REG - M5 - Business Law Part 1 Flashcards
How do you create a Contract (legally enforceable agreement)?
1) Express contract: A contract formed with “express” language.
2) Implied-in-fact contract: formed based on actions, not words
An implied-in-law contract, aka., a “quasi-contract” is NOT a
contract, rather it is a remedy
What is a Breach
What happens when one party breaches a contract?
1) When one party does not perform their contractual duties
2) The non-breaching party can sue the party in breach and seek a legal remedy against the breaching party.
2 Main Sources of Contract Law
Common Law
R
I
S
E
UCC
Name the three elements necessary for an enforceable contract.
1) An agreement made up of an offer and an acceptance;
2) An exchange of consideration (something of legal value); and
3) A lack of defenses.
Define an “Offer”
An offer is a statement by the offeror that invites the offeree to form a contract.
To be an offer:
1) The offer must be seriously intended
2) The terms must be definite and certain
3) It must be complicated
3 exceptions to offeror’s ability to revoke
1) Option contract where consideration is paid to keep offer open
2) Merchant’s firm offer under UCC
3) Beginning performance of a unilateral contract
Elements of Fraud
Victim must prove 5 elements of Fraud
1) Misrepresentation of a material fact
2) Scienter - the misrepresentation was made with an intent to deceive (scienter) or with a reckless disregard of the truth
3) Misrepresentation made with intent to induce reliance
4) Victim justifiably relied on the misrepresentation
5) Victim suffered damages
Promises that must be evidenced by a writing
Marriage
Year
Land
Executor’s promise
Goods $500 or more
Suretyship
Parol Evidence Rule
If parties entered into a fully integrated written contract
Prior or contemporaneous oral statements and prior written statements
CANNOT be admitted into evidence to vary the written terms of the contract
4 Exceptions to Statute of Frauds Under the Sales Article
Specially manufactured goods
Written confirmatory memo between merchants
Admission in court
Performance
Accommodation Shipment Rule
Shipment of nonconforming goods will not operate as an acceptance, but rather will operate as a counteroffer, if the seller notifies the buyer that the shipment is intended
as an accommodation.
How long is Statute of Limitations in UCC Sales
When does it begin to run?
The UCC statute of limitations is four years from the time the cause of action accrued (from the date of breach).
The limitations period begins to run when the breach occurs.
When do Agencies require a signed writing?
Agencies require a signed writing when:
a) agency includes the sale of land
b) agency is impossible to complete in one year
Under Sales Article of UCC - Risk of loss passes from MERCHANT seller to a buyer when?
On actual delivery of goods into the buyer’s possession
NOT when delivered if seller uses its own truck to deliver
NOT even when tendered at seller’s place of business if not delivered to into buyer’s possession
PMSI - Purchase Money Security Interest first
Perfected Security Interest SECOND
Security Interest LAST
Suretyship Calc
Max Share co-surety / total sureties
reduce total if one surety goes bankrupt
calculate obligation based on remaining amount guaranteed and remaining % between co-sureties that aren’t bankrupted
S Corp Status can be revoked if more than 50% of issued and outstanding shares
does not matter if shares are voting or nonvoting
Before collecting from a guarantor
creditor MUST pursue the debtor first
BEFORE recovering from the guarantors
Power of attorney requirements
NOT required
NOT need be limited to a particular task (but can be)
NOT need to be a licensed attorney
NOT need to be 18 years or older
BUT MUST
be in writing and signed by grantor
Void contracts
Void
Illegal subject matter
Lack of capacity - minors, mental incapacity, intoxicated
Violates public policy - like agreement to commit a tort
Impossible terms from the beginning
Mistake of fact
Voidable contracts
Fraud or misrepresentation
Duress or coercion
Undue Influence
Minor as a Party
Lack of Capacity at the Time of Signing
Void vs Voidable
Void - unenforceable from the start
Voidable - enforceable but can be canceled by one party if reason
Statute of Frauds - surety contract to pay debt or default
MUST be in writing signed by the surety - not oral guaranty
Agency Relationship Terminated by law
Principal’s death
Principal’s incapacity
Agent failure to acquire necessary license
NOT a renunciation of the agency by the Agent
Statute of Frauds require written proof in real estate?
written proof of material terms in writing signed by party BEING sued
Breach of Real Property Sale rememdies
can recover
Compensatory damages (that compensate for the breach)
OR
Specific performance (forced performance)
NOT BOTH
