Chapter 16 ACCT 324 - 002
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This 3 page Class Notes was uploaded by Kendall Davis on Thursday September 8, 2016. The Class Notes belongs to ACCT 324 - 002 at University of South Carolina taught by Julius David Johnson (P) in Fall 2016. Since its upload, it has received 6 views. For similar materials see Survey of Commercial Law in Accounting at University of South Carolina.
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Date Created: 09/08/16
Chapter 16 September 7 Parent Liability for Minors’ Contracts, Necessaries, and Torts o General Rule: parents not liable for contracts entered into by their minor children Exception: contracts for necessaries o General Rule: Parents not liable for torts committed by their minor children Exception: Individuals Having No Capacity to Contract o Those adjudicated insane Cannot enter into a contract with an insane person o Those adjudicated habitually intoxicated Cannot enter into a contract with a known drunk or drug user o Those with appointed legal guardians Ex: elderly Rules Regarding Intoxication o Generally: contracts made by intoxicated persons are voidable If intoxication only causes person to exercise poor judgment, contract not voidable When intoxicated person becomes sober, contract can be ratified or disaffirmed Exhibit 16.3 in text* look for exam Illegal Contracts o Contracts with no legal purpose and/or subject matter Ex: agreement to commit crime o Contracts violating statute(s) and/or “public policy” Covenant not to compete: o Ex. if someone buys a restaurant and tells the old owner that they are not allowed to open a restaurant any where in the state of south Carolina (that’s unfair) instead of in the area Ex: Usurious loan agreement (loan contract exceeding state imposed maximum interest rate) o Ex: enter into a contract with a landscaper who does not have a license and you do not have to pay o Hailey vs. Williams Ex: Unconscionable contract (agreement so unfair that it is “void of conscience”) Chapter 17 Legal Assent: promise to buy or sell courts will require parties to obey o Without assent, contract may be avoided/rescinded o If you were tricked into the contract it can be voided o Mistake: an erroneous belief regarding material facts of contract at the time agreement made Mistake of fact is the only one recognized Unilateral mistake: mistake made by only one part; generally, contract still binding Ex. if you make a contract saying that retirement benefits only benefit you, then you die and your wife wants to get the benefits Mutual (Bilateral) Mistake: Mistake made by both parties; either party can rescind Ex. each party thought they were using a different ship of the same name to ship cotton o Fraudulent or Negligent Misrepresentation Innocent misrepresentation: contract can be rescinded but the other party cannot sue for damages o Ex. jeep seller thinks it is ’74 but it is actually ’84, but she actually always thought it was a ‘74 Fraudulent Misrepresentation: intentional, untruthful assertion of material fact by contracting party; aggrieved party can rescind contract, and sue for damages Concealment: actively hiding the truth Nondisclosure: failure to disclose important information about the contract Negligent Misrepresentation: Negligent, untruthful assertion of material fact by contracting party; aggrieved party can rescind contract, and sue for damages o Undue Influence: persuasive efforts of dominant party, who uses special relationship to interfere with other’s free choice of terms Any relationship involving one party’s unusual degree of trust in another can give rise to undue influence Ex. tricking one’s elderly mother to sell them the farm for an unfairly low amount Persuasion o Duress: Occurs when one party threatens other with wrongful act unless assent given It is not legal assent When one threatens physical harm, criminal or frivolous lawsuit, economic interests Threat o Unconscionability: occurs when one party has so much relative bargaining power that he/she effectively dictates terms of contract, resulting in situation where dominated party, in essence, lacks free will One party’s bargaining power is too large Chapter 18 Statute of Frauds: rule of state law requiring certain types of contract to be in writing in order to be enforceable o If contract is not in writing, then courts cannot enforce it o Need reasonable, reliant evidence of terms o Prevent unreliable oral evidence from interfering with contract People still lie under oat o This rule makes people think more about the contract Contracts Subject to Statute of Frauds o Contracts that cannot be performed within one year from the date of their making o Promises made in consideration of marriage; prenups o Contracts to pay the debt of another party o Real estate
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