Business Law 220 Final Study guide
Rules of Construction:
● The intention of the parties’ contracts.
-Certified mail= no good
● Courts require to interpret contracts as a whole(have to look at the entire agreement).
● “Laches”, if you wait too long to take a legal position, you might lose your chance to that position.
● Contradictions or ambiguity- if the inconsistency is very drastic, the court will say it’s not enforceable.
● HW (handwriting) over TW (typewriting) over PM (printed material) ● The written amount is always> numerals
● Strict construction against the drafting party- the rule that the court uses as the last step. - Some contracts are written by one party and the other just signs.
● Good faith is an obligation to carry out your contract without disrupting the deal. ● Conduct of the parties(past practice),
- If you do something one way one time, it’s going to be assumed you’re going to do it that way another time.
● Trade usage- confusion in terms used in jobs but a very useful term to know what parties intended.
● Avoidance of hardship- *Judges decide things to help the people they feel bad for and support them.
* Example- widows and orphans
Third-Party Beneficiary Contracts:
----When one of the primary aspects of that contract was intended to benefit the third party person. They have a right to enforce a claim.
Kinds of 3rd beneficiary contracts:
● Donee beneficiary- Receiver of a gift(donor gives the gift).
● Creditor beneficiary- Third-party beneficiary which arises out of Business relationship or transaction. *Same right as Donee beneficiary. *Allowed to enforce even if they weren't a party initially We also discuss several other topics like What is a sociocultural perspective
● Incidental beneficiary- You have no rights, so you can’t enforce contracts that you aren't a part of. Ex- Can’t sue the god catcher for not catching that bit you.
● Assignment goes from Assigner(an obligee who transfers a right) to Assignee(a party to whom a right has been transferred)
1. Assignment of Mortgage- *No borrower consent required
2. Subrogation in the Insurance Industry
3. Assignment of contract: transfer of contracts
Some contract rights are not assignable
1. An assignment that would materially alter the parties’ contract is not assignable.
2. Personal Satisfaction Contract- can't change who you have to satisfy and are not assignable.
3. Personal Services Contracts are not assignable to someone.
4. Credit Rights- Can't transfer rights to a different person
● Standardized non-personal work- If you have defenses which are good against the Assignor remain good against the Assignee.
● Discharge Contracts: contracts come to an end
● Discharge by Performance- parties do what they are required to do, but some contracts aren’t straightforward.
*Conditions = contingencies
Moral clause: if you something immoral you could lose an endorsement.
● Time is the essence- a contract that has this phrase and that have dates and deadlines they are enforced.
● Time for performance- if the contract doesn’t specify a time, a reasonable time is assumed. We also discuss several other topics like What is Distress?
● Tender of performance- offer open to performing, put something in writing to the party that you are ready.
● Legal tender- lawful money
● They can demand cash unless K says otherwise
● Don't have to accept an offer to work off the debt
● Adequacy of Performance- Substantial good faith performance is good enough to enforce K.
● Discharge by Agreement
■ Anything 2 parties agree to they can terminate
● Discharge by Possibility
■ Sometimes things happen and if it’s impossible to obtain k, you can back out of k. ● Commercial impracticability
● Stuck with contract
● Temporary impossibility: to carry out your contract obligations. If you want to learn more check out What were some of the main principles behind the Constitution of 1876?
Don't forget about the age old question of what is the equation for covariance?
● Creates a delay in K performance
Discharge by Operation of Law: certain legal effect. What kind? Don't forget about the age old question of what is “Availability Heuristic”?
- Reaffirmation of debt
- Sign up for a new loan to replace the other one
- Automatic stay
2. Statute of Limitations
○time limits, certain kinds of claims only live so long
● Contract claim in Ny = 6 years after
○ Start lawsuit to beat time frame
● Medical practice: 2 ½ years
3. Notice of claim requirements- Similar to the statute of limitations! Time limit = 90 days 4. Contractual Limitations- sometimes contracts get over because of restrictions. ● Breach of Contract Remedies
○ What does the victim do when other party breaches K
1. Money Damages
-Compensatory damages (actual loss): Damages to make the victim whole (compensate for their loss)
○ Punitive damage- damages meant to punish the victim
○ Duty to mitigate damage- Victim of breach has duty to keep damage to a minimum 2. Recission
-Court order which officially terminates the contract.
- Return the parties to the original status
3. Specific Performance
○ The victim doesn’t want money, they want a court order that requires the other party to carry out the K
-Personal service courts don’t like to order specific performance.
Examples : ■ Real estate K, works of art, and antiques If you want to learn more check out Primatology means what?
-Courts have authority to rewrite K to reform it when there's a clear mistake -Liquidenal damages: damages agreed to in advance by parties of K
● Don't have to prove what the actual damages are
● Clause in K: enforceable
○ Attorney Fees, are not awarded in breach of K case unless K specifies ○ Limitation of Liability Clauses
■ Sporting event cases are normally releasable
Negotiable Instruments or Commercial Paper:
● Promissory Note, borrower signs promising to pay the $ back to lender (loans) ○ Maker: borrower and payee/lender
● Personal Checks, order to a bank to pay
○ Drawer: person who writes the check
● Forget to sign? Then not useable
○ Drawee, the bank
○ HDC helps endorsed check problem
○ Endorser, sign back of the check to someone else
○ Endorsee, the person the check was signed over to
○ Requirements of Negotiability
● A written or computer record
● Signed or authenticated
● Unconditional order or promise
○ Payable to order, “paid to the order of”
○ Payable to bearer, last person to sign their name
● Make checks payable to anyone with physical possession
● Payable to cash or blank endorsement/sign the check ○ Order paper can only be cashed/negotiated if it is signed and delivered ○ Holder, a person in physical possession of the check
● Kinds of Endorsements
1. Blank endorsement
○ Simple signature
○ No special instructions
○ Makes check into bearer paper
2. Special endorsement
○ “Pay to the order of” on back and signed
○ Continues to be order paper
○ Only cashed with the signature of who it’s delivered to 3. Restrictive endorsement (protect check)
○ ex) for deposit only
○ A first bank check is presented to can only deposit it to that account 4. Qualified endorsement
* A middle man passing check through
* Misspelled name = doesn’t matter
* Joint, “and” (both signatures required)
*Alternative, “or” (either 1 signature)
* Certain office holder, signed by whoever is in the position * Forgery, no endorsement
■ Whoever deals with forger is the one who will bear losses (responsible) * Lost check, depends on if its order or bearer paper when lost ■ Order = protected, bearer = cashable by anyone
* Payable to cash is bearer paper so anyone is holder
Holder and Due Course (HDC):
1. Holder, physical possession which at that time is payable to them 2. Due Course of Business, encourage business people to trace checks 3. Good Value, sell a product, service, take money off account ○ If its a gift then there’s no value
4. Good Faith, open honesty/no scheme
5. Ignorance of Defenses
○ At the time you take the check, you don’t know of any problems with it ○ Later acknowledgment of problem won’t affect HDC status ● HTHDC, holder through a holder in due course
* Holder who comes after HDC but isn’t a HDC themselves * Same protection that HDC gets
● Different Kinds of Defenses
* Personal (limited)
■ An HDC isn’t subject to personal defenses and will win 1. Ordinary breach of K defenses (didn’t do job)
2. Fraud in the inducement (false statement in sales pitch) 3. Unauthorized completion
○ Real (universal)
■ HDC won’t win, subject to real defenses
2. Fraud as to the nature of the paper, paper shuffle prevented you from signing intentionally
3. Duress: the threat of violence made you do it
4. Altercation as to the amount of the altercation
● Federal Trade Commission Rules, consumer protection
- Buy something for personal, family, or household use and sign a promissory note to pay it off over months
- Another company cannot be an HDC
● Presentment, for payment
-Holder goes to the bank to cash check or acceptance (certification) ● Dishonor, when the bank bounced the check (refuses to make a payment on a check) ● Negotiation of commercial paper, endorsing a check over to someone else ● Notice of Dishonor, check bounced and give notice to who you got the check from ● Ordinary Personal Check
- No one has primary liability (unless signed by the bank)
- The drawer has secondary liability
Checks in the Banking System:
● Promissory notes have due dates
● Postdate checks unless given advanced notice, banks aren’t restricted to that date ● Check is demand paper, no due date
-Personal checks are paid on demand
● If drawer writes check and drawee bank rejects then drawer is liable for it -Civil liability, pay the amount of check and bounce fee charges
- A person who writes check may get criminal liability
- 10-day rule to fix it
● Certified check, ordinary check that is presented for acceptance ○ Can be requested by drawer or holder
● Duty of the drawee bank is to follow the instructions of the drawer ● Overdraft privilege
○ Bank has agreed that if you don’t have enough for a check, the bank will pay it as a loan
● Stale check, more than 6 months old = bank isn’t required to honor it ● Drawer’s death: 10-day rule
- The bank is required to continue to cash checks after drawer has died Stop Payment Rules:
● Reasons for stop payment: payee lost check or mad at the payee ● If follow all rules, the bank must stop the check
● Negligence isn’t a defense
● The drawer has to give drawee bank all required information on the front of the check ● Oral = 14 days first
- Then, computer/written authenticated = 6 months and can renew ● No stopping payment on certified or cashiers check
● Bank has given reasonable time to put a stop payment through (processing)
● Bank wrongfully refuses to make a payment, the only drawer has a claim.
● Forged drawer signature, drawee bank has an obligation to know the signature of the drawer
- If the negligence of the drawer causes the problem stop payment doesn’t apply (you’re not careful)
■ ex) signature stamp
● Checking account customers have the obligation to check the monthly statement ○ 30 days rule, after 30 days bank