BUSFIN 4510 Final Exam

Essential Elements of Sherman Act Section 1 Violation

1. Agreement between parties (especially price-fixing) 2. Unreasonable restraint on trade 3. Restraint affects interstate commerce

Market Share Liability Elements of Proof

1. All defendants are tortfeasors 2. Allegedly harmful products made by the different defendants are identical and share same defective qualities 3. Plaintiff unable to identify which defendant caused injury 4. Manufacturers of substantially all the defective products in relevant are and during relevant timeframe are named as defendants

Requirements to Satisfy Merchantability Warranty

1. Be able to pass without objection in trade or market for similar goods 2. Be of fair or average quality within product's description 3. Be adequately contained, packaged, and labeled 4. Conform to any promises/affirmations on package/label 5. Be fit for ordinary purposes for which such goods are used

Buyer Actions that can Waive Warranty

1. Buyer fails or refuses to examine goods when warranty arose from display of sample or model 2. Buyer fails or refuses to inspect goods as requested by seller 3. Buyer fails to file suit within applicable statute-of-limitations period

Inspection, Payment, and Acceptance

1. Buyers/lesses obligated to accept and pay for conforming goods in accordance with contract 2. Buyers/lesses typically inspect goods before paying to ensure they conform to agreement 3. Concept of reasonableness governs inspection process 4. After inspection, buyer can accept, partially accept, reject, or revoke acceptance

Three Types of Loans

1. Consensual - Secured interest in property created by parties' agreement 2. Statutory - Arise as a matter of state statutes 3. Judicial - Court-Ordered

Negligence-Based Product Liability Elements of Proof

1. Defendant manufacturer/seller owed duty of care to plaintiff 2. Defendant breached duty of care by supplying defective product 3. Defendant's breach of duty caused plaintiff's injury 4. Plaintiff suffered actual injury

Cover Requirements for Buyer

1. Demonstrate good faith in obtaining substitute goods 2. Pay reasonable price for substitute goods 3. Act without unreasonable delay in buying substitute goods 4. Buy goods that are reasonably substitutes

Methods of Perfection

1. Filing financing statement 2. Processing the goods (pledge) 3. Automatic Perfection of PMSI - Perfection happens automatically when retailer sells consumer goods, (a good primarily for personal, family, or household purposes) 4. Notation on certificate of title of motor vehicle or boat - Title to vehicle follows the vehicle around, want everyone to know it is pledged to someone for collateral

Agency by Ratification Requirements

1. Individual must misrepresent himself or herself as another party's agent 2. Principal must accept or ratify the unauthorized act 3. Principal has complete knowledge of all material facts regarding contract 4. Principal must ratify entirety of agent's act

Two Requirements to Form Agency Relationship

1. Must be created for lawful purpose 2. The proposed agent must have contractual capacity

Three Elements to Establish Promissory Estoppel

1. Party made a promise and either knows or should know the other party will reasonably rely on it 2. Other party reasonably relies on the promise and suffers damages 3. Only way to avoid injustice is for court to enforce the promise

Strict Liability Based Product Liability Elements of Proof

1. Product was defective when sold 2. Product was so defective that it was unreasonably dangerous 3. Product caused plaintiff's injury

Federal Trade Commission Act

1. Prohibits unfair and deceptive methods of competition 2. Any anti-competitive behavior not prohibited by Sherman Act/Clayton Act is potentially illegal under Federal Trade Commission Act

Buyer Options if Goods are Nonconforming

1. Reject goods subject to seller right to cure 2. Reject goods and cancel contract if nonconformity is incurable 3. Accept nonconforming goods and revise contract accordingly

Warranty Based Product Liability Elements of Proof

1. Representation by manufacturer/seller was basis of the bargain 2. Breach of representation: generally plaintiff doesn't need to prove occurrence of breach was defendant's fault

Acceptance Issues

1. Seller is entitled to presume acceptance if buyer fails to reject goods within reasonable time 2. Buyer can partially accept when goods are nonconforming and seller fails to cure 3. Buyer may revoke acceptance if the nonconformity substantially impairs the goods' value, but only if buyer had a legitimate reason for initially accepting (buyer must return goods promptly to seller)

Basic UCC Performance Obligations

1. Sellers and lessors are obligated to transfer and deliver conforming goods 2. Buyers and lessees are obligated to accept and pay for conforming goods in accordance with contract terms 3. Good faith is required in performance and enforcement of every contract

Breach of Implied Warranty of Fitness for a Particular Purpose Elements of Proof

1. The seller had knowledge of the customer's specific purpose for the good 2. The buyer relied on the seller's skill and judgment in selecting the good

Three Requirements to Attach (Create) Secured Interests

1. Written Agreement - Agreement describes collateral and is signed by debtor Must be accurate and describe collateral with enough detail to permit identification 2. Value provided by secured party (creditor) Value - Item of value given from creditor to debtor, consideration, in a bank loan, cash is the value from the creditor 3. Debtor has right in or to collateral Debtor rights in collateral - Debtor must have rights in the collateral

Warranty

A binding promise regarding a product in the event that the product does not meet the manufacturer's or seller's promises (express or implied)

Cure

A breaching party's right to provide conforming goods when nonconforming goods were initially delivered; subject to a reasonable time test

Artisan's Lien

A claim placed on personal property to satisfy a person's debt related to the property

Mechanic's Lien

A claim placed on real property to satisfy the debt a person incurred to have improvements made to that property

Merger

A combination of two or more corporations in which only one of the corporations continues to exist

Monopolization Occurs when

A company has market power and unfairly achieved this market power and/or abuses this market power

Suretyship

A contract between a creditor and a third party who agrees to pay another person's debt, Third party is the surety and is primarily liable for the debt, surety is responsible for payment, Surety must pay even if the creditor has not asked the original debtor to pay, generally doesn't have to be in writing

Composition Agreement

A contract between creditors and a debtor in which the creditors agree to accept a lesser amount to satisfy the debts and discharge the remaining debt, If debtor doesn't pay his/her debt under the composition agreement, the creditors may collect on the original debt

Attachment Lien

A court order permitting a local court officer to seize a debtor's property, occurs before the entry of a final judgment (pre-judgment)

Judicial Lien

A court order that allows a creditor to satisfy a debt by seizing the property of the debtor, Three Types of Judicial Liens are attachment, writ of execution, and garnishment

Writ of Execution

A court order that authorizes a local law officer to seize and sell a debtor's real or personal nonexempt property, within the court's geographic jurisdiction, to enforce a judgment awarded by the court (post judgment) Exempt Property: Homestead exemption permits a debtor to retain family home so that family will have shelter

Manufacturing Defect

A defect in an individual product that makes the product more dangerous than other, identical products

Failure to Provide Adequate Warnings

A defect that arises when a potentially dangerous product is not labeled to indicate that it can be dangerous

Design Defect

A defect that is found in all products of a particular design and renders them dangerous

Course of Dealing

A history of previous commercial transactions between the same parties

Statutory Lien

A lien that is created solely through statute, regardless of whether the debtor wishes the lien to be created (include mechanic's lien and artisan's lien)

Horizontal Merger

A merger between two or more competitors producing the same or similar products

Vertical Merger

A merger in which a company at one level of the manufacturing-distribution system acquires a company at another level of the system

Revocation of Authority Termination

A principal can revoke an agent's authority an any time, but such revocation may constitute a breach of contract with the agent leaving the principal liable for damages, if agent breached duty, principal can revoke without liability

Undisclosed Principal

A principal whose existence is not known by a third party, that is, the third party does not know that an agent is acting on behalf of a principal, Agent liable; principal liable

Disclosed Principal

A principal whose identity is known to a third party, third party is aware that the agent is making an agreement on behalf of the principal, Agent not liable; principal liable

Partially Disclosed (Unidentified) Principal

A principal whose identity is not known by a third party, although the third party is aware that the agent is making an agreement on behalf of a principal, aka unidentified principal, Agent presumptively liable; principal liable

Duty to Compensate

A principal's obligation to pay an agent for his or her services, the type and amount of compensation is usually specified as well as the time it will be paid

Tender of Delivery

A requirement that a seller/lessor have and hold conforming goods at the disposal of the buyer/lessee and give the buyer/lessee reasonable notification to enable him or her to take delivery

Price Fixing

A restraint of trade in which two or more competitors agree to set prices for a product or service

Security Transaction

A transaction in which the payment of a debt is guaranteed by personal property owned by the debtor (Article 9 of UCC)

Guaranty

A type of contract which ensures that a third party is secondarily liable for the debt to be paid; similar to a suretyship, In contrast to a surety, the third party in a guaranty is secondarily liable whereas a surety is primarily liable Third party is known as a guarantor, must pay the debt only after the debtor has defaulted

Special Power of Attorney

A type of express authority that allows an agent to act on behalf of the principal only in regard to specifically outlined acts

General Power of Attorney

A type of express authority that allows an agent to conduct all business for the principal

Intangibles

Accounts (AP and AR), goodwill, and literary rights

Unauthorized Acts

Acts that go beyond the scope of an agent's authority, agent liable, principal not liable

Scope of Security Interest

After-Acquired Property - Parties may agree that creditor has a security interest in property the debtor acquires after the parties enter into the security agreement Proceeds - When debtor sells the collateral, the creditor automatically has rights to sale proceeds Under UCC, the debtor's rights in the proceeds last for 10 days after the sale, agreement can make this longer

Expressed Agency

Agency formed by making written or oral agreement (EX: Power of attorney)

Agency by Ratification

Agency that exists when individual misrepresents himself as a party's agent and principal then nonetheless accepts or ratifies unauthorized act

Authorized Acts

Agent acts that are within scope of agent's authority

Demand for Accounting

Agents who feel they are not being properly compensated, especially when working on commission, may demand an accounting and may withhold further performance of their duties until the principal supplies appropriate accounting data

Market Allocation

Agreement between competitors to divide market among themselves by geography, customers, or products

Security Agreement

Agreement in which debtor gives secured interest to secured party

Sherman Antitrust Act Section 1

Agreements between competitors that reduce competition

Per Se Violation

An action that by its very existence carries with it liability, as opposed to an action that violates a rule of reason

Agency by Estoppel (Apparent Agency)

An agency relationship created by operation of law when one party causes a third party to believe someone is his/her agent even though that person actually has no authority to act as his/her agent

Agency Coupled with an Interest Termination

An agency relationship that is created for the benefit of the agent, not the principal, principal can't terminate this relationship, it is terminated when an event occurs that discharges the principal's obligation

Renunciation by the Agent Termination

An agent can terminate the agency relationship by renouncing the authority given to him or her, the agent can be liable for breach of contract if the agreement stated a specific time for the relationship to exist

Loyalty Duty

An agent's obligation to act in the interest of the principal, includes avoiding conflicts of interest and protecting the principal's confidentiality, agent can't represent a principal and a third party in an agreement

Duty of Notification

An agent's obligation to inform the principal of the agent's actions on the principal's behalf and of all relevant information

Horizontal Restraint of Trade

An agreement between two competitors in the same market to engage in a practice that restrains trade

Horizontal Division of Market

An agreement between two or more competitors to divide markets among themselves by geography, customers, or products

Vertical Restraint Against Trade

An agreement between two parties at different levels in the manufacturing-distribution system to engage in a practice that restrains trade

Exclusive-Dealing Contract

An agreement in which a seller requires that a buyer buy products supplied only by that seller

Consent Decree

An agreement that binds the violating party to cease his or her illegal behavior

Geographic Market

An area in which a company competes with others in the relevant product market

Implied Warranty of Trade Usage

An assurance created through well-accepted course of dealing or trade usage, If a certain way of doing business is understood, it isn't necessary for the seller to state it will abide by the custom; implied warranty arises from usage of trade (EX: sellers always pack and ship goods a particular way, if they fail to do it this way they failed)

Implied Warranty of Fitness for a Particular Purpose

An assurance that when a seller/lessor knows or has reason to know why the buyer/lessee is purchasing/leasing the goods and that the buyer/lessee is relying on him or her to make the selection, the buyer/lessee has an enforceable warranty if such assurance is false

Implied Warranty of Merchantability

An assurance, that merchantable goods will conform to a reasonable performance expectation, the purchaser must have purchased or leased the good from a merchant

Constructive Trust

An equitable trust imposed on someone who wrongfully obtains or holds legal right to property he or she should not possess, Principals are the legal owners of anything an agent may come to possess through the employment or agency relationship

Rule of Reason

An inquiry into the competitive effects of a company's anticompetitive behavior to determine whether the benefits of the behavior outweigh the harm

Specific Performance

An order of the court requiring that a nonbreaching party fulfill the terms of the contract, deliver the particular goods in the contract

Who can be liable under Negligence-Based Product Liability

Any commercial supplier in distribution chain (manufacturers, wholesalers, retailers)

Who can be liable under Strict Liability Based Product Liability

Any commercial supplier in distribution chain (manufacturers, wholesalers, retailers)

Express Warranty

Any description of a good's physical nature or its use, either in general or specific circumstances, that becomes part of a contract

Who can sue under Negligence-Based Product Liability

Any foreseeable plaintiff

Usage of Trade (Trade Usage)

Any practice that members of an industry expect to be part of their dealings (EX: might not permit buyer to reject goods based on minor flaw)

Who can sue under Strict Liability Based Product Liability

Any reasonably foreseeable injured party (buyer, buyer's family, guests, friends, and foreseeable bystanders)

Who can be liable under Warranty Based Product Liability

Any seller

Sherman Antitrust Act

Applies to business practices that restrain trade or commerce Penalties: Treble damages; felony

Robinson-Patman Act

As originally written, the Clayton Act did not apply to buyers, In effort to limit buyers' power, in addition to that of sellers, Congress adopted the Robinson-Patman Act to prohibit certain types of price discrimination

Defenses for Negligence-Based Product Liability

Assumption of the risk, Product misuse, State-of-the-art defense, Preemption

Defenses for Warranty Based Product Liability

Assumption of the risk, product misuses, disclaimer

Destruction of Goods

Both parties are excused from performance when goods that have been identified to the contract are destroyed through no fault of parties

Substantial Impairment

Buyer can revoke previous acceptance only if the defect substantially impairs the goods' value, In installment contract, buyer can reject installment only if the defect is incurable and substantially impairs the goods' value

Who can sue under Warranty Based Product Liability

Buyer, buyer's family, or buyer's guest - privity

Sue to Recover Damages

Buyers and lessees are entitled to incidental and consequential damages

Buyer UCC Remedies for Seller Breach

Cancel contract, Buy cover (substitute goods), Sue to recover damages, Recover the goods, Economic loss rule (contract vs. tort), Obtain specific performance, Reject nonconforming goods, Revoke acceptance of nonconforming goods, Accept nonconforming goods and seek damages

Seller UCC Remedies for Buyer Breach

Cancel contract, Withhold delivery, Resell or dispose of the goods, Sue to gain the benefit of the bargain, Claim liquidated damages under agreement or UCC, Stop delivery, Reclaim the goods

Contract Cancelation Remedy

Canceling the contract is the least desirable remedy-remedy of last resort, UCC prioritizes remedies that enable keeping the contract in force, Seller can cancel and then pursue other remedies, most commonly suing for damages, Seller must notify buyer that seller is canceling

Lien

Claim to property (or proceeds of property sale)

Classification of Principal

Classified as either disclosed, partially disclosed, or undisclosed

Damages Recoverable under Negligence-Based Product Liability

Compensatory damages for personal injuries and property damage, Punitive damages (design to punish and deter defendant)

Damages Recoverable under Strict Liability Based Product Liability

Compensatory damages for personal injuries and property damage, Punitive damages (design to punish and deter defendant)

Preemption

Compliance with federal laws

Goods

Consumer goods, farm products, inventory, equipment, fixtures, accessories

Assumption of the Risk

Consumer knows that a defect exists, but proceeds unreasonably to make use of the product, creating a situation in which the consumer has voluntarily assumed the risk of injury from the defect

Contractual Modifications/Limitations to Remedies UCC Provides

Contracting parties may agree to modify or limit remedies, may agree certain remedies can't be recovered, Parties can agree that the remedies specified in the contract are exclusive Courts generally enforce such provisions unless the specified remedies fail of their essential purpose

Sue to Get Benefit of the Bargain

Courts often grant damages to recover the purchase price or lease payments due, in some cases even lost profit will be awarded, especially if the goods can't be resold

Creditor (Secured Party) Remedies for Default

Creditor can take possession of collateral and has options: May sell, lease, or transfer collateral May choose to keep collateral as payment of debt Creditor may disregard collateral and proceed to judgment, i.e. sue debtor for entire amount of debt instead of dealing with collateral

Mortgage Foreclosure

Creditor who holds interest in real property usually has a mortgage, Credit with mortgage, the "mortgagee" can foreclose on debtor's property when he/she defaults, Mortgagee must follow state procedures for foreclosing on mortgage - including notice to the debtor, any time before property sale, debtor may recover property by paying debt plus interest and any additional costs If there is a surplus, it goes to the debtor, if the sale proceeds do not satisfy full debt, mortgagee may sue debtor for a deficiency judgment

Liquidated Damages

Damages specified in contract, courts generally enforce liquidated damages clause as long as it is reasonable and not punitive, Code has its own "liquidated damages" provision allowing non-breaching party seller to recover from breaching buyer 20% of purchase price or $500, whichever is less

Termination of Agency Relationship by Operation of Law

Death of principal or agent, Insanity of principal or agent, Bankruptcy of principal or agent, Change in circumstances, Change in law, Impossibility of performance, Disloyalty of agent, War (or insurrection)

Commercial Impracticability Doctrine

Delay in delivery or nondelivery, in whole or in part, does not constitute breach if a contingency not contemplated at time of contracting occurs that makes performance impracticable

Daubert Test

Did the expert for the expert testimony use a scientific method, has the theory that the expert's testimony is based on been peer reviewed, is the technique the expert used generally accepted in the scientific community

Indispensable Paper

Documents of title, negotiable instruments, investment property, and chattel paper

Principal-Agent Relationship

Employer hires employee to enter into contracts on employer's behalf, parties agree agent has power to bind principal in contracts

Employer-Independent Contractor Relationship

Employer retains or hires persons (other than employee) to carry out some task; employer has no control over the details of the independent contractor's work

Power of Attorney

Establishes an agency by agreement that gives an agent authority to sign legal documents on behalf of the principal

Three Types of Warranties

Express Warranties, Implied Warranties of Title, Implied Warranties of Quality

Magnuson-Moss Warranty Act

Federal statute that governs warranties on consumer products, enacted to protect consumers by detailing the obligations of warrantors that offer written warranties on consumer products, must state if warranty is full or limited, Provides procedural protections for consumers who are recipients of warranties, If good is sold with warranty, the warranty must disclose info clearly and understandably

Disclaimer Requirements

Fitness for particular purpose: disclaimer must be written Merchantability: may be written or oral, some states require disclaimer to expressly mention "merchantability" Implied: Clear and conspicuous

Consequential Damages

Foreseeable damages that result from special facts and circumstances arising outside the contract itself, the damages must be within the contemplation of the parties at the time the breach occurs, aka special damages

Antitrust Law Policy and Rationale

Free and open markets are the foundation of a vibrant economy, Aggressive competition among sellers benefits consumers-both individuals and businesses-with lower prices, higher quality products/services, more choices, more innovation, Antitrust law promotes fair competition and aims to prevent unfair business practices that jeopardize these benefits

Conforming Goods

Goods that conform to contract specifications

Good Faith

Honesty during the creation and history of an agreement, as in a contract component that promises "performance in good faith", honesty in fact

Crime and Agency Relationship

If agent commits crime, agent liable for crime, If agent commits crime in scope of employment without authorization of principal, principal is not liable for agent's crime, but If principal authorized agent's criminal act, principal liable for agent's crime

Agent Misrepresentation

If agent misrepresent himself or herself to third party, principal may be liable in tort for agent's misrepresentation

Lapse of Time Termination

If an agency agreement specifies that the relationship will exist for a certain amount of time, it will end when that time expires

Buyer in Ordinary Course of Business

If buyer buys good in ordinary course of business without knowing it is collateral, he/she has right to good, Need to act in good faith, no intent to defraud/deceive, buyer needs to be unaware that buying item interferes with someone else Buyer can know about security agreement, but not that selling item violates creditor's rights

Buyer of Consumer Goods

If buyer does not know consumer good is collateral, buyer takes the good free from security interest Exception: If PMSI creditor has filed a financing statement before the debtor resells the good, creditor may repo the consumer good

Buyer of Chattel paper and Instruments

If buyer purchases chattel paper and instruments, he or she is free from security interest, Buyer typically must be unaware of the security interest

Perfect Tender Rule

If goods or tender of delivery fail in any respect to conform to contract specifications, buyer has the right to: 1. Accept the goods 2. Reject entire shipment 3. Accept part and reject part

Specific Performance Remedy Against Principal

If principal refuses to comply with what agent has done, can go to court to make them enforce that principal has to hold up their end of the deal

Full vs. Limited Warranty

If seller makes a warranty, seller must disclose whether warranty is "full" or "limited" The law presumes "full" if warranty does not say it's limited, it's presumed to be a full warranty

Tying Arrangement

Illegal agreement in which the sale of one product is tied to the sale of another

Reclaim the Goods

In some circumstances, the UCC allows the seller or lessor to reclaim the goods, it can happen when a buyer is insolvent or a lessee fails to make payments according to the lease terms

Implied Warranties of Quality

Includes implied warranty of merchantability, implied warranty of particular purpose, and implied warranty of trade usage

Principal's Liability and the Independent Contractor

Individual who hires independent contractor not liable for independent contractor's tortious actions under doctrine of respondeat superior Exception: Strict liability situation when the independent contractor engages in ultra-hazardous activities

Exceptions to Perfect Tender Rule

Industry norms (trade usage), Past dealings between parties, terms of parties' agreement, Seller's right to cure, Destruction of goods, Substantial impairment, Commercial impracticability

Purchase Money Security Interest (PMSI)

Interest formed when debtor uses borrowed money from secured party to buy collateral, Buying on credit, Debtor uses borrowed money from secured party to buy collateral

Secured Interest

Interest in personal property/fixtures that secures payment/performance of obligation

Termination of Agency Relationship by Acts of the Agent/Principal

Lapse of time, Fulfillment of purpose, Occurrence of specific event, Mutual agreement by parties, Revocation of authority, Renunciation by agent

Strict Product Liability

Liability under which courts may hold the manufacturer, distributor, or retailer liable for any reasonably foreseeable injured party, focuses on the product

Factors to Determine if Failure to Warn was Negligent

Likelihood of injury, seriousness of injury, ease of warning

Product Misuse

Misuse must be unreasonable or unforeseeable, defendant argues harm was caused by the plaintiff's failure to properly use the product, use was unreasonable/unforeseeable

Sherman Antitrust Act Section 2

Monopolization by a powerful firm, Unlawful for a company with monopoly power to use its economic power to limit production and raise prices

Actual Notice

Notice of agency termination that is given by directly informing third parties, either orally or in writing

Constructive Notice

Notice of agency termination that is usually given by publishing an announcement in a newspaper

Agent

One authorized to act for or on behalf of principal

Fiduciary

One with duty to act primarily for another person's benefit

Garnishment

Order that satisfies debt by seizing debtor's property or wages being held by third party, commonly bank or employer (pre or post judgment, during course of lawsuit too)

Exceptions Outlined in Parties' Agreement

Parties may agree that seller must have the opportunity to repair or replace nonconforming goods within a particular period of time, Parties may agree with a level of performance that is less than perfect

Agency by Implied Authority

Parties' conduct supports the implication of agency relationship

Proceeds

Payment in money/money streams or in-kind

Security Interest Perfection

Perfection is the process by which a secured party legally protects its claim to collateral

Principal

Person who hires agent to represent him or her

Lienholder

Person who holds a lien

Debtor

Person/party that has obligation to secured party

Secured Party

Person/party that holds interest in secured property (secured creditor)

Failure to Warn

Plaintiff must prove defendant knew ordinary or reasonably foreseeable use would be dangerous yet failed to warn

Durable Power of Attorney

Power of attorney that remains effective after principal becomes incapacitated and/or that springs into effect upon principal becoming incapacitated

Economic Loss Rule

Prevents tort recovery for economic loss, generally defined as loss resulting from product failure when there is no personal injury or damage to other property, injury is limited to the product itself

Safe Working Conditions Duty

Principal has a duty to ensure safe working conditions and to warn the agent if principal is aware of any potential dangers

Reimbursement and Indemnification Duty

Principal has duty to reimburse or indemnify agent for any authorized costs or losses agent incurs working on principal's behalf

Tort Liability and Agency Relationship

Principal is directly responsible in two situations: 1. Principal directs agent to commit tortious act (or ratifies the agent's unlawful act) 2. Principal fails to give agent proper instruments, tools, or adequate instructions

Respondeat Superior/Vicarious Liability

Principal/employer liable if employee, acting in scope of employment, wrongfully injures third party (on theory principal negligently hired agent

Defenses for Strict Liability Based Product Liability

Product misuse, assumption of the risk, lapse of time (statute of limitations, statute of repose)

Clayton Act Section 7

Prohibits anti competitive mergers and acquisitions

Clayton Act Section 3

Prohibits exclusionary practices, including exclusive dealing and tying arrangements

Clayton Act Section 2

Prohibits price discrimination; occurs when company sells same goods to competing buyers for different prices

Collateral

Property subject to security interest

Sales Puffing is not a Warranty

Puffery generally does not create an express warranty because it's not a statement of fact (EX: World's best cup of coffee), Puffing is a salesperson's statement of opinion not representation of facts, Subjective not objective statements

Commercial Reasonableness

Reasonable commercial standards of fair dealing, required of merchants in addition to honesty in fact

Avoidance

Right of avoiding contract, agent did something in violation of agreement

Perfection by Filing Financing Statement

Secured party commonly perfects by filing financing statement (UCC-1 form) with state agency, Financing statement is a public declaration of the secured party's rights to repossess the debtor's property if the debtor defaults

Third Party Rights Under Warranties

States are given three choices regarding third party beneficiaries of warranties 1. Buyer's household members and guests 2. Any reasonable and foreseeable user (most states use this) 3. Anyone injured by the good

Defenses of Surety and Guarantor

Statute of frauds writing requirement, Discharge from debt, Bankruptcy (of the surety/guarantor), Debtor's fraud

Reimbursement

Surety/Guarantor can recover from debtor actual amount of debt it pays to creditor, plus legal expenses against debtor

Implied Warranty of Title

The UCC assumes the seller 1. Seller has good and valid title to goods 2. Seller has right to transfer title free and clear of liens, judgments, or infringements of IP rights of which buyer has no knowledge

Monopoly Power

The ability to control price and drive competitors out of the market

Duty of Obedience

The agent must follow the lawful instruction and direction of the principal

Duty of Accounting

The agent must keep an accurate account of the transactions of money and property made on behalf of the principal, If the principal asks to see this accounting, the agent has a duty to provide it

Duty of Performance

The agent must perform the duties as specified in the agency agreement and perform the specified duties with the same skill, care, and professionalism as a reasonable person in the same situation would provide

Agency Relationship

The association between one party and an agent who acts on behalf of that party

Agency

The fiduciary relationship that arises when one person consents to have another act on his behalf and subject to his control and the other consents to do so

Course of Performance

The history of dealings between the parties in the particular contract at issue

Vicarious Liability

The liability or responsibility imposed on a person, a party, or an organization for damages caused by another; commonly used in relation to employment, with the employer held vicariously liable for damages caused by its employees

Right of Contribution

The other sureties or guarantors must pay their equal shares; consequently, the surety who originally paid the large amount can recover this money

Predatory Pricing

The practice in which a company prices one product below normal cost until competitors are eliminated and then it sharply increases the price

Price Discrimination

The practice of selling the same goods to different buyers at different prices

Indemnnification

The principal has a right to indemnification which means when sued by a third party, a principal may sue the agent to recover the amount assessed to the third party

Duty of Cooperation

The principal must assist the agent in the performance of their duties, the principal can do nothing to interfere with the agent's reasonable conduct

Respondeat Superior

The principle by which liability for harm caused by an agent/employee is held by the principal/employer

Insurance Considerations for Type of Product

The product's nature and purpose drive the cost of insurance - if the product is one that performs and/or relates to safety, it will be more costly to insure than a decorative item

Perfection

The series of legal steps a secured party takes to protect its right in collateral from other creditors that want to have their debts returned through the same collateral

Subrogation

The surety or guarantor is entitled to all the rights that the creditor had against the debtor

Attempts to Monopolize

The use of certain business practices with the intent to gain market share by excluding competitors and thereby gain monopoly power

Purpose and Policy of Breach Remedies

To fulfill parties' expectations and intentions and give them "benefit of the bargain" they negotiated and nothing more, contract damages not meant to punish or vindicate social policy, UCC encourages parties to faithfully carry out agreements or if they do breach agree to a mutually satisfactory settlement

Damages Recoverable under Warranty Based Product Liability

Under UCC, economic damages (difference between value of goods as warranted and value of goods as delivered); consequential personal or property damages

Specific Performance Remedy

Under limited circumstances, seller may be required to deliver particular goods identified in the contract, UCC allows buyer to demand specific performance if the goods are unique or there is no adequate remedy at law (money damages are inadequate)

Recover the Goods

Under the UCC, buyers and lessees can recover the goods identified in the contract if the seller or lessor becomes insolvent within 10 days after receiving the first payment due under the agreement

Accept Nonconforming Goods and Seek Damages

Under the UCC, buyers or lessees can accept nonconforming goods and then seek monetary damages to give them the benefit of the bargain, The buyer/lessee must give the seller/lessor reasonable notice of the defect

State-of-the-Art Defense

Used to demonstrate the the alleged negligent behavior was reasonable, given the available scientific knowledge existing at the time the product was sold or produced

FedEx Case

We want to collectively bargain with you, issues with payment, FedEx says no because they are all independent contractors so they can't organize/bargain, litigation about this and FedEx wins, doesn't extent to FedEx drivers (came down to degree of control)

Past Dealings Between Parties

When a contract for sale involves repeated occasions for performance by either party with the other party's knowledge of the nature of performance and opportunity to reject it, any course of performance accepted without objection is relevant to determine what the parties' agreement means

Negligence Per Se

When a law establishes labeling, design, or content requirements for products, the manufacturer has a duty to meet those requirements, failure to meet those standards means the manufacturer breached its duty of reasonable care → plaintiff can recover under negligence per se

Change in Law Termination

When a new law makes the commission of an existing agency agreement illegal, the agreement is terminated

Employer-Employee Relationship

When an employer hires an employee to perform some sort of physical service and the employee is subject to the employer's control

Resale Remedy

When buyer is in breach and seller has not yet delivered the goods, seller allowed to sell the goods to another buyer or dispose of goods, Seller then seeks recovery from buyer for any loss, preferred seller remedy when buyer breaches is resale, Resale must be made in good faith and in a commercially reasonable manner, Seller keeps profits

Movable Collateral

When debtor moves collateral to another state, secured party must re-perfect in new state, need to refile if you relocate to new state, Interest from prior state remains effective for four months post-move, Relates to notation on certificate of title of motor vehicle or boat

Market Share Theory

When it is impossible to identify the manufacturer of a particular product that caused harm, the plaintiff may sue all manufacturers of the product, with liability apportioned among them on the basis of each one's market share

Cover/Substitute Goods Remedy

When seller breaches, buyer may buy cover, or substitute goods for those due under the agreement, Buyer can then seek benefit-of-the-bargain damages from the breaching seller

Security Interest Termination Process

When the debtor pays off the debt, the security interest terminates, and the secured party must file a termination statement, Termination statement filed in the filing office Secured party has up to one month after debt is paid to file termination statement, If the debtor asks the creditor in writing to file a termination statement, creditor must file termination statement within 20 days *Debtor may recover $500 from creditor if creditor fails to file termination statement*