R7 - Business Law Pt 1 Flashcards
(27 cards)
- Death of principal or agent
- incapacity of principal
- discharge in bankruptcy (principal)
- failure to acquire necessary license
- destruction of subject matter
- subsequent illegality
What are some conditions that could cause automatic termination of agency?
What are the duties of the agent to the principal?
Loyalty - no self dealing, no competing
Obedience - obey reasonable directions
Reasonable care - don’t be negligent
Account - account for money received and spent
What is doctrine of respondeat superior?
a principal, including corporation can be held liable for employees tort committed within the scope of employment
*Employee is also personally liable if they were negligent
What is agent’s personal liability when working for disclosed/undisclosed principal?
Not liable - disclosed principal
Liable - undisclosed / partially disclosed principal
What is the duty of indemnification?
Principal has implied duty to reimburse (indemnify) agent for all expenses incurred while carrying out agency.
Who can be held liable for a contract by a third party with an undisclosed principal?
Third party can hold agent or principal (but not both) liable for a contract with an undisclosed principal
What is the undisclosed principal’s effect on apparent and actual authority?
- No apparent authority - if third party does not know I am working for Bob, cannot assume apparent authority.
- Does NOT affect actual authority - If Bob told me to buy land, it doesn’t matter that seller doesn’t know Bob.
What are the three required elements of a legally enforceable contract?
1) Agreement with an offer and an acceptance
2) exchange of consideration (legally sufficient)
3) lack of defenses
What is the mailbox rule for contracts?
ACCEPTANCES are effective when they are dispatched (mailed).
REJECTIONS are effective when received.
Exception: if offeror explicitly states “acceptance must be RECEIVED by certain date”
What types of fraud make a contract VOID
not voidABLE
- Fraud in the execution - deceived into signing something
- Physical duress - sign the contract or I will break your arm
- Mutual mistake - both parties thought it was a real painting, but it was famous
- illegal contract hire a hit man
- Required protection license missing - contract to buy real estate through someone who is not licensed
- Adjucated mental capacity
What are six categories of contracts which require to be in writing?
MYLEGS - marriage, year, land, executors, goods, suretyship must be in writing
- Marriage - if you get married, I will buy you a house
- Year - cannot be performed within a year
- Land - real estate
- Executors - pay estate debts out of personal funds
- Goods - Sale of goods more than $500 (services are ok)
- Surety - pay the debt of another
What is the parole evidence rule?
If a final contract is evidence, cannot introduce any oral or written statements from negotiations PRIOR or contemporaneous to contract. Or that contradict the contract.
-Oral or written modification AFTER contract signed are admissible.
In an action for a breach of contract, what is the start date for the time period for the statute of limitations?
Computed from the date of the breach.
What is fraud in the inducement?
- Deceived as to the meaning of the transaction.
- voidable
- victim must prove defrauder made misrepresentations with intent to decieve
- EX: movie star knowingly signed a contract, but there was a buried clause that they must also film a lingerie commercial
What is a novation?
Agreement among two parties to substitute a third party and release from contract. EX: I hired Bob to build a garage, but he is not able to fulfill and I agree to let Tom build it in his place.
What is accord and satisfaction?
Parties mutually agree to substitute one contract for another. EX: Was going to pay for services with $500 cash, but decided to give you a bike instead
What are the legal remedies a buyer has under UCC Sales article when seller fails to deliver goods identified in the contract?
- Specific performance (i.e. rare baseball card)
- Recover the goods (replevin)
- purchase substitute goods (cover)
NO punitive damages for breach of contract
What is the implied warranty of fitness?
The seller knows the particular purpose for which the buyer will use the goods and knows the buyer is relying on sellers expertise to select suitable fitness.
EX: Buyer wants to buy a new truck to tow a 2 ton boat. Don’t sell him a ford ranger.
What makes liquidated damages clauses enforceable?
1) reasonable in relation to actual harm done
2) not a penalty
What contract applies to sales of goods?
The UCC Sales Article applies to all contracts with a merchant seller and a non-merchant buyer.
If the purchase price is over $500, writing may be required to enforce contract under Sales Article Statute of Frauds.
What are the exceptions to the written requirement in the statue of frauds? SWAP
Specifically manufactured (custom) goods
Written confirmation between merchants
Admission in court
Performance
If these exceptions exist, oral contract will be enforceable
What is anticipatory repudiation (rejection)?
Either buyer or seller indicates they will not perform. Causes breach of contract. Can make written demand for assurance.
What is subrogation is a surety context?
The right a surety has by which the surety succeeds to the creditor’s right against the principal when the surety pays the principal’s obligations.
If mom has to pay off your car because you defaulted, then she has the right to the car, not the bank.
What is the difference between a surety and guarantor?
Surety - directly liable for loan
Guarantor - liable to creditor only if debtor does not perform (bank has to try to get money from debtor before going to guarantor).
