WGU LCW1- Business Law and Ethics – Flashcards
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Contract
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A promise the law will enforce.
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Judicial Restraint
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Court takes a passive role & enforces what is already written in the contract. Even if one party benefits over the other party.
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Judicial Activism
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Court takes an active interest in the contents of the contract & makes decisions based on what is "fair" and "right".
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Four Elements of a Contract
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1. Agreement- offer made by one party & accepted by another party. 2. Consideration- bargaining 3. Legality- has to be legal. 4. Capacity- all parties must be of legal, adult age and be sound of mind.
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Issues Regarding Contracts
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1. Consent- no tricking or using force 2. Written Contract- some must be written. Third Party Interests- affect other people or parties that are not included in the contract. 3. Performance and discharge- once parties fulfill their duties under the contract, those duties are discharged. 4. Remedies- Court ordered after breach of contract. May result in money being awarded to the injured party.
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Bilateral Contract
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A contract in which both parties make a promise.
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Unilateral Contract
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One party makes a promise that the other party can only except by doing something
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Express Contract
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Parties intend to contract and agree on explicit terms.
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Implied Contract
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Parties do not formally agree, but words and conduct indicate intention to create a contract.
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Executory Contract
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When one or more parties has not fulfilled its obligations.
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Executed Contract
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When all parties have fulfilled their obligations.
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Valid Contract
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Is one that satisfies all of the law's requirements.
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Unenforceable Agreement
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Occurs when the parties intend to form a valid bargain but a court declares that some rule of law prevents enforcing it.
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Voidable Contract
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Occurs when the law permits one party to terminate the agreement.
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Void Agreement
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Neither party can enforce. Illegal or had no legal authority to make a contract.
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Promissory Estoppel
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No contract. Defendant makes false promise; plaintiff relies on it. Court can force it to happen.
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Quasi-Contract
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No intention to contract, plaintiff gives some benefit to the defendant, who knows that the plaintiff expects compensation;unjust not to award the plaintiff damages.
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What governs if the contract is for the sale of goods?
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UCC Article 2 UCC=Uniform Commercial Code
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What governs If the contract is for services,employment, or real estate?
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Common Law
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Discharge
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No longer have any duties under a contract.
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Conditions for a discharge of a contractual obligation
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Most contracts are discharged by full performance or Sometimes the parties discharge a contract by agreement.
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What constitutes a breach of contract?
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An unjustifiable failure to perform all or some part of a contractual duty without a valid excuse
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What are the 2 types of acceptable performance in a contract.
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Strict and Substantial Performance. 1. Strict: requires 1 party to perform its duties perfectly. 1. Substantial: generally sufficient completion to entitle the other party the contract price, minus the cost of defects in the work.
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Condition
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An event that must occur before a party becomes obligated under a contract.
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Conditional Precedent
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An event must occur before a duty arises. Plaintiff has burden of proof.
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Conditional Subsequent
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Condition must occur after the particular duty arises. Defendant has the burden to prove.
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Personal Satisfaction Contracts
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The promisee makes a personal, subjective evaluation of the promisor's performance.
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Concurrent Conditions
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Both parties have a duty to perform simultaneously.
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Public Policy
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Permitting the conditional clause would hurt society.
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Strict Performance
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Requires one party to perform its obligations precisely, with no deviation from the contract terms. The contract must expressly demand the performance and the demand must be reasonable.
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Substantial Performance
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Actions do not vary greatly from those anticipated in the contract & has the same benefits as promised in the contract.
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Good Faith
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Absence of knowledge of any defects or problems.
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Time of the Essence Clauses
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Makes contract dates strictly enforceable.
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Frustration of purpose
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An event has occurred that neither party anticipated and the contract now has no value for one party
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Commercial Impracticability
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Some event has occurred that neither party anticipated, making the contract extraordinarily difficult and unfair to one party.
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Remedy
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Method a court uses to compensate an injured party.
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Condition Precedent
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Something must occur before there is an obligation to pay.
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Express Condition
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A condition is expressly stated by a party of the contract.
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Implied Condition
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Nothing is said about a condition, but the agreement clearly shows the intention of a condition.
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Interest
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A legal right in something, such as a contract.
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Name the four contract remedies (interests)
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1. Expectation interest 2. Reliance Interest 3. Restitution Interest 4. Equitable Interest
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Expectation Interest
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Puts the injured party in the position she would have been in had both sides fully performed. 3 components: 1. Compensatory damages: flow directly from the contract 2. Consequential damages: result from the unique circumstances of the particular injured party. The injured party may recover only if the breaching party should have foreseen them 3. Incidental damages: minor costs an injured party incurs responding to a breach.
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Reliance Interest
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Puts injured party in the position he would have been as though he never entered into a contract. Focuses on the time & money the injured party spent performing his part of the agreement. If there was no valid contract, a court might still award reliance damages under a theory of promissory estoppel.
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Restitution Interest
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Returns to the injured party a benefit that she has conferred on the other party, which it would be unjust to leave with that person.
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Equitable Interest
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When money damages will not suffice to help the injured party. Something more is needed, such as an order to transfer property to the injured party or an order forcing one party to stop doing something. (Specific Performance & Injunction)
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Specific Performance
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An order to transfer property to the injured party.
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Injunction
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An order forcing one party to stop doing something
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Reformation
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When the court will rewrite a contract to ensure that it accurately reflects the parties' agreement and/or to maintain the contract's viability.
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Duty to Mitigate
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An party injured by a breach of contract may not recover for damages that he could have avoided with reasonable efforts.
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Nominal Damages
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Are a token sum, such as one dollar, given to an injured plaintiff who cannot prove damages.
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Liquidated Damages
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A provision stating in advance how much a party must pay if it breaches.
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Punitive Damages
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Designed to punish the breaching party. not to compensate the injured party
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Describe the key provisions of the Sherman Antitrust Acts.
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1. Prohibits all agreements "in restraint of trade." 2. Bans "monopolization" wrongful acquisition of a monopoly.
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Describe the key provisions of the Clayton Antitrust Acts.
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Corrects problems of the Sherman Antitrust Act, 1. Prohibits anti-competitive mergers 2. Tying arrangements 3. Exclusive dealing agreements.
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Market Division
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Any effort by a group of competitors to divide its market is a per se violation of S1 of the Sherman Act.
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Bid-Rigging
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When competitors eliminate price competition by agreeing on who will submit the lowest bid.
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Price-Fixing
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When competitors eliminate price competition by agreeing on what the price shall be throughout.
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Refusals to Deal
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A group of competitors boycotts a buyer, supplier, or even another competitor.
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Reciprocal Dealing Agreements
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A buyer refuses to purchase goods from a supplier unless the supplier also purchases items from the buyer.
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Price Discrimination
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Illegal to charge different prices to different purchasers if: The items are the same, and the price discrimination lessens competition. Legal to charge a lower price to a particular buyer if: The costs of serving this buyer are lower, or the seller is simply meeting competition.
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Horizontal Mergers
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A horizontal merger involves companies that compete in the same market.
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Vertical Mergers
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Merger involves companies at different stages of the production process
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Joint Ventures
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A Partnership for a limited purpose.
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Monopolization
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To monopolize means to acquire a monopoly in the wrong way.
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Predatory Pricing
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When a company lowers its prices below cost to drive competitors out of business.
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Tying Arrangements
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An agreement to sell a product on the condition that the buyer also purchases a different (or tied) product.
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Vertical Allocation
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Illegal only if it adversely affects competition in the market as a whole.
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Exclusive Dealing Agreements
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Is one in which a distributor or retailer agrees with a supplier not to carry the products of any other supplier.
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Resale Price Maintenance
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Manufacturer sets minimum prices that retailers may charge.
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Vertical Maximum Price-Fixing
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When a manufacturer sets maximum prices
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Federal Trade Commission
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Created to regulate business, original focus was antitrust law, now regulates a wide range of business activities that affect consumers, Advertising - debt collection practices.
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Describe prohibited sales activities under the FTC Act
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DECEPTIVE ACTS OF PRACTICES: Under the FTC act, an advertisement is deceptive it is contains and important misrepresentation or omission that is likely to mislead a reasonable consumer. UNFAIR PRACTICES: it causes a substantial consumer injury, the harm of the injury outweighs any countervailing benefit, the consumer could not reasonably avoid the injury. BAIT AND SWITCH: FTC rules prohibit bait and switch advertisements a merchant may not advertise a product and then diparage it to consumers in an effort to sell a different item
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How is consumer credit regulated?
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1. Truth in lending act 2. Fair credit billing act.
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What is the Magnuson-Moss Warranty Act?
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Requires any supplier that offers a written warranty on a consumer product that costs more than $15 to disclose the terms of the warranty in simple, understandable language before the sale.
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What government regulations apply to consumer product safety?
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Consumer Product Safety Commission created by the Consumer Product Safety Act of 1972
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What is the role of the EPA?
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The EPA was created by congress to consolidate environmental regulation under one roof. When Congress passes a new environmental law, the EPA issues regulations to implement it. The agency can bring administrative enforcement action against those who violate its regulations.
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Describe requirements of the Clean Air Act.
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1. Primary Standards. 2. Secondary Standards. 3. State Implementation Plans (SIPs). 4. Citizen Suits. States that the EPA must establish national ambient air quality standards for both primary and secondary pollution. States must produce implementation to meet quality air standards citizens can sue people for not following the clean air act and companies can share emission allowances
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Describe requirements of the Clean Water Act.
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(1) Industrial Discharges (2) Water Quality Standards (3) Sewage (4} Waste Disposal (5) Superfund
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Identify regulations regarding waste disposal that businesses must follow.
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Resource Conservation and Recovery Act. -Establishes rules for treating both hazardous wastes and other forms of solid waste *Anyone who owns property with an underground storage tank must notify the EPA and comply with regulations leak detectors. *Anyone who creates, stores, transports, treats or disposes of a certain amount of hazardous waste must be tracked and have to be disposed of at a certain facility. Any company that generates more than 100 kg of hazardous waste must obtain an ID# for its waste. When it ships its waste disposal facility it must send a multi copy manifest that identifies the waste, the transporter and destination. The company must notify the EPA if it does not receive a receipt from the disposal site indicating that the waste has been received.
