LS 240 study guide for Exam 3
LS 240 study guide for Exam 3 LST 240
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This 15 page Study Guide was uploaded by Sydney Hunt on Tuesday May 17, 2016. The Study Guide belongs to LST 240 at Murray State University taught by Dr. Alkhatib in Spring 2016. Since its upload, it has received 26 views. For similar materials see Business Law/Legal Environment in Business at Murray State University.
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Date Created: 05/17/16
LST 240 Chapter 12 1. What is consideration? Consideration is inducement to make a promise enforceable. 2. A’s son is in the hospital. B is the doctor who will operate on him. A tells the doctor that if he successfully operates on her son she will give him $200,000. The operation is successful. Is A legally bound to pay B the $200,000? What kind of promise did A make? No, A doesn’t have to pay B it was a gift promise, there was no consideration from B. 3. A goes to the dentist for an operation. Dentist bills patient for $10,000 due on April 1. On April 2 A sends a check to dentist for $5,000with a note that by cashing the check the dentist agrees to the full discharge of the debt. Can the dentist deposit the check and later sue A? Yes, there is an undisputed debt. 4. A gets a phone call from a collection company saying that he owes $8,000 for a credit card debt that the collection company bought from the credit card company. A tells collection agency that the debt to credit card company was $4,000. Credit Card Company is unable to provide paperwork proving the amount. A offers to pay $6,000 to settle the claim with Collection Company. Can the collection company cash the check and sue for the balance owed. Why? No, there is a disputed debt. Chapter 13 1. What is an illegal agreement? Is it void, voidable or unenforceable? An illegal agreement is the formation or performance of an agreement that is of criminal, tortious, or otherwise contrary to public policy, the agreement is unenforceable. 2. A is a medical doctor from Romania. He failed the exams required for practicing medicine in the US and is therefore not licensed to practice medicine in Kentucky. A does liposuction on B at a hotel pursuant to a legal agreement between the two. B liked the results of the operation but refuses to pay. Can A sue B to collect? What kind of licenses are medical licenses? No, this is an illegal agreement. Medical licenses are regulatory licenses, which are for public safety. 3. A is a pharmacist who worked for a pharmacy B in a small town. A is laid off from her work. A’s former employer reminds her of the noncompete clause in her employment contract that reads that for three years from the end of her employment with B, A cannot get a job as a pharmacist in a pharmacy within 4 miles of B’s pharmacy? Is this provision enforceable? Why? Yes, there is a legitimate business reason and is reasonable as to its scope and duration. Chapter 14 1. Contracts with minors are voidable. What should a merchant do to protect its interest when entering a contract with a minor? Have an adult cosigner. 2. A is under guardianship by court order. B learns that A wants to sell her house. If A and B enter into a contract for the sale of the house. What is the legal effect of this contract? This contract is void due to A lacking capacity to enter a contract. Chapter 15 1. What does the statute of frauds require? Statute of frauds requires that certain designated types of contracts be evidenced by a writing to be enforced. 2. What are the five kinds of contracts within the statute of frauds? Promise to answer for the duty of another Promise of an executer or administrator to answer personally for a duty of the defendant whose frauds he is administrating Agreements upon consideration of marriage Agreements for the transfer of an interest in land Agreements not to be performed within one year 3. What is the parole evidence rule? The parole evidence rule excludes inconsistent prior and contemporaneous oral and written agreements not incorporated into an integrated contract. The parole evidence rule excludes oral or written negotiations or agreements of the parties or their contemporaneous oral agreements. (vary or change an integrated written contract) The parole evidence applies to an integrated contract that is one obtained in a certain writing or writings to which the parties have assented as being the statement of the complete and exclusive agreement or contract between them. Chapter 18 1. What is a choice of law provision? The choice of law provision is a term of a contract in which the parties specify that any dispute arising under the contract shall be determined in accordance with the law of a particular jurisdiction. 2. Can the parties have in the contract a provision that in the event of a breach of contract that the aggrieved party can get attorney’s fees? Yes 3. What is the primary objective of contract remedies? The primary objective of contract remedies is to compensate (not punish). To make whole. To put in the same position the aggrieved would have been had the breaching party performed as they were supposed to. 4. How do we calculate compensatory damages from a breach? Which damages expose the breaching party to the biggest and most uncertain liability? To calculate the compensatory damages from a breach of contract it is the money back plus incidental (money spent to fix the problem). Consequential damages expose the breaching party to the biggest and most uncertain liability. 5. Are punitive damages allowed in contract action? What does the conduct constituting the breach have to be in order for an aggrieved party to get punitive damages? Punitive damages are not allowed in contract law. The conduct must be to make whole again constitution a breach of contract in order for the aggrieved party to get punitive damages. 6. What is a penalty? Are penalties allowed in contract? A penalty is more than the amount of the economic loss. Penalties are not allowed in contracts. 7. A signs a contract with a cell phone company for a one year contract and gets a free cell phone. The company has a provision in the contract that should A cancel the service before the end of the contract term A would owe the company $300. Is this a penalty? Can company enforce this provision in the event of a breach by A? No, there is not a penalty. The phone company can enforce the provision in the event of a breach by A due to liquidated damages which are reasonable damages agreed to in advance by the parties to a contract. 8. A buys a ticket to the super bowl. A week before the game stadium management calls to tell him that the ticket he has is for a section of the stadium that has not been finished yet. A gets angry and books a hotel and a plane ticket to go to the game any way. In a lawsuit against the stadium, can A recover the cost of the hotel and the plane ticket? No, due to mitigation of damages. The aggrieved has a duty to mitigate their damages. 9. Which remedy requires the defaulting party to perform her contractual obligations? In what kind of contracts courts will not grant such a remedy? Specific performance is a remedy requiring the defaulting party to perform their contractual obligations. Courts will not grant this remedy in personal service contracts where there is forced labor. 10. A signed an agreement with a valid covenant not to compete. If A breaches this provision, what should the aggrieved party do? The aggrieved party should have a judge sign an injunction to prohibit A from performing a specific act. Chapter 19 1. Why is “sales” the most common and important of all commercial transactions? Sales is the most common and important of all commercial transactions because practically everyone is a buyer and/or seller of goods. 2. What is a “good,” sale, and lease? A good is a moveable personal property. A sale is the transfer of a title of goods from the seller to the buyer for a price. A lease is the transfer of a right of possession and use of goods in return for consideration. 3. Which law governs the sale of goods? The UCC (Uniform Commercial Code) article 2 is the law governing the sale of goods while the UCC article 2A is the law for governing leases. Chapter 20 1 What is performance? Performance is a fulfillment of a contractual obligation. 2 What is the place of tender of the goods? The place of tender of goods, if not specified, is the place of delivery is the seller’s place of business or if he has no such place, his residence. 3 What if the seller has no place of business, where is the place of tender of goods? If the seller has no place of business the place of tinder of goods is his residence. 4 What is a shipment contract? A destination contract? A shipment contract is where the risk of loss in transfer to buyer when goods are with the shipper. A destination contract is where the risk of loss in transfer to seller when goods are with the shipper. 5 A buys good from B. Goods are on a ship en route to be delivered to B. The ship sinks. Who bears the loss? It depends on if there is a shipment or a destination contract who bears the loss. If there was a shipment contract the buyer bears the loss. If there was a destination contract the seller bears the loss. Chapter 24 1 What is a negotiable instrument? Negotiability? A negotiable instrument includes drafts, checks, promissory notes, and COD (certificates of deposited.) Negotiability is a legal concept that makes written instruments freely transferable and therefore a readily accepted form of payment in substitution for money. 2 Can a bank cash a postdated check before its date? When would the bank be liable? Yes the bank can deposit the check before the postdate. The bank is only liable when they haven’t been notified not to deposit the check till after its postdate. 3 What is a promissory note? What does a note have to have to be negotiable? A promissory note is a written promise by a maker (issuer) to pay the payee.
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