Bus Law Exam 2 Notes Flashcards by Shun Shun

Expression of willingness of the offeror to enter a contractual agreement

Offer

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person/party who initiates or makes an offer

Offeror:

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person/party to whom an offer is made

Offeree:

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Requirements of a Valid Offer

Definite
Basis for agreement
Seriously intended Not a joke
Nor offered in jest fear or anger
Communicated from offeror to offeree
Both parties must be cognizant of the agreement

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Invitation to Deal

Advertisements
Price lists and quotation
Bids
Estimates
Not valid offers
May lead to an offer

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Annulment or cancellation of an instrument act or promise by one doing or making it

Communicated by offeror to Offeree prior to acceptance

By Revocation

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If terms are not met there is no contract

By terms of the offer

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Termination of an Offer
By Revocation
By lapse of "reasonable" period of time
By death or insanity of offeror
By Rejection
By Counteroffer
By intervening illegality

Termination of an Offer
By Revocation
Annulment or cancellation of an instrument, act, or promise by one doing or making it
Communicated by offeror to Offeree prior to acceptance
By terms of the offer
If terms are not met, there is no contract
By lapse of “reasonable” period of time
Depends on type of offer
By death or insanity of offeror
Insane: person afflicted with a serious mental disorder impairing ability to function
By Rejection
Refusal to accept
By Counteroffer
Intended acceptance which changes or qualifies the offer, and is a rejection of the original offer
By intervening illegality
Legal situation interfering with an offer and agreement
Ie: making a contract to kill someone

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person afflicted with a serious mental disorder impairing ability to function

Insane:

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Intended acceptance which changes or qualifies the offer and is a rejection of the original offer

By Counteroffer

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Legal situation interfering with an offer and agreement

Ie: making a contract to kill someone

By intervening illegality

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Agreement to an offer resulting in a contract Communicated by offeree to offeror Oral or written Including mail or telegram

Acceptance

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Reality of Consent

Justifiable reliance by offeree Offeree believes what offeror says is true No reason to believe otherwise Without this contract is Voidable
Influencing factors:
Misrepresentation
Fraud
Undue influence
Duress
Mistake

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Innocent Misrepresentation

False statement made in the belief it is true

Misrepresentation

False statement of a matter of fact

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Intentional or reckless false statement of a material fact upon which the injured party relied which induced the injured party to enter into a contract at his/her detriment

Fraud

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Manner of Committing Fraud

By express misrepresentation 
Oral or written
By concealment 
Attempting to hide information
By silence when one has a duty to speak
Not sharing information when asked or requested

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Improper influence that is asserted by one dominant person over another without threat of harm
Often with a fiduciary relationship

Undue Influence

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Person in a relationship of trust or confidence

family relationships
attorney and client
physician and patient
funeral director and family

Fiduciary

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Means of removing one’s free will
Obtaining consent by threat to do harm to the person his/her family or property
Element of coercion or force
Physical emotional and financial

Duress

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Mistake by one party to a contract
Mistake as to quality value or price
Mistake as to terms of contract
Generally will not render agreement defective

Unilateral mistake:

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Mistake by both parties to a contract
Mistake as to nature of transaction
Mistake as to identity or existence of subject matter
Generally render agreement defective

Mutual mistake:

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necessity that parties desiring to enter into contracts meet all requirements

Contractual Capacity:

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Contractual Capacity Requirements:

Parties must have the ability to understand a contract is being made
Parties must understand the contracts general nature
Must have legal competence to contract

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Protected Classes of Persons

Afforded special protection in contracts:

Minors
Insane persons
Intoxicated persons
Convicts

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Repudiation of or election to avoid a voidable contract

DISAFFIRMANCE

Confirming of an act which was executed without authority or an act which was voidable

RATIFICATION

Items required or proper and useful for sustaining a human being at an appropriate living standard (food clothing and shelter)

NECESSARIES

That which the offeror/promisor demands and receives as the price for an offer/promise ....... Includes money, personal property and service Generally promises unsupported by consideration are not enforceable

Consideration

Promising to do what one is legally obligated to do Cannot promise to drive legal speed limit Already obligated to follow speed laws .....

Invalid Consideration

Promising or refraining from doing that which one has no right to do Refraining from doing something Promising not to rob a bank

FORBEARANCE

Promises Enforceable without Consideration Charitable pledges and subscriptions Church or other charity organization Legally required to honor your pledge or subscription Depend on this for budget and expenses

Your subscription or pledge... | "is an offer of a unilateral contract that is accepted by creating liabilities and making expenditures"

Enforceable promise whereby one party justifiably acts in reliance upon the promise of another

Promissory Estoppel

``` Elements of Promissory Estoppel Offer is made Offeror reasonably expects the promise to induce action by offeree Offeree acts Offeror fails to honor the offer What can the offeree do? ```

....... According to Promissory Estoppel Justice requires enforcement of the promise when the offeree would be substantially harmed if it were not enforced

Classes of Illegal Agreements

Agreements to commit crimes or torts Agreements prohibited by statute Agreements contrary to public policy

Injurious to individuals and society at large

Agreements to Commit Crimes or Torts

Agreement Prohibit by Statue

``` Usurious Restraint of trade Fix prices Influence fiduciaries Defraud creditors Obstruct justice Relieve liability for willful negligence ```

USURIOUS Exceeding maximum rate of interest which may be charge on loans or consumer credit accounts USURY Charging a higher rate of interest than the law allows

Usurious Agreements

MAXIMUM CONTRACT RATE | Highest legal rate of interest

LEGAL RATE | Interest rate applied when no rate is specified

``` Laws which seek to promote competition among businesses ....... Prevents creation of a MONOPOLY Prohibits contracts not to compete Restrain (limit or prohibit) trade Fix prices of goods and services Unfair competitive practices ```

ANTITRUST LAWS

Legislation intended to promote competition among businesses by prohibiting restraint of trade

SHERMAN ANTITRUST ACT

Person or persons in a relationship of trust or confidence

FIDUCIARIES

Agreements to Influence Fiduciaries FIDUCIARIES Person or persons in a relationship of trust or confidence Agreements to Defraud Creditors Regarding payment of a debt Money owed Agreements to Obstruct Justice Process of law and justice Determined by established laws Court judgments

Agreements to Relieve Liability for Willful Negligence Agreements in which someone else "takes the blame" Agreements Contrary to Public Policy Contracts limiting freedom of marriage Contracts injurious to public service or the "public good"

Written Contracts Statute of Frauds Originally enacted by the English Parliament (1677) Present in some form in all states Lists certain types of contracts which can only be enforced if in written form

``` Types of Contracts in Writing Contracts to transfer an interest in real property Real Property (Real Estate) Land Objects attached to land ```

Executory bilateral contracts which cannot be completed within one year from date of making Ensures parties do not forget contract terms Example: Purchase of real estate with long term loan contract/mortgage .... Agreement to become responsible for the debt (or default) of another DEBT Obligation to pay money or goods DEFAULT Nonperformance of a duty or obligation ......

Contracts made by executors or administrators to pay debts of an estate out of his/her personal funds Rather than paying debts from decedent's estate Agreement to pay debts of another ...... Promises made in consideration of marriage Prenuptial agreements ...... Contracts involving sale of goods or merchandise with price of $500 or more GOODS Moveable tangible personal property

Satisfactory or Complete Performance: | Contract that has been performed in a manner that would "satisfy" an ordinary reasonable person

Nature of Performance

``` Impossibility of performance Destruction of the subject matter Occurs when subject matter of a contract is destroyed without fault of either party ........... Intervening illegality New laws which make the contract illegal ```

Discharge by Impossibility

One party announces his/her intention not to perform prior to time to perform If innocent party accepts breach of contract contract is discharged

Anticipatory Breach:

Remedies for Breach of Contract

Damages: Sum of money awarded to injured party | Nominal Compensatory Punitive Liquidated

Token award to symbolize vindication of wrong done to the plaintiff Generally award of $1

Nominal Damages

Award paid to injured party to cover exact amount of their loss, but no more

Compensatory Damages

Award paid to the plaintiff in order to punish the defendant, not to compensate the plaintiff AkA Exemplary (mental anguish) Occurs most with torts Rather than breach of contract

Punitive Damages

Provision in a contract fixing the amount of damages to be paid in the event one party breaches the contract

Liquidated Damages

``` Remedies for Breach of Contract Rescission: ..... Specific Performance: ...... Injunction: ```

In addition... Debts discharged in bankruptcy cannot be collected Individual or business debts Upon filing with and discharge by bankruptcy court Creditor's rights of action to enforce contracts of the debtor are barred ...... Statute of Limitations Time within which right to sue must be exercised or lost Time limits vary from state to state Types of suits Types of debts

Transferring one's rights under a contract to another party

Rights of Assignment

Person to whom the promisee owes an obligation, which is discharged if the promisor performs Example Mary owes John $1000 Charles is Mary's wealthy friend Charles (promisor) makes a contract with Mary (promisee) to pay her debt to John (creditor beneficiary)

Creditor Beneficiary

Transfer of title to goods from seller to buyer for consideration called the price

Sale

Consideration stipulated by the contract, generally expressed in money or money's worth Consideration can be: money, goods, services

Price

Person who deals in goods and/or has knowledge or skills related to the sale of goods

Merchant

Document of conveyance which provides written evidence of one's title to tangible person property (goods) Provides two things -Sellers proof of title - if questioned by buyer -Buyers proof that goods were obtained legally

Bill of Sale

Land and objects permanently attached to land | Real Estate

Real Property

Passage of Title Acceptance of goods by buyer -Required for passage of title -Occurs when buyer signifies that he/she will take/retain the goods

``` Transfer of Title and Risk of Loss Depends on: Shipment contract Destination contract Sale on approval Sale or return ```

Actual and define statement of a seller, either orally or in writing, guaranteeing a standard or level of performance Seller promises either in writing or orally assures the quality, description, or performance of the goods

Express Warranty

Warranty of merchant ability (merchant seller) Warranty of fitness for a particular purpose The goods being sold shall be merchantable and fit for the purpose for which the seller implied

Types of Implied Warranties

Designed to protect public or consumers' interests

Regulatory Agencies

Expansion of Consumer Protection Product safety laws -Require goods to meet safety standards Product Safety Act (1972) -Established the Consumer Product Safety Commission -Which creates and enforces safety standards for many products

Exceeding maximum rate of interest which may be charge on loans or consumer credit accounts

USURIOUS

Charging a higher rate of interest than the law allows

USURY

Highest legal rate of interest

MAXIMUM CONTRACT RATE

``` Prevents creation of a MONOPOLY Prohibits contracts not to compete Restrain (limit or prohibit) trade Fix prices of goods and services Unfair competitive practices ```

ANTITRUST LAWS function

Regarding payment of a debt | Money owed

Agreements to Defraud Creditors

Process of law and justice Determined by established laws Court judgments

Agreements to Obstruct Justice

Agreements to Relieve Liability for Willful Negligence | Agreements in which someone else "takes the blame"

Agreements to Relieve Liability for Willful Negligence

Contracts limiting freedom of marriage | Contracts injurious to public service or the "public good"

Agreements Contrary to Public Policy

Originally enacted by the English Parliament (1677) Lists certain types of contracts which can only be enforced if in written form Present in some form in all states

Written Contracts | Statute of Frauds

cannot be completed within one year from date of making Ensures parties do not forget contract terms Example: Purchase of real estate with long term loan contract/mortgage

Executory bilateral contracts

by performance agreement impossibility acceptance of breach or operation of law

Discharge: | Termination of a contract

When all terms of the contract have been fulfilled the contract is discharged by performance

Discharge by Performance | Performance

Contract that has been performed in a manner that would "satisfy" an ordinary reasonable person

Nature of Performance | Satisfactory or Complete Performance:

Fulfilling major terms of the contract Contract can be discharged Less any damages that might occur for minor breaches of contract

Substantial Performance:

Mutual agreement to cancel the contract Entering into a contract is a mutual agreement Parties can also mutually agree to cancel the contract

Discharge by Agreement

Change of one party to a contract at the mutual agreement of the original parties You buy a house You decide to sell the house Another person agrees to assume your bank mortgage

Novation:

Agreement made and executed in satisfaction of the rights one has from a previous contract. You satisfy your contract with the bank when another party assumes payment of your mortgage.

Accord and Satisfaction:

Impossibility of performance Destruction of the subject matter Occurs when subject matter of a contract is destroyed without fault of either party

Discharge by Impossibility

Situation in which one of the parties to a contract fails or otherwise refuses to perform the obligation established in that contract

Discharge by Acceptance of Breach Material breach of contract Breach of Contract:

Canceling, annulling, or avoiding When contract is breached Aggrieved party is released from all obligations not yet performed Or allowed to sue for damages

Remedies for Breach of Contract | Rescission:

Carrying out terms of the contract Contracts involving sale of real estate Sale of rare articles of personal property

Specific Performance:

Judicial order or decree forbidding performance of a certain act

Injunction:

Intervening illegality | New laws which make the contract illegal

Discharge by Operation of Law

Method whereby one party conveys rights to another person who is not a party to the original contract (beneficiary insurance assignment to funeral home)

Assignment

party making assignment

Assignor:

party to who assignment is made

Assignee:

Person not a party to a contract, but whom the parties intend to benefit Example Mrs. Jones makes pre-funded funeral arrangements for her invalid husband Mrs. Jones and the funeral director are the contracting parties Mr. Jones will receive benefits of the pre-funded funeral upon his death

Third-Party Beneficiary

Third party beneficiary to whom no legal duty is owed and for whom performance is a gift Example Beneficiary named in a life insurance policy

Donee Beneficiary

is a contract in which ownership of goods transfers immediately from the seller to the buyer for a price

A Sale

Movable tangible personal property | IE: Food vehicles clothing furniture

Goods Types of Goods: Existing Goods Future Goods

Goods which are in existence and owned by the seller when the contract is made

Existing Goods

Goods which are not in existence when the contract is made | "Goods to be provided at a later date"

Future Goods

Specifying of goods by the buyer to the seller

Identification

Seller agrees to transfer title of goods to a buyer for consideration (price) "At a future time"

Contract to Sell

Recognized as most important statute in business law Includes provisions which regulate certain sales of goods ....... Applies to personal property classified as goods Personal Property All property which is not real property

Uniform Commercial Code (UCC) ``` ......... Does Not Apply To: Real property Intangible personal property Service contracts ```

Evidences of ownership of personal property such as stock of corporations checks and copyrights

Intangible Personal Property

Contracting for services rather than goods

Service Contracts

Defines offer acceptance consideration incapacity and illegality Applies to circumstances not covered under the UCC

Contract Law

Acceptance of goods by buyer - Required for passage of title - Occurs when buyer signifies that he/she will take/retain the goods

Passage of Title

Sale is not complete until the buyer approves the goods

Sale on Approval

Is a complete sale with the right of the buyer to return the goods and thereby set aside the sale

Sale or Return

Guarantee made by a seller that an article good or service will conform to a certain standard or will operate in a certain manner

Warranty:

Warranty of title Sale of goods implies the seller owns the item offered for sale Warranty against patent and/or copyright infringement Goods shall be delivered free of the rightful claim of any third party by way of patent or trademark infringement

Warranties imposed by the UCC:

Warranty imposed by law | Arises automatically because the sale has been made

Implied Warranty

Protection for merchant -Limits warranty coverage to that provided by manufacturer of goods Disclaimer on Casket Price List

Disclaimer of Warranties

Usury laws Antitrust laws Regulatory agencies

Consumer Protection | Traditional protection:

Disclosure and Uniformity

Truth-in-advertising Truth-in-lending Fair credit reporting Federal Trade Commission Funeral Rule

Meeting eligibility requirements prior to licensure in a regulated profession

Administrative law:

Bus Law Exam 2 Notes Flashcards

(113 cards)