Business Law 1 Flashcards
What are common laws?
When are they used for?
Reusing laws for similar situations
Real estate, insurance, services or employment
Three parts to a contract
Offer and acceptances
Exchange of consideration
no defenses
What is a Quasi-Contract?
Remedy for unenforceable contracts. Getting back consideration for incomplete contract
What terms must be presented to have a complete offer under UCC and COMMON LAW?
UCC: Quantity (sale of goods)
Common Law: Offeree, price, time, quantity, nature of work
How can you revoke an offer
How can you prevent an offeror from revoking an offer?
Communicate or implued through conduct like selling it to someone else
Offeror can revoke at any time even if they gave a set time to accept. The offeree can buy time (option) to prevent revocation. Just giving money saves the spot
When are rejections and acceptances effective?
Rejection: when received
Acceptance: When sent
How to reject offer? (3)
communicate
counter
DIDI - death incompetence illegal destroyed
Is an agreement to give a gift enforcable?
Exception
No
Charity (if they rely on it)
Five main reasons that a contract is VOID
- Subject matter is destroyed
- Fraud in the execution
- Duress (physical)
- Illegality
- Incompetence
Statute of limitation under common law and UCC
Common law: 4-6 years from the date of breach
UCC: 4 years
Statue of Fraud: contracts required in writing
- M - Marriage as considerations
- Y - Over a Year agreement
- L - Land (house, warehouse, lease or rentals or sales)
- E - Executor agreement to pay estate debts out of personal funds
- G - Sale of goods for more than $500
- S - Surety (pay debt of another)
Is a contract void if the recipient dies?
No, an estate would take over as recipient
What is Accord and Satisfactions
When a new agreement is presented to replace an old one, the original agreement is discharged upon completion of new agreement (parties may still sue in regards to original agreement until new agreement is complete)
LIKE NOVATION BUT FOR ACTS
What is a novation?
Changing parties in an agreement
LIKE ACCORD AND SAT. BUT FOR PARTIES
What is Parole Evidence
Prohibited information made on or before agreement date (judicial purposes)
Difference in Remedy rules for Common Law and UCC
UCC: Have to perform exactly
Common law: If things arent done rihgt there may be additional payments for the difference for services (specific performance for other)
- Liquidated Damages
- Punitive damages
- Rescission - exception
- Damages imposed for break in contract, must be reasonable
- Punishment for fraud
- When both parties in a contract go back to before they agreed to the contract, unless if their has been substantial performance (common law)
FOB RULES
FOB shipment: buyer is in risk of loss until the carriers delivers the goods (FOB seller)
FOB destination: the seller is in risk of loss until the carrier delivers the goods
(FOB buyer
Implied Warranties
- Express warranty: Oral & Written (Something making the buyer wanted to buy)
- Implied Warranty of Title (seller owns gods and has right to sell)
- Implied warranty of merchantability (Goods must fit ordinary purpose)
- Warranty of fitness (Fit buyers purpose)
Three parties in agency
Principal, Agent, Third Party
AGENCY rules for principal and agent:
- capacity?
- Age limit?
- consideration
Prinicpal needs to have mental capcity but agent doesn’t
principal can’t be a minor but agent can be
No consideration is needed for this type of relationship
Duties that an agent owes to a principal
LORA
Loyalty, obedience, reasonable care, duty of account
what is an agency coupled with an interest?
When someone defaults on a loan and agrees to transfer duties to debtor (making the debtor an agent)
Define:
- Actual Authority
- Apparent Authority
- Ratification
- Agent has the power and the right to engage in the contract on behalf of the principal
- Agent has power to bind principal to third parties does not have the right to do it
- Agent has no power or right, but principal chooses to be bound by unauthorized act, BUT PRINCIPAL ACCEPTS
When is actual authority terminated?
- fired or quit (may require pay of monetary damages)
- accomplishment of agreement
- by law (“BIDLID”)
- principal Bankruptcy discharge
- Incapacity of principal
- Death
- failure of License
- Illegal
- Destruction
main different between apparent and actual authority
Apparent: Third party beleives agent has power
Actual: Agent beleives agent has power
*both power to bind the principal
Termination of Apparent Authority and exception
- Termination of authority must be commincated by principal to third parties
- terminations by law don’t require third party notices (BIDLID)
Define Estoppel …
Estoppel to deny existence of agency, this is when third parties believe someone is your agent and you don’t correct it. Now you can’t deny if they act in your behalf as an agent
When are principals liable for torts committed by the agent?
When the agent was an employee performing within the scope of employment (Respondeat Superior) but this could still hold the agent liability also
WHo is directly liable for some elses debts and who is only liable if the debtor defaul ts?
- Surety
- Guarantor
Legal options when debtor defualts on loan with no collateral, Surety or guarantor
Lien: on property of debtor (a claim on the asset to back up debt, kind of like a collateral but imposed by the court)
Garnishment: Garnish (obtain) debtors property in the hands of a third party
Writ of seizure and sale where the court seizes the debtors property and allows the creditor to sell it
What is the homestead exemption?
Some states allow for debtors the right not to be seized if a creditor wants to take their primary house
Describe the steps in a typical Secured transactions
- DEBT: Creditor loans money to debtor
- ATTACHMENT: Debtor places “personal property or fixtures” as collateral for the creditor to sell in the case of debtor default
- PERFECTION: Creditor makes sure to have first dibs on the collateral (letting third parties know that you have first rights to the collateral property)
What is a PMSI creditor?
PMSI Creditor advantage in a secured transaction?
- “Purchase money security interest” gives the creditor right to the financed item as collateral
- They take priority if the debtor defualts (ex. Mercedes has right to seize car and sell it if you defualt on thier loan) (same applies if you use a bank directly)
five ways to perfect attachments in secured transactions
- Filing
- Possession
- control
- Automatic Perfection
- Temporary Perfection
Proceeds from the sale of collateral
- Pay any expenses associated with the sale of collateral like REPOSITION expense
- Pay off any creditors wiht a security interest in the collateral in order of priority
- Pay the debtor any surplus amounts received from the proceeds
