Mississippi State University Legal Environment of Business Exam 2 (ch. 6,7,9)

Statute of Fraud

a statute requiring certain contracts to be in writing to prevent fraud

Fraud

deception intended to result in financial gain

Statute of Fraud examples

contracts for marriage, contracts to buy land, contracts that can't be performed within one year

Valid

when a contract has the required elements

Void

when an agreement lacks one of the required elements

Unenforceable

when a contract meets all the required elements to be considered valid, but one party asserts a legal defense to performing the contract

Accord

to be harmonious or consistent with

Uniform Electronic Transactions Act (UETA)

grants electronic signatures the same legal weight as handwritten signatures

Mutual assent

also referred to as an assent or agreement; requires an offer and an acceptance of that offer

Assent

contract approval of facts; it's the knowing, voluntary, and mutual approvable of the terms of a contract by each party

Offeror

the person making the offer

Offeror example

A offers to sell his laptop to B for $300.00.

Offeree

the person to whom the offer is being made

Offeree example

B is the one A made the offer to

Offer

a promise to do a specified activity such as selling a good at a certain price or offering to provide services for a given rate

Acceptance

the offeree's expression of agreement to the terms of the offer

Counteroffer

where the offeree rejects the original offer and proposes a new offer with different terms

Counteroffer example

A wants to sell B a laptop for $300.00. B responds with "what about $250.00 instead?"

Mirror image rule

requires that any acceptance by the offeree must be the mirror image of the original offer

Valid contracts are made up of what four elements?

mutual assent, consideration, capacity, legality

Consideration

the mutual exchange of benefits and detriments

Consideration example

A offers to sell B his laptop for $300.00. B accepts. Both must exchange/give up something of value to make this a valid contract. A's consideration (what he gives up) is the laptop. B's consideration (what he gives up) is the money.

Capacity

contracts will be enforced by the courts only if each party has legal ______ to enter a contract; to be mentally capable to enter into a contract

Legality

for a contract to be enforceable, it must meet the requirement of ______, that is, the subject matter of the contract must be legal

Genuine assent

for a contract to be enforceable, the law requires the parties to have given ______ on the terms of the contract; did the offeree genuinely believe the terms he agreed to

Mistake

defined as a belief that is not in accord with the facts

Duress

If one party to a contract uses any form of unfair coercion to induce another party to enter or modify a contract, the coerced party may avoid the contract based on _______

Coercion

the practice of persuading someone to do something by using force or threats

Three categories of duress:

1. violence or threats of a violent act

2. economic threats such as wrongful termination or threats to breach a contract

3. threats of extortion or other threats in which the other party has no meaningful choice

Threats of a violent act example

A tells B that A will shoot B in the leg if he doesn't sign the contract

Economic threat example

A is B's boss. A tells B that if he doesn't sign this contract with A, then A will fire B

Threats of extortion example

A tells B that, unless B signs the contract, A will tell the IRS that B has been lying on his taxes

Avoided

the contract is not legally binding or enforceable

Unconscionability

gives the court the power to refuse to enforce a contract where the consideration is grossly unequal

Even if the elements of a contract are met, the contract must still:

1. be the product of genuine assent

2. be in writing under certain circumstances

Prescribed

dictated or indicated as a rule or course of action to be followed

Statute of frauds primarily applies to four types of contract:

1. contract that involve the sale of interest in land

2. contracts that cannot be performed in under one year

3. contracts to pay the debt of another

4. contracts made in consideration of marriage

Prenuptial agreement

an agreement made by a couple before they marry concerning the ownership of their respective assets should the marriage fall

Discharge

the release of a legal obligation

Rescission

the cancellation of a contract where each party gives up rights under the contract in exchange for the release by the other party from performing their obligations

Operation of law

contract obligations may be discharged through ______

Supervening illegality

occurs when the performance of a contract becomes illegal subsequent to the contract formation but prior to performance

Breach

when a party to an agreement owes a duty to performs and fails to fulfill their obligation

Remedies

the law provides certain relief for aggrieved parties that suffer losses because of another party's breach of contract

Money damages

a simple legal mechanism awarded by the court to the nonbreaching party for compelling the breaching party to compensate the innocent party for losses related to the breach

Equitable relief

a court may grant this in some instances when money damages are insufficient to compensate the nonbreaching party

Injunctive relief

a court order to refrain from performing a particular act

Tort

civil wrong where one party has acted, or failed to act, and that action or inaction causes a loss to be suffered by another party

Tortfeasor

one who commits a tort

Tortfeasor conduct

the tortfeasor's wrongful conduct

Tort law example

O.J Simpson was prosecuted for murder and was sued by the victims' families for the deaths

Intentional tort

one in which the tortfeasor is willful in bringing about a particular event that causes harm to another party

Libel

written defamation

Slander

oral defamation

Truth

an absolute defense to a charge of defamation

Fraudulent misrepresentation

recognized as a tort in cases where the law provides a remedy to recover damages when the innocent party suffers a monetary loss because of a false representation

Material fact

a fact that is significant or would impact the parties' rights or obligations in a transaction as opposed to a minor and inconsequential detail

False imprisonment

intentional infliction of a confinement upon another party

false imprisonment example

A points a gun at B and won't let him leave the room

Assault

the intentional touching of another person without that person's consent in a harmful or offensive manner, or the act of putting someone in fear and apprehension of immediate harmful or offensive contact

Assault example

A hits B in the nose or A threatens to hit B in the nose and swings to hit B but misses

Intentional infliction of emotional distress

extreme, outrageous, or reckless conduct that is intended to inflict emotional or mental distress

Intentional infliction of emotional distress example

Michelle Carter sending text messages to her boyfriend to kill himself

Trespass

the act of entering another's land or causing another person or object to enter land without the owner's consent

Negligence

an accidental event that causes harm to another party

Liable

to be held legally responsible

Licensee

a social guest; has the owner's consent to be on property for a nonbusiness purpose

Licensee example

A tells B to not go into the bedroom of A's home because that is where A placed his aggressive German Shepard

Invitee

a customer inside a business, is invited onto property by owner for business purposes

Invitee example

A owns a restaurant. B comes in to eat. A just mopped the floor. A must put up a wet floor sign to warn customers of the danger

Trespasser

a party enters premises without owner's consent; someone who didn't have permission to be on the property

Reasonable care

the level of care that a reasonable person would exercise in such circumstances

Actual damages

to recover in a negligence case, the tortfeasor must have caused another party _____

Actual damages example

A flailed his arm around and hit B in the nose. B's nose didn't break. B didn't have an injury. This means B cannot sue A for negligence because there was no injury.

Four elements to prove a negligence/unintentional tort lawsuit:

1. duty

2. breach of duty

3. causation

4. damages/injury

Duty example

A and B are supposed to act with reasonable care while sitting next to each other

Breach of duty example

A flailed his arms around. This means he wasn't acting with reasonable care and, therefore, he breached his duty of care.

Causation example

But for A flailing his arm around, would B have had an injury?

Damages/injury example

Did B get a broken nose from A's breach of duty? If yes, then B can sue for negligence.

Comparative negligence

in cases where the injured party's conduct has played a factor in the harm suffered, the law allows the tortfeasor to assert the defense of ______

Comparative negligence example

A and B get into a wreck. A suffers $10,000.00 in damages. The jury finds that both A and B were negligent, as B ran the red light but A was also speeding, which caused more injury to himself. The jury finds both A and B to be 50% at fault. A wins $10,000.00 in court. But, because he was 50% at fault, he will only get 50% of the $10,000.00. So A will actually win $5,000.00.

Assumption of the risk

When the injured party knows that a substantial and apparent risk is associated with certain conduct and the party goes ahead with the dangerous activity anyway, the law allows the tortfeasor to assert the defense of ______

Assumption of the risk example

A walks around and sees a fenced off construction area. A knows getting into a construction area is risky/dangerous. A, on his own, voluntarily climbed the fence and got into the construction area. A wooden plank falls off a building and hits A in the head. If A tried to sue MSU, MSU would use the defendant of assumption of risk.

Strict liability

used primarily for abnormally dangerous activities and for defective products

Strict liability example

Not stopping as a stop sign

Products liability

the ability of any seller of a product that, because of a defect, causes harm to a consumer

Substantial change

for strict liability to apply, the product must reach the end user without ______

Misuse of product

in a case where the injured party may not know of a certain risk and yet fails to use the product in a way an ordinarily prudent person would, the seller may use product misuse as a defense

Misuse of product example

spraying roach spray on your hair like hair spray