STU16 Flashcards
Under agency law, what is the best way to describe ratification?
After an unauthorized act by the agent, the principal can assent to the agent’s act if the principal is aware of all material facts. Ratification can be expressed or may be inferred by the principal’s words or conduct that reasonably indicates intent to ratify.
Why is a franchisor’s requirement that its franchisees buy inputs from a particular supplier legal as long as such a requirement is necessary to assure product quality?
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.
Describe the Robinson-Patman Act of 1936.
The Robinson-Patman Act of 1936, an amendment to the Clayton Act, outlaws price discrimination that would lead to restraint of trade. Both buyer and seller can be found guilty of price discrimination under the provisions of the Robinson-Patman Act. Price differentiation between customers is allowed if there is a difference in costs. For example, quantity discounts are permitted if it can be shown that larger quantities can be shipped with a cost savings. Charging competing wholesalers different prices for similar goods would be a violation of the act.
