ACCT 331- Exam 1 Concepts (short answers)

Outline the primary sources of law and understand the hierarchy of those sources of law

Federal Law- US constitution, federal statutes, and administrative law

State Law- state constitutions, state statutes, administrative law, and local ordinances

Case Law- appellate opinions and stare decisis

Understand stare decisis and explain why the doctrine is important

“To stand on decided cases”

Tradition of common law system

A court should not overturn its own precedents unless there is a compelling reason to do so.

Decisions made by a higher court are binding on lower courts.

Be familiar with jurisdiction (personal; subject matter; original; appellate)

Personal Jurisdiction- is the court’s authority over parties to the case – or over persons or property located in court’s boundaries'

Subject Matter Jurisdiction- is the power over the particular issues involved in the case

Original Jurisdiction- the authority of a court to hear a case before any other court

Appellate Jurisdiction- the authority of a court to review a lower court’s decisions

Analyze whether a federal court has jurisdiction through the following categories: federal question cases and
diversity of citizenship cases

Federal Question- interpretation of U.S. Constitution, federal law, or treaty; no monetary minimum for this category of cases

Diversity of Citizenship- the plaintiff and defendant are residents of different states; and the dollar amount in controversy exceeds $75,000

Understand the basics relating to our dual court system

Supreme Court of the US → US courts of appeals or highest state courts

Define and differentiate the three types of alternative dispute resolution

Negotiation- informal settlement talks “meeting of the minds”

Arbitration- parties select an arbitrator (a neutral third party or a panel of experts) who hears a dispute and imposes a resolution on the parties

Mediation- utilizes the services of a neutral third party, called a mediator and the mediator acts as a communicating agent between the parties and suggests ways in which the parties can resolve their dispute

Outline the basic litigation phases (pretrial; trial; posttrial) and explain what happens at each stage

Pretrial → Trial → Posttrial

Pretrial- pleadings, discovery, pretrial motions

Trial- actual trial with defendant, prosecution, and jury

Posttrial- appeal process

Identify pleadings and explain, generally, what is contained within each pleading

Complaint- Plaintiff describes the allegations; Addresses the Court’s jurisdiction; States the relief sought.

Answer- Defendant admits or denies each allegation in complaint; Contains affirmative defenses.

Counterclaims- Defendant can assert claims against the Plaintiff. Defendant describes the allegations. States the relief sought.

Define discovery and identify the various forms of discovery

Discovery- allows both parties to be fully aware of the facts involved in the case and of the intentions of the parties.

Interrogatories- series of written questions to be answered by the opposing party

Requests for Production of Documents- requests for production of specific documents

Depositions- oral questions to the witness transcribed by a court reporter

Requests for Admissions- requests for the opposing party to admit or deny certain issues

Explain the difference between the trial court and appellate court

Trial Courts- a judge or jury determines the facts of the case and reaches a verdict; “try” cases

Appellate Courts- this court reviews decisions made by a trial court when one party believes a legal error occurred; “review” cases

Define contract and outline the elements of a contract

Contract- an agreement that can be enforced in court; formed by two or more parties; with each party agreeing to perform or refrain from performing some act

Elements of a contract

Agreement- an offer and acceptance

Consideration- something of value received or promised to convince someone to make a deal

Capacity- both parties must have the contractual capacity (ex. competence) to contract

Legality- purpose of the contract must be legal and not against public policy

Understand the difference between a valid, voidable, unenforceable, and void contracts

Valid- the person had the capacity to know the legal consequences despite intoxication or mental incompetence

Voidable- the person was in a state where they lacked mental capacity to enter into the contract

Unenforceable- Lack of Voluntary Consent (consent must be voluntary) and Improper Form (the contract must be in whatever form the law requires)

Void- a court has determined a person is mentally incompetent and appointed a legal guardian

Be familiar with how a court interprets a contract and the general rules of interpretation

A court will enforce a contract according to its obvious terms when it is clear and unambiguous.

General Rules of Interpretation

A reasonable, lawful, and effective meaning will be given to all of a contract’s terms as much as possible

Contracts are interpreted as a whole

Terms that are negotiated separately are given greater weight than standardized terms

Words will be given their ordinary, commonly accepted meanings

Specific wording given greater weight than general language

Written or typewritten given greater weight than preprinted

Ambiguous terms will be interpreted against the drafter

Trade usage, prior dealing, and course of performance can be used to clarify the contract

Express terms are given the greatest weight, followed by course of performance, course of dealing, and custom and usage of trade—in that order.

Explain offer and how and when offers can be terminated

Offer- proposal made by one party (the offeror) to another party (the offeree) that shows a present intent to enter into a contract

When an offer can be terminated

by action of the parties: revocation, rejection, and counteroffer

by operation of law: lapse of time, destruction of the specific subject matter of the offer, death or incompetence of the offeror or the offeree, and supervening illegality of the proposed contract

Explain acceptance and how and when offers can be accepted

Acceptance- voluntary act by the offeree - either by words or conduct - that shows that the offeree agrees to the terms of the offer

Ways to show acceptance

Agreeing to perform as requested

Completing the requested act

Define consideration and outline the types of agreements that lack consideration

Consideration- is “the value given in return for a promise (in a bilateral contract) or in return for performance (in a unilateral contract).

Types of agreements that lack consideration

Preexisting obligation

Past consideration

Promise to make a gift

Explain contractual capacity, the groups with special protections, and what a party can do if he/she lacks capacity

Contractual capacity- parties to a contract must have the legal ability to be bound by a contract

Groups with special protections

Minors

Intoxicated persons

Mentally incompetent persons

Be familiar with examples of illegal contracts (violation of law or public policy)

Contracts that violate a law-

contract to sell illegal drugs

contract to rob a bank

Contracts that violate public policy-

contracts restraining trade

exculpatory clauses

unconscionable contract

contracts that obstruct justice

Explain various situations when a contract may lack voluntary consent

contracts that are a result of fraud, undue influence, mistake, or duress

Define the statute of frauds and outline exceptions

Statute of frauds- a statute that stipulates what types of contracts must be in writing (denies enforceability to certain contracts that do not comply with its writing requirements)

Exceptions to the statute of frauds

partial performance

full performance

admission in court

Define privity of contract and outline exceptions

Privity of contract- a principle that a contract is a private agreement between the parties that have entered into it and that the parties alone have rights and liabilities under the contract

Exceptions

assignments and delegations

third party beneficiaries

Understand the difference between assignment and delegation

Assignment- is the transfer of contractual rights to a third party

Delegation- is the transfer of contractual duties to a third party

Be familiar with the difference between intended beneficiaries and incidental beneficiaries

Intended beneficiary- a third party to whom performance is rendered directly and/or who has the right to control the details of the performance or who is designated a beneficiary in the contract (CAN SUE TO ENFORCE THE CONTRACT)

Incidental beneficiary- a third party who benefits from a contract but whose benefit was not the reason for the contract and/or who has no rights in the contract (CANNOT SUE TO ENFORCE THE CONTRACT)

Define condition and outline types of conditions

Condition- a qualification in a contract based on a possible future event

Types of conditions

condition precedent

condition subsequent

concurrent condition

express condition

implied condition

Explain and differentiate discharge by performance, discharge by agreement, and discharge by operation of law

Discharge by performance- complete performance and substantial performance

Discharge by agreement- mutual rescission, novation, settlement agreement, accord and satisfaction

Discharge by operation of law- material alteration, statute of limitations, bankruptcy, impossibility, impracticability, and frustration of purpose

Understand the differences between a material breach of contract and a minor breach of contract

Material breach- occurs when performance is not at least substantial

Minor breach- a breach that is not material

Define remedies in law and remedies in equity

Remedies in law- monetary damages

Remedies in equity- awarded when money is inadequate

Identify various forms of monetary damages

monetary damages- compensatory damages, consequential damages, and liquidated damages

Be familiar with Uniform Commercial Code (UCC) and distinctions between the UCC and common law

Uniform commercial code- the single most comprehensive codification of the broad spectrum of laws involved in a total commercial transaction

UCC- offer can be more open-ended, but quantity must be identified

Common law- offer must include all terms