R7 - Business Law: Part 1 Flashcards
Who does the subagent owes a duty to?
Both principal and agent.
What is respondeat superior?
Means a principal can be held liable for an employee’s tort committed within the scope of employment.
What is an agency coupled with an interest?
When an agent is given an interest in the subject matter of the agency. Commissions are not an “interest”.
In the case of a disclosed principal, is the agent liable to a third party?
No, the principal would be liable.
In the case of a UNdisclosed principal, is the agent liable to a third party?
Yes, the agent would be personally liable.
What are the 6 events that would terminate an agency by operation of law?
- Death of principal or agent.
- Incapacity of principal.
- Discharge in bankruptcy of the principal.
- Failure to acquire a necessary license.
- Destruction of the subject matter of the agency.
- Subsequent illegality.
What are the duties of principal to agent?
- Compensation.
- Reimbursement/Indemnification.
- Remedies of agent.
What are the duties of agent to principal?
- Loyalty.
- Obedience.
- Reasonable care.
- Account
- Subagent.
What are the principal’s remedies if agent breaches duties?
- Tort damages.
- Contract damages.
- Recovery of secret profits.
- Withhold compensation.
What is actual authority?
Authority that the agent reasonably believes she possesses because of what the principal told her.
What is apparent authority?
Authority based on the reasonable beliefs of the third party that agent has authority.
What are the requirements of Ratification?
- Agent must have told people he was acting on behalf of principal.
- Principal must know all materials facts.
- Principal must ratify 100%.
- No consideration or notification required.
What is a General agent?
Agent that performs a series of transactions involving a continuity of service.
What is an Special agent?
Agent that performs a series of transactions NOT involving a continuity of service.
What is required to form a contract?
- Offer.
- Acceptance.
- Consideration.
What are the definite terms of a contract under common law?
- Price.
- Time of performance.
- Identity of the person receiving the offer and the subject matter.
- Nature of the work.
- Quantity.
What is the mailbox rule?
Applies to acceptance of an offer. It states that acceptances are effective when they are mailed, emailed, fax (time stamp), as long as the offer does not specify means of acceptance or time of acceptance.
What is a unilateral contract?
Where there is one promise in exchange for performance. Contract is formed when performance is completed.
What is a bilateral contract?
Where there are two promises. One promise in exchange for another. Contract is formed when promises are exchanged.
What is modification by both parties?
If each party offers to give something different from what was originally promised, the courts will usually enforce the promise despite the preexisting legal duty rule.
What is Bargained-for-Exchange?
Something is not consideration unless it was given in exchange for other consideration.
What is not considered Bargained-for-Exchange?
Gifts and Moral consideration.
What is nonmonetary consideration?
When you promise you’re going to do something you’re not obligated to do or refraining from doing something you could do.
What is an option contract?
A contract where consideration if paid to keep the offer open. It does not need to be monetary.
What are the 3 ways to terminate an offer?
- Revoke
- Reject
- Law
When is rescission or cancelation available?
Rescission or cancelation is available for:
- Mutual or unilateral mistakes (but mostly Mutual).
- Fraud.
- Material breach of contract.
When does the statute of limitations period start?
Date of the breach.
What are the two limitations on Monetary Damages?
- Foreseeability.
2. Mitigation.
What is accord?
NOT A HONDA!!!
Accord is an agreement to substitute a contract for another.
What is satisfaction?
Execution of the accord.
What is the exception to a unilateral mistake?
Unilateral mistake is a defense if the other person knew or should’ve known of the mistake.
What is inadmissible under the parol evidence rule?
- Oral or written statements made prior to the written contract
- Oral statements made contemporaneously with the written contract.
- Oral statements that seek to vary the terms of the contract.
What is admissible under the parol evidence rule?
Subsequent modifications.
What are the types of conditions present in contracts?
- Precedent
- Concurrent
- Subsequent.
What is a substituted contract?
Where the original parties are both released from the original agreement but are bound by a new agreement.
What are liquidated damages?
Damages agreed in the contract if there is breach. i.e. I keep your down payment if you back down.
What are the different kind of damages remedies?
- Compensatory Damages
- Consequential Damages if Foreseeable
- Specific Performance
- Liquidated Damages
What kind of damages are not available for breach of contract?
Punitive Damages
What is novation?
Occurs when a new contract substitutes a new party for an old party in an existing contract. All parties must agree to the release.
What is the UCC obligation of good faith?
Everyone must be good, and observe reasonable standards of fair dealing in the trade.
What is an express warranty?
Warranty created by the seller’s description of the goods which forms part of the basis of the bargain between the parties.
What are the 3 types of implied warranties?
- Title
- Merchantability.
- Fitness
What is the implied warranty of merchantability?
Merchants be merchants
What is the implied warranty of fitness?
Arises when the seller knows the particular purpose for which the buyer will use the goods and that the buyer is relying on seller to choose suitable goods.
What are the 3 remedies of BOTH buyer or seller?
- Anticipatory Repudiation - Sue or Wait
- Demand Assurances - If Reasonable
- Duty to Mitigate - Avoid Damages
What are the 5 remedies a seller can seek if buyer wrongs him? (Right to)
- Cancel and sue for damages.
- Resell and sue for damages.
- Withhold delivery and stop shipment (A&O).
- Liquidated damages.
- Full contract price.
What are the 5 remedies a buyer can seek if seller wrongs him? (Right to)
- Reject for any nonconformity.
- Cancel or rescind.
- Sue for damages.
- Specific performance.
- Seller’s insolvency.
What is sale on approval?
Ex: Peloton - Try for 30 days, and get your money back.
Title and risk of loss remain with the seller until approval.
What is sale or return?
Ex: Sale con consignment.
Buyer has title and risk of loss until the goods are retured to the seller.
When does risk of loss passes from seller to buyer in noncarrier cases?
- Not a merchant (normal) seller: ROL passes to buyer upon seller’s tender of delivery.
- Merchant seller: ROL passes on actual delivery (physical).
When does risk of loss passes from seller to buyer in common carrier cases?
When there is FOB shipment, or FOB destination.
- FOB shipment: When goods are delivered to UPS.
- FOB destination: When goods reach destination and seller tenders delivery.
What is a merchant’s firm offer?
- Irrevocable offers for a specific time.
- If no time is specified: max 3 months.
What are the qualifications of a merchant’s firm offer?
- Merchant.
- Writing and signed by merchant.
- Assurances that offer will be open for a certain time.
What is a written confirmation/confirmatory memo?
W in SWAP. Could be a PO. It will also bind the receipient if she does not object within 10 days.
What are the surety’s rights against creditors?
None
What are the surety’s rights against principal debtor?
- Subrogation.
- Exoneration.
- Reimbursement.
What are the surety’s rights against cosureties?
- Defined.
- Exoneration.
- Contribution.
What is exoneration?
Against debtor: Sue to make him pay because it’s not fair.
Against cosureties: Sue to make them pay their portion because it’s not fair.
What is subrogation?
I am now the bank and collect, since the bank already collected from me. It is only fair I get my $ back.
What is a writ of attachment?
A document that gives the property (real or personal) to the police so they can sell it and give me the proceeds so I get paid.
What is composition of creditors?
What mom does! Offer less $$ to settle the debt.
What is assignment for the debtor of creditors?
When property is transferred to someone else (trustee) for them to sell it, and settle my debts with proceeds.
What are the 6 types of fraudulent conveyance?
- the transfer was to an insider (i transfer to natalia)
- the debtor retained possession or control of the property transferred; (i “sold” but i keep)
- the transfer was not disclosed or was concealed (secret);
- the transfer was of substantially all the debtor’ s assets; (i give all; so i protect for future mom w/ berna)
- the value received by the debtor for the asset was not reasonable; (i sold too low) and
- the debtor was insolvent or became insolvent shortly after the transfer. (i go bankrupt just right before im due).
What is the difference between attachment and perfection?
Attachment is the collateral, and perfection is protection of that collateral against third parties (if the same collateral was promised to many other creditors).
What is excluded from UCC art 9?
- Land.
- Wage claims.
- Liens.
What is a PMSI?
A special creditor that gets higher priority because they gave me the money to buy something, which becomes my collateral. Ex: Me buying CRV from Honda. Honda is PMSI.
What are the 3 requirement for a security to attach?
- Security agreement.
- Value is given by creditor.
- Debtor must have rights on the collateral.
What is a termination statement?
A notification that the debt has been settled or what is the unpaid amount of the debt. It’s the duty.
What are the 5 methods of perfection?
- Filing (Financing Statement).
- Automatic perfection (PMSI for consumer goods, upon attachment).
- Control (investment property).
- Taking posession of the collaterial (pawn shop).
- Temporary perfection (if collateral is sold, I have 20 days perfection so I can amend filing).
What are the 4 rights on default?
- Take posession and sell collateral.
- Retention of Collateral in Satisfaction of Debt.
- Redemption (pay all debt).
- Judicial action.
What is detrimental reliance?
Replacement for consideration to parties who were not given consideration to perform. Ex: Singer that promises to give a concert for her school to raise funds (charity), but then can’t make it because scheduling conflicts!
