refusal* when considering a lease? -ANSWER When adjacent space is about to become available, the landlord must offer the space to you at the same rent as another person offered to rent it. You have the first right to refuse to accept the lease or to accept it What is assignment and how is it different from a sublease? -ANSWER If a lease is assigned to another dentist, all rights and duties under the contract are now the property of that new dentist. You are no longer liable for the remainder of the lease term. The new dentist has taken over the contract. Sublease: unlike the assignment, there are no transfers of rights or duties. You still remain bound to the original lease What is a non-disturbance clause in a lease? -ANSWER A type of clause in a mortgage contract. The nondisturbance clause ensures that the rental agreement between the tenant and the landlord will continue under any circumstances. This is done primarily to protect the renter from eviction by the mortgagor if the property is foreclosed upon. *A nondisturbance clause ensures that a tenant will not be evicted in the event that the landlord goes bankrupt.* What are "fixtures" and why would lease provisions concerning them be important to dentists? -ANSWER The Landlord should fix everything except dental fixtures (x-ray, etc.) and improvements made by the dentist. What is *indemnification* and why is it included in a practice contract? -ANSWER To indemnify another party is to compensate that party for losses that that party has incurred or will incur as related to a specified incident Indemnify means that if Dentist A committed an act of negligence that resulted in some liability to Dentist B, Dentist A would indemnify B and hold him harmless i.e. Dentist A would pay any monetary damages or expenses that Dentist B would be forced to pay What is a *condition precedent* and give an example -ANSWER A condition precedent is an event or state of affairs that is required before something else will occur Example: Dentist A must pass CDCA to uphold a business contract; failure to do so will void said contract What are the two types of consumer debt accounts? -ANSWER Open end account Closed end account Open end account = -ANSWER Results from a series of consumer credit transactions in which the debtor decides as to whether to pay AND how much to pay. Example: Visa, MasterCard, credit cards Closed end account = -ANSWER This involves credit for a specific period of time. A good example here may be the patient that needs to pay for a crown in several payments T/F: In an *open end account*, the debtor cannot decide when or how much to pay (their debt) -ANSWER False, this statement would be true for *closed end account* What is Truth in Lending (Act) and when does it apply to the dental practice? -ANSWER United States federal law designed to promote the informed use of consumer credit, by requiring disclosures about its terms and cost to standardize the manner in which costs associated with borrowing are calculated and disclosed Who is subject to Truth in Lending? Persons who: in the ordinary course of business, sell on credit to a consumer, an item or service purchased primarily for personal, family or household purpose and the debt is payable in installments (more than 4 payments) or a credit service charge is made and the amount financed does not exceed $25,000." How can a dentist avoid Truth in Lending requirements? -ANSWER For example, a crown is $1000. The patient tells you that she can only pay $100 at a time. The entire unpaid amount is due at all times. You simply do not penalize the patient with interest, finance charges or late payment fees. Another way is to factor any financing into your fees. Lastly, *you may allow installments but keep it to 4 payments or less* When is repossession of a dental appliance an option for the dentist when fees are owed? -ANSWER Trick question: YOU CANNOT REPO A DENTAL APPLIANCE FOR OWED FEES If you try to repo a dental appliance (denture/RPD) then you have committed battery because dentists provide services, not products