Advantages and Disadvantages of a Non-Disclosure Agreement

Non-Disclosure Agreements (NDAs) are versatile and necessary tools in the arsenal of anyone, inventor or corporation, who handles intellectual property. An NDA is a contract whereby the signer agrees not to disclose certain information, except under terms as described in the contract. A non-compete agreement (NCA), inhibiting use of the information in competition with the disclosing party, is often included as a clause within the NDA.

A NDA can be obtained at little to no cost, although one needs to be cautious in making sure the agreement will fit the use intended. NDAs should be used as part of a larger strategy and may be used in conjunction with patents and patent applications. This paper identifies the principal arguments in favor of and counter to NDAs.

1. Cost

NDAs are perhaps the lowest cost of protection for an invention. Often a simple agreement can be obtained for little to no cost. Although cost is one of the primary benefits of NDAs, this advantage has a tendency to breed over reliance.

2. Breadth

NDAs provide broader protection than patents, which is a reason justifying simultaneous use of NDAs and patent applications. Breadth includes both positive and negative aspects. Broad protection is beneficial at nearly any time. Most NDAs, however, struggle in determining exactly what is and is not covered under the terms of the contract. A common example is where there is no recording of what information was communicated during the discussion. The ambiguity can lead to problems should the matter ever come to litigation. The disclosing party wants the contract interpreted broadly including all information related to the actual disclosure, whereas the disclosee may wish to interpret the coverage much more narrowly. This can be a costly issue to resolve.

3. Integrity of the disclosee

There is an old adage that a contract is only as good as the person signing it. One is safer using an NDA with those people of known high integrity and is of little value with person having low integrity. This integrity problem is compounded with the inventor’s inability to monitor the disclosee. Often people will not have an NDA signed by persons having high integrity, but this leads to the next problem.

4. Integrity of the Process

Inventors often get in a hurry and forget to use the NDA. For example, flaws can easily occur when one has the invention witnessed, when speaking to a friend, or when forming a relationship with a marketer or manufacturer. Perhaps this forgetfulness occurs due to the inventor perceiving everyone to be on the same side or perceiving people will respect the interests of the disclosing party. Even if they are and do, the disclosure in the absence of an NDA can constitute a public disclosure and void any future protection. Public disclosure is a legal point that has nothing to do with the integrity of the people hearing about the invention.

5. Integrity of the Document

Each state has laws regulating the validity of NDAs and other such contracts. Some states show little concern for NDAs and regularly find them invalid. Should the contract be flawed, it may provide no protection at all. In some states one invalid clause will invalidate the entire contract. One can guard against this problem by seeking legal counsel on the validity of the contract before reliance is placed on it.

6. Delays necessary filing date of a patent

In the US, a patent must be filed within one year of the first public disclosure or offer for sale. Nearly all other countries require the patent application to be filed before the first public disclosure or offer for sale. A disclosure under the terms of a valid NDA does not constitute a public disclosure, assuming no inadvertent mistakes. The one year clock (US) or the requirement of prior filing does not take hold absent an offer for sale or a mistake in the handling of the NDA.

One, evaluating the benefits and risks of NDAs, should keep squarely in their mind whether ultimate protection may include a patent. NDAs are highly risky for protecting an invention. Problems with a flaw in the signing process, unexpected impact of law, an inadvertent mistake on the part of the discloser or disclosee and lack of clarity in breadth will generally destroy all possible foreign patent rights and start the US one year clock ticking. Discovering the error may not occur quickly, which can lead to permanent loss of US patent rights before the inventor learns s/he needs to act. A more secure form of protection is advised when the information being protected could be protected with a patent.

These tough patent laws should be contrasted with trade secret laws that generally require reasonable care. An inadvertent error under trade secret law is much less likely to be fatal. Unlike patent law, trade secret law generally does not require flawless execution. Trade secret law typically requires reasonable care under the circumstances, which tends to make allowance for inadvertent and non-consequential errors.

Low cost and broad protection make the NDA a valuable tool in appropriate circumstances. An NDA should always be used to protect trade secrets, but has limited value as the risks increase for protecting patentable subject matter. Patentable subject matter is better protected under the more secure patent laws with either a provisional or formal patent application. One should use NDAs where appropriate and in view of these risks and benefits.

About the Author:

N. Paul Friederichs, founder, started practice as a patent attorney in 1992 at a major Minneapolis, Minnesota law firm where he was the highest performing associate. In 1993, he started and developed Friederichs Law Firm with his father. Throughout this time Paul’s experience was heavily weighted toward litigation. He served such clients as Tonka Toys, American Harvest and Boston Medical.

He can be reached at http://www.angenehm.com/

How does a law firm work?

Although every lawyer has his or her own unique way of doing things, most law offices share a surprising number of similar characteristics in terms of how they do business. Understanding some of them will help you to get more effective legal representation.
Size Matters
Law offices range in size from sole practitioners to firms with literally hundreds or even thousands of lawyers. While all of them charge for their time in one form or another, there are some practical distinctions to keep in mind that can roughly be broken down by the following categories:
Sole Practitioners: Once a lawyer has passed the bar exam, it does not take much more to start his or her own practice other than renting office space and hanging up a shingle. Thus, it is not surprising that law offices of sole practitioners are probably the biggest single category of practicing lawyers. Sole practitioners can be excellent lawyers and so you may want to consider retaining one if it makes sense, given the nature of your legal problem. Although no two lawyers are the same, potential benefits of hiring a sole practitioner include:
A more direct one-on-one working relationship with your lawyer. Your case is not going to get lost in the shuffle because it is not going to be handed off to another attorney.
Lower fees and costs. Although not always the case, sole practitioners generally have lower overhead a larger law firm. Thus, it is not unusual for a sole practitioner to charge less than a big firm might charge for doing the same type of routine work.
Taking smaller cases. As another potential benefit of being able to charge less, a sole practitioner may be more inclined to take the smaller cases that are not cost effective for a big firm.
A more informal working relationship. You are likely to get to know everyone in your lawyer’s office if he or she is a sole practitioner. This can lead to a better one-on-one working relationship, which may make you feel more comfortable.
Conflicts of interest are easier to handle. Generally speaking, a law firm cannot handle a legal matter when it gives rise to a conflict of interest between clients of the firm that they are not wiling to waive. Depending on the size of your community, the larger the law firm, the more likely there may be conflicts of interest. Things tend to be more cut and dry with sole proprietors and the smaller law firms.
Small Law Firms: A law office with two to ten lawyers can be characterized as a small law firm. The benefits of working with a small law office can include one or more of the factors mentioned above for a sole practitioner. Additional benefits may include:
More expertise in a given specialty. In a firm environment, lawyers are better able to develop areas of expertise since they do not have to be all things to all people. Some small law offices are called “boutique” firms because they tend to specialize in a given area.
A small law firm can handle a broader range of legal matters. Some cases are simply too complex for a sole practitioner to handle.
Better coverage. No lawyer can be available all the time, so a benefit of a small law firm is having other lawyers to help out on a matter.
Pooling of knowledge and experience. It is always helpful on a complicated legal matter to be able to talk to other lawyers to pick their brains on legal strategies. A small law firm is a great environment in which to do this.
Mid-Size Law Offices: A mid-size law office would be a firm of perhaps ten to fifty lawyers. Potential benefits of hiring a mid-size firm include:
Being the best of both worlds. A mid-size firm may have many of characteristics of a small law office yet at the same time have the legal resources to do battle with the big firms. The balancing process can be a difficult one, but many mid-size firms are successful in preserving it.
Full-service capabilities. A mid-size firm may truly be able to provide effective legal representation in every major area of practice. Thus, it may be able address all of your legal needs.
Reputation. The larger law firms did not get big overnight. Such firms have usually been together for a number of years, and the fact that they have stayed together is evidence of a good reputation. Hiring a well-respected law firm can be a big benefit to a client.
Contacts. The contacts that a law firm has may be just as important as reputation. Although it is not always the case, the larger the law firm, the better the contacts they may have, not only in bar association matters, but also the community as a whole.
Large Law Offices: A large law firm of fifty or more lawyers is still going to be able to do the same legal work of any of the smaller law offices. Typically, though, they have grown so big because of their ability to devote the legal resources and expertise that are necessary to handle large and complex legal problems. More particularly, potential benefits include:
Lawyers with high levels of expertise who have been educated at the most prestigious law schools.
Resources to handle legal matters for public companies, governments, and other large organizations.
Clout. You are a formidable opponent if you have a large law firm on your side. It can convey a message to an opposing party that you mean business.
Multiple locations. Almost all large law firms have offices in strategic metropolitan areas. More and more, these firms have offices worldwide. As businesses go global, this gives the large law firms a major competitive edge when it comes to representing international companies.
Identifying the People Who Work at a Law OfficeA law office typically has many employees in addition to the lawyers. Knowing who these people are and what they do may help you to be a more informed client and thereby facilitate the effectiveness of your lawyer’s representation. Typically, the hierarchy can include any of the following people:
Partners: People commonly refer to the owners of a law firm as being the partners. It is very prestigious for a lawyer to become a partner of his or her law firm. Partners are usually the most experienced lawyers in a firm and, consequently, they charge the highest fees.
Associates: Lawyers who are employed by a firm but who are not owners are usually called associates. Generally, associates can be very good lawyers but they typically have less experience than the partners of the firm. Although it varies from firm to firm, associates may have to work for perhaps three to ten years before they are considered for partnership. Given their experience, associates tend to bill at lower rates than partners do.
Contract Lawyers: A firm will sometimes hire outside lawyers as independent contractors to do part-time work. The firm will usually pay a contract lawyer on an hourly basis and then bill out his or her time at a higher rate in order to cover overhead costs and hopefully make a profit off of the lawyer’s work.
“Of Counsel” Lawyers: Many firms will also develop an affiliation with one or more lawyers under an “of counsel” arrangement. Such an arrangement is oftentimes hard to define, but it usually contemplates something more than a part-time contracting relationship. For example, a lawyer who is quasi-retired may continue a relationship with his or her firm on an “of counsel” basis rather than being a partner.
Law Clerks: It has been a tradition for as long as there have been lawyers to have law students clerk for firms while they are going to law school. They will do legal research and otherwise assist lawyers in preparing cases and working on other law-related matters. Hiring a law clerk is one way for a firm to recruit new lawyers.
Paralegals: A paralegal is someone who has legal training but who is not a lawyer. Paralegals can serve a very important role in a law firm by providing critical support to lawyers when they are working on cases. In many instances, paralegals can have a practical working knowledge of the law that can make them more valuable to a law firm than a new associate. They are able to work under the supervision of a lawyer on the detail work that has to be done on every case but that cannot justify the high billing rates of a lawyer. Paralegals typically bill at rates that are probably half of what a lawyer charges.
Legal Assistants: This is really a catchall term that is sometimes used by law firms to describe anyone in a law office who assists in working on legal matters. It may include paralegals, legal secretaries, and other support staff.
Legal Secretaries: Every lawyer is burdened with an endless barrage of administrative details and procedural requirements that are a part of practicing law. These duties and requirements can be a huge distraction for a lawyer who does not have a competent legal secretary to organize and assist with the day-to-day affairs of his or her practice. Part of the process of hiring a lawyer may even include an assessment of whether he or she has a good legal secretary.
Receptionists: A firm of any size will have a legal receptionist. Commentators will tell you that the receptionist is the most important person in the office since he or she is the firm’s initial contact with the outside world.
Investigators: Depending on the type of law they practice, some law firms will hire their own investigators who are charged with going out and investigating background facts on a case.
Administrative Personnel: Larger law firms will have their own administrative personnel to run the internal operations of the firm. While administrative staff generally do not charge for their services, they do constitute an overhead cost that is ultimately reflected in billing rates. Administrative staff may include accountants, bookkeepers, librarians, billing and accounts receivable personnel, and human resources.
Marketing Directors: Yes, larger firms will even hire their own marketing directors. They are responsible for creating a positive image for their law firms with the goal being to attract new clients and to retain existing ones.
Other Personnel: Many law firms will have runners, part-time clerical help, and other staff members to perform certain functions of the law office. The larger the law office, the more likely you will find such personnel on staff.
Tips for Keeping Down the Legal Bills
Upon hiring a lawyer, you may have contact with some or all of the personnel listed above. Thus, it is important for you to know who these people are and what role they play since it can affect how you are charged. As some more helpful hints, you may want to keep in mind the following:
A partner is going to bill at higher rates for time spent on your case. At the same time, though, having a partner work on your matter may actually be cheaper in the long run if it requires a high level of expertise since it may take the partner less time to resolve a legal problem than it would an associate who has a lot less experience.
Lawyers typically bill for telephone calls. Thus, make sure you have a good reason for calling your lawyer before you do so. It is sometimes a good idea to try talking to the lawyer’s secretary or even a paralegal to see if you can resolve the issue at hand rather than talking directly to the lawyer.
Lawyers bill for travel time and costs. Thus, if you are given the choice, plan meetings at your lawyer’s office rather than insisting that he or she come to your office.
You want to insist that your lawyer provide you with an itemized bill that gives detailed information on how you are being charged. While every law firm does things differently, many of them charge not only for lawyer time but also for time spent by paralegals, legal secretaries, and other support staff. You can use the information on an itemized bill to decide how to communicate most effectively with your lawyer’s law firm without running up the legal bills.
The more time a lawyer has to spend on preparing a case, the more you are going to be charged. Thus, you may want to work on developing an effective working relationship with support personnel with the goal of using your own time to help them work up the case and thereby keep legal bills at a minimum. (This does not mean trying to do all the work yourself and then simply having the lawyer sign off on it. You have to defer to the discretion of your lawyer in this regard since it is sometimes easier for a lawyer to develop his or her own work product from scratch rather than trying to revise something that the client has already tried to do on his or her own accord.)

Adoption Assistance for Michigan

1. What specific factors or conditions does your State consider to determine that a child cannot be placed with adoptive parents without providing financial assistance? ("What is your State definition of special needs?") A child with special needs is defined as a child that has at least one of the following needs or circumstances that may be a barrier to placement or adoption without financial assistance:
Three years of age or older and under eighteen years of age
Ethnic or family background
Member of a minority or ethnic group
Member of a sibling group of two or more children being placed together
Physical, mental or emotional disability, handicap or condition
Medical condition
Length of time waiting for an adoptive home
2. What are the eligibility criteria for your State-funded adoption assistance program?
In order to be eligible for state-funded adoption assistance, a child must be a special needs child as defined above and in state foster care for at least four months immediately prior to the eligibility determination for adoption assistance is made.
3. What is the maximum amount a family may receive in non-recurring adoption expenses from your State? (Adoptive parents can receive reimbursement of certain approved, "one-time" adoption expenses incurred in the process of finalizing a special needs adoption.)
$2,000 per child
4. Does your State enter into deferred adoption assistance agreements? (In some States, adoptive parents can enter into an agreement in which they choose to defer the receipt of a Medicaid card, the monthly monetary payment, or both and can elect to receive the Medicaid card and/or monetary payment at another time.)
Michigan does not offer deferred adoption assistance.
5. When may adoption assistance payments and benefits begin in your State?
Adoption assistance payments and benefits may begin in Michigan at adoption placement.
6. How are changes made to the adoption assistance agreement in your State?
When can a parent request a change in the adoption assistance agreement?
How does a parent request a change in the adoption assistance agreement?
What if a parent does not receive the change they request in the adoption assistance agreement?
Changes to the adoption assistance agreement are possible when state legislative changes are made to the foster care maintenance rates for children the same age of the child receiving adoption assistance. Adoption assistance rates can increase to reflect increases in the foster care maintenance rates. Adoption assistance rates are capped at the rate the child would receive were they in state foster care.
7. What types of post adoption services are available in your State and how do you find out more about them?
Post adoption services in Michigan are administered by the FIA, Child and Family Services Administration through FIA, contracted agencies, and parent organizations. Post adoption services include the following examples:
Information and referral
Educational programs
Educational materials
Support groups
Therapeutic intervention
Advocacy
Confidential Intermediary Program
Tuition incentive program
Recreation and training programs
The FIA provides Regional Post Adoption Support Services (PASS) through seven regional PASS Centers for families who have adopted children from state foster care. PASS information is available from the FIA.
The Adoption Services of the Michigan Department of Human Services runs a cooperative project with the Michigan State University School of Social Work. Link to PASS information on Michigan State’s Post Adoption Website under the For Parents section for more information on services and eligibility requirements here.
Parent groups also offer adoption support services. The Clinton County Council Foster/Adoptive Youth Support Group offer additional support programs, e-mail klooster@edzone.net or phone: 517.668.0185. Many private organizations offer a variety of respite options. See the ARCH National Respite Network Respite Locator Service, search by state to locate Michigan’s respite programs. See also the Michigan Adoption Resource Exchange (MARE and its listing of service providers.
Note: Not all services may be available in all cases. Contact your adoption assistance worker or post adoption services contact for information regarding process, eligibility, availability, and duration of services.
8. What mental health services are provided by your State?
Public mental health services for children in Michigan are administered through the Department of Community Health (DCH), Division of Mental Health Services to Children and Families and are coordinated through local Community Mental Health Services Programs (CMHSPs). Services include the following examples: physician visits, in patient and outpatient hospitalization, medical supplies, prescription drugs, mental health care, personal care services, and substance abuse services.
Department of Community Health, Children and Families mental health. Community mental health services programs locator. Or phone the Michigan Medical Assistance Hotline: 800.642.3195.
Note: Not all services may be available in all cases. Contact your adoption assistance worker or medical assistance specialist for information regarding process, eligibility, availability, and duration of services.
9. Does your State provide additional finances or services for medical or therapeutic needs not covered under your State medical plan to children receiving adoption assistance?
The Michigan Family Independence Agency, through the state Adoption Medical Subsidy program, can supplement payment for certain services to the extent that the services are not available through other public and private resources available to the child. Other resources that must first be utilized include: Medicaid, the Intermediate School District, Community Mental Health Centers, Children’s Special Health Care Services, or the parent’s private insurance.
Application for the Adoption Medical Subsidy program may be made either before or after adoption. The program is available to children who were in Michigan’s foster care system prior to adoption or whose adoptions were finalized in a Michigan court prior to June 28, 1992.
Note: Not all services may be available in all cases. Contact your adoption assistance worker for information regarding process, eligibility, availability, and duration of services.
10. What is your State's process for applying for a fair hearing? (A fair hearing is a legal, administrative procedure that provides a forum to address disagreements with agency decisions.)
Adoptive parents can request a fair hearing any time a Family Independence Agency decision affects their child’s adoption assistance benefits. Parents are directed to send a written request for fair hearing to:
Fair Hearing Coordinator, Adoption Subsidy Program Michigan Family Independence Agency P.O. Box 30037, Grand Tower Building Lansing, Michigan 48909
11. What is your State Web address for general adoption information?
Michigan’s general adoption
12. What is your State Web address for adoption assistance information?
Michigan’s adoption assistance and More Michigan’s adoption assistance.
See the FIA publication, Adopting a Child in Michigan, under Section F, Assistance in Adoption.
13. What is your State Web address for State-specific medical assistance information for children?
Michigan’s state-specific medical assistance and More Michigan’s state-specific medical assistance

Equity and Trusts

Equity is a body of rules that developed in England separately from the "common law". The common law was administered by judges. The Lord Chancellor on the other hand, as the King's keeper of conscience, could overrule the judge made law if he thought it equitable to do so.[48] This meant equity came to operate more through principles than rigid rules. For instance, whereas neither the common law nor civil law systems allow people to split the ownership from the control of one piece of property, equity allows this through an arrangement known as a 'trust'. 'Trustees' control property, whereas the 'beneficial' (or 'equitable') ownership of trust property is held by people known as 'beneficiaries'. Trustees owe duties to their beneficiaries to take good care of the entrusted property.[49] In the early case of Keech v Sandford[50] a child had inherited the lease on a market in Romford, London. Mr Sandford was entrusted to look after this property until the child matured. But before then, the lease expired. The landlord had (apparently) told Mr Sandford that he did not want the child to have the renewed lease. Yet the landlord was happy (apparently) to give Mr Sandford the opportunity of the lease instead. Mr Sandford took it. When the child (now Mr Keech) grew up, he sued Mr Sandford for the profit that he had been making by getting the market's lease. Mr Sandford was meant to be trusted, but he put himself in a position of conflict of interest. The Lord Chancellor, Lord King, agreed and ordered Mr Sandford should disgorge his profits. He wrote,
"I very well see, if a trustee, on the refusal to renew, might have a lease to himself few trust-estates would be renewed ... This may seem very hard, that the trustee is the only person of all mankind who might not have the lease; but it is very proper that the rule should be strictly pursued and not at all relaxed."[51]
Of course, Lord King LC was worried that trustees might exploit opportunities to use trust property for themselves instead of looking after it. Business speculators using trusts had just recently caused a stock market crash. Strict duties for trustees made their way into company law and were applied to directors and chief executive officers. Another example of a trustee's duty might be to invest property wisely or sell it.[52] This is especially the case for pension funds, the most important form of trust, where investors are trustees for people's savings until retirement. But trusts can also be set up for charitable purposes, famous examples being the British Museum or the Rockefeller Foundation.

Property law

Property law governs valuable things that people call 'theirs'. Real property, sometimes called 'real estate' refers to ownership of land and things attached to it.[43] Personal property, refers to everything else; movable objects, such as computers, cars, jewelry, and sandwiches, or intangible rights, such as stocks and shares. A right in rem is a right to a specific piece of property, contrasting to a right in personam which allows compensation for a loss, but not a particular thing back. Land law forms the basis for most kinds of property law, and is the most complex. It concerns mortgages, rental agreements, licences, covenants, easements and the statutory systems for land registration. Regulations on the use of personal property fall under intellectual property, company law, trusts and commercial law. An example of a basic case of most property law is Armory v Delamirie. A chimney sweep's boy found a jewel encrusted with precious stones. He took it to a goldsmith to have it valued. The goldsmith's apprentice looked at it, sneakily removed the stones, told the boy it was worth three halfpence and that he would buy it. The boy said he would prefer the jewel back, so the apprentice gave it to him, but without the stones. The boy sued the goldsmith for his apprentice's attempt to cheat him. Lord Chief Justice Pratt ruled that even though the boy could not be said to own the jewel, he should be considered the rightful keeper ("finders keeper") until the original owner is found. In fact the apprentice and the boy both had a right of possession in the jewel (a technical concept, meaning evidence that something could belong to someone), but the boy's possessory interest was considered better, because it could be shown to be first in time. Physical possession is nine tenths of the law, but not all.
This case is used to support the view of property in common law jurisdictions, that the person who can show the best claim to a piece of property, against any contesting party, is the owner. By contrast, the classic civil law approach to property, propounded by Friedrich Carl von Savigny, is that it is a right good against the world. Obligations, like contracts and torts are conceptualised as rights good between individuals. The idea of property raises many further philosophical and political issues. Locke argued that our "lives, liberties and estates" are our property because we own our bodies and mix our labour with our surroundings.

Tort law

Torts, sometimes called delicts, are civil wrongs. To have acted tortiously, one must have breached a duty to another person, or infringed some pre-existing legal right. A simple example might be accidentally hitting someone with a cricket ball. Under negligence law, the most common form of tort, the injured party could potentially claim compensation for his injuries from the party responsible. The principles of negligence are illustrated by Donoghue v Stevenson. A friend of Mrs Donoghue ordered an opaque bottle of ginger beer (intended for the consumption of Mrs Donoghue) in a café in Paisley. Having consumed half of it, Mrs Donoghue poured the remainder into a tumbler. The decomposing remains of a snail floated out. She claimed to have suffered from shock, fell ill with gastroenteritis and sued the manufacturer for carelessly allowing the drink to be contaminated. The House of Lords decided that the manufacturer was liable for Mrs Donoghue's illness. Lord Atkin took a distinctly moral approach, and said,
"The liability for negligence ... is no doubt based upon a general public sentiment of moral wrongdoing for which the offender must pay ... The rule that you are to love your neighbour becomes in law, you must not injure your neighbour; and the lawyer's question, Who is my neighbour? receives a restricted reply. You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour."This became the basis for the four principles of negligence; (1) Mr Stevenson owed Mrs Donoghue a duty of care to provide safe drinks (2) he breached his duty of care (3) the harm would not have occurred but for his breach and (4) his act was the proximate cause, or not too remote a consequence, of her harm.[36] Another example of tort might be a neighbour making excessively loud noises with machinery on his property.[38] Under a nuisance claim the noise could be stopped. Torts can also involve intentional acts, such as assault, battery or trespass. A better known tort is defamation, which occurs, for example, when a newspaper makes unsupportable allegations that damage a politician's reputation. More infamous are economic torts, which form the basis of labour law in some countries by making trade unions liable for strikes, when statute does not provide immunity.

Contract law

Contract law regulates the exchange of promises between parties to perform or refrain from performing an act enforceable in a court of law. Contracts can be formed from oral or written agreements. The concept of a "contract" is based on the Latin phrase pacta sunt servanda (agreements must be kept). In common law jurisdictions, three key elements to the creation of a contract are necessary: offer and acceptance, consideration and the intention to create legal relations. In Carlill v Carbolic Smoke Ball Company a medical firm advertised that its new wonder drug, the smokeball, would cure people's flu, and if it did not, the buyers would get £100. Many people sued for their £100 when the drug did not work. Fearing bankruptcy, Carbolic argued the advert was not to be taken as a serious, legally binding offer. It was an invitation to treat, mere puff, a gimmick. But the court of appeal held that to a reasonable man Carbolic had made a serious offer. People had given good consideration for it by going to the "distinct inconvenience" of using a faulty product. "Read the advertisement how you will, and twist it about as you will", said Lord Justice Lindley, "here is a distinct promise expressed in language which is perfectly unmistakable".

"Consideration" indicates the fact that all parties to a contract have exchanged something of value. Some common law systems, including Australia, are moving away from the idea of consideration as a requirement. The idea of estoppel or culpa in contrahendo, can be used to create obligations during pre-contractual negotiations. In civil law jurisdictions, consideration is not required for a contract to be binding. In France, an ordinary contract is said to form simply on the basis of a "meeting of the minds" or a "concurrence of wills". Germany has a special approach to contracts, which ties into property law. Their 'abstraction principle' (Abstraktionsprinzip) means that the personal obligation of contract forms separately from the title of property being conferred. When contracts are invalidated for some reason (e.g. a car buyer is so drunk that he lacks legal capacity to contract) the contractual obligation to pay can be invalidated separately from the proprietary title of the car. Unjust enrichment law, rather than contract law, is then used to restore title to the rightful owner.

Criminal law

Criminal law (also known as penal law) pertains to crimes and punishment. It thus regulates the definition of and penalties for offences found to have a sufficiently deleterious social impact. Investigating, apprehending, charging, and trying suspected offenders is regulated by the law of criminal procedure. The paradigm case of a crime lies in the proof, in the concept of beyond reasonable doubt, the judgement that a person is guilty of two things. First, the accused must commit an act which is deemed by society to be criminal, or actus reus (guilty act). Second, the accused must have the requisite malicious intent to do a criminal act, or mens rea (guilty mind). However for so called "strict liability" crimes, an actus reus is enough. Criminal systems of the civil law tradition distinguish between intention in the broad sense (dolus directus and dolus eventualis), and negligence. Negligence does not carry criminal responsibility unless a particular crime provides for its punishment.

Acts of crime include murder, assault, fraud and theft. In exceptional circumstances defences can apply to specific acts, such as killing in self defence, or pleading insanity. Another example is in the 19th century English case of R v Dudley and Stephens, which tested a defence of "necessity". The Mignonette, sailing from Southampton to Sydney, sank. Three crew members and Richard Parker, a 17 year old cabin boy, were stranded on a raft. They were starving and the cabin boy was close to death. Driven to extreme hunger, the crew killed and ate the cabin boy. The crew survived and were rescued, but put on trial for murder. They argued it was necessary to kill the cabin boy to preserve their own lives. Lord Coleridge, expressing immense disapproval, ruled, "to preserve one's life is generally speaking a duty, but it may be the plainest and the highest duty to sacrifice it." The men were sentenced to hang, but public opinion was overwhelmingly supportive of the crew's right to preserve their own lives. In the end, the Crown commuted their sentences to six months in jail.

Criminal law offences are viewed as offences against not just individual victims, but the community as well. The state, usually with the help of police, takes the lead in prosecution, which is why in common law countries cases are cited as "The People v ..." or "R (for Rex or Regina) v ..." Also, lay juries are often used to determine the guilt of defendants on points of fact: juries cannot change legal rules. Some developed countries still condone capital punishment for criminal activity, but the normal punishment for a crime will be imprisonment, fines, state supervision (such as probation), or community service. Modern criminal law has been affected considerably by the social sciences, especially with respect to sentencing, legal research, legislation, and rehabilitation. On the international field, 108 are members of the International Criminal Court, which was established to try people for crimes against humanity.

Constitutional and administrative law

Constitutional and administrative law govern the affairs of the state. Constitutional law concerns both the relationships between the executive, legislature and judiciary and the human rights or civil liberties of individuals against the state. Most jurisdictions, like the United States and France, have a single codified constitution, with a Bill of Rights. A few, like the United Kingdom, have no such document. A "constitution" is simply those laws which constitute the body politic, from statute, case law and convention. A case named Entick v Carrington[16] illustrates a constitutional principle deriving from the common law. Mr Entick's house was searched and ransacked by Sheriff Carrington. When Mr Entick complained in court, Sheriff Carrington argued that a warrant from a Government minister, the Earl of Halifax, was valid authority. However, there was no written statutory provision or court authority. The leading judge, Lord Camden, stated that,
"The great end, for which men entered into society, was to secure their property. That right is preserved sacred and incommunicable in all instances, where it has not been taken away or abridged by some public law for the good of the whole ... If no excuse can be found or produced, the silence of the books is an authority against the defendant, and the plaintiff must have judgment."[17]
The fundamental constitutional principle, inspired by John Locke, holds that the individual can do anything but that which is forbidden by law, and the state may do nothing but that which is authorised by law.[18] Administrative law is the chief method for people to hold state bodies to account. People can apply for judicial review of actions or decisions by local councils, public services or government ministries, to ensure that they comply with the law. The first specialist administrative court was the Conseil d'État set up in 1799, as Napoleon assumed power in France.

International law

International law can refer to three things: public international law, private international law or conflict of laws and the law of supranational organisations.
Public international law concerns relationships between sovereign nations. The sources for public international law development are custom, practice and treaties between sovereign nations, such as the Geneva Conventions. Public international law can be formed by international organisations, such as the United Nations (which was established after the failure of the League of Nations to prevent the Second World War),[10] the International Labour Organisation, the World Trade Organisation, or the International Monetary Fund. Public international law has a special status as law because there is no international police force, and courts (e.g. the International Court of Justice as the primary UN judicial organ) lack the capacity to penalise disobedience.[11] However, a few bodies, such as the WTO, have effective systems of binding arbitration and dispute resolution backed up by trade sanctions.[12]
Conflict of laws (or "private international law" in civil law countries) concerns which jurisdiction a legal dispute between private parties should be heard in and which jurisdiction's law should be applied. Today, businesses are increasingly capable of shifting capital and labour supply chains across borders, as well as trading with overseas businesses. Increasing numbers of businesses opt for commercial arbitration under the New York Convention 1958.[13]
European Union law is the first and, so far, only example of a supranational legal framework. Given the trend of increasing global economic integration, many regional agreements—especially the Union of South American Nations—are on track to follow the same model. In the EU, sovereign nations have gathered their authority in a system of courts and political institutions. These institutions are allowed the ability to enforce legal norms both against or for member states and citizens in a manner which is not possible through public international law.[14] As the European Court of Justice said in the 1960s, European Union law constitutes "a new legal order of international law" for the mutual social and economic benefit of the member states.[15]

Law

Law[4] is a system of rules, usually enforced through a set of institutions.[5] It shapes politics, economics and society in numerous ways and serves as a primary social mediator in relations between people. Contract law regulates everything from buying a bus ticket to trading on derivatives markets. Property law defines rights and obligations related to the transfer and title of personal and real property. Trust law applies to assets held for investment and financial security, while tort law allows claims for compensation if a person's rights or property are harmed. If the harm is criminalised in penal code, criminal law offers means by which the state can prosecute the perpetrator. Constitutional law provides a framework for the creation of law, the protection of human rights and the election of political representatives. Administrative law is used to review the decisions of government agencies, while international law governs affairs between sovereign nation states in activities ranging from trade to environmental regulation or military action. Writing in 350 BC, the Greek philosopher Aristotle declared, "The rule of law is better than the rule of any individual."[6]

Legal systems elaborate rights and responsibilities in a variety of ways. A general distinction can be made between civil law jurisdictions, which codify their laws, and common law systems, where judge made law is not consolidated. In some countries, religion still informs the law. Law provides a rich source of scholarly inquiry, such as legal history and philosophy, or social scientific perspectives such as economic analysis of law or the sociology of law. The study of law raises important and complex issues concerning equality, fairness, liberty and justice. "In its majestic equality", said the author Anatole France in 1894, "the law forbids rich and poor alike to sleep under bridges, beg in the streets and steal loaves of bread."[7] In a typical democracy, the central institutions for interpreting and creating law are the three main branches of government, namely an impartial judiciary, a democratic legislature, and an accountable executive. To implement and enforce the law and provide services to the public, a government's bureaucracy, the military and police are vital. While all these organs of the state are creatures created and bound by law, an independent legal profession and a vibrant civil society inform and support their progress.