Business Law Exam 2

Types of Justice

Commutative, Distributive, Legal

Which form of justice is the heart of contract ethicality?

Commutative

Contract

a promise for the breach of which the law grants a remedy

Elements of a contract

agreement between competent parties with genuine assent supported by consideration for a legal object in a legal form

What kind of intent is contractual intent?

objective

privity

the relationship between parties in a contract

formal contract

under seal, has negotiable instruments, and recognizance

negotiable instruments

promise to pay

recognizance

promise to return

Uniform Commercial Code (UCC)

subject matter of contracts (real property, personal property, and services)

Enforceability of contracts

I. Valid II. Voidable III. Void IV. valid but unenforceable

Executed Contracts

contract has been performed

Executory Contracts

duties of a performance remain

Bilateral contracts

a promise for a promise (most common)

Unilateral Contracts

a promise for an act

Option

a contract supporting a second contract

Right of first refusal

an obligation to make the first offer to the person having the right of first refusal

Law of agreements

governed by law, breach gives rise to money damages

Quasi-contract

governed by equity, breach gives rise to equitable remedy

is a quasi contract a contract?

NO

Express law

words, spoken or written law

Implied in fact

actions/conduct of parties law

Implied in law

quasi contract, seeks to give the injured party the reasonable value of benefit

Agreement

an offer and an acceptance

Offer

legal definite terms, and communication

Advertising

generally not an offer, an invitation to negotiate

Terms incorporate by reference

exception to definiteness, uses a separate document's rules, terms, etc. in law that makes a contract cleaner

Implied terms

exception to definiteness, unspoken terms still enforceable by law because we live in a trust society

Best efforts clause

exception to definiteness, a contractual promise to make a good faith attempt at completing a goal

Output and requirements contract

exception to definiteness, a seller agrees to sell their entire output to a buyer who agrees to purchase all of it

Option contract

A promise, supported by consideration to hold an offer open for a specific time period or to a particular date

Firm offer

A UCC offer between merchants, in writing for the sale of goods that states its terms to be irrevocable for up to 3 months

Termination of Offers

Revocation, counter offer, rejection, lapse of time, death of a party, disability of a party, or subsequent illegality

Acceptance of Offers

only the offeree has powwer of acceptance, unconditional, and unvarying material terms

Silence as acceptance

rare, but can be appropriate (ex. milkman)

Mailbox Rule

revocations of offers are effective upon reciept, but acceptances are effective upon posting

Capacity - Traditional Rule

A person must have understanding of the: nature, purpose, and effect of a transaction

Factual Incapacity

mental impairment from drugs, alcohol, or age

Statutory Incapacity

minority

Legal Incapacity

adjudicated incompetent, as when a guardian has been appointed

Factors affecting mental capacity

genetics, alcohol/drugs, injury, medication, dementia

minority equity rule

minors must pay reasonable value for necessaries supplied to them (ex. rent, food, etc.)

Voidability of minor contracts

contracts are voidable up until you turn 18 then become regular contracts

Misrepresentation of minors (Fake IDS)

contracts are avoidable, but restitution is required

Genuine Assent

the knowing, voluntary, and mutual approval of the terms of a contract by each party; required for a contract to be enforceable

Mistake in genuine assent

mutual mistake of material fact, basis for recession, unilateral with duty owed

Deception in genuine assent

A lie about an important fact believed by the relying party resulting in damages (fraud, negligence, or misrepresentation)

Pressure in genuine assent

undue influence, duress

Fraud

uses subjective intent and depends on what the relying party cares about

Undue Influence

requires the presence of a fiduciary relationship that has no threat of violence

Duress

coercion or threats

Consideration

what the promise requests and receives as the price of the promise

Attributes of consideration

1. bargained for

2. present

3. legal

4. can consist of forbearance

5. binding

6. usually need not be adequate

Benefit detriment test

what each party will pledge and recieve in the performance of a contract, applies in most circumstances

Forbearance

promise to refrain from doing that which you have a legal right to do

Gifts

not consideration, charity is though

Illusory Promises

when a party appears obligated but factually isn't, cancellation provisions, conditional promises

Pre-existing legal obligation

generally isn't consideration, you can't promise to do something you are already legally bound to do

Exceptions for pre-existing legal obligation

good faith adjustment, contract for sale of goods, compromise and release of claims, part-payment checks, composition of creditors

Composition of creditors

multiple creditors with the same client agree among themselves to take a portion of the amount owed as to not bankrupt the client

Past consideration

not binding consideration, there is no "if" for an outcome

Moral obligation

not legally binding consideration, however unethical it may be to ignore

Charitable subscription

an exception to consideration, public policy favors charitable giving and detrimental reliance over the strict benefit-detriment requirement

UCC Provisions

exceptions to consideration, firm offer is an example

Promissory Estoppel

an exception to consideration, allows a court to enforce an unwritten or uncompensated promise when a party relies on that promise (no "if)

Adequacy of consideration

courts generally don't care, only sufficiency is required