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Definition of Law

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''a rule of civil conduct prescribed by the supreme power in a state, commanding what is right, and prohibiting what is wrong'' (William Blackstone)

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Functions of Law

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to maintain stability in the social, political, and economic system through dispute resolution, protection of property, and the preservation of the state, while simultaneously permitting ordered change

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Legal Sanctions

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are means by which the law enforces the decisions of the courts Law and Morals are different but overlapping; law provides sanctions, while morals do not

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Law and Justice

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are separate and distinct concepts; justice is the fair, equitable,and impartial treatment of competing interests with due regard for thecommon good

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• Substantive Law

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law creating rights and duties

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• Procedural Law

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rules for enforcing substantive law Public and Private Law

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• Public Law law

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dealing with the relationship between government and individuals

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• Private Law

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law governing the relationships among individuals and legal entities

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• Civil Law

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law dealing with rights and duties the violation of which constitutes a wrong against an individual or other legal entity

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• Criminal

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Law law establishing duties which, if violated, constitute a wrong against the entire community

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Constitutional Law

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fundamental law of a government establishing its powers and limitations

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• Common Law

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body of law developed by the courts that serves as precedent for determination of later controversies

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• Equity body of law

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based upon principles distinct from common law and providing remedies not available at law Legislative Law statutes adopted by legislative bodies

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• Treaties

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agreements between or among independent nations

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• Executive Orders

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laws issued by the President or by the governor of a State Administrative Law body of law created by administrative agencies to carry out their regulatory powers and duties

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Ethics

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study of what is right or good for human beings

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Business Ethics

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study of what is right and good in a business setting

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Ethical Fundamentalism

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individuals look to a central authority or set of rules to guide them in ethical decision making

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Ethical Relativism

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actions must be judged by what individuals subjectively feel is right or wrong for themselves

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Situational Ethics

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one must judge a person's actions by first putting oneself in the actor's situation

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Utilitarianism

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moral actions are those that produce the greatest net pleasure compared with net pain

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• Act Utilitarianism

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assesses each separate act according to whether it maximizes pleasure over pain

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• Rule Utilitarianism

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supports rules that on balance produce the greatest pleasure for society

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• Cost-Benefit Analysis

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quantifies the benefits and costs of alternatives Deontology actions must be judged by their motives and means as well as their results

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Social Ethics Theories

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focus is on a person's obligations to other members in society and also on the individual's rights and obligations within society

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• Social Egalitarians

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believe that society should provide all its members with equal amounts of goods and services regardless of their relative contributions

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• Distributive Justice

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stresses equality of opportunity rather than results

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• Libertarians

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stress market outcomes as the basis for distributing society's rewards Other Theories

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• Intuitionism

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a rational person possesses inherent power to assess the correctness of actions

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• Good Person

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individuals should seek out and emulate good role models

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Choosing an Ethical System

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Kohlberg's stages of moral development is a widely accepted model (see Figure 2-1)

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Corporations as Moral Agents

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because a corporation is a statutorily created entity, it is not clear whether it should be held morally responsible

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Regulation of Business

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governmental regulation has been necessary because all the conditions for perfect competition have not been satisfied and free competition cannot by itself achieve other societal objectives

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Corporate Governance

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vast amounts of wealth and power have become concentrated in a small number of corporations, which in turn are controlled by a small group of corporate officers

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• Profitability

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because corporations are artificial entities established for profit- making activities, their only social obligation should be to return as much money as possible to shareholders

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• Unfairness

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whenever corporations engage in social activities such as supporting the arts or education, they divert funds rightfully belonging to shareholders and/or employees to unrelated third parties

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• Accountability

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a corporation is subject to less public accountability than public bodies are

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• Expertise

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although a corporation may have a high level of expertise in selling its goods and services, there is absolutely no guarantee that any promotion of social activities will be carried on with the same degree of competence

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• The Social Contract

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because society allows for the creation of corporations and gives them special rights, including a grant of limited liability, corporations owe a responsibility to our society

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• Less Government Regulation

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by taking a more proactive role in addressing society's problems, corporations create a climate of trust and respect that has the effect of reducing government regulation

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• Long-Run Profits

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corporate involvement in social causes creates goodwill, which simply makes good business sense

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District Courts

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trial courts of general jurisdiction that can hear and decide most legal controversies in the Federal system

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Courts of Appeals

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hear appeals from the district courts and review orders of certain administrative agencies

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The Supreme Court

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the nation's highest court, whose principal function is to review decisions of the Federal Courts of Appeals and the highest

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Special Courts

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have jurisdiction over cases in a particular area of Federal law and include the U.S. Court of Federal Claims, the U.S. Tax Court, the U.S. Bankruptcy Courts, and the U.S. Court of Appeals for the Federal Circuit

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Inferior Trial Courts

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hear minor criminal cases, such as traffic offenses, and civil cases involving small amounts of money; conduct preliminary hearings in more serious criminal cases

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Trial Courts

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have general jurisdiction over civil and criminal cases

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Special Courts

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trial courts, such as probate courts and family courts, having jurisdiction over a particular area of State law Appellate Courts include one or two levels; the highest court's decisions are final except in those cases reviewed by the U.S. Supreme Court

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Subject matter jurisdiction

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authority of a court to decide a particular kind of case Federal Jurisdiction

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• Exclusive Federal Jurisdiction

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Federal courts have sole jurisdiction over Federal crimes, bankruptcy, antitrust, patent, trademark, copyright, and other specified cases

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• Concurrent Federal Jurisdiction

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authority of more than one court to hear the same case; State and Federal courts have concurrent jurisdiction over (1) Federal question cases (cases arising under the Constitution, statutes, or treaties of the United States) that do not involve exclusive Federal jurisdiction, and (2) diversity of citizenship cases involving more than $75,000

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State Jurisdiction

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State courts have exclusive jurisdiction over all matters to which the Federal judicial power does not reach

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In Personam Jurisdiction

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jurisdiction based upon claims against a person, in contrast to jurisdiction over the person's property

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In Rem Jurisdiction

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jurisdiction based on claims against property

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Attachment Jurisdiction

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jurisdiction over a defendant's property to obtain payment of a claim not related to the property venue geographical area in which a lawsuit should be brought

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• Complaint

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initial pleading by the plaintiff stating his case

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• Summons

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notice given to inform a person of a lawsuit against her

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• Answer

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defendant's pleading in response to the plaintiff's complaint

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• Reply

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plaintiff's pleading in response to the defendant's answer

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Pretrial Procedure

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process requiring the parties to disclose what evidence is available to prove the disputed facts; designed to encourage settlement of cases or to make the trial more efficient

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• Judgment on Pleadings

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a final ruling in favor of one party by the judge based on the pleadings

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• Discovery

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right of each party to obtain evidence from the other party

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• Pretrial Conference

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a conference between the judge and the attorneys to simplify the issues in dispute and to attempt to settle the dispute without trial

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• Summary Judgment

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final ruling by the judge in favor of one party based on the evidence disclosed by discovery

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Negotiation

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consensual bargaining process in which the parties attempt to reach an agreement resolving their dispute without the involvement of third parties

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Federalism

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the division of governing power between the Federal government and the States

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Federal Supremacy

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Federal law takes precedence over conflicting State law Federal Preemption right of the Federal government to regulate matters within its power to the exclusion of regulation by the States

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Judicial Review

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examination of governmental actions to determine whether they conform to the U.S. Constitution

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Separation of Powers

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allocation of powers among executive, legislative, and judicial branches of government

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State Action

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actions of governments to which constitutional provisions apply

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Federal Commerce Power

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exclusive power of the Federal government to regulate commerce with other nations and among the States

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State Regulation of Commerce

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the Commerce Clause of the Constitution restricts the States' power to regulate activities if the result obstructs interstate commerce Federal Fiscal Powers

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• Taxation and Spending

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the Constitution grants Congress broad powers to tax and spend; such powers are important to Federal regulation of the economy

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• Borrowing and Coining Money

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enables the Federal government to establish a national banking system and to control national fiscal and monetary policy

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• Eminent Domain

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the government's power to take private property for public use with the payment of just compensation

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Contract Clause

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restricts States from retroactively modifying contracts

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Freedom of Speech

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First Amendment protects most speech by using a strict scrutiny standard

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• Corporate Political Speech

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First Amendment protects a corporation's right to speak out on political issues

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• Commercial Speech

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expression related to the economic interests of the speaker and its audience; such expression receives a lesser degree of protection

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• Defamation

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a tort consisting of a false communication that injures a person's reputation; such a communication receives limited constitutional protection Due Process Fifth and Fourteenth Amendments prohibit the Federal and State governments from depriving any person of life, liberty, or property without due process of law

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Substantive Due Process

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determination of whether a particular governmental action is compatible with individual liberties

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Procedural Due Process

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requires the governmental decision-making process to be fair and impartial if it deprives a person of life, liberty, or property

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Equal Protection

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requires that similarly situated persons be treated similarly by governmental actions

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• Rational Relationship Test

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standard of review used to determine whether economic regulation satisfies the equal protection guarantee

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• Strict Scrutiny Test

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exacting standard of review applicable to regulation affecting a fundamental right or involving a suspect classification

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• Intermediate Test

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standard of review applicable to regulation based on gender and legitimacy

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Rulemaking

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process by which an administrative agency promulgates rules of law

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Legislative Rules

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substantive rules issued by an administrative agency under the authority delegated to it by the legislature

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Interpretative Rules

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statements issued by an administrative agency indicating how it construes its governing statute

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Procedural Rules

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rules issued by an administrative agency establishing its organization, method of operation, and rules of conduct for practice before the agency

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Enforcement

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process by which agencies determine whether their rules have been violated

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Adjudication

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formal methods by which an agency resolves disputes

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Judicial Review

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acts as a control or check by a court on a particular rule or order of an administrative agency

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Legislative Control

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includes control over the agency's budget and enabling statute Control by Executive Branch includes the President's power to appoint members of the agency

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Disclosure of Information

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congressionally required public disclosure enhances oversight of agency activities

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Nature of Crimes

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any act or Essential Elements

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• Actus Reus

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wrongful or overt act

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• Mens Rea

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criminal intent or mental fault Classification

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• Felony

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a serious crime

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• Misdemeanor

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a less serious crime

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Vicarious Liability

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liability imposed for acts of employees if the employer directed, participated in, or approved of the acts

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Liability of a Corporation

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under certain circumstances a corporation may be convicted of crimes and punished by fines

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White Collar Crime Definition

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nonviolent crime involving deceit, corruption, or breach of trust Computer Crime use of a computer to commit a crime

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Racketeer Influenced and Corrupt Organizations Act (RICO)

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Federal law intended to stop organized crime from infiltrating legitimate businesses

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Larceny

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trespassory taking and carrying away of personal property of another with the intent to deprive the victim permanently of the property

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Embezzlement

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taking of another's property by a person who was in lawful possession of the property

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False Pretenses

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obtaining title to property of another by means of representation one knows to be materially false; made with intent to defraud

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Robbery

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committing larceny with the use or threat of force

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Burglary

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under most modern statutes, an entry into a building with the intent to commit a felony

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Extortion

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making threats to obtain money or property

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Bribery

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offering money or property to a public official to influence the official's decision

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Forgery

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intentional falsification of a document to defraud

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Bad Checks

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knowingly issuing a check without funds sufficient to cover the check

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Defense of Person or Property

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individuals may use reasonable force to protect themselves, other individuals, and their property

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Duress coercion by threat of serious bodily harm

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a defense to criminal conduct other than murder

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Mistake of Fact

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honest and reasonable belief that conduct is not criminal Entrapment inducement by a law enforcement official to commit a crime

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Steps in Criminal Prosecution

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generally include arrest, booking, formal notice of charges, preliminary hearing to determine probable cause, indictment or information, arraignment, and trial

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Fourth Amendment

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protects individuals against unreasonable searches and seizures Fifth Amendment protects persons against self-incrimination, double jeopardy, and being charged with a capital crime except by grand jury indictment

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Sixth Amendment

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provides the accused with the right to a speedy and public trial, the opportunity to confront witnesses, a process for obtaining witnesses, and the right to counsel

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Battery

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intentional infliction of harmful or offensive bodily contact

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Assault

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intentional infliction of apprehension of immediate bodily harm or offensive contact

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False Imprisonment

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intentional confining of a person against her will

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Infliction of Emotional Distress

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extreme and outrageous conduct intentionally or recklessly causing severe emotional distress

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Defamation

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false communication that injures a person's reputation

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• Libel

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written or electronically transmitted defamation

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• Slander

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spoken defamation

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• Defenses

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truth, absolute privilege, conditional privilege, and constitutional privilege are defenses to a defamation action Invasion of Privacy

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• Appropriation

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unauthorized use of a person's identity

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• Intrusion

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unreasonable and highly offensive interference with the seclusion of another

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• Public Disclosure of Private Facts

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highly offensive publicity of private information

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• False Light

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highly offensive and false publicity about another

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Misuse of Legal Procedure

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torts that protect an individual from unjustifiable litigation

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Real Property

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land and anything attached to it

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• Trespass

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wrongfully entering on land of another

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• Nuisance

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a nontrespassory interference with another's use and enjoyment of land

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Personal Property

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any property other than land

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• Trespass

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an intentional taking or use of another's personal property

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• Conversion

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intentional exercise of control over another's personal property

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Interference with Contractual Relations

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intentionally causing one of the parties to a contract not to perform

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Disparagement

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publication of false statements about another's property or products Fraudulent Misrepresentation a false statement, made with knowledge of its falsity, intended to induce another to act

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Consent

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a person may not recover for injury to which he willingly and knowingly consents

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Self-Defense

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a person may take appropriate action to prevent harm to himself where time does not allow resort to the law

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Definition of Negligence

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conduct that falls below the standard established by law for the protection of others against unreasonable risk of harm

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Reasonable Person Standard

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degree of care that a reasonable person would exercise under all the circumstances

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• Children

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must conform to conduct of a reasonable person of the same age, intelligence, and experience under all the circumstances

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• Physical Disability

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a disabled person's conduct must conform to that of a reasonable person under the same disability

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• Mental Disability

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a mentally disabled person is held to the reasonable person standard

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• Superior Skill or Knowledge

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if a person has skills or knowledge beyond those possessed by most others, these skills or knowledge are circumstances to be taken into account in determining whether the person has acted with reasonable care

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• Emergencies

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the reasonable person standard applies, but an unexpected emergency is considered part of the circumstances

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• Violation of Statute

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if the statute applies, the violation is negligence per se in most States

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Duty to Act

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a person is under a duty to all others at all times to exercise reasonable care for the safety of the others' person and property; however, except in special circumstances, no one is required to aid another in peril

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• Duty to Trespassers

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not to injure intentionally

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• Duty to Licensees

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to warn of known dangerous conditions licensees are unlikely to discover for themselves

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• Duty to Invitees

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to exercise reasonable care to protect invitees against dangerous conditions possessor should know of but invitees are unlikely to discover

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Res Ipsa Loquitur

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permits the jury to infer both negligent conduct and causation

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Factual Cause

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the defendant's conduct is a factual cause of the harm when the harm would not have occurred absent the conduct

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Scope of Liability (Proximate Cause) l

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iability is limited to those harms that result from the risks that made the defendant's conduct tortious

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• Foreseeability

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excludes liability for harms that were sufficiently unforeseeable at the time of the defendant's tortious conduct that they were not among the risks that made the defendant negligent

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• Superseding Cause

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an intervening act that relieves the defendant of liability

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Harm to Legally Protected Interest

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courts determine which interests are protected from negligent interference

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Burden of Proof

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plaintiff must prove that defendant's negligent conduct caused harm to a legally protected interest

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Contributory Negligence

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failure of a plaintiff to exercise reasonable care for his own protection, which in a few States prevents the plaintiff from recovering anything Comparative Negligence damages are divided between the parties in proportion to their degree of negligence; applies in almost all States

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Assumption of Risk

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plaintiff's express consent to encounter a known danger; some States still apply implied assumption of the risk

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Definition of Strict Liability

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liability for nonintentional and nonnegligent conduct Abnormally Dangerous Activity strict liability is imposed for any activity that (1) creates a foreseeable and highly significant risk of harm and (2) is not one of common usage

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Keeping of Animals

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strict liability is imposed for wild animals and usually for trespassing domestic animals

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Contributory Negligence

answer

is not a defense to strict liability

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Comparative Negligence

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some States apply this doctrine to some strict liability cases Assumption of Risk express assumption of risk is a defense to an action based upon strict liability; some States apply implied assumption of risk to strict liability cases

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Definition of Contract

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a binding agreement that the courts will enforce Common Law most contracts are governed primarily by State common law, including contracts involving employment, services, insurance, real property (land and anything attached to it), patents, and copyrights

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Uniform Commercial Code Article 2 of the UCC

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governs the sales of goods

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• Sale

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the transfer of title from seller to buyer

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• Goods

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tangible personal property (personal property is all property other than an interest in land)

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Mutual Assent

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the parties to a contract must manifest by words or conduct that they have agreed to enter into a contract

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Consideration

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each party to a contract must intentionally exchange a legal benefit or incur a legal detriment as an inducement to the other party to make a return exchange Legality of Object the purpose of a contract must not be criminal, tortious, or otherwise against public policy

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Capacity

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the parties to a contract must have contractual capacity

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• Express Contract

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an agreement that is stated in words, either orally or in writing • Implied in Fact Contract a contract in which the agreement of the parties is inferred from their conduct

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• Bilateral Contract

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a contract in which both parties exchange promises

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• Unilateral Contract

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a contract in which only one party makes a promise Valid, Void, Voidable, and Unenforceable Contracts

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• Valid Contract

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one that meets all of the requirements of a binding contract

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• Void Contract

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no contract at all; without legal effect

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• Voidable Contract

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a contract capable of being made void

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• Unenforceable Contract

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a contract for the breach of which the law provides no remedy

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• Executed Contract

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a contract that has been fully performed by all of the parties

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• Executory Contract

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a contract that has yet to be fully performed Formal and Informal Contracts

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• Formal Contract

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an agreement that is legally binding because of its particular form or mode of expression

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• Informal Contracts

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all contracts other than formal contracts

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Promissory Estopel

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a doctrine enforcing some noncontractual promises

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Requirements

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a promise made under circumstances that should lead the promisor reasonably to expect that the promise would induce the promisee to take definite and substantial action, and the promisee does take such action

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Remedy

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a court will enforce the promise to the extent necessary to avoid injustice

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Quasi contracts

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an obligation not based on contract that is imposed to avoid injustice Requirements a court will impose a quasi contract when (1) the plaintiff confers a benefit upon the defendant, (2) the defendant knows or appreciates the benefit, and (3) the defendant's retention of the benefit is inequitable

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Remedy

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the plaintiff recovers the reasonable value of the benefit she conferred upon the defendant

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Offer

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indication if willingness to enter into a contract

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Communication

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offeree must have knowledge of the offer and the offer must be made by the offeror to the offeree

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Intent

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determined by an objective standard of what a reasonable offeree would have believed

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Definiteness

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offer's terms must be clear enough to provide a court with a basis for giving an appropriate remedy

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Lapse of Time

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offer remains open for the time period specified or, if no time is stated, for a reasonable period of time

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Revocation

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generally, an offer may be terminated at any time before it is accepted, subject to the following exceptions

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• Option Contract

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contract that binds offeror to keep an offer open for a specified time

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• Firm Offer

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a merchant's irrevocable offer to sell or buy goods in a signed writing

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• Statutory Irrevocability

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offer made irrevocable by statute

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• Promissory Estoppel

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noncontractual promise that binds the promisor because she should reasonably expect that the promise will induce the promisee (offeree) to take action in reliance on it

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Rejection

answer

refusal to accept an offer terminates the power of acceptance Counteroffer counterproposal to an offer that generally terminates the original offer Death or Incompetency of either the offeror or the offeree terminates the offer Destruction of Subject Matter of an offer terminates the offer

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Subsequent Illegality

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of the purpose or subject matter of the offer terminates the offer

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Acceptance of offer

answer

positive and unequivocal expression of a willingness to enter into a contract on the terms of the offer

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Mirror Image Rule

answer

except as modified by the Code, an acceptance cannot deviate from the terms of the offer

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General Rule

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acceptance effective upon dispatch unless the offer specifically provides otherwise or the offeree uses an unauthorized means of communication

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Stipulated Provisions

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the communication of acceptance must conform to the specification in the offer

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Authorized Means t

answer

he Restatement and the Code provide that unless the offer provides otherwise, acceptance is authorized to be in any reasonable manner Unauthorized Means acceptance effective when received, provided that it is received within the time within which the authorized means would have arrived

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Acceptance

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Following a Prior Rejection first communication received by the offeror is effective

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Defective Acceptance

answer

does not create a contract but serves as a new offer

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Duress

answer

wrongful or unlawful act or threat that overcomes the free will of a party

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Physical Compulsion

answer

coercion involving physical force renders the agreement void

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Improper Threats

answer

improper threats or acts, including economic and social coercion, render the contract voidable

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FRAUD

answer

wrongful or unlawful act or threat that overcomes the free will of a party

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Physical Compulsion

answer

coercion involving physical force renders the agreement void

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Improper Threats

answer

improper threats or acts, including economic and social coercion, render the contract voidable

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Undue Influence

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taking unfair advantage of a person by reason of a dominant position based on a confidential relationship

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Effect

answer

renders a contract voidable

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Fraud in the Execution

answer

a misrepresentation that deceives the other party as to the nature of a document evidencing the contract renders the agreement void

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• False Representation

answer

positive statement or conduct that misleads

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• Fact

answer

an event that occurred or thing that exists

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• Materiality

answer

of substantial importance

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• Knowledge of Falsity and Intention to Deceive

answer

called scienter and includes (1) actual knowledge, (2) lack of belief in statement's truthfulness, or (3) reckless indifference to its truthfulness

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• Justifiable Reliance

answer

a defrauded party is reasonably influenced by the misrepresentation

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Negligent Misrepresentation

answer

misrepresentation made without due care in ascertaining its truthfulness; renders agreement voidable

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Innocent Misrepresentation

answer

misrepresentation made without knowledge of its falsity but with due care; renders contract voidable

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Mistake

answer

an understanding that is not in accord with existing fact

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Mutual Mistake

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both parties have a common but erroneous belief forming the basis of the contract; renders the contract voidable by either party

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Unilateral Mistake

answer

courts are unlikely to grant relief unless the error is known or should be known by the nonmistaken party

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Assumption of Risk

answer

a party may assume the risk of a mistake

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Effect of Fault upon Mistake

answer

not a bar to avoidance unless the fault amounts to a failure to act in good faith

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CONSIDERATION

answer

the inducement to enter into a contract Elements legal sufficiency and bargained-for exchange

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Definition

answer

consists of either a benefit to the promisor or a detriment to the promisee

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• Legal Benefit

answer

obtaining something to which one had no prior legal right

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• Legal Detriment

answer

doing an act one is not legally obligated to do or not doing an act that one has a legal right to do

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Adequacy

answer

not required where the parties have freely agreed to the exchange

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Illusory Promise

answer

promise that imposes no obligation on the promisor; the following promises are not illusory:

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• Output Contract

answer

agreement to sell all of one's production to a single buyer

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• Requirements Contract

answer

agreement to buy all of one's needs from a single producer

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• Exclusive Dealing Contract

answer

grant to a franchisee or licensee by a manufacturer of the sole right to sell goods in a defined market

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• Conditional Promise

answer

a contract in which the obligations are contingent upon the occurrence of a stated event

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Preexisting Public Obligations

answer

public duties such as those imposed by tort or

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Preexisting Contractual Obligation

answer

performance of a preexisting contractual duty is not consideration

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• Modification of a Preexisting Contract

answer

under the common law a modification of a preexisting contract must be supported by mutual consideration; under the Code a contract can be modified without new consideration

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• Substituted Contracts

answer

the parties agree to rescind their original contract and to enter into a new one; rescission and new contract are supported by consideration

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• Settlement of an Undisputed Debt

answer

payment of a lesser sum of money to discharge an undisputed debt (one whose existence or amount is not contested) does not constitute legally sufficient consideration

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• Settlement of a Disputed Debt

answer

payment of a lesser sum of money to discharge a disputed debt (one whose existence or amount is contested) is legally sufficient consideration

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Bargained for exchange

answer

a mutually agreed-upon exchange

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Past Consideration

answer

an act done before the contract is made is not consideration

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Promises to Perform

answer

Prior Unenforceable Obligations

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• Promise to Pay Debt

answer

Barred by the Statute of Limitations a new promise by the debtor to pay the debt renews the running of the statute for a second statutory period

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• Promise to Pay Debt

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Discharged in Bankruptcy may be enforceable without consideration

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• Voidable Promises

answer

a new promise to perform a voidable obligation that has not been previously avoided is enforceable

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• Moral Obligation

answer

a promise made to satisfy a preexisting moral obligation is generally unenforceable for lack of consideration

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Promissory Estoppel

answer

doctrine that prohibits a party from denying her promise when the promisee takes action or forbearance to his detriment reasonably based upon the promise

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Promises under Seal

answer

where still recognized, the seal acts as a substitute for consideration

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Promises Made Enforceable by Statute

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some gratuitous promises have been made enforceable by statute; the Code makes enforceable (1) contract modifications, (2) renunciations, and (3) firm offers

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Violations of the statutes General Rule

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the courts will not enforce agreements declared illegal by statute Licensing Statutes require formal authorization to engage in certain trades, professions, or businesses

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• Regulatory License

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licensing statute that is intended to protect the public against unqualified persons; an unlicensed person may not recover for services she has performed

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• Revenue License

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licensing statute that seeks to raise money; an unlicensed person may recover for services he has performed

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Gambling Statutes

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prohibit wagers, which are agreements that one party will win and the other lose depending upon the outcome of an event in which their only interest is the gain or loss

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Usury Statutes

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establish a maximum rate of interest

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Sunday Statutes

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prohibition of certain types of commercial activity on Sunday (also called Blue Laws)

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Common Law Restraint of Trade

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unreasonable restraints of trade are not enforceable

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• Sale of a Business

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the promise by the seller of a business not to compete in that particular business in a reasonable geographic area for a reasonable period of time is enforceable

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• Employment Contracts

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an employment contract prohibiting an employee from competing with his employer for a reasonable period following termination is enforceable provided the restriction is necessary to protect legitimate interests of the employer

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Exculpatory Clauses

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the courts generally disapprove of contractual provisions excusing a party from liability for her own tortious conduct

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Unconscionable Contracts

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unfair or unduly harsh agreements are not enforceable

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• Procedural Unconscionability

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unfair or irregular bargaining

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• Substantive Unconscionability

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oppressive or grossly unfair contractual terms Tortious Conduct an agreement that requires a person to commit a tort is unenforceable

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Corrupting Public Officials

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agreements that corrupt public officials are not enforceable

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Unenforceability

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neither party may recover under an illegal agreement where both parties are in pari delicto (in equal fault)

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Exceptions permit one party to recover payments

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• Party Withdrawing before Performance • Party Protected by Statute • Party Not Equally at Fault • Excusable Ignorance • Partial Illegality

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Minors Definition

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persons who are under the age of majority (usually 18 years) Liability on Contracts a minor's contracts are voidable at the minor's option

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• Disaffirmance

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avoidance of the contract; may be done during minority and for a reasonable time after reaching majority

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• Ratification

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affirmation of the entire contract; may be done upon reaching majority

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Liability for Necessaries

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a minor is liable for the reasonable value of necessary items (those that reasonably supply a person's needs)

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Liability for Misrepresentation of Age

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prevailing view is that a minor may disaffirm the contract

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Liability for Tort Connected with Contract

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if a tort and a contract are so intertwined that to enforce the tort the court must enforce the contract, the minor is not liable in tort

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Person under Guardianship

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contracts made by a person placed under guardianship by court order are void

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Mental Illness or Defect

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a contract entered into by a mentally incompetent person (one who is unable to understand the nature and consequences of his acts) is voidable Intoxicated Persons a contract entered into by an intoxicated person (one who cannot understand the nature and consequence of her actions) is voidable

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