Remember and Understand - Business Law Flashcards
What are the three types of agency?
- Actual authority
- implied authority
- apparent authority
What is actual authority
- An agent has actually been told by contract that he or she may act on behalf of the principal
What is implied authority?
Authority an agent has by virtue of being reasonably necessary to carry out his or her express authority (i.e., when an agent relieves premium payment or signsa binder - it is implied that he or she has the authority to do so by the principal as it is necessary to carry out thier duty
What is apparent authority
Apparent authority is based on a third party’s perspective, they believe that the agent has the authority to enter into a contract based on
1) prior dealings with agent
2) agents title leads the third party to believe they can enter into a contract
3) principal hires the agent to carry out duties that normally carry with them the rights to enter into a contract
What is required for an agency relationship to exist?
1) both parties conset to the relationship
2) agent owes principal fiduciary duty
3) principal doesn’t owe agent fiduciary duty
4) a contract is NOT required and an agency agreement is not based on contract law
contract required if more than one year
What are the various duties and liabilities of the principal
1) Compensation - unless otherwise agreed
2) Reimbursement for all expenses in carrying out agency relationship
What are the various duties and liabilities of an agent
L - Loyalty - must act solely in the principal’s best interest
O- obedience - obey principal’s reasonable instructions
R- Reasonable care - must not act negligently
D- Duty to account - for money and property received and paid out
S- Subagent - if agent is authorized to hire a subagent- the subagent owes duty to both agent and principal
what is agency law
deals with someone’s ability to bind you to a contract with a third party
How is agency terminated
1) both parties agree
2) the agent fires the principal
3) principal fires the agent
4) agent breaches their contract by doing something like violating their obligation to act as a fiduciary to principal
When are agent liable for torts they commit?
Agents are liable for torts committed whether they had authority or not
when will an agent by liable?
They will be liable for the act unless the principal ratifies the contract
What must a contract contain?
- offer
- acceptance
- consideration
- proper form (oral or written)
- Legal subject matter
- Two competent parties
what are elements of a contract
agreement (offer and acceptance), consideration and lack of defenses
What is offer and acceptance
a meeting of the minds, terms must be definite and certain
- an offer must be communicated to the offerree
Who can accept the offer?
An offer must be accepted by intended party (offeree)
- it can be made only by a party who knows an offer has been made and has all of the facts
What is a counter offer
When an offeree accepts a contract but puts added stipulations
What is the mailbox rule
acceptances are effective upon dsipatch
- offerer may opt out by stating that “acceptance is effective upon receipt”
What is consideration
- legal value (not necessarily equal or fair) though a bargained for exchange
What is the legal requirement
The contract needs to be legal. You can’t enter in a contract with illegal terms
What voids an offer
- if offeror dies or becomes insane before acceptance, offer is void
- contact is binding if acceptance occurs before death
what actions or circumstances will revoke a contract?
1) offeror revokes and offeree receive revocation
2) offeree finds out prior to acceptance that offeror has sold the item
What is a unilateral contract
- only one party has a legal obligation to uphold the terms of the contract
- example: If you put an advertisement in the newspaper with a $100 reward for your lost pet and someone returns your lost pet then you have a legal obligation to pay that person. Nobody has a legal obligation to find your pet
What is a bilateral contract
a. More common that a unilateral contract. Both parties have a lega obligation to uphold the terms of the contract
b. Example: Company X promises to pay Company Y 10,000 in exchange for computer equipment. Company Y must provide the equipment and Company X must pay them 10,000
what is an implied contract?
a. You can imply that a contract exists based on the actions of both parties. A contract can still exist even when one party doesn’t actively agree to the terms of the contract. The courts will uphold implied contracts so that one party won’t be unfairly enriched
b. Example: Bob get’s into a car accident and is rushed to the hospital. A surgery is needed to save Bob’s life and bob is not conscious to agree to the contract. The hospital saves bob’s life and sends him a bill. Bob is liable for the bill even though he didn’t agree to the contract
What is an expressed contract
both parties come together and agree to the terms of the contract
What is void versus voidable
Void - won’t be upheld in court
Voidable - can be voidable by one party. Usually happens when there is a material mistake, misstatement of fraud from one of the parties
What are different ways a contract can be discharged?
1) Performance
2) Agreement - must agree to end or modify liability
- End
- Modify
3) Operations of law - under certain circumstances, unperformed contracts may be excused by operations of law
4) Breach
What are seller remedies?
- cancel and sue for damages
- withold delivery and stop goods in transit if buyer has failed to make a required payment has repudiated
c. Resell and sue for damages – usual measure if the difference between contract price and resale price, plus incidental damages – usual measure is the difference between contract price and resale price, plus incidental damages, such as storage fees
d. Full contract pirce- may be recovered if goods cannot be resold Incidental damages may also be recovered
e. Liquidated damages – recoverable if reasonbale an dnot a penalty. If buyer has made a down payment and breaches, seller may keep the lesser of $500 or 20% of the price
What are buyer remedies?
a. Reject for any nonconformity – rejection may be of all goods or some goods or buy may accept. In any case, buyer may sue for damages for the nonconformity
b. Damages for accepted goods – difference between the value of the goods if conforming and the value as delivered plus incidental and consequential damages
c. Damages for rejected or undelivered goods – difference between market price and contract price, or cover (buy replacement goods) and sue for difference between cost of cover and contract price
d. Specific performance or replevin – specific performance can be used only if goods are unique or buy cannot cover. Replevin (right to recover goods wrongfully in hands of seller) may be used if the goods have not been identified and the buy cannot reasonable cover.
e. On seller’s insolvency – if buyer has paid all of the part of price buyer may recovered goods from the seller if goods have been identified
Summarize the priority rules of secured transactions
- The rules follow the first come first served principal. This means that the first debtor to perfect their secured interest (usually by filing in the appropriate locality or jurisdiction will have priority over all other debtors. Essentially the first debtor to file the appropriate paper work to secure their interest will win
a. Example: John buys a car using a collateralized loan from his local bank. The bank files the appropriate paperwork and “perfects” the lien against the car. A year later
What is a perfect security interest and what are the ways to perfect?
- Perfection sets a secured party’s rights in collateral against third parties who may also have an interest in the same collateral
- Timing of perfection – perfection cannot be completed until there is attachment but attachment and perfection may be simultaneous
- Ways to perfect:
a. Filing – Filing a financing statement
b. Possession – no intangibles
c. Control – investment property
d. Automatic perfection – PMSI in consumer goods and small scale assignments of accounts
Describe the federal unemployment tax act?
- an employer paid tax
- must file return and pay even if only one employee works there
- deductible to company - not deductible by the employee
- allows employers to credit the FUTA liability by the amount of state unemployment tax (SUTA) they pay
What are the major aspects of FICA and Social Security taxes?
Aspects of FICA and SS taxes
- paid by employer and employee - employer withholds from employee’s paycheck and must pay tax matching employee’s withholding
2) If employer underwithheld, they are required to make up the difference
3) Self-employed individuals must pay both the employer and the employee share, which is self employment tax
4) People drawing social security may have their benefits reduced if they go back to work and earn an income
What is employee covered by workman’s compensaion
Employees injured on the job get protection even if they messed up and caused the injury themselves
exception - if intentional
What age group is protected under age discrimination laws
They protect people ages 40 and above at companies where at least 20 people are employed
what are the tenets of the occupational safety and health act?
1) Employers should prmote a safe workplace and environment for their employees to work in
2) injury records must be kept
3) penalties can be both:
- Civil - 1000 fines per day
- criminal - could include inprisonment
4) Employer can require a search warrant for OSHA to investigate their facilities
What types of discrimination are prohibited for employers based on civil rights laws?
Based on civil rights law, employers prohibit discrimination on:
- sex
- race
- religion
- national
- origin
What are the powers granted under the environmental protection act?
EPA has the power to assess environmental laws
