Business Law 1

Question 1

What are common laws?

When are they used for?

Answer 1

Reusing laws for similar situations

Real estate, insurance, services or employment

Question 2

Three parts to a contract

Answer 2

Offer and acceptances

Exchange of consideration

no defenses

Question 3

What is a Quasi-Contract?

Answer 3

Remedy for unenforceable contracts. Getting back consideration for incomplete contract

Question 4

What terms must be presented to have a complete offer under UCC and COMMON LAW?

Answer 4

UCC: Quantity (sale of goods)

Common Law: Offeree, price, time, quantity, nature of work

Question 5

How can you revoke an offer

How can you prevent an offeror from revoking an offer?

Answer 5

Communicate or implued through conduct like selling it to someone else

Offeror can revoke at any time even if they gave a set time to accept. The offeree can buy time (option) to prevent revocation. Just giving money saves the spot

Question 6

When are rejections and acceptances effective?

Answer 6

Rejection: when received

Acceptance: When sent

Question 7

How to reject offer? (3)

Answer 7

communicate

counter

DIDI - death incompetence illegal destroyed

Question 8

Is an agreement to give a gift enforcable?

Exception

Answer 8

No

Charity (if they rely on it)

Question 9

Five main reasons that a contract is VOID

Answer 9

• Subject matter is destroyed
• Fraud in the execution
• Duress (physical)
• Illegality
• Incompetence

Question 10

Statute of limitation under common law and UCC

Answer 10

Common law: 4-6 years from the date of breach

UCC: 4 years

Question 11

Statue of Fraud: contracts required in writing

Answer 11

• M - Marriage as considerations
• Y - Over a Year agreement
• L - Land (house, warehouse, lease or rentals or sales)
• E - Executor agreement to pay estate debts out of personal funds
• G - Sale of goods for more than $500
• S - Surety (pay debt of another)

Question 12

Is a contract void if the recipient dies?

Answer 12

No, an estate would take over as recipient

Question 13

What is Accord and Satisfactions

Answer 13

When a new agreement is presented to replace an old one, the original agreement is discharged upon completion of new agreement (parties may still sue in regards to original agreement until new agreement is complete)

LIKE NOVATION BUT FOR ACTS

Question 14

What is a novation?

Answer 14

Changing parties in an agreement

LIKE ACCORD AND SAT. BUT FOR PARTIES

Question 15

What is Parole Evidence

Answer 15

Prohibited information made on or before agreement date (judicial purposes)

Question 16

Difference in Remedy rules for Common Law and UCC

Answer 16

UCC: Have to perform exactly

Common law: If things arent done rihgt there may be additional payments for the difference for services (specific performance for other)

Question 17

• Liquidated Damages
• Punitive damages
• Rescission - exception

Answer 17

• Damages imposed for break in contract, must be reasonable
• Punishment for fraud
• When both parties in a contract go back to before they agreed to the contract, unless if their has been substantial performance (common law)

Question 18

FOB RULES

Answer 18

FOB shipment: buyer is in risk of loss until the carriers delivers the goods (FOB seller)

FOB destination: the seller is in risk of loss until the carrier delivers the goods
(FOB buyer

Question 19

Implied Warranties

Answer 19

• Express warranty: Oral & Written (Something making the buyer wanted to buy)
• Implied Warranty of Title (seller owns gods and has right to sell)
• Implied warranty of merchantability (Goods must fit ordinary purpose)
• Warranty of fitness (Fit buyers purpose)

Question 20

Three parties in agency

Answer 20

Principal, Agent, Third Party

Question 21

AGENCY rules for principal and agent:
- capacity?

• Age limit?
• consideration

Answer 21

Prinicpal needs to have mental capcity but agent doesn’t

principal can’t be a minor but agent can be

No consideration is needed for this type of relationship

Question 22

Duties that an agent owes to a principal

Answer 22

LORA

Loyalty, obedience, reasonable care, duty of account

Question 23

what is an agency coupled with an interest?

Answer 23

When someone defaults on a loan and agrees to transfer duties to debtor (making the debtor an agent)

Question 24

Define:
- Actual Authority
- Apparent Authority
- Ratification

Answer 24

1. Agent has the power and the right to engage in the contract on behalf of the principal
2. Agent has power to bind principal to third parties does not have the right to do it
3. Agent has no power or right, but principal chooses to be bound by unauthorized act, BUT PRINCIPAL ACCEPTS

Question 25

When is actual authority terminated?

Answer 25

1. fired or quit (may require pay of monetary damages) 2. accomplishment of agreement 3. by law ("BIDLID") - principal Bankruptcy discharge - Incapacity of principal - Death - failure of License - Illegal - Destruction

Question 26

main different between apparent and actual authority

Answer 26

Apparent: Third party beleives agent has power Actual: Agent beleives agent has power *both power to bind the principal

Question 27

Termination of Apparent Authority and exception

Answer 27

- Termination of authority must be commincated by principal to third parties - terminations by law don't require third party notices (BIDLID)

Question 28

Define Estoppel ...

Answer 28

Estoppel to deny existence of agency, this is when third parties believe someone is your agent and you don't correct it. Now you can't deny if they act in your behalf as an agent

Question 29

When are principals liable for torts committed by the agent?

Answer 29

When the agent was an employee performing within the scope of employment (Respondeat Superior) but this could still hold the agent liability also

Question 30

WHo is directly liable for some elses debts and who is only liable if the debtor defaul ts?

Answer 30

- Surety - Guarantor

Question 31

Legal options when debtor defualts on loan with no collateral, Surety or guarantor

Answer 31

Lien: on property of debtor (a claim on the asset to back up debt, kind of like a collateral but imposed by the court) Garnishment: Garnish (obtain) debtors property in the hands of a third party Writ of seizure and sale where the court seizes the debtors property and allows the creditor to sell it

Question 32

What is the homestead exemption?

Answer 32

Some states allow for debtors the right not to be seized if a creditor wants to take their primary house

Question 33

Describe the steps in a typical Secured transactions

Answer 33

1. DEBT: Creditor loans money to debtor 2. ATTACHMENT: Debtor places "personal property or fixtures" as collateral for the creditor to sell in the case of debtor default 3. PERFECTION: Creditor makes sure to have first dibs on the collateral (letting third parties know that you have first rights to the collateral property)

Question 34

What is a PMSI creditor? PMSI Creditor advantage in a secured transaction?

Answer 34

- "Purchase money security interest" gives the creditor right to the financed item as collateral - They take priority if the debtor defualts (ex. Mercedes has right to seize car and sell it if you defualt on thier loan) (same applies if you use a bank directly)

Question 35

five ways to perfect attachments in secured transactions

Answer 35

- Filing - Possession - control - Automatic Perfection - Temporary Perfection

Question 36

Proceeds from the sale of collateral

Answer 36

1. Pay any expenses associated with the sale of collateral like REPOSITION expense 2. Pay off any creditors wiht a security interest in the collateral in order of priority 3. Pay the debtor any surplus amounts received from the proceeds