Chapter 2 - Business Law Flashcards
Implied Contract
Actions act as acceptance
Quasi Contract
Understanding (Ordering at restaurant)
Common Law vs. Statutory Law
Common Law: Intangible (services/real estate), judge made law, previous court decisions used
Statutory Law: Tangible goods (UNN-Uniform Commercial Code)
6 Elements to a Contract
P - Proper Form
L - Lawful Object - Cannot sell illegal items
A - Acceptance - Unconditional, if condition placed then considered counter-offer; Can be accepted with words or actions; Mailbox Rule
C - Consideration - Promise for a promise, meeting of the minds; Past Consideration-Previous actions not used for present contract; Future Consideration- Promise to make a promise (not legally binding)
C - Competence - Person cannot be a minor or mentally incompetent
O - Offer - Has to be serious; definite terms; must be communicated to offeree
Contract Offers ends when
Counter-offer made; Offeree rejects; Offeror revokes
Exception- Offeror agrees to keep offer for period of time; Offer is deemed open for reasonable amount of time
Void / Voidable Contracts
Unenforceable by law (selling illegal drugs)
When one party has ability to void (contract with a minor)
Statute of Contract Frauds (Must be in writing)
G - Goods - Sales of goods $500 or more
R - Real Estate Contracts
I - Impossible - Impossible to perform in one years time
P - Promise - Promise to answer for debt of another
E - Executor - Executor’s promise to be liable for debt of an estate
Marriage contract
Elements of Fraud
M - Misrepresentation
R - Reliance
I - Intent to mislead (scienter)
D - Damages of Injury
Gross Negligence or Constructive Fraud
M - Misrepresentation
R - Reliance
R - Reckless disregard for truth
D - Damages or Injury
Types of Fraud
Inducement or Misrepresentation creates voidable contract
If Written contract different from verbal agreement can void contract
Defenses
Undue Influence - Someone of authority (relative) influences party that has been wronged
Duress - Pressured to sign contract
Parole Evidence Rule - Car dealer doesn’t act on verbal promise and did not put in contract (evidence out side of 4 Corners of contract)
Transferring/Delegating Contracts
Assignment (Ex: Mortgage- banks can transfer, most contracts freely assignable unless writing says otherwise
Cannot be assigned: Insurance contracts; Personal service contract requiring skill
3rd Party Beneficiaries of Contracts
Intended Beneficiary - have privity (life insurance- named in contract)
Incidental Beneficiary - Not intended, no privity
Contract Remedies
Actual/Compensatory - Get back what value of contract was; sometimes prohibitions placed
Liquidation Damages - Put in contract what damages will be (reasonable amount)
Punitive Damages - Purpose is to punish, used when there is fraud
Agency
Working/making transactions on behalf of another person with a 3rd party.
Agent is working for Principal (Agent-Principal relationship)
Principal must give legal consent
Minors can appoint an agent
Have fiduciary duty to principal (acting in best interest of principal)
Disclosed vs. Undisclosed Principal
Disclosed - 3rd party aware of who principal is. If 3rd party harmed, able to pursue principal
Undisclosed principal - Agent does not disclose seller. If breach of contract, 3rd party has option to pursue principal or agent.
Agent/Principal Liabilities when dealing with 3rd party
If client surpasses agent to negotiate with 3rd part, client is liable
If agent spends more or agrees to transaction outside the range principal agreed to then agent is liable
