Business Law USF Exam 2 Spring2015

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Bilateral/Unilateral Contract
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Bilateral = A contract entered into by way of exchange of promises of the parties; “a promise for a promise” Unilateral = A contract in which the offeror’s offer can be accepted only by the performance of an act by the offeree; “a promise for an act”
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Quasi – Contract
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An equitable doctrine whereby a court may award monetary damages to a plaintiff for providing work or services to a defendant even though no actual contract was involved. The doctrine is to prevent unjust enrichment and detriment.
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Implied in fact contract
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A contract in which agreement between parties has been inferred from their conduct.
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Executed Contract (2 questions)
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A contract that has been fully performed on both sides; a completed contract.
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Executory Contract
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A contract that has not been fully performed on both sides.
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Counter Offer
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A response by an offeree that contains terms and conditions different from or in addition to those of the odder. A counter offer terminated the previous offer.
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Rejection
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Express words or conduct by the offeree to reject the offer. Rejection terminates the offer. (REFUSAL TO ACCEPT AN OFFER = REJECTION)
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Communication of an offer
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An offer cannot be accepted if it is not communicated to the offeree by the offeror or a representative or an agent of the offer.
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Rewards (2 questions)
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An award given for performance of some service or attainment. To collect a reward, the offeree must (1) have knowledge of the reward offer prior to completing the requested act and (2) perform the requested act.
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Intent to make an offer
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The offeror must objectively intend to be bound by the offer, the terms of the offer must be definite or reasonably certain, and the offer must be communicated to the offeree.
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Mirror Image Rule
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A rule which states that for an acceptance to exist, the offeree must accept the terms as stated in the offer. (HAVE TO ACCEPT EVERY OFFER UNDER THE MIRROR IMAGE RULE = TRUE)
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Rejection and Revocation – when effective
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Revocation of offer effective when received by offeree. Rejection of offer effective when received by offeror.
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Acceptance – when effective
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Acceptance of offer for a bilateral contract is effective when dispatched by offeree.
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Pre-existing Contractual Duty
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Something a person is already under an obligation to do. A promise lacks consideration if a person promises to perform a preexisting duty.
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Special Business Contracts
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Output contract – A contract in which a seller agrees to sell all of its production to a single buyer. Requirements contract – A contract in which a buyer agrees to purchase all of it requirements for an item from one seller. Best – Efforts contract – A contract which contains a clause that requires on or both of the parties to use their best efforts to achieve the objective of the contract.
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Promissory Estoppel
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An equitable doctrine that prevents the withdrawal of a promise by a promisor if it will adversely affect a promise who has adjusted his or her position in justifiable reliance on the promise.
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Gratuitous Promise
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A promise that is unenforceable because it lacks consideration. (SMITH FEELS SORRY FOR JONES AND TELLS HIM HE’LL PAY FOR HIS RENT, LACKS CONSIDERATION = TRUE)
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Consideration – Forbearance
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Something of legal value given in exchange for a promise. Forbearance (accepting an out of court settlement in exchange for dropping a lawsuit.)
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Revenue Raising License Statute (2 Questions)
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A licensing statute with the primary purpose of raising revenue for the government. (Fishing license)
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Exculpatory Clause
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A contractual provision that relives one (or both) of the parties to a contract from tort liability for ordinary negligence. Also known as a release of liability clause.
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Regulatory Licensing Statute
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A licensing statute enacted to protect the public (lawyer has to pass bar exam to earn license)
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Necessaries – quasi contract
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Quasi contract = the minor is obligated only to pay the reasonable value of the goods or services received.
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Intoxicated Person
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A person is under contractual incapacity because of ingestion of alcohol or drugs to the point of incompetence.
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Necessaries of Life
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Food, clothing, shelter, medical care, and other items considered necessary to the maintenance of life. Minors must pay the reasonable value of necessaries of life for which they contract.
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Disaffirmance (5 questions)
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The act of a minor to revoke a contract under the infancy doctrine. Disaffirmance may be done orally, in writing, or by the minor’s conduct. The contract may be disaffirmed at any time prior to the person’s reaching the age of majority plus a “reasonable time.”
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Ratification
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The act of a minor after the minor has reached the age of maturity by which he or she accepts a contract entered into when he or she was a minor. (RATIFICATION OF A CONTRACT…= TRUE)
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Fraud in the Inducement
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Fraud that occurs when the party knows what he or she is signing but has been fraudulenty induced to enter the contract.
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Undue Influence/Duress
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UI – a situation in which one person takes advantage of another person’s mental. emotional, or physical weakness and unduly persuades that person to enter into a contract; the persuasion by the wrongdoer must overcome the free will of the innocent party. Duress – A situation in which one party threatens to do a wrongful act unless the other party enters into a contract.
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Difference between fraud and innocent misrepresentation
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Fraud – an event that occurs when one person consciously decides to induce another person to rely and act on a misinterpretation. I.M – Fraud that occurs when a person makes a statement of fact that he or she honestly and reasonably believes to be true even though it is not. (the intent)
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Fraud in the Inception
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Fraud that occurs if a person is deceived as to the nature of his or her act does not know what he or she is signing.
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Duress or Valid Request
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A situation in which one party threatens to do a wrongful act unless the other party enters into a contract. Does not have to be physical harm.
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Statute of Frauds writing requirements
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– Contracts that cannot be performed within 1 year must be in writing. – Contracts concerning the sale of real property. – A promise given in consideration of marriage. – A promise to answer for the duty ( debt, default, or miscarriage) – A promise by an executor or administrator to answer personally for the debt of a decedent’s estate. – A contract for the sale of goods for $500 or more(UCC)
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Transactions within the Statute of Frauds
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Page 235 to 240… Transaction examples that deal with all of the writing requirements.
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Parol Evidence Rule
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Any oral or written words outside the “four corners” of the written contract. The rule states of a written contract is a complete and final statement of the parties’ agreement, any prior or contemporaneous oral or written statements that alter, contradict, are inadmissible om court regarding a dispute over the contract. There are several exceptions to this rule.
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Main Purpose Doctrine
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An exception to the statute of the frauds that states that if the main purpose of a transaction and an oral collateral contract is to provide financial benefit to the guarantor, the collateral contract does not have to be in writing to be enforced.
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Promise to pay debt of another
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Guarantor is a person who agrees to pay a debt if the primary debtor does not by entering into a guaranty contract. It is between the guarantor and the original creditor.
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Novation
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An agreement that substitutes a new party for one of the original contracting parties and relives the exiting party of liability on the contract.
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Donee Beneficiary
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A third party on whom a benefit is to be conferred(granted)
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Assignments – American Rule and English Rule
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AR – provides that the first assignee in time prevails, regardless of notice. Most states follow this rule. ER – provides that the first assignee to give notice to the obligor (the person who owes the money or value) prevails.
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Coverage of the Article 2(sales) of the UCC
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Governs the sale of goods. All states except Louisiana follow.
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UCC 2-201 (2) Between Merchants (2 questions)
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If within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of subsection. Against such party unless written notice of objection to its contents is given within 10 days after it is received.
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Requirements for a firm offer
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A merchant who (1) offers to buy, sell, or lease goods and (2) gives a written and signed assurance on a separate form that the offer will be held open and cannot revoke the offer for the stated or, if no time stated, for a reasonable time. Max time is 3 months.
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UCC 2-403 (1)
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A purchaser of goods acquires all title which his transferor had or had power to transfer except that a purchaser of a limited interest acquires rights only to the extent of the interest purchased. A person with voidable title has power to transfer a good title to a good faith purchaser for value.

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