Area 2 - Business Law

Question 1

What is covered by “common law”? RISE

Answer 1

Real Estate, insurance, services, employment

Question 2

What is UCC? What is covered by UCC?

Answer 2

Uniform law (portions only) passed in all states except Louisiana that provides uniform treatment for contracts that involve the sale of goods.

Question 3

Ex. of things considered under UCC…

Answer 3

Food, crops and timber harvested by the seller, cars, boats, iPads, clothing

Question 4

What is bilateral contract?

Answer 4

A promise in exchange for a promise

Question 5

What is unilateral contract?

Answer 5

A promise in exchange for an act

Question 6

Acceptances must be communicated in the same way as offers?

Answer 6

NO;An offer can provide that acceptance must be received to be effective or that an acceptance must be communicated in a particular manner. Unless so specified in the offer, acceptances can be by any reasonable means.

-Mailbox rule acceptances are valid as soon as they are mailed.

Question 7

Revocation of acceptance req consideration?

Answer 7

No; An offer can be withdrawn any time prior to acceptance (unless it is a UCC firm offer or is supported by consideration, as with an option contract). The knowledge of the sale is an effective revocation.

Question 8

What attributes does the offer need to contain under UCC?

Answer 8

objective intent to contract; Under the Uniform Commercial Code (UCC): subject matter and quantity if more than one
UCC will supply the remaining terms if not in the offer

Question 9

3 types of irrevocable offers

Answer 9

1. Options
2. Sales of goods firm offers
3. Offers irrevocable by estoppel

Question 10

Whats a “firm offer”? 3 reqs..

Answer 10

Offeror is a merchant.
Offeror is an authenticated record.
Assures offer will remain open for a stated period of time (without consideration not to exceed three months, regardless).

Question 11

Whats an “option contract”?

Answer 11

An option contract is a distinct contract in which the offeree gives consideration to keep the offer open.

Question 12

When is an acceptance of an offer effective?

Answer 12

• If sent by authorized medium: effective when delivered to the medium
• If sent by unauthorized medium: effective when received by offeror, provided that the offer is still open

Question 13

What attributes does the offer need to contain under common law ?

Answer 13

objective intent to contract; Under common law: subject matter, price, payment terms, time for performance, and so on

Question 14

Mirror-image rule regarding acceptance of an offer?

Answer 14

Acceptance must be absolute, unequivocal, and unconditional. In common law, if the acceptance is not a mirror image of the offer’s terms, it is a rejection and counteroffer. Under common law, which applies to contracts involving real property and services (employment), any deviation in the terms of acceptance from those in the offer constitutes a counteroffer, not an acceptance.

Question 15

Req for contract to be formed:

Answer 15

1. Offer
2. Acceptance
3. Consideration (see next lesson on “Consideration”)
4. No defenses (see lessons on “Contracts: Formation” and “Defenses to Formation”)

Question 16

What req consideration to be binding?

Answer 16

Only UCC contracts for the sale of goods can be modified without new consideration. Contracts for services, the sale of land, or other transactions governed by the common law require consideration if they are to be modified.

Question 17

Parol evidence rule

Answer 17

It applies to prior or contemporaneous oral agreements that contradict the terms of final written agreements.

*If the record of a contract has ambiguities, it is not fully integrated, and parol evidence can be introduced only to clean up the ambiguity.

Exceptions to the Parol Evidence Rule

1. Subsequent modification—If the parties to a contract later agree to modify their contract, evidence of the modification is admissible. If the modification is required to be in writing, the parties will need that record as proof of the modification.
2. Defenses to the formation of the contract—Oral evidence can be introduced to show any of the defenses to formation (covered in the “Defenses to Formation” lesson). For example, if the seller used fraud or mistake or duress to get acceptance by the buyer, then the buyer can have evidence admitted to show that there is no valid contract.

Question 18

Statue of Frauds: (MYLEGS) must be in writing under statue

Answer 18

Marriage
>1 Year
Land
Executors 
Goods >$500 (UCC)
Surety 

*oral contracts for large amounts can be enforceable and not in writing

Question 19

When do bilateral mistakes create a binding contract?

Answer 19

when the mistake is due to 1) value or 2) quantity

Question 20

Additional exceptions for contracts involving sale of goods (SPAM)

Answer 20

(S)pecifically manufactured goods can be enforced by the seller
(W)ritten confirmation of a contract is sent to a merchant, the confirmation can be used against the merchant if the merchant does not object within 10 days
(A)dmits in court to making the contract
(P)artially performed contracts to the extent of performance

Question 21

Real Defenses (FABLE)

Answer 21

(F)orgery
(A)lteration
(B)ankruptcy discharge
(L)ack of capacity
(E)xecution of fraud or extreme duress

Question 22

List the elements that constitute a fraud

Answer 22

• Intentional deceit (or negligent misrepresentation)
• Deceit of a material fact
• Reliance of the party deceived

Question 23

List the types of assent defenses that can be used to invalidate the formation of a contract

Answer 23

Mistake
Misrepresentation
Fraud
Duress
Undue influence