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Final review

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by: gemma22

Final review BSL 212


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BSL212 Final Review Guide
Introduction to business law
Study Guide
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"You're awesome! I'll be using your notes for sure moving forward :D"
Bailee Lesch

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This 10 page Study Guide was uploaded by gemma22 on Wednesday December 9, 2015. The Study Guide belongs to BSL 212 at University of Miami taught by in Fall 2012. Since its upload, it has received 117 views. For similar materials see Introduction to business law in Business Law at University of Miami.


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Date Created: 12/09/15
BSL212 FINAL REVIEW -10 questions. Major single area; no questions repeat an area of rule of law. -Identify area of law, plug in facts, and make decision. -1 makeup question CHAPTER 1: How the Legal System Works No questions CHAPTER 3: Civil Dispute Resolution -Where to sue- State or Federal? -Court Systems General Rules:  State Vs. Federal: -State: 1. Trial- every county 2. Appeal- no new evidence 3. Supreme -Federal: 1. Federal question (constitutional?) 2. Exceeds $75,000 + diversity of citizenship. 3. Motion to change venue to proper venue. (Where defendant resides or dispute occurs) o *Otherwise, the proper venue is in state court, either nearest the DEFENDANT's residence or the state court nearest where the dispute occurred. -Less than $5,000 peoples court. -Greater than $5,000 circuit court.  Jurisdiction over person (papers served on you): service of process (serve anyone that lives in residence) 20 days to respond. o For companies there needs to be someone to accept.  Motion to dismiss for improper services. Ex. Giving child papers  Self-impairment will not get you out of a contract. EXCEPTION if someone else impairs you (plaintiff) to purposely have you make that decision (fairness doctrine)  UCC Uniform Commercial Code: Applies to sale of goods o Protects consumers in the event of a malfunction, manufacturer defect, or other instances in which the consumer's actions have not contributed to the damage of the product, through warranty coverage. Only applies to tangible goods, not services. o Warranty protection if goods are defective- Breach of Warranty o If you are buying something and want it to be considered a good so UCC can apply. Legal text is required of how much goods/labor was work, so that if there is a defect you are covered under the UCC for the good. CHAPTER 6: Business Ethics: Moral Philosophies and Values No questions CHAPTER 9: Intro to Contracts -Offer + Acceptance= Agreement -Void contract: illegal substance -Voidable one of the parties can get out ex. Minors contract -Legally enforceable contract:  Offerer: 1. Present intent to contract 2. Definite terms (subject matter, price, payment, warranty, etc.) 3. Communicated  A (Offeree): 1. Present intent to accept 2. Mirror image rule 3. Communicated o *Mirror Image Rule: Acceptance has to be the same as the offer. -Forms of contracts:  Bilateral: promise for a promise (agreement made when both promises made, money paid later)  Unilateral: promise exchanged for an act, reward case. (not obligated to pay till action is complete) **The offerer can revoke offer before acceptance. EXCEPTION: once person starts action and is proceeding in good faith, they have to be allowed to finish (fairness exception). -Four types of contracts: 1. Express: details spelled out with no gaps in the facts; either verbally or written- subject matter, price, delivery, terms, details 2. Implied (in fact): gaps are filled by circumstances; no terms or quantity discussed. Ex. Buying cherry coke 3. *Quasi (implied in law): legal fixation; unjust enrichment, unfair benefits, reasonable prevention. *EXCEPTION: The payment must only be made if the person receiving the services would be reasonably able to prevent the completion of the service. Therefore, of a person is unable to reasonably prevent such actions, they are not required to pay for services which they did not enter into a valid contract for. Ex. Driveway example 4. *Promissory Estoppel: -unenforceable promise, someone makes a promise knowing your reliance, you rely on it, change position in detrimental reliance. Ex. Detrimental Reliance (Key to Promissory Estoppel): if Party A does not keep his promise and Party B is hurt financially, Party B has detrimental reliance. *Fairness* CHAPTER 10: Mutual Assent – Offer vs. Acceptance -Mutual Assent required for a valid offer. Mirror image rule must apply: The acceptance must reflect exactly the same offer in order for it to be valid.  Definite terms: subject matter, terms, delivery method, payment method, and date of pickup, quantity, and price. *UCC has gap filling rules/exceptions -If legally enforceable, the agreement is a CONTRACT -Advertisement Rule: as a general rule, advertisements do not constitute offers. EXCEPTION: if the offer is so specific and so definite that reasonable people would rely on it, the advertisement can be considered an offer. -Rewards: Always unilateral, and you are always entitled to compensation. -Auctions (have to specify): 1. Auction with reserve: person auctioning is allowed to withdraw 2. Auction without reserve: AKA Absolute auction, auction is offer, no withdrawal. *Offer Revocation: can occur at anytime prior to acceptance, even if the offeror expressly gives the offeree more time. Irrevocable: 1. Unilateral: fairness exception, starting and continuing in good faith. Has to be made legally irrevocable. 2. Option: Verbally or in writing, exchange for something of value accepted by the other party. 3. UCC Firm Offer (sale of goods): The one who says you have more time needs to be the merchant. Terms need to be put in writing and max 90 days. 4. Promissory estoppel: If detrimental reliance is created. Ex. Going back to get money for the loan. -Mailbox Rule: Offer and revocation are effective when communication is received, acceptance can be effective when sent, so long as it is done in a similar timeframe as the offer was sent. -UCC Battle of the Forms: 1. Did both parties agree on basic terms? (Yes=Agreement) 2. The first form of the contract governs. *send form first CHAPTER 11: Conduct Invalidating Assent (Real Consent) -Canceling Acceptance 1. Duress – Improper coercion Ex. Force or the stress of force -Economic duress: Strong and weak party, stronger party realizes weak party is vulnerable to being exploited. Taking unfair advantage and weak party signs and agrees. (Not duress) Hard bargaining: getting the best of you in business 2. Under Influence: You have to prove: -Special relationship of trust and confidence: doctor, relative -Transfer of assets that raise a presumption 3. Mistake- Error -Mistaken of existence of transaction -Mutual mistake -Unilateral mistake cannot be cancelled, has to be Bilateral 4. Fraud- Deception -Rescission+ Damages -Intentional deception  Inducement: 1. Misrepresentation of material fact (if you knew truth you wouldn’t buy it) 2. Defendant knows it’s false 3. Plaintiff reasonably rely 4. Plaintiff suffers financial damage  Execution: An unintentional signature, such as an autograph, cannot be used as a valid acceptance. -Expert Opinion Rule: A present statement of opinion, if given by an expert or someone who has superior knowledge can be construed as fact. Predictions are exempt from this. -Silence is not fraud, unless defendant has duty to speak if hidden facts affect health or safety. Also if hidden facts effect value (financially) CHAPTER 12: Consideration *Consideration: a mutual, current, bargained for exchange of benefit. (Each side gives up something of value). There has to be a benefit and a detriment from each party *Rules: 1. Courts do not consider adequacy of consideration 2. Gift promises are not enforceable, except in cases of donation to charity. 3. Past consideration is not grounds for valid, CURRENT consideration to uphold a promise. 4. Promissory Estoppel is a substitute for consideration *Debt Settlement: Agreement A. Check written for less than amount of invoice B. Paid in Full written on the check. C. A prior good faith dispute exists. D. Cashing the check would constitute acceptance of a debt settlement. *Pre-existing Duty Promise: modification of price for a prior agreed upon service is unenforceable, because no new detriment has been created. *EXCEPTIONS: 1. New detriment is created 2. A new contract is substituted (Pre-existing duty promise is removed) 3. UCC Merchant Promise: Merchants are subject to an additional good faith standard, which requires "honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade." 4. Unforeseeable Difficulties Exception: an unforeseeable natural disaster etc. CHAPTER 13: Illegality Void Contract: A. Contrary to Law (Licensing laws, lending laws, gambling laws, etc.) B. Contrary to Public Policy: A. Non-Competition Contracts: 1. Non-compete clauses: must be reasonable in terms of time, area (Only within area of direct competition), and scope. B. Releases of liability: Liability cannot be released if a party is negligent C. Unconscionable contracts: contracts that are unfair or one- sided. “void, illegal, and unenforceable” A. Licensing Laws: Regulatory laws: meant to protect the public. Regulates competence to perform duties. Violation voids contracts. (Lawyers, accountants, etc.) Revenue-raising laws: sole purpose is to generate revenue for municipality. Contracts still enforceable if law is violated, only municipality can go after you. (Occupational laws, etc.) B. Lending laws: exceeding statutory ceiling for interest amounts is considered usury. *Generally, you can still collect principal. (Not in Texas). C. Gambling Laws: Generally, gambling is illegal, but some statutory exceptions exist. Ex. Race tracks, casinos CHAPTER 14: Contractual Capacity (Voidable Contracts) A. Mental Impairment: at the time of contracting *Self-Impairment: will not allow a contract to be voided. *Lucid Interval: if at the moment of contract a person is coherent, regardless of his prior or future state, the contract is valid. *Incompetent persons: people who are under guardianship *Adjudication of Incompetency: can void any contracts the incompetent person enters B. Minors' contracts: Minors can cancel contracts up to the time they turn 18, plus a reasonable amount of time thereafter. They must only return what they paid for in its existing condition, and they will receive a full refund in 26 states, including Florida. The other 24 states allow for the merchant to deduct money for reasonable wear and tear on the item, *EXCEPTIONS: 1. Age Misrepresentation: If a minor deliberately misrepresents his age, he can't cancel the contract (lying, fake ID). 2. Purchase of a Necessity: a minor cannot cancel contracts made for the purchase of a necessity (food, water, shelter, clothing vs. luxury). 3. Cancellation in a Timely Fashion: if the minor does not cancel within a reasonable amount of time (Which is up for interpretation) after their 18th birthday, they are said to have ratified the contract. *Law of Disaffirming: Only the minor may cancel a contract based on his minority, the adult may not. CHAPTER 15: Contracts in Writing *4 Statues of Fraud of Verbal Agreements that must be in Writing: 1. Real Estate: including a lease for one year or more. (Under a year can be verbal) 2. Guaranty: A promise to pay the debt of another. 3. Fixed, definite term service contract of one year or more. 4. Sales of goods of $500 or more. *Must at leased by signed by the party to be charged. -If outside statute of frauds, verbal agreement is ok with proof. *4 Fairness Exceptions: 1. Part-Performance: if a verbal agreement occurs for a sale of land, and the buyer either makes improvements to the property or makes a deposit, seller is stopped by Promissory Estoppel from voiding contract. 2. Benefit Rule: if the person guarantees the payment for their own personal benefit, they can't nullify the contract. 3. For-Life Contracts: outside the statute of frauds, verbal contract is enforceable. (Except in New York and Michigan) 4. Non-Signer Rule: if both parties of the transaction are merchants, and the transaction is for $500 or more, and one merchant signs, if the other does not object within 10 days, the non-signer is bound to the contract. 5. Special Manufacturer Exception: verbal agreements for unique, customized goods are enforceable once production begins. CHAPTER 16: Third Parties to Contracts *Accounts Receivable Financing: 1. Obligor (Buyer)-person obligated to pay 2. Assignor (Seller)-person selling account 3. Assignee (3rd-Party)-person buying seller's account *3 Typical Disputes: A. Notice to Obligor: as a general rule, the obligor does not have to be notified of the sale of the account, but it is required. *Pinhead rule: it is incredibly stupid not to, because the seller can collect from you and then the buyer. *Factoring (providing cash): Person buying the account should notify obligor B. Consent to Obligor: as a general rule, consent of the obligor is not required, unless the assignment will cause hardship to the buyer. *Hardship rule: any kind of hardship that the obligor can justify violates the hardship rule. C. Stands in Shoes Rule: If you are sold defective merchandise, you don’t have to pay (Transactional defense) Everything ok? Sold a few? *Negotiable Instruments Law (NIL): If a promissory note is 1) still in negotiable form and 2) the outside party is a holder in due course (he has paid value), 3rd party is freed from Stands in Shoes rule. *Delegation of duties: certain duties are considered non-delegable under the hardship rule. *3rd-party beneficiary Contracts: 1. If the outside 3rd-party is an intended beneficiary, the beneficiary has 3rd-party rights. 2. If the outside 3rd-party would only receive incidental or indirect benefit, they have no 3rd-party rights. Intended beneficiary: named directly, or part of a direct group. CHAPTER 17: Performance, Breach, and Discharge 1. Condition PRECEDENT: not liable unless/until the condition occurs 2. Condition SUBSEQUENT: liable now, but may be excused in future if condition occurs. 3. SATISFACTION contracts (condition precedent) 2 legal tests: A. Personal-Subjective: Satisfaction contracts for personal goods/services are subject to the approval of the person receiving the good/service. B. Commercial-Objective: Satisfaction contracts for commercial goods/services are subject to the objective opinion of an expert to determine of they are satisfactory. *4 Kinds of Discharges 1. Performance by the parties 2. Material breach by one or both parties 3. Agreement of the parties 4. Operation of law. CHAPTER 18: Contract Remedies A. Monetary Damages 1. Compensatory Damages: compensation as a consequence of defendants actions 2. Consequential Damages: consequent to a specific action of the defendant 3. Punitive Damages: to punish/set an example 4. Liquidated Damages: For violation of a contract that specifies a certain service will be completed by a certain date. Per diem damages are then assessed. *Liquidated Damage clause must be reasonably related (i.e. not too much money), otherwise it is considered a penalty, which is void, illegal, and unenforceable. Ex. Money for every day late *Damages must be certain and reasonably foreseeable. *Non-monetary remedies: 1. Specific Performance: forcing the defendant to sell, etc. 2. Injunction: Restraining order to prevent an unlawful act. 3. Reformation: prior to a breach occurring, parties go to court to reform contract. CHAPTER 21: Transfer of Title and Risk of Loss  Trial Sales (Conditional Contracts): 1. Sale on Approval: Inducement, no payment to use for X amount of days, return if not satisfied. A condition precedent contract. The buyer is not the owner until he makes a payment, or acts as an owner (Tries to sell, uses as collateral, etc.) *No risk of loss for buyer until he becomes owner. 2. Sale or Return: A condition subsequent contract. As soon as goods are delivered, buyer becomes owner and assumes risk of loss. *Imperfect Title: 1. Void Title Rule: if something is stolen, the possessor has only a void title, even if it is sold to a good-faith purchaser. 2. Voidable Title Rule: if someone voluntarily delivers goods to someone, even if they are scammed, the person receiving the goods can void the title the deliverer previously held. 3. Merchant Entrustment: when goods are brought into a merchant for repair, the merchant holds good title. *Good-Faith Buyer: 1. Pay Fair value 2. No reasonable knowledge of theft. *Shipping of Goods Lost, Damaged, or Destroyed in transit: Shipment contract: Risk of loss passes from seller to buyer when seller delivers goods to carrier. *Contracts silent to risk of loss are considered shipment contracts under UCC. *If the contract states F.O.B., risk of loss depends on who is named. F.O.B. shipment or F.O.B. origin means buyer pays and has risk of loss as soon as goods leave sellers possession. F.O.B. destination means seller will pay shipment costs and holds responsibility until delivery of goods to buyer. Destination Contract: risk of loss stays with seller until delivery of goods to buyer. CHAPTER 22: Product Liability: Warranties 1. (Tort) Negligence: Fault-based 2. (Tort) Strict Liability: No fault-merchant sells "dangerously" defective goods. 3. (Contract) Breach of Warranty: Express and Implied Warranty * Areas for Product Liability Negligence 1. Negligent Manufacture 2. Negligent Design 3. Failure to notify public of defects 4. Failure to inspect for defects *Defenses Against Liability 1. Assumption of the risk: user of a product assumes the risk of known dangers 2. Product misuse: manufacturer protected if product is misused. 3. Strict Liability: user can sue anyone in supply chain for "dangerously defective" goods. (Only way to escape liability is to prove goods were ok when they left.) 4. Merchant Ability: product must be what the customer asks for *Fitness for Special Use: 1. Seller knows, or should know purpose of buying 2. Buyer relies on seller to give him the correct item 3. Seller breaches agreement (gives the wrong item to the buyer) 4. Buyer suffers damages


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