Business Law - Exam 2 Review

Pepsi Advertisement

If you drink more pepsi, you can get stuff through collecting pepsi points. A man collected 7 million points and attempted to collect the jet. However, it wasn’t a valid offer because there was no serious intent. The jet in the ad was a military jet, meant as a form of exaggeration/humor.

Wendys How Many Retweets

“How many retweets for a year of free chicken nuggets?” Wendy replies with 18 million. The offer was valid because it was present, there was serious intent, and the offer terms were reasonably detailed.

RJ Cipriani against Jeff Shell

RJ Cipriani has 9 different claims against Jeff Shell worth $150 million. RJ has connections to the media and claims that Jeff verbally promised to produce an English adaptation of a Spanish show on Paramount for him. In exchange, RJ provides crisis communication services. He was told to plant gossip about other companies to distract society from Jeff and his own scandals with women. One of the claims was a breach of verbal promise, where Shell backed out.

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Privity

parties that have rights in the contract; original ones in the agreement. Can be gained by a 3rd party as an intended beneficiary.

Intended Beneficiary

a 3rd party who received a benefit from a contract intentionally. They gain privity and can sue.

Incidental Beneficiary

a 3rd party who received a benefit from a contract unintentionally. They don't have privity and can't sue.

Donee Beneficiary

an intended beneficiary who's a gift recipient.

Creditor Beneficiary

an intended beneficiary who's owed money.

Assignments

transfer of contractual rights to a 3rd party.

Delegations

transfer of contractual duties to a 3rd party.

Exceptions to Assignments

1) Contract prohibits assignment, 2) Contract for personal services, 3) Rights and dues change substantially

Statute of Frauds

Prevents the fraud that happens with hiring third-party witnesses by requiring writing in specific circumstances

Land Transfer

writing required for the transfer of an interest in land. Examples are a house, mortgages, leases, etc.

Full Performance by the Seller

exception to writing requirement, where the seller already performs.

Part Performance by the Buyer

exception to writing requirement, where the buyer partially performed.

Promissory Estoppel (Writing)

exception to writing requirement, with no writing needed so long as there’s a promise, a detrimental reliance proven with economic change, and unfairness

Performance Exceeding a Year

writing required when something can't be performed within a year; 1 year period starts on the day of contracting.

Browning v. Poirier

a couple in 1998 agreed that if either won the lottery, they split the winnings. 2007, they broke up, but the woman wins the lottery and doesn't share the money. The man sues her. Ruled in his favor because she could've won the lottery within a year, thus, it doesn't need to be in writing.

Party pays the Debt of Another

writing required when a party promises to pay the debt of the other party. The party that promises is often the guarantor.

Marriage Consideration

writing required in consideration of marriage, what to do after divorce; prenuptial - decided before the wedding, postnuptial - decided after the wedding.

Writing Constitution

needs 1) Essential terms (who parties are, what they're buying, consideration and subject matter) and 2) Signature from the person enforced against.

Sale of Goods >$500

writing required for the sale of goods exceeding 500$. Under the UCC, writing only requires quantity and signature from the person enforced against.

Parol Evidence

verbal evidence is prohibited once a fully integrated contract is signed.

Capacity

the ability to get into a contract, but also get out.

Age of Majority/Emancipation

if <18 years old, contract not upheld (do not understand what they're doing). if >18 years old, contract upheld.

Voidable Contracts

when 1 or both parties can get out because the contract is voidable.

Disaffirmance/Ratification

you can get out. If you pay off the car from 16-18 years old, after you turn 18, you agree to be bound.

Parental Liability

parents are generally not liable for their child's contract if it's not cosigned. Otherwise, they are.

Minor Returns

the minor has to return whatever they have, whether it's the car, the smashed car, or the steering wheel. Exceptions are necessary items (food, medical, shelter) and emancipation from parents, where they're treated as a adult.

Mental Incompetence - Void

if a court previously determined that a person is mentally incompetent (need a guardian), then they can't enter a contract.

Mental Incompetence - Voidable

the person wasn't mentally competent at the time of the contract, despite not being deemed as an incompetent individual.

Mental Incompetence - Valid

the personal is mentally ill but had capacity at the time the contract was formed, understanding the nature of consequences.

Intoxication - Voidable

person lacked sufficient mental capacity to understand the legal consequences of the agreement; to be SO drunk you don't understand. The party, once sober, can get out or choose to be bound.

Babcock v. Engel

traded property (farm and hotel exchange) during drinking. When Babcock got the trade, the value was half what it actually was. Ruled in favor of Babcock because 4 disinterested witnesses confided in him being extremely drunk.

Fraudulent Misrepresentation

a tort, indicating a party's lack of voluntary consent. Requires 1) Misrepresentation of a material fact, 2) An intent to deceive, 3) Innocent party reliance on misrepresentation, 4) Innocent party was harmed as a result of misrepresentation.

Innocent Misrepresentation

representing a lie, not knowing that it was a lie.

Negligent Misrepresentation

saying something reckless, not digging deeper and using assumptions.

Silence as Misrepresentation

1) Not correcting a previous assertion, you have to say something. 2) Not correcting a basic mistaken assumption, 3) Not correcting a mistaken understanding about writing, and 4) Not being honest in a relationship of trust

Bilateral Mistakes

both parties were mistaken, where either party can get out.

Unilateral Mistakes

only 1 party was mistaken; that party can't get out.

Sherwood v. Walker

Sherwood owned a female cow that couldn't make babies. He sold it for substantially less and both parties were aware of that fact. When Walker shows up, the female cow is pregnant, and Sherwood wants out of the contract. Ruled in favor of Sherwood because they were both confused about the fact.

Mistakes of Value

when someone enters a bad bargain. Individuals are expected for their own due diligence. The court doesn't assist you.

Undue Influence

one party influences another, overcoming their free will. 1) Special relationship (family, lawyer-client, doctor-patient) and 2) 1 party overcomes the freewill of the other party

Duress

usage of threats to force a party to enter a contract i.e. gun to the head, revealing a secret to everyone, etc.

Contracts that Violate Statutes

contracts deemed as illegal via the legislature; criminal statutes, gambling, insurance, licensing, and usury.

Contracts that Violate Public Policy

courts deem these contracts as bad for society; restraint of trade/non-compete, exculpatory clauses, bailment cases, and unconscionable contracts.

Criminal Statutes

contracts with illegal subject matters like drugs, kidnapping, stealing, murder, etc. It's illegal.

Gambling

illegal in TX; the agreement to win/lose something of value solely/partially by chance. Ex: Betting on a football game.

Insurance

life insurance on somebody else => implies a bet on their death. Can only be bought for family members/employees.

Exceptions to Gambling

lottery, social gambling (bingo, charity auctions, Friday night card game), horse racing, chuckee cheese, etc.

Licensing

2 types; 1) Protect the public, i.e. medical, law, or electrician licenses that protect consumers from entering a contract with a false worker. 2) Revenue raising i.e. business license to raise money.

Usury

puts a cap/max amount on interest charged; laws vary on who gives/what it's for. Ex: No exceeding 10% interest on auto loans.

American Express Travel vs. Assih

Assih lived in NY and made purchases in NY, through an American Express bank in NY. After many charges and missed payments, his situation got bad. He went to court and argued that AE's Utah law wasn't fair. Ruled in favor of Assih because AE didn't have a bank in Utah. It violated the usury statute. NY law applied instead of Utah.

A.Z. v. B.Z.

a couple planned for implant fertilization; prepared an egg from the woman and sperm from the man to be frozen. The man signed a contract that said the woman could use the eggs even if they break up. After they break up, she wants to use the eggs and make him a parent, but the man doesn't want to have kids. Ruled in favor of the man; can't force someone to be a parent, not good for society.

Restraint of Trade/Non-compete

if you leave a company, you can't work for a competitor within a period of time and geographic scope. Exception is if it's reasonable in both respective aspects.

Exculpatory Clauses

"waiver"; the attempt to shift liability from one party to another. Most likely enforced for negligence. Checks 1) What kind of liability is shifted? 2) Easy to understand shift of liability 3) Clear and obvious, in bold or caps 4) Any ability to change the terms?

Bailment Cases

temporary transfer of personal property from 1 person to another, a risk shifting device. 2 parties involved are the bailor and bailee. Examples are a car wash, valet, or compute repair. It needs an exculpatory clause.

Unconscionable Contract

contracts that shock the conscious so much that it must be refused; example: 500% interest.

Williams v. Walker-Thomas Furniture Co.

Ms. Williams wanted furtniture but didn't have the money. She did a rent-to-own. She purchased a chair, paid it off, purchased a table, paid it off, then purchased a kitchen set and missed the payment. The contract said they can take back all the furniture, even though she paid previously for them. Ruled in her favor as unconscionable. She didn't understand what she signed and it was unfair to take away the paid off items.

Procedural Unconscionability

used as proof for an unconscionable contract; oppression and surprise, there was pressure or the individual doesn’t know the language

Consideration

the evidence that the parties intended to form the contract (money, jewelry, etc.)

Adequacy of Consideration

1) Legally sufficient Value and 2) Bargained-for Exchange

Legally Sufficient Value

you have something, but it doesn't have to be equal to what you're getting. Bad bargains don't matter, you should've done your research (due diligence).

Bargained-for Exchange

2 way street; what I give you has to induce you to give me something.

Hamer v. Sidway

uncle visits nephew and tells him not to smoke, gamble, or drink and he'll give $5,000. After a few years, the Nephew completes the task, but the uncle's dead. Nephew sues estate of the family. The family argued that the nephew gave no assets up. Ruled in favor of the nephew, because he gave up the right to smoke, gamble, and drink.

Illusory Promises

NOT consideration; it sounds like a promise but it's not. "I'll give you 1 million if I feel like it."

Pre-existing Duty

NOT consideration; promising something that you already have a legal duty to complete.

Past Consideration

NOT consideration; something already happened. "I'll pay you $500 if you make an A." but you already did it before.

Alaska Packers' Ass'n v. Domenico

a captain hired people to fish on boats and paid 25$.The fishermen agreed, but when the boat took off, they demanded double. Captain agrees to double it since they're already out at sea. Once they're back at shore, the captain doesn’t double their pay. Ruled in favor of the captain because of pre-existing duty, the fisherman offered the same consideration.

Moral Consideration

a special type of consideration via charitable donation pledges; "Pay 1$ a day to help charity". We offer 1$ and they offer nothing. But the charity can argue promissory estoppel! (Promise, reliance, unfair not to be paid)

Contract Requirements

1. Agreement, 2. Consideration, 3. Contractual Capacity, 4. Legality (5. Writing, applicable to some, and 6. Consent)

Bilateral Contract

most contracts; a promise for a promise.

Unilateral Contract

acceptance through an action or performance (promise of performance)

Executory Contract

not fully performed, nothing was exchanged yet. Ex: I'll get the car and you'll get the money, but it hasn't happened yet.

Executed Contract

fully performed. Ex: You get the car and I get the money.

Valid Contract

all 4-6 elements of a contract are satisfied.

Unenforceable Contract

the contract has to be in writing, but it's not.

Voidable Contract

allows 1 party to get out of the contract (mental capacity issue/gun to head)

Void Contract

illegal contracts in which everyone goes home and the court doesn't help anyone.

Express Contract

A contract that’s specifically stated.

Implied Contract

A contract implied by the conduct. Ex: When you go to a restaurant, it's implied you'll eat and pay for the food.

Common Law Source

contracts for goods that AREN'T tangible or moveable.

Uniform Commercial Code

contracts for the sale of goods that are TANGIBLE and MOVEABLE.

Predominant Factor Test

check whether the tangible good or the service is the predominant factor => lets you determine the source of contract law

Non-contract Remediation

1. Promissory Estoppel and 2. Quasi

Promissory Estoppel

1. Promise, 2. Detrimental Reliance (proven with economic change in circumstance), and 3. Show Unjust Enrichment, "It would be unfair"

Quasi

a situation without a promise. 1. Received a benefit, 2. Normally have to pay for it, 3. Be unfair not to make them pay.

Agreement Elements

1. Mutual Assent, 2. Voluntary Consent, 3. Doesn't always require writing

Mutual Assent

offer and acceptance; parties have to be on the same page. Decided objectively, don't look inside the head, ignore bad bargains.

Offer

promise/commitment to do/refrain from doing specified action in future. 1. Offeror has serious intent to be bound, 2. Terms are reasonably detailed, 3. Offer must be communicated

Offeror

the person making the offer.

Offeree

the person receiving the offer and has the option to accept.

Common Law Offer

invalid contract if no price decided.

UCC Offer

gap filler provision; a contract can be concluded if nothing is said as to price, price is left to be agreed by the parties and they fail to agree, or the price is fixed through a market price.

UCC Contract

Requires that at minimum, the quantity must be decided.

Output Contract

exception to UCC contract; "I'll buy as much as you make." ALL counts as quantity. Ex: Farm production, you don't know how much they'll make.

Requirements Provisions

exception to UCC contract; "I don't know how much I need, but I'll buy as much as I need from you." Ex: Gasoline at a gas station.

Revocation

offer termination when the offeror changes the terms; REVOKED, "I take it back." Can only happen if the offeree hasn't accepted.

Rejection

offer termination when the offeree doesn't agree; REJECTION, "No thanks, not interested." If they change their mind later, the offeree becomes the new offeror.