Test Two

Question 1

DISCUSS THE 5 WAYS A CONTRACT MAY BE DISCHARGED BY OPERATION OF LAW.

Answer 1

1. By alteration or material change by a party
2. Destruction of the written contract with intent to discharge it
3. Bankruptcy
4. Statute of limitations
5. Contractual limitations-says in contract that it will terminate on a specific day.

Question 2

GIVE THREE EXAMPLES NOT IN THE TEXT BOOK WHERE A COURT MIGHT ORDER SPECIFIC PERFORMANCE UNDER A CONTRACT THAT A PARTY HAS BREACHED.

Answer 2

Has to involve a unique object

1. Muffle rifle- sell to b but decided not to, b sued a.
2. Painting

Question 3

DISCUSS THE 4 WAYS AN AGENCY RELATIONSHIP CAN BE TERMINATED BY OPERATION OF LAW.

Answer 3

1. If either the principle or agent were to die or be legally insane-termination by operation of law
2. Bankruptcy of either party
3. Impossibility of performance- ex. if agency is destroyed
4. When the country of the principle is at war with the country of the agent.

Question 4

UNDER CERTAIN CIRCUMSTANCES THE PRINCIPAL MAY BE LIABLE FOR THE TORTS OR CRIMES OF THE AGENT. DISCUSS 3 SUCH CIRCUMSTANCES.

Answer 4

When agent is negligent
If the agent forms an intentional tort
If the agent commits fraud
If the agent breaks a Gov. Regulation

2 things must occur:
Must be done by agent within scope of the agency
Does the act while trying to promote the business.

Question 5

YOU HAVE JUST OPENED A NEW BUSINESS SELLING HIGH END WOMEN’S DRESS SHOES IMPORTED FROM ITALY. WHAT POLICIES WOULD YOU WANT TO HAVE TO AVOID OR AT LEAST LIMIT YOUR COMPANY BEING HELD VICARIOUSLY LIABLE FOR THE TORTS AND/OR CRIMES OF THE 20 AGENTS YOU PLAN TO RETAIN TO MARKET YOUR PRODUCT THROUGHOUT THE U.S.?

Answer 5

Background/criminal check, civil litigation.
Ask for references and check them
After hired-do not retain them as agents once you find that they have something that could be a lawsuit such as drug addict, sexual harassment, etc.
Policies of random alcohol and drug testing
Fidelity bond-insurance that will pay the agency money for any loss that you would receive due to the agent.

Question 6

CREDITOR BENEFICIARY

Answer 6

A want to sell to B, A also owes money to C as part of a debt. A want to sell to B the object/business with the debt owed to C still attached

Question 7

DONEE BENEFICIARY

Answer 7

Life insurance

Question 8

BENEFICIARY IDENTIFIED BY CLASS

Answer 8

can be bwteen differnt levels of workers- race track example- promotor, owner and racer. racer being the third party beneficiary, can sue the owner if he is not paid.

Question 9

INCIDENTAL BENEFICIARY

Answer 9

Does end up benefiting from a contract from two other parties even though it is not intended for them to be a beneficiary

Question 10

ASSIGNOR

Answer 10

Can enter into a contract and assign away to right under that contract to someone else

Question 11

ASSIGNEE

Answer 11

The person you sign your right to

Question 12

CONDITION PRECEDENT

Answer 12

Comes before the contract is performed. Must happen for the contract to be valid.

Question 13

CONDITION SUBSEQUENT

Answer 13

A condition within the contract that happens after the contract is made.

Question 14

TENDER

Answer 14

A way to show that you are preforming the contract. Delivering an object or paying money. Have to physically hand them the money.

Question 15

TIME IS OF THE ESSENCE

Answer 15

To get a service within a certain amount of days.

Question 16

SUBSTANTIAL PERFORMANCE

Answer 16

Construction-gets 95% done by deadline but any amount of work unfinished will not be paid for

Question 17

CONSUMER CREDIT PROTECTION ACT

Answer 17

Can cancel within a three day period

Question 18

RECISSION

Answer 18

When you cancel a contract and return both parties to status quo (to the way they were before the contract)

Question 19

NOVATION

Answer 19

When you have a contract but in the middle decide to change the contract or its terms.

Question 20

ACCORD AND SATISFACTION

Answer 20

Occurs when you can’t agree on how you are supposed to make a payment under a contract. Ex. 1000 or 3000 was owed. Someone sent 2000 as a compromise.

Question 21

DISCHARGE BY IMPOSSIBILITY

Answer 21

Something happen during the course of the contract which makes it impossible to uphold your side of the contract

Question 22

FORCE MAJURE

Answer 22

Listing in the contract, if impossible events do occur that make the contract impossible then the contract will be canceled.

Question 23

ANTICIPATORY REPUDIATION

Answer 23

The other side to a contract warns that they are going to breach the contract

Question 24

MITIGATE DAMAGES

Answer 24

Someone has breached a contract, effort must be put in to minimize damage.

Question 25

REFORM A CONTRACT

Answer 25

When the court rewrites a contract in the way the parties meant for it to read originally.

Question 26

LIQUIDATED DAMAGES

Answer 26

In the event that there is a breach of contract and both sides agree they can set an amount for any damages. Must be reasonable.

Question 27

AMERICAN RULE

Answer 27

In a breach of contract, each party is responsible for their attorney fees.

Question 28

SPECIAL AGENT

Answer 28

Hired to be your agent, only to handle one specific transaction.

Question 29

GENERAL AGENT

Answer 29

Hired as agent, to handle all the business, it the state, or the country, or the world

Question 30

UNIVERSAL AGENT

Answer 30

Retaining someone as an agent for everything that you could do legally they can do. Power of Attorney.

Question 31

RATIFICATION OF AGENCY

Answer 31

Occurs where you have no hired someone as an agent but they do something to get your business and you accept it, then you accept their work as your agent.

Question 32

EXPRESS AUTHORITY

Answer 32

Principle states orally or in writing.

Question 33

INCIDENTAL AUTHORITY

Answer 33

Give agent some but not all authority

Question 34

APPARENT AUTHORITY

Answer 34

When the principle gives a person the stuff to be seen as an agent even though they are not hired as an agent. You will be bound by whatever the agent does.

Question 35

UNDISCLOSED PRINCIPAL

Answer 35

Agent wants to do business with you but they will not tell you who they are working for.

Question 36

SPECIFIC PERFORMANCE

Answer 36

the court will order the contract terms be carried out

Question 37

A THIRD PARTY BENEFICIARY IS SOMEONE WHO IS NOT AN ACTUAL PARTY TO A CONTRACT, BUT WHO WILL BENEFIT FROM THE CONTRACT. DISCUSS THE CHARACTERISTICS OF A CREDITOR BENEFICIARY, A DONEE BENEFICIARY, AND AN INCIDENTAL BENEFICIARY, AND GIVE AT LEAST ONE EXAMPLE OF EACH

Answer 37

Creditor Beneficiary: The intended beneficiary, promisee’s primary intent is to discharge a duty owed to the third party.
Ex. A is selling a business but still owes payments on it to B. A sells business along with the debts to C.
Donne Beneficiary: intended, to whom the promisee’s intent primary intent in contracting is to give a benefit.
Ex. life insurance broker
Incidental Beneficiary: Not intended

Question 38

A AND B ENTER INTO A BINDING CONTRACT FOR PERFORMANCE OF A CERTAIN SPECIFIED ACT. B THEN ASSIGNS HIS RIGHTS UNDER THE CONTRACT TO C, MAKING C THE “ASSIGNEE”. DISCUSS WHAT RIGHTS C WILL HAVE IF THE CERTAIN SPECIFIED ACT
(1) REQUIRED A TO PAINT B’S HOUSE, WHICH IS HALF THE SIZE OF C’S HOUSE; (2) REQUIRED A TO PAINT B’S HOUSE TO B’S PERSONAL SATISFACTION; (3) REQUIRED B TO PAINT A’S PORTRAIT; (4) REQUIRED A TO LOAN MONEY TO B WITH B TO REPAY THE MONEY IN 6 MONTHS AND C DOES NOT HAVE A JOB.

Answer 38

None of them are valid.

Question 39

WHEN THE OCCURRENCE OR NONOCCURRENCE OF AN EVENT, AS EXPRESSED IN A CONTRACT, AFFECTS THE DUTY OF A PARTY TO THE CONTRACT TO PERFORM THE EVENT, IT IS CALLED A “CONDITION”. DEFINE THE TERMS “CONDITION PRECEDENT” AND “CONDITION SUBSEQUENT” AND GIVE AN EXAMPLE OF EACH THAT IS NOT IN THE TEXT BOOK.

Answer 39

Precedent: Must be done before the contract is made
Subsequent: written into contract and must be preformed after contract is made

Question 40

DISCUSS THE 8 WAYS THE PARTIES MAY DISCHARGE THEIR OBLIGATIONS BY AGREEMENT.

Answer 40

1. contract ends on specific date
2. mutual cancellation
3. mutual rescission and return to status quo
4. substitution of a new contract between the same parties
5. novation or substitution involving a new party
6. and accord and satisfaction
7. release
8. waiver

Question 41

YOUR BOSS IN THE CAR DEALERSHIP WHERE YOU WORK HANDS YOU A LETTER AND SAYS FOR YOU TO TAKE CARE OF IT. THE LETTER IS FROM JOE BLOW AND STATES THAT HE IS THE AGENT FOR THE ISTANBUHL CAR MANUFACTURING COMPANY IN TURKEY WHO HAS JUST COME OUT WITH A NEW CAR CALLED “SUPER CAR” THAT USES OXYGEN EXTRACTED BY THE CAR FROM PLAIN AIR AS ITS FUEL. THE LETTER GOES ON TO STATE THAT JOE BLOW WOULD LIKE TO SELL A LINE OF THESE “SUPER CARS” TO YOUR CAR DEALERSHIP. HOW TO YOU HANDLE IT?

Answer 41

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