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Business Law > Mgmt 108 Midterm > Flashcards

Mgmt 108 Midterm Flashcards

1
Q

Contract Acceptance

A

Acceptance must be a mirror image of the offer otherwise the offer is rejected and the deal is dead

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2
Q

Impossibility of Performance

A

Contract cannot be fulfilled; voids the deal

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3
Q

Offers must have

A

Reasonably definite terms

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4
Q

Substantial Performance Doctrine

A

If you do just about everything right, but make a minor unintentional mistake, the contract is still binding but the price must be reduced by the cost of the error

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5
Q

Consideration

A

A mutual exchange of economic benefits that don’t have to be fair or equal; favors and gifts are not enforceable (exception charitable pledge)

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6
Q

Promissory Estoppel

A

A charity may enforce a charitable pledge even though the charity did not give any consideration

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7
Q

Misrepresentation

A

A misstatement or omission of a material fact: Voidable

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8
Q

Fraud (In the Inducement)

A

An intentional misstatement or omission of a material fact: Voidable

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9
Q

Fraud (In the Execution)

A

Tricking someone into signing a document when they are unaware that the document has legal significance: Void

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10
Q

Undue Influence

A

Using your special position of trust to influence someone for your own economic advantage: Voidable

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11
Q

Duress

A

Using physical or emotional threats to force someone to enter into a contract: Void

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12
Q

Unilateral Mistake

A

A contract is voidable if one party makes a mistake and the other party knows or reasonably should suspect that a mistake was made

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13
Q

UCC Contract Acceptance

A

All material terms must be the same but there can be immaterial differences

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14
Q

UCC Favors

A

Favors are enforceable without additional consideration unlike contract law

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15
Q

UCC Offers

A

An advertisement or brochure is generally not an offer;
An offer may not be revoked if the offeror was paid for an option;
The offer must remain open for its stated time or for a reasonable time but never for over 3 months if a merchant made the offer and the offer is contained in a signed writing

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16
Q

UCC Consideration

A

A contract modification is valid even if the parties do not exchange new consideration;
A later favor that modifies or changes an existing contract thus is enforceable

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17
Q

Statute of Frauds

A

Applies to sales of goods over $500 (or equal to)

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18
Q

Express Warranty

A

Very clear promise; ex) Michelin rating tires for a certain number of miles

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19
Q

Implied Warranty

A

Nothing was said or communicated but it was understood implicitly in the contract

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20
Q

Implied Warranty of Title

A

Goods are not stolen or subject to a creditor’s lien; given by all sellers; disclaimed only with specific language

21
Q

Implied Warranty of Mercantability

A

Goods are not defective; given by merchants only; disclaimed with specific or broad “sold as is” language

22
Q

Implied Warranty of Fitness for a Particular Purpose

A

Goods are suitable for the buyer’s specific needs that were expressed to the seller; given by all sellers; disclaimed with specific or broad “sold as is” language

23
Q

Statute of Frauds:

To What Contracts Does It Apply?

A

1) Contracts that cannot possibly be performed within one year from the date on which they were formed; 2) Sales of real estate; 3) Sales of goods for $500 or more; 4) Surety agreements guaranteeing repayment of another person’s debts

24
Q

Statute of Frauds:

If It Applies, How Is It Satisfied?

A

1) Some writing signed by the denying party; 2) Party admits that a contract exists; 3) Observed partial performance

25
Q

Statute of Frauds

A

Requirement that certain kinds of contracts be memorialized in a signed writing with sufficient content to evidence the contract

26
Q

Parol Evidence Rule

A

After parties have entered into a clear, written agreement, evidence may not be admitted if the evidence conflicts with the written agreement and arose prior to the time of forming the written agreement

27
Q

Statute of Limitations

A

The period of time during which a party must commence a lawsuit
CA) oral contract: 2 yrs; written contract: 4 yrs; *from when problem arises

28
Q

Illegality

A

1) Certain illegal contracts are void: price fixing/territorial restrictions
2) A unlicensed professional person such as a realtor or CPA cannot collect his fee; *if licensing law that was violated was enacted merely to raise tax revenues, then the contract is enforceable

29
Q

Rules for a Covenant Not to Compete

A

1) It is reasonable in time and geographic area (where the original business did business) and
2) It is for a legitimate business purpose such as protecting business goodwill or trade secrets

30
Q

Third Party Assignment Rule:

A

An assignment is valid only if the affected party’s rights or obligations are not materially changed;
Third party beneficiaries may sue if it’s intended but not if it’s incidental may not sue

31
Q

Implied Covenant of Goodfaith

A

Things not specifically written in the agreement can still be illegal
Ex) Dry cleaner can’t tell his son trade secrets after selling the business because that would break the non-competitor clause

32
Q

When is a Contract Void (relating to competition)

A

If you do anything that minimizes competition, and it isn’t a valid covenant not to compete

33
Q

Contract Performance:

General Rule

A

A party breaches a contract if he does not properly perform all of his contract obligations

34
Q

Contract Performance:

Excused from performing when?

A

1) A novation, or new contract, replaces the original contract
2) An accord and satisfaction, or compromise of the dispute, is reached
3) The initial event, or condition precedent, that was supposed to occur before his own duties were to arise never happened; Ex) buyer fails to give required cash deposit
4) The other party commits an anticipatory breach by clearly indicating that he does not intend to fulfill his obligations when the time for his performance arrives
5) Under the substantial performance doctrine, a seller must appropriately reduce the contract price if his breach is minor and unintentional

35
Q

Novation

A

New contract

36
Q

Accord and Satisfaction

A

Compromise of the dispute

37
Q

Condition Precedent

A

The initial event

38
Q

Contract Remedies:

Injunction

A

Prohibits someone from performing certain acts

39
Q

Contract Remedies:

Recession and Restitution

A

A party can cancel, or rescind, a contract. He then must provide restitution by returning any property, such as an advance deposit, that he received from the other party

40
Q

Contract Remedies:

Specific Performance

A

A party may obtain specific property, item, or service that the contract entitled him to receive. Only if: the item is unique, such as unique property or a unique good, and the item does not involve a personal service

41
Q

Contract Remedies:

Damages (definition)

A

The sum of money needed to place an injured party in the same financial position as if the contract had been performed (economically whole); *you only have to pay for reasonably foreseeable damages

42
Q

Contract Remedies:

Damages (measurement)

A

(Market Price - Contract Price) + Incremental costs

43
Q

Contract Remedies:

Damages (rules/exceptions)

A

The injured person must attempt to minimize, or mitigate, his damages; punitive damages, or damages in excess of provable damages, are never granted by a court in contract law

44
Q

Contract Remedies:

Consequential Damages

A

Don’t get attorney’s fees back unless “prevailing party clause” is written in; don’t get interest for time period between the breach and judgement if the damages were unliquidated (the amount was uncertain); you get interest only if the damages were liquidated (there was a stated amount)

45
Q

Buyer’s Options in a Breach of UCC Contract

A

1) Reject entire shipment of goods even if only one is defective
2) Reject only the defective units and keep the good units
3) Accept the entire shipment and reduce the price paid to reflect the lower value of the goods received

**Buyer must give seller a reasonable time to correct, or cure, its breach by replacing the defective product units with good units

46
Q

UCC Contract: Statute of Limitations

A

Buyer of goods must commence a lawsuit within 4 yrs after discovering the seller breached his duties. The parties can agree to reduce this time period to as short as one year

47
Q

Conducting Agency:

Consideration

A

Consideration is not required for these agreements

48
Q

Conducting Agency:

Contract

A

An agent is liable when acting for an undisclosed principal;
A principal is liable for his agents authorized acts: actual (both express and implied), apparent, and ratification;
An agent owes his fiduciary duty to his principal: honesty, loyalty, and careful performance

49
Q

Conducting Agency:

Tort

A

An agent always is liable for his own torts (misconduct not within employment);
A principal is liable if its agent commits a tort within the scope of his employment;
An agent owes a fiduciary duty to his principal: honesty, loyalty, and careful performance

Business Law (2 decks)

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