Remember and Understand - Business Law

Question 1

What are the three types of agency?

Answer 1

1. Actual authority
2. implied authority
3. apparent authority

Question 2

What is actual authority

Answer 2

• An agent has actually been told by contract that he or she may act on behalf of the principal

Question 3

What is implied authority?

Answer 3

Authority an agent has by virtue of being reasonably necessary to carry out his or her express authority (i.e., when an agent relieves premium payment or signsa binder - it is implied that he or she has the authority to do so by the principal as it is necessary to carry out thier duty

Question 4

What is apparent authority

Answer 4

Apparent authority is based on a third party’s perspective, they believe that the agent has the authority to enter into a contract based on

1) prior dealings with agent
2) agents title leads the third party to believe they can enter into a contract
3) principal hires the agent to carry out duties that normally carry with them the rights to enter into a contract

Question 5

What is required for an agency relationship to exist?

Answer 5

1) both parties conset to the relationship
2) agent owes principal fiduciary duty
3) principal doesn’t owe agent fiduciary duty
4) a contract is NOT required and an agency agreement is not based on contract law

contract required if more than one year

Question 6

What are the various duties and liabilities of the principal

Answer 6

1) Compensation - unless otherwise agreed

2) Reimbursement for all expenses in carrying out agency relationship

Question 7

What are the various duties and liabilities of an agent

Answer 7

L - Loyalty - must act solely in the principal’s best interest
O- obedience - obey principal’s reasonable instructions
R- Reasonable care - must not act negligently
D- Duty to account - for money and property received and paid out
S- Subagent - if agent is authorized to hire a subagent- the subagent owes duty to both agent and principal

Question 8

what is agency law

Answer 8

deals with someone’s ability to bind you to a contract with a third party

Question 9

How is agency terminated

Answer 9

1) both parties agree
2) the agent fires the principal
3) principal fires the agent
4) agent breaches their contract by doing something like violating their obligation to act as a fiduciary to principal

Question 10

When are agent liable for torts they commit?

Answer 10

Agents are liable for torts committed whether they had authority or not

Question 11

when will an agent by liable?

Answer 11

They will be liable for the act unless the principal ratifies the contract

Question 12

What must a contract contain?

Answer 12

1. offer
2. acceptance
3. consideration
4. proper form (oral or written)
5. Legal subject matter
6. Two competent parties

Question 13

what are elements of a contract

Answer 13

agreement (offer and acceptance), consideration and lack of defenses

Question 14

What is offer and acceptance

Answer 14

a meeting of the minds, terms must be definite and certain

- an offer must be communicated to the offerree

Question 15

Who can accept the offer?

Answer 15

An offer must be accepted by intended party (offeree)

- it can be made only by a party who knows an offer has been made and has all of the facts

Question 16

What is a counter offer

Answer 16

When an offeree accepts a contract but puts added stipulations

Question 17

What is the mailbox rule

Answer 17

acceptances are effective upon dsipatch

- offerer may opt out by stating that “acceptance is effective upon receipt”

Question 18

What is consideration

Answer 18

• legal value (not necessarily equal or fair) though a bargained for exchange

Question 19

What is the legal requirement

Answer 19

The contract needs to be legal. You can’t enter in a contract with illegal terms

Question 20

What voids an offer

Answer 20

• if offeror dies or becomes insane before acceptance, offer is void
• contact is binding if acceptance occurs before death

Question 21

what actions or circumstances will revoke a contract?

Answer 21

1) offeror revokes and offeree receive revocation

2) offeree finds out prior to acceptance that offeror has sold the item

Question 22

What is a unilateral contract

Answer 22

• only one party has a legal obligation to uphold the terms of the contract
• example: If you put an advertisement in the newspaper with a $100 reward for your lost pet and someone returns your lost pet then you have a legal obligation to pay that person. Nobody has a legal obligation to find your pet

Question 23

What is a bilateral contract

Answer 23

a. More common that a unilateral contract. Both parties have a lega obligation to uphold the terms of the contract
b. Example: Company X promises to pay Company Y 10,000 in exchange for computer equipment. Company Y must provide the equipment and Company X must pay them 10,000

Question 24

what is an implied contract?

Answer 24

a. You can imply that a contract exists based on the actions of both parties. A contract can still exist even when one party doesn’t actively agree to the terms of the contract. The courts will uphold implied contracts so that one party won’t be unfairly enriched
b. Example: Bob get’s into a car accident and is rushed to the hospital. A surgery is needed to save Bob’s life and bob is not conscious to agree to the contract. The hospital saves bob’s life and sends him a bill. Bob is liable for the bill even though he didn’t agree to the contract

Question 25

What is an expressed contract

Answer 25

both parties come together and agree to the terms of the contract

Question 26

What is void versus voidable

Answer 26

Void - won't be upheld in court Voidable - can be voidable by one party. Usually happens when there is a material mistake, misstatement of fraud from one of the parties

Question 27

What are different ways a contract can be discharged?

Answer 27

1) Performance 2) Agreement - must agree to end or modify liability - End - Modify 3) Operations of law - under certain circumstances, unperformed contracts may be excused by operations of law 4) Breach

Question 28

What are seller remedies?

Answer 28

1. cancel and sue for damages 2. withold delivery and stop goods in transit if buyer has failed to make a required payment has repudiated c. Resell and sue for damages – usual measure if the difference between contract price and resale price, plus incidental damages – usual measure is the difference between contract price and resale price, plus incidental damages, such as storage fees d. Full contract pirce- may be recovered if goods cannot be resold Incidental damages may also be recovered e. Liquidated damages – recoverable if reasonbale an dnot a penalty. If buyer has made a down payment and breaches, seller may keep the lesser of $500 or 20% of the price

Question 29

What are buyer remedies?

Answer 29

a. Reject for any nonconformity – rejection may be of all goods or some goods or buy may accept. In any case, buyer may sue for damages for the nonconformity b. Damages for accepted goods – difference between the value of the goods if conforming and the value as delivered plus incidental and consequential damages c. Damages for rejected or undelivered goods – difference between market price and contract price, or cover (buy replacement goods) and sue for difference between cost of cover and contract price d. Specific performance or replevin – specific performance can be used only if goods are unique or buy cannot cover. Replevin (right to recover goods wrongfully in hands of seller) may be used if the goods have not been identified and the buy cannot reasonable cover. e. On seller’s insolvency – if buyer has paid all of the part of price buyer may recovered goods from the seller if goods have been identified

Question 30

Summarize the priority rules of secured transactions

Answer 30

1. The rules follow the first come first served principal. This means that the first debtor to perfect their secured interest (usually by filing in the appropriate locality or jurisdiction will have priority over all other debtors. Essentially the first debtor to file the appropriate paper work to secure their interest will win a. Example: John buys a car using a collateralized loan from his local bank. The bank files the appropriate paperwork and “perfects” the lien against the car. A year later

Question 31

What is a perfect security interest and what are the ways to perfect?

Answer 31

1. Perfection sets a secured party’s rights in collateral against third parties who may also have an interest in the same collateral 2. Timing of perfection – perfection cannot be completed until there is attachment but attachment and perfection may be simultaneous 3. Ways to perfect: a. Filing – Filing a financing statement b. Possession – no intangibles c. Control – investment property d. Automatic perfection – PMSI in consumer goods and small scale assignments of accounts

Question 32

Describe the federal unemployment tax act?

Answer 32

- an employer paid tax - must file return and pay even if only one employee works there - deductible to company - not deductible by the employee - allows employers to credit the FUTA liability by the amount of state unemployment tax (SUTA) they pay

Question 33

What are the major aspects of FICA and Social Security taxes?

Answer 33

Aspects of FICA and SS taxes - paid by employer and employee - employer withholds from employee's paycheck and must pay tax matching employee's withholding 2) If employer underwithheld, they are required to make up the difference 3) Self-employed individuals must pay both the employer and the employee share, which is self employment tax 4) People drawing social security may have their benefits reduced if they go back to work and earn an income

Question 34

What is employee covered by workman's compensaion

Answer 34

Employees injured on the job get protection even if they messed up and caused the injury themselves exception - if intentional

Question 35

What age group is protected under age discrimination laws

Answer 35

They protect people ages 40 and above at companies where at least 20 people are employed

Question 36

what are the tenets of the occupational safety and health act?

Answer 36

1) Employers should prmote a safe workplace and environment for their employees to work in 2) injury records must be kept 3) penalties can be both: - Civil - 1000 fines per day - criminal - could include inprisonment 4) Employer can require a search warrant for OSHA to investigate their facilities

Question 37

What types of discrimination are prohibited for employers based on civil rights laws?

Answer 37

Based on civil rights law, employers prohibit discrimination on: - sex - race - religion - national - origin

Question 38

What are the powers granted under the environmental protection act?

Answer 38

EPA has the power to assess environmental laws