BLAW exam 2 STUDYGUIDE
BLAW exam 2 STUDYGUIDE BLAW 3311 - 001
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Date Created: 11/01/15
::: BLAW TEST 2 Study Guide ::: Test on MONDAY Nov 2 Test will be 50 Questions MC/ TF You will need an 882E scantron and a #2 pencil *NOTE* This is not an exclusive review but does go into basics of the key points the Prof. mentioned*** UNIT THREE- CONTRACTS and E-CONTRACTS Chapter 10 Nature and Terminology Contracts: The making of enforcements that society expects you to keep Pg 224 Moral Promises: Don’t require legal action- cannot be legally enforced EX) social engagements but parties feel a moral obligation to keep these promises because of their mutual self interest. Promissor: One who makes the promise Promissee: One who receives the promise Pg 225 Objective theory of contracts: The facts of contract law* What parties say and do should rely on what a reasonable person would do <See example on pg 223 about the landlord and tenant> Your actions and words are interpreted as what you meant. Not whatever you may have been thinking at the time. Subjective theory of contracts: Contract law from an individual perspective Uniform commercial code: law of sales relating to tangible/moveable goods - Common law of contracts: studied services and sales · Requirements to a contract -Must have Mutual Assent- is an agreement, one party offers and the other party accepts - Supported by legally sufficient consideration -Capacity-Parties must be legally capable to enter into the contract -Legality- it must be a valid contract, in a valid form it cannot be void, voidable or unenforceable Formal contract: can only be in a certain form to be legal (ex- negotiable instruments, bail bon contracts) Informal contract: doesn’t require a certain form if it doesn’t require and specific performance (ex- house, car) pg 230 Expressed vs. Implied Expressed contract: (Words)- use words to express exactly what the arrangement deals with (ex- house or car). The terms of the contract are fully expressed by either words, oral or written. A signed lease for an apartment and/ or My promise to pay you $100 for your Law book at the end of the semester is an example of an Expressed Contract. Implied contract- (No words) Some words are used but not enough. These contracts are applied in fact (ex- ordering at a restaurant, you don’t have to say directly “If I order this, I will pay for it later”) this kind of contract is filled out by a party’s actions. Differs from express contract in the fact that the conduct of the parties implies the contract (rather than words or through a formal contract) When you get a haircut you don’t begin with signing a contract that she won’t mess up your hair. It’s implied that your hairdresser will do a good job, but if she doesn’t then it is implied you won’t pay for the cut. Terrible example haha Executed contract- both sides do what they were supposed to do Executory contract- either one side or both sides have to perform an action before its considered an executed contract pg 232 Quasi contract * Not real contracts * Not an actual contract. They are not formed by the parties themselves, but the courts to cure an Unjust Enrichment. Unjust enrichment- People should not be allowed to profit or enrich themselves inequitably at the expense of others. If a doctor is driving down the road and sees an unconscious man and the doctor saves his life the unconscious man is unjustly enriched and needs to pay the Doc. Even though the unconscious man did not solicit the medical services he still received a valuable benefit, so the requirements for the Quasi contract were fulfilled. Quantum meruit: “as much as it’s worth” if a benefit has been applied to you. And you have been enriched- but you have been unjustly enriched if you didn’t have the opportunity to deny the benefit and therefore wouldn’t have to pay the “as much as it’s worth” amount (the example of the lawn care company mowing your lawn instead of your neighbors. If you see it and don’t stop it you still have to pay for it.) Pretyped form: handwriting holds greater value << example case 11.3 << example case pg 237 pg 228 Offers- Every contract has at least two parties Offeror- the one who offers the contract Offeree- the one who is offered the contract - the words must be such that a reasonable person would take it seriously -a statement of opinion cannot be regarded as an offer -making an offer to do something in the future is NOT an offer now Negotiations- Similar to offers but entails 2 people going back and forth. You may have a contract depending on how serious it gets pg 242Advertisement- ads are generally an invitation for customers to make an offer. Stores ads are not considered contracts *If it is very specific (ie- first 10 people get this deal) it can be interpreted as a contract- but only for the first 10 people. So, not contracts but invitations to negotiate. Are they offers- No. Auctions- is the auction with reserve or without reserve? - Online Auction- the auctioneer puts up a description and allows bids until an offer is accepted - With Reserve- the auction doesn’t have to accept the highest offer (With reserve: The people making offers- bidders are the offerors and the owner is the offeree) -Without Reserve- the auctioneer has to accept the highest offer (Without reserve: the people bidding are the offerees and the owner is the offeror) Agreements to agree- are agreements to agree to the material terms of a contract. << Example Case pg 244 Involving emails with Amazon>> Contract offer- has to be definite enough for a court to be able to enforce the contract Required for a contract to be enforceable: 1. Identifiable parties 2. What is to be done 3. The amount of money involved 4. Time for performance Reward- an award is an offer- to a large group or the general public MUST HAVE COMMUNICATION OF THE OFFER- the offer must be communicated to those intended to be offered to << Example case on pg 246>> Offers are fragile- if there is no acceptance an offeror can withdraw their offer, the offeror controls how long it is open for or if they want to revoke it Revoke- directly or indirectly: offers made to a mass public must be rovoked in the same way: this is called “same coverage” < and this rule applies to limiting liable damages also pg 248 Operation of law- offer’s expiring because of an issue of law because either the subject matter is destroyed, party died, time has lapsed. Types of acceptance -Grumbling acceptance: not happy but indicating that you accept -Changing the offer with conditions- THAT is a counter offer pg 250 Silence- cannot be considered acceptance * Silence exception in the case of allowing a lawn service to mow your lawn when you are well aware they’re mowing the wrong lawn. The silence here IS an acceptance Or in the case of a free trial-not returning the product after the trials termination Implied contracts: the ordering at a restaurant example Chapter 11 Agreements in Traditional and E-Contracts Bilateral Contract- “A promise for a promise.” The contract is formed simply when the offeree accepts to perform. Nothing has to be performed or no money has to be given for there to be a Bilateral contract. The only thing that absolutely needs to happen is both parties promise to perform for each other. “I promise to pay you $200 for your notes next week. If you *accept to give me your notes next week when I pay you we’ve made a bilateral contract. The contract was formed when you *accepted the offer; not when the money was turned over. Unilateral contract- “A promise for an act.” You can have $200 only if you give me your notes. Here, the contract is not formed when the promise is exchanged, but when the contract is Performed. Click-on agreement: the agreements you can click on on an electronic device “Pay Now” or “I Agree” Forum-selection clause Partnering agreement Pg 248 Types of Response: - Acceptance - Rejection- If the offeree rejects the offeror's contract by words or by conduct- the offer is terminated. - Counteroffer- any new number or deal is a rejection and a new offer - Equivocal Response- not accepting or declining an offer Offers are effective only when the other party accepts it (Mailbox rule is the exception) pg 251 Mailbox rule: The contract is effective in two ways. 1. Immediately effective when Sending acceptance by the medium in which they sent you (mail) or faster. If I sent a driver to send the acceptance and it took two times longer to reach you the acceptance is not effective immediately. 2. Only effective when the other party actually receives the messages. the acceptance is effective when dispatched (different because it has not been received by the other party yet) -If B mails an acceptance to A then calls A and rejects. There is still a contract and B must pay or B will be in breach -If B mails a rejection then mails an acceptance- it will be a race to whichever response gets to A first. Record pg 247 Questions and offers terminating pg 259 There are three actions the parties have to Termination of an offer- 1. Revocation- The offeror can reject the offer only if the offeree hasn’t accepted yet. The offer is officially terminated when the offeree receives the notice. In the case of mailing a rejection of the offer on April 1st and it getting to the offeree April 3rd; April 3rd, the offer was officially rejected. 2. Irrevocable offers- Some offers can not be revoked. If it is clearly stated that you can not get out of contract for reasonable reasons. If the Irrevocable clause is ridiculous and malice then the court can overturn it. There are Option Contracts within the Irrevocable offers. Open contracts leave the offer on the table for a given amount of time for the offeree. “I promise I won’t sell this car to anyone else for at least one month.” (Option contracts are a property right issue and can survive through death***) 3. Rejection of the offer- If the offeree rejects the offer by words or conduct- the offer is rejected. Operational Law- Can be either 1. Lapse of Time 2. Destruction of the specific subject matter of the offer 3. Death of incompetence of the offeror or the offeree 4. Supervening illegality of the proposed contract. Mirror image rule- the accepting has to be exactly reflect the offer or its considered a rejection or counteroffer Pg 342 Material alteration of a contract- includes almost any changes in the terms/ Cyber notary Pre-existing duty: if someone was already required to do something, there is no basis to furnish consideration, if a secondary promise doesn’t give any benefit or allow for any detriment to the other party- then there is no consideration (exception: if the secondary promise is to counter an unforeseeable problem- to overcome this problem is a benefit to you and the problem is a detriment to them. -example-- hired an excavator to dig and unforeseen rocks under the ground are a detriment. Agreement E-contract- electronic contracts Shrink-wrap agreement: things inside the package that you are deemed to have accepted the terms of Browse-wrap terms: if they are hidden you wouldn’t be held to them E-signature- E-signatures are binding, and if there was a conflict over an e-signature the federal law is over any state law- this came about due to the Uniform Electronics Act Accord and satisfaction: an alternative proposal for a way to settle and agreement between parties that will lead to both parties being satisfied accord and satisfaction can also be used to satisfy unliquidated debts · Chapter 12 Consideration Pg 261-262 Consideration- is making a promise binding and must include a promise to do something that one has no prior legal duty to do and the performance of an action that one is otherwise not obligated to undertake, and the refraining from an action that one has a legal right to undertake. 1- A bargain “i'll do this if you do that” 2- Legal value provided: How is B going to make A under what theory - a benefit to the promisor OR- it was a detriment to the promisee << example case: with the uncle and the nephew, where the uncle will pay the nephew to “give up his vices” Exceptions to consider- If you’re asked to do what you’re already doing is not consideration. Recession of a new Contract allows both parties to dissolve the contract and go back to normal. If the other party does not have to do anything to receive something- It is a gift not consideration. Forbearance Liquidated debt: a debt that the amount has been fixed or determined- it is known to both parties Pg 263 Past consideration: is no consideration. You can bargain for something to take place now or in the future but not for something that happened in the past. “I gave you my t.v. last year. I need $100 now.” If you make a promise to someone based on something someone did in the past, it’s not part of a current bargain because past consideration is no consideration and it is not enforceable. << pg 263 example case 13.4>> Release: contract when one party forfeits the rights to legal claims against another. Covenant not to sue: is not the same as a release there is still an opportunity for recovery in a covenant not to sue. Rescission: a contract to give up rights one-sided contracts: if a contract is so one-sided that one party obviously comes out ahead. Then there is a level of fraud (disparity and or-undue influence) illusory promise: there is a promise “unless I change my mind”. No- you don’t furnish consideration if your promise is non-committal. “Unless I want to.. “ etc. These are ways to create an illusory promise. In order for the promise to be enforceable it must be committal. Was it a detriment to the promisor to make that promise- no. so there is no consideration. NO BINDING promise. an option to cancel clause- before performance has begun under illusory promises cancelling afterwards with notice would not be illusory. requirements and output contracts- problems with consideration due to uncertain performance Chapter 13 Capacity and Legality Pg 273-274 Minors in Contracts- Contract with minors are not enforceable. Even if the minor fraudly represents themselves (fake i.d.) The contract is not valid. There is a clause of Contracts for Necessaries- The contract may not go though but the other party must give the necessaries to the child (food, water, shelter) Pg 264 Majority rule- Pg 273 Age of majority- the age when an individual is capable of conducting themselves responsibly in the eyes of the law, entitled to full rights of citizenship. can no longer disaffirm contracts based on infancy. at this age (18) there is full contractual capacity unless there is some form of mental incompetency contractual capacity- mental capacity required to be bound to a contract Pg 274 buying and selling- Covenant not to compete: & the sale of ongoing business: a restrictive covenant/promise if reasonable is enforceable Pg 278 Licensing: to raise revenue and to protect the public (ex- Doctors and lawyers) Disaffirmance- a legal avoidance of contractual obligation Emancipation Exculpatory clause Ratification- when someone reaches the age of majority they can ratify (approve, or express responsibility for) a contract that they formed as a minor becoming fully liable from then forward Unconscionable Usury Chapter14 Mistakes, Fraud and Involuntary Consent Pg 291 Mistake- Only a mistake of fact make a contract voidable. -pg 288 bilateral vs. unilateral - bilateral mistake of facts (mutual)- both parties are mistaken- if both parties are mistaken about a material fact there should be NO CONTRACT A mutual misunderstanding is made by Both of the contracting parties. If both parties are mistaken then either one can void the contract. It is usually done by the adversely affected party. - unilateral mistake: one party made a mistake –if the other party didn’t know it was a mistake it would be a valid agreement Pg 292 Value- These mistakes are still enforceable on the contract. Just because you found out the watch you sold your friend turned out to be a collectors item and worth millions, doesn’t mean you’re entitled to any of that worth Your mistake about value can not be retroactive to the proper price You can’t undo a contract based on value* value will not save you Mistake of material fact- You sell an infertile cow to another party. The cow is now fertile in the hands of the other party- Are you entitled to get your cow back because it is now fertile- Yes, because both parties were mistakenly understood about the material of the contract. Voluntary consent Innocent Misrepresentation Negligent misrepresentation Pg 276 Mental incompetency Anytime mental illness is in play and you can prove it, you’ll be able to get out of a contract. 2 levels 1. “I’m crazy and I don’t know what I’m doing”- This contract is void 2. The court can prevent you from entering contracts now and in the future. If shown evidence of this, the contract is void. 1-Void- If a court has previously said that a person is mentally incompetent then they cannot enter into a contract and that contract is void (hire a hit-man- because it’s illegal you don’t have to pay b/c its technically a void contract) 2- Voidable contract: one or both parties have a reason they don’t have to perform (food, shelter, clothing, health care) if someone is a minor (under 18) then they don’t have to pay for it, or if someone can be found to lack capacity- for age or mental competency reasons. 3-unenforceable-meets all 4 requirements but isn’t in the proper form- or because of a change in the law a contract cannot be enforced. pg 268 Illegal contracts- If the contract is illegal in anyway it is void. 1. Contracts to commit a crime- You can’t hire someone to sell drugs for you and sue them when they don’t 2. Usury- this is mostly with states’ maximum limit on interest rates you can charge on people. If your lender charged you 30 interest and the limit is 25 the contract is void. Some laws are stated that some professions can’t work a certain amount of hours to ensure safety for the rest of the public (doctors, pilots, truckers) But even if the doctor or pilot does intentionally or accidentally work those extra hours they are legally due of that money. Pg 298 Undue influence- When one party has more power than the other the powerful could overcome the less powerful parties free will. A party that entered into a contract under excessive or unduer influence- this contract lacks voluntary consent and is voidable. Undue influence is looking out for the less powerful party. Adhesion contract Pg 286 Fraud- can you recover in an illegal contract? Chapter 15 The Statute of Frauds: Writing Requirement and Electronic Records Pg 314 Parole evidence rule*** when a court finds parties intended their contract to be final it won’t allow any new evidence of communication that wasn’t in the contract already <<see example case 16.3 If a contract is really ambiguous— then sometimes a court will accept outside information/evidence and apply a rule for who drew the contract in favor of: · a typed form- if handwriting is on a preprinted form: handwriting holds greater value because it is the most recent adaptation of a document · Industry standards under UCC **Contracts subject to a condition under an oral agreement attached to the written contract Integrated contract Statute of frauds : requirement for certain kinds of contracts to be in writing, signed and with sufficient evidence to back up the contract exception: Partial performance: when the purchases pays part of the price or has already taken possession of the sale item, made permanent improvements to it, or it cannot be returned Main purpose rule: an oral promise to answer to the debts of another< covered by statute of frauds (exception) If you are agreeing to pay someone’s debt but you are really doing it for yourself *if you are sued and admit that there was an oral contract- that admission would count as the written contract* pg 308 contracts that fall within the statute of frauds, so they are required to be in writing: Collateral promises: have to be in writing* (MYLEGS) M arriage Pg 309- any promise made to induce a marriage must be in writing, prenuptial agreements Year (one year rule)Pg 307- starting with the day of contract: if it cannot be performed within a year the contract must be in writing Land: involving interest in lan Executor’s promise: what action the executors of a promise has to perform G uaranty - a contract between guarantor and the creditor must be in writing (the main purpose exception may apply) Suretyship- promise made by a 3rd party who will be responsible for the debtor’s obligation- express contract between a surety (the one liable for the debt of the principal/ or original owner of the debt) and a creditor Pg 309 $500+: under the UCC contracts for the sale of goods priced $500 or more Majority rule: ** the first party to receive an assignment gets it Donne Creditor beneficiary contract Disclosure Misrepresentation- if a seller says something without knowing if it's true or false -Negligent Misrepresentation- didn’t do the due diligence to get it checked out so that you can represent properly -Innocent Misrepresentation- not knowing you were misrepresenting Reliance- Relying on what someone else says Reasonable Reliance- if you rely on what someone says who doesn’t have any greater knowledge of the law than you do. Then that’s a foolish investment in their knowledge and you could be a fault. - But overall reliance on a receiver is reasonable Duress- the vice of threats to force a party to enter into a contract out of fear. If one party is forced into a contract or is involuntary it is voidable. To establish Duress there must be proof of a threat to do something that the threatening party has no right to do. Economic Duress: you have someone in a vice and you keep applying pressure until they will pay you what you are asking- has to be created by the party attempting to gain the money Chapter 16 Third Party Rights alienation- transfer of land ownership pg318 Assignment- transfer of rights. In a valid assignment the original party no longer has rights under the contract Assignor- administers the assignment (original party) Assignee-receives the assignment** the first party to receive the assignment gets it < majority rule> << example case pg 320… ** the only assignment that must be in writing are for wages or the interest in land You cannot assign: - Money - Land -Negotiable instruments - if the contract prohibits assignment -is for personal services (ex- social security and tax refunds) pg 324 Delegation: transfer of duties has same regulations about personal service contracts - Delegator --Delegatee Pg 324-325 Inferior performance- you can’t delegate to someone who isn’t equally qualified Obligor-the person who must perform Obligee- the person an assignment is being performed for -Some obligor is performing a personal service for you, cannot be assigned to anyone else. (ex- massages. -also can’t assign if it changes the risk or duties for the obligor (ex- can’t assign insurance policy) ** when you delegate a duty you remain as a backup the original obligor and the delegated obligor could be sued by the customer 3 party beneficiaries- someone who benefits from a contract but who is not a party in the original contract pg 327 Incidental beneficiary- someone who incidentally benefits some someone else's contract but their benefits were separate from the reason behind the contract. has no rights in the contract and cannot sue to have it enforced Intended beneficiary- only intended have rights to contract. Substitutes are intended and must be indicated to receive benefits. · 3 party rights pg 321 Privity of contract – when parties have a relationship they can be “in privity” Promissory estoppel: a court may (estop) prevent the promisor from denying a contract existedbased on the offeree’s reliance on the offer * read Extension of promissory estoppels Contracts must indicate: - Who is entering into the contract.. - What the party must do - When the deal should occur.. - Any Delegation (you’re still liable if the party you delegate to doesn’t perform) Chapter 17 Performance and Discharge in Traditional and E-Contracts Discharge in bankruptcy Pg 341 Novation- occurs when both parties agree to change one of the parties out for a 3rd party this requires: 1- previously valid agreement 2- agreement to the new contract- by ALL parties 3- discharging the old obligation and the original party 4- a new valid contract Pg 343 Frustration of purpose: if circumstances make it impossible to attain the purpose of their contract- the contract will be discharged, usually decreases the value of what a party receives * must not have been foreseeable also read on pg 354 Commercial impracticability: the event must not have been foreseeable. An event that increases the cost or difficulty of performance Anticipatory repudiation Pg 335 Condition precedent: must be fulfilled before a party can perform Condition subsequent: when conditions terminate a party’s promise to perform Concurrent conditions: when each party’s performance relies on the other party’s performance Impossibility of performance Tender: unconditionally offer to perform Discharge Mutual rescission · Chapter 18 Breach of Contract and Remedies Pg 350 Damages- Differences between what you get and what you are supposed to get -Incidental damages -Liquidated damages: a provision in the contract that a fixed amount is to be paid in the future or there will be a breach of contract - what you are supposed to get. -Mitigation of damages - Pg 352 Consequential damages: are special damages, they are brought on by special circumstance they flow from the consequences or results of a breach may be awarded for the loss of profits, to recover these special damages the breaching party must have reason to know that this could cause the other party to suffer loss. what you get -Nominal damages Breach of contract Penalty Reformation Restitution Pg 348 Performance-: common law= doesn’t have to be complete, but substantial. pg 365 Specific performance- a buyer of land can always get specific performance, specifically perform the contract when is a quasi contract enforceable? pg 232 pg 359 Waiver- giving something up “overlooking”. When you waive a performance- you can’t go back and sue on that issue. You can waive one aspect but that doesn’t waive the entire contracts still. ^^ he stopped all of his test review with the waiver topic^^ CHAPTER 19: The formulation for sales and lease contracts * I wasn’t there for chapter 19 so I’m not sure what he said is important. I think he barely touched on 19 Choice of language clause choice of law clause Course of dealing Course of performance Substantial beginning: Any beginning getting prepared to fulfill a contract going out of your normal routine because of contract terms. If the other party cancels their end of the contract you can fight that because of a substantial beginning Firm offer Force majeure clause Lease agreement: a legally binding document and if the lesse violates the terms can be evicted from the property Lessee- the tenant who rents the land or property from the lesser Lesser- the person who rents land or property to the tenant Merchant Output contract Predominant-factor test Requirements contract Sale Sales contract Seasonably Tangible property Usage of trade
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