Chapter 15, 17, 18, and 19 Notes
Chapter 15, 17, 18, and 19 Notes ACCT 2700 - 001
Popular in Business Law
Popular in Accounting
This 5 page Class Notes was uploaded by Caspian Roberts on Thursday April 28, 2016. The Class Notes belongs to ACCT 2700 - 001 at Auburn University taught by Robert Hollis Cochran in Fall 2015. Since its upload, it has received 59 views. For similar materials see Business Law in Accounting at Auburn University.
Reviews for Chapter 15, 17, 18, and 19 Notes
Report this Material
What is Karma?
Karma is the currency of StudySoup.
You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!
Date Created: 04/28/16
Business Law Notes April 26, 2016 Contractual Capacity Minors: the Age of Majority is either 18 or 19 depending on the state. Minors – Disaffirmance Minor must disaffirm the entire contract. 2 general rules for disaffirmance: Minor disaffirms and must return the Consideration in the condition it is in at time of disaffirmance to receive his total Consideration back. Minor disaffirms but his conduct has been willful, wanton, egregious, and/or irresponsible; the minor must return the Consideration in the condition it was in upon receipt. o Examples: 2 Tennessee cases. st 1 case- 9 year old kid wanted to get a car, his parents could not pay for it because they were poor, kid saved up up until he was 16, he went to a used car place after his birthday, buys a 3,000 dollar car, he pulls up to a stop- light, drunk guy rear ends him, cop said get tower to tow back car to dealer, then say he wants to disaffirm contract, kid got 3,000 dollars back 2nd case- same deal, 2 of high school classmates, messed with him, they race, kid lucky fastened seat belt, car flipped 12 times, he lost his 3,000 dollars Ch. 17 Third Party Rights Introduction Privity of Contract: o Only original parties to a contract have rights and liabilities under the contract Exceptions: o Assignment or Delegation o Third Party Beneficiary Contract Assignments and Delegations Transfer of contractual rights is an assignment Transfer of contractual duties is a delegation Assignments Rights that cannot be assigned: o When a statute expressly prohibits assignments o When a contract is personal in nature o If assignment materially changes risks or duties of obligor o When the contract expressly prohibits assignment Delegations Contractual duties in a bilateral contract that are delegated to a third party Terminology o Delegator: party making the delegation of duty o Delegatee: party to whom the duty is owed Delegations Duties that cannot be delegated o When duties are personal in nature (special trust) o When performance by a third party will vary materially from that expected by the obligee o When the contract prohibits delegation Delegations Effect of a delegation o Delegator remains liable Assignments of “All Rights” When an “assignment of all rights” is made this is both an assignment and a delegation If the wording says this is an assignment of all rights then legally that is both an assignment of rights and delegation of duties Third Party Beneficiaries Second Exception to Privity of Contract Types of intended Beneficiaries o Distinguish only between intended and incidental beneficiaries o Ignore information in textbook about “done” and “creditor” beneficiaries Ch. 18 Introduction A party may be discharged (released) from a valid contract by: o A condition occurring – or not occurring o Full performance or material breach by the other party o Agreement of the parties o Operation of law Conditions A possible future event, the occurrence or nonoccurrence of which will trigger the performance of a legal obligation or terminate an existing obligation under a contract Types of conditions: o Precedent o Subsequent o Concurrent April 28, 2016 Discharge by Performance Types of performance o Complete (100%) o Substantial (90-99%)- means you can do whatever you were supposed to do with that product you were contracted for o Inferior (<90%) Performance to the Satisfaction of another Reasonable Person Standard: for most contracts, unless contract explicitly states third party approval Material Breach of Contract o Occurs when performance is not substantial o Nonbreaching party is excused from performance and entitled to damages Non-Material Breach of Contract- substantial performance o Duty to perform is not excused and the non-breaching party must resume performance of the contractual obligations undertaken Time for Performance If no time is stated in contract, reasonable time is implied Discharge by Agreement Discharge by Mutual Rescission o If executory, parties must make a new contract, oral or written o If one party has performed, agreement to rescind must have additional consideration Discharge by Novation Both parties agree to substitute a new third party for one of the original parties Requirements: o Previous valid obligation, o Agreement by all parties, o Extinguishment of all old obligations, and o New valid contract By Accord and Satisfaction Accord is a new agreement made to resolve a contract dispute Satisfaction: performance of accord Discharge by Operation of Law Material alteration: innocent party is discharged after material alteration Statutes of Limitations Bankruptcy: generally bars enforcement of non-exempt transactions Impossibility of Performance (not inconvenience). Objective impossibility of performance: Supervening event was not foreseeable When Performance is Impossible: o Death or incapacitation in personal contract prior to performance, o Destruction of the Subject Matter; or o Change in Law makes Contract illegal Ch. 19 Breach of Contract and Remedies Introduction Most Common Remedies: o Damages o Rescission and Restitution o Specific Performance o Reformation o Recovery Based on Quasi Contract Damages (Legal Remedies) Damages are the most common breach of contract remedy The goal of damages is either to “make the party whole” or give them the “benefit of their bargain” Types of Damages: o Compensatory o Consequential (Ex: Hadley v. Baxendale) o Nominal o Punitive- are available if there is a corresponding crime Damages Is a breach of contract a “wrong?” No Is a breach of contract a “crime?” No Damages Mitigation of Damages o When breach of contract occurs, the innocent injured party is held to a duty to reduce the damages that he or she suffered o Ex: Magenta paint o Ex: Parker vs. MGM Liquidated Damages vs. Penalties Enforceability. Court asks two questions: Equitable Remedies Sometimes damages are an inadequate remedy If there is no legal remedy, courts can create equitable remedies: o Rescission: Remedy whereby a contract is canceled and the parties are restored to the original positions that they occupied prior to the transactions o Restitution: Both parties must return goods, property, or money previously conveyed Specific Performance Equitable remedy calling for the performance of the act promised in the contract Provides remedy in cases involving: o Sale of land o Contracts for personal services Sample Questions T/F If you don’t have Contractual Capacity you may not enter into a contract. - False T/F Privity of Contract means that contracts are private agreements and the parties therefore have an expectation of privacy concerning their contract. - False T/F You may not delegate duties which are personal in nature. - True
Are you sure you want to buy this material for
You're already Subscribed!
Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'