REG 7

Is "in writing" a general element of a contract?

No, not generally

Is there apparent authority if the 3rd party does not know the ID of the principal?

No, there cannot be

What is the person that makes the offer called?

Offeror

What are the Definite and Certain terms that need to be disclosed for an offer to be valid?

UCC Sale of Goods = JUST quantity of item Common Law (RISE) = -Identity of oferee -Price -Time of performance -Quantity -Nature of work

What are the duties of the agent to the principal?

"LORAS" Loyalty (no self dealing, kickbacks or competing) Obedience (all reasonable instructions) Reasonable Care Account (to principal for all property and money you received/payed out)

What contracts are governed by Common Law?

"RISE" Real Estate Insurance Services Employment

What are the 2 potential defenses already discussed that can make a contract unenforceable?

1. Lack of an agreement 2. Lack of consideration

What does the "right" to terminate an agency relationship mean?

If I have a 5 year contract to work for you and I quit, obviously I have the power to not perform work for you, but I did not have the right to quit, so you can sue me for breach of contract

What is "Offer and Acceptance" also called?

Mutual Assent Meeting of the Minds

If something was given or performed BEFORE the promise was made, if this enforceable?

NO EX- You save someones life and then they say they will pay you $100. This is not enforceable b/c the life saving was done before the promise was made

How is Apparent Authority terminted?

NOTICE to 3rd parties

How can a contracting party establish the defense of Fraud to make a contract unenforceable?

"MAIDS" ALL 5 requirements for fraud- Misrepresentation of a material fact (not an opinion) Actual (and reasonable) reliance on the misrepresentation Induced reliance Damages suffered Scienter- you did it intentionally

Does Ratification require consideration?

No

Does the law enforce gratuitous promises (promises to give a gift)?

No b/c consideration (something of legal value) must be given for an agreement to be legally enforceable EXCEPTION- Detrimental Reliance: If you promise to donate money to a charity and they detrimentally rely on this donation, they might be able to sue you if you do not give the $

Alex asks Bob to repaid a broken window at his store within 3 days. The price will be agreed upon later. Is this offer complete?

No b/c this is governed under common law (RISE) and there is no price

Are employers liable for intentional torts of their employees?

No b/c this is out of scope of their duties within the business

Once an offer is effectively rejected, can the offeree then go an accept it?

No once the offeree rejects the offer it can never be accepted. A new offer would have to be made

Does consideration need to flow to the party IN the agreement to be valid?

No the consideration CAN be given to a 3rd party and still be valid consideration

Is an advertisement in the newspaper an offer?

No this is just an invitation seeking an offer EXCEPT- You advertising rewards, the first 30 people that show up, whoever finds my dog, this is an offer

Does an agents mere representation that she is an agent establish apparent authority?

No this is not enough. The principal must do an act that makes it reasonable for 3rd parties to believe the agent has this authority

If you were already legally or contractually required to do or give something, is this considered valid consideration?

No when you have a preexisting duty you have not given any new consideration

Is fairness required when evaluating the consideration given by parties in an agreement?

No, as long as its not unconscionable and its arms length its okay if it is not fair EX- You can sell your property for whatever you want if you needed cash now

Is consideration required to form an agency relationship?

No, consideration is not required.

Do 3rd parties need to be notified that a principal ratified a contract?

No, the 3rd party already believes the agent was working for the principal and was allowed to do this

To be considered consideration legally, does the item need to have monetary value?

No. If I get straight A's as my part of the agreement, that is consideration even though there is no monetary value to getting straight A's

Are employers liable for the torts of independent contractors?

No. If the driver of UPS gets into an accident when delivering my package, I am not liable. Only UPS is, b/c I am not UPS's employer. UPS is an independent contractor I allowed to deliver my package

If you have an agreement with someone to commit a crime, can they sue you if you do no perform?

No. Illegality is a defense EX- Unnecessary/Unreasonable covenant not to compete.... you could break this by law

Is a principal liable for torts committed by his agent?

No. Only the agent is liable. EXCEPTION- Respondeat Superior

Is a written agreement required for the creation of an agency relationship?

No. Oral relationships are fine. EXCEPT- If the agent is buying or selling land for the principal, a written agreement is required. AND If the agents agreement cannot be performed in 1 year, a written agreement is required.

What is an Implied-in-Law Contract or a Quasi-Contract?

Not a contract at all. It is a remedy that allows a plaintiff to recover a benefit unjustly granted to the defendant EX- If after class you're in an accident and knocked unconscious. An ambulance shows up and performs care to you, but you did not verbally agree to this or agree to this in writing or perform conduct that agreed to this. The law imposes an Implied-in-Law contract where you will be forced to pay for the service that was received on your behalf

Undue Influence

Not an arms length transaction, so fairness IS required now.

Who may accept an offer?

ONLY the person to whom the offer was made Offers are NOT assignable. Options ARE assignable.

Who is the 3rd party liable to for performing their side of a contract?

ONLY the principal. The 3rd party is not liable to the agent if they do not perform.

If the agent did not have authority, is the principal bound?

Only if the principal ratifies

Who is required to sign the Power of Attorney?

Only the principal

Does the principal or agent have to have capacity to form a contract?

Only the principal must be competent. The agent actually does not have to have the capacity to form a contract. (A minor or mentally incompetent individual can be appointed as an agent)

How can agent have the apparent authority, but not the actual authority?

Principals conduct- the principal does an act that makes it reasonable for 3rd parties to believe the agent has this authority. EX- You give someone the title of partner, officer, manager, a 3rd party would believe the individual has the right to certain duties

If the agent breaches the duties she owes the principal, what can the principal do?

Recover damages (money)

What does an innocent misrepresentation lack compared to fraud?

Scienter- intent You cannot recieve punitive damages for an innocent misrepresentation

When does an agency coupled with an interest arise?

The agent has an interest in the subject matter. The agent paid for the right be be appointed as agent. EX- Paul borrows $20,000 from Alex promising to pay Alex back and appointing Alex as his agent. Paul (principal) does not have the power or right to terminate the contract b/c Alex (agent) has an interest in this money

If the subject matter is destroyed through no fault of either party, what happens to the contract? What happens to the buyers deposit?

The contract is void and the buyer would get his deposit back

What is Apparent Authority?

The principals conduct caused 3rd parties to reasonably believe the agent had the authority (even though they really didn't) **POWER, but NOT the right

If both parties make a material mistake regarding the contract, who can void the contract?

Either party can void the contract

Alex and Bob entered into a contract for Alex to buy and Bob to sell Bobs designed watch for $200. The parties then both discover the watch is fake. Who can void the contract?

Either party- mutual mistake

What is the difference between Express Actual Authority and Implied Actual Authority?

Express Actual Authority = The principal expressly grants authority through oral or written instructions EX- A prof. athlete hires me to negotiate their next contract. They said they want me to get them to most amount of money. This was oral/written instructions. Implied Actual Authority = This is reasonably necessary to carry out the agency, even though the principal did not expressly state I can do this. EX- I book a flight for the athlete to fly to LA to negotiate this contract. This was reasonably necessary to get them their contract, so I have actual authority.

If the agent had authority, is the principal bound?

Yes, it does not matter if the principal was disclosed, partially disclosed or fully disclosed.

Is there actual authority if the 3rd party does not know the ID of the principal?

Yes, there can be actual authority even if the 3rd party does not know the ID of the principal

Can offeror opt out of the mailbox rule?

Yes, this is allowed. The offeror can state that the offer must be received to be accepted

Can you indirectly revoke an offer?

Yes, through your conduct. EX- You sell to someone else

Fraud in the Execution

You are tricked into signing something. The agreement is void

What is the common example the test-takers give of Implied Actual Authority?

You hire someone as the manager of your store. It is implied that they have the right to hire employees, buy merchandise, etc. (The manager is there to run the business, NOT destroy it!!!!!! The manager has no Implied Actual Authority to sell mortgages, borrow money or or sell fixtures other than inventory)

What happens if the subject matter is destroyed before the offer is accepted?

The offer is terminated by operation of law.

What happens if either of the parties dies or becomes incompetent prior to the acceptance of an offer?

The offer is terminated by operation of law. If there was an option purchased on the offer, this is not terminated by death.

Who is the agent in an agency relationship?

The person who acts on behalf of the principal

Who is the principal in an agency relationship?

The person who appoints another person to act on his or her behalf

What is an Implied-in-Fact Contract?

A contract formed by conduct

When does the agent have the power to contractually bind the principal to 3rd parties?

***KNOW THESE INSIDE AND OUT*** 1. The agent has been granted actual authority (power & right) 2. The agent had apparent authority (power, no right) 3. Ratification by principal of something the agent did not should not have done (power, no right)

What makes an agreement legally enforceable?

**MEMORIZE** 1. Offer and acceptance 2. Exchange of consideration 3. Lack of defenses

How is Actual Authority terminated?

1. Act of the parties - Agent quits or gets fired 2. Accomplishment of objective- Agent was there for a limited purpose and the purpose was accomplished or expired 3. Automatic termination by operation of law: -Death of either party -Incapacity of princ. -Failure to acquire necessary license -Discharge in bankruptcy of princ. -Destruction of subject matter (Paula hires Alex to purchase antique car, the car is destroyed before it can be purchased) -Subsequent illegality (US corp hires Alex to sell raw materials to a company in Asia. Then the Asian company is nationalized and the Asian govt. makes it illegal to purchase materials outside of Asia)

When is the agent liability to 3rd parties for contract duties?

1. Disclosed Principal- If the agent discloses the existence and identity of the principal, the agent is NOT LIABLE for contract duties ***If the agent has no authority for contract duties, but they lie, then they may still be liable for fraud!!!!!!! 2. Partially Disclosed and Undisclosed Principal- The agent IS LIABLE for contract duties 3. Third Party Election- Once 3rd party discovers the principals exact ID, then the 3rd party can elect either the agent or principal to be liable for the contract duties (NOT both)

What are the 2 ways to ratify a contract?

1. Expressly- oral/writing 2. Implicitly- accepting the benefits of the contract

How can you terminate an offer?

1. Revoke 2. Reject 3. By Law

What are the requirements for Ratification?

1. The agent must have indicated she was acting on behalf of the principal (agent must have apparent authority) 2. Principal knows ALL material facts 3. Must ratify ENTIRE transaction, not just a part

What is an Express Contract?

A contract formed my language (oral or written)

If for any reason an attempted acceptance is invalid (late, wrong method, etc.), what is it considered?

A counteroffer

What is Ratification?

A principal chooses to become bound by a previously unauthorized act of his or her agent (the agent had apparent but not actual authority)

If an agent appoints an assistant, what is this called?

A subagent

What is a tort?

A wrongful act. Intentional- Fraud Unintentional- Negligent

What is necessary to create an agency?

ALL you need is consent and a principal with capacity. (Remember writing is not required except for special occassions)

Duress: threatened by physical force-

Contract is void

Duress: threatened by economic or social force-

Contract is voidable

Respondeat Superior

An employer CAN be liable for an employees torts committed within scope of employment (This does not relieve the agent of liable, it just means both parties can be sued)

What does the Uniform Commercial Code Statutory Law govern?

Contracts for the sale of goods

Where is common law generally derived from?

Courts

How is an offer accepted?

Any reasonable matter. EX- Call, text, in person, email. UNLESS, if the offeror specifies a method of communication, you HAVE to follow or the offer will not be accepted

When can the offeror revoke an offer?

Any time before acceptance even if you promised you were going to keep the offer and said the offer was irrevocable. EXCEPTION- The only way the offeree can protect themselves is to buy an option with consideration for the offeror to keep an offer opened

Apparent VS. Actual Authority

Apparent- based on 3rd parties belief the agent has power Actual- agents reasonable belief they have the power

Why is the promise to give a gift or donation not legally enforceable?

B/c there is lack of consideration EXCEPTION- Detrimental Reliance: If you promise to donate money to a charity and they detrimentally rely on this donation, they might be able to sue you if you do not give the $

To have a contract, the offer has to be accepted before WHEN?

Before the offer is terminated

General VS. Special Agent

General- series of continuous services Special- one or more transactions not involving a continuity of services

Who has the power to terminate an agency relationship?

Generally either party has the power to terminate, but having the "power" to terminate something does NOT mean you have the "right"

What happens when there is a Unilateral Mistake?

Generally when a mistake is made by 1 party only, you are out of luck. EX- I give you a deposit for land thinking I can build apartment buildings there. After I pay the deposit I find out I am not allowed to build apartment buildings here. TOUGH. This is a unilateral mistake, I cannot get out of this deal. MAJOR EXCEPTION- If the other party knew or should have known of the mistake, they cannot take advantage of it EX- I give you a deposit for land and tell you I want to build apartment buildings there. You knew I was not allowed to build apartments there. After I pay the deposit I find out I am not allowed to build apartment buildings here. This is the EXCEPTION. I am not locked in.

When is the principal liable to 3rd parties for things the agent has negotiated?

If the agent had apparent or actual authority OR the principal ratified

When is the only time an agent is held personally liable to 3rd parties?

If the principals ID is partially or undisclosed

How do you know if somebody is an employee or not?

If you control them and their method of work. Work full time, use employers facilities and tools. Compensated weekly or biweekly Supervision

For an offer to be valid, what must the offer have?

Intent (you actually intended to perform) and Definite/Certain terms **A statement made in jest or anger is not an offer.

If the principal breaches the duties she owns the agent, what can the agent do?

Sue the principal for breach of contract. Receive damages

What happens if a properly addressed acceptance is lost or delayed in the mail?

The acceptance is still valid as of the date it was placed in the mail

Fraud in the Inducement

The terms are materially misstated The agreement is voidable

What is a Bilateral Contract?

There are 2 promises. A promise is exchanged for a promise. The contract is formed as soon as promises are exchanged. EX- I promise to pay you $10 if you promise to wash my cas

What is a Unilateral Contract?

There is only one promise given in exchange for performance. The contract is not formed until the performance is completed, b/c you have to accept the contract by performing the service EX- I pay you $10 if you wash my car.

If I hire you to be the manager of my store, and then I put a limit on you, I say I know managers usually buy the supplies but I want to be the purchasing agent. If I never notify the vendors of this limitation, what happens?

This is a secret limitation. Since the vendors do not know about this limitation, the 3rd party vendors STILL have belief that the manager has this power, so there is still apparent power. Secret limitations do no break apparent authority b/c this limitation is unknown by 3rd parties

What happens when there is an attempted acceptance that changes some terms or adds new terms?

Under Common Law (RISE) there is a "mirror image rule" which requires you to accept a mirror image of what was offerred. Changing terms would not result in a valid acceptance.

When are acceptances generally effective?

Upon dispatch- when they are dispatched (mailed) **Mailbox Rule** (Revocations, Rejections, Counter Offers are effective when RECEIVED, Acceptances are different)

What are the duties of the principal to the agent?

Whatever is spelled out in the agreement + Compensation (unless agent agreed to act for free) + Reimbursement of reasonable expenses (unless agent agreed to paid)

What is the exception to the principal and agent both having the power to terminate their contract?

When there is agency coupled with an interest, the principal has NO power OR right to terminate the contract

What is Power of Attorney?

Written authorization of agency. Normally limited to specific transactions - ("special agents"). It just means the agent has the power to act on behalf of the principal for a specific transaction such as executing the closing documents on the sale of your home.

Casey tells Pat she will give Pat $500 if he names his first son Casey. Pat does so. Is naming the son after Casey valid consideration to make this agreement enforceable?

Yes

Joan promises Keith that she will refrain from suing Keith for 60 days on a valid claim if Keith promises to give an option. Is Joan promising not to sure Keith valid consideration to make this agreement enforceable?

Yes

If you make an employee sign a contract to not do something, or do something correctly and they sign it but do not listen, can a 3rd party still hold the employer liable?

Yes an agreement between the employer and employee stating that the employer is not responsible for the employees torts does not stop a 3rd party from holding the employer liable