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BLAW3080: Contracts

by: Madison Morman

BLAW3080: Contracts BLAW 3080

Madison Morman
GPA 3.82

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About this Document

Covers contracts, defenses of a contract, and damages.
Legal Environment of Business
Peter Burrell
Class Notes
Contract, defense, damage, Law, business
25 ?




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This 3 page Class Notes was uploaded by Madison Morman on Saturday March 5, 2016. The Class Notes belongs to BLAW 3080 at University of Cincinnati taught by Peter Burrell in Summer 2015. Since its upload, it has received 46 views. For similar materials see Legal Environment of Business in Business Law at University of Cincinnati.


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Date Created: 03/05/16
Week  2  notes  (class  19  and  20,  21)     Preexisting  Duty  not  Sufficient  Consideration:    A  promise  to  perform  an  existing   duty  is  not  sufficient  (employee  non-­‐compete)   • If  employee  says  they  will  quite  and  employer  offers  same  amount  of  money   to  work  longer,  that  is  not  adequate.     Defenses  of  Contract:     • 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:    A  contract  must  be  formed  for  a  legal  purpose   o Any  contract  prohibited  by  laws  is  void;  tortious  act  is  illegal   o Contracts  for  Usury  Statute  prohibits  excessive  rate  of  interest   o Contracts  contrary  to  public  policy  or  restraint  of  trade  are  void   o EXCEPTION:  Non-­‐Compete  in  connection  with  sale  of  business  AND   covenant  no  tot  compete  in  employment   o The  agreement  not  to  compete  preserves  goodwill  that  buyer  has   purchased;  typically  five  years  agreement  to  not  compete   o Courts  are  more  likely  to  scrutinize  non-­‐competes  in  the  employment   area  than  in  sale  of  business   • Licensing  statutes   • Contracts  violate  public  privacy     Valid  contract:    Offer,  acceptance,  and  consideration     Exculpatory  Clauses:    Release  a  party  from  liability  in  the  event  of   monetary/physical  injury  (doesn’t  matter  who’s  at  fault)   • Enforceable  when  they’re  not  against  public  policy   • Protects  commercial  enterprises  form  liability  for  consequences  of  conduct   that  would  be  negligent   • Sign  these  clauses  for  activities  such  as  sky  diving,  skiing  etc     Contractual  Capacity   • Intoxication-­‐  Lack  of  capacity  at  the  time  the  contract  is  being  made;  has  to   be  extremely  intoxicated  for  the  court  to  term  the  contract  invalid     Impaired  person  can  do  2  things   1. Disaffirmance  (voidable)   2. Ratification:    After  sobering  up     Statute  of  Limitation:    Provides  a  legal  action  must  be  commenced  within  a  certain   period  of  time  (4-­‐6  years/8  years  in  OH  for  written  contracts)     Statute  of  Frauds:    General  rule  is  that  contracts  don’t  need  to  be  in  writing   • Two  types  of  contracts  that  MUST  be  in  writing  to  be  enforceable   • Involving  Interest  of  Land   • Sales  of  Goods  over  $500   • Contracts  involving  land  must  be  evidenced  by  a  Writing   • EXCEPTION-­‐  Leases  for  less  than  a  year  AND  full  or  partial  performances     Contract  for  Sale  of  Goods:    Provides  evidence  of  the  material  terms  of  the  contract   that  is  signed  by  the  person  being  sued.    Contract  for  Sale  of  Goods  must  have   quantity  term  and  a  signature.     Effect  of  Non-­‐Compliance:    Failure  to  satisfy  the  Statute  of  Frauds  doesn’t  prevent   formation  of  a  contract  AND  makes  it  unenforceable     Mental  Incompetence:   • 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   • Valid:    Person  is  able  to  understand  nature  and  effect  of  contract  but  may   lack  capacity  to  engage  in  other  activities       Impossibility:    After  the  parties  enter  contract  and  an  event  occurs,  that  will  make   performance  of  contract  impossible   1. Destruction  of  Subject  Matter:    Before  acceptance  of  offer,  terminates   2. Death  or  Incompetence  of  Offerer/Offeree:    Automatically  terminates  unless   it’s  an  irrevocable  offer     Novation:    Occurs  when  a  new  contract  substitutes  a  NEW  party  for  an  old  party  in   an  existing  contract  (all  parties  must  agree  to  release).     Contingency   1. Sale  Contingency-­‐  purchase  depends  on  inspection/  sale  of  other  house   2. Appraisal-­‐  Purchase  of  real  estate  is  contingent  on  contract  price  being  below   or  at  a  fair  market     Parol  Evidence  Rule:       • Prohibits  a  party  in  a  lawsuit  involving  a  fully  integrated  contract   • Prohibits  a  party  from  introducing  evidence  at  trial  of     1. Oral  or  written  statements  prior  to  written/oral  statements  made  with   written  contract   2. That  seeks  to  vary  terms  of  written  contract.     Three  categories  of  damages   1. Compensatory-­‐  Compensates  non-­‐breaching  party  for  loss  of  the  bargain   a. Standard  Measure:    Cost  of  substitute  performance  versus  the   contract  price  (Build  home  addition,  sell  lemons,  lease)   2. Consequential   3. Punitive  –  Not  generally  awarded;  even  if  one  of  the  parties  to  the  contract   was  mean     Duty  to  Mitigate  Damages:    Want  to  lower  damages  before  suing   • Final  Note:    Attorney’s  fees  in  action  for  breach  of  contract   • Pay  attorney  fees,  which  can  outweigh  benefits  of  suing  (American  Rule)     Limits  on  duty  to  mitigate   • When  you  have  real  estate   • Or  a  very  unique  good    


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