R7 Flashcards
What are the duties of an agent (5)
Loyalty - solely in principal interest
Obedience - agent must obey principals reasonable instructions
Reasonable care - must not be negligent
Account - duty to account for money and property received and paid out
Subagent - owes duty of care to both agent and principal
What are the damages that the principal can recover from the agent? (4)
Tort damages, contract damages, secret profits, and withhold compensation
What does duties does the principal owe the agent? (3)
Compensation - unless otherwise agreed on
Reimbursement/indemnification - expenses
Remedies of agent - if principal breach duties, agent can bring action against principal for damages
Define actual authority
Authority agent reasonably believed that he or she possess bc of principal communication to the agent
What are the 2 types of Actual Authority
- Express - principal specifically rants power
- Implied - agent reasonably believes they have authority based on dealings between principal and agent (necessary to run the business or carry out agency
What are the 2 main ways both actual and apparent authority are terminated?
- operation of law
2. death of principal or agent
Define Apparent Authority
Power that a third party reasonably believes agent has based on prior dealings:
Title and failure to give notice of agents termination
What the requirements of ratification (3)
Ratification can bind the principal in contract . Requirements:
- Agent must have indicated that they are acting on behalf of principal
- All material facts must be disclosed to principal
- Principal must ratify the entire transaction
Define disclosed principal liability
Principal’s existence and ID are known to third party, agent is not liable to 3rd party under contract
Define Partially disclosed party liability
3rd party does not know agent is an agent or does not know principal’s ID, agent is liable under contract with 3rd party along with principal
Define respondeat Superior
Employer can be held liable for employee’s torts committed within scope of employment (while employee is performing services for employer))
What are the elements of a contract?
Agreement (Offer and acceptance) - “meeting of the minds”, offer must be communicated to the offeree
Consideration - legal value
Lack of defense
What is the Statue of frauds (MY LEGS)
Contracts that need to be in writing
Marriage Year - contracts that are longer than one year Land Estate Goods for more than $500 Surety contracts
*Need only be singed by one party but can be enforce only against the one who signed
What are the differences between an Accord and satisfaction and substitute contract
Accord - agreement to substitute one contract for another
Satisfaction - execution (performance) of the accord until the accord is completed
Substitute contract - discharges the original contract discharge
immediately
what is a novation
Occurs when a new contract substitutes a new party for an old party in an existing contract and all parties agree that old party is immediately released from liability
What are the Damages the on breaching party may be entitled to? (4)
Compensatory (money, compensated to where the non breaching party would be if there would be no breach)
Specific Performance (land and unique items) - court order requiring to perform
Liquidated damages - damages agreed to in the contract, reasonable and not penalty
Punitive - punish defendant, not available for breach of contract
What are the exceptions to the statute of frauds?
Specifically manufactured goods (goods not suitable for sale of others)
Written confirmations
Admission in court
Performance
Where is the risk in sale on approval vs sale or return contracts
Sale on approval - ROL on seller until buyer gives approval
Sale or return - Buyer has title and risk of loss unless and until the goods are returned to the seller
What are the types of warranties? (4)
Express warranty - statement of fact or promise made by seller, description of the goods made by seller, or any sample or model shown by seller made or shown at a time
Implied warranty of title - implied in every sale is a promise that seller has good title and a right to transfer it (no patent or trademark) no “as is”
Implied warranty of merchantability - sale by merchant, goods are fit for ordinary purposes. have general disclaimer “as is”, can be oral
Implied of fitness for particular purpose - arises when buyer relies on seller to select goods suitable for buyers particular purpose for the goods. (does not need to be a merchant)
Define surety and parties involved
Person who is liable for debt of another… suretyship involves Creditor (obligee), Debtor (obliger), and surety
What is the gratuitous surety and compensated surety
gratuitous - not compensated for their promise to creditor (if creditor does anything that varies surety’s risk –> discharge)
compensated surety - one who is paid for promise to creditor (chares by creditor that increase risk will release surety)
What are the 3 rights of the surety
Exoneration - if the debtor fails to pay, surety may bring a suit for exoneration to compel the debtor to pay (do prior to paying creditor
Subrogation - once the surety pays the creditor, surety may enforce any right that creditor had against debtor
Reimbursement - entitled to reimbursement from debtor for any amounts that surety paid “indemnification”
What happens when a debtor owes creditor money that doesn’t have sufficient funds to pay
- file bankruptcy
- creditors’ composition (agreement among debtor and at least 2 creditors that debtor payless than full on claim)
What is a mechanics lien?
A mechanic/artisan who works on property and either improves it or repairs it automatically has lien on the property
What is a fraudulent conveyance?
when debtor transfers property with the intent to hinder, delay, or defraud the creditors (void or voidable)
What is PMSI
Purchase Money Security interest - special type of security interest that has priority over the other types of security interests in the same collateral
What are the 3 categories of collateral?
consumer goods (personal use)
inventory (goods held for sale)
Equipment (pther goods used in the business)
Under UCC - Secured transactions: when does a security interest become enforceable?
Debtor has rights in the collateral
What are the 3 requirements of attachment?
- Parties agree to create a security interest (either take possession or written agreement)
- secured party must have given value in exchange for the security interest
- Debtor must have rights in the collateral
Under the UCC - how can the seller recover the full contract price from the buyer?
When the goods are destroyed while risk of loss is with the buyer
In an F.O.B place of shipment contract, when does the risk of loss pass to the buyer?
Passes when the goods are placed in the hands of a carrier at the sellers loading dock
What is anticipatory repudiation?
Material breach of contract, giving the non-breaching party the right to sue immediately
What is Fraud in the Execution?
Party is deceived into signing something that does not look like contract (ball player signs autograph but actually a contract)
Contract is void
What is Fraud in the inducement?
Defrauded party is aware of contract but lied to
Voidable contract
What is the duress?
Threat of physical duress - void contract
Economic or social duress - voidable contract
What is undue influence?
defendants abuse of position or confidence (spouse, trustee, guardian, attorney) to take advantage of others weakness
What are the defenses causing a contract to be VOIDED? (5)
Adjudicated incompetency
Illegality
Mutual mistake
Physical (duress)
Execution (fraud)
What is a unilateral mistake?
mistake by one party
Exception: unilateral mistake as to material fact is a defense IF the other party knew or should have known of the mistake
What will result in a discharge of a party to a contract?
- Prevention of performance
- Accord and satisfaction
What circumstance will discharge contractual duties by operation of law?
Impossibility of performance
What are the three methods of ratifying a contract entered into by a minor?
- Expressly ratifying the contract after reaching the age of majority
- Failing to disaffirm the contract within a reasonable time after reaching the age of majority
- Impliedly ratifying the contract after reaching the age of majority
What are the 3 things included in a financing statement?
- Name and address of a debtor and secured party
- Description or indication of the collateral by financing statement
- If collateral is real property, description of property
What requires an agent for a corporation to have written agency agreement?
Purchasing an interest in undeveloped land for the principal
