Bus Law Exam 2 Notes Flashcards
Expression of willingness of the offeror to enter a contractual agreement
Offer
person/party who initiates or makes an offer
Offeror:
person/party to whom an offer is made
Offeree:
Requirements of a Valid Offer
Definite Basis for agreement Seriously intended Not a joke Nor offered in jest fear or anger Communicated from offeror to offeree Both parties must be cognizant of the agreement
Invitation to Deal
Advertisements Price lists and quotation Bids Estimates Not valid offers May lead to an offer
Annulment or cancellation of an instrument act or promise by one doing or making it
Communicated by offeror to Offeree prior to acceptance
By Revocation
If terms are not met there is no contract
By terms of the offer
Termination of an Offer By Revocation By lapse of "reasonable" period of time By death or insanity of offeror By Rejection By Counteroffer By intervening illegality
Termination of an Offer
By Revocation
Annulment or cancellation of an instrument, act, or promise by one doing or making it
Communicated by offeror to Offeree prior to acceptance
By terms of the offer
If terms are not met, there is no contract
By lapse of “reasonable” period of time
Depends on type of offer
By death or insanity of offeror
Insane: person afflicted with a serious mental disorder impairing ability to function
By Rejection
Refusal to accept
By Counteroffer
Intended acceptance which changes or qualifies the offer, and is a rejection of the original offer
By intervening illegality
Legal situation interfering with an offer and agreement
Ie: making a contract to kill someone
person afflicted with a serious mental disorder impairing ability to function
Insane:
Intended acceptance which changes or qualifies the offer and is a rejection of the original offer
By Counteroffer
Legal situation interfering with an offer and agreement
Ie: making a contract to kill someone
By intervening illegality
Agreement to an offer resulting in a contract Communicated by offeree to offeror Oral or written Including mail or telegram
Acceptance
Reality of Consent
Justifiable reliance by offeree Offeree believes what offeror says is true No reason to believe otherwise Without this contract is Voidable Influencing factors: Misrepresentation Fraud Undue influence Duress Mistake
Innocent Misrepresentation
False statement made in the belief it is true
Misrepresentation
False statement of a matter of fact
Intentional or reckless false statement of a material fact upon which the injured party relied which induced the injured party to enter into a contract at his/her detriment
Fraud
Manner of Committing Fraud
By express misrepresentation Oral or written By concealment Attempting to hide information By silence when one has a duty to speak Not sharing information when asked or requested
Improper influence that is asserted by one dominant person over another without threat of harm
Often with a fiduciary relationship
Undue Influence
Person in a relationship of trust or confidence
- family relationships
- attorney and client
- physician and patient
- funeral director and family
Fiduciary
Means of removing one’s free will
Obtaining consent by threat to do harm to the person his/her family or property
Element of coercion or force
Physical emotional and financial
Duress
Mistake by one party to a contract
Mistake as to quality value or price
Mistake as to terms of contract
Generally will not render agreement defective
Unilateral mistake:
Mistake by both parties to a contract
Mistake as to nature of transaction
Mistake as to identity or existence of subject matter
Generally render agreement defective
Mutual mistake:
necessity that parties desiring to enter into contracts meet all requirements
Contractual Capacity:
Contractual Capacity Requirements:
Parties must have the ability to understand a contract is being made
Parties must understand the contracts general nature
Must have legal competence to contract
Protected Classes of Persons
Afforded special protection in contracts:
- Minors
- Insane persons
- Intoxicated persons
- Convicts
Repudiation of or election to avoid a voidable contract
DISAFFIRMANCE
Confirming of an act which was executed without authority or an act which was voidable
RATIFICATION
Items required or proper and useful for sustaining a human being at an appropriate living standard (food clothing and shelter)
NECESSARIES
That which the offeror/promisor demands and receives as the price for an offer/promise
…….
Includes money, personal property and service
Generally promises unsupported by consideration are not enforceable
Consideration
Promising to do what one is legally obligated to do
Cannot promise to drive legal speed limit
Already obligated to follow speed laws
…..
Invalid Consideration
Promising or refraining from doing that which one has no right to do
Refraining from doing something
Promising not to rob a bank
FORBEARANCE
Promises Enforceable without Consideration
Charitable pledges and subscriptions
Church or other charity organization
Legally required to honor your pledge or subscription
Depend on this for budget and expenses
Your subscription or pledge…
“is an offer of a unilateral contract that is accepted by creating liabilities and making expenditures”
Enforceable promise whereby one party justifiably acts in reliance upon the promise of another
Promissory Estoppel
Elements of Promissory Estoppel Offer is made Offeror reasonably expects the promise to induce action by offeree Offeree acts Offeror fails to honor the offer What can the offeree do?
…….
According to Promissory Estoppel
Justice requires enforcement of the promise when the offeree would be substantially harmed if it were not enforced
Classes of Illegal Agreements
Agreements to commit crimes or torts
Agreements prohibited by statute
Agreements contrary to public policy
Injurious to individuals and society at large
Agreements to Commit Crimes or Torts
Agreement Prohibit by Statue
Usurious Restraint of trade Fix prices Influence fiduciaries Defraud creditors Obstruct justice Relieve liability for willful negligence
USURIOUS
Exceeding maximum rate of interest which may be charge on loans or consumer credit accounts
USURY
Charging a higher rate of interest than the law allows
Usurious Agreements
MAXIMUM CONTRACT RATE
Highest legal rate of interest
LEGAL RATE
Interest rate applied when no rate is specified
Laws which seek to promote competition among businesses ....... Prevents creation of a MONOPOLY Prohibits contracts not to compete Restrain (limit or prohibit) trade Fix prices of goods and services Unfair competitive practices
ANTITRUST LAWS
Legislation intended to promote competition among businesses by prohibiting restraint of trade
SHERMAN ANTITRUST ACT
Person or persons in a relationship of trust or confidence
FIDUCIARIES
Agreements to Influence Fiduciaries
FIDUCIARIES
Person or persons in a relationship of trust or confidence
Agreements to Defraud Creditors
Regarding payment of a debt
Money owed
Agreements to Obstruct Justice
Process of law and justice
Determined by established laws
Court judgments
Agreements to Relieve Liability for Willful Negligence
Agreements in which someone else “takes the blame”
Agreements Contrary to Public Policy
Contracts limiting freedom of marriage
Contracts injurious to public service or the “public good”
Written Contracts
Statute of Frauds
Originally enacted by the English Parliament (1677)
Present in some form in all states
Lists certain types of contracts which can only be enforced if in written form
Types of Contracts in Writing Contracts to transfer an interest in real property Real Property (Real Estate) Land Objects attached to land
Executory bilateral contracts which cannot be completed within one year from date of making
Ensures parties do not forget contract terms
Example: Purchase of real estate with long term loan contract/mortgage
….
Agreement to become responsible for the debt (or default) of another
DEBT
Obligation to pay money or goods
DEFAULT
Nonperformance of a duty or obligation
……
Contracts made by executors or administrators to pay debts of an estate out of his/her personal funds
Rather than paying debts from decedent’s estate
Agreement to pay debts of another
……
Promises made in consideration of marriage
Prenuptial agreements
……
Contracts involving sale of goods or merchandise with price of $500 or more
GOODS
Moveable tangible personal property
Satisfactory or Complete Performance:
Contract that has been performed in a manner that would “satisfy” an ordinary reasonable person
Nature of Performance
Impossibility of performance Destruction of the subject matter Occurs when subject matter of a contract is destroyed without fault of either party ........... Intervening illegality New laws which make the contract illegal
Discharge by Impossibility
One party announces his/her intention not to perform prior to time to perform
If innocent party accepts breach of contract contract is discharged
Anticipatory Breach:
Remedies for Breach of Contract
Damages: Sum of money awarded to injured party
Nominal Compensatory Punitive Liquidated
Token award to symbolize vindication of wrong done to the plaintiff
Generally award of $1
Nominal Damages
Award paid to injured party to cover exact amount of their loss, but no more
Compensatory Damages
Award paid to the plaintiff in order to punish the defendant, not to compensate the plaintiff
AkA Exemplary (mental anguish)
Occurs most with torts
Rather than breach of contract
Punitive Damages
Provision in a contract fixing the amount of damages to be paid in the event one party breaches the contract
Liquidated Damages
Remedies for Breach of Contract Rescission: ..... Specific Performance: ...... Injunction:
In addition…
Debts discharged in bankruptcy cannot be collected
Individual or business debts
Upon filing with and discharge by bankruptcy court
Creditor’s rights of action to enforce contracts of the debtor are barred
……
Statute of Limitations
Time within which right to sue must be exercised or lost
Time limits vary from state to state
Types of suits
Types of debts
Transferring one’s rights under a contract to another party
Rights of Assignment
Person to whom the promisee owes an obligation, which is discharged if the promisor performs
Example
Mary owes John $1000
Charles is Mary’s wealthy friend
Charles (promisor) makes a contract with Mary (promisee) to pay her debt to John (creditor beneficiary)
Creditor Beneficiary
Transfer of title to goods from seller to buyer for consideration called the price
Sale
Consideration stipulated by the contract, generally expressed in money or money’s worth
Consideration can be: money, goods, services
Price
Person who deals in goods and/or has knowledge or skills related to the sale of goods
Merchant
Document of conveyance which provides written evidence of one’s title to tangible person property (goods)
Provides two things
-Sellers proof of title - if questioned by buyer
-Buyers proof that goods were obtained legally
Bill of Sale
Land and objects permanently attached to land
Real Estate
Real Property
Passage of Title
Acceptance of goods by buyer
-Required for passage of title
-Occurs when buyer signifies that he/she will take/retain the goods
Transfer of Title and Risk of Loss Depends on: Shipment contract Destination contract Sale on approval Sale or return
Actual and define statement of a seller, either orally or in writing, guaranteeing a standard or level of performance
Seller promises either in writing or orally assures the quality, description, or performance of the goods
Express Warranty
Warranty of merchant ability (merchant seller)
Warranty of fitness for a particular purpose
The goods being sold shall be merchantable and fit for the purpose for which the seller implied
Types of Implied Warranties
Designed to protect public or consumers’ interests
Regulatory Agencies
Expansion of Consumer Protection
Product safety laws
-Require goods to meet safety standards
Product Safety Act (1972)
-Established the Consumer Product Safety Commission
-Which creates and enforces safety standards for many products
1
Exceeding maximum rate of interest which may be charge on loans or consumer credit accounts
USURIOUS
Charging a higher rate of interest than the law allows
USURY
Highest legal rate of interest
MAXIMUM CONTRACT RATE
Prevents creation of a MONOPOLY Prohibits contracts not to compete Restrain (limit or prohibit) trade Fix prices of goods and services Unfair competitive practices
ANTITRUST LAWS function
Regarding payment of a debt
Money owed
Agreements to Defraud Creditors
Process of law and justice
Determined by established laws
Court judgments
Agreements to Obstruct Justice
Agreements to Relieve Liability for Willful Negligence
Agreements in which someone else “takes the blame”
Agreements to Relieve Liability for Willful Negligence
Contracts limiting freedom of marriage
Contracts injurious to public service or the “public good”
Agreements Contrary to Public Policy
Originally enacted by the English Parliament (1677)
Lists certain types of contracts which can only be enforced if in written form
Present in some form in all states
Written Contracts
Statute of Frauds
cannot be completed within one year from date of making
Ensures parties do not forget contract terms
Example: Purchase of real estate with long term loan contract/mortgage
Executory bilateral contracts
by performance agreement impossibility acceptance of breach or operation of law
Discharge:
Termination of a contract
When all terms of the contract have been fulfilled the contract is discharged by performance
Discharge by Performance
Performance
Contract that has been performed in a manner that would “satisfy” an ordinary reasonable person
Nature of Performance
Satisfactory or Complete Performance:
Fulfilling major terms of the contract
Contract can be discharged
Less any damages that might occur for minor breaches of contract
Substantial Performance:
Mutual agreement to cancel the contract
Entering into a contract is a mutual agreement
Parties can also mutually agree to cancel the contract
Discharge by Agreement
Change of one party to a contract at the mutual agreement of the original parties
You buy a house
You decide to sell the house
Another person agrees to assume your bank mortgage
Novation:
Agreement made and executed in satisfaction of the rights one has from a previous contract.
You satisfy your contract with the bank when another party assumes payment of your mortgage.
Accord and Satisfaction:
Impossibility of performance
Destruction of the subject matter
Occurs when subject matter of a contract is destroyed without fault of either party
Discharge by Impossibility
Situation in which one of the parties to a contract fails or otherwise refuses to perform the obligation established in that contract
Discharge by Acceptance of Breach
Material breach of contract
Breach of Contract:
Canceling, annulling, or avoiding
When contract is breached
Aggrieved party is released from all obligations not yet performed
Or allowed to sue for damages
Remedies for Breach of Contract
Rescission:
Carrying out terms of the contract
Contracts involving sale of real estate
Sale of rare articles of personal property
Specific Performance:
Judicial order or decree forbidding performance of a certain act
Injunction:
Intervening illegality
New laws which make the contract illegal
Discharge by Operation of Law
Method whereby one party conveys rights to another person who is not a party to the original contract (beneficiary insurance assignment to funeral home)
Assignment
party making assignment
Assignor:
party to who assignment is made
Assignee:
Person not a party to a contract, but whom the parties intend to benefit
Example
Mrs. Jones makes pre-funded funeral arrangements for her invalid husband
Mrs. Jones and the funeral director are the contracting parties
Mr. Jones will receive benefits of the pre-funded funeral upon his death
Third-Party Beneficiary
Third party beneficiary to whom no legal duty is owed and for whom performance is a gift
Example
Beneficiary named in a life insurance policy
Donee Beneficiary
is a contract in which ownership of goods transfers immediately from the seller to the buyer for a price
A Sale
Movable tangible personal property
IE: Food vehicles clothing furniture
Goods
Types of Goods:
Existing Goods
Future Goods
Goods which are in existence and owned by the seller when the contract is made
Existing Goods
Goods which are not in existence when the contract is made
“Goods to be provided at a later date”
Future Goods
Specifying of goods by the buyer to the seller
Identification
Seller agrees to transfer title of goods to a buyer for consideration (price)
“At a future time”
Contract to Sell
Recognized as most important statute in business law
Includes provisions which regulate certain sales of goods
…….
Applies to personal property classified as goods
Personal Property
All property which is not real property
Uniform Commercial Code (UCC)
......... Does Not Apply To: Real property Intangible personal property Service contracts
Evidences of ownership of personal property such as stock of corporations checks and copyrights
Intangible Personal Property
Contracting for services rather than goods
Service Contracts
Defines offer acceptance consideration incapacity and illegality
Applies to circumstances not covered under the UCC
Contract Law
Acceptance of goods by buyer
- Required for passage of title
- Occurs when buyer signifies that he/she will take/retain the goods
Passage of Title
Sale is not complete until the buyer approves the goods
Sale on Approval
Is a complete sale with the right of the buyer to return the goods and thereby set aside the sale
Sale or Return
Guarantee made by a seller that an article good or service will conform to a certain standard or will operate in a certain manner
Warranty:
Warranty of title
Sale of goods implies the seller owns the item offered for sale
Warranty against patent and/or copyright infringement
Goods shall be delivered free of the rightful claim of any third party by way of patent or trademark infringement
Warranties imposed by the UCC:
Warranty imposed by law
Arises automatically because the sale has been made
Implied Warranty
Protection for merchant
-Limits warranty coverage to that provided by manufacturer of goods
Disclaimer on Casket Price List
Disclaimer of Warranties
Usury laws
Antitrust laws
Regulatory agencies
Consumer Protection
Traditional protection:
Disclosure and Uniformity
Truth-in-advertising
Truth-in-lending
Fair credit reporting
Federal Trade Commission Funeral Rule
Meeting eligibility requirements prior to licensure in a regulated profession
Administrative law:
