Business Law final

Assignment

voluntary transfer to a third party of the rights arising from a contract so that the assignor's right to performance is extinguished

Assignor

the party making the assignment

Assignee

party to whom contract rights are assigned

Obligor

party owing a duty to the assignor under the original contract

Obligee

party to whom a duty of performance is owed under a contract

Revocability of Assignment

when the assignee gives consideration, the assignor may not revoke the assignment without the assignee's consent

Partial Assignment

transfer of a portion of contractual rights to one or more assignees

Assignability

most contract rights are assignable except:

Assignments that materially increase the duty, risk, or burden upon the obligor

Assignments of personal rights

Assignments expressly forbidden by the contract

Assignments prohibited by law

Implied Warranty

obligation imposed by law upon the assignor of a contract right

Express Warranty

explicitly made contractual promise regarding contract rights transferred

Successive Assignments of the Same Right

the majority rule is that the first assignee in point of time prevails over later assignees; minority rule is that the first

assignee to notify the obligor prevails

Delegation

transfer to a third party of a contractual obligation

Delegator

party delegating his duty to a third party

Delegatee

third party to whom the delegator's duty is delegated

Obligee

party to whom an obligation is owed.

Novation Contract

a substituted contract to which the promisee is a party, which substitutes a new promisor for an existing promisor, who is consequently no longer liable on the original contract and is not liable as a delegator

Third Part Beneficiary Contracts

one party promises to render a performance to a third person (the beneficiary)

Intended Beneficiaries

third parties intended by the two contracting parties to receive a benefit from their contract

Donee Beneficiary

a third party intended to receive a benefit from the contract as a gift

Creditor Beneficiary

a third person intended to receive a benefit from the contract to satisfy a legal duty owed to him

Rights of Intended Beneficiary

an intended donee beneficiary may enforce the contract against the promisor; an intended creditor beneficiary may enforce the contract against either or both the promisor and the promisee

Conditions

an event whose happening or nonhappening affects a duty of performancef

Subjective Satisfaction

approval based on a party's honestly held opinion

Objective Satisfaction

approval based on whether a reasonable person would be satisfied

Subjective Impossibility

the promisor—but not all promisors—cannot perform; does not discharge the promisor

Objective Impossibility

no promisor is able to perform; generally discharges the promisor

Subsequent Illegality

if performance becomes illegal or impractical as a result of a change in the law, the duty of performance is discharged

Accord and Satisfaction

substituted duty under a contract (accord) and the discharge of the prior contractual obligation by performance of the new duty (satisfaction)

Mutual Rescission

an agreement between the parties to terminate their respective duties under the contract

Substituted Contract

a new contract accepted by both parties in satisfaction of the parties' duties under the original contra

Material Breach

nonperformance that significantly impairs the injured party's rights under the contract and discharges the injured party from any further duty under the contract

Legal Benefit (consideration)

Obtaining something to which one had no prior legal right to

Legal Detriment (consideration)

Doing an Act one is not legally obligated to do or not doing an act that one has a legal right to do

Illusory Promise (special rules of consideration)

Promise that imposes no obligation on the promisor; exceptions include: output contracts requirements contracts, exclusive dealing contracts, conditional contracts

Pre existing Public Obligations (special rules of consideration)

Public duties such as those imposed by tort or criminal law are neither a legal detriment nor a legal benefit (rich grandpa drinking example)

Pre existing contractual obligations (special rules of consideration)

Performing pre existing contractional duties is not valid consideration for new benefits

Modification of Preexisting Contract (special rules of consideration)

must include new or additional information to make the contract binding. (need new consideration). Expectation is under UCC (no new consideration needed)

Substituted Contracts (special rules of consideration)

Contract enter into that replaces in its entirety the original contract (three contracts are made in this process, 1. the original, 2. recission, 3. substituted contract)

Settlement of an Undisputed Debt (special rules of consideration)

Payment of a lesser sum of money to discharge an undisputed debt (one whose existence and amount are not contested) does not constitute legally sufficient consideration

Settlement of a Disputed Debt (special rules of consideration)

Payment of a lesser sum of money to discharge a disputed debt (one whose existence or amount is contested) is legally sufficient consideration

Past Consideration (special rules of consideration)

An act done before the contract was made is not valid consideration

Regulatory Licensing Statue

State legislature statue that requires a party is granted some license to engage in that specific trade or profession (can not sue for a breach of contract)

Revenue Licensing Statue

You have to pay a fee to get license (I.E. sell liquor) (can sue for a breach of contract)

Gambling Statues

Either prohibits gambling in the state or specifies what gambling is allowed (if you make wagering agreement in a way not authorized under state gambling statues then it is a illegal bargain)

Usury Statutes

Determines maximum interest rate for loans per state. If agreement exceed this statue loan is unenforceable

Covenants not to compete

Agreement party signs where thy promise/covenant not to compete against other party. (Must be reasonable in duration of time and geographic scope to be enforceable)

Exculpatory clause

Excusing or releasing liability claim against other party.

- subject to a reasonable standard

-must only excuse or release a party from its negligence liability

Procedural Unconscionability

Procedure used to form the contract was unfair (EX: small printed font at the bottom of the page or Spanish speaking community but all contract is in english)

Substantive Unconscionability

Terms of contract are oppressive or grossly unfair

Tort Law

imposes a duty of reasonable care protecting people from foreseeable injury

Legal Right

Ability to require that someone perform a certain act

Legal Duty

An obligation to perform a certain act

Plaintiff

Party seeking dispute; dispute starter (goes first)

Defendant

Party defending their case vs the plaintiff (goes second)

Subject Matter jurisdiction

authority of a court to decide a particular kind of case

Exclusive Federal Jurisdiction

jurisdiction over Federal crimes, bankruptcy, antitrust, patent, trademark, copyright, and other specified cases

Concurrent Jurisdiction

authority of more than one court to hear the same case; state and federal courts have jurisdiction over (1) federal question cases (cases arising under the Constitution, statutes, or treaties of the United States) which do not involve exclusive federal jurisdiction and (2) diversity of citizenship cases involving more than $75,000

Exclusive State Jurisdiction

all other matters not subject to federal jurisdiction; property, torts, contract, state crimes

Minimum Contact

an amount of contact that a defendant must have with a state in order for that state's courts to have jurisdiction over that person or business

Long Arm Jurisdiction

The personal jurisdiction that a state acquires over a nonresident defendant because of his or her minimum contact with the state

attachment jurisdiction (quasi in rem)

jurisdiction over a defendant's property to obtain payment of a claim not related to the property

Mutual Assent

both parties must demonstrate by words OR by conduct that they're agreeing to a contract (if no, VOID)

Consideration

Both parties must exchange something of value to enter contract (if no, VOID)

Capacity

Both parties must be in an adequate state of mind to enter a contract (if no, VOID)

Invalidating conduct

physical/economical duress, defraud, false statement, undue influence, etc.; has there been conduct that makes the contract voidable (not void on all cases, but VOIDABLE)

Express contract

A contract in which the terms of the agreement are stated in words, oral or written.

Implied contract

Contract in which the agreement of the parties is inferred from their conduct

Bilateral Contract

contract in which both parties exchange promises

Unilateral Contract

exchange of promise for an action (action has to go through first)

May still be entitled to equitable remedy (promissory estoppel OR restitution) even if contract is not valid

Uniform Commercial Code (UCC)

section of law that governs the sale of goods

Sale: the transfer of title from seller to buyer. Goods: tangible personal property (personal property is all property other than an interest in land)

Promissory Estoppel

A doctrine enforcing a noncontractual promises

Promissory Estoppel Requirements

1) promisor [party giving promise] reasonably expects promisee [party receiving promise] to rely on promise

(2) promisee reasonably relies on promise

(3) The court's refusal to enforce the promise results in injustice

Quasi-contract (restitution)

an obligation not based upon contract that is imposed by law to avoid injustice; also called an implied in law contract

Quasi Contract/Restitution - requirements

1) plaintiff conferred a non-gratuitous benefit on defendant (didn't gift him anything)

(2) defendant realized value from benefit (knew that he was receiving something)

(3) inequitable for defendant to retain benefit without paying plaintiff for its value (unfair if defendant doesn't give anything to plaintiff in return

Mutual Assent requirements

Definite and essential terms communicated to offeree? (if NO, NO OFFER)

Offer revoked by offeror? (if YES, OFFER TERMINATED)

Offeror received a rejection or counteroffer? (if YES, OFFER TERMINATED)

Lapse of time, death, incompetency, destruction of subject matter, or subsequent illegality? (if YES, OFFER TERMINATED)

Is acceptance effective? (if NO, NO CONTRACT)

Output Contract

Agreement of a buyer to buy all of a sellers output

requirements contract

Agreement of a seller to provide all of the requirements of a buyer

Revocation rule

Valid offer can be revoked at any time before the offer is accepted; there are some exceptions.

Option Contract (revocation exception)

contract to hold an offer to make a contract open for a fixed period of time

UCC firm rule (revocation exception)

a merchant's irrevocable offer to sell or buy goods in a signed writing that ensures that the offer will not be terminated for up to three months

Unilateral Contract (revocation exception)

Offer is irrevocable if the offeree goes through with the action (basically accepting the promise); the act must be substantially (not even fully completed)

promissory estoppel (revocation exception)

If offer is in form of a promise, offer may not be revocable

Statutory Irrevocability (revocation exception)

Offer made irrevocable by statue

Acceptance of Offer

positive and unequivocal expression of a willingness to enter into a contract on the terms of the offer (words or conduct)

Defective Acceptance

does not create a contract but serves as a new offer

Valid Acceptance

acceptance is effective upon dispatch unless the offer specifically provides otherwise or the offeree uses an unauthorized means of communication

Stipulated Provisions in the Offer

The communication of acceptance must conform to the specifications in the offer (e.g. accept by email within 5 days)

Unauthorized method of acceptance

effective when received (e.g. accepted by physcial mail instead of email as stipulated)

Acceptance Following Prior Rejection

First communication received by the offeror is effective (e.g. if acceptance is received, then rejection is disregarded or vice versa)

Common Law Mirror image Rule

Terms of acceptance must be identical to the terms of offer (e.g. if offer was 300, i cannot accept with 300 and lunch)

UCC modification rule

terms of offer may be modified for acceptance and still be valid under UCC

Specific Performance

equitable remedy demanding that the other party should perform the promise they failed to perform; seen in real estate alot

physical duress

A wrongful act of threat using physical force to make a party enter agreement

Legal effect: Void

Remedies: Damage or restoration

Duress by Improper Threats

Wrongful threat or act involving social or economic interests that makes a party enter into an agreement

Legal effect: Voidable

Remedies: Damages, or rescission, restitution

Under Influence

Taking unfair advantage of a party through a dominant position in a confidential relationship with that party (e.g. parent/child, attorney/client)

Legal effect: Voidable

Remedies: Damages, or rescission, restitution

Fraudulent Misrepresentation

Party is knowingly giving false statement

Fraud in the Execution (Fraudulent Misrepresentation)

intentional misrepresentation that deceives the other party of the ENTIRE nature of the agreement. (e.g. fake UPS delivery man deceives homeowner into signing off on a document to give him the house disguised as a sign off sheet for a package)

Legal effect: void

Remedies: Damages, or restitution

Fraud in the Inducement (Fraudulent Misrepresentation)

intentional misrepresentation or concealment of a material fact that the other party justifiably relies on when entering agreement (e.g. car salesman states that the car he is selling you has 10k miles but knows it actually has 100k)

Legal effect: voidable

Remedies: Damages, or rescission, restitution

Duty to Disclose (Fraudulent Misrepresentation)

A party knows of a material fact that is only accessible to them and fails to disclose the information to the other party knowingly

Legal Effect: Voidable

remedies: Damages, or rescission, restitution

Nonfraudulent Misrepresentation

Party is unknowingly giving false statements

Legal Effect: Voidable

remedies: Damages, or rescission, restitution