JPMorgan Chase - Assignment Example

Business Law: JPMorgan Chase and Bank of America Answering Business Law Questions Question Administrative agencies like the SEC and CFTC are tasked with identifying high risk gambles and developing regulatory initiatives to help prevent them. They define high risk gambles as factors that may disrupts orderly market activities. Their actions to prevent high risk gambles can be summarized in four key points (CFTC & SEC, 2010). The first point is by implementing stock-by-stock circuit breakers. They work in concert with the stock exchange to apply a uniform circuit breaker that would pause trading in stocks if stock price trends are likely to cause severe market disruptions. The second point is by using market orders especially to address sudden price changes. They can limit market orders, prohibit their use, communicate warnings over their use, and educate investors on their risks. The third point is developing procedures to beak erroneous trade. Any erroneous trades that are discovered are consistently and promptly resolved using a transparent process that applies objective standards. The fourth point is regulating stub quotes and market making obligations. They require all market makers to maintain stub quotes that are bona fide and consider maintaining two-sided stub quotes that do not have to be executed in sever market conditions. They are particularly considering banning all stub notes use (CFTC & SEC, 2010). Question 2: A valid contract is an agreement, legally enforceable, between two or more parties. The parties do not necessarily have to be people must be independent entities. Contracts between consumers and banks must be valid because large amounts of money are usually involved and all care must be taken to ensure that there are no misunderstandings in the contract terms. The parties must be aware of what the contract promises and what it does not promise. There are four elements to a valid contract; competent parties; legal purpose; offer and acceptance; and consideration (Emerson, 2009). In examining the competent parties’ element, the parties involved must have the legal capacity to enter into a contract. They must be sane, of legal age, sober, of sound mind and not coerced to enter into the contract. The second element is the legal purpose element. It proposes that the contract purpose must be legally agreeable. Illegal activities cannot be contractually upheld. The third element is the offer and acceptance. For a contract to hold there must be an offer followed by acceptance. The fourth element is consideration. For a contract to hold some form of equitable exchange must take place(Emerson, 2009). Parties involved in bank contracts must observe the doctrine of utmost good faith that states that each party must rely on the integrity of all other parties involved in the contract. It is assumed that all the parties expect the contract to work out and therefore full disclosure is expected(Emerson, 2009). Question 3: A tort is a civil wrong that does not involve the breach of acontract. The individual who commits a tort may not necessarily have breached the contract but they are still culpable for the breach and may be held liable dependent on the tort type(Emerson, 2009). Intentional tort actions are activities carried out with the intentional of violating civil rights. They may be offensive or harmful. They involve actual action or intent to cause apprehension that such an action is eminent. Intentional tort can occasionally be transferred when the targeted party is not he party eventually wronged. Any party that injures party A while intent on injuring party B is liable to party A whom they actually injured. Intentional tort is negated if the parties involved synonymously consented to the action occurrence, though this is limited to normal consequences such that any consequences outside the normal spectrum could still invite liability. Intent to harm without proof or actual harm may not necessarily invite liability unless they are accompanied by circumstances indicating an intent to cause harm(Emerson, 2009). Negligent tort involves a party acting in a manner that increases the risk for other parties. The rudimentary principle behindnegligence tort is that each party has a responsibility to act in a manner that circumvents arbitrary risks of harm to other parties. This implies that each party must practice prudence. If a party’s actionsfall below prudence standards, then they have breached a duty and are liable for any resulting harm. The most important aspect of negligence tort is foreseeability of harm and risks involved. The notion behind the tort is that a reasonable party would act to avoid rationally foreseeable risks of harm toother parties(Emerson, 2009). Question 4: Tort action of interference with contractual relations and participating in a breach in fiduciary duty occurs when a party intentional damages a contractual agreement with a third party. It seeks to; promote healthy business competition; and protect existing contractual agreements. Though a capitalistic economy encourages free market competition, it recognizes that contracts must be protected. If they are not protected from intentional harm then the incentive to conduct contractual business is eliminated. The tort action has for basic elements that must be met to state a prima facie; existence of a valid contract; knowledge of contract existence and its expectations; intentional interference causing breach of contract; and damage to parties whose contractual agreement had been damaged (Antony, 2006). I would be able to prevail in such a case as the lie was intentional and the case had the four basic elements that have been discussed. All banks have a valid contract with the SEC, they have knowledge of the contract terms, they intentionally lied with the intent to defraud and being found out damaged the banks image. Question 5: Automation has been applied to make mobile banking more secure and ensure that online transaction records are protected. Automation involves requiring that users enter their passwords when they need to conduct any banking services using their mobile phones. Authenticating access to account information on mobile phones can be quiet challenging thus the need to protect use information. An authentication protocol on mobile phones will typically follow either of two approaches; need to enter a password every time the account information is accessed from any mobile phone; and need to enter a password only once after which it is stored in the device and accessed during future log ins (National Bank, 2013). Requiring a password every time creates a risk in that the users are either likely to store the password in the phone using plain text format thereby allowing anyone with access to the phone to easily access the password, or use weak passwords that can easily be hacked. Entering a password once after which it can be accessed for future authentications creates a risk in that the password is either stored in the phone as an encryption or stored in the server. The implication is that automation creates security risks that could compromise accounts and passwords (National Bank, 2013). References Antony, D. (2006). Tortious Interference with Contract or Business Expectancy: An Overview of Virginia Law. The Virginia Bar Association NewsJournal,10, 9-14. CFTC and SEC (2010). Preliminary Findings Regardingthe Market Events of May 6, 2010: Report of the Staffs of the CFTC and SEC to the Joint Advisory Committee onEmerging Regulatory Issues as presented on May 18, 2010. Washington, DC: Commodity Futures TradingCommission, and Securities & Exchange Commission. Emerson, R. (2009). Business Law. New York: Barrons Educational Series National Bank (2013). Agreement Governing the Use of Automated Services and Electronic Banking Solutions. Ontario: National bank Financial Group. Read More