BUSINESS LAW FINAL EXAM REVIEW

agreement (offer and acceptance), consideration, legality, capacity, consent

list the elements of a contract

Elements of a Valid Contract

1. Agreement (valid Offer and Acceptance)

2. Consideration (the idea that both parties of an agreement must give something of value)

3. Legality 

4. Capacity – must be 18 to get in a contract, have to be mentally competent (understand to what you're agreeing to) 

5. Consent – you have to have the will to enter in the contract

Bilateral Contract

• Agreement that involves an exchange of promises 

• Ex. The dean asks saunders to teach a class next semester, just a promise nothing happened yet 

Unilateral Contracts

• Ex. Saunders promises a student to pay $50 to whoever mows his grass, the contract will only be fulfilled by the other party when they (the student) mows his grass 

Voidable Contracts

defective but can still be honored by the one who didn’t defect

ex. princess bride (mostly dead)

Void Contracts

so defective that it cannot be revived

ex. princess bride (all dead)

common law (by the courts)

source of contract law

Uniform Commercial Code

exception to sources of contract law. a statute which just deals with the sale of goods.

Promissory Estoppel

Alternative Equitable Theories when there is no formal/valid contract to begin with.

a promise was made to you and you relied on it to your detriment. because of this, it would not be fair if the person/entity who made the promise get out without facing consequences. you would be able to sue with this term.

eg. insurance agents ensured that people’s home insurance covered floods but it didn’t

Quasi-Contract

Alternative Equitable Theories when there is no formal/valid contract to begin with.

The plaintiff gave some benefit to the defendant and reasonably expected to be paid for the benefit and the defendant knew this, and not compensating the plaintiff would lead to the defendant’s benefit at the expense of the plaintiff. the plaintiff would recompensate them.

Agreement (general statements don’t count because of the lack of specificity or detail ex. sopranos)

• meeting of the minds to all material terms of the agreement

• what doesn’t count?

Offers (Price Quotes, Letters of Intent, and Advertisements)

list three things that are not generally offers extended to the public (rather, they are invitations to the public to bid or make an offer)

Mirror Image Rule

when you accept an offer, it has to be the the same as the offer, and if it’s different, you made a counter-offer

in order to have a valid offer, your acceptance can't tweak it from the terms of the original offer. The offer that you accept has to mirror the offer from the person who offers it to you.

Mailbox Rule

the moment you place your acceptance in the mailbox, that counts as an acceptance of the offer.

ex. if the buyer sends a check through postal mail to a seller and the seller doesn't want to sell it anymore. Even though the seller doesn't want it to sell it anymore, when buyer sends the check in the mail, that is the sign of acceptance and you can't take it back

Consideration (Doesn’t have to be tangible- It can be a promise given by one party in return for a promise given by the other party)

• Each party to a contract must give or give up something of value to have legal consideration (selling aqua velvet, the other person gives money).

• has to be tangible?

Preexisting Duty (Alaska packers association)

• is not consideration for a new promise or agreement since it’s something that they were obligated to do.

• name an example

basically an obligation that you would of otherwise had not a consideration for a new agreement.

“Accord and Satisfaction” (massage therapist case)

• constitutes an acceptance of the check as full payment and you cannot demand more money after the fact

• name example

Criminal Statutory Violations and Licensing statutes

Contracts that violate these statutes are invalid (two types of statutes-legality)

• If the contract needs someone who has a _ and a party doesn’t have it, the contract is invalid

Non-compete agreements (type of job, length, geography)

an employee promises not to work for a competitor for some time after leaving the company

three limitations?

Exculpatory Clause (bailment relationships)

one that attempts to release you from any future liability to another party in the event of injury to that party. mostly enforceable.

• Seen when signing waivers, leases, etc. 

• Exception?

Bailment Relationship

exception to exculpatory clause (legality)
where you give up your stuff to be held by someone else temporarily (eg. Parking a car in a paid parking spot, putting your clothes in a locker at a gym. If these things are stolen, you can't sue.) 

MUST BE AT LEAST 18, MENTALLY COMPETENT, and NOT BE INTOXICATED

Capacity (three requirements)

Fraud, mutual mistake, and duress/undue influence

Three things that render a contract invalid/voidable (capacity)
examples:

1. you sell a car with no engine

2. lady buys 5 chicekns but one was a rooster, and both parties did not know

3. held at gunpoint

Statute of Frauds

requires some types of contracts to be in writing:

• contracts involving interest in land

• contracts involving sale of goods worth $500 or more (uniform commercial code)

contracts involving an interest in land and contracts involving sale of goods worth $500 or more (uniform commercial code)-these include goods, land, or services (like an attorney)

types of contracts that must be in writing:

Parole Evidence Rule

if you do have a written contract, you can’t introduce other evidence outside of what the contract states that adds or contradicts what is in the written terms of the contract in the event of a lawsuit about the contract.

Third Party Beneficiary

someone that benefits from a contracts even though they aren’t a party to it

they had to been thought as one by the parties of the contract and actually benefit from it

EX. saunders and a builder have a contract for the builder to build a fence for saunders, and they are the only two parties in the contract. however, there are subcontracters who do some work in the process of building the fence, making them third party beneficiaries who could potentially sue to enforce the agreement despite them not being an actual party.

been thought as one by the parties of the contract and actually benefit from it

Two requirements of a Third Party Beneficiary?

Assignable Contracts (the contract prohibits it or the assignment is against public policy, ex. adele concert)

Contract rights are generally assignable unless these two things occur? (list concept and exceptions)

example?

Third party concept

When transferring the rights of an original party to a third party, the original party must:

1. assign rights

2. delegate duties to them

assign rights and delegate duties to them

When transferring the rights of an original party to a third party, the original party must:

Condition Precedent

Contract Termination

conditions in a contract that have to be met before a party’s duty to perform under the contract is triggered.

arising at the outset of a contract (ex. a real estate purchase agreement with the condition of buyer financing) type of condition that has to be satisfied at the beginning of the contract before the duty to be performed is triggered.

Strict Performance

Contract Termination

the exception to substantial performance

the first party to a contract must perform to the subjective satisfaction of the second party before the first party is discharged from the contract.

Substantial Performance

Contract Termination

the most common type of performance that triggers fulfillment of the contract

substantial performance (using an objective standard) is sufficient to entitle a party to partial compensation under a contract for the performance accomplished to date, subject to the items of performance that remain.  As long a reasonable person thinks the person performed the job well, then they contract is fulfilled.

Time of the Essence Clauses

provides that deadlines in a contract are to be construed strictly and if missed by one party discharges the other party from performance (i.e., if your rent payment is one day late the landlord may not have to heed the duty to continue leasing the apartment to you). Can’t miss a deadline even by one day; it’s very strictly followed.

Anticipatory Breach as a defense to performance

Contract Termination

one party immediately discharges the other party from any duty to perform under the contract.

Announce that you’re gonna breach a contract before performing it.

EX. Telling the dean that you can’t teach a class before you start teaching it, meaning that the dean can immediately go out and replace you.

Direct Damages

immediate, foreseeable costs due to the breach of contract

EX. damages to replace movie star (warner bros wanted to replace cruise with pitt, but pitt was going to charge than more that cruise, so the extra money that they had to pay is direct damages) (the extra money incurred by warner brothers).

they would sue tom cruise for these extra incurred costs

Consequential Damages

result from the unique circumstances of the injured party in question (individual)
Damages must be foreseeable

EXAM EX. two people share a cab to the airport and one person are late to their flight. One person didn’t care that much since they didn’t have any pressing things to worry about. The other person suffered damage since they didn’t get to a meeting on time and lost an important client. the second passenger incurred consequential damages since it was unique to their situation.

Incidental Damages

out of pocket expenses resulting from breach

ex. other expenses to get the other movie star to the set: e.g. air fare, dining, etc

secretary of state's office

The branch of state government you deal with regarding business entities:

LLC: file articles of organization to the secretary of state's office

CORP: file corporate charter/articles of corporation to the secretary of state's office

GP: you don’t have to file anything

How does each type of entity form?

LLC

Corporation

(all general partners are liable)

for which business entitie(s) are individuals associated with it shielded from personal liability?

LLC

Which entitie(s) have a choice as to how it manages its business?

1. managed by members

2. managed by one person (chief manager)

3. managed by a group of directors

What are the types of ways LLC’s can be managed?

Members

What are the owners of a LLC called?

Shareholders

What are the owners of a Corporation called?

At a minimum, a president and a secretary

What officers do corporations must have?

officers

Out of shareholders, directors, and officers,, which group handles the day-to-day operations of a corporation?

Franchises

not a legal entity, but the way a company choose to operate.

Ex. McDonalds shares franchise rights to franchisee which entitles the franchisee to operate a store.

1. duty of loyalty: all decisions will be made with the best interests of the business

2. duty of care: they will carry out their management duties with care and not be negligent.

Management/Fiduciary Duties of a Partnership (and all other entities)

Whoever is in position in management owes the owners of the business two duties:

Promoter’s Liability

personal liability that may be faced by someone doing something on behalf of an entity that has not yet officially formed.

Ex. someone signs a contracts on behalf of tony’s pizza even though it hasn’t fully formed yet, they would be liable under the theory of this liability.

Register Agent

person designated to receive official mailings and service process of lawsuits on behalf of a business

LLC: include either limited liability company/LLC

Corporation: include either Inc., Co. or Corp.

Legal requirements for the name of LLC’s and Corporation

Secretary of State

Where do you file corporate charter and articles of organization?

Corporate Veil (and piercing it)

protects you individually from liability on behalf of the company (for a llc or corporation)

if you act badly that is not in the best interests of the company such as defrauding it, the veil is “pierced” meaning you can be liable for qit

Cumulative Voting

allows a minority shareholder to have greater power with their stock. Take number of shares of stock (ex. 27 multiply it times the number of votes you need to make)

with this you can put all of those votes on one board of directors (ex.), which would give you more of a leverage than before since you have 81 total votes than 27.

look at the picture.

1. Asset Sale

2. Merger

3. Stock Sale

Different ways to sell a corporation

Asset Sale

1 way to sell a corporation

someone/some comany purchases the assets of the company but doesn’t cause them to take on the debts and liabilities of the company. the company that’s being sold still remains liable for the debts.

Merger

1 way to sell a corporation

the company does take on the debts and liabilities of the other company

Stock Sale

1 way to sell a corporation

a person/company buys the stock of the other company

Chapter 7

Chapter 11

Chapter 13

3 types of Bankruptcy:

Chapter 7

liquidating the assets of the company, converting them to cash, spreading them among the creditors. Here you go out of business.

Chapter 11

reorganization for  ONLY businesses: company stays in business and allows it to restructure its debts to pay them off.

Chapter 13

reorganization for individual wage earners/restructuring payments: same as __ but for people.

Securities Act of 1933

regulates the initial issuance of stock and securities by a company

Securities Exchange Act of 1934

regulations the subsequent buying and selling of already issued stock

makes it a crime to commit insider trading

Insider Trading

1934 statute bans this, which is buying or selling stock based on information that’s not readily available to the public

real property (surface, sub-surface/minerals, permanent buildings, air space, plant life, fixtures)

includes all aspects of property (list them-6 things)

Fee Simple Absolute

most complete form of ownership and is most common

Joint Tenancy with Right of Survivorship

Tenants in Common

Joint Ownership types

Joint Tenancy with Right of Survivorship

jan and saunders own property together. If saunders dies, jan has all ownership

Tenants in Common

jan and saunders own property together. saunders dies, saunders heirs are half the owners while jan is the other half.

Easement

Profit

Licenses

Other Property Rights

Easement

limited use of land belonging to another –

Ex. go onto someone’s yard to get to another place (ex. crossing someone’s property to get to a highway)

Ex.go onto someone’s yard to fix something on it (ex. Utilities).

Profit

right to enter someone else’s land to get to mineral rights – an oil company may have the profit right to go onto someone else's land to drill into their land and take oil under it

License

right to be on someone else’s property for a limited period of time, such as with an event – ex. Ticket to see a game or event temporarily on another piece of land.

Adverse Possession

if you openly act as though you’re the owner of the land for a long period of time, the law says you are the owner. (ex. Building a fence on someone else's property)

Tenancy for Years

Periodic Tenancy

Tenancy at Wil

Tenancy at Sufferance

Triple net lease

List 5 different leases:

Tenancy for Years

for a stated, fixed period (Ex. a year, but doesn’t have to be)

Periodic Tenancy

lease for a fixed period that automatically renews if you don’t indicate that you want to terminate after that fixed period

Tenancy at Will

lease with no fixed duration that can be terminated by either party at any time; informal (ex. Month to month)

Tenancy at Sufferance

tenancy that occurs when the tenant holds over after the termination of a lease

also called holdover tenant, you’ve stayed beyond the term of you’re written lease.

Triple net lease (property taxes, property insurance, and utilities.)

(ex. commercial spaces like a shopping mall)- pay a monthly rent and 3(triple) other normal expenses: (list them)

Patent

what you get for creating something

an exclusive right given by the U. S. Government to an inventor to use and market their invention for a limited period of time.

Utility Patent

Design Patent

Plant Patent

three types of patents

Utility Patent (20 years)

invent some totally new thing (how long is it good for?)

Design Patent (15 years)

creating a new design for something that already exists (how long is it good for?)

ex. unique frames on cars-they didn’t invent the car but only the frame

Plant Patent (20 years)

create a new plant, shrub, or tree, using bioengineering. (how long is it good for?)

you have to file with the Patent and Trademark Office, or else you don’t get protection on whatever you created.

What you have to do to get a patent (or else what?)

the one who files with the patent and trademark office automatically has the right to the patent

What happens when there’s a dispute to who has the right to a patent

Copyrights (tangible, you don’t have to file, copyright protections automatically spring into existence)

intellectual property protection given to someone who creates something expressive (ex. literature, song)

particular _ expression of an idea

have to file?

the copyright rights last as long as the life of the creator plus 70 years

Copyright Term

First Sale Doctrine

says that you can purchase copyrighted material and resell it, which doesn’t violate copyright law. However, you can’t purchase copyrighted material and copy it.

Fair Use Exception (criticism, research, and teaching)

list the doctrine and uses of copyrighted material are ok and don’t violate copyright act (list them-3 things):

ex. “pretty woman” criticism

Parody

accepted use of copyright material

ex. two live crew

Trademarks, no set length, automatic protection (even though there is benefit)

words or symbols that a business uses to identify or distinguish its products(ex. Nike checkmark, apple with the apple bit out of it). 

Length?

Protection?

Employment At Will Doctine

a common law doctrine that says companies are free to hire or fire people without having to demonstrate there was a reason. It still exists but there are many exceptions.

Wrongful Discharge

intentional tort that is the exception to the employee at will doctrine, if a company fires someone for some wrongful reason (ex. age), they’ve committed this tort

Workplace Bullying

intentional tort: intentional infliction of emotional distress

Family and Medical Leave Act

a federal statute providing for the right of up to 12 weeks of unpaid leave each year for childbirth, adoption or medical emergencies