Business Law Flashcards
What are the 6 elements of an express contract?
1) offer- which is made by offeror and accepted by offeree
2) acceptance- counteroffer
3) consideration- past considerations, promissory estoppel/detrimental reliance
4) capacity- void, voidable, unenforceable
5) Legality
6) intent- no mutual mistake, unilateral mistake
What is a counteroffer
the offeree rejects the offer and comes up with a new offer and if the other person accepts then we will have a final offer
What are considerations
contracts have to be supported by good consideration meaning both sides must give up and receive semi equal value
What are past considerations
acting on an event before a contract or promise is made
what is an example of promissory estoppel/ detrimental reliance
they put down $200 and made a promise, you relied on it and then we harmed (They made a promise to a 10)
What is it when a void is put on a capacity
illegal, neither side can inforce it
What is it when capacity is voidable
one side can choose to enforce it
What is it when capacity is unenforceable
it is up to a judge to decide whether it is enforceable or not enforceable
Contract Law is derived from what two sources?
-Common Law (case)
-Statutes (laws)
(both being part of regulating contracts)
What are the 5 types of capacities
- minor
- intoxication
- insanity
- undue influence
- duress
What are minor capacities and the 3 exceptions
voidable at the minors options;
1) student loans
2) if the minor is entering into business contracts
3) contracts of necessity including food, clothing, and shelter
What is an intoxication capacity?
it is when contracts entered into by an intoxicated person is voidable at his option once sober
What is an insanity capacity
There is a lack of capacity. If a prior court ruled you lack of capacity then any contract you enter into is considered void. If no prior court ruled lack of capacity it will be voidable at her guardian option.
What is undue capacity
To put a person in position of trust, played on trust to get what they want, it was not forced. Example is sucking up to get what you want.
What is duress capacity?
To be forced into contract, if you can prove this then it can be voided
What is an example of legality
if a title pawn shop charged 600% it would be considered illegal - is regulating maximum interest rates allowable
-usury, gambling
What is it when there is intent
- both parties need to be on the same page (both sides mistaking) no contract
- no mutual mistake
- but unilateral mistake
What would consider breach of express contract?
- existence of valid contract
- breach
- plaintiff notified defendant of breach
- plaintiff performed all conditions precedent to filing action
- damages
An express contract (if having all elements) can be represented in what 2 ways?
written or orally
What is an example of implied contract?
-Painting the fence because the guy never said not to paint the fence. It was implied that the job was wanted to be done because he never said not to do it.
What is an implied contract in fact?
- based on conduct
- is when the defendant conduct made it seem like acceptance
What is implied contract in law?
- unjust enrichment, meaning quasi contract
- says you would be unjustly enriched if you don’t pay the bill
What is an example of implied contract in law?
The hospital bill is $100,000. You have good insurance that pays 80%. You pay $20,000 and your deductible is met for that year. The insurance says the most you will ever have to pay is $20,000. Once getting the bill from the hospital in the mail, you contact the insurance company and the hospital to complain about the bill being absurd. You propose paying monthly fee for final amount to come out as $5,000 or send $4,000 with a letter and check clearly stating that the money meets the full satisfaction of debt $20,000. If they cash it they have 90 days to change their minds but otherwise you don’t owe any more money.
What is an unconscionable contract?
-contract of adhesion, a one sided consumer contract where you have no ability to negotiate
What are the 5 examples of Boilerplate clauses discussed in class?
1) default and acceleration
2) choice of law
3) forum selection
4) attorney’s fee
5) severability/ savings
What is default an acceleration boilerplate clause?
the entire balance is due now; in the event any payment due hereunder is not paid when due, your account will be deemed in default. (very standard when there is a finance agreement ex. car, home, apartment)
What is a choice of law boilerplate clause?
agreement governed by laws of the state of Washington, USA; (example, you would want to have the ability to have the venue and law to be in your state)
What is a forum selection boilerplate clause?
where will it be?; (Example, you herby irrevocably consent to the exclusive jurisdiction and venue of courts in King County, Washington USA. In all disputes arising out of or relating to the use of the MSN Sites/ Services)
What is an attorney’s fee boilerplate clause?
the winning side gets the fee; In the unlikely event of litigation and appeals, the prevailing party can recover all reasonable attorneys fees and costs. (if you have this within your business people will be scared to cross you)
What is a serveablility/ savings boilerplate clause?
Says judge cut out or serve the bad part of the contract then save the rest; If any part of this argument is determined to be invalid or unenforceable pursuant to applicable law including, but not limited to, the warranty disclaimers and liability limitations set forth above, then the invalid or unenforceable provision will be deemed superseded by a valid, enforceable provision that most closely matches the intent of the original provision and the remainder of the agreement shall continue in effect
What is a modification/ merger boilerplate clause?
Unless otherwise specified herein, this argument constitutes the entire agreement between the user and Microsoft with respect to the MSN Sites/Services and it supersedes all prior or contemporaneous communications and proposals, whether electronic, oral or written, between the user and Microsoft with respect to the MSN sites/services. May only be modified if done so in writing and signed by both parties
What is an assignment boilerplate clause?
clause with and without recourse
What is a covenant not to complete boilerplate clause?
it shows 3 things if you quit, get laid off, or fired then…
1) cant have a job in the same title
2) within 3 year
3) within a geographical region of company choosing
What clauses are generally combined together
- non solicitation
- non disclosure
- convenant not to complete
What are types of clause Damages
1) Compensatory
2) Consequential
3) Punitive
4) Liquidated
4) Nominal
5) Anticipatory Repudiation
What are compensatory damages
actual damages; Ex-the beer that the guy put the rat in , company sued him for their loss in profit, it was an actual damage to their company
What are consequential damages?
Lost profits
What are punitive damages?
there are no punitive damages allowed; an example would be fraud
What is liquidated damages?
it is a fixed amount written into a contract in the event of breach. It must be a reasonable amount and not a penalty, otherwise the court will throw it out
What is nominal damages?
it is token damages, it is where the judge found liability but not damages. Ex-the GM case they found pain and suffering but parents didnt want the money so the reward was $1
What is anticipatory repudiation damages?
cause of action. Example, a breach of contract or compensatory repudiation. You gave 1 million dollars down payment to a guy who said he would give you a car, you try to contact him for 3 weeks and he ignores you then you can file under anticipatory repudiation based on good information that he will breach the contract.
What is statute of fraud
- tells us which contracts must be in any form of writing
1) all contracts come with real estate, land/homes must be in writing, personal property talking about movable goods
2) any contract which can not be performed within one year
3) any sale of goods not services over $500 and in GA over $5,000
What is Uniform Commercial Code (UCC)
set of contract laws between merchants and merchants and consumers
-it is incorporated in OCGA- GA statutes
What is article 2 of the UCC
transactions involving the sale of goods (not services)
What are two forms of warrantees?
Express Warranty and Implied Warranty
What is an express warranty
it is a sellers promise or guarantee that a buyer relies on when they purchase an item; doesn’t necessarily have to be written but can be
What is an implied warranty?
- merchantability- the reliability that the product actually works, consumers get this but it is not specifically told to you
- but considered different when buying a used product “as is”
describe mitigation of damages
a person who has suffered an injury or loss should take reasonable action to avoid additional injury or loss . Example if you contact a farmer to buy 100 bushels of corn for $10 per/bushel and then he runs out of corn and then you have other farmers 1)offering $12 p/b 2)offering $12 3)offering $12 p/b 4)offering $15 p/b and you choose #4 b/c he’s a good friend then the 1st farmer that you used owes you only $200 instead of $500 because you were given a cheaper offer than $15 p/b
- it is a Deffence to breach contract or negligent actions, saying that the plaintiff has a duty to reduce defendants damages
What is article 9 of the UCC
- discusses secured transactions
- secured creditor
- unsecured creditor
- secured agreement/financing agreement
- collateral
example of secured creditor
any creditor that takes collateral for the extensions of a credit , example financing a car (look up in book)
example of unsecured creditor
example credit card (look up in book)
What is a collateral
something that can be taken from you, prior to judgment; if you default ; Example if you default on your car payments then they can take away the car and then sue you
How does a creditor “perfect” a security interest- priority as to goods or land
1)Goods- UCC 1 financing statement- filled with clerk of superior court- lasts 5 years
fixture filling-a good attached to real estate so much that it becomes part of the real estate
2)Land- deed and mortgage is filled in public records in the county, showing that the bank owns the land
What is bankruptcy chapter 7?
Liquidation-For corporations and individuals, but since a new law, individuals no longer have a right to file a 7, only committed if the person has an extreme hardship and will no longer have ability to pay, making them file a 13 instead
What is a bankruptcy chapter 11
corporate reorganization- making an agreement with creditors to pay x amount of money over x period of time, the company stays in business
What is bankruptcy chapter 13?
individuals reorganization- for individuals similar to chapter 11
What is intellectual property?
intangible property rights- mostly governed by federal statures- things you cannot touch; copyrights, trade marks, trade secrets, and patents
What are elements of infringement for copyrights?
- ownership; best thing to do is file for $3500
- have to show the defendant’s access to your work
- have to show copyright/substantial similarity
- damages
When is something considered copyrighted?
once it is recorder in a fixed form like on a computer or written on paper
What are the advantages of registration on a copyright?
-within 3 months of production work…
->attorney fees-winning party gets the attorney fees
-> election of statutory damages-if you register your work you can ask for $750-$150,000 per violation to copy infringement
-
What is the defenses of copyright?
1) permission
2) public domain-copyright expired
3) fair use - ex professor using small amount of a book to teach class; parody
A copyright lasts life of author plus _____ years
-70
Work for hire or anonymous work- shorter period of ______ years from date of publication or ____ years from date of creation
- 95
- 120
What is work for hire and who owns the IP?
-work for hire is done by an independent contractor who waves international property. If no contract is offered to hire then the creator owns it, if there is a contract then the buyer owns it
Businesses need WfH Agreement and have the Independent Contractor agree that your business owns the IP. Have that person sign a Transfer of IP agreement
what is the claim section?
a special section describing what your product can do, this section must be written perfectly,only patan atternies can give you advise
What is a utility paten
the invention must be non-obvious, novel, or useful
can plants be patented?
yes
what does it mean when a design can be patented by law?
the ornamental design is protected
What is the application process of getting a patent?
you must present a claim section describing your product
Patents last _____ years (Design lasts ____) from date applied, not granted. (could take )_____ months to ______ years to receive a patent.
- 20
- 14
- 6
- 3
How long do trade secrets last?
Forever, as long as they stay a secret, you use it in commerce, and renew it
rank from hardest to least hardest to obtain: federal trade marks, trade secrets, trademarks
1) federal trade marks
2) trademarks
3) trade secrets
What do trademarks do? What do Service marks do?
- protect product
- protect service
What are trademark levels of protection?
1) common law
2) state
3) federal
4) international
trademark common law is the use of
TM and SM
trademark state law is the use of ____ and the limit action is _____; secretary of state office-renewable every_____ years
- TM and SM
- can only file it when you are using it in a business
- 10 years
trademark federal law is renewable every____ years, your have an intent to use __(_______)____- use it within _____ months, and it is the use of _____ symbol
- 10
- not at state level
- 6
- R
What must you do for a trademark international law , if infringement occurs it is known as _______
- you must look up which treaties cover which countries, must file in every place that covers the treaty
- treble damages
Strength in the trademark is determined by?
Distinctive- make up a word thats new but describes your product “Netflix”
secondary meaning- provide secondary meaning to old words, “Apple”
generic- stay away from generic names like “shoe”
What is Anti-Cybersquatter law
someone who registers company domain name in bad faith, 1999, filled by injunction plus damages
What does the company need to do to take you to domain arbitration?
prove all three things:
1) the domain name is identical or substantially similar to the trade name
2) the domain name holder acted in bad faith
3) the DNH has no legitimate use for the site
what is a typosquatter?
a cybersquatter that preys on you inability to type
what is an independent contractor?
having no benifits but you control hours, work of others, and you pay your own taxes
what is vicarious liability
holding one person responsible for the axe of another
what is respondent superior?
employers are liable for employees negligence committed in the scope of employment
what is an express agency
having actual authority whether orally or written down; tells the employee exactly what their job is; job description
what is an implied agency?
?
what is sole proprietor liability
the person can be personably liable if not protected.
what is an example of domestic corporation
working in Georgia
what is an example of foreign corporations
out of state but doing business in Georgia
what is an example of alien corporations
out of country but doing business in Georgia
what is common stock
the voting stock
what is preferred stock?
no voting stock
advantages include1)probably pays higher dividends 2)in the case of liquidation they get paid out before common sharholders
what are examples of shareholder agreements in a small company
pre emptive rights- a right of first refusal to purchase shares up to your percentage interest
voting bloc agreement- A and B agree to vote together on all important decisions
what is business judgment rule?
individuals on the board are not personally liable for committing negligence or entering itnto bad contracts however they are personally liable if they commit fraud or gross negligence
what is piercing the corporate veil? and what are the factors
trying to prove that company is the alter ego of another company or person
1) we need to show the court that it is an undercapitalization (shell)
2) both companies have commingling of funds
3) is there improper corporate filing
4) unlawful bulk transfer
describe a sole proprietor and General Partnership
- biggest problem-unlimited personal liability
- taxed only on profits
- fictitious name-recorded in the county clerks office of the superior court
- GP: all partners liable for negligence of any partner
- easy to form
describe a limited partnership
- one or more general partners involved in the day-to-day operation
- unlimited liability
- partners have little to no involvement and cannot loose more than their investment
describe Subchapter C Corporations
- many forms of shares
- taxed on profits and dividend distribution-a double tax
- shield from personal liability
- file article of incorporation with secretary of state
describe subchapter S Corporations
- taxed only on profits
- shield from personal liability
- file articles of incorporations with secretary of state
- limits on number of shareholders permitted
- limitations on who can be a shareholder, only one class of stock permitted which is common stock
Describe Limited Liability Company
- taxed only on profits
- shield from personal liability
- professional malpractice- non M committing professionals is not personably liable
- fewer limitations than SC Corporation
- Members file Articles of Organization with Secretary of State
Describe Limited Liability Partnership
- taxed only on profits
- shield from personal liability
- professional malpractice
- fewer limitations than SC corporation
- to convert from GP to LLP, partners file Certificate of Election In County Clerks Office of the Superior Court
what are practical concerns with S, C, LLC, and LLP Corporations?
-creditors will likely have shielded officers/members sign personal guaranty. /if the corporation defaults then you are personably liable. Thus removing their personal shield from liablility
what are bylaws
rules of how company operates
Are private corporations sold on the stock exchange?
they are not sold on the stock exchange
Describe a public corporation?
- shares can be bought by public
- file many documents including the prospectus with the securities and exchange commission
- there may be risk of investing in that company
what are the two forms of raising money within corporations?
- promissory nots (also called debt securities)
- stocks (equity securities)-by giving away equity of the company
what is par value
the minimum amount of money that the share can be sold for
what is authorized stock
number of shares that the articles permit
what is issued stock
number of shares sold
what is outstanding stock
number of shares in the hands of a shareholder
what is treasury stock
stock that the company can buy back by a certain date
___________ corporation is an international entity doing business in Georgia
Alien
when a corporation “goes public” a/n __________ is filled with the SEC, listing the financials and risks of investing in that company
prospectus
A federal trademark lasts forever if:
it is used in commerce
it is renewed every 10 years
An individual writing a novel can seek copyright protection lasting his/her life plus ______ years
70
What are two advantages of an LLC as compared with a Subchapter S corp
- fewer limitations
- the malpractice issues for professionals
