R7 Flashcards
When is a unilateral contract formed?
Formed when a promise is exchanged for an act
What are the 4 exceptions for the Statute of Frauds where it can be an enforceable contract without sufficient writing? (SWAP)
Under the 4 exceptions, the sale over $500 can be enforcable by oral contract:
Specially Manufactured goods
Written confirmation between merchants
Admission in court
Performance
What are the 3 types of rights a Surety has against a Debtor?
Exoneration - Before Surety Pays –> they know that the debtor can pay and file a suit to make debtor pay
Subrogation - After Surety Pays, Surety enforces same rights as Creditor
Reimbursement - After surety pays –> files suit to ensure the debtor pays back.
Under the Secured Transactions Artice of UCC - what are the 3 requirements to have security interest attached?
- Parties agree to create security interest (agreement OR creditor taking possession of collateral)
- Debtor must have rights in collateral
- Creditor must give value
Under the Secured Transactions Article of the UCC - what items are included in the financing statement? (4)
- name and address of debtor
- name and address of secured party
- Description of collateral
- Debtor’s authentication (signature)
Under Sales Article of the UCC - when is warranty of merchantability implied?
Implied whenever a merchant (one who ordinarily sells goods of the kind sold) sells goods
What is a novation?
Agreement that is unchanged but one of the original parties is release and new party is substituted into their place (old party out and new party in, same contract)
What is a substituted contract?
Original parties are same but new agreement (contract)
What is an automatic stay and when is it imposed?
Automatic stay - stops the enforcement of all judgement liens and collection actions against the debtor
This is imposed when the filing of involuntary petition in bankruptcy
What is the difference b/n guarantor and surety?
Creditor can go directly after the surety however, inorder to go after the guarantor –> have to exhaust all options prior to going after guarantor
What are the Surety rights against the principal debtor? (3)
- Exoneration - when the surety knows that the debtor can pay and trying to avoid payment - surety brings claim prior to payment of debt
- Subrogation - After paying debt –> surety can enforce same rules as creditor could on debtor (int)
- Reimbursement - surety is entitled to reimbursement from principal debt for any amt paid on behalf
What are the sureties rights against other sureties? (2)
- Exoneration - when the surety knows that the surety can pay and trying to avoid payment - surety brings claim prior to payment of debt
- Contribution - after payment, surety that paid can receive contribution from other cosurties
What is a composition of creditors?
Agreement b/n debtor and at least 2 creditors that will take less than full pmt to discharge debts owed by debtor to creditors who are in composition agreement
This results in discharge of debts in full (bc they are agreeing to discharge for discount)
What is an Assignment for the benefit of creditors?
When transfer of some or all of debtor prop to trustee who then uses to pay back creditors
No discharge of debts (if prop not worth enough –> debtor still liable)
What are the 3 criteria for a security interest to attach?
- There must be an agreement to create the security interest evidenced by either an authenticated security agreement OR creditors take possession of collateral
- Creditor must give value
- Debtor must have rights in the collateral
Who does the concept of perfection of security interest protect the rights of?
Protects the rights of creditors against third parties
Who does the concept of security agreement protect the rights of?
Creditor against the debtor
Under UCC –> If a contract is modified, what must the new contract have in order for Statute of Frauds to be satisfied?
The new contract needs to be evaluated separately and ensure it complies with Statute of Frauds to be accurate
When a principal is not disclosed and agent is making contracts on behalf - who can be liable VS when principal is disclosed?
When not disclosed –> agent is liable OR TP can hold either Principal or TP
when disclosed –> Principal is liable
If an individual gives goods to a merchant to repair goods and it is accidentally sold in the ordinary course of biz - can the individual sue the merchant?
No, the individual entrusted the goods to the merchant –> merchant has transfer of title to those goods . individual can sue for damages
What are the contracts that Statute of frauds are applicable to? (MY LEGS)
Marriage
Contacts that cannot be performed within 1 YEAR
contracts involving LAND
Executors or similar reps to pay estate debts
sale of GOODS over $500
Surety contracts
If a seller is not a merchant - when is the ROL passed?
Passed to buyer on tender of delivery
If an employee is negligent in performing duties on job and is injured - who is liable?
BOTH employee and employer (respondient superior)
In the Statue of fraud - who is required to sign?
Only party being sued needs to sign
What security interest are not applicable under Secured transactions?
- Security interest in land (mortgage)
- Wage claims
- Statutory liens as mechaniccs liens
What is Apparent authority?
Exists when a TP has reason to believe that an agent has authority to enter into contracts of nature involved
What is the difference b/n a unilateral contract and a bilateral contract?
Bilateral - offer allows acceptance to be in the form of a promise
Unilateral - requires acceptance to be in the form of performance (NOT promise to perform)
What is consideration?
Required for a contact to be legally binding
Both parties must get something/sacrifice something
Does not have to be equal value
What is an executory contract?
When one party has yet to perform
What is Purchase money security interest? and what 2 steps are needed to obtain this?
Special type of interest that has priority over all other claims in collateral.
- Creditor sells collateral to debt on credit - retaining security interest for purchase price (gave money to buy collateral
- Creditor advances funds used by the debtor to purchase the collateral
What is the process of the right to take possession of collateral after default?
Creditor can take possession by themselves if they do not breach the peace
If no —> have to get a “replevy action” by court
What is Agency by estoppel?
When the Principal fires agent and does not let third parties know –> Agent continues to act on principals behalf –> Principal is still liable to TP
What are the 5 conditions of ratification?
Agent has no authority to enter contract on behalf of principal and principal accepts (ratifies) contract –>
- Principal must have existed at the time of the contract made by agent
- Principal must have legal capacity at time of contract
- Ratification must take place within reasonable time
- Ratify entire contract
- Communicate ratification to third party clearly
When is an agent is liable? (4)
- When they want to take the liability
- Agent is acting on own behalf (even when should be on behalf of principal)
- Part of biz
- Agent enters into collateral contract
What are the 4 ways that an agency can be terminated
- by agreement
- operation of law –> Death of principal, principal becomes insane, principal or agent go bankrupt
What is the differences b/n Valid, Voidable, and Void?
Valid - binding contract, legally enforceable (immaterial mistake
Voidable - Valid but one party has right to cancel - mistake
Void - Without legal effect - illegal contracts are void
Who are the three people who lack capacity to enter into binding agreement?
Minors (except to necessaties)
Insane
Intoxicated
How do minors ratify?
- Express
- Implied
