COB 318 Exam 3

Express Authorization

"here is how you accept it", offer specifics method of acceptance a. Bi lateral contract: (99% of contracts), both parties exchanging FUTURE performance b. Unilateral contract: (1% of contracts), can only accept the contract by only performing it - example: if you provide info to someone wanted and it leads to their arrest-> you get $10,000-> only get the money if you turn them in

Involuntary Consent

"meeting of the minds" - mutual mistake of material fact: both confused about what they agreed upon -Fraudulent misrepresentation: omission (leaving something important out to deceive the other person-> misrepresented a material fact + intended to deceive + good lie + actual harm) - duress: threats or physical force (not for future) that are immediate + extortion/blackmail - under the influence: exerts influence + removes free will (relationship in balance, elderly (tricked))

Ilusary Consideration ***

"value" cannot be imaginary - Baugh v. Columbia heart clinic

Ch 7: Liquidation Bankruptcy

- "all persons" (Banks, insurance companies DO NOT COUNT) - voluntary ch 7 BR - involuntary ch 7 BR

Venture associates v. Verith Data Systems

- 2 companies got together -> sign letter of intent to NEGOTIATE A MERGER for $120 mil and close at the end of the deal -> buyer realizes other company is worse off than they thought -> tried to change contract -> other company tried arguing they had a contract -> judge said they only had a contract to negotiate so they are not doing anything wrong - definite terms

Definite Terms

- Under offer - sufficient detail for a court to enforce the deal - all have to be here for court to enforce: parties + specific tasks + specific goods + payment details + timing of transaction - Venture associates v. Verith Data systems

Objective Intent

- Under offer - would a reasonable person (judge) think it was truthful/sincere -Lucy v. Zammer (1954) -______ Realty v. Olas

Acceptance of an Offer

- agree via words/conduct (ex. thumbs up, nod, etc) - Mirror image rule - Mailbox Rule - Express Authorization

Bankruptcy

- allowed to wipe out most debt, we want people to have a fresh start - bankruptcy code: ch 7, ch 11, ch 13

Hammer v. Sidway

- an uncle promised his nephew money to refrain from drinking and gambling till he was an adult, kid cleans up his act, uncle dies before he gets his money, estate tried not giving him his money, went to court, judge said kid gave up his right to do something, so he gets the money - Consideration of a contract

Product liability

- buyer beware is now -> strict product liability = product defect + customer l=injury = automatic damages - manufacturing defects: deviation from specs - design defects: ERROR in specs, if you forgo a reasonable alternate design + minimal cost savings (Riley v. Ford Motor company) -Inadequate warning: reasonable warning (super hero costume-> this will not make you fly) - there are defenses

Implied Warranties

- caviat emptor (buyer beware-> was too harsh so it is no longer) -McFarland v. Newman 1. Implied Warranty of merchantability: fit for normal use 2. Implied Warranty for a particular person: fit for a known purpose + specific +non traditional uses 3. Implied warranty trade customer: oil in car example 4. Warranty disclaimer: (batteries not included) seller can wave IW if you do so by prominently displaying waiver in writing

UCC offers

- common law: objective intent + definite terms + communicated - UCC changes: indefinite terms are okay= if judge can fill in the blank terms w/ reasonable certainty 1. price: market price 2. payment method: timing-> at receipt of goods 3. Delivery method: pick up at sellers place of business

Baugh v. Columbia heart clinic

- gave doctor money to work, gave him a noncompete contract (if you leave the clinic for 1 yr you cannot compete within 20 miles), for each month of that year they will pay you $5,000, he quit and opened one across the street, if there was no 5k he could have opened it, he tried arguing it was imaginary, did not work - under illusary consideration

Seller Performance obligations

- have to make perfect tender: deliver or make available "conforming goods" - if seller delivers or tenders non conforming goods, buyer can: accept, reject, accept some and reject some - exceptions to perfect tender rule: curing (notice of cure + deliver conforming goods prior to deadline), substitute carrier ( substitute commercially reasonable carrier-> truck change), commercially impactable, destruction of goods

Buyer Performance Obligations

- must accept perfectly tender goods (absolute inspection rights, implied acceptance-> failure to reject + using the goods) - Pay for perfectly tender goods

Ch 13: Fixed Income (salary and pensioners)

- negotiate 3-5 yr payment plan - remaining debt discharged

UCC Statue of Frauds

- sale of goods greater than $500 require written contract - except: oral is okay if (oral contract between merchants memorialized in writing-> follow up email), an oral contact for specially manufactured goods after a substantial start -> glass cut specifically for JMU), an oral contract where 1 party admits to contract-> usually a mistake), and oral contract is valid with "partial performance"

Buyer Remedies

- seller weasels out 1. seller delivers nonconforming goods = reject + move on OR reject, cover, sue 2. seller goes bankrupt = sue 3. seller refuse to tender unique goods = sue for specific performance 4. seller delivers difficult to discover "non conforming goods (trying to trick you, revoke or sue, discover in reasonable time + notify seller in reasonable time) -> Fiti v. Strek

UCC remedies for break of contract

- sellers remedies - buyer remedies

Involuntary Bankruptcy

- threat - creditors petition court to initiate involuntary proceedings a. you owe more than $15,325 + not paying + actively avoiding

Warrants

- title warranties - express warranties - implied warranties

Termination of Offer

- under communicated portion of contract offer - has to happen before BEFORE acceptance 1. Revoke 2. reject 3. Counter Offer 4. Time loop (deadline or defaults to a "reasonable period") 5. Subject Matter destroyed (offer to sell house->house burnt down) 6. Offerings 7. Law Changes

Consideration of a contract

- value exchange for value - value= money, promise to act, promise not to act (for bearance) - Exchange= mutual sacrifice - Hammer v. Sidway - Baugh v. Columbia heart clinic

UCC Performance

-Duties for both buyer and seller: do business in good faith (dont lie) + observe reasonable commercial standards (depends on industry)

3rd party rights under contract

1. Assignment 2. Delegation 3. 3rd party beneficiary

Seller Remedies

1. if buyer accepts the goods and refuse to pay for it = sue 2. buyer makes "anticipatory reputation -> dont bring it, i wont take it= withhold, cover, sue for difference (or walk away)

Product liability defenses

1. known and voluntary risk 2. misuse of product -> crushed up and snorted drugs 3. commonly known damages: trying to sue a knife company for it cutting you 4. comparative negligence

Voluntary CH 7 Bankruptcy

1. petitioning BR court, where you declare your bankruptcy = debt disclosures, financial statements 2. Court reviews = "substantial abuse" = lets make sure your debt does exceed income (means test: looks at gross income and looks to see if it is below the state median income-> state investigates disposable income) 3. judge issues order of relief = bankruptcy proceeds 4. Automatic stay = suspends all debt collection except-> domestic support i.e. child support/ alimony) 5. estate in property = pool all assets for liquidation except-> homestead, car, personal items ($12,250), trade tools ($2,300) 6. Court appoints a bankruptcy trustee who takes "continuous control of estate in property, people try to engage in creditor preference (loan from family), fraudulent transfer 7. Distribution of liquidation remainder: credit preference -> secure creditors (collateral) then unsecure creditors 8. discharge of remaining debt: exceptions -> domestic support and back taxes, student loans = technically can discharge but only if you show undue hardship (nearly impossible)

Title Warranties

1. warranty of good title: valid +right to transfer 2. warranty against leans = no third party security interests 3. warranty against infringements = no pending IP claims

Jacob & Youngs v. Kent

J &Y hire kent to make house out of certain material -> the store did not have enough so they bought just as good pipe-> J&Y realized it during inspection -> they tried to sure and ripe out pipe -> jury said no because it was just as good, for same price and very little difference Substantial performance

McFarland v. Newman

Mc wanted to buy a horse, hose was acting weird, he asked abut it and the guy said thing but to go look at it, bought the horse and it had a disease, he tried to sue, judge said no cuz he had the change to look at the horse - Implied warranties, buyer beware

Equity Remedies

Specific Performance: court order you to perform (one of a kind things) Reformation: court rewrites contract if there is an obvious error

3rd party beneficiary (3rd party rights under contract)

a known third party whos intended to benefit from the contract, then they cannot - MC gets paid by student tutor, he tells his school about contract to pay them off, she does not pay him, he does not want to sue, the school can sue student instead

UCC "Merchant"

a. person who deals in specific goods (retail) b. person who holds themselves out as having knowledge/skill about goods (people you refer) c. employer of merchant: merchants firm offer-> irrevocable until the state of deadline + or until a reasonable time (3 months)

Mailbox Rule

acceptance occurs when deposit of acceptance not receive - can't say you never got it (stops weaseling) - Under acceptance

Uniform Commercial Codes

article 2 - UCC sales -UCC goods -UCC merchant

Discharge by agreement

both parties agree to a new or different type of performance - mutual recession (both just walk away), discharge by novation (email they can not do it and suggest someone else), discharge by settlement ("settled in the relationship, could have done better), accordance satisfaction (works out just as well for me, Ill give you free tutoring for teaching my kids the guitar), content to sue (will give your more time and will not sue them)

Strict (complete performance)

both parties carry out all material terms + exactly as argued = happy (no complaints/no lawsuit) - reasonable person standard (the jury)

Ch 11: Reorganization of bankruptcy

business entities (typically) + high net worth individuals - company files ch 11 petition-> court reviews it -> court almost always grants it (because of damages to rep) -> continues business as "debter in possession" -> debitor and creditor negotiate a repayment plan (usually pay back 29 cents on the $)-> each class of creditor approves the repayment plan (senior debt goes first= banks, bondholders, suppliers, shareholders), can result in judge cram down (force those^^ to take what they can get-> discharge

Contract Performance

carrying out your contractional dues=discharge from contract 5 types: strict (complete performance), substantial performance, timeliness of performance, discharge by agreement, and discharge by operation of law

Capacity of contract

certain people in certain contexts cannot contract -voidable: incapacitated party may not void contract (up to..) - minors: up to them, other party cannot back out - Mental incompetence: someone w/ disability/insanity - Involuntary Intoxication: someone put something in your drink

UCC Acceptance

common law: assent to offer by way of words or conduct - UCC Acceptance: ANY reasonable manner + any reasonable means - shipping goods: acceptance of an offer to purchase a. conforming goods: nice clean acceptance b. non conforming goods: (1/2 the time) acceptance = breach - mirror image rule does NOT apply between merchants (battle of forms/boiler plate war: if the acceptance has new terms, the new terms are incorporated into deal) -> UNLESS: materially alters the contract, if the offering merchant objects within a reasonable time -> payment time: payment due within 30 days, offers back 40 days x passing of title

Damages

compensatory damages (compensate for losses, pay what extra money you are out), consequential damages (might have to pay all foreseeable damages skimming from breach-> cost someone other profits), punitive damages (goes beyond social standards-> gross), nominal damages ($1, just to punish them), liquidation (about punishment if they miss "time of essence clause" -> each day you are late type of thing)

Ch 12

family farms and fisheries

Brown & Brown v. Johnson

if Johnson quit job you cannot work in the industry for 2 years -> judge ruled unconscionable -legality of contract

Riley v. ford Motor Company

keeps an old latch on car to save 85 cents, man was driving and died because of it, died to due to design defect - product liability (design defects)

Discharge by operation of law

law itself negates the duty or ability to perform the contract -material alteration: if you make it, contract no longer exists -statue of limitations: within the period va=5 yrs - bankruptcy: law discharges you from owing money -commercial impracticable: hard to accomplish, pandemic -impossibility of performance: law wont allow it (Kolodin v. Valenti)

Contract

legally enforceable agreement between parties breach=pay damages/money Elements: offer, acceptance, consideration, capacity, legality

Lucy v. Zammer

lucy drinking in the bar -> zammer is trying to buy his farm-> lucy is having $ troubles-> zammer asks lucy when he is drinking to sell it and they make the contract on a napkin-> zammer went the next day to kick lucy out of his farm -> lucy tries to say hes not actually selling it-> judge made him -> zammer won - objective intent

______ Realty v. Olas

man signs a lease for a huge house (decides he does not want it so he never showed)-> tried to get out of it-> judge said it was reasonable (he had to pay) - objective intent

Mirror Image Rule

mimic exact offer, any counter offer goes against it - under acceptance

Timeliness of Performance

minor delay is typically not a breach -" time of essence" clause: has to be done by a certain time (stated in contract)

Fiti v. Strek

mint condition $18k - bought baseball card mint, waited 2 years to get it appraised, was worthless, he tried getting his money back, other guy said no, threatens to sue, did he discover and notify in reasonable time, judge ruled in favor of guy who bought it (said he was in reasonable time) - buyer remedies, seller delivers difficult to discover non conforming goods

Express Warranties

overt promising about a product = "basic of the bargon-> induced purchases 1. statement of fact about the product 2. sample and floor model (making an over promise the quality will be that good) 3. Descriptions + labels (like GF, 100% cotton, etc)

UCC "Sales"

passing of title (evidence of ownership transfer) from seller to buyer -risk of loss: $500 mil (cars sinking to bottom example) -Nautilus Insurance v. Chevron Insurance

Offer

promise to do (or refrain from doing) some future act -to be valid: OBJECTIVE INTENT of the offer (sincerity) + DEFINITE TERMS of the deal + was the offer actually COMMUNICATED to the person

Nautilus Insurance v. chevron insurance

regular starts paying a payment plan to owner of the bar for all assets (not property), there was a fire, burnt down, who got insurance money?, they paid the guy who was making payments - UCC "Sales", risk of loss -business planning (when title passes) =FOB (freight on board), at embarkment, delivery, paid in full

Substantial Performance

sort of missed the mark, good faith effort + minor - jacob & Young v. kent

UCC "Goods"

tangible and moveable

Kolodin v. Valenti

they had a relationship -> man started abusing her -> she got a restraining order -> she wanted out of their working contract -> company cannot represent her w the restraining order -> judge agreed and let her out of the contract -Impossibility of performance (discharge of operation of law)

Assignment (3rd party rights under contract)

transfer contractual rights to a third party, non assignment clause (to get a new roommate you have go through renting company)

Delegation (3rd party rights under contract)

transfer duties of contract; allowed if no non delegation clause, i default rule; if a personal contract (hire a band for you bday but another shows up)

Legality of a contract

you cannot enter a contract for illegal acts + violates public policy (it is void) - example: gambling contract, unlicensed professional, unconscionable (unfair), contracts in restraint of trade - Brown & Brown v. Johnson - Statue of frauds: prenuptial agreement, real estate, goods above $500, contract spanning more than 1 yr