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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
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
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
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
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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