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Flashcards in REG 9 Deck (13):

What act prohibits price discrimination and what is it an amendment to?

Price discrimination is prohibited by the Robinson-Patman Act of 1936, which was an amendment to the Clayton Act of 1914.


What does the Clayton Act of 1914 prohibit?

The Clayton Act of 1914 prohibits (1) mergers that may lessen competition or tend to create a monopoly, (2) sales that prevent the buyer from dealing with the seller’s competitors, (3) tie-in sales (requiring a buyer to take other products in order to buy the first product), (4) price discrimination, and (5) interlocking directorates.


What does the Federal Trade Commission Act Prohibit

The Federal Trade Commission Act addresses unfair and deceptive business practices such as false advertising.


What does the Clayton Act say about Franchisees?

The Clayton Act of 1914 prohibits exclusive-dealing requirements. However, a franchise relationship is contractual, and the agreement is in force for a specified period. Because the franchisee and the franchisor have a common public identity, an exclusive-dealing contract is allowable if it is necessary to assure product quality. Without the exclusive-dealing requirement, a low-quality product sold by the franchisee could reflect badly on the reputation of the franchisor.


What are horizontal and vertical mergers and what law prohibits them?

A vertical merger is between buyers and sellers, as opposed to competitors (called horizontal mergers). It will be attacked if entry of other firms into the market thereby becomes more difficult, or if it would make the company disproportionately large compared with competitors. A horizontal merger is presumed illegal with a smaller market share.

Sherman Act (through the FTC) makes monopolization at any time illegal


What federal agency enforces the Sherman Act and oversees permission for mergers and aquisitions

The federal trade commission.


Which law prohibits. price fixing and price discrimination. Which one of the following laws prohibits price discrimination and other exclusionary practices that may give certain firms a competitive advantage over other firms in the same market?

The Robinson-Patman Act of 1936 amended the Clayton Act with respect to price discrimination. Price discrimination by both buyers and sellers is prohibited in interstate commerce of goods of like grade and quality. The purpose of the act is to protect competition. However, price differentials are allowed if justified by a cost savings to the seller or a good-faith effort to meet a competitor’s lawful price.


What law created the FTC (is it part of Sherman Antitrust?)

The FTC Act of 1914 prohibits unfair methods of competition, and unfair or deceptive acts, in or affecting interstate commerce. The basic objectives are to initiate antitrust actions and protect consumers


What is a mutual mistake of fact.

A mutual mistake occurs when both parties to a contract are mistaken about the same material fact. A material fact is one that is important and central to the contract. It is a basis of the bargain. Mutual mistake of material fact is grounds for rescission or is a sufficient defense for failure to perform the contract.


Can a unilateral mistake of fact void a contract?

A unilateral mistake of fact does not permit rescission of the contract unless (1) the other party knew or should have known of the mistake, (2) enforcement would result in extreme hardship, or (3) the error was due to mathematical mistake or omission of items in computing the cost of the contract.


Under what circumstances can a recissission of a contract take place if there is a unilateral mistake of fact?

Answer (A) is correct.
The offer contained a unilateral mistake of fact. A contract is formed. But rescission is available under certain circumstances, for example, when the other party knew or should have known of the mistake, and the error was clerical/mathematical and not grossly negligent.


What is innocent misprepresentation?

Innocent misrepresentation is false representation of a material fact, intended to induce reliance, justifiably and detrimentally relied upon. It differs from fraud in that knowledge of the falsity or reckless disregard for truth is not present. The only remedy customarily available absent fraud is rescission: cancelation of the agreement and restoration of the parties to their positions prior to contracting.


What would make a contract void versus voidable?

Answer (D) is correct.
Fraud in the inducement occurs even when the defrauded party is aware of entering into a contract and intends to do so. However, (s)he is deceived about a fact material to the contract (e.g., the nature of the goods or services). Thus, the contract is voidable.

These are the other 3, they would make a contract void only above is voidable
Fraud in the execution.
B. Physical coercion.
C. Contracting with a person under a guardianship.