business law final

Contract

an agreement between 2 or more parties enforced by law

A contract must contain which elements to be considered a la….

1. Acceptance

2. genuine agreement

3. consideration

4. capacity

5. legality

offer

must be one in a contract, proposal made to demonstrate an intent to enter a contract

acceptance

agreement to be bound by the terms of an offer

consideration

can be money, property, a promise, or some right; ex: music company sells studio equipment;the promised equipment is the consideration for the people.

the promissory estoppel doctrine

an exeption to the requirement of consideration for contracts, when one party acts on the other party’s, allows aggrieved parties to pursue justice for fairness for the performance of a contract in court

what makes an agreement voidable?

if people meeting the criteria in a contract are legal minors, mentally ill, and intoxicated, person who lacked capacity has the choice to either end the contract or continue.

who lacks capacity to make a contract

minors under the age of 18, they can either honor an agreement or void the contract

mental incapacity

if person lacks mental capacity to enter a contract, their legal guardian may void it.

voluntary intoxication

do not find lack of capacity to contract for people who are voluntarily intoxicated

what happens if party is inebriated and unable to understand the nature of agreement

then the contract may be voided by the inebriated party

what must a contract have for it to be binding

it must have a criminal or immoral purpose or go against public policy

what can make a contract void

engagement in illegal activities during its formation or performance

illegal contracts

distribution of illegal drugs, loansharking, and employment contracts for the hiring of undocumented workers.

legally binding

both both parties must have the legal capacity to understand and agree to the terms.

breach of contract

when either (or both) parties claim that there was a failure w/o legal excuse, to perform on any, or all, parts & promises of the contract.

material breach

something differently from what was expected under the terms of the contract is delivered, ex: contract promises the delivery of x-mas ornaments, buyers received box of candies.

minor breach

the other party still receives a majority of goods & services in the contracts; ex: breaching party may be late on delivering goods or services promised under a contract that does not specific a firm delivery date and doesn’t state that time is or the essence.

restitution

focuses on returning the injured party to their original position before the contract was formed.

recission

terminates the duties of both parties under the contract

reformation

allows courts to equitably change the contract’s substance

how do courts determine if a breach of contract is considered material?

by considering whether the breaching party can still fulfill the contract terms

specific performance

addresses a contract breach when monetary damages are insufficient to compensate the non-breaching party

sales contract

specific type of contract in which one party is obligated to deliver and and transfer ownership of a good to a second party, who in turn is obligated to pay for the good in money

vendor/seller

the party obligated to deliver the good

vendee/buyer

the party obligated to pay for the good

6 main feature of sales contract: consensual

perfected by mere consent w/o the need for any additional acts

6 main feature of sales contract: bilateral

both parties in the contract are bound to fulfill reciprocal obligations toward each other.

6 main feature of sales contract: onerous

good sold is conveyed in consideration of the price, price is conveyed in consideration of the good.

6 main feature of sales contract: commulative

good sold is considered to be equivalent of the price, vice versa.

6 main feature of sales contract: nominate

this type of contract has a special designation

6 main feature of sales contract: principal

validity doesn't depend upon the existence of other contracts

what are the 2 main sources for law of goods (1950s)

1. state common law

2. state statutory law

uniform commercial code (UCC) 1952

created to govern business transactions, all 50 states adopted the code

UCC catergorizes items that can be bought/sold into 3 types: goods

section 2-105 of UCC defines it as tanggible items that are “moveable at the time of identification to the contract for sale” (ex; refrigerators, paper, & furnitures)

UCC catergorizes items that can be bought/sold into 3 types: services

items that are moveable but not tangible (ex:accounting)

UCC catergorizes items that can be bought/sold into 3 types: realty

non-good items that are tangible but not moveable (ex: commercial & residential property)

trade fixtures

items that are realty (counter or bar) are used for business activities and treated as goods.

mixed sale

tangible item tied to an intangible item

merchants:

classified as separate entity under the terms of UCC

firm offers:

made by merchants

mirror-image rule

if the terms of the acceptance do not mirror those of the offer, the acceptance is treated as a counteroffer and no legal contract is formed.

what happens in the sense if good gets damages

if supplier delivers good to buyer and its damages, company must replace machine. but if supplier is considered a merchant, the loss remains w/ merchant until buyer takes possession of good

UCC consideres 4 issues relating to titles: ownership

when title transfers to vendor or vendee, hence when ownership occurs

UCC consideres 4 issues relating to titles: encumbrance

when vendee is granted an interest in the good such that the good can be used for a debt, limits how owner can use/sell it

UCC consideres 4 issues relating to titles: loss

when the responsibilities of the buyer & seller are to each & other, should a loss consider

UCC consideres 4 issues relating to titles: insurable interest

the right to insure the goods against exposure to risk of loss or damage.

simple delivery contract

when goods are transferred form the buyer to the seller at the time of the salem or if goods are delivered.

rule of tender of delivery

risk remains w/ the buyer

common-carrier delivery contract

when common carrier; a independent contractor rather than an agent of the seller delivers the good

shipment contract

Responsibility of the seller to make shipping arrangements and transferring goods to the common carrier. title is to the buyer here so they bear risk of loss even when they do not have possession of goods yet.

destination contract

when seller is required to deliver goods to a location stipulated to the contract. Title transfers once goods are delivered, seller bears risk of loss until that time.

goods-in-bailment contract

when goods are stored under the control of a third party; like a warehouse or ship. title depends on if documents are negotiable or non-negotiable

negotiable document

contains words “deliver to the order of “[seller]’” then both title and risk goes to buyer

non-negotiable document

does not have the words "“deliver to the order of “[seller]”

conditional sales contract

occurs when sale is dependent on approval. ex: sale-or-return agreement occurs when both parties agree that the buyer can return the goods at a later date

title

ownership of a good

3 types of titles: good title

title obtained from a person who owns the goods free and clear

3 types of titles: void title

when title is passed to the buyer from a person who doesn’t own the title. Trust is important to the title

3 types of titles: voidable title

when contract would’ve been good, but certain circumstances makes it voidable. ex: buyer lies and is actually a minor, or buyer wrote bad check in sale, then title is voidable.

warranty

guarantee on the good that comes as part of the sales contract and that the buyer is free from detects and a legally binding commitment.

good faith

the observance of reasonable commerical standards of fair dealing

commercial reasonableness

transaction should be taken in a sensible, prudent way

express warranty

seller guarantees the quality of the good or service sold

warranty against infringement

goods sold by merchants carry an implied warranty against claims by any third party by way of trademark infringement, patent infringement, or any other intellectual property law infringement

puffery

language used to bolster sales; lawful, and the consumer is required to apply reason when evaluating statements

what makes an organization stronger?

if organization is built on socially responsible values, it will be stronger than an organization that is built on profit alone.

executive compensation rates during employee layoffs

if company is facing economic downturn and lays off portion of workforce, will CEO take annual raise or take pay cut when others are losing jobs, taking a raise can be unethical because CEO should sacrifice some pay for the company.

poor company reputation

unethical decisions made by business people become permanent stains on the company

fair compensation for employees

minimum wage may not be fair compensation and cost of living has not been adjusted, meaning people are surviving on less money

negative employee relations

if employees see a lack of balance between whats expected of them and how leadership behaves, can cause problems in management of employees. some employees can be disenaged, while others stop working as hard. entire company becomes less productive, less responsive to customers & less profitable.

recruitment and retention problems

once company has negative reputation it can be difficult to hire new talent. disengaged employees who grow tired of the double standards will leave. customers have to deal with less experiences/interested employees, and are already overworked & frustrated.

company credibility lost

if customers hear of a problem, they’ll question the actions of every person at the company

ethics and compliance initiative

organizations committed to creating best practices in ethics.

elements that belong in a code of conduct: legal considerations

ex; a company should define whats sexual harassment is and what employee should do if they experience it

elements that belong in a code of conduct: value-based ethics

business should think about how it wants to be viewed by the community. ex: commitment to green office practices.

elements that belong in a code of conduct: regulatory ethics

designed to maintain certain standards of performance based on the industry. ex: commitment to maintaining data privacy at all times, pertaining to customer records.

elements that belong in a code of conduct: professional behavior

establishing behavioral standards for professionalism should include what is acceptable in the office.

corporate social responsibility

movement through global business community to improve the world through smarter use of resources and giving back to communities.

corporate responsibility of the businessman book:

introduced concept of companies giving book as a form of investment in the future.

civil suits

damages suffered by one or more persons/entities from the hands of another person/entity

-can be unintentional/intentional

-decided by judges/juries based on situation

torts

wrongs committed against others who suffer some form of damage as a result

torteaser

actor of the wrongs

tort law

addresses the damages based on the circumstances of the issue based on the fault

redress

provided in form of money from issued party instead of incarceration from criminal proceedings.

plaintiff

injured party filing the lawsuit where civil court makes decision

defendant

offender becomes defendant who responds to accusations of the plaintiff in civil suit

tort litigation

judge and jury have certain separate functions

intentional torts

result of a conscious and purposeful act

harm

individual leads to civil wrong that occurs as liability