Buisness Law and Ethics, end of course test.

Quantum meruit

"As much as he deserved." The damages awarded in a quasi-contract case

Tara is building an artificial beach at her lakefront resort. She agrees in writing to buy 1,000 tons of sand from Frank for $20 per ton, with delivery on June 1, at her resort. Frank fails to deliver any sand, and Tara is forced to go elsewhere. She buys 1,000 from Maureen at $25 per ton and then is forced to pay Walter $5,000 to haul the sand to her resort. Tara sues Frank. Tara will recover:

$5,000.

Courts typically divide the expectation damages into three parts:

(1) direct (or compensatory damages), which represent harm that flowed directly from the contract's breach; (2) consequential (or "special") damages, which represent harm caused by the injured party's unique situation; and (3) incidental damages, which are minor costs such as storing or returning defective goods, advertising for alternative goods, and so forth.

In February, Chuck orally agrees to sell his hunting cabin, with 15 acres, to Kyle for $35,000, with the deal to be completed in July, when Kyle will have the money. In March, while Chuck is vacationing on his land, he permits Kyle to enter the land and dig the foundation for a new cottage. In July, Kyle arrives with the money, but Chuck refuses to sell. Kyle sues.

(a) Chuck wins because the contract was never put in writing.

Mark, a newspaper editor, walks into the newsroom and announces to a group of five reporters: "I'll pay a $2,000 bonus to the first reporter who finds definitive evidence that Senator Blue smoked marijuana at the celebrity party last Friday." Anna, the first reporter to produce the evidence, claims her bonus based on:

(a) unilateral contract.

Sarah, age 17, uses $850 of her hard-earned, summer-job money to pay cash for a diamond pendant for the senior prom. She has a wonderful time at the dance, but decides the pendant was an extravagance, returns it, and demands a refund. The store has a "no refund" policy that is clearly stated on a sign on the wall. There was no defect in the pendant. The store refuses the refund. When Sarah sues, she will:

(a) win $850. because she was a minor

In which case is a court most likely to enforce an exculpatory clause?

(b) Hang gliding

Ted's wallet is as empty as his bank account, and he needs $3,500 immediately. Fortunately, he has three gold coins that he inherited from his grandfather. Each is worth $2,500, but it is Sunday, and the local rare-coin store is closed. When approached, Ted's neighbor Andrea agrees to buy the first coin for $2,300. Another neighbor, Cami, agrees to buy the second for $1,100. A final neighbor, Lorne, offers "all the money I have on me"—$100—for the last coin. Desperate, Ted agrees to the proposal. Which of the deals is supported by consideration?

(c) All three of the agreements

Consider the following: I. Madison says to a group of students, "I'll pay $35 to the first one of you who shows up at my house and mows my lawn." II. Lea posts a flyer around town that reads, "Reward: $500 for information about the person who keyed my truck last Saturday night in the Wag-a-Bag parking lot. Call Lea at 555-5309."

(c) Both I and II

Tobias is selling a surrealist painting. He tells Maud that the picture is by the famous French artist Magritte, although in fact Tobias has no idea whether that is true or not. Tobias's statement is:

(c) a fraud.

Raul has finished the computer installation he promised to perform for Tanya, and she has paid him in full. This is:

(c) an executed contract.

Which of the following amounts to an offer?

(d) All of these

Louise emails Sonya, "I will sell you my house at 129 Brittle Blvd. for $88,000, payable in one month. Best, Louise." Sonya emails back, "Louise, I accept the offer to buy your house at that price. Sonya." Neither party prints a copy of the two emails.

(e) Neither party is bound because the agreement was never signed.

On Monday night, Louise is talking on her cell phone with Bill. "I'm desperate for a manager in my store," says Louise. "I'll pay you $45,000 per year, if you can start tomorrow morning. What do you say?" "It's a deal," says Bill. "I can start tomorrow at 8 a.m. I'll take $45,000, and I also want 10 percent of any profits you make above last year's." Just then Bill loses his cell phone signal. The next morning he shows up at the store, but Louise refuses to hire him. Bill sues. Bill will:

(e) lose, because Louise revoked the offer

The charter includes:

-Name -Address and registered agent -Purpose -Incorporator

Two questions determine whether a statement is an offer:

. Do the offeror's words and actions indicate an intention to make a bargain? 2. Are the terms of the offer reasonably definite?

An employee cannot be paid at a lesser rate for equal work than employees of the opposite sex

. Equal Pay Act

True impossibility is generally limited to these three causes:

1. Destruction of the subject matter. This happened with Francoise's vineyard. 2. Death of the promisor in a personal services contract. When the promisor agrees personally to render a service that cannot be transferred to someone else, her death discharges the contract. 3. Illegality. If the purpose of a contract becomes illegal, that change discharges the contract.

What three things must a plaintiff show to win promissory estoppel to enforce the defendant's promise.

1. The defendant made a promise knowing that the plaintiff would likely rely on it, 2. The plaintiff did rely on the promise, and 3. The only way to avoid injustice is to enforce the promise.

What are three steps in a disparate impact case?

1. The plaintiff must present a prima facie case.(The plaintiff is not required to prove discrimination; he need only show a disparate impact—that the employment practice in question excludes a disproportionate number of people in a protected group.) 2. The defendant must offer some evidence that the employment practice was a jobrelated business necessity 3. To win, the plaintiff must now prove either that the employer's reason is a pretext or that other, less discriminatory rules would achieve the same results.

What is the duration of a trademark?

10 years, but can be renewed an unlimited times

What is the duration of a patent?

20 years

What is the duration of a copyright?

70 years after the death of the author, or a corporation. 95 years from the publication or 120 years from creation whichever is shorter.

Signature

A Statute of Frauds typically states that the writing must be "signed by the party to be charged therewith,"

Executory contract

A binding agreement in which one or more of the parties has not fulfilled its obligations. Recall Gloria, who agrees to act in the producer's film beginning in three months. The moment Gloria and the producer strike their bargain, they have an executory bilateral express contract.

7. PROMISSORY ESTOPPEL

A claim of promissory estoppel requires that the defendant made a promise knowing that the plaintiff would likely rely, and the plaintiff did so. It would be wrong to deny recovery.

Restitution Interest

A common remedy in contracts involving fraud, misrepresentation, mistake, and duress. restitution often goes hand in hand with rescission, which means to "undo" a contract and put the parties where they were before they made the agreement.

Mirror image rule

A contract doctrine that requires acceptance to be on exactly the same terms as the offer

Contracts That Must Be in Writing, Agreements for an Interest in Land

A contract for the sale of any interest in land must be in writing to be enforceable. A mortgage, an easement, and a leased apartment are all interests in land Exception: Full Performance by the Seller; If the seller completely performs her side of a contract for an interest in land, a court is likely to enforce the agreement even if it was oral. Exception: Part Performance by the Buyer; The buyer of land may be able to enforce an oral contract if she paid part of the purchase price and either entered upon the land or made improvements to it.

This is the sixth and final contract that must be written,

A contract for the sale of goods worth $500 or more is not enforceable unless there is some writing, signed by the defendant, indicating that the parties reached an agreement.

What is the definition of a contract?

A contract is a legally enforceable promise.

exculpatory clause

A contract provision that attempts to release one party from liability in the event the other party is injured is generally unenforceable when it attempts to exclude an intentional tort or gross negligence. is generally unenforceable when the affected activity is in thepublic interest, such as medical care, public transportation, or some essential service.

Valid contract

A contract that satisfies all of the law's requirements. The seven elements offer, acceptance, consideration, capacity, legal purpose, consent, and sometimes, whether the deal is in writing.

What is the definition of a Bilateral contract?

A contract where both parties make a promise.

What is the definition of a Unilateral contract?

A contract where one party makes a promise that the other party can accept only by doing something. Lost dog reward and someone returns the dog to collect the reward.

Unenforceable agreement

A contract where the parties intend to form a valid bargain but a court declares that some rule of law prevents enforcing it

Implied contract

A contract where the words and conduct of the parties indicate that they intended an agreement

THE CHARTER

A corporate charter must generally include the company's name, address, registered agent, purpose, and a description of its stock.

Domestic corporation

A corporation is a domestic corporation in the state in which it incorporates.

Foreign corporation

A corporation operating in a state in which it did not incorporate

Atlas operated warehouses that stored food for grocery stores. Imagine the upset when a mystery employee began leaving his feces in a warehouse. To solve the mystery of the devious defecator, Atlas required cheek swabs from two of its workers so that it could compare their DNA with that of the feces. Was Atlas liable to the workers?

A court held that Atlas had violated GINA, which prohibits employers from requesting genetic information from its workers. It doesn't matter that the DNA did not match. Lowe v. Atlas Logistics Group Retail Servs. Atlanta, LLC, 102 F. Supp. 3d 1360 (N.D. Ga. 2015). © Cengage

. PIERCING THE CORPORATE VEIL

A court may, under certain circumstances, pierce the corporate veil and hold shareholders personally liable for the debts of the corporation.

Injunction

A court order to do something or to refrain from doing something

Design Patents

A design patent protects the appearance, not the function, of an item. Design patents are granted to anyone who invents a new, original, and ornamental design for an article. These types of patents protect the design of products ranging from Star Wars action figures to Coca-Cola bottles,

What do patents protect?

A invention that is the tangible application of an idea.

SENIORITY

A legitimate seniority system is legal even if it perpetuates past discrimination.

Novation

A new contract

RIGHT TO ASSIGN

A party generally may assign contract rights unless doing so would substantially change the obligor's rights or duties, is forbidden by law, or is validly precluded by the contract.

Incidental beneficiary

A party who benefits from the contract although the contract was not designed for their benefit

Quasi-contract

A possible remedy for an injured plaintiff in a case with no valid contract, when the plaintiff can show benefit to the defendant, reasonable expectation of payment, and unjust enrichment

Promissory estoppel

A possible remedy for an injured plaintiff in a case with no valid contract, when the plaintiff can show justifiable reliance on a promise made by the defendant

PROXY

A proxy authorizes someone else to vote in place of the shareholder

REMEDIES

A remedy is the method a court uses to compensate an injured party.

Mitigation of Damages

A rule requiring a plaintiff to have done whatever was reasonable to minimize the damages caused by the defendant.

Statute of Limitations

A statute of limitations begins to runat the time of injury and will limit the time within which the injured party may file suit.

Which of the following items cannot be trademarked?

A surname

THIRD PARTY BENEFICIARY

A third party beneficiary is an intended beneficiary and may enforce a contract only if the parties intended her to benefit from the agreement and (1) enforcing the promise will satisfy a debt of the promisee to the beneficiary or (2) the promisee intended to make a gift to the beneficiary.

Delegation

A transfer of contract duties to a third party

Assignment

A transfer of contract rights to a third party

3. The intention to deceive the other party

A. Fraud

Statute that prohibits discrimination against the disabled

ADA

Statute that prohibits age discrimination

ADEA

Promise Made in Consideration of Marriage

After they are married, Barney refuses to deliver the deed. Li-Tsing will get nothing from a court either because a promise made in consideration of marriage must be in writing to be enforceable.

Adopt

Agree to be bound by the terms of a contract

What is the definition of offer under contract law?

All contracts begin when a person or a company proposes a deal. It might involve buying something, selling something, doing a job, or anything else.

Despite its detailed dress code for employees, Starbucks stores permitted workers to wear multiple pins and buttons, some of which, but not all, were related to its employee-reward and product-promotion programs. When a union tried to organize employees, management prohibited workers from wearing more than one pro-union pin at a time. (One employee had tried to wear eight union buttons.) Is this rule a ULP?

Although the NLRB ruled that this prohibition was an ULP, the 2nd Circuit overruled the Board, on the grounds that management had a legitimate interest in protecting the company's image. NLRB v. Starbucks Corp., 679 F.3d 70 (2d Cir. 2012).

When two people invent the same product, who is entitled to the patent—the first to invent or the first to file an application?

America Invents Act (AIA) changed the law so that the first person to file a patent application has priority.

Executed contract

An agreement in which all parties have fulfilled their obligations. When Gloria finishes acting in the movie and the producer pays her final fee, their contract will be fully executed.

Void agreement

An agreement that neither party may legally enforce

Voidable contract

An agreement that, because of some defect, may be terminated by one party, such as a minor, but not by both parties or under duress or a party commits fraud

Express contract

An agreement with all important terms explicitly stated

Under the Wrongful discharge-Supporting Societal Values

An armor truck driver left vehicle violating company policy to help a person being attached Courts are sometimes willing to protect employees who do the right thing, even if they violate the boss's orders.

Substantial Change.

An assignment is prohibited if it would substantially change the obligor's situation. But suppose that, before delivery, Lydia had wanted to assign her rights to the shipment of 500 bottles of champagne to a business in another country. In this example, Bruno would be the obligor, and his duties would substantially change.

How Rights Are Assigned

An assignment may be written or oral, and no particular formalities are required. However, when someone wants to assign rights governed by the Statute of Frauds, she must do it in writing. If City wants to assign to Investor its rights to the land, it must do so in writing

ASSIGNMENT AND DELEGATION

An assignment transfers the assignor's contract rights to the assignee. A delegation transfers the delegator's duties to the delegatee.

BONA FIDE OCCUPATIONAL QUALIFICATION (BFOQ)

An employer is permitted to establish discriminatory job requirements if they are essential to the position in question.

INJUNCTION

An injunction is a court order that requires someone to do something or refrain from doing something.

Intentional infliction of emotional distress

An intentional tort in which the harm results from extreme and outrageous conduct that causes serious emotional harm

Requirements for a Utility Patent-Novel

An invention is not patentable if it has already been (1) patented, (2) described in a printed publication, (3) in public use, (4) on sale, or (5) otherwise available to the public any place in the world.

Requirements for a Utility Patent-Nonobvious

An invention is not patentable if it is obvious to a person with ordinary skill in that particular area. To determine if an invention is obvious, the PTO and courts look at the difference between it and existing technologies to see if that difference would be unexpected to someone skilled in the field (at the time of patenting).

What Duties Are Delegable The rules concerning what duties may be delegated mirror those about the assignment of rights.

An obligor may delegate his duties unless: 1. Delegation would violate public policy, or 2. The contract prohibits delegation, or 3. The obligee has a substantial interest in personal performance by the obligor.

Counteroffer

An offer made in response to a previous offer

Opinions and "puffery" do not amount to fraud.

An opinion is not a statement of fact. "I think land values around here will be going up 20 or 30 percent for the foreseeable future."

Personal services

Any service that must be performed by the promisor

Plant Patents

Anyone who creates a new type of plant can patent it, provided that the inventor is able to reproduce it asexually—through grafting, for instance, rather than by planting its seeds. For example, one company patented a unique rose whose color combination did not exist in nature. This type of patent lasts for 20 years from the date of application.

controlling shareholder

Anyone who owns enough stock to control a corporation has a fiduciary duty to minority shareholders and is subject to the business judgment rule.

What are requirements for patent protection?

Application approved by the PTO

Incidental damages

Are the relatively minor costs that the injured party suffers when responding to the breach

Compensatory damages

Are those that flow directly from the contract

What is the duration of a trade secret?

As long as it is kept confidential

SAY-ON-PAY

At least once every three years, companies must take a nonbinding shareholder vote on the compensation of the five highest-paid executives.

The shares listed in the company charter

Authorized shares

What are the requirements for copyright protection?

Automatic once it is in tangible form.

4. Restoring the other party to its original position

B. Restitution

Discriminatory job requirements that are essential to the job

BFOQ

West purchased a horse from Strauss. When West discovered that the horse had a leg injury, he got a driver to return the horse to Strauss, but Strauss refused to accept delivery. Not knowing what to do with the injured animal, the driver took it to Bailey. Five months later, Bailey sent bills for the horse's care to West, who returned them with a note saying he did not own the horse. Bailey sued West for the expenses incurred in boarding the horse. West argued that when Bailey accepted the horse, he was aware of the controversy regarding the horse's ownership, so he could not reasonably expect to be compensated. Who wins, and why?

Bailey v. West, 249 A.2d 414 (1969). A volunteer may not recover for a benefit conferred under quasi-contract. Bailey acted as a volunteer at his own risk that he might not be compensated. There was no implied-in-fact contract because there was no evidence that the parties ever actually intended to contract. If performance is rendered by one party without request by another, that person will generally not owe a duty to compensate the performing party.

The Madariagas owned a restaurant where they served "Albert's Famous Mexican Hot Sauce." They entered into a contract to sell the restaurant and the formula for the secret sauce to Morris. Although Morris paid the agreed-upon price, the sellers refused to give him the recipe unless he also paid them lifetime royalties for the salsa. Which of these remedies should Morris seek: expectation, restitution, specific performance, or reformation? Why?

Based on Madariaga v. Morris, 639 S.W.2d 709 (1982). The court granted specific performance on the sale of the hot sauce recipe. "Morris does not have an adequate remedy at law and cannot be adequately compensated in damages. This is apparent from the subject matter of the sale. The business, including the hot sauce formula and goodwill, has a special, peculiar, unique value or character; it consists of property which Morris needs and could not be obtained elsewhere." © Cengage

An agreement based on one promise in exchange for another

Bilateral contract

The CBA at Red Corp. has expired, as has the CBA at Blue Corp. At Red, union and management have bargained a new CBA to impasse. Suddenly, Red locks out all union workers. The next day, during a bargaining session at Blue, management announces that it will not discuss pay increases.

Blue has committed a ULP, but Red has not.

The agreement between Bob and Cathy says nothing about assignment. May Bob assign his claim to Hardknuckle?

Bob may assign his claim without Cathy's agreement.

Bob, a mechanic, claims that Cathy owes him $1,500 on a repair job. Bob wants to assign his claim to Hardknuckle Bank. The likeliest reason that Bob wants to do this is:

Bob owes Hardknuckle Bank money.

Oil Co. was a controlling shareholder of Pogo, a company that drilled for oil and gas in the Gulf of Mexico. When some additional leases became available, Oil Co. purchased all of them for itself. Which of the following statements is true?

Both A and B.

What has to be present in an offer to consider it legally binding?

But only proposals made in certain ways amount to a legally recognized offer. Needs to be detailed.

5. Entry onto land, or improvements made to it, by a buyer who has no written contract

C. Part performance

Revocation

Cancellation of the offer

What is the definition Consent under contract law?

Certain kinds of trickery and force can prevent the formation of a contract.

STATE OF INCORPORATION

Companies generally incorporate in the state in which they will be doing business. However, if they intend to operate in several states, they may choose to incorporate in a jurisdiction known for its favorable corporate laws, such as Delaware.

Specific Performance

Compels parties to perform the contract they agreed to when the contract concerns the sale of land or some other unique asset

Damages that can be recovered only if the breaching party should have foreseen them

Consequential

Agreements that Cannot Be Performed within One Year

Contracts that cannot be performed within one year are unenforceable unless they are in writing.

Protects the particular expression of an idea

Copyright

Strict Performance.

Courts dislike strict performance because it enables one party to benefit without paying and sends the other one home empty-handed. A party is generally not required to render strict performance unless the contract expressly demands it and such a demand is reasonable.

Fair use doctrine -The effect of the use upon the potential market. C

Courts generally do not permit a use that will deprive the copyright owner of income or compete with the original work

Which of the following activities is legal under Title VII?

Craig refuses to hire Ben, who is blind, to work as a playground supervisor because it is essential to the job that the supervisor be able to see what the children are doing

A contract clause intended to relieve one party from potential tort liability

D. Exculpatory clause

Consequential damages

Damages that result from the unique circumstances of the plaintiff. Also known as special damages. Sharon misses her flight to San Francisco and incurs a substantial fee to rebook the flight.

Whistleblowers are protected in the following situations:

Defrauding the government, Employees of public companies, Violations of securities or commodities laws, and Common law.

Public Policy.

Delegation may violate public policy, for example, in a public works contract. If City hires Builder to construct a subway system, state law may prohibit Builder from delegating his duties to Subcontractor. A public agency should not have to work with parties that it never agreed to hire.

Fair use doctrine - The amount and proportion of the work that is used.

Digitally sampled songs use a riff from a classic song. Faculty members show a short clip of a Hollywood film in class. Less is more. Or, in the copyright context, less is more likely to be fair use.

When a party has no more obligations under a contract

Discharged

RIGHT TO DELEGATE

Duties are delegable unless delegation would violate public policy, the contract prohibits delegation, or the obligee has a substantial interest in personal performance by the obligor.

The idea that contracts must be a two-way street

E. Consideration

CPA QUESTION A corporate stockholder is entitled to which of the following rights?

Elect officers

An employee without an explicit employment contract

Employee at will

GUNS

Employers have the right to ban guns from the workplace but, in almost half the states, laws prevent companies from banning firearms in the workplace parking lot.

DEFAMATION

Employers may be liable for defamation if they give false and unfavorable references. More than half of the states, however, recognize a qualified privilege for employers who give references about former employees

RELIGION

Employers must make reasonable accommodation for a worker's religious beliefs unless the request would cause undue hardship for the business.

HOSTILE WORK ENVIRONMENT

Employers violate Title VII if they permit a work environment that is so hostile toward people in a protected category that it affects their ability to work. This rule applies whether the hostility is based on race, color, religion, sex, national origin, pregnancy, age, or disability.

MANAGER'S PROTECTION FROM LIABILITY

Even if a manager violates the business judgment rule, he is still protected from liability (and his decision is upheld) under any of the following circumstances: The disinterested members of the board of directors form a special committee that approves the decision. The disinterested shareholders approve it. A court determines it was entirely fair to the corporation

Registration under the federal Lanham Act is not necessary. However, registration has several advantages:

Even if a mark has been used in only one or two states, registration makes it valid nationally. Registration notifies the public that a mark is in use, which is helpful because anyone who applies for registration first searches the Public Register to ensure that no one else has rights to the mark. The holder of a registered trademark generally has the right to use it as an internet domain name.

Congressional Airlines was highly profitable operating flights between Washington, D.C. and New York City. The directors approved a plan to offer flights from Washington to Boston. This decision turned out to be a major mistake and the airline ultimately went bankrupt. Under what circumstances would shareholders be successful in bringing suit against the directors?

Even if the plan was bad, it met the standard of having a "rational business purpose." Only if there had been self-dealing on the part of the board, or if they had made an uninformed decision, would shareholders have a chance of being successful in their suit. © Cengage

What are the four principal contract interests that a court may seek to protect:

Expectation interest, Reliance interest., Restitution interest., Equitable interest.

. A federal statute that regulates wages and limits child labor

FLSA

Fair use doctrine - The nature of the copyrighted work.

Facts receive less protection than fiction. If we were not permitted to use, say, the facts described in a textbook, education would be stifled.

A company must include in its proxy materials the names of all shareholder nominees for the board of directors.

False

A corporation can be formed in any state or under the federal corporate code.

False

A provisional patent lasts until the product is used in interstate commerce.

False

Abdul hires Sean to work in his store and agrees to pay him $9 per hour. This agreement is governed by the Uniform Commercial Code

False

An agreement for the sale of a house does not need to be in writing if the deal will be completed within one year.

False

Any employer always has the right to insist that employees submit to a lie detector test.

False

Contract dates and deadlines are strictly enforceable unless the parties agree otherwise.

False

If an offer demands a reply within a stated period, the offeree's silence indicates acceptance.

False

If more whites than Native Americans pass an employment test, the test necessarily violates Title VII

False

Once you have purchased a CD and copied it onto your iPod, it is legal to give the CD to a friend.

False

Only workers, not their spouses or children, are entitled to benefits under the Social Security system.

False

Oral promises made by the employer during the hiring process are not enforceable.

False

Shareholders own the corporation; thus they have the right to manage the corporate business.

False

The first person to file the application is entitled to a patent over someone else who invented the product first.

False

To be enforceable, all contracts must be in writing.

False

While organizing, workers may not discuss union issues on company property but may do so off the premises.

False

An agreement for the sale of 600 plastic cups, worth $0.50 each, must be in writing to be enforceable.

False because only purchases over $500 must be writting.

Contract Prohibition.

Finally, one of the contracting parties may try to prohibit assignment in the agreement itself. For example, most landlords include in the written lease a clause prohibiting the tenant from assigning the tenancy without the landlord's written permission.

incorporation in Delaware offers certain advantages:

Flexible laws that favor management. If shareholders or directors want to take a vote in writing instead of holding a meeting, many other states require the vote to be unanimous; Delaware requires only a majority to agree. However, this advantage is diminishing as other states copy Delaware's laws. An efficient court system. Delaware has a special court (called "Chancery Court") that hears nothing but business cases and has judges who are experts in corporate An established body of law. Because so many businesses incorporate in the state, its courts hear a vast number of corporate cases, thus creating a large body of precedent which makes the law more predictable. A neutral arena. Because few businesses are actually based in Delaware, it is a neutral place in which to do battle. Better to try a case against Amazon or Microsoft in Delaware than Washington State.

INDEPENDENT DIRECTORS

For publicly traded companies, independent directors must comprise a majority of the board and the entire audit, compensation, corporate governance, and nominating committees.

Delegation of Duties

Garret transfers the car and equipment to Brady, who agrees in writing to pay all money owed to Maybelle. Brady stops paying. Most duties are delegable. But delegation does not by itself relieve the delegator of his own liability to perform the contract. Garret was the delegator and Brady was the delegatee. Garret has legally delegated to Brady his duty to repay Maybelle. However, Garret remains personally obligated. When Maybelle sues, she will win. Garret, like many debtors, would have preferred to wash his hands of his debt, but the law is not so obliging

WRONGFUL DISCHARGE AND PUBLIC POLICY

Generally, an employee may not be fired for refusing to violate the law, exercising a legal right, or supporting fundamental societal values.

The following categories are not distinctive and cannot be trademarked

Generic trademarks. No one is permitted to trademark an item's ordinary name— "shoe" or "book," Personal names. The PTO generally will not grant a trademark in a surname unless it has acquired secondary meaning due to an association with a specific business or product Similar to an existing mark.To avoid confusion, the PTO will not grant a trademark that is similar to one already in existence on a similar product.

GOOD FAITH

Good faith performance is required in all contracts.

Leila agrees to pay Kendrick $35,000 to repair windmills. Confident of this cash, Kendrick contracts to buy Derrick's used Porsche for $33,000. Then Leila informs Kendrick she does not need his help and will not pay him. Kendrick tells Derrick that he no longer 2058730 - Cengage US © wants the Porsche. Derrick sues Kendrick, and Kendrick files suit against Leila. What law or laws govern these lawsuits?

Goods means anything movable, and a Porsche surely qualifies. The UCC will control Derrick's suit. Repairing windmills is primarily a service. Kendrick's lawsuit is governed by the common law of contracts.

When Brook went to work at an advertising agency, his employment contract stated that he was "at will and could be terminated at any time." After 28 months with the company, he was fired without explanation. Which of the following statements is true?

He could be fired for any reason except a bad reason.

In determining if information is a trade secret, courts consider:

How difficult (and expensive) was the information to obtain? Was it readily available from other sources? Does the information create an important competitive advantage? Did the company make a reasonable effort to protect it?

UNIFORM COMMERCIAL CODE AND COMMON LAW

If a contract is for the sale of goods, the UCC is the relevant body of law. For anything else, the common law governs. If a contract involves both goods and services, a court will examine the agreement's primary purpose to determine which law applies.

The obligor may generally raise all defenses against the assignee that she could have raised against the assignor

If the champagne was indeed worthless, Lydia owes Doug nothing.

ILLEGAL CONTRACTS

Illegal contracts are void and unenforceable. Claims of illegality often arise concerning non-compete clauses and exculpatory clauses.

An agreement based on the words and actions of the parties

Implied contract

Sequenom developed a noninvasive prenatal diagnostic test to assess the risk of Down syndrome and other chromosomal abnormalities in fetuses. The test analyzes DNA from the fetus that is found in the mother's blood. Prior to this test, women had to undergo invasive tests that carried a slight risk of miscarriage. The PTO awarded Sequenom a patent on the test, but other diagnostic testing companies sued to invalidate the patent. Is Sequenom's patent valid?

In 2013, a California federal court invalidated Sequenom's patent on the basis that it covered a natural phenomenon—the presence of DNA from the fetus in the mother's blood. This was based on the Myriad precedent discussed in this chapter. © Cengage

Substantial Performance.

In a contract for services, a party that substantially performs its obligations will receive the full contract price, minus the value of any defects.

In a mixed contract, between services and goods, what does Article 2 of UCC cover?

In a mixed contract, UCC Article 2 governs only if the primary purpose was the sale of goods.

Which of the following statements is true?

In about half the states, employees have the right to bring guns into their workplace parking lot.

OFF-DUTY ACTIVITIES

In the absence of a specific law to the contrary, employers have the right to fire workers for off-duty conduct.

Plaintiff 's Remedies for Fraud

In the case of fraud, the injured party generally has a choice of rescinding the contract or suing for damages or, in some cases, doing both.

The person who prepares and files the charter

Incorporator

What are the requirements for trade secret protection?

Information that, when used in business gives the owner an advantage over competitors.

What does a trade secret protect?

Information that, when used in business, gives its owner an advantage over competitors.

A third party who should be able to enforce a contract between two others

Intended beneficiary

Section 8 prohibits unions from engaging in these ULPs:

Interfering with employees who are exercising their labor rights and Charging excessive dues.

Section 8 of the NLRA prohibits employers from engaging in the following unfair labor practices (ULPs):

Interfering with union organizing efforts, Discriminating against a union member, and Refusing to bargain collectively with a union.

When the boss fired Clarence from his job at a moving company, she said it was because he could no longer lift heavy furniture, his salary was too high, and as he got older, he would have a hard time remembering stuff. Clarence is 60. Has the boss violated the law?

It is legal to fire someone who can't perform the job requirements or because his salary is too high. There may have been some age discrimination, but there is no evidence that age was the deciding factor. Therefore, the firing was legal. © Cengage

. Reginald Delaney managed a Taco Time restaurant in Portland, Oregon. Some of his customers told Mr. Ledbetter, the district manager, that they would not be eating there so often because there were too many black employees. Ledbetter told Delaney to fire Ms. White, who was black. Delaney did as he was told. Ledbetter's report on the incident said: "My notes show that Delaney told me that White asked him to sleep with her and that when he would not, that she started causing dissension within the crew. She asked him to come over to her house and that he declined." Delaney refused to sign the report because it was untrue, so Ledbetter fired him. What claim might Delaney make against his former employer?

Ledbetter committed a wrongful discharge when he fired Delaney for refusing to commit the tort of defamation. Delaney v. Taco Time International, Inc., 297 Or. 10, 681 P.2d 114

CORPORATE OPPORTUNITY

Managers are in violation of the corporate opportunity doctrine if they compete against the corporation without its consent.

A type of breach that substantially harms the innocent party

Material

Which of the following employers has violated Title VII?

Max hired a male corporate lawyer because his clients had more confidence in male lawyers.

Utility patents are available to those who invent (or significantly improve) any of the following:

Mechanical, Electrical, Chemical Inventions, Process, Machine, Composition of matter

FAMILY RESPONSIBILITY DISCRIMINATION

Men and women may not be treated differently because of their family responsibilities.

A common law principle requiring the acceptance to be on exactly the terms of the offer

Mirror image rule

Museum schedules a major fund-raising dinner, devoted to a famous Botticelli painting, for September 15. Museum then hires Sue Ellen to restore the picture, her work to be done no later than September 14. Sue Ellen is late with the restoration, forcing Museum to cancel the dinner and lose at least $500,000 in donations. Sue Ellen delivers the picture, in excellent condition, two weeks late. Museum sues.

Museum will win if, when the parties made the deal, Sue Ellen knew the importance of the date.

what are the three things a written contract for Agreements for an Interest in Land, Agreements that Cannot Be Performed within One Year, Promise to Pay the Debt of Another, Promise Made by an Executor of an Estate, Promise Made in Consideration of Marriage.

Must be signed by the defendant and Must state with reasonable certainty the name of each party, the subject matter of the agreement, and all the essential terms and promises.

What are the requirements for trademark protection?

Must be used on the product in interstate commerce.

Which of the following activities would not be considered sexual harassment?

Nancy yells "Crap!" at the top of her lungs every time her Rotisserie Baseball team loses.

Guyan Machinery, a West Virginia manufacturing corporation, hired Albert Voorhees as a salesman and required him to sign a contract stating that if he left Guyan, he would not work for a competing corporation anywhere within 250 miles of West Virginia for a two-year period. Later, Voorhees left Guyan and began working at Polydeck Corp., another West Virginia manufacturer. The only product Polydeck made was urethane screens, which comprised half of 1 percent of Guyan's business. Is Guyan entitled to enforce its non-compete clause?

No 250 miles and West Virginia is not reasonable. 5 miles and a town would be considered reasonable.

. Brockwell left his boat to be repaired at Lake Gaston Sales. The boat contained electronic equipment and other personal items. Brockwell signed a form stating that Lake Gaston had no responsibility for any loss to any property in or on the boat. Brockwell's electronic equipment was stolen and other personal items were damaged, and he sued. Is the exculpatory clause enforceable?

No, said the North Carolina Supreme Court. The court held that boat repairing is in the public interest and that it is against public policy for a company in that business to use an exculpatory clause to escape liability for its own negligence. The clause was void and Brockwell won. Note that while most states would extend public policy to cover auto repairs, not all states would include boat repairs, Brockwell v. Lake Gaston Sales & Service, 105 N.C. App. 226, 412 S.E.2d 104, 1992 N.C. App. LEXIS 39 (N.C. Ct. App. 1992). © Cengage

While in college, David invented a new and useful machine to make macaroni and cheese (he called it the "Mac n' Cheeser"). It was like nothing on the market, but David did not apply for a patent. At that time, he offered to sell his invention to several kitchen products companies. His offers were all rejected, and he never sold the invention. Years later, he decided to apply for a utility patent. Is David entitled to a utility patent?

No, while the Mac n' Cheeser was new, useful, and nonobvious at the time it was invented, David's disclosure to the kitchen product companies years before renders it not novel now. Inventors have a grace period of one year once disclosure is made to apply for a patent. That time lapsed. Patent rejected. © Cengage

Which of these activities is legal under the Digital Millennium Copyright Act?Eric is a clever fellow who knows all about computers. He:

None

Requirements for a Utility Patent-Nonobvious-Patentable subject matter.

Not every innovation is patentable. A patent is not available solely for an idea, but only for its tangible application. Thus, patents are not available for laws of nature, scientific principles, mathematical algorithms, mental processes, intellectual concepts, or formulas such as a 2 + b 2 = c 2 .

A federal statute that ensures safe working conditions

OSHA

Unilateral mistake

Occurs when only one party negotiates based on a factual error

A party that receives an offer

Offeree

A party that makes an offer

Offeror

What is the definition of Acceptance under contract law?.

Once a party receives an offer, he must respond to it in a certain way.

Rights of the Parties after Assignment

Once the assignment is made and the obligor notified, the assignee may enforce her contractual rights against the obligor. If Lydia fails to pay Doug for the champagne she gets from Bruno, Doug may sue to enforce the agreement.

The charter must also provide information about the company's stock:

Par Value & Number of Shares. Authorized stock represents the maximum shares the company can issue—unless it amends its charter. Stock that the company has sold but later bought back is treasury stock.

Extends patent protection overseas

Paris Convention

Grants the inventor exclusive use of an invention

Patent

Patent

Patents give inventors the right to prevent others from making, using, or selling their inventions for a limited time

Under contract law employees at will hold employers liable for what?

Promises Made During the Hiring Process. Employee Handbooks.

PROMISES MADE DURING THE HIRING PROCESS

Promises made during the hiring process are generally enforceable, even if not approved by the company's top executives.

Someone who organizes a corporation

Promoter

PROXY ACCESS

Proxy access bylaws require companies to include in their proxy material the names of board nominees selected by large shareholders and to allow all shareholders to vote for these nominees.

States that an employer may not fire a worker for refusing to violate the law, exercising a legal right, or supporting basic societal values

Public policy rule

Nationwide Discount Furniture hired Rampart Security to install an alarm in its warehouse. A fire would set off an alarm in Rampart's office, and the security company was then supposed to notify Nationwide immediately. A fire did break out, but Rampart allegedly failed to notify Nationwide, causing the fire to spread next door and damage a building owned by Gasket Materials Corp. Gasket sued Rampart for breach of contract, and Rampart moved for summary judgment. Comment.

Rampart's motion was allowed. Gasket was merely an incidental beneficiary of the Rampart-Nationwide contract. Neither party intended to benefit Gasket, and Gasket thus had no right to enforce the contract. Orion Group v. Nationwide Discount Sleep Center, 1990 U.S. Dist. LEXIS 10197 (E.D. Pa. 1990). © Cengage

The company's representative in its state of incorporation

Registered agent

Restitution

Restoring an injured party to its original position A minor who disaffirms a contract must return the consideration he has received, to the extenthe is able.

REVERSE DISCRIMINATION

Reverse discrimination means making an employment decision that harms a non-Hispanic white person or a man because of his gender, color, or race. As a general rule, it is just as illegal as discriminating against a minority or a woman.

After the death of Babe Ruth, one of the most famous baseball players of all time, his daughters registered the name "Babe Ruth" as a trademark. Which of the following uses would be legal without the daughters' permission?

Sales of Babe Ruth autographs

RIGHT TO ORGANIZE

Section 7 of the NLRA guarantees employees the right to organize and join unions, bargain collectively, and engage in other concerted activities. Section 8 of the NLRA makes it a ULP for an employer to interfere with union organizing, discriminate against a union member, or refuse to bargain collectively. During a union organizing campaign, an employer may vigorously present anti-union views to its employees, but it may not use threats or rewards to defeat the union effort.

SELF-DEALING

Self-dealing means that a manager makes a decision benefiting either himself or another company with which he has a relationship. It is a violation of the duty of loyalty under the business judgment rule

SEXUAL HARASSMENT

Sexual harassment involves unwelcome sexual advances, requests for sexual favors, or other verbal or physical conduct of a sexual nature that are so severe and pervasive that they interfere with an employee's ability to work.

elections

Shareholders elect directors. Then the directors elect the officers of the corporation.

SHAREHOLDER RIGHTS

Shareholders have neither the right nor the obligation to manage the day-to-day business of the enterprise. Shareholders do have: The right to inspect and copy the corporation's records (for a proper purpose); The right to approve fundamental corporate changes: charter amendments, merger, the sale of major assets, or dissolution; The right to attend shareholder meetings; and The right to elect directors.

EXECUTIVE COMPENSATION

Since 1978, CEO pay has increased by twice the rate of stock market growth. Research consistently shows little correlation between CEO pay and firm performance.

Public Policy.

Some assignments are prohibited by public policy. For example, someone who has suffered a personal injury may not assign her claim to a third person.

Whistleblower

Someone who disclose wrongdoing. They are employees who disclose illegal behavior on the part of their employer.

Third party beneficiary

Someone who is not a party to a contract but stands to benefit from it (life insurance)

Promoter

Someone who organizes a corporation promoter is personally liable on any contract he signs before the corporation is formed.

SPECIFIC PERFORMANCE

Specific performance, ordered only in cases of a unique asset, requires both parties to perform the contract.

Question: Norv owned a Ford dealership and wanted to expand by obtaining a BMW outlet. He spoke with Jackson and other BMW executives on several occasions. Norv now claims that those discussions resulted in an oral contract that requires BMW to grant him a franchise, but the company disagrees. Norv's strongest evidence of a contract is the fact that Jackson gave him forms on which to order BMWs. Jackson answered that it was his standard practice to give such forms to prospective dealers, so that if the franchise were approved, car orders could be processed quickly. Norv states that he was "shocked" when BMW refused to go through with the deal. Is there a contract?

Strategy: A court makes an objective assessment of what the parties did and said to determine whether they had a meeting of the minds and intended to form a contract. Norv's "shock" is irrelevant. Do the order forms indicate a meeting of the minds? Was there additional evidence that the parties had reached an agreement? (See the "Result" at the end of this Exam Review section.) 9 Result: The order forms are neither an offer nor an acceptance. Norv has offered no evidence that the parties agreed on price, date of performance, or any other key terms. There is no contract. Norv allowed eagerness and optimism to replace common sense.

Question: Ajouelo signed an employment contract with Wilkerson. The contract stated: "Whatever company, partnership, or corporation that Wilkerson may form for the purpose of manufacturing shall succeed Wilkerson and exercise the rights and assume all of Wilkerson's obligations as fixed by this contract." Two months later, Wilkerson formed Auto-Soler Co. Ajouelo entered into a new contract with Auto-Soler providing that the company was liable for Wilkerson's obligations under the old contract. Neither Wilkerson nor the company ever paid Ajouelo. He sued Wilkerson personally. Does Wilkerson have any obligations to Ajouelo?

Strategy: A promoter is not liable for a contract he signed on behalf of a yet-to-be formed corporation if the third party (in this case, Wilkinson) agrees to a novation. (See the "Result" at the end of this Exam Review section. Result: Wilkerson may have had an ethical obligation to Ajouelo, but not a legal one. The court held that the second contract was a novation, which ended Wilkerson's obligations under the first contract.

The Hoffmans owned and operated a successful small bakery and grocery store. They spoke with Lukowitz, an agent of Red Owl Stores, who told them that for $18,000, Red Owl would build a store and fully stock it for them. The Hoffmans sold their bakery and grocery store and purchased a lot on which Red Owl was to build the store. Lukowitz then told Hoffman that the price had gone up to $26,000. The Hoffmans borrowed the extra money from relatives, but then Lukowitz informed them that the cost would be $34,000. Negotiations broke off and the Hoffmans sued. The court determined that there was no contract because too many details had not been worked out—the size of the store, its design, and the cost of constructing it. Can the Hoffmans recover any money?

Strategy: Because there is no contract, the Hoffmans must rely on either promissory estoppel or quasi-contract. Promissory estoppel focuses on the defendant's promise and the plaintiff's reliance. Those suing in quasi-contract must show that the defendant received a benefit for which it should reasonably expect to pay. Does either fit here? (See the "Result" at the end of this Exam Review section.) 8 Result: Red Owl received no benefit from the Hoffmans' sale of their store or purchase of the lot. However, Red Owl did make a promise and expected the Hoffmans to rely on it, which they did. The Hoffmans won their claim of promissory estoppel.

Joe buys an Otterhound named Barky from Purity Dog Shop. He pays $2,500 for the puppy, the high cost due to the certificate Purity gives him indicating that the puppy's parents were both AKC champions (elite dogs). Two months later, Joe sells the hound to Emily for $2,800. Joe and Emily both believe that Barky is descended from champions. Then a state investigation reveals that Purity has been cheating and its certificates are fakes. Barky is a mixed-breed dog, worth about $100. Emily sues Joe. Who wins?

Strategy: Both parties are mistaken about the kind of dog Joe is selling, so this is an instance of mutual mistake. What is the rule in such cases? Result: If the two sides agree based on an important factual error, the contract is voidable by the injured party. A mutt is entirely different from a dog that might become a champion. The parties erred about the essence of their deal. Joe's good faith does not save him, and Emily is entitled to rescind.

50 Cent has been rapping all day, and he is very thirsty. He pulls his Ferrari into the parking lot of a convenience store. The store turns out to be closed, but luckily for him, a vending machine sits outside. While walking over to it, he realizes that he has left his wallet at home. Frustrated, he whistles to a 10-year-old kid who is walking by. "Hey kid!" he shouts. "I need to borrow fifty cents!" "I know who you are!" the kid replies. Fiddy tries again. "No, no, I need to borrow fifty cents!" The kid walks over. "Well, I'm not going to just give you my last fifty cents. But maybe you can sell me something." 50 Cent cannot believe it, but he really is very thirsty. He takes off a Rolex. "How about this?" "Deal," the kid says, handing over two quarters. Can 50 Cent get his watch back?

Strategy: Even in extreme cases, courts rarely take an interest in how much consideration is given or whether everyone got a "good deal." Even though the Rolex may be worth thousands of times more than the quarters, the quarters still count under the peppercorn rule. Result: After this transaction, 50 Cent may have second thoughts, but they will be too late. The kid committed an act by handing over his money—he was under no legal obligation to do so. And 50 Cent received something of small, but measurable, value. So there is consideration to support this deal, and 50 Cent would not get his watch back.

To ensure that its employees did not use illegal drugs in or outside the workplace, Marvel Grocery Store required all employees to take a polygraph exam. Moreover, managers began to check employees' Facebook pages for reference to drug use. Jagger was fired for refusing to take the polygraph test. Jonathan was dismissed after revealing on his Facebook page that he was using marijuana. Has the company acted legally?

Strategy: First: As employees at will, are Jagger and Jonathan protected by a statute? The Employee Polygraph Protection Act permits employers to require a polygraph test as part of ongoing investigations into crimes that have occurred. Second: What about Jonathan's marijuana use? No statutes protect a worker for illegal off-duty conduct. Can the company punish Jonathan for what he wrote on his Facebook page? Not if it relates to work conditions and involves concerted activity. Result: Here, Marvel has no reason to believe that a crime occurred, so it cannot require a polygraph test. Jonathan's Facebook postings have nothing to do with work conditions, and illegal activity is not protected. So the company is liable to Jagger for requiring him to take the polygraph exam, but not to Jonathan for firing him over illegal drug use.

Question: Vern owned 32 percent of Coast Oyster Co. and served as president and director. Coast was struggling to pay its debts, so Vern suggested that the company sell some of its oyster beds to Keypoint Co. After the sale, officers at Coast discovered that Vern owned 50 percent of Keypoint. They demanded that he give the Keypoint stock to Coast. Did Vern violate the business judgment rule?

Strategy: Here, Vern has violated the business judgment rule not once, but twice. (See the "Result" at the end of this Exam Review section.) Result: If the shareholders and directors did not know of Vern's interest in Keypoint, they could not evaluate the contract properly. Vern should have told them. Also, by purchasing stock in Keypoint, Vern took a corporate opportunity. He had to turn over any profits he had earned on the transaction, as well as his stock in Keypoint.

Omega Concrete had a gravel pit and factory. Access was difficult, so Omega contracted with Union Pacific Railroad (UP) for the right to use a private road that crossed UP property and tracks. The contract stated that use of the road was solely for Omega employees and that Omega would be responsible for closing a gate that UP planned to build where the private road joined a public highway. In fact, UP never constructed the gate; and Omega had no authority to construct the gate. Mathew Rogers, an Omega employee, was killed by a train while using the private road. Rogers's family sued Omega, claiming that Omega failed to keep the gate closed as the contract required. Is Omega liable?

Strategy: Impossibility means that the promisor cannot do what he promised to do. Is this such a case? (See the "Result" at the end of this Exam Review section.) Result: There was no gate, and Omega had no right to build one. This is a case of true impossibility. Omega was not liable.

Question: For Michael, it was the job of his dreams—editor of Literature magazine. When Cyrus, the owner of the magazine, offered him the position, Michael accepted immediately. But he also revealed a secret few people knew—he was in the early stages of Parkinson's, a neurological disorder that affects the patient's ability to move. While that symptom is controllable with medication, about 40 percent of Parkinson's patients suffer severe dementia and eventually become unable to work. Michael had no signs of dementia—he was the host of a popular television talk show. Fifteen minutes after Michael returned to his hotel room, Cyrus called to withdraw the job offer. He said he did not like some of Michael's ideas for changing the magazine. Has Cyrus violated the ADA? Could he fire Michael if dementia set in?

Strategy: Is Michael covered by the ADA? Can he perform the essential functions of the job? Result: Michael is covered by the ADA. He has an impairment that substantially limits a major life activity—movement. But Michael is able to perform the essential functions of the job, so Cyrus violated the law when he withdrew the offer. If Michael becomes demented in the future and can no longer run a magazine, Cyrus could fire him then.

Question: Ladies Plus refuses to hire Eric for a job as a sales associate because his credit score is too low to meet the store's hiring standards. Men, on average, have worse credit ratings than women. Has the store violated Title VII?

Strategy: Is there evidence that men and women are being treated differently? No, the same rule applies to both. Do the rules have a disparate impact? Yes, more women have acceptable credit ratings. Is sex a protected category under Title VII? Yes. Are the standards essential for the job? Would other, less discriminatory rules have achieved the same result? (See the "Result" at the end of this Exam Review section.) Result: The store is in violation of Title VII unless it can show that (1) credit ratings directly relate to a sales associate's job performance and (2) no other, less discriminatory, requirement would accurately evaluate applicants for this work.

Question: Frank B. McMahon wrote one of the first psychology textbooks to feature a light and easily readable style. He also included slang and examples that appealed to a youthful student market. Charles G. Morris wrote a psychology textbook that copied McMahon's style. Has Morris infringed McMahon's copyright?

Strategy: McMahon cannot copyright an idea—only the expression of an idea. (See the "Result" at the end of this Case Questions section.) Result: The style of a textbook is an idea and not copyrightable. Thus, Morris could write a book with funny stories, just not the same stories told in the same way as in McMahon's book. Morris did not infringe McMahon's copyright.

The Monroes, a retired couple who live in Illinois, want to move to Arizona to escape the northern winter. In May, the Monroes contract in writing to sell their house to the Temples for $450,000. Closing is to take place June 30. The Temples pay a deposit of $90,000. However, in early June, the Monroes travel through Arizona and discover it is too hot for them. They promptly notify the Temples they are no longer willing to sell and return the $90,000, with interest. The Temples sue, seeking the house. In response, the Monroes offer evidence that the value of the house has dropped from about $450,000 to about $400,000. They claim that the Temples have suffered no loss. Who will win?

Strategy: Most contract lawsuits are for money damages, but not this one. The Temples want the house. Because they want the house itself, and not money damages, the drop in value is irrelevant. What legal remedy are the Temples seeking? They are suing for specific performance. When will a court grant specific performance? Should it do so here? Result: In cases involving the sale of land or some other unique asset, a court will grant specific performance, ordering the parties to perform the agreement. All houses are regarded as unique. The court will force the Monroes to sell their house, provided the Temples have sufficient money to pay for it.

Mr. and Ms. Beard contracted for Builder to construct a house on property he owned and sell it to the Beards for $785,000. The house was to be completed by a certain date, and Builder knew that the Beards were selling their own home in reliance on the completion date. Builder was late with construction, forcing the Beards to spend $32,000 in rent. Ultimately, Builder never finished the house, and the Beards moved elsewhere. They sued. At trial, expert testimony indicated the market value of the house as promised would have been $885,000. How much money are the Beards entitled to, and why?

Strategy: Normally, in cases of property, an injured plaintiff may use specific performance to obtain the land or house. However, there is no house, so there will be no specific performance. The Beards will seek their expectation interest. Under the contract, what did they reasonably expect? They anticipated a finished house, on a particular date, worth $885,000. They did not expect to pay rent while waiting. Calculate their losses. (See the "Result" at the end of this Exam Review section.) Result: The Beards' direct damages represent the difference between the market value of the house and the contract price. They expected a house worth $100,000 more than their contract price, and they are entitled to that sum. They also suffered consequential damages. The Builder knew they needed the house as of the contract date, and he could foresee that his breach would force them to pay rent. He is liable for a total of $132,000.

Question: Consider these two entrepreneurs: Judith formed a corporation to write a blog that is unlikely to generate substantial revenues. Drexel operated his construction business as a sole proprietorship. Were these forms of organization right for these businesses?

Strategy: Prepare a list of the advantages and disadvantages of each form of organization. Sole proprietorships are best for businesses without substantial capital needs. Corporations can raise capital but are expensive to operate. Result: Judith would be better off with a sole proprietorship—her revenues will not support the expenses of a corporation. Also, her debts are likely to be small, so she will not need the limited liability of a corporation. And no matter what her form of organization, she would be personally liable for any negligent acts she commits, so a corporation would not provide any additional protection. But for Drexel, a sole proprietorship could be disastrous because his construction company will have substantial debts and a large number of employees. If an employee causes an injury, Drexel might be personally liable. And if his business fails, the court would take his personal assets. He would be better off with a form of organization that limits his liability, such as a corporation or an LLC.

Question: A man asked a question of the advice columnist at his local newspaper. His wife had thought of a clever name for an automobile. He wanted to know if there was any way they could trademark the name so that no one else could use it. If you were the columnist, how would you respond?

Strategy: Recall that trademark registration requires a use—or bona fide intent to use— in commerce. (See the "Result" at the end of this Case Questions section.) The couple could not trademark the name unless they had already or were intending to attach it to a product used in interstate commerce. So unless they had plans to manufacture a car, they could not trademark the name.

Question: Jack was a top salesperson but a real pain in the neck. He argued with everyone, especially his boss, Ross. Finally, Ross had had enough and abruptly fired Jack. But he was worried that if Jack went to work for a competitor, he might take business away. So Ross told everyone who called for a reference that Jack was a difficult human being. Is Ross liable for these statements?

Strategy: Ross would be liable for making untrue statements. (See the "Result" at the end of this Exam Review section.) Result: These statements were true, so Ross would not be liable. Before making the statements, though, he should ask himself if he wants the burden of having to prove them true in court.

Question: When Shiloh interviewed for a sales job at a medical supply company, the interviewer promised that she would only have to sell medical devices, not medications. Once she began work (as an employee at will), Shiloh discovered that the sales force was organized around regions, not products, so she had to sell both devices and drugs. When she complained to her boss over lunch in the employee cafeteria, he said in a loud voice, "You're a big girl now—it's time you learned that you don't always get what you want." He then fired her on the spot. Does she have a valid claim against the company?

Strategy: Shiloh is an employee at will. She has had two key interactions with the company—being hired and being fired. What protections does the law provide? Result: The employer's promises made during the hiring process are enforceable. Here, the company is liable because the interviewer clearly made a promise that the company did not keep. What about the way in which Shiloh was fired? She might allege that she is entitled to damages for the intentional infliction of emotional distress. But Shiloh is unlikely to win on that claim—the behavior was not extreme and outrageous enough.

Question: Shauna flew a World War II fighter aircraft as a member of an exhibition flight team. While the team was performing in a delta formation, another plane collided with Shauna's aircraft, causing her to crash-land, leaving her permanently disabled. Shauna sued the other pilot and the team. The defendants moved to dismiss based on an exculpatory clause that Shauna had signed. The clause was one paragraph long and stated that Shauna knew team flying was inherently dangerous and could result in injury or death. She agreed not to hold the team or any members liable in case of an accident. Shauna argued that the clause should not be enforced against her if she could prove the other pilot was negligent. Please rule.

Strategy: The issue is whether the exculpatory clause is valid. Courts are likely to declare such clauses void if they concern vital activities like medical care, exclude an intentional tort or gross negligence, or arise from unequal bargaining power. Result: This is a clear, short clause, between parties with equal bargaining power, and does not exclude an intentional tort or gross negligence. The activity is unimportant to the public welfare. The clause is valid. Even if the other pilot was negligent, Shauna will lose, meaning the court should dismiss her lawsuit.

Question: The appearance policy at Starwood Hotels prohibited employees from wearing hairstyles that showed excessive scalp. When Carmelita Vazquez repeatedly came to work with her hair in cornrows, Starwood fired her for violating its policy. Vazquez was AfricanAmerican and Hispanic. White women were allowed to wear their hair in braids. Vazquez filed a disparate treatment claim under Title VII.

Strategy: The steps of a disparate treatment case are: 1. Vazquez has presented a prima facie case—she has shown that she was treated differently from similar people who are not protected under Title VII. 2. Starwood presented evidence that its decision was based on legitimate reasons— Vazquez had violated its appearance policy. 3. To win, Vazquez must show that Starwood's decision was a pretext or had a discriminatory intent. Result: The court found for Vazquez, believing that Starwood did have a discriminatory intent.

The purchaser of a business insisted on putting this clause in the sales contract: The seller would not compete, for five years, "anywhere in the United States, the continent of North America, or anywhere else on Earth." What danger does that contract represent to the purchaser?

Strategy: This is a non-compete clause based on the sale of a business. Such clauses are valid if reasonable. Is this clause reasonable? If it is unreasonable, what might a court do? (See the "Result" at the end of this Exam Review section.) "Anywhere else on Earth"? This is almost certainly unreasonable. It is hard to imagine a purchaser who would legitimately need such wide-ranging protection. In some states, a court might rewrite the clause, limiting the effect to the seller's state or some other reasonable area. However, in other states, a court finding a clause unreasonable will declare it void in its entirety—enabling the seller to open a competing business next door.

Donald Waide had a contracting business. He bought most of his supplies from Paul Bingham's supply center. Waide fell behind on his bills, and Bingham told Waide that 2058730 - Cengage US © he would extend no more credit to him. That same day, Donald's father, Elmer Waide, came to Bingham's store and said to Bingham that he would "stand good" for any sales to Donald made on credit. Based on Elmer's statement, Bingham again gave Donald credit, and Donald ran up $10,000 in goods before Bingham sued Donald and Elmer. What defense did Elmer make, and what was the outcome?

Strategy: This was an oral agreement, so the issue is whether the promise had to be in writing to be enforceable. Review the list of six contracts that must be in writing. Is this agreement there? (See the "Result" at the end of this Exam Review section.) Result: Elmer made a promise to pay the debt of another. He did so as a favor to his son. This is a collateral promise. Elmer never signed any such promise, and the agreement cannot be enforced against him.

Question: You are the vice president of administration at a hospital. A hospital study reveals that both male and female patients prefer to have a male neurosurgeon, while men prefer male urologists and women prefer female gynecologists. Can you act on this information when hiring doctors?

Strategy: To hire based on sex is a violation of Title VII unless sex is a BFOQ for the job. (See the "Result" at the end of this Exam Review section.) Result: Customer preference does not justify discrimination except in cases of sexual privacy. You cannot consider sex when hiring neurosurgeons, but you can when selecting urologists and gynecologists.

Question: Jerry Falwell was a nationally known Baptist minister whose website was falwell.com. One of his most outspoken critics registered the website fallwell.com—note the misspelling—to criticize the minister's views on homosexuality. This site has a disclaimer indicating that it was not affiliated with Reverend Falwell. The minister sued fallwell.com, alleging a violation of trademark law. Was there a violation?

Strategy: To win a trademark claim, the reverend must show that there was some confusion between the two sites. Result: The reverend lost. The court ruled that there was no confusion—fallwell.com had a clear disclaimer. Also, there was no indication of bad faith or consumer confusion. The court was reluctant to censor political commentary.

Question: When Phil McConkey interviewed for a job as an insurance agent with Alexander & Alexander, the company did not tell him that it was engaged in secret negotiations to merge with Aon. When the merger went through soon thereafter, Aon fired McConkey. Was Alexander liable for not telling McConkey about the possible merger?

Strategy: Was McConkey protected by a statute? No. Did the company make any promises to him during the hiring process? (See the "Result" at the end of this Exam Review section.) Result: The court held that when Alexander hired him, it was making an implied promise that McConkey would not be fired immediately. The company was liable for not having 2058730 - Cengage US © revealed the merger negotiations.

Question: In 1572, during the reign of Queen Elizabeth I of England, a patent application was filed for a knife with a bone rather than a wooden handle. Would this patent be granted under current U.S. law?

Strategy: Was a bone handle novel, nonobvious, and useful? Result: It was useful—no splinters from a bone handle. It was novel—no one had ever done it before. But the patent was denied because it was obvious. 3

Jade owns a straight track used for drag racing. She hires Trevor to resurface it for $180,000, paying $90,000 down. When the project is completed, Jade refuses to pay the balance and sues Trevor for her down payment. He counterclaims for the $90,000 still due. At trial, Trevor proves that all of the required materials were applied by trained workers in an expert fashion, the dimensions were perfect, and his profit margin very modest. The head of the national drag racing association testifies that his group considers the strip unsafe. He noticed puddles in both asphalt lanes, found the concrete starting pads unsafe, and believed the racing surface needed to be ground off and reapplied. His organization refuses to sanction races at the track until repairs are made. Who wins the suit?

Strategy: When one party has performed imperfectly, we have an issue of substantial performance. To decide whether Trevor is entitled to his money, we apply four factors: (1) How much benefit did Jade receive? (2) Can she use the racing strip for its intended purpose? (3) Can Jade be compensated for defects? (4) Did Trevor act in good faith? Result: Jade has received no benefit whatsoever. She cannot use her track for drag racing. Compensation will not help Jade—she needs a new strip. Trevor's work must be ripped up and replaced. Trevor may have acted in good faith, but he failed to deliver what Jade bargained for. Jade wins all of the money she paid. (As we will see later in this chapter, she may win additional sums for her lost profits.

Question: Dr. Warfield hired Wolfe, a young carpenter, to build his house. A week or so after they signed the contract, Wolfe incorporated Wolfe Construction, Inc. Warfield wrote checks to the corporation, which it cashed. Unfortunately, the work on the house was shoddy. The architect said he did not know whether to try to fix the house or just blow it 2058730 - Cengage US © up. Warfield sued Wolfe and Wolfe Construction, Inc., for damages. Wolfe argued that if he was liable as a promoter, then the corporation must be absolved and that, conversely, if the corporation was held liable, he, as an individual, must not be. Who is liable to Warfield?

Strategy: Wolfe's argument is wrong. Warfield does not have to choose between suing him individually or suing the corporation. He can sue both. Result: Wolfe is personally liable on any contract he signed before incorporation, no matter whose name is on the contract. The corporation is liable only if it adopts the contract. Did it do so here? The fact that the corporation cashed checks that were made out to it means that the corporation is also liable. So Warfield can sue both Wolfe and the corporation.

SUBSTANTIAL PERFORMANCE

Strict performance, which requires one party to fulfill its duties perfectly, is unusual. In construction and service contracts, substantial performance is generally sufficient to entitle the promisor to the contract price, minus the cost of defects.

Substantial Interest in Personal Performance.

Suppose Hammer had omitted the "nondelegation" clause from his contract with Spot. Could Hammer still refuse the delegation on the grounds that he has a substantial interest in having Spot do the work? No. Most duties are delegable. There is nothing so special about painting a house that one particular painter is required to do it. But some kinds of work do require personal performance, and obligors may not delegate these tasks. The services of lawyers, doctors, dentists, artists, and performers are considered too personal to be delegated. There is no single test that will perfectly define this group, but generally when the work will test the character, skill, discretion, and good faith of the obligor, she may not delegate her job.

The Limits of Patentable Subject Matter: Living Organisms

Technology and business are constantly challenging patent law and the limits of what is patentable, especially when it comes to living things. Under what conditions are life forms patentable?—could be patented if they are different from anything found in nature and a product of human ingenuity.

EEOC

The EEOC is the federal agency responsible for enforcing Title VII, the Equal Pay Act, the Pregnancy Discrimination Act, the ADEA, the ADA, and GINA. Before a plaintiff can bring suit under any of these statutes (except the Equal Pay Act), she must first file a charge with the EEOC.

THE FAIR LABOR STANDARDS ACT (FLSA)

The Fair Labor Standards Act regulates minimum and overtime wages. It also limits child labor.

CLAWBACKS

The SEC has the right to clawback some CEO and CFO compensation if misconduct on the part of any employee causes the company to restate its financials. Companies must establish clawback policies, whereby they can require the CEO and CFO to reimburse the company for any bonus or profits they received from selling company stock within a year of the release of flawed financials.

SOCIAL SECURITY

The Social Security system pays benefits to workers who are retired, disabled, or temporarily unemployed and to the spouses and children of disabled or deceased workers.

Michael incorporated Erin Homes, Inc., to manufacture mobile homes. He issued himself a stock certificate for 100 shares for which he made no payment. He and his wife served as officers and directors of the organization, but, during the eight years of its existence, the corporation held only one meeting. Erin always had its own checking account, and all proceeds from the sales of mobile homes were deposited there. It filed federal income tax returns each year, using its own federal tax number. John and Thelma purchased a mobile home from Erin, but the company never delivered it to them. John and Thelma sued Erin Homes and Michael, individually. Should the court "pierce the corporate veil" and hold Michael personally liable?

The appeals court pierced the corporate veil and held the shareholder liable because the corporation had grossly inadequate capitalization, had disregarded corporate formalities, and the shareholder was also actively participating in the operation of the business. Laya v. Erin Homes, Inc., 177 W. Va. 343, 352 S.E.2d 93 (1986). © Cengage

BUSINESS JUDGMENT RULE

The business judgment rule provides that managers are not liable for decisions they make: In good faith, For a lawful purpose, Without a conflict of interest, To advance the best interests of the corporation, and With the care that an ordinarily prudent person would take in a similar situation.

. Sal says to Jennifer, "I'll trim all of your trees if you pay me $300." Jennifer replies, "It's a deal, if you'll also feed my dog next week when I go on vacation." Does the common law or the UCC apply to Sal's proposal? Is Jennifer's reply an acceptance? Why or why not?

The common law applies. Jennifer's reply is not an acceptance because the mirror image rule requires that acceptance be on precisely the same terms as the offer.

What is the definition Legality under contract law?

The contract must be for a lawful purpose. Courts will not enforce agreements to sell cocaine, for example.

In the documentary movie Expelled: No Intelligence Allowed, there was a 15-second clip of "Imagine," a song by John Lennon. The purpose of the scene was to criticize the song's message. His wife and sons, who held the copyright, sued to block this use of the song. Under what theory did the film makers argue that they had the right to use this music? Did they win?

The court held that Sesame Street had not infringed Reyher's copyright because Reyher could not copyright the plot of a story, only her expression of the plot. Reyher v. Children's Television Workshop, 533 F.2d 87, 190 U.S.P.Q. (BNA) 387 (2d Cir. 1976). © Cengage

When Theodore Staats went to his company's "Council of Honor Convention," he was accompanied by a woman who was not his wife, although he told everyone she was. The company fired him. Staats alleged that his termination violated public policy because it infringed upon his freedom of association. He also alleged that he had been fired because he was too successful—his commissions were so high, he out-earned even the highest-paid officer of the company. Has Staats's employer violated public policy?

The court held that freedom of association is an important social right and should be protected. However, being fired for bringing a lover to an employer's convention is not a threat to public policy. Nor is discharge for being too successful. © Cengage

What three things do you need to prove in fraud?

The defendant knew that his statement was false or he made the statement recklessly and without knowledge of whether it was false, 2. The false statement was material, and 3. The injured party justifiably relied on the statement.

. BARGAINING

The employer and the union must bargain over wages, hours, and other terms and conditions of employment. They may bargain over other subjects, but neither side may insist on doing so. The union and the employer must bargain in good faith, but they are not obligated to reach an agreement.

EXPECTATION INTEREST

The expectation interest puts the injured party in the position she would have been in had both sides fully performed. It has three components: direct, consequential, and incidental damages.

Element Three: Justifiable Reliance

The injured party must also show that she actually did rely on the false statement and that her reliance was reasonable. The buyer believes what he hears but does not much care because he plans to demolish the building and construct a day-care center. There was a material misstatement but no reliance, and the buyer may not rescind.

Element Two: Materiality

The injured party must demonstrate that the statement was material, or important. A minor misstatement does not meet this second element of fraud. If the actual acreage is 199, he has almost certainly not made a material misstatement. But if the actual acreage is 150, he has.

ACT OR FORBEARANCE

The item of value can be either an act or a forbearance. An act does not count if the party was simply complying with the law or fulfilling her obligations under an 2058730 - Cengage US © existing contract.

Capacity

The legal ability to enter into a contract. Minors, mentally impaired persons, and intoxicated persons generally may disaffirm contracts.

FIDUCIARY DUTY

The officers and directors of a corporation owe a fiduciary duty to both the corporation and its shareholders.

Contract Prohibition.

The parties may forbid almost any delegation, and the courts will enforce the agreement. Hammer, a contractor, is building a house and hires Spot as his painter, including in his contract a clause prohibiting delegation. Just before the house is ready for painting, Spot gets a better job elsewhere and wants to delegate his duties to Brush. Hammer may refuse the delegation even if Brush is equally qualified.

What is the definition Capacity under contract law?

The parties must be adults of sound mind.

Assignor

The person making an assignment

Obligor

The person obligated to do something under a contract

Assignee

The person receiving an assignment

What three things do you need to prove to win a Quantum meruit case?

The plaintiff gave some benefit to the defendant, The plaintiff reasonably expected to be paid for the benefit and the defendant knew this, and The defendant would be unjustly enriched if he did not pay.

Which of the following steps is not required in a disparate treatment case?

The plaintiff must submit to arbitration

Fair use doctrine Permits limited use of copyrighted material without permission of the author with these four factors

The purpose and character of the use., The nature of the copyrighted work, The amount and proportion of the work that is used., The effect of the use upon the potential market.

RELIANCE INTEREST

The reliance interest puts the injured party in the position he would have been in had the parties never entered into a contract.

RESTITUTION INTEREST

The restitution interest returns to the injured party a benefit that she has conferred on the other party which would be unjust to leave with that person.

STATUTE OF FRAUDS Contracts that must be in writing to be enforceable concern:

The sale of any interest in land, Agreements that cannot be performed within one year, Promises to pay the debt of another, Promises made by an executor of an estate, Promises made in consideration of marriage, and The sale of goods worth $500 or more

The president of R. Hoe & Co., Inc., refused to call a special meeting of the shareholders although 55 percent of them requested it. One purpose of the meeting was to reinstate the former president. Do shareholders have the right to make these two requests?

The shareholders have the right to call a meeting, but not to reinstate the president.

SEXUAL ORIENTATION

The specific language of Title VII does not include sexual orientation as a protected category but some courts now interpret the statute to include it as one. Also, the federal government prohibits discrimination based on sexual orientation among its own employees and also among government contractors.

What does copyright protect?

The tangible expression of an idea but not the idea itself

If a manager engages in self-dealing, which of the following answers will not protect him from a finding that he violated the business judgment rule?

The transaction was of minor importance to the company.

WRITING REQUIREMENT

The writing must be signed by the defendant and must state the name of all parties, the subject matter of the agreement, and all essential terms and promises.

What is the definition Consideration under contract law?

There has to be bargaining that leads to an exchange between the parties. Contracts cannot be a one-way street; both sides must receive some measurable benefit.

After the terrorist attacks of 9/11, the United States tightened its visa requirements. In the process, baseball teams discovered that 300 foreign-born professional players had lied about their age. (A talented 16-year-old is much more valuable than a 23-year-old with the same skills.) In some cases, the players had used birth certificates that belonged to other (younger) people. To prevent this fraud, baseball teams began asking for DNA tests on prospects and their families to make sure they were not lying about their identity. Is this testing legal?

There have not been any cases yet, but commentators speculate that the testing would violate the Genetic Information Nondiscrimination Act. It seems clear the teams would be in violation if they used the information to predict whether a player is susceptible to disease. © Cengage

When is performance substantial?

There is no perfect test, but courts look at these issues: How much benefit has the promisee received? If it is a construction contract, can the owner use the thing for its intended purpose? Can the promisee be compensated with money damages for any defects? Did the promisor act in good faith?

In the absence of specific state statutes, non-compete agreements are enforceable only if they meet all of the following standards:

They are reasonably necessary for the protection of the employer They provide a reasonable time limit They have a reasonable geographic limit. They are not harsh or oppressive to the employee. They are not contrary to public policy. Employers who hide terms or sneak them into contracts after the employee has accepted the job may be acting illegally

. ETHICS Richard and Michelle Kommit traveled to New Jersey to have fun in the casinos. While in Atlantic City, they used their MasterCard to withdraw cash from an ATM conveniently located in the "pit," which is the gambling area of a casino. They ran up debts of $5,500 on the credit card and did not pay. The Connecticut National Bank sued for the money. What argument should the Kommits make? Which party, if any, has the moral high ground here? Should a casino offer ATM services in the gambling pit? If a credit card company allows customers to withdraw cash in a casino, is it encouraging them to lose money? Do the Kommits have any ethical right to use the ATM, attempt to win money by gambling, and then seek to avoid liability?

They should and did claim that they borrowed the money to gamble. They argued correctly that a gambling debt is unenforceable in Connecticut. The appellate court remanded the case so that the trial court could determine whether the bank knew that the money was borrowed for gambling. If the bank knew the intended use of the money (which a court could but need not infer from the location of the ATM), the debt is void. Connecticut National Bank of Hartford v. Kommit, 31 Mass. App. Ct. 348, 577 N.E.2d 639, 1991 Mass. App. LEXIS 660 (Mass. Ct. App. 1991). As to which party has the high ground, of course, the answer is that it is a tie for last place. Clearly, the credit card company is encouraging people to gamble by placing its ATM in the gambling pit. Just as certainly, the Kommits are trying to have it both ways, gambling in the hopes of a quick gain, then attempting to avoid liability by invoking this legal principle. Generally, when faced with two parties who are both less than saintly, courts attempt to make rulings that will be in the best interests of society, in the long term. © Cengage

Evans built a house for Sandra Dyer, but the house had some problems. The garage ceiling was too low. Load-bearing beams in the "great room" cracked and appeared to be steadily weakening. The patio did not drain properly. Pipes froze. Evans wanted the money promised for the job, but Dyer refused to pay. Comment.

This case creates an issue of substantial performance. The court held that the low garage ceiling was a minor problem and would not defeat substantial performance. But the cracked beams were very serious and might require major reconstruction. The water collecting in the patio could seep under the house and destroy the foundation. The freezing pipes posed a danger of bursting. The contractor had failed to substantially perform and was not entitled to his contract price. He was owed only the value of work completed, if any. Evans & Associates v. Dyer, 246 Ill. App. 3d 231, 615 N.E.2d 770, 1993 Ill. App. LEXIS 826 (Ill. App. Ct. 1993). © Cengage

expectation interest

This refers to what the injured party reasonably thought she would get from the contract. The expectation interest is designed to put the injured party in the position she would have been in had both sides fully performed their obligations.

Statute that prohibits discrimination on the basis of race, color, religion, sex, or national origin

Title VII

TITLE VII

Title VII of the Civil Rights Act of 1964 prohibits employers from discriminating on the basis of race, color, religion, sex, or national origin.

RETALIATION

Title VII prohibits employers from retaliating against workers who oppose discrimination, bring a claim under the statute, or take part in an investigation or hearing.

Requirements for a Utility Patent-Nonobvious-Utility.

To be patented, an invention must be useful. It need not necessarily be commercially valuable, but generally, it must do something. This requirement is the least restrictive: An invention will only be denied a patent if it has absolutely no practical utility

Disaffirm

To give notice of refusal to be bound by an agreement

DISPARATE TREATMENT

To prove a disparate treatment case under Title VII, the plaintiff must show that she was treated differently because of her sex, race, color, religion, or national origin.

DISPARATE IMPACT

To prove disparate impact under Title VII, the plaintiff must show that the employer has a rule that on its face is not discriminatory, but in practice excludes too many people in a protected group.

TERMINATION

To terminate a corporation, the shareholders undertake a three-step process: a shareholder vote, the filing of Articles of Dissolution, and the winding up of the enterprise's business. The secretary of state may also dissolve a corporation that violates state law by, for example, failing to pay the required annual fees. And a court may dissolve a corporation or order that it be sold if it is insolvent or if its directors and shareholders cannot resolve conflict over how the corporation should be managed.

Compilation of information that would give its owner an advantage in business

Trade secrets

A word that a business uses to identify a product

Trademark

TRADITIONAL COMMON LAW RULE

Traditionally, an employee at will could be fired for a good reason, a bad reason, or no reason at all. But modern law has created exceptions to this rule that prohibit firing an employee at will for a bad reason.

GENDER IDENTITY AND EXPRESSION

Traditionally, courts ruled that employees were not protected from discrimination based on gender identity. But some federal courts, the EEOC, about one-third of the states, and hundreds of cities prohibit gender identity and expression discrimination. Also, the federal government prohibits discrimination on gender identity among its employees and by government contractors.

Stock that the company has sold but later bought back

Treasury stock

A contract may not be rescinded based on puffery.

True

A court is unlikely to enforce an exculpatory clause included in a contract for surgery.

True

A party who delegates duties remains liable for contract performance.

True

A seller of property must generally disclose latent defects that he knows about.

True

An agreement to sell cocaine is a voidable contract.

True

An employee may be fired for a good reason, a bad reason, or no reason at all.

True

Courts award the expectation interest more often than any other remedy

True

Employers do not have to accommodate an employee's religious beliefs if doing so would impose an undue hardship on the business.

True

Employers that have contracts with the federal government are required to fill a quota of women and minority employees.

True

In a disparate impact case, an employer may be liable for a rule that is not discriminatory on its face

True

Managers have a fiduciary duty to shareholders.

True

Most companies use a very broad purpose clause in their charter.

True

Non-compete clauses are suspect because they tend to restrain free trade.

True

Title VII applies to all aspects of the employment relationship, including hiring, firing, and promotion.

True

Under the fair use doctrine, you have the right to make a photocopy of a chapter of this textbook for a classmate.

True

Without a meeting of the minds there cannot be a contract.

True

n the case of corporations, copyright protection lasts 120 years from the product's creation.

True

. IMPOSSIBILITY

True impossibility means that some event has made it impossible to perform an agreement.

impossibility of performance

True impossibility means that something has happened making it utterly impossible to do what the promisor said he would do.

What is the difference between UCC governs contracts and common law?.

UCC governs contracts for a sale of goods, while common law principles govern contracts for sales of services and everything else.

Unlawful management interference with a union

ULP

GENETIC INFORMATION NONDISCRIMINATION ACT

Under GINA, employers with 15 or more workers may not require genetic testing, or use information about genetic makeup or family medical history as a factor in hiring, firing, or promoting employees.

IMMIGRATION

Under Title VII, it is illegal for employers to discriminate against noncitizens because "national origin" is a protected category.

ALCOHOL AND DRUG USE

Under federal law, private employers are permitted to test job applicants and workers for alcohol and illegal drugs. The Equal Employment Opportunity Commission prohibits testing for prescription drugs unless a worker seems impaired.

AGE DISCRIMINATION

Under the Age Discrimination in Employment Act, employers may not fire, refuse to hire, fail to promote, or otherwise reduce a person's employment opportunities because he is 40 or older.

DISABILITY

Under the Americans with Disabilities Act, an employer may not refuse to hire or promote a disabled person as long as she can, with reasonable accommodation, perform the essential functions of the job. A disabled person is someone with a physical or mental impairment that substantially limits a major life activity or the operation of a major bodily function or someone who is regarded as having such an impairment. An accommodation is not reasonable if it would create undue hardship for the employer.

EQUAL PAY ACT

Under the Equal Pay Act, a worker may not be paid for equal work at a lesser rate than employees of the opposite sex.

PREGNANCY DISCRIMINATION

Under the Pregnancy Discrimination Act, an employer may not fire, refuse to hire, or fail to promote a woman because she is pregnant.

STORED COMMUNICATIONS ACT (SCA)

Under the SCA, an employer has the right to monitor workers' electronic communications if (1) the employee consents; (2) the monitoring occurs in the ordinary course of business; or (3) in the case of email, if the employer provides the computer system. This monitoring may include an employee's social media activities.

Rodney Platt was the vice chairman of the board of Mylan. He was also one of the owners of an office park that Mylan leased, making him Mylan's landlord. How could Mylan comply with the business judgment rule in connection with this transaction?

Under the business judgment rule, either the disinterested members of the board of directors or the disinterested shareholders would have to approve the transaction. If they did not, then a court would have to determine whether the transaction was entirely fair. © Cengage

INFORMED DECISION

Under the duty of care, managers must make an informed decision, that is, with the care that an ordinarily prudent person would take in a similar situation.

DISCHARGE

Unless the obligee agrees otherwise, delegation does not discharge the delegator's duty to perform

When they were dating, Kris promised his wife Wendellyn that if she moved to Wyoming and married him, he would take care of her for the rest of her life. Three years later, the couple filed for divorce and Wendellyn claimed that Kris's oral promise entitled her to care for life. Kris argued that his promise was unenforceable because it should have been in writing. Who is right?

Wendellyn Kay Dane v. Kris Alan Dane, 2016 WY 38; 368 P.3d 914; 2016 Wyo. LEXIS 40. Court held for the husband. The husband's alleged promises relating to support should have been in writing. It was a promise in consideration of marriage. © Cengage

Mutual Mistake

When both parties to a contract make the same fundamental factual error as to the existence or the identity of the contract's subject matter, either party may rescind.

Fair use doctrine - The purpose and character of the use.

When copyrighted material is used for purposes such as criticism, parody, comment, news reporting, scholarship, research, or education, it is more likely to be a fair use. F

Breach

When one party materially breaches a contract, the other party is discharged. A material breach is one that substantially harms the innocent party. The discharged party has no obligation to perform and may sue for damages

Bargained for

When something is sought by the promisor and given by the promisee in exchange for their promises

Donee beneficiary

When the contracting party intended the benefit as a gift, the beneficiary is a donee beneficiary.

Creditor beneficiary

When the contracting party intended the benefit in fulfillment of some duty or debt, the beneficiary is a creditor beneficiary

Utility Patents

Whenever people use the word "patent" by itself, they are referring to a utility patent. In fact, about 94 percent of all patents are utility patents.utility patents protect how they work. Utility patents are valid for 20 years from the date of filing the application.

What is the definition Writing under contract law?

While verbal agreements often amount to contracts, some types of contracts must be in writing to be enforceable.

What does a trademark protect?

Words, and symbols that a business uses to identify its products or services.

WORKERS' COMPENSATION

Workers' compensation statutes ensure that employees receive payment for injuries incurred at work.

Any contractual right may be assigned unless the assignment:

Would substantially change the obligor's rights or duties under the contract, or Is forbidden by law or public policy, or Is validly precluded by the contract itself.

When an employee is fired for a bad reason

Wrongful discharge

In response to the subprime mortgage crisis, the federal government created the Home Affordable Modification Program (HAMP) to help struggling homeowners refinance their mortgage debt, thereby reducing the foreclosure rate. HAMP facilitates contracts between the U.S. Treasury and mortgage lenders, who modify eligible homeowners' mortgage loans in return for incentive payments. The Mackenzies applied for a HAMP modification of their home. Although they were eligible, Flagstar bank foreclosed on their Massachusetts home. The Mackenzies sued Flagstar for breach of contract, claiming they were intended third party beneficiaries of the lender's contract with the government. Will the Mackenzies succeed on this theory?

YES, because there was a contract between HAMP and mortgage lenders. The Mackenzies were approved. If the promisee is fulfilling some duty, the third party beneficiary is called a creditor beneficiary. Most often, the "duty" that a promisee will be fulfilling is a debt already owed

Does a mentally impaired person create a voidable contract?

Yes, if, by reason of mental illness or defect, he isunable to understand the nature and consequences of the transaction. can be insanity that has been formally declared by a court, or mental illness that has never been ruled on but is now evident. such as schizophrenia, or to mental retardation, brain injury, senility, or any other cause that renders the person unable to understand the nature and consequences of the contract.

ETHICS John Stevens owned a dilapidated apartment that he rented to James and Cora Chesney for a low rent. The Chesneys began to remodel and rehabilitate the unit. Over a four-year period, they installed two new bathrooms, carpeted the floors, installed new septic and heating systems, and rewired, replumbed, and painted. Stevens periodically stopped by and saw the work in progress. The Chesneys transformed the unit into a respectable apartment. Three years after their work was done, Stevens served the Chesneys with an eviction notice. The Chesneys counterclaimed, seeking the value of the work they had done. Are they entitled to it? Comment on the law and the ethics.

Yes, they are entitled to the value of their work, said the court in Chesney v. Stevens, 435 Pa. Super. 71, 644 A.2d 124.0, 1994 Pa. Super. LEXIS 2388 (Pa. Super. Ct. 1994). They have neither an express nor an implied contract for the work. Stevens did nothing to create either. But he was aware of the work they were doing, and he should know that they would reasonably expect compensation. It would be unjust, said the court, to permit him to keep the benefit without paying anything, and so the Chesneys won their case of quasi-contract, receiving quantum meruit damages for the value of their work.

The Patent and Trademark Office (PTO) issues patents after

a long application process known as a prosecution, but courts can invalidate patents that the PTO has granted improperly.

"peppercorn rule,"

a reference to a Civil War-era case in which a judge mused, "What is a valuable consideration? A peppercorn." Even the tiniest benefit to a plaintiff counts, so long as it has a measurable value.

Disparate impact

applies if the employer has a rule that, on its face, is not discriminatory, but in practice excludes too many people in a protected group. D

Incidental damages

are the relatively minor costs that the injured party suffers when responding to the breach.

Direct damages

are those that flow directly from the contract. They are the most common monetary award for the expectation interest. Ace is entitled to the difference between what it expected to pay ($3 million) and what the breach forced it to pay ($4 million), or $1 million in direct damages.

Under the FMLA:

both men and women are entitled to take a leave of absence from their jobs for childbirth, adoption, or a serious health condition of their own or in their immediate family.(

Taylor Swift wanted to trademark her song lyrics: "And I'll write your name." She _______________

cannot trademark it because it is generic

What four types of illegal activities under this statute of prohibited activities?

disparate treatment, disparate impact, hostile environment, and retaliation.

Section 7 of the National Labor Relations Act (NLRA or Wagner Act)

guarantees employees the right to: Organize and join unions, Bargain collectively through representatives of their own choosing, and Engage in other concerted activities.

FMLA The Family and Medical Leave Act

guarantees workers up to 12 weeks of unpaid leave each year for childbirth, adoption, or a serious health condition of their own or in their immediate family.

To rescind for unilateral mistake,

he mistaken party must demonstrate that he entered the contract because of a basic factual error and that the nonmistaken party knew or had reason to know of the error. If the nonmistaken party knows or has reason to know of the other party's error, courts will not allow him to profit by snapping it up.

An example of true impossibility is:

illegality.

non-compete agreement

is a contract in which one party agrees not to compete with another in a stated type of business. is ancillary to the sale of a business, it is enforceable if reasonable in time, geographic area, and scope of activity.

To receive a patent, an invention must meet all of the following tests, except:

it has not ever been used anyplace in the world.

Jody is obligated under a contract to deliver 100,000 plastic bottles to a spring water company. Jody's supplier has just gone bankrupt; any other suppliers will charge her more than she expected to pay. This is:

legally irrelevant.

FREE SPEECH Under the NLRA

non-unionized workers cannot be fired for complaining about their jobs, so long as these complaints are shared with other employees and are not inappropriately hostile or violent. This rule does not protect supervisors.

Requirements for a Utility Patent

novel nonobvious utility patentable subject matter

What are the elements of a contract?

offer, acceptance, consideration, capacity, legal purpose, consent, and sometimes, whether the deal is in writing.

What are the four types of Intellectual property?

patent, trademark, copyright, trade secret

The duty of care:

protects directors who make an uninformed decision if it was entirely fair to the company

CPA QUESTION Generally, a corporation's articles of incorporation must include all of the following except the:

quorum requirements.

What are the three rules are considered wrongful discharge?

refusing to violate the law, exercising a legal right, or supporting basic societal values.

To prove a disparate treatment case, the plaintiff must show

that she was treated differently because of her sex, race, color, religion, or national origin.. The plaintiff presents evidence that the defendant has discriminated against her because of a protected trait. This is called a prima facie case, that is, a case that appears to be true upon first look. The plaintiff is not required to prove discrimination; she need only create a presumption that discrimination occurred. The defendant must present evidence that its decision was based on legitimate, nondiscriminatory reasons. To win, the plaintiff must now prove that the employer intentionally discriminated, although this motive can be inferred from differences in treatment.

To win a trademark infringement suit, the original trademark owner must show

that the alleged infringer's trademark is likely to confuse customers about who has made the goods or provided the services.

To prove a violation of copyright law, the plaintiff does not need to prove that the infringer actually copied the work, but she does need to prove:

the infringer had access to the original. & the two works are similar.

A remedy is

the method a court uses to compensate an injured party. The most common remedy, used in the great majority of lawsuits, is money damages

An employer can legally require all employees to have a high school diploma if:

the nature of the job requires those skills.

A person is an intended beneficiary and may enforce a contract if

the parties intended her to benefit and if either (a) enforcing the promise will satisfy a duty of the promisee to the beneficiary or (b) the promisee intended to make a gift to the beneficiary.

Where one party has clearly breached, the injured party must mitigate damages.

true

A "take it or leave it" exculpatory clause is

unenforceable when the parties have greatly unequal bargaining power.

An exculpatory clause is generally unenforceable

unless the clause is clearly written and readily visible.

What are the three types of patents?

utility, design, plant

CPA QUESTION An unemployed CPA generally would receive unemployment compensation benefits if the CPA:

was fired as a result of the employer's business reversals.

The first step that a court takes in choosing a remedy is to decide

what interest it is trying to protect. An interest is a legal right in something.