bus 202 exam 3

Procedural vs. Substantive Law

"Procedural law," which refers to the guarantees of certain procedural methods and rules is distinguished from "substantive law," which refers to the rights and duties of everyday conduct, such as those related to contract law and tort law

Liquidated Damages

An amount, stipulated in the contract, that the parties to a contract believe to be a reasonable estimation of the damages that will occur in the event of a breach.

limitation of liability

Limit on the amount of money that a hotel must pay a guest for a loss of property.

Impossibility

performance of contract cannot be done

promoter/founder

person who forms LLC

duress

compulsion, force

Complete Performance

All terms have been carried out properly and completely.

Void vs. Voidable vs. Unenforceable

- void contracts are invalid from the start - voidable contracts can be canceled or kept as they are by one of the parties - unforeseeable contracts are valid but the court chooses to not enforce

Requirements of a Valid Contract

1. Agreement 2. Consideration 3. Contractual Capacity 4. Legality

Sole Proprietorship

A business owned by one person

exculpatory clause

A clause that releases a contractual party from liability in the event of monetary or physical injury, no matter who is at fault.

Mirror Image Rule

A common law rule that requires that the terms of the offeree's acceptance adhere exactly to the terms of the offeror's offer for a valid contract to be formed.

condition precedent

A condition in a contract that must be met before a party's promise becomes absolute.

In which of the following situations does the first promise serve as valid consideration for the second promise?

A debtor's promise to pay $500 for a creditor's promise to forgive the balance of a $600 unliquidated (disputed) debt.

Specific Performance

A legal action to compel a party to carry out the terms of a contract.

Statute of Frauds

A state statute under which certain types of contracts must be in writing to be enforceable.

Damages

A sum of money paid in compensation for loss or injury in a civil case

intended beneficiary

A third party for whose benefit a contract is formed. An intended beneficiary can sue the promisor if such a contract is breached.

Fraudulent Misrepresentation

Any misrepresentation, either by misstatement or omission of a material fact, knowingly made with the intention of deceiving another and on which a reasonable person would and does rely to his or her detriment.

UCC Article 2

Applies to contracts for the sale of goods

Assignor vs. Assignee

Assignor- person assigning the obligation Assignee- receives the obligation assignee becomes primarily liable

Chet, a minor, signs a contract with Denise, an adult. The contract is voidable at the option of​

Chet only

Offeror vs. Offeree

Offeror- Party making offer Offeree- Party to whom the offer is made

What terminates an offer?

Revocation, Rejection, Counteroffer, Death or Insanity of the Offeror, Lapse of time.

Richard writes a letter to Sarah authorizing her to sell his car and sends a copy of the letter to Timothy, a prospective buyer. The next day, Richard sends a letter to Sarah revoking her authority, but he fails to notify Timothy.

Sarah has apparent authority to sell the car to Timothy

assignment

The act of transferring to another all or part of one's rights arising under a contract.

Legality

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

State University (SU) provides housing on campus and in some adjacent off-campus neighborhoods. To lease a university house or apartment, a person must be student at SU. This requirement is​:

a condition

Reformation

a court's equitable power to modify a contract to reflect the parties' true intent where some error has been committed

Waiver

a decision by an administrative agency granting some other part permission to violate a law or rule that would otherwise apply to it

why is joint several liability bad

a partner can be liable for another partners actions

Custom Auto, LLC, is a limited liability company. Its members include Dennis and Emma. Like other LLCs with more than one member, the default rule is that the LLC will be taxed as​:

a partnership

incidental beneficiary

a party who is unintentionally benefited by other people's contracts

Meeting of the minds

agreement between a buyer and seller on major points

No way to distinguish between the owner and the corporation

alter ego doctrine

objective theory of contracts

an agreement between parties is legally binding if, in the opinion of a reasonable person who is not a party to the contract, an offer has been made and accepted

accord and satisfaction

an agreement made and executed in satisfaction of the rights one has from a previous contract

Acceptance of a contract

an agreement to the exact details of an offer

Lyle and Miranda agree that Lyle will fix the refrigeration unit in Miranda's Buns n' Burgers in exchange for her payment of a debt that Lyle owes to New Credit Corporation. New Credit is​:

an intended third party beneficiary

s corporation taxing

pass through tax (owned by human beings)

restitution

payment for an injury; compensation

Ann and Bill form Consumer Sales, Inc. Ultimate responsibility for strategic decisions necessary to the management of corporate affairs rests with Consumer's:

board of directors

What is filed with the secretary of state for a corporation?

certificate of incorporation

Substantial Performance

performance by a contracting party that deviates only slightly from complete performance

c corporation taxing

double

Which of the following expresses the duties that the officers and directors owe to the corporation and its shareholders?

duties of loyalty and care

Impracticality

excuses performance of a duty, where the said duty has become unfeasibly difficult or expensive for the party who was to perform

Contract Consideration

the payment made by the patient for the service provided

The business judgment rule holds that:

if directors act in a careful, well-informed manner, they will be immune from liability based on business decisions that turn out badly for the corporation.

why can't a sole proprietorship have multiple partners

income and expenses from this one-owner business entity get reported on a personal tax form

Paul and Chris operate a vineyard as a general partnership. Paul is driving a truck delivering grapes for the partnership when he negligently backs into a customer's new Mercedes. The customer sues the partnership and recovers $5000 in damages. What liability does Chris have for Paul's actions?

joint and several liability

officers

manage day to day

material breach vs any breach

material breach- when one party receives significantly less benefit or a significantly different result than what was specified in a contrac any breach- a failure to do what is required by law, an agreement, or duty

Eve hires Frank to do some remodeling work in her home office. They agree that she will pay him in a lump sum when the job is complete, and that Frank may come and go as he pleases. Gary, a customer, enters Eve's office. Frank negligently drops a tool on Gary's foot, injuring him. Eve is likely:

not liable to Gary because Frank is an independent contractor

Undue Influence

occurs when one party to a contract is in a position of trust and wrongfully dominates the other party

Under the doctrine of respondeat superior, an employer will be held liable for the torts:

of any employee acting within the scope of employment

why don't all partners have limited liability and a limited partnership

one party in general and one is limited

alien corporation

one that is incorporated in a foreign country

members

owners

General Partnership

partnership in which partners share equally in both responsibility and liability

Offer Requirements

present intent to contract, definiteness, communicated to the offeree

Frustration of Purpose

principal purpose of a contract cannot be fulfilled because of a subsequent event

Joe owns a used car lot. When Alan buys a car from Joe, Joe tells him he's bought "the best little car in the world." Joe's statement is:

puffery

Ann offers to buy a laser printer, with a case of paper and an extra cartridge, from Best Office Products, for $200. Curt, Best's representative, says, "OK, but no paper and no extra cartridge." Curt has:

rejected the offer and made a counteroffer.

Release vs. Covenant not to Sue

release- to cease to be bound by an obligation or to concede a right covenant not to sue- a legal agreement in which the party seeking damages agrees not to sue the party that it has cause against

Charlie, Dora, and Ethel are the first directors on the board of Face Time Corporation, a social media host. Subsequent directors are elected by a majority vote of Face Time's​:

shareholders

domestic corporation

state its formed in and a permanent residence

managers

strategic management

Sunita owns a coffee shop. She hires Howard to manage the shop. Which of the following best describes their relationship?

sunita, the employee, is the principal; Howard, the employee, is the agent

As an employer's defense to liability for an agent's torts, a frolic is:

the agent's substantial deviation from the service of the employer

Mike is an architect who works for General Construction Co. The most important factor in determining whether Mike is General's employee or an independent contractor is:

the degree of control that General exercises over Mike

Ernie is a director of Five-Star Properties, Inc. Ernie is a property appraiser. Five-Star makes several purchases in which it pays too much. Ernie approves all the transactions without evaluating them. He is most likely liable for breach of​:

the duty of care

Carlo is a director of Desserts Italiano, Inc. Carlo opposes a tender offer that is in the company's best interest because its acceptance would cost his position as a director. Carlo is most likely liable for a breach of​

the duty of loyalty

Avery wants to go into business as Boom! to make and market fireworks. When deciding which form of business organization would be most appropriate, Avery would normally take into account all of the following except​

the forms of competitors' business organizations

Usury

the illegal action or practice of lending money at unreasonably high rates of interest.

Tile & Grout (T&G) contracts to resurface the insides of the pools at Water Park. T&G knows that without the resurfacing, Water Park will have to delay its seasonal opening. T&G does not perform as promised. As consequential damages, Water Park can recover:

the loss of profit from the delayed opening

Dental Clinic, LLC has four members. The members do not have an operating agreement or any other agreements about how the LLC will be governed, therefore the LLC will be managed by:

the members

Mona is induced by her guardian Newt to sign a contract to invest her student loan funds in OptiBank through Newt's investment firm. Unknown to Mona, Newt realizes a commission from the investment. Most likely, Mona may rescind the contract on the basis of​:

undue influence

United Trucking Co. employs Vic as a driver. While driving a United truck within the scope of employment, Vic causes an accident in which Wendy is injured. Wendy can recover from:

united or vic

unconscionable

unscrupulous; shockingly unfair or unjust

Like the bylaws of other corporations, the bylaws of Rocks, Paper & Scissors, Inc.,​

were adopted at its first organizational meeting

foreign corporation

when a business branches out to another state to do business

When does UCC Article 2 apply?

when a sale or purchase involves $500 or more