business law exam 2

chapters 7-12

Bill of Sale

Bill of Sale

document that conveys or evidences title to tangible personal property

Contract to Sell

an agreement to sell goods at a future time

Existing Goods

goods which are, at the of the contract, in existence and owned by the seller

Future Goods

goods not in existence or not yet owned by the seller at the time the contract was created

Goods

moveable tangible personal property

Identified Goods

the goods specified by the buyer and seller (both parties)

Intangible personal property

personal property that lacks a physical presence

Merchant

a person who deals in goods of a kind or otherwise by occupation purports to have knowledge or skill particular to the practices or goods involved in the transaction

Price

the consideration stipulated by contract, generally expressed in money

Sale

the transfer of title to goods from the seller to the buyer for consideration

Service Contract

a contract whose subject matter predominately involves services

Title

ownership; evidence of ownership of property

Bill of Lading

the contract existing between the consignor and the carrier

Common Carrier

any carrier required by law to convey passengers or freight without refusal if the approved fare or charge is paid (airline, train, etc.)

Consignee

one who receives goods shipped by common carrier (usually the buyer)

Consignor

one how ships goods by common carrier (usually the seller)

Express Warranty

the actual and definite statement of a seller, either verbally or in writing, at the time of the sale

FOB Destination

a sales contract term where title and risk of loss passes to the buyer when the goods are delivered to the buyer

FOB Shipment

a sales contract term where risk of loss passes to the buyer when the goods are delivered to the shipper and transportation arrangements are made

Implied Authority

an agent's authority to do things in order to carry out express authority

Implied Warranties

protections imposed by law, arising automatically because the sale has been made

Personal Property

moveable and tangible property

Private Carrier

those who transport only in particular instances and only for those they chose to contract with (e.g., funeral establishments vehicles and livery)

Sale on Approval (Sale on Trial)

goods are delivered to a buyer with the understanding they can be returned if the buyer is not satisfied after having the opportunity to examine or test the goods before making the purchase

Warranties

guarantees made by a seller that an article, good or service will conform to a certain standard or will operate in a certain manner

Federal Trade Commission (FTC)

an agency of federal government to promote free and fair competition by prevention of trade restraints, price fixing, false advertising, and other unfair methods of competition

Antitrust Law

laws which seek to promote competition among businesses. 3 Primary Federal Antitrust Laws are: Sherman Antitrust Act, Federal Trade Commission Act, and Clayton Act

Negotiation

the act of transferring ownership of a negotiable instrument to another party

Uniform Commercial Code (UCC)

Model act that includes provisions concerning certain sales of goods and negotiable instruments

UCC Article 2

Model law that applies to moveable and tangible personal property classified as goods.

real property

land and objects permanently attached to it

service contracts

contract whose subject matter primarily involves service

contract is governed by common law

if the predominant factor is providing services

contract would be governed by the UCC

if the predominant factor is sale of goods

counteroffer

a change to an original offer that rejects that offer and becomes a new offer

if any terms are added or changed to an offer, it is considered a counteroffer, unless accepted by the offeror and there is no contract

consideration

the bargained for exchange in a contract

something of a legally sufficient value given in exchange for a promise and there must be a bargained for exchange

still a prerequisite to the formation of a valid sales contract. a firm offer from a merchant is revocable with consideration

price

the consideration stipulated by contract, generally expressed in money

if it’s not in the contract, it’s what’s reasonable for the market

option contract

contract that requires either consideration or promissory estoppel

perfect tender rule

under UCC, a buyer can reject goods shipped or delivered from the seller if they’re not perfect.

perfect

goods match the contract terms

cure

correct, repair, or replace goods. They can also make substitutions without being held liable.

revocation

cancellation of an instrument by the drawer; rescinding an offer

cover

substitution of goods

Bearer

person in possession of a negotiable instrument

Bearer Paper

negotiable instrument payable to bearer or cash

Cashier's Check

a check drawn on a bank's own funds and signed by a responsible bank official

Certified Check

check for which the bank assures that the drawer has sufficient funds to make payment

Certificate of Deposit (CD)

the acknowledgement by a bank of a receipt of money with an agreement of repayment

Check

an order by a depositor to the bank to pay a sum of money to a payee

Draft

a written order by one person directing another to pay a sum of money, to a third person (this is a check)

Drawee

the person, company, or financial institution ordered to pay a check

Drawer

the person who executes any check

Endorsee /Indorsee

Named holder of indorsed/endorsed negotiable instrument

Maker

the party who executed a promissory note

Negotiable Instrument

a writing down in a special form which can be transferred as a substitute for money or as an instrument of credit

Order Paper

negotiable instrument made payable to the order of a named party; the word 'order' or its equivalent must be used

Payee

the party to whom a negotiable instrument is made payable

Promissory Note

a negotiable instrument containing a promise to pay

Blank Indorsement (Endorsement)

having no words except the signature of the endorser

Holder

one in possession of a negotiable instrument

Endorser/Indorser

Person who signs his or her name on the back of an instrument

Note

a promise to pay money

Qualified Indorsement (Endorsement)

an indorsement which limits the liability of the indorser

Restrictive Indorsement (Endorsement)

indorsement that restricts use of a negotiable instrument

Special Indorsement (Endorsement)

an endorsement which designates the particular person to whom payment is to be made

Indorsement/Endorsement

Signature of holder on the back of a negotiable instrument, with any directions or limitations

electronic fund transfer (EFTS)

transfers of money within the same financial institution or across multiple institutions -via computer- based systems, without bank staff

alteration

an unauthorized change to an important element in a negotiable instrument or contract that affects the rights of the parties

duress

removing one’s free will and obtaining consent by means of threat of force or violence

usury laws

laws that define the maximum interest rates that may be legally charged on a loan. Each state has a statute that provides interest rate protections for consumers

Loan Sharks

Individuals who charge an excessive interest rate. This is a derogative term

Fair Credit Reporting Act (FCRA)

promotes the accuracy, fairness, and privacy of information in the files of consumer reporting agencies.

Product safety laws

laws in the US are a collection of codes and rules regulated primarily by the Consumer Product Safety Commission (CPSC)

Consumer Product Safety Commission (CPSC)

charged with protecting the public from unreasonable risks of injury or death associated with the use of thousands of types of consumer products under the agency’s jurisdiction

the Sherman Act

outlaws every contract, combination, or conspiracy in restraint of trade, and any monopolization, attempted monopolization, or conspiracy or combination to monopolize

Federal Trade Commission Act

Prohibits unfair methods of competition and unfair or deceptive acts or practices. All violations of the Sherman act violate the FTC act.

the Clayton Act

Addresses such practices as mergers and interlocking directorates and prohibits mergers and acquisitions where the effect may be substantially to lessen competition, or tend to create a monopoly

truth in advertising laws

collection of requirements primarily regulated by the FTC. Federal law that requires advertisements be truthful, not misleading, and when appropriate backed by scientific evidence

bilateral contract

a legally enforceable agreement which consists of mutual promises to perform future acts

Magnuson-Moss Warranty Act

legislation dealing with warranty abuses when dealing with consumers

Creditor
Amount Financed
Itemization of Amount financed
finance charge
annual percentage rate
Payment schedule
Total of payments
total sale price
late payments
security interest

10 standard disclosures

Promise in consideration of Marriage
Contract not completed within a Year
Involve real property- Land
contracts made by Estate fiduciary
Guaranty to pay debts of another
Sale of goods when the is 500 or more

Statute of frauds

Nominal damages

small amount awarded when there is a technical breach but no injury

Punitive damages

an award paid to the plaintiff in order to punish the defendant

Liquid damages

reasonable damages stipulated in a contract to be paid in the event of a breach

Compensatory damages

an award paid to the injured party to cover the exact amount of their loss, but no more

An offer
an acceptance
contractual capacity
consideration

4 essential elements that make a contract legally binding:

Void contract

an agreement of no legal effect

Voidable contract

a contract which would be an enforceable agreement, but due to circumstances may be set aside by one of the parties

Valid contract

a contract which is legally enforceable.

Unenforceable contract

an agreement which at the current time is not enforceable by law.

Children’s Gasoline Burn prevention Act

Requires portable gasoline containers manufactured for sale in the US and conform to safety requirements for child resistant packaging

Federal Hazardous Substance act

requires certain hazardous household products have warning labels. Gives CPSC the authority to regulate or ban a hazardous substance

Flammable Fabrics Act

regulates the manufacture of highly flammable clothing and interior furnishings

Refrigerator Safety Act

Requires refrigerators have a mechanism that enables the door to be opened from the inside in the event of accidental entrapment

Warranty of merchantability
Warranty of fitness for a particular purpose
Warranty arising from circumstances or usage of trade

3 most common implied warranties

Jurisdiction

the official power to make legal decisions and judgements

Disaffirmance

election to avoid a voidable contract.

Ratification

approving an act which was executed without authority; electing to be bound by a voidable contract.

Revocation

cancellation of an instrument by the maker or drawer; rescinding an offer.