LGS 200 Exam 2 Study Guide
LGS 200 Exam 2 Study Guide LGS 200
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This 6 page Study Guide was uploaded by Grant Logsdon on Monday February 29, 2016. The Study Guide belongs to LGS 200 at University of Alabama - Tuscaloosa taught by Charlye S. Adams in Winter 2016. Since its upload, it has received 47 views. For similar materials see Legal Environment of Business in Law and Legal Studies at University of Alabama - Tuscaloosa.
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Date Created: 02/29/16
LGS 200 Exam 2 Study Guide Grant Logsdon Taken from study guide by Charlye Adams Chapter 9Contracts Contract An agreement between two or more competent parties to perform or refrain from performing some act ● The parties assent is judged not by the objective intent that a similarly situated reasonable person would understand the parties to have ● Formation ○ agreement the offeror must offer to enter into an agreement, and the offeree must accept the terms of the offeror's offer ○ Offeror the person proposing an agreement ○ Offeree The person with whom the offeror proposes the agreement ○ COnsideration something of value given or promised to a party to convince the party to agree to the deal ○ Contractual capacity both parties must be legally competent to enter into the agreement ○ Legality the contract’s purpose must be to accomplish a legal goal ○ Genuineness of Assent the apparent consent of both parties must be genuine ○ Formthe agreement must be in whatever form the law requires (ex: written, seal) ● Bilateral Contract the offeror gives her promise in exchange for offerees return promise (ex: X promises to deliver a car to Y, and Y promises to pay X an agreed price) ● Unilateral Contract when the offeree can only accept the offer by performance (X offer x Y $30 to mow X’s yard); once the offeree begins to perform, the offeror loses the ability to revoke offer ● Express Contract a contract in which the terms of the agreement are explicitly stated ● Impliedinfact contract A contract formed in whole or in part by the conduct (as opposed to the words) of the parties; In order to establish an implied contract the following must be present; ○ the plaintiff must have furnished some service or property to the defendant ○ the plaintiff reasonably expected to be paid and the defendant knew or should have known that a reasonable person in the plaintiff’s position would have expected to be paid for the service or property rendered ○ the defendant must have had the opportunity to reject the service or property and failed to do so ● Executed Contract a contract that has been completely performed by both parties ○ Executory contract contract has not yet been fully performed by one or more parties ● Valid Contract A contract satisfying all of the formation elements ○ Unenforceable Contract an otherwise valid contract rendered unenforceable by some statute of law ○ Voidable Contract an otherwise valid contract that one of the parties may legally avoid, cancel, or annul (e.g., a contract entered into under duress or under false pretenses) ○ Void Contract a contract having no legal force or binding effect (e.g., a contract entered into for an illegal purpose) ● Agreement a meeting of two or more minds in regard to the terms of a contract ○ OfferA promise or commitment to perform or refrain from performing some specified future act made by the offeror. The offeror must seriously, and objectively, intend to perform or refrain as offered. The terms of the offer must be reasonably certain or definite. The offeror must communicate the offer to the offeree ○ Acceptance A voluntary act by the offeree – either in the form of words or of conduct – which indicates agreement to the terms of the offer. The acceptance must be unequivocal and must be communicated to the offeror ● Rejection/ Counteroffer ○ Revocation an offeror may revoke offer prior to offeree acceptance ○ Rejection The offeree may reject and the offer is terminated, to accept a new offer must be created ○ Counteroffer a rejection to original offer, coupled with a new offer made by the original offeree ○ Mirror Image Rule An offeree's acceptance must match the offeror's offer exactly ● Termination of Offer ○ Lapse of Time An offer terminates automatically when the time period specified in the offer expires ○ Destruction of Subject Matter An offer terminates automatically if the subject matter of the contraci.e, goods, property) is destroyed prior to acceptance. ○ Death of Incompetence An offeree’s power to accept is terminated when the offeree or the offeror dies or is deprived of legal capacity to enter into the contract ○ Illegality a statute or court action can make a previously valid offer illegal ● Considerationvalue given in return for a promise Must be ○ legally sufficient ○ bargained for by party receiving it May take form of ○ promising to do something ○ performing an action ○ refraining from exercising a legal right ● Insufficient consideration ○ Preexisting duty a promise to do what one already has a legal duty to do does not constitute legally sufficient consideration ○ Likewise, if the parties agree to replace an existing contract with a new, superseding contract, the promise to perform the new contract is a new promise; and, thus, not a promise to perform a preexisting legal duty. ○ Past Consideration: Promises made in return for acts or events that have already taken place are unenforceable for lack of sufficient consideration ● Contractual Capacity ○ Minors if a minor enters a contract it is voidable ○ Intoxicated persons if an intoxicated person enters into a contract it may be avoid ○ same with mentally impaired or incompetent persons ● Statute of Frauds Certain types of contracts must be evidenced by a signed writing in order to be enforceable, including (1) contracts involving an interest in reae.g, a home mortgage); (2) contracts tcannot, by their terms, be performed within one year after the date the contract was formed e.g., a fiveyear employment contract); (3) collateral promises, such as promises to answer for or guarantee the debt or duty of another person and promises by an executor or administrator to answer personally for the debts of an estate; (4) promises made in consideration of marriagei.e, prenuptial agreements); and (5) contracts for the sale of goods for $500 or more ● Privity of Contracts In general, only the parties involved in a contract enjoy rights arising from contract, three exceptions; ○ Assignment transaction whereby the assignor transfers their rights to a third party (assignee), as a consequence, the assignors contract rights are extinguished ○ ThirdParty Beneficiary Contract A third party is intended by the terms of the contract between two other parties performance of the contract ○ Intended Beneficiary A third party for whose benefit a contract is formed ■ Incidental Beneficiary a third party who benefits from the performance of a contract, nut whose benefit was not the reason the contract was formed Ch 10 Performance, Breach, and Remedies ● Mistake parties enter into a contract with one or more different understandings of the material ○ Mutual Mistake of Fact Bilateral, a mistake by both parties on a term of the contract ○ Unilateral Mistake of Fact a mistake made by one party, generally a unilateral mistake will not excuse performance unless it was a mathematical error or the other party knew of the mistake ○ Mistake of Value mistake concerning the future market value or some quality of the object in contract, either party can normally enforce the contract ● Undue Influences when one party influences another party overcoming that parties free will ○ Duress entering a contract because of fear ● Discharge termination of a party’s obligation arising under a contract; occurs when both parties have performed or operation of law released parties from obligation to perform ● Condition a contractual qualification, provision, or clause which affects the terms of the contract depending on occurrence or nonoccurrence of some event ● Discharge by performance a contract terminates when both parties perform or tender performance of acts the have promised ● Complete or. Substantial Performance when a party fails to completely perform their contractual duties it must be decided if party had substantial performance or not ● Breach a party's failure to perform any of their contractual obligations ● Novation Substituting a new contract, replacing one or more of the original parties for the old contract, thereby terminating the original parties’ rights and duties under the old contract. Novation requires ○ a valid, prior agreement, for which ○ al parties agree to substitute a new contract ○ discharge of the prior obligation ○ a valid, new agreement ● Equitable Remedies ○ Recession canceling a contract and returning the parties to their precontract position ○ Restitution Returning goods, property, or money (or, in the case of goods or property, their value in money) previously transferred in order to restore the nonbreaching party to his precontract position ○ Specific Performance Requires the breaching party to perform specifically as required in the breached contract, usually granted when monetary damages would be an inadequate remedy ○ Reformation a remedy allowing the contract to be rewritten to reflect the true intent of parties Ch 11 Sales and Lease Contracts ● Article 2 of the UCC governs the sales of and contracts for the sale of goods to which the seller transfers to a buyer a title to goods (must be tangible and movable) in exchange for money. Does not govern services, real property, or intangible personal property ● Offer (Open Terms) a sale or lease contract is sufficiently definite, even if one or more terms remain open, provided that 1) the parties intended to be bound and 2) there is a reasonably certain basis for remedy ● Open Price Term if parties have not agreed on a price the court will determine a reasonable price at the time of delivery ● Open PAyment Term As a general rule, if the parties do not specify otherwise, payment iat ue the time and the place that the buyer receives the . Moreover, the buyer can tender payment usingany commercially acceptable means; however if the seller demands payment in cash, the buyer must be given areasonable tim to obtain it. ● Open Delivery Term If the parties do not specify the place of delivery, the buyer will take deliveryat the seller’s place of busi, or (if none exists) at the seller’s residence; or the time of delivery, the seller will deliver witreasonable period of time. ● Acceptance a seller may accept an offer to buy goods for current or prompt delivery by a promise to ship to the buyer or shipment of conforming goods ● UCC Statute of Frauds The UCC requires that a contract be evidenced by a writing to be enforceable if it is (1) for the sale of goods for $500 or more, or (2) for the lease of goods for which scheduled lease payments (exclusive of renewal option fees) total $1,000 or more. ● Identifying Goods two requirements must be met to become a good 1) the goods must exist 2) they must be identified as specific goods designated in the contract ○ Existing Goods If the contract calls for the sale or lease of goods that already exist in their final form, then identification occurs at the time the contract is made. ○ Future Goods If the contract calls for the sale or lease of goods that have yet to be completed or modified in accordance with the contract, identification occurs when the goods are shipped, marked, or otherwise designated by the seller or lessor for delivery to the buyer or lessee ● Passing Title title passes to the buyer at the time the goods are physically delivered to the buyer ○ Shipment Contractrequires seller to ship goods to buyer and transfers title once goods are en route ○ Destination Contract requires seller to ship goods to buyer and transfers title seller notifies the buyer that goods are available ○ NonDelivery Contract Buyer will take possession of the goods without delivery by the seller ● Risk of Loss ○ Shipment Contract: Risk of loss passes to the buyer/lessee when the seller/lessor delivers the goods to the carrier. ○ Destination Contract: Risk of loss passes to the buyer/lessee when the seller/lessor or its carrier makes the goods available to the buyer/lessee at the designated destination. ○ Goods Held by the Seller/Lessor: If the seller/lessor is a merchant, risk of loss passes to the buyer/lessee when shtakes physical possession of the g If the seller/lessor is a nonmerchant, risk of loss passes to the buyer/lessee when the selletenders the goods to the buyer/lessee. ○ Goods Held by a Bailee: Risk of loss passes to the buyer/lessee when (1) the buyer/lessee receives the title document from the seller/lessor, (2) the bailee acknowledges the buyer’s/lessee’s right of possesr (3) the buyer/lessee receives a nonnegotiable title document and has had a reasonable period of time to demand the goods from the bailee. ● Perfect Tender Rule If the goods delivered or the tender of delivery fail in any respect to conform to the terms of the contract then the buyer may accept the goods, reject the entire shipment, or accept part and reject part ○ Exceptions include ■ when there is still time to perform, adjustments or repairs can be made ■ when agreed manner of delivery is impractical, a reasonable substitute can be made ● Impracticability when an occurrence, unforeseen at the time that the contract was made, makes performance commercially impracticable ○ Perfect Tender rule no longer applies ○ not a breach ● Accepting Goods After the buyer has a reasonable amount of time to inspect a good they accept it by: ○ expressly accepting the shipment by words or conduct ○ failing to reject the goods with a reasonable period of time ○ acting in a manner inconsistent with the seller's ownership ■ Buyers can also make a partial acceptance ● Title Warranties ○ Good Title sellers warrant that they have good and valid title to the goods being sold and that they mar rightfully transfer title to the buyer ○ Quiet Possession A lessor transfers the rights to possess and use the goods during the lease term, not title to the goods, therefore lessors warrant only that no one has a superior right to possess or use the goods during the lease term. ○ No Liens Except where disclaimed, sellers warrant that the goods they are selling are free of any liens – that is, any encumbrance on the goods to satisfy a debt or protect a claim for payment of a debe.g. asecurity interest on personal propert ortgage on real property). ○ No Infringements Except where disclaimed, merchant sand merchant lessors warrant that the goods delivered are free from any infringement claims by a third party. ● Express Warranties a seller's oral written promise, ancillary to an underlying sales or lease agreement, as to quality , description, or performance of the goods being sold or leased ○ Any oral or written express warranty may be disclaimed by a (1) clear and conspicuous written disclaimer, (2) which is called to the buyer’s attention (3) at the time the contract is formed ● Implied Warranties A warranty implied or inferred from the nature of the transaction or the relative bargaining positions or circumstances of the parties (merchantability and fitness) ○ Implied Warranty of Fitness: To disclaim an implied warranty of fitness for a particular purpose, the disclaimer must be (1) written and (2) conspicuous. ○ Implied Warranty of Merchantability: The discladoes ot have to be written; however, (1) it must specifically use the term “merchantability,” ais written, it must be conspicuous.
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