BLAW Unit 3

consideration

UCC does not require a contract modification to be supported by new consideration. The UCC states that an agreement modifying a contract for the sale or lease of goods "needs no consideration to be binding"

merchants firm offer

Under 2-205 of the UCC, an offer required to be held open if made in writing by a merchant, even though no consideration is given.

predominant factor test

A test courts use to determine whether a contract is primarily for the sale of goods or for the sale of services.

criteria used by the IRS

IRS used to look at 20 factors now look at one:the degree of control the business exercises over the worker

article 2a

deals with leases of goods

Independent contractor

no paid vacation, benefits, etc. but employer may pay you more in fees as independent contractor than it would in salary as employee flexibility

employee-employer relationship

normally all employees that deal with third parties are deemed to be agents generally speaking, employees acting within the scope of their employment also are agents, even though not dealing directly with third parties employment laws apply an employee is one whose physical conduct is controlled or subject to control by an employer the key feature is the employer's right to control the employee in the performance of tasks involved in the employment

ratification

occurs when the principal affirms, or accepts responsibility for, an agent's unauthorized act. principal must affirm entire deal principal must affirm before 3rd party withdraws from transaction principal and 3rd party must have legal capacity to contract when agent made the deal principal must observe the same formalities when approving the act done by the agent as would have been required to authorize it

exceptions

officers acting for corporation agents act in principal's presence

power of attorney: confers express authority on agent

special: specified acts only general: transact all business for principal ordinary: terminates on incapacity or death of principal durable: continues to be effective despite principal's incapacity

Parol evidence

terms of a written agreement intended to be the final expression of parties' intentions, cannot be contradicted by prior or contemporaneous agreements

promise to ship or prompt shipment

shipment of non-conforming gods is both an acceptance and a breach unless goods sent as an "accommodation" to buyer

offer pt 2

some things can be indefinite as long as it appears that partied intended to form a contract! note that UCC will allow courts to create a "reasonable" price

cooperation

a principal must cooperate with and assist an agent in performing his or her duties

compensation

a principal must pay an agent for services rendered and to do so in a timely manner except in a gratuitous agency the amount is the agreed on value, the customary value, or, if no amount has been agreed on or established custom or law, the reasonable value

safe working conditions

a principal must provide safe premises, equipment, and conditions and warn about unsafe areas.

indemnification & reimbursement

a principal must reimburse an agent for sums disbursed at the principal's request or fore necessary expenses in the agent's performance of his or her duties a principal also must indemnify an agent for liability incurred in accord with the agency a subagent can recover from the principal or the agent who hired him or her.

disclosed principal

a principal whose identity is known by the third party at the time the contract is made by the agent.

a partially disclosed principal

a principal whose identity is not known by the third party, but the third party knows that the agent is or may be acting for a principal at the time the contract is made

course of dealing

a sequence of actions and communications between the parties to a particular transation that establishes a common basis for their understanding

indemnification

a third party can sue a principal for an agent's negligent conduct and sometimes an agent must indemnify the principal for the damages the same is true if an agent violates a principal's instructions

accounting

an agent must account for all property and money received and paid on behalf of the principal the agent should keep personal funds separate

consumer lease

1. a lessor who regularly engages in the busines of leasing and selling 2. a lessee who leases the goods for use in the home 3. total lease payments are less than 25k

rules when both parties are merchants

1. original offer expressly limited acceptance to its terms or 2. the new or changed terms materially alter the contract or 3. the offeror objects to the new or changed terms within a reasonable period of time

bundle of rights

All of the legal rights incident to ownership of property including rights of use, possession, encumbering and disposition.

Conflict between UCC and CISG

CISG prevails

UCC

Created by the NCCUSL to encourage and accommodate commerce by creating a uniform legal environment. one transaction, multiple sections of the UCC UCC trumps common law where there are conflicts; otherwise, common law still applies

Article 2 of the UCC

Only applies to the sale of goods, not real estate, services, or securities

lease agreement

a lessor and lessee's bargain with respect to the lease of goods, as found in their language and as implied by other circumstances

principal's tortious conduct

a principal acting through an agent may be liable to 3P for harm resulting from principal's own authorization of tortious conduct a principal acting through an agent may be liable to 3P for harm resulting from the principals negligence or recklessness ex: principal knowas agent cannot dirve but oders her to do so anyway eg to deliver urgently needed products to a customers

acceptance

acceptance of an offer is to buy, sell, or lease goods generally made in any reasonable manner by any reasonable means

agency by operation of law

agency based on social duty is formed in certain situations when the agent is unable to contact the principal necessaries emergencies

agent's tortious conduct

agent is liable to 3P for his own torts ex: agent cannot drive but does so anyway, eg to deliver products to a customers agent is liable to 3P for his own torts Principal also may be liable for Agents torts If they result from agent's misrepresentation principal is directly responsible for an agents misrepresentation made within the scope of authority, whether actual or apparent

demand for an accounting

an agent can withhold further performances and demand that a principal give an accounting

apparent authority

an agent has apparent authority when the principal, by either word or action, causes a third party reasonably to believe that the agent has authority to act, even though the agent has no express or implied authority.

implied authority

an agent has the implied authority to do what is reasonably necessary to carry out express authority and accomplish the objectives of the agency. custom agents position what's necessary to carry out express authority

loyalty

an agent must act solely for the benefit of the principal thus, an agent cannot represent two principals in the same transaction unless both know of the dual capacity and consent an agent who owns property cannot sell it to the principal without first disclosing the ownership an agent authorized to buy cannot buy from himself or herself, without the principal's consent an agent authorized to sell cannot sell to himself, w/o principal consent knowledge acquired through agency relationship is confidential

obedience

an agent must follow the principal's instructions except during an emergency or when instructions are not clearly stated, in which case an agent must act in good faith and in a manner reasonable under the circumstances

notification

an agent must notify a principal of all material matters that come to his or her attention concerning the subject matter of the agency although the principal is bound even if the agent says nothing

partial performance

an oral contract for the sale or lease of goods is enforceable if payment has been made and accepted or goods have been received and accepted.

specially manufactured goods

an oral contract is enforceable if it is for gooods that are specially manufactured for a particular buyer or specially manufactured or obtained for a particular lessee, they are not suitable for resale or lease to others, and the seller or lessor has substantially started to manufacture the goods

emergency powers

arises when an agent should protect principal and agent cannot communicate with principal

formation of sales and lease contract

at common law, once a valid offer is unequivocally accepted, a binding contract is formed ucc is more flexible and allows for open pricing, payment, and delivery terms

rent to own

at the end of the lease, lessor will convey title

mfo

at ucc, offer made by merchant in signed writing is irrevocable for reasonable period of time no consideration required

NCCUSL

body that drafted UNIL (1896) and Uniform Sales Act (1996) drafted the first version of the UCC in 1949

agency relationship

consensual agreement no consideration required principal needs contractual capacity, agent does not contract made by agent is viewed as contract of the principal for any legal purpose generally need not be in writing

cisg

does not require writing makes offer irrevocable as soon as acceptance is sent but contract is not formed until acceptance is received choice of forum clauses, choice of law, and choice of language

actions by e-agents

e-agents include semi-autonomous computer programs capable of executing specific tasks Under UETA e-agents may enter binding agreements on behalf of their principals If an e-agent does not give an opportunity to prevent errors at the time of the transaction, the other party can avoid it

work for hire

employer owns copyrighted works created by employee within the scope of employment, but not works of independent contractors

oral agreements

enforceable after written confirmation between merchants

admissions

enforceable if party against whom enforcement is sought admits in pleadings, testimony, or other court proceedings that a sales or lease contract was made

offer-open terms

even if terms are undetermined, a contract may still exist

rules of construction

express terms, course of performance, prior course of dealing, usage of trade

agency by agreement

formed through express consent (oral or written) or implied by conduct

fiduciary

from the latin fiducia meaning trust a person who has the power and obligation to act for another under circumstances which require total trust, good faith, and honesty he or she must avoid self dealing or conflicts of interest, in which the potentiatl benefit to the fiduciary is in conflict with what is best for the person who trusts him/her

open quantity

generally courts will not impose a quantity

merchant

he or she, acting in a mercantile capacity, possesses or uses an expertise specifically related to the goods being sold.

apparent authority and estoppel

if 3rd party changes legal position by relying on principal's words or acts, principal is estopped from denying agent had authority to contract

undisclosed principal liability

if a principal is undisclosed, the undisclosed principal is fully bound to perform if a principal is undisclosed, an agent is liable as a party to the contract if an agent acts within the scope of authority, agent entitled indemnification from principal generally speaking, the undisclosed principal may enforce the agreement agianst the third party

avoidance

if an agent breaches an agency agreement, a principal can avoid any contract entered into with the agent

open price

if parties have not agreed on pricing, a court can determine "reasonable price"

communication of acceptance

if the offeror is not notified within a reasonable time that the offeree has accepted the contract by beginning performance, than the offeror can treat the offer as having lapsed before acceptance

things attached

if the thing attached to the property does not cause damage to the property than it is a sale of goods

offer

in general contract law, the moment a definite offer is met by an unqualified acceptance, a binding contract is formed. UCC says contract can exist even if the moment of its making is undetermined

equal dignity rule

in most states, if the contract being entered into by the agent is or must be in writing, the agent's authority also must be written failure renders contract voidable by principal principal must affirm or ratify in writing

employer-independent contractor relationship

independent contractors are not employees, because the person for whom they have agreed to perform generally has no control over the physical conduct of their performance an independent contractor may or may not be an agent ex: 1. you hire a real estate agent to sell your house, you do control to a much greater extent their negotiations, i.e., they are negotiating with prospective buyers for you 2. you hire a general contractor to build your house: you do not control the physical details of how he/she performs so you dont control the negotiations of the subcontractors

finance leases

involves a 3rd party supplier under 2a, a lessee's obligations under a commercial finance lease are irrevocable and independent from the financer's obligations lessee must look to supplier for any recovery a finance lease has 3 parties the lessor buys or leases goods from a supplier and leases or subleases them to the lessee typically, in a finance lease, the lessor is simply financing the transaction

open terms

is OK as long as the parties intended to make a contract and there is a reasonable basis for a court to grant a remedy

a contract for the sale of minerals or a structure

is a contract for the sale fo foods if the seller removes the minerals from the place but if the buyer has to then it is a sale of real estate

sale of growing crops

is a contract for the sale of goods regardless of who severs them

undisclosed principal

is a principal whose identity is totally unknown by the third party, and the third party has no knowledge that the agent is acting in an agency capacity at the time the contract is made.

express authority

is authority declared in clear, direct, and definite terms. express authority can be given orally or in writing

usage of trade

is defined as any practice or method of dealing having such regularity of observance in a place, vocation, or trade to justify an expectation that it will be observed with respect to the transaction in question.

disclosed or partially disclosed principal

is liable to a third party for contract made by the agent agent has no liability to 3P for disclosed principal's non-performance in most states, agent may be liable if Principal is partially disclosed if an agent acts within the scope of authority, agent entitled to indemnification from principal

lessee

is one who acquires the right to the possession and use of goods under a lease not title or ownership that means cannot destroy or sell

lessor

is one who transfers the right to the possession and use of goods under a lease

CISG incorporate

mirror image rule

agency by estoppel

principal causes a third person to believe that another person is the Principal's agent ant the third person acts to his detriment in reasonable reliance on that belief

agency by ratification

principal either by act or by agreement ratifies conduct of a person who is not in fact an agent

scope of agent's authority

principal is liable for acts entered into by agent when he/she/it gives Agent either actual or apparent authority

Doctrine of Respondeat Superior

principal is vicariously liable for Agent's negligent torts commited within the course of scope and employment applies especially to employer-employee relationships why? in most cases in which a principal has the level of control required, the agent will be an employee

CISG permits

promises to hold offer open to be enforced, even without additional consideration

conditioned on offeror's assent

regardless of merchant status, the UCC provides that the offeree's expression cannot be construed as acceptance if it contrains additional or different terms that are expressly conditioned on the offeror's assent to those terms

tort and contract remedies

remedies follow normal contract and tort remedies

Principal's rights and remedies against the agent

remedies follow normal contract and tort remedies actions available include constructive trust, avoidance, and imdemnification

exceptions to open terms rules

requirements contract=buyer agrees to purchase what the buyer needs or required output contract-buyer agrees to buy all of the seller's production or output

employee

salary, two weeks paid vacation, benefits insurance, 401 (k), social security, unemployment

course of performance

the conduct that occurs under the terms of a particular agreement is called course of performance

rules when one party both parties are non-merchants

the contract is formed according to the terms of the original offer and not according to the additional terms of the acceptance

performance

the degree of skill or care required of an agent is that expected of a reasonable person under similar circumstances unless the agent has presented himself as possessing special skills if an agent fails to perform his or her duties, he or she will generally be liable for breach of contract and may also be liable in tort for careless or negligent performance an agent who does not act for money may be subject to the same standards of care, but cannot be liable for breach of contract because there is no contract can be liable in tort

agency

the fiduciary relation that results from the manifestation of consent by one person to another that the other shall act in his or her behalf and subject to his or her control and consent by other other so to act. agent will act on behalf and instead of the principal in negotiating and transacting business with third parties

goods

the item must be tangible and movable physical existence

sale

the passing of title evidence from the seller to the buyer for a price the price may be payable in cash or in other goods or services

statute of frauds

the statute of frauds requires that certain types of contracts, to be enforceable, must be in writing or be evidenced by a written memorandum or record sales of goods of $500 or more must have a signed writing to be enforceable

unauthorized acts

unauthorized acts are outside of the agents express, implied, or apparent authority if agent has no authority but nevertheless contracts principal is not liable but agent is liable

open delivery terms

unless otherwise agreed, buyer takes delivery at the seller's place of business

open payment terms

unless otherwise agreed, payment is due on delivery

constructive trust

when an agent retains benefits or profits that belong to the principal, a court may impose a constructive trust

any reasonable means

when the offeror does not specify a means of acceptance, the UCC provides that acceptance can be made by any means of communication that is reasonable under the circumstances