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Exam 2 Business Law

by: Madison Morman

Exam 2 Business Law BLAW 3080

Madison Morman
GPA 3.82

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About this Document

This is a study guide with the material for the second exam. Most of the content covers contracts and the components of a contract such as damages, defenses, and consideration.
Legal Environment of Business
Peter Burrell
Study Guide
Consideration, Contract, rule, damages, defense, compensatory, consequential, punitive, Theory, Law, business
50 ?




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This 4 page Study Guide was uploaded by Madison Morman on Wednesday March 9, 2016. The Study Guide belongs to BLAW 3080 at University of Cincinnati taught by Peter Burrell in Summer 2015. Since its upload, it has received 232 views. For similar materials see Legal Environment of Business in Business Law at University of Cincinnati.


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Date Created: 03/09/16
  TEST  2  STUDY  GUIDE     Bilateral : Two  promises—promise  is  exchanged  for  a  promise.  Here,  a  contract  is  formed   as  soon  as  promises  are  exchanged.     Unilateral: One  promise,  given  exchange  for  act/performance  (flagpole)   Void: Person  is  mentally  incompetent  by  a  court  of  law  and  a  guardian  has  been  appointed     Voidable: Person   doesn’t   know   they   are   entering   contract/lacks   mental   capacity   to   comprehend  its  nature,  purpose,  and  consequences  (minor  underage)     Valid:  Person  is  able  to  understand  nature  and  effect  of  contract  but  may  lack  capacity  to   engage  in  other  activities (supported by consideration)     Executory: If  duties  remain  to  be  performed  under  contract.  A  contract  may  be  wholly   executory   (neither   party   has   performed)   or   partially   executory   (one   party   has   not   performed).       Executed:  If  all  of  the  duties  under  the  contract  have  been  performed   1. Jimmy’s  Marketing  Company  and  Tunes,  Inc.,  sign  a  document  where  Jimmy’s  agrees   to  create  a  marketing  campaign  for  Tunes  and  Tunes  agrees  to  pay  Jimmy’s  for  the   service.  Jimmy’s  and  Tunes  have     a.   an  executed,  voidable  contract.     b.   an  express,  executory,  bilateral  contract.     c.   an  implied,  executory,  unilateral  contract.     d.   no  contract.     Common  Law  offer  Requirements:    Statement  by  an  offeror  that  allows  OE  to  accept.   1. Intent to contract 2. Defintieness and certainty: Identify subject matter, quantity, price, payment, delivery 3. Has to be communicated: No question ofer was communicated Inquiry- Would you take x amount of money (not an offer) Advertisement- invitation to offer (not an offer) Intent  –  objective  theory:      Offeror  must  intend  to  make  offer;  no  subjective  intent   o Objective  Theory:    Dictates  one  should  look  for  objective  signs  of  intent  to  make  an   offer  rather  than  scrutinize  the  fairness  of  the  transaction.   General  rule  regarding  offer  –  Offer  can  be  revoked  anytime  before  acceptance  by  offeree   making  the  offer  irrevocable   THREE  EXCEPTIONS   1. Option  contract-­‐  paid  offeror  in  order  to  buy  time  to  keep  offer  open   2. Calls  for  a  performance   3. Merchants  firm  offer-­‐  have  merchant  who  makes  offer  in  writing  and  signs  that   they  will  keep  the  offer  open   Irrevocable  offers  –  under  common  law  and  UCC   Offer  made  by  merchant  in  a  signed  writing  is  irrevocable  for  reasonable  period  of  time.  No   consideration  necessary.   -­‐Offer  must  be  in  writing  and  signed  by  the  OR   -­‐When  accepted,  non-­‐revokable     Rejections/counteroffers  –  effect  in  negotiations   OE  rejects  expressly;  counteroffer  is  both  a  rejection  AND  new  offer     Acceptance  –  mirror  image  –  mailbox  rule   o Must  be  unequivocal/Mirror  Image:    Common  law  contracts  follow  Mirror  Image   Rule-­‐  attempted  acceptance  that  changes  terms  or  adds  new  terms  is  not  valid -­‐  is  a   counteroffer   o Mailbox  Rule:  Acceptances  are  effective  when  they  are  mailed   o Exception:  When  OR  has  to  receive  physical  acceptance  to  b e  accepted     Consideration:  A  legal  detrimant  that  must  be  bargained  for   Rules  of  the  consideration   • Doesn’t  need  to  have  monetary  value   • Courts  don’t  inquire  into  adequacy  of  consideration  (enforce  contracts)   • Preexisting  duty  NOT  sufficient  consideration  (non-­‐compete/delivery  person)     Legal  Detriment   • Act   • Forbearance   • Promise  to  Act   • Promise  to  Forebear   Defenses  to  contract  –  fraud,  duress,  undue  influence   Fraud-­‐ In  most  fraud  cases,  party  is  aware  they  are  making  a  contract  but  terms  are   misrepresented o Misrepresentation  of  Fact   o Intent  to  Deceive   o Actual  and  justifiable  reliance  by  victim   o Damages   Duress-­‐  Forcing  a  party  to  enter  into  a  contract  under  fear  or  threat  makes  the  contract   voidable;  threatened  act  must  be  wrongful/illegal  and  render  a  person  incapable   of   exercising  free  will.  (civil  suit  threat  is  not  duress)   Undue  influence-­‐ Contract lacks voluntary consent and is voidable; o Confidentiality,  fiduciary,  or  relationship  of  dependence   o Persuasion  is  presumed  if  a  weaker  party  talked  into  doing  something  not  beneficial  to   him/herself.     Illegality  –  contracts  that  violate  statute  -­‐-­‐  or  public  policy     -­‐Contracts  that  violate  statutes/laws/public  policy  are  void   -­‐EXCEPTION:    Non-­‐compete  with  sale  of  business  AND  covenant  not  to  compete  in  employement     Statute  of  Frauds  Common  Law   Certain  types  of  contracts  that  must  be  in  writing     Under the Statute of Frauds, real estate sales contracts must be in writing to be enforceable.   a.   True     b.   False     Statute  of  Frauds  UCC  Sales  article  –  Exceptions?   Agreement for $5 or more has to be in writing   Merchant’s  confirmation  of  verbal  contract :       Damages   Compensatory  Damages:  Damages  that  compensate  the  non-­‐breaching  party  for  the  loss   of  the  bargain.    These  compensate  the  injured  party  only  for  damages  sustained  and   proved  to  have  arisen  from  the  loss  of  the  bargain  from  breach  of  contract.    They   replace  what  was  lost.   Punitive  Damages:  Available  for  fraud  (misrepresented  fact),  buy  into  insurance  policy   Consequential   Damages:     Foreseable   damages   that   result   from   a   party’s   breach   of   contract  (special  damages).   Liquidated  Damages-­‐  Specifies  a  certain  dollar  amount  in  the  event  that  the  contract  is   breached.     Equitable  Remedies   Injuction:  Remedy  where  court  orders  breaching  party  to  do  something   Specific  Performance:  Used  with  land/unique  personal  property   Rescission:  Puts  parties  back  in  same  position  as  they  were  before  the  contract     General  rule  of  damages  in  contracts:  Tries  to  put  people  in  original  state  they  were  in   before  the  contract     2. A  contract  in  a  writing  signed  by  both  parties  to  buy  product  X  from  a  business,  for   $4,500,  but  business  fails  to  deliver.  Buyer  buys  the  product  elsewhere  for  $5,500.   The  measure  of  damages  is     a.   $1,000.   b.   $1,000  plus  attorney  fees.   c.   incidental  and  punitive  damages  only.   d.   $0. -­‐Don’t  get  attorney  fees  unless  specifically  say  in  contract     Duty  to  mitigate:  Has  to  try  and  find  another  buyer  or  seller                


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