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Common (Contract) Law

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Judge-made law Each state differs There is uniformity about general contract principles that run throughout most states' laws

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UCC

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All States have adopted except Louisiana Covers contracts for sale of goods

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Elements

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1. An Agreement, through - Offer Acceptance 2. Consideration 3. Contractual Capacity 4. Legality 5. Genuine Consent 6. Writing If necessary under the Statute of Frauds If all elements are present, the contract is generally termed valid

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Option Contract

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an agreement between a buyer and seller that gives the purchaser of the option the right to buy or sell a particular asset at a later date at an agreed upon price

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Revocation

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Withdrawing of offer by the Offeror

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Rejecttion

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withdrawing by the offeree

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Bilateral Contracts

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2 promises A promise in exchange for a promise Ex: I promise to pay you $250 to trim my trees; you promise to trim the trees. If promises are broken, there may be responsibility if losses are incurred.

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Unilateral Contract

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Only 1 promise A promise in exchange for a performance Ex: I promise to pay you $250 to trim my trees; you go out and do it. Once performance has been made, the other party's duty arises to fulfill his/her promise

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Void

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Contract does not exist at law One of elements is missing - lacks a requirement of a contract. Court will not accept dispute

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Voidable

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One party to the contract has right to avoid legal obligation Is valid but capable of being voided by a circumstance

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Promissory Estoppel or Detrimental Reliance

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Use of this doctrine avoids injustice due to the promisee's reasonable reliance on the promisor's promise. Promisor is estopped (prevented) from denying a promise.

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Unenforceable Contracts

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Contract that courts will not enforce because of change in law Ex: Company agrees to ship wheat to Iran. After shipment is at sea, U.S. government declares no U.S. firms may trade with Iran. Result: unenforceable under U.S. law even if seen as legal in Iran

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Unconscionable Agreements

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unequal bargaining power Outcome is grossly unfair to an innocent party

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Breach

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Performance substantially less than required Damages now due to non-breaching party

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Assignment

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transfer of rights to another

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Delegation

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transfer of duties to another

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Novation

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Substitution of an original party to a contract with a new party, or substitution of an original contract with a new contract.

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Quasi-Contract

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- not a true contract Legal concept used by courts to prevent injustice Courts apply this classification in equity (out of a sense of fairness) to give relief to innocent parties

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UCC

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Governs contracts for sale of goods (not services, real estate or professional services) Primarily state, not federal Purpose "simplify, clarify, and modernize the law governing commercial contracts"

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Goods

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All parties are bound to a standard of good-faith, or honest dealing Title must pass to be a sale Can hold title if: 1) goods exist 2) goods ID'd to contract

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Dealers of the kind

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1) regularly deals in these kinds of goods 2) presents himself as having knowledge or skill special to the transaction, or 3) has an agent who does the same

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Formation of Contract

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Common law governs unless UCC changes or modifies the rules Mostly, UCC reduces the formality required

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Statute of Frauds

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Sale of goods for $500+ is not enforceable unless in writing and signed by the party against whom enforcement is sought. Sufficiency of writing under UCC is relaxed; not every material term needs to be specified

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Express Warrenty

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created by seller's promise as to quality, safety, performance or durability of goods. May be created: from sample or model by description of attributes by seller's statements or promises

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Implied Warranty of Merchantibility

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for sales by merchants: Goods must be of quality generally acceptable in trade; Must be able to do what is expected

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Implied Warranty of fitness for a particular purpose

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buyer communicates to seller, or seller "had reason to know" buyer's particular needs; buyer relies on seller's expertise; then may have warranty. I.e. a salesperson's recommendation of a certain paint for a metal building that will not chip and peel.

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CISG (UN Convention on Contracts for the International Sale of Goods)

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commercial sale of goods by parties who have places of business in countries that have adopted CISG

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Chapter 7 bankruptcy

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This is a liquidation bankruptcy, sometimes called "straight bankruptcy". The principle advantage is that the debtor comes out without any future obligations on his discharged debts. The fact that the term liquidation is used in describing a chapter 7 can be misleading. A chapter 7 bankruptcy trustee can only liquidate nonexempt assets owned by the debtor.

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Chapter 13 bankruptcy

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the debtor must pay all or part of his debts from the future income over a period of three to five years through his chapter 13 plan. For some people, the time period must be five years.

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Chapter 11 bankruptcy

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Allows businesses to keep operating, without liquidation of assets "Prepackaged" bankruptcy filings: debtor & creditors settle issues before debtor files, and court then approves Reorganization stays further action by creditors debtor acts as trustee, called debtor in possession, to run business for benefit of all parties creditors are satisfied by class in order of priority of claims

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Sole Propriatorship

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A person doing business for himself/herself Usually the proprietor owns all of the business property Responsible for control of the business Responsible for management Responsible for liabilities/debts May hire agents - liable for them as well Capital must come from the owner's own resources or is borrowed Profits from the business are taxed personally to the proprietor Record keeping formalities are at the owner's discretion

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Partnership

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An association of two or more persons to carry on business as co-owners for a profit

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Corporations

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Legal "entities"/"persons" Can sue & be sued It has liability It has constitutional rights Except the privilege against self-incrimination (only officers & employees have that right) MUST meet formal requirements according to state statutes Liable for agents' actions and contracts

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LLCs

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is treated like a corporation for liability purposes but like a partnership for federal tax purposes.

Business Law chapter 10-13 – Flashcards

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