Business Law I Exam 2: Essay Questions – Flashcards

a. Agreements for the sale of any interest in land, subject to certain exceptions b. Agreements that cannot be performed within one year from the date of the agreement c. A promise to pay the debt of another, subject to the leading object rule exception d. A promise made in consideration of marriage e. A promise made by an executor of an estate to use his personal funds to pay a debt of the decedent f. a contract for the sale of goods worth $500 or more. If they do not comply with requirements then the contract is unenforceable, but not void or illegal. -can still choose to perform the contract

PRE-READING. Before you begin reading the first draft of a contract, -spend some time thinking about the provisions that are important to you. -If you skip this step you may find that, as you read, your attention is so focused on the specific language of the contract that you lose sight of the larger picture. THE FIRST READ. Read through once, - just to get the basic idea of the contract - its structure and major provisions. WHAT-IFS. This is the time to think about various outcomes, good and bad. What happens, under the terms of the contract, if all goes according to your plan? Also consider worst case scenarios. In both situations, does the contract produce the result that you want? What happens if sales are higher than you expect? Or if the product causes unexpected harm? THE SECOND READ. Now read the contract to make sure that it handles the what-ifs in a manner that is satisfactory to you. -Think about the relationship between various provisions - does it make sense?

VAGUENESS occurs when the parties do not want the contract to be clear. They want to keep their options open, so they don't clearly define some terms. AMBIGUITY is different --- it means that the provision is accidentally unclear. -It occurs in contracts when the parties think only about what they want a provision to mean, without considering the literal meaning or the other side's perspective. -Any ambiguity is interpreted against the drafter of the contract.

a. Title b. Introductory Paragraph c. Definitions d. Covenants - promises the parties make about what they will do in the future e. Breach f. Conditions g. Representations and Warranties - are statements of fact about the present or past h. Boilerplate - choice of law and forum, modification, arbitration, attorney's fee, integration, etc.

1. Offer -begin when a person or a company proposes a deal. It might involve buying something, selling something, or doing a certain job 2. Consideration - Something of value was promised in exchange for the specified action or nonaction. This can take the form of a significant expenditure of money or effort, a promise to perform some service, an agreement not to do something, or reliance on the promise. Consideration is the value that induces the parties to enter into the contract. Both sides must receive some measureable benefit. 3. Acceptance - The offer was accepted unambiguously. Acceptance may be expressed through words, deeds or performance as called for in the contract. Generally, the acceptance must mirror the terms of the offer. If not, the acceptance is viewed as a rejection and counteroffer. 4. Legality - the contract must be a lawful purpose. Courts will not enforce agreements to sell cocaine, for example. 5. Capacity - the parties must be adults of sound mind 6. Consent - certain kinds of trickery and force can prevent the formation of a contract 7. Writing - while verbal agreements are often contracts, some types of contracts must be in writing to be enforceable

-the defendant made a promise knowing the plaintiff would likely rely on it -the plaintiff did rely on the promise; and -the only way to avoid injustice is to enforce the promise.

-the plaintiff gave some benefit to the defendant; -the plaintiff reasonably expected to be paid for the benefit and the defendant knew this; and -the defendant would be unjustly enriched if he did not pay.

BILATERAL CONTRACTS: a promise made in exchange for another promise -If a producer asked gloria, "I'll pay you $2 million to star in my new romantic comedy, which we are shooting three months from now in Santa Fe." and Gloria says, "it's a deal" UNILATERAL CONTRACT: one party makes a promise that the other party can accept only by actually doing something. -"I'll pay $100 to anyone who returns my lost dog." EXECUTORY CONTRACT: an agreement in which one or more parties has not yet fulfilled its obligations -The moment Gloria and the producer strike their bargain, they have an executory contract. (from above) EXECUTED CONTRACTS: an agreement in which all parties have fulfilled their obligations -When Gloria finishes acting in the movie and the producer pays her final fee

Yes, he does. UCC 2-207 dramatically changes the common law mirror image rule for the sale of goods. Under UCC 2-207 an acceptance that contains additional or different terms may create a contract. It says that between merchants, an additional term becomes part of the contract unless the proposal meets one of the following exceptions: 1) the offer expressly limits acceptance to the terms of the offer; 2) the additional term materially alters the offer; or 3) the offeror promptly objects to it.

Offer: an act or statement that proposes definite terms and permits the other party to create a contract by accepting those terms Elements -offeror has to intend to make a bargain -terms of the offer need to be definite Examples: Price quotes, Advertisements, Items on the auction block, invitations to bargain.

CONSIDERATION: the inducement, price, or promise that causes a person to enter into a contract and forms the basis for the parties exchange. ELEMENTS -Value: requires legal benefit. legal benefit: receiving something of measurable value ex: money, groceries, insurance, promise not to sue, etc. -Bargained-for exchange: the parties must bargain for the consideration. "If you do this, I'll do that."

1) concerns "organizations" which receive potentially thousands of checks every day and cannot inspect them all. -if organization notifies debtor that offers to settle for less than debt claimed, must be made to a particular official (if not, check generally doesn't create an accord and satisfaction) 2) if within 90 days of cashing a "full payment" check, the creditor can send a check to debtor for the wrong "full payment" that was paid. he has undone the agreement and may sue for full amount.

There must be: 1) an unliquidated debt 2) an agreement between the parties that the creditor will accept as full payment a sum less than originally claimed 3) payment by the debtor for the agreed amount.

Pros: -create jobs and steady income -provide money for the state -take business away from organized crime Cons: -appeals to human weakness b/c those who cannot afford to lose money will spend it on the unlikely chance of gaining more -destroys families -weakens fabric communities b/c people can get something from nothing rather than encouraging citizens to earn honestly. -crime increased Many states do not allow gambling on credit. The California Court of Appeals in Metropolitan Creditors Service of Sacramento v. Sadri, set forth a special reason for treating gambling on credit differently from gambling in general. The court stated that having lost cash, a pathological gambler will continue to play on credit, if extended, in an attempt to win back the loses. -play themselves right into debt.

Exculpatory clause: a contract provision that attempts to release one party from liability in the event the other is injured. Exculpatory clauses are generally unenforceable when.... 1) It attempts to exclude an intentional tort or gross negligence 2) The affected activity is in the public interest, such as medical care, public transportation, or some essential service 3) The parties have greatly unequal bargaining power 4) The clause is unclearly written and not readily visible

Yes, the contract is still enforceable. -Even though Reed is a minor, the items that Martha provided are necessaries, so the promise would be enforceable. -He can take measures to disaffirm the contract, but would still owe Martha the benefits that he received

(a) when disclosure is necessary to correct a previous assertion; (b) when disclosure would correct a basic mistaken assumption on which Adrianna is relying; (c) when disclosure would correct Adrianna's mistaken understanding about a writing; (d) when Adrianna and the seller have a relationship of trust. The seller generally must disclose any latent property.

Designed to protect public: any contract made by an unlicensed worker is unenforceable -Require licenses for anyone who practices a profession, such as law or medicine, works as a contractor or plumber. -Because work that they do is potentially dangerous to homeowner. Designed to generate revenue: a contract made by an unlicensed person is generally enforceable -Example: license to open certain kinds of retail stores -State will not investigate the store owner the way it will examine a prospective lawyer or electrician

Capacity: the legal ability to enter into a contract. An adult of sound mind has capacity → any deal they enter will be enforced if all elements on the contract checklist are present. Minors lack legal capacity, normally can create only a voidable contract. -Contract can be canceled by party who lacks capacity. -Minor who wishes to escape contract may disaffirm it --Notify other party that he refuses to be bound by that contract -May disaffirm contract anytime before reaching 18 or within a reasonable time after turning 18

Unilateral mistake: occurs when only one party enters a contract under a mistaken assumption Mutual Mistake: occurs when both contracting parties share the same mistake. If the contract is based on a fundamental factual error by both parties, the contract is voidable by either party. Courts will NOT rescind contracts on the basis of: -Prediction error -Mistake of value -Conscious uncertainty: when one party knows they are taking on a risk, Realizes there is uncertainty about quality of the thing being exchanged

-makes the law of sales more flexible -negotiations with open terms may create a binding agreement -Intent of the parties to create a contract is controlling under the UCC. -Section 2-204(3) --even if terms are left open, a sale doesn't fail for indefiniteness if parties have intended to make a contract and there is a reasonable certain basis for appropriate remedy. -"gap-filler" provisions or rules for supplying the missing terms of a contract.

The English Parliament passed the original statute of frauds in 1677 to prevent lying (fraud) -At that time, neither the plaintiff nor defendant was permitted to testify at trial. Reasons for -to provide more reliable evidence as to the existence of a contract by requiring that certain types of contracts be in writing to be enforceable. -to provide courts with the best possible evidence of whether parties intended to make a contract. Arguments for and against For: they are a valuable tool for justice Against: rather than preventing wrongdoing, they help people commit fraud -Someone might orally agree to terms and then, if the terms become unprofitable, walk away from the contract, knowing it would be unenforceable without a writing

The statement must first be a fact, not an opinion. -"This car is the best" would not be the type of statement that should be relied upon. Contrast that type of statement with, "this car gets 28 miles per gallon." -This is a statement of fact upon which someone would rely. The statement must also be material, that is important in the decision to enter into the contract. -For the fact to be material, the maker must have expected the other party to rely on the statement, and the other party must have relied upon it.