Bus Law Exam 3

Rewards

public offer for reward IS an offer - unilateral offer - offeree must be knowledgable of offer

The Doctrine of Promissory Estoppel

-promisor should reasonably expect reliance of promisee on his promise - promisee does rely on the promise -injustice results to the promisee as a result of relying on promise CAN BE ENFORCED

4 things needed for a contract

- offer - acceptance - valid consideration - no defenses

UCC contract for a "good"

"goods" under the UCC would be a computer system (hardware or software), bicycle, bus-- Not sale of office building or real property -"tangible, movable, PERSONAL property"

Intent and Acceptance of the Offeror's Terms

- Common law "mirror image rule": acceptance must be exactly a mirror image of the terms of the office (no changes otherwise considered a counteroffer), inquiry of the terms is ok - UCC and the "Battle of the Forms": very different than the common law

Communication of Acceptance

- acceptance by instantaneous forms of communication (face to face or telephone) - acceptance by non- instantaneous forms ( letter, fax, email) - Stipulated means of communication (acceptance must be expressed using certain medium if stated in the offer)

UCC Article 2

- only applies to the "sale of goods" no service contracts -came be applied to hybrid transactions (both good & service) ONLY if the good aspect of the contract dominates

Contracts of Intoxicated Persons

-intoxicated can be drugs or alcohol -intoxication is ground of lack of capacity only in extreme (other party must also be knowledgeable of extreme impairment) -similar to mentally incapacitated but courts less sympathetic (rare to escape obligations)

Offer

A promise or commitment to perform or refrain from performing some specified act in the future. - must be objective evidence of a present intent to contract -definitiveness or certainty of the terms (more of it means more likely an offer) -objective is "what would a reasonable person would conclude here"

Mistake

Belief about a past/existing fact that is not in accord with the truth (not result of fraudulent untrue statement)

Acceptance in Bilateral vs Unilateral

Bilateral= offeree make promise requested by the offer expressly or implicitly Unilateral= performing the requested act

Fraud

Must prove all 5: 1) untrue assertion of a past/existing fact must have been made by the defendant (assertion= NOT fraud, active lie=fraud) opinion generally NOT fraud except fro trust between existing relationship, party is vulnerable, reasonable belief from and expert 2)fact must have been material 3) fraudulent assertion made knowingly and with "intent to deceive" 4)party entered contract because of reasonable and justifiable reliance on assertion 5)relying party must have been injured or suffered damage

UCC vs. Common Law rules

UCC governs sale of goods, Common law governs service, land, etc.

Auctions

WITH RESERVE: person biding=offeror seller= offeree - acceptance is when hammer brought down and said "sold" WITHOUT RESERVE: seller=offeror bidder= offeree - once call for bids seller can't withdraw property - bidder can withdraw bid before hammer

Unilateral Contract

a promise in return for some type of an act or performance (ie. if you find my dog I will reward you $500)

Bids

advertisements for bids generally treated as invitations to deal UNLESS when sated "contract awarded to lowest bidder"

Past Consideration

agreeing to do something that has already taken place in the past is NOT valid consideration

UCC Contract Modification Rule

agreement to modify a contract for sale of goods does NOT need new consideration to be binding

contract

an agreement that can be enforced in court; formed by 2 or more parties who agree to perform or to refrain from performing come act or in the future

Death or insanity of either party

automatically terminates offer without notice

Mutual Mistake

both parties to a contract have an incorrect belief about the same fact -mistake related to same basis assumption which the contract was made -has a material effect on the agreed-on exchange -party adversely affected by the mistake doesn't bear the risk of the mistake

Contractual Capacity

contract voidable at the option of the person who lacked capacity (ability to incur legal obligations and acquire legal rights)

Effect of the Contract Defenses

contracts induced by fraud, duress, mistake, undue influence, etc are voidable at option of injured party - contract is unwounded and parties must return anything received from other party

Agreements/Contracts to commit a crime

contrary to public policy - both parties aware contract is illegal -ignorance of the law?if both ignorant no enforcement, if one party ignorant and pulls out before learning of illegality then other party can sometimes recover based on breach of agreement

Contracts in Restraint of Trade or Competition

contrary to public policy-- not to compete - unenforceable unless reasonable in scope, time, geographic area, serve legitimate business interest

Contracts of Waiver from Liability Clauses

contrary to public policy-- unenforceable if... -excludes intentional tort or gross negligence -affected activity is an important public interest or public policy involved -parties have greatly unequal bargaining power -clause is not clearly written or visible

Unconscionable Contracts

contrary to public policy-- where the contract is so harsh, oppressive, unintelligible, contains inconspicuous print

Usury/Usurious Contracts

contrary to statute-- charge excessive interest on loan - california legal rate is 10% -credit card companies exempt from this

Gambling Contracts

contrary to statute-- the hallmark of a wager or gambling contract neither party has any finnacial stake in the uncertain event except for the the stake they created in the bet

Quasi Contract

court-imposed obligation to prevent unjust enrichment in the absence of a contract

Intervening Illegality

embargo of any kind terminates offer

Contract Covered by Certain Licensing Statutes

for people who are required to get a permit or license to practice but don't get one (ie doctor, contractor, attorneys) -Protection of public statute -revenue raising statute

Advertisements

generally NOT offers instead viewed as invitations - not certain or definitive -if terms are certain/definitive then can be and offer

Substitutes for Consideration

if consideration fails there are still exceptions that if satisfied the promise/contract can still be enforced

Lapse of Time

if not time stated the offer will stay open for a "reasonable" period of time before termination

Destruction of the subject matter of the contract

if subject matter destroyed without knowledge or fault of either party then offer automatically terminated

Legality

in order to be a enforceable contract must formed for legal purpose, not contrary to statute, not violate public policy

Bilateral Contract

involves a promise in return for a promise (ie. paying someone $500 to put a new roof in)

Idea of Consideration

legal value, bargained for, and given in exchange for an act or a promise

Minor Damaging subject matter of contract

majority of states= don't need to make restitution to adult minority of states= do need to make restitution to adult

Minor's Right to Disaffirm

minor can disaffirm any contract they enter EXCEPTIONS -Statutory exception:marriage, agreements to support child, school loans, sports contracts, employment of child actor -Emancipated minor -Necessities: food, clothing, shelter, medical care, education (not liable for price of necessity)

Moral Consideration

promises based on moral obligations are generally held to lack adequate/valid legal consideration and are unenforceable (ie mother promises to give child money)

Gifts

not enforceable because no bargaining took place and consideration FAILS

Communication to the Offeree

offer must be communicated to offeree otherwise lack of present intent to contract

Terms of the Offer

offeror can give length of life to the offer and if not accepted in time offer may terminate

Revocation

offeror can revoke offer at anytime even if promised to hold open for certain period of time EXCEPTIONS - option contract supported by consideration -UCC Firm Offer (writing signed by merchant promising to buy/sell goods AND promises to hold offer open -Unilateral contract ins involved and the offeree starts to perform the requested act -Promissory Estoppel

Rejection by the Offeree

once offeree rejects offer they cannot "revive" it and then try to accept

Breach

one of the parties obligated to do/don't do something under contract failed to do that (breach) and therefore is liable to the other party for monetary damages

Unilateral Mistake

one party makes about a basic assumption on which he made the contract -mistake made must relate to basic assumption on which contract made -must have had material effect on the agreed upon exchange -mistaken party must have not borne the risk of that mistake -non-mistaken caused the mistake made by the mistaken party

Who can accept an offer?

only the offeree (or their agents) can accept - anyone else attempting to accept will be treated as a different offer

Implied Contract

parties create a contract by their conduct (ie.going to a doctor for treatment)

Express Contract

parties expressly create a contract either by words or in writing

Adequacy of Consideration

promise/performance only needs to satisfy legal value test --> NOT whether it was worth the reward -rationale/social policy: freedom of contract includes right to make bad bargains as well as good ones (only fight against if contract based upon grounds as fraud, duress, unconscionability, lack of capacity, it was a gift, etc) - illusory promises: not valid consideration b/c not legally binding to do anything (ie I will wash your car if i feel like it) -Preexisting duties: Common Law rule-promise to do who one is already legally obligated to do is NOT valid consideration UCC contract modification rule- agreement to modify a contract for sale of goods does NOT need new consideration to be binding

Silence as an acceptance

silence cannot/is not an acceptance - except custom in industry is otherwise or prior relationship between parties is otherwise

Promissory Estoppel

situation where one person relies on a promise made by another, but one of the elements of a contract is missing so contract has NOT been made

Capacity of Mentally Impaired Persons

test for mental capacity - mental illness, brain damage, intellectual disability, senility, etc -cognitive test requested by courts right to disaffirm - only mentally impaired person can disaffirm contract - person formally incapacitated can ratify if regains capacity - must return and consideration given -liable for reasonable value of necessities same way as minors

Voidable

the contract can be cancelled (or rescinded by the damaged party)

Bargaining for Exchange

the essence of consideration that it is given and accepted as the motive or inducement of the promise

Offeree

the person receiving the offer

Offeror

the person who makes the offer

Legal Value

the promisee agreeing to do something he had no prior legal duty to do, by agreeing adds legal duty - doesn't mean it must have economic or monetary value

Duress

the wrongful coercion such as physical compulsion, threats of physical, emotional or harm -contract induced by an improper threat -victim had no reasonable alternative (economic duress?-- modern approach: yes duress)

Misrepresentation of Age

traditional: doesn't affect right to disaffirm contract modern: estoppel (barred) from asserting minor status to disaffirm contract

Undue Influence

unfair persuasion (not coercion) -relationship between parties is one of trust or confidence OR persuading party dominates the other party (parent-child, lawyer-client) -persuasion is unfair

Acceptance

voluntary act by the offeree that shows agreement to the terms of the offer - intention to accept - intent and acceptance of the offeror's terms

UCC Firm Offer

writing signed by merchant promising to buy/sell goods AND promises to hold offer open