BL Exam 2

Define ‘contract’

A promise or agreement with legal consequences if the promise is not kept

What type of contracts does common law cover?

All contracts except where modified or replaced by statutory law (such as the UCC) or administrative agency regulations

What type of contracts does UCC cover?

The sale of goods and the lease of goods

List the types of contracts governed by common law

Real estate, services, employment, and insurance

List the elements of a contract

1. offer

2. acceptance

3. consideration

4. capacity

5. legality

List the classifications of contracts and define each

1. bilateral (a promise for a promise) v. unilateral (a promise for an act)

2. formal (requires a special form for creation) v. informal (requires no special form for creation)

3. expressed (formed explicitly by words/writing) v. implied (formed by the conduct of the parties - sitting at restaurant)

Detailed definition of ‘offer’

-A proposal to make a contract on certain terms - a promise to do, or refrain from doing certain things

-Recipient must get a clear idea of the essential terms (obligations, benefits, potential responsibility)

-Must be understood to be an offer by the person who receives it

Define the 2 types of offers

-Revocable - offers stay open a reasonable time unless otherwise stated; offeror may revoke or act inconsistently with the offer

-Irrevocable - option contracts - offeror can not revoke for a stipulated period; offeree must give conclusion

Define ‘option contract’

-The offeror can not revoke the offer for a stipulated time period, and the offeree can accept or reject at any time during that period

-The offeree must give consideration for the offer to be enforceable

Define ‘acceptance’

-A contract is created when acceptance is made - effective when communicated to the offeror

-Must be sent within a reasonable time

What is the ‘mirror image rule’ and what contract element does it apply to?

-acceptance must do no more than say “yes” to the offer

Contract element:

-additional terms make it a counteroffer and start the process over

Define ‘acceptance by performance’

-performing the contract may be acceptance if done in a way that shows it accepts the offer

Define the requirements for ‘consideration’ and give examples

1. Bargained for exchange - something of value flows from one party to the other (‘value’ does not need to be monetary; mutual promises count) (Ex: “I’ll paint your fence for $1”)

2. Legal detriment - doing something not already legally required, or refraining from something lawful (dad paying 21yr old to stop smoking)

3. Adequacy - the amount does not matter as long as there was an exchange; moral obligation is not sufficient (Ex: selling car for $1)

What is a contract without consideration?

-a promise to make a gift

List the types of agreements that lack consideration

-preexisting duty (Ex: firefighter getting reward for putting out a fire)

-past consideration (Ex: promise for action already taken)

-illusory promises (Ex: terms so uncertain the promise is not definite)

Define ‘capacity’ and list what voids it

-the legal ability to make a contract

Voids:

-lacking capacity: mental defect or illness; intoxication cause by (or known to) the other party

-minors: may contract for necessities of life; must return property received under a void contract or pay for the benefit

Define ‘legality’

-a contract will not be enforced if its subject is illegal

-performance must be legal under the contracts terms, conditions, and time of performance

List examples of contracts contrary to ‘statute’

-usurious loans, gambling contracts (state-dependent), contracts to commit a crime (always illegal), contracts by unlicensed persons (depends on the statute’s purpose)

List examples of contracts contrary to ‘public policy’

-restraints of trade (unless reasonable; some covenant not to compete), contracts to commit a tort, unconscionable contracts (one-sided), adhesion contracts (take it or leave it), exculpatory clauses (excuses liability - ‘not responsible for injuries’), discriminatory contracts

If a contract is oral, but all 5 elements exist is it enforceable?

Yes, unless statute of frauds

Define the ‘statute of frauds’ and list examples

-Certain contracts must be in writing to be enforced

-The writing must identify the subject matter, indicate a contract was made, set out essential terms, and be signed by the party against whom it is enforced

Examples:

-marriage consideration, contracts not performable in one year, interests in land (must state price and property description), executor paying estate debts personally, goods over $500, answering for another’s debt

Can contracts be enforced by only 1 party and why?

Yes, only the party against whom enforcement is sought must sign

Define ‘E-Sign Act’ and ‘UETA’

-e-signature is as valid and enforceable as a paper one

-electronic records and signatures are too as long as parties agree to transact electronically (only for transactions) (does NOT apply to wills, testamentary trusts, or UCC-governed transactions)

Define ‘privity of contract’ and its exceptions

-only the parties to a contract have rights and liabilities under it

-intended beneficiaries can sue to enforce once rights vest; incidental beneficiaries can not sue

Exceptions:

-assignment (of rights) or delegation (of duties) to another person

-third party beneficiary contract - the parties intend the contract to benefit a third party

Define ‘vesting’

-rights vest when a third party expressly consents, materially altering position in detrimental reliance (neighbor hears about plans to fix their garage and tears it down), or the vesting conditions are satisfied (dying for life insurance payout) (until vesting, the original parties may modify or rescind without the third party’s consent)

Define ‘intended beneficiary’ and ‘incidental beneficiary’

-performance rendered directly, right to control details, or designated in the contract

Incidental:

-benefits but was not the reason for the contract (city builds stadium next to preexisting restaurant)

Define ‘assignment’ and which types of rights can be assigned

-assignor transfers rights to assignee

-assignor’s right are extinguished; assignee takes only the rights the assignor had

-generally all rights can be assigned except: prohibited by statue, personal contracts, materially changed risk/duties, or contract prohibits it

Define ‘delegation’ and when it is prohibited

-delegation transfers duties to the delegatee with no special form required (expressed intention to delegate is effective)

-delegation does NOT relieve the delegator - the obligee generally can sue both the delegator and delegatee if duties aren’t performed

Prohibited

-special trust is placed in the obligor; performance depends on skill or talents; third party performance would vary materially; contract has an anti delegation clause

What is the ‘plain meaning rule’

-if the terms are clear from the document, the contract is enforced as written

What happens when a contract’s intent can not be determined?

-the contract is considered ambiguous and extrinsic evidence is allowed only if that evidence does not contradict any express terms

List the priority of terms (greatest —> least)

1. express terms (what the contract actually has written)

2. course of performance (how these parties have acted under this current contract)

3. course of dealing (how these parties have acted under earlier different contracts)

4. custom/usage of trade (industry customs)

(ambiguous language is determined against the drafter)

List and define why a contract may contain all elements but is NOT enforceable

-Misrepresentation: reliance on a false statement of fact (not opinion); reliance must be reasonable and cause harm

-Mistake: may make the contract voidable if it relates to existing facts, a basic assumption, has a material effect, and the party didn’t assume the risk

-Undue influence: improper persuasion, or unfair advantage in a fiduciary relationship (avoidable)

-Duress: threat of harm or wrongful act (may be economic) leaving no reasonable choice

Define material vs. minor breach of contract and the factors in defining

-Material: Plaintiff party loses most/all of what they bargained for and plaintiff party can stop performing their own side

-Minor: Plaintiff gets most of what they bargained for and plaintiff still need to perform their side, but usually at a discount

-Factors: benefit received by nonbreaching party; adequacy of compensation; extent of performance; hardship to the breaching party; negligent or willful behavior; likelihood of completion

Define ‘anticipatory breach’

-notice the contract won’t be performed or failure to give requested assurances

-breach occurs as of the date the notice is issued that it won’t be performed and statute of limitations clock starts running (time plaintiff must file suit by)

What are the defenses for breach of contract?

-impossibility/force majeure (not possible)

-breach by the other party (you broke it first)

-waiver: intentional relinquishment of a legal right, if repeated can operate as a continued waiver but the breaching party remains liable for damages caused by the waived breach (you let it slide, can’t complain)

List the possible damages/remedies for breach of contract

-Compensatory: loss of the bargain (promised value - actual value + incidental damages)

-Consequential: indirect losses that were reasonably foreseeable at the time of breach

-Punitive: rarely awarded in contract; Nominal - small award on principle

-Liquidated damages: compensation for breach in contract; must be a reasonable pre-estimate and not penalize to enforce

-Equitable remedies: recission (cancel contract) & restitution (return what you received), specific performance (do what was promised), reformation (rewrite contract)

What does the UCC do and difference from common law?

-simplifies and streamlines commercial transactions (sale and lease transactions)

-article 2: sales of goods

-article 2a: leases

-CISG: international sales

-Differences: open terms OK (quantity required); no mirror image rule; modification needs no consideration; merchant firms offer irrevocable without consideration; writing required for goods $500+

Define ‘parol evidence’

-fully integrated contract can’t be contradicted by prior agreements

Define ‘agency’ and the principal’s role

-a relationship in which one party (the agent) agrees to represent or act for another (the principal)

-principle has the right to control the agent’s conduct in matters entrusted to the agent

Why are agency relationships crucial in business?

-allows principals to conduct multiple operations simultaneously in different locations through agents

-some entities can act only through agents

Explain the relationship between agency and employees and how law covers it

-all employees who deal with third parties are deemed agents of their employers

-agency and employment law overlap (agency goes further tho)

-agency law is common law; much employment is statutory

Define ‘independent contractor’ and are they considered employees and/or agents

-works for and is paid by an employer, but working conditions and methods are not controlled by the employer

-not an employee

-may be an agent (insurance agent is both an agent of insurance company and an independent contractor)

List the factors that differentiate an employee from an independent contractor

-How much control does the employer exercise over details of the work?

-Distinct occupation or business from the employers?

-Work under the employer’s direction, or by an unsupervised specialist

-Who supplies the tools? How long is the engagment?

-Paid by time period (employee) or by the job (contractor)?

-High skill level suggests independant contractor

Define ‘work for hire’

-copyrighted work created by an employee under the scope of employment belongs to the employer

-independent contractors own the rights unless stated in contract and falls under movies, motion pictures, textbooks, tests, etc.

In an agency relationship who is liable for torts committed by the agent?

-agent is always liable for their own tort

-respondeat superior: the principal-employer is liable for harm an agent-employee causes a third party in the course or scope of employment

-Vicarious liability: imposed regardless of fault, similar to strict liability

List the factors for determining if an agent committed tort is within the scope of employment

-Authorized by the employer?

-time/place/purpose

-act commonly performed for employer

-employers interest advanced

-employer furnished the means (gave tools to allow it)

-employee’s private interests

Define ‘employment at will’

-either party may terminate at any time, for any reason, unless a contract says otherwise

-statute of most US workers

Define ‘wrongful discharge’

-termination that violates a law or an employment contract

-even without a statutory violation (broken law basically), employees may sue under tort or agency theories

What is the FLSA and how does it cover tipped workers?

-Fair Labor Standards Act: the comprehensive federal wage-hour law; covers employers in interstate commerce

-Employers can pay $2.13 + tips but if it’s less than the $7.25 minimum wage the employer must cover the shortfall (some states require full $7.25 wage + tips)

What does and does not qualify for overtime?

-overtime is everything over 40hrs/week at 1.5x pay

-executive, admin, and professional employees (management duties, discretion, independent judgement), outside salesperson, computer-code creators, and workers above a pay threshold do NOT qualify

-Employers can voluntarily pay overtime to ineligible workers, but can not waive or reduce FLSA overtime

What does FMLA provide and what qualifies for it?

-Family and medical leave

-employers with 50+ employees must provide up to 12 weeks of unpaid leave per 12 months (employees with 1+ yrs experience)

-health coverage continues and most employees restored to same or comparable position

-Qualifiers: newborn child, foster child, care for spouse/parent/child with serious medical condition, employee’s own medical condition, military qualifying exigencies (arranging child care or financial matters while spouse is deployed)

What is OSHA?

-act for general duty to keep the workplace safe; sets industry-specific standards (machine safety guards)

List and define the government income-security programs

-Social Security (OASDI): retirement, survivors, and disability insurance; benefits indexed to cost of living

-Medicare: federal health insurance for 65+ and some disabled persons

-Unemployment insurance

-Regulation of pensions and health plans

What is FICA and it’s contribution %’s?

-employer and employee each contribute to Social Security and Medicare (7.65% each typically)

-social security 12.4% total, capped at annual wage base

-medicare 2.9% total no cap

What is ERISA?

-regulates private pension plans; doesn’t require a plan, but sets management standards

What is FUTA?

-state administered unemployment compensation funded by employer taxes

-must be willing, able, and actively seeking work; not fired for misconduct or voluntarily

What is HIPPA and its penalties?

-group health plan that restricts how employers collect, use, and disclose employee/family health info

-employers must designate privacy officials, distribute privacy notices, and train employees

-penalties: $100 per person per violation ($25k/yr cap); criminal fines up to $250k and up to 10 years in prison

What is the ACA and its penalty?

-affordable care act

-group health plan where employers with 50+ full-time employees must offer health insurance benefits

-50/30 rule: fines up to $2k per employee after the first 30 for non-compliance

-tax credits up to 35% for businesses offering benefits

-penalty: plan must be less than 9.5% of income or penalty triggered

Is electronic monitoring of employees common?

-yes, more than half of employers monitor employees’ social media, email, videos, calls, etc.

How is employee privacy measured in court?

-Courts weigh employer’s interests against employees’ reasonable expectation of privacy

-Employees informed of monitoring can’t reasonably expect privacy (especially on employer-provided systems)

-Employer is liable for invasion of privacy if employee is not notified

Define employment discrimination

-unequal treatment of employees or job applicants on the basis of race, color, national origin, religion, gender, age, or disability; prohibited by federal statutes

Define protected class

-a group of persons protected by specific laws because of the group’s defining characteristics, including race, color, religion, national origin, gender, age, and disability

What does Title VII of the Civil Rights do and who does it apply to?

-prohibits job discrimination against employees, applicants, and union members on the basis of race, color, national origin, religion, and gender

-bans discrimination at ANY stage of employment (including promotion, benefits, discharge, and discipline)

-applies to: employer’s with 15+ employees; labor unions with 15+, labor unions with hiring halls, employment agencies, state/local governing units or agencies, most federal government employment

What is the EEOC, how does it work, and what cases does it choose?

-equal employment opportunity commission

-monitors compliance with title VII by requiring employees to file a claim with the EEOC before a lawsuit can be brought against the employer

-chooses priority cases like; retaliatory discharge (firing in retaliation for employee submitting a claim to the EEOC); and types of discrimination that are of particular concern

What happens when the EEOC chooses to investigate vs. not investigate?

-investigation by the EEOC leads to an attempt for the parties’ consent to an out-of-court settlement, but if settlement not reached then the EEOC may file suit on the employee’s behalf

-no investigation by the EEOC leads to the employee being issued a “right to sue”

Is unintentional discrimination prohibited under title VII?

-yes

What is the legal term and definition for intentional discrimination?

-Disparate-treatment discrimination: intentionally discrimination against employees of a protected class

What is the legal term and definition for UNintentional discrimination and how is it tested?

-Disparate-impact discrimination: actions that have a discriminatory effect

-Tests: employee must show how the employer’s practices, tests, or procedures are discriminatory then once the case is prima facie (shown enough evidence that it would win without an argument) employer must show how those things are justified

What can employers not do and how must they accommodate employees in regards to religion?

-CANT: treat employees less favorably or require/forbid them participating in any religious activity

-Employer must “reasonably accommodate” religious practices to the extent that they do not cause undue hardship on the business

What is the one scenario where you can hire based on gender and what must a plaintiff prove to win a gender lawsuit?

-Gender of the applicant must be essential to the job (hooters waiter)

-Determining factor: plaintiff must demonstrate that gender was a determining factor in the employer’s decision to hire, fire, or promote him/her

What is the equal pay act?

-Genders must be paid the same for doing similar work at the same establishment

-If there is “any factor other than gender” that makes the work different then NO violation

What is the Lily ledbetter fair pay act?

-made discriminatory wages actionable under federal law regardless of when the discrimination began

How does Title VII apply to transgenders?

-in the past most courts have not protected transgender people

-today though, more courts are protecting them

Define constructive discharge and how to prove it

-a termination of employment brought about by making the employee’s working conditions so intolerable that the employee reasonably feels compelled to leave

-once claimed, the employee can pursue damages for loss of income and back pay (expected income from time of leave until case is over)

-Prove by: objective proof of intolerable working conditions; employer knew or had reason to know about the conditions and failed to correct within a reasonable time period; proof of causation that the discrimination cause the intolerable working conditions

Define sexual harassment

-demanding of sexuasl favors in return for job promotions or other benefits, or language or conduct that is so sexually offensive that it creates a hostile working environment

Define the 2 forms of sexuasl harassment

1. Quid pro quo: when sexual favors are demanded return for job opportunities, promotions, salary increases, or other benefits

2. Hostile environment: pattern of sexually offensive conduct runs throughout the workplace and the employer has not taken steps to prevent or discourage it (so severe it alters the conditions of employment)

What is the Ellerth/Faragher affirmative defense and its 2 parts?

-sexual harassment defense where employer is not liable for a supervisor’s harassment if they can prove 2 things

1. employer must have taken reasonable care to prevent and promptly correct and sexual harassing behavior (establishing policies/procedures)

2. The plaintiff-employee must have unreasonably failed to take advantage of preventative or corrective opportunities provided by the employer to avoid harm

How does retaliation work under title VII?

-employers can NOT retaliate against employees who complain about title VII violations

-for an employee to be protected they must have opposed a practice prohibited by title VII AND suffered an adverse employment action as a result (extends out to employees who speak out on behalf of other employees during investigation)

What is the ADEA and what factors must occur for it to apply?

-age discrimination employment act

-prohibits employment discrimination on the basis of age against 40yrs+, mandatory retirement for nonmanagerial workers, and federal and private sector employees from retaliation based on age-related complaints

-Factors: 20+ employees; business activities must affect interstate commerece

What happens when an older worker is replaced by a younger worker?

-if the younger worker receives a lower salary, then the plaintiff must prove the discharge was motivated by age (greater the age difference the better)

What is the ADA?

-Americans with disabilities act: prohibits disability-based discrimination in all workplaces with 15+ workers (except state government employees protected under the 11th amendment)

-Employer must reasonably accommodate unless doing so causes “undue hardship”

What is ADA’s definintion of ‘disability’

-physical or mental impairment that substantially limits one more of the major life activities of the affected individual

-a record of having such an impairment

-being regarded as having such an impairment

-association with a disabled person (parent with disabled child to take care of morethan avg person)

-Mitigating measures are NO longer considered when defining if someone is disabled

-LOOK OVER HEALTH CONDITIONS SLIDE (37) B4 TEST

What is reasonable accomadation?

-Employers must provide stuff like ramps, flexible hours, modifying job assignments, improving training materials, but only if applicant is qualified otherwise

How do defenses for employment discrimination work?

1. assert the plaintiff has failed to meet their initial burden of proving discrimination occurred

2. Once the plaintiff proves that, the defendant must justify the discriminatory practice (business necessity or bona fide occupational qualification, seniority system)

-Seniority system: company budget cuts result in last hired, first out

-Business necessity: plaintiff can still prove there is a less discriminatory route

-Occupational Qualification: job requires heavy weight lifting and some people aren’t physically capable of the lifting