Business law #2

Strong Marks:

(trademark violations) Fanciful, arbitrary, or suggestive trademarks are generally considered to be most distinctive, because the mark usually is unrelated to the nature of the product or service.

Past consideration

(under insufficient consideration) Promises made in return for acts or events that have already taken place are unenforceable for lack of sufficient consideration.

Lapse of Time

(under termination by law) An offer terminates automatically when the time period specified in the offer expires.  If no time period is stated in the terms of the offer, then the offer will terminate after a reasonable period of time has expired.

Acceptance by Silence

Generally speaking, silence (or inaction) cannot constitute acceptance - even when the offeror indicates that silence or inaction will be taken as acceptance. There are exceptions:

Consideration:

Value given in return for a promise. Consideration must be (1) legally sufficient and (2) bargained for by the party receiving it.

what must happen for accord and satisfaction to occur?

the amount of the obligor's debt to the obligee must be in dispute, or unliquidated.

Collective Mark

(trade dress and service marks) A mark used by members of a cooperative, association, or other organization to distinguish products or services approved by the collective from those not so approved (e.g., union labels).

what can a trademark be established by?

(trademark protection) (1) registering the mark with one or more states or with the U.S. Patent and Trademark Office pursuant to the Lanham Act, or (2) prior use sufficient to warrant common law protection.

Trademark

(trademark protection) A distinctive mark, motto, device, or emblem that a manufacturer stamps, prints, or otherwise affixes to the goods it produces so that they may be identified on the market and their origins made known.

once a trademark is established, what is its owner entitled to?

(trademark protection) exclusive use of the trademark.

Generic Terms:

(trademark violations) Terms that refer to an entire class of products are not entitled to protection, even if the term was originally the name of a trademarked product.

Trademark Dilution

(trademark violations) Using a mark similar, but not identical, to a protected trademark

Covenant Not to Sue:

(under releases and covenants not to sue) An agreement to substitute a contractual obligation for some other type of legal action based on a valid claim.

Release:

(under releases and covenants not to sue) An agreement whereby one party forfeits its rights to pursue a legal claim against another party.

Supervening Illegality

(under termination by law) A statute or court action that makes a previously valid offer illegal will automatically terminate the offer.

Destruction of Subject Matter:

(under termination by law) An offer terminates automatically if the subject matter of the contract (i.e., goods, property) is destroyed prior to acceptance.

Death or Incompetence

(under termination by law) offeree's power to accept is terminated when the offeree or the offeror dies or is deprived of legal capacity to enter into the contract, unless the offer is irrevocable, in which case only the offeree's death or incompetence will terminate the offer.

Requirements Contract:

(under uncertain obligations) A contract whereby the buyer agrees to purchase all of the goods of a designated type she needs from the seller. Requirements contracts are not illusory, despite the uncertainty whether the buyer will actually require any of the designated goods (and, if so, how many).

Illusory Promises:

(under uncertain obligations) If the terms of a contract call for performance in such uncertain terms that the promisor has not definitely promised to do (or refrain from doing) anything, the contract is unenforceable for lack of sufficient consideration

what are the impliedly authorized methods that common law recognizes

(1) Any means that is as fast or faster than the method identified as acceptable by the offeror; and (2) U.S. Mail is always impliedly acceptable when the parties are bargaining at a distance.

When are releases generally binding?

(1) given in good faith, (2) written, and (3) accompanied by consideration.

what are the exceptions to the mailbox rule?

(1) if the acceptance is not properly dispatched, it will be effective when received by the offeror; (2) if the offeror conditioned the offer on receipt of the offeree's acceptance, it will be effective when received by the offeror; and (3) if the acceptance is sent after a rejection, whichever is received first by the offeror is given effect.

Meta Tags

(cyber marks)Words inserted in a web site's "key words" field in order to increase the likelihood that an Internet search engine, such as AltaVista™, Yahoo!™, or Lycos™, will include that Web site in a key word search.

Intent to offer

 A variety of common statements related to business transactions are not offers, including:  expressions of opinion;  statements of intention;  preliminary negotiations;  agreements to agree to one or more material contract terms or conditions at some later day; and  auctions and other invitations to bid, negotiate, or contract, including most forms of advertisement.

What are the exception of acceptance by silence

 Acts Consistent with Acceptance: If the offeree, despite having an opportunity to reject, takes the benefit of offered goods or services, he is implied to have accepted the goods or services and agreed to compensate the offeror according to the terms of the offer.  Prior Dealings: If the offeror and offeree have prior dealings, pursuant to certain standard terms and conditions, the offeree has the duty to reject or risk being bound by his silence.  Unilateral Contract: Because a unilateral contract requires acceptance by some action on the part of the offeree, acceptance is usually evidenced by the action; and, therefore, notification is unnecessary - unless the offeror has specifically requested notification or has no means to determine whether the requested act has been performed. When the offeror and offeree cannot or chose not to deal face to face, acceptance is effective when communicated by the offeree to the offeror by an authorized means.

promisor vs. promisee

 Promisor: The person making the promise.  Promisee: The person to whom the promisor made the promise.

what are some examples of irrevocable offers?

 option contracts, under which the offeror, in exchange for valuable consideration from the offeree, cannot revoke her offer for a stipulated time period during which the offeree has the sole right of acceptance.  The offeree must give the offeror valuable consideration to make an option contract irrevocable.  firm offers for the sale or purchase of goods made by a merchant and subject to the provisions of the Uniform Commercial Code ("UCC"); and  offers on which the offeree has justifiably relied to her detriment (a.k.a. "promissory estoppel").

Legally sufficient consideration may take the form of:

(1) promising to do something that the promisee has no prior legal duty to do (e.g., promising to pay money for the promisor's goods); (2) performing an action that the promisee is not otherwise obligated to undertake (e.g., painting the promisor's house); or (3) refraining from exercising a legal right that the promisee is otherwise entitled to exercise (e.g., dismissing a viable lawsuit against the promisor).

what do you have to consider with the object theory of contract?

(Contact interpretation) (1) the words used by the parties in the agreement, (2) the actions of the parties pursuant to the agreement, and (3) the circumstances surrounding the agreement as they would be interpreted by a reasonable person - rather than by considering the parties' subjective intentions (usually expressed after the fact).

Rules of Interpretation:

(Contact interpretation) When a contract contains ambiguous or unclear terms, a court will resort to one or more rules in order to determine and give effect to the parties' intent.

The Plain Meaning Rule

(Contact interpretation) When a contract is clear and unequivocal, a court will enforce it according to its plain terms, set forth on the face of the instrument, and there is no need for the court to consider extrinsic evidence or to interpret the language of the contract; cannot be ambiguous.

Options to Cancel:

(Under uncertain obligations) If the terms of a contract give one party the option to cancel at any time (including before the other party begins to perform), for any reason, without prior notice, the contract is unenforceable for lack of sufficient consideration.

what is the key to contract interpretation?

(contract interpretation) is to give effect to the intent of the parties as expressed in their agreement.

Valid Contract

(contract performance and enforceability) A contract satisfying the requisites discussed earlier - agreement, consideration, legal purpose, capacity, and form.

Executed Contract:

(contract performance and enforceability) A contract that has been completely performed by both (or all) parties.

void contract

(contract performance and enforceability) is a contract having no legal force or binding effect (e.g., a contract entered into for an illegal purpose

unenforceable contract

(contract performance and enforceability) is an otherwise valid contract rendered unenforceable by some statute or law (e.g., an oral contract that, due to the passage of time, must be evidenced by a writing to be enforceable)

voidable contract

(contract performance and enforceability) is an otherwise valid contract that one of the parties may legally avoid, cancel, or annul (e.g., a contract entered into under duress or under false pretenses);

executory contract

(contract performance and enforceability)is a contract that has not yet been fully performed by one or more parties.

Copyright Infringement:

(copyright violations) Using a copyrighted form or expression of an idea, even with slight variations, without permission.

Is it possible to copyright an idea? or a fact?

(copyright violations) While it is not possible to copyright an idea, the particular expression of an idea is copyrightable. Likewise, facts cannot be copyrighted; however, compilations of facts can.

Can a copyright grant its holder the same monopolistic control over his/her creation as a patent or trademark?

(copyright violations) Yes, however, a copyright may be obtained only for works of art, literature, music, and other forms of authorship (e.g., computer programs).

Do copyrights need to be registered?

(copyright violations) they can but don't need to be; registered with the U.S Copyright Office

Trade Name

(counterfeit goods and trade names) A term used to indicate part or all of a business' name and that is directly related to the business' reputation and goodwill.  Trade names are protected by common law.

Counterfeit Goods

(counterfeit goods and trade names) Goods that copy or otherwise imitate trademarked goods.

Stop Counterfeiting in Manufactured Goods Act (SCMGA)

(counterfeit goods and trade names) criminalized trafficking or attempting to traffic in counterfeit goods or services. It also prohibits creating or shipping counterfeit labels that are not attached to goods.

Cybersquatting

(cyber marks) Registering someone else's name or trademark as a domain name (i.e., Internet address), then offering to sell the registered domain name to that person.

Anticybersquatting Consumer Protection Act

(cyber marks) Congress passed in 1999, (ICANN) oversees the domain name system, accredits companies to register domain names, and manages an online arbitration system to resolve domain name disputes and approve online ADR providers.

Internet Corporation for Assigned Names and Numbers (ICANN)

(cyber marks) oversees the domain name system, accredits companies to register domain names, and manages an online arbitration system to resolve domain name disputes and approve online ADR providers.

Implied-in-Fact Contract:

(express and implied contracts) A contract formed in whole or in part by the conduct (as opposed to the words) of the parties. In order to establish an implied-in-fact contract, (1) the plaintiff must have furnished some service or property to the defendant, (2) the plaintiff must have reasonably expected to be paid and the defendant knew or should have known that a reasonable person in the plaintiff's position would have expected to be paid for the service or property rendered, and (3) the defendant must have had the opportunity to reject the service or property and failed to do so.

Express Contract

(express and implied contracts) A contract in which the terms of the agreement are explicitly stated either orally or in writing.

What are the examples of Formal Contracts?

(formal and informal contracts)  Contract Under Seal: A formalized writing with a special seal attached.  Negotiable Instrument: A check, note, draft, or certificate of deposit - each of which requires certain formalities.  Letter of Credit: An agreement to pay that is contingent upon the receipt of documents (e.g., invoices and bills of lading) evidencing receipt of and title to goods shipped.

Informal Contract

(formal and informal contracts) A contract that does not require a specified form or method of formation in order to be valid.  The vast majority of contracts are informal.

Formal Contract

(formal and informal contracts) contract that requires a special form or method of formation (creation) in order to be enforceable

Intellectual Property:

(intellectual property) Any property resulting from intellectual, creative processes - the product of one or more individual's mind.  The framers of the U.S. Constitution recognized the need to protect and promote intellectual property more than two hundred years ago. Article I, Section 8 empowers Congress [t]o promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.

What are laws protecting patents, trademarks, copyrights explicitly designed to do?

(intellectual property) protect, nurture, and reward inventive and artistic creativity.

Licensing

(intellectual property)An intellectual property owner may license another party to use the owner's trademark, copyright, patent, etc. for certain purposes. A licensor must maintain some form of control over the nature and quality of goods or services sold or rendered under the license.

"mirror image" rule

(part of counter offer) An offeree's acceptance must match the offeror's offer exactly. If the offeree's acceptance materially changes, adds to, or deletes any terms in the original offer, the offeree's attempted acceptance is deemed to constitute a counteroffer, not an acceptance.

To obtain protection under the Copyright Act and work must be original and constitute what?

(patents) (1) literary, musical, or dramatic work, (2) pantomime or choreographic work, (3) pictorial, graphic, or sculptural work, (4) motion picture or other audiovisual work, (5) sound recording, or (6) architectural work.

Patent Infringement:

(patents) Making, using, or selling another person's patented product, process, or design without permission.

Copyright

(patents)The exclusive right of an author to publish, print, or sell for a certain period of time a product of her intellect.

Patent

(patents: A grant from the government giving an inventor the exclusive right or privilege to make, use, or sell his invention for a set period of time.  A patent may protect a product, a process, or a design.  In order to obtain a patent, the inventor must convince the U.S. Patent and Trademark Office that the product, process, or design is genuine, novel, useful, and not obvious in light of current technology.  Unlike many other countries, the U.S. awards patent protection to the first person to invent a product, process, or design, not the first person to file a patent application for said product, process, or design.  The patent owner will frequently grant exclusive or non-exclusive licenses to others to enable them to make, use, or sell the patented product, process, or design. In return for which, the patent owner will typically be paid a royalty on all sales of goods manufactured or sold pursuant to the license.

Quasi Contract

(quasi contract)A fictional contract imposed on parties by a court in the interests of fairness and justice, typically to (1) prevent the unjust enrichment of one party at the expense of the other, and (2) allow the party whose actions would otherwise unjustly enrich the other to recover the value of the enrichment.

Random facts to memorize for rules of interpretation

(rules of interpretation)  Insofar as possible, give the contract's terms a reasonable, lawful, and effective meaning.  Interpret the contract as a whole and "harmonize" its various provisions to yield a consistent expression of intent.  Give negotiated terms greater consideration than standard-form, or "boilerplate," terms.  Give a non-technical term its ordinary, commonly-accepted meaning and a technical term its technical meaning, unless the parties clearly intended something else.  Favor specific terms over general terms.  Favor handwritten terms over typewritten terms and typewritten terms over printed terms.  Construe any ambiguity against the drafting party.  Interpret a contract in light of pertinent usages of trade in the locale or industry, the course of prior dealing between the parties, and the parties' course of performance of the contract.

Certification Mark

(trade dress and service marks) A mark used by one or more persons or entities other than the owner to certify the region, materials, mode of manufacture, quality, or accuracy of the owner's goods or services (e.g., "UL Tested," "Good Housekeeping Seal of Approval," "J.D. Power & Associates").

Service Mark

(trade dress and service marks) A mark used in the sale or the advertising of services to distinguish the services of one person or entity from those of another.  Titles, character names, and other distinctive features of radio and television programs may be registered as service marks

Trade Dress

(trade dress and service marks) The image and overall appearance of a product (e.g., the distinctive decor, menu, layout, and style of service of a particular restaurant).  Trade dress is afforded basically the same protection as a trademark.

Trademark Infringement

(trademark violations) Using a protected trademark in its entirety, or copying it to a substantial degree, without authorization.  Only those marks that are sufficiently distinctive from all similar or competing marks will be protected from infringement. Such trademark must enable consumers to (1) identify the manufacturer of the good easily, and (2) differentiate between competing products.

Secondary Meaning

(trademark violations): Descriptive terms, geographic terms, and personal names are not inherently distinctive, but will be protected if consumers associate the specific term or phrase with the particular trademarked item.

what are the requiring elements of Prommisory Estoppel?

(under Promissory Estoppel) (1) the promisor made a clear and definite promise; (2) the promisee justifiably relied on the promise; (3) the promisee's reliance was substantial and of a definite character; and (4) enforcing the promise will serve the best interests of justice.

Charitable Subscriptions:

(under Promissory Estoppel) A promise to a charity on which the charity detrimentally relies - particularly by undertaking a project for which it specifically solicited the promise - may bind the promisor, even if it was insufficient to form the basis of a valid, legally binding contract.  The Restatement (Second) of Contracts dispenses with the reliance requirement for charitable subscriptions, but only a few courts have followed suit.

Promissory Estoppel:

(under Promissory Estoppel)When a promisor makes a clear and definite promise on which the promisee justifiably relies, the promisor may be bound, even if its promise was insufficient to form the basis of a valid, legally binding contract.

Liquidated Debt

(under accord and satisfaction) A debt whose amount has been ascertained, fixed, agreed on, settled, or exactly determined.

Unliquidated Debt:

(under accord and satisfaction) A debt, the amount of which reasonable persons may dispute.

Offer:

(under agreement) A promise or commitment to perform or refrain from performing some specified future act made by the offeror.  The offeror must seriously, and objectively, intend to perform or refrain as offered.  The terms of the offer must be reasonably certain or definite.  The offeror must communicate the offer to the offeree.

Acceptance

(under agreement) A voluntary act by the offeree - either in the form of words or of conduct - which indicates agreement to the terms of the offer.  The acceptance must be unequivocal and must be communicated to the offeror.  A third party, other than an agent acting on behalf of the offeree, generally cannot substitute itself for the offeree and accept the offer.

Bilateral Contract:

(under bilateral and unilateral contracts) A bilateral contract arises when the offeror gives her promise in exchange for the offeree's return promise (e.g., X promises to deliver a car to Y, and Y promises to pay X an agreed price).

Unilateral Contract:

(under bilateral and unilateral contracts) A unilateral contract arises when the offeree can only accept the offer by performance (e.g., X offers Y $25 to mow X's yard).

Once the offeree of a unilateral contract begins to perform, what happens to the offeror?

(under bilateral and unilateral contracts) Once the offeree of a unilateral contract begins to perform, the offeror loses the ability to revoke her offer (e.g., if X offered Y $25 to mow X's yard, on Y had substantially begun to perform, X could not revoke her offer to pay Y for mowing her yard).

The mailbox rule*

(under communicating acceptance) An acceptance is effective once the offeree places it in the mailbox.  Note that, whereas a revocation becomes effective upon its receipt by the offeree, an acceptance becomes effective upon its dispatch by the offeree to the offeror.

Consideration

(under contract requisites) Something of value given or promised to convince a party to agree to the deal.

Form

(under contract requisites) The agreement must be in whatever form (e.g., written, under seal) the law requires.

Contractual Capacity

(under contract requisites) Both parties must be legally competent to enter into the agreement.

Legality

(under contract requisites) The contract's purpose must be to accomplish some goal that is legal and not against public policy.

Agreement:

(under contract requisites) The offeror must offer to enter into an agreement, and the offeree must accept the terms of the offeror's offer.

Contract:

(under contract vs. promise) An agreement between two or more competent parties, for valuable consideration, to perform or to refrain from performing some act now or in the future.

Genuineness of Assent:

(under contract vs. promise) The apparent consent of both parties must be genuine.

Offeror vs. Offeree

(under contract vs. promise)  Offeror: The person proposing an agreement.  Offeree: The person to whom the offeror proposes the agreement.

Objective Theory of Contract:

(under contract vs. promise) The parties' assent is judged not by the subjective intent of each party, but by the objective intent that a similarly situated reasonable person would understand the parties to have.

Promise

(under contract vs. promise)A person's declaration that something will or will not happen in the future.

Preexisting Duty:

(under insufficient consideration) A promise to do (or refrain from doing) what one already has a legal duty to do (or refrain from doing) generally does not constitute legally sufficient consideration.  However, under the "unforeseen difficulties" doctrine, an existing contract may be modified to account for unforeseen difficulties that arise during the course of performance. In such a case, the promisee's obligation under the modified contract is new consideration.  Likewise, if the parties agree to replace an existing contract with a new, superseding contract, the promise to perform the new contract is a new promise; and, thus, not a promise to perform a pre-existing legal duty.

Output Contract:

A contract whereby the seller agrees to sell all of the goods of a designated type it produces to the buyer. Output contracts are not illusory, despite the uncertainty whether the seller will actually produce any of the designated goods (and, if so, how many).

Agreement

A meeting of two or more minds in regard to the terms of a contract, through offer and acceptance.

Accord and Satisfaction

An agreement between an obligor (debtor) and obligee (creditor), by which the obligor agrees to pay the obligee some amount owed under the contract (generally less than the amount in dispute) in exchange for a discharge of all obligations owed by the obligor to the obligee.

Definiteness

Generally, an offer must include the following terms, either expressed in the contract or capable of being reasonably inferred from it: (1) the identity of the parties to the offer; (2) the identity of the object or subject matter of the offer, including, e.g., quantity of goods, work to be performed, specific identity of unique goods, etc.; (3) the consideration to be paid; and (4) the time of payment, delivery, or performance.  An offer may invite an acceptance to be worded in such specific terms that a contract is made definite by the acceptance.  A court may supply one or more missing terms if the parties have clearly manifested their intent to form a contract. However, if the parties have clearly failed to agree on a particular term, a court generally will not supply a reasonable term in its stead.

Rejection

The offeree may reject the offer, in which case the offer terminates when the offeror receives notice of the rejection.  Any subsequent attempt by the offeree to "accept" will be construed as a new offer, which the original offeror (now the offeree) may accept.  Rejection is ordinarily accomplished by words or by conduct evidencing an intent not to accept.  To be effective, the rejection must be received by the offeror prior to any contrary writing or conduct evidencing acceptance by the offeree.

Counter offer:

The offeree's rejection of the original offer, coupled with the original offeree's new offer to the original offeror.

Revocation

The withdrawal of an offer, communicated to the offeree or its agent prior to the offeree's acceptance. Unless an offer is irrevocable, the offeror may revoke without liability an unaccepted offer.

what is the general rule of acceptance?

acceptance is effective at the time it is communicated by the offeree via an authorized means of communication (the "mailbox rule"),  If the acceptance is not communicated by an authorized means, it will be effective when the offeror receives it.

When is consideration bargained for?

if the promisor sought it in exchange for the promisor's promise and the promisee gave it in exchange for the promisor's promise.  Courts will generally not inquire into the adequacy of the consideration, as long as the promisor bargained for it - although some courts will make an exception for grossly inadequate consideration.