Business Law 1 - MGMT 265

Fixtures

Real property includes land, buildings, air and subsurface rights, plant life, and fixtures. A fixture is any good that has become attached to other real property, such as land.

Commercial Speech

Commercial speech that is false or misleading may be outlawed; otherwise, regulations on this speech must be reasonable and directed to a legitimate goal. (minimally protected under the First Amendment)

What actions does a court have the authority to take when a defendant violates an injunction?

Fines and imprisionment

tenancy at will

a tenancy with no fixed duration, which may be terminated by either party at any time

Tort

a violation of a duty imposed by the civil law

commercial impracticability

Some unexpected event has made it extraordinarily difficult and unfair for one party to perform its obligations.

managing partners

a partner in charge of running a partnership

exculpatory clauses

a provision that protects directors from personal liability to the corporation and its shareholders

partnership

an unincorporated association of two or more co-owners who operate a business for profit

offer The person to whom an offer is made is the _______________. The person who made the offer is the ___________________

offeree offeror

easement An owner of an easement may sell the easement if the easement

does not benefit the easement owner in the use of other land An easement in gross benefits its owner, but not in the use of other land. Unlike easements appurtenant, which benefit the owner in his use of other land, an easement in gross can be sold.

Negligence could be called an "unintentional" tort because it

concerns harm that arises by accident

tenant Landlord-tenant law involves a combination of which three areas of law?

contracts, negligence and real property

American colonists were content to adopt many English laws, including religious restrictions true/false

false

Consideration is a requirement for contracts to be enforceable, unless the parties agree otherwise in writing. true/false

false

Only the Senate may propose a new statute, called a bill true/false

false

Precedent set in South Carolina courts is binding in all courts in the U.S.

false

appellate court has made a ruling, every state court in the country must follow precedent; true/false

false

agent Once an agency relationship ends, the agent no longer ________________. If she continues to act, she ______________________.

has the authority to act for the principal is liable to the principal for any damages she incurs as a result

Throughout history, we _____________ had laws that we now regard as immoral

have

criminal For a defendant to be found guilty of a crime, he must _________________

have committed a voluntary act

Economic damages

lost wages, medical expenses, and other measurable losses

Tortious interference with a prospective advantage

malicious interference with a developing economic relationship

Arson

malicious use of fire or explosives to damage or destroy real estate or personal property

vetoed bill

by the president

UCC allows _____________ of existing contracts for the sale of goods without additional consideration.

modification

principal is liable for the physical torts of an independent contractor

only if the principal has been negligent in hiring or supervising the contractor

condition If a contract contains a condition precedent, the ________ has the burden of proving that the condition actually happened. If a condition subsequent exists, the ____________ has the burden of showing that the condition occurred.

plaintiff; defendant

offer Ways in which an offer can be rejected?

rejection; counteroffer

rescission

to "undo" a contract and put the parties where they were before they made the agreement

affirm(ed)

to allow the decision to stand

damages circumstances under which a court might award restitution damages?

when a contract is breached or discharged when an injured party to a voidable contract rescinds the agreement in cases of quasi-contract when a contract is terminated by impossibility

capacity

the parties must be adults of sound mind

Subject Matter Jurisdiction

the power of a court to hear a particular type of case

liquidated damages

will be enforced if and only if, at the time of creating the contract, it was very difficult to estimate the actual damages and the liquidated amount is reasonable

quantum meruit

"As much as he deserves" - the damages awarded in a quasi-contract case

consideration

there has to be bargaining that leads to an exchange between two parties two basic rules: value: both parties must get something of measurable value from the contract bargained for exchange: the two parties must have bargained for whatever was exchanged

corporation 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.

to avoid liability by proving tha tPogo could not afford to pay for the additional leases

tenant nuisance is an unprivileged interference with a person's ________________ of property. Courts will balance the ____________ of the act being complained of against the harm to the property _________________. If a court finds a nuisance exists, it will order a/an ____________________ .

use and enjoyment utility property owners abatement

contract Courts will not enforce a sales agreement ________________________________________

when the agreement is not socially responsible

libel per se

when written statements relate to criminal or sexual conduct, contagious diseases, or professional abilities, they are assumed to be harmful to the subject's reputation

concurrent conditions

both parties have a duty to perform simultaneously

In what way do "we the people" have control over statutes?

by electing the politicians who pass statutes

civil case Burglar Bob breaks into Vince Victim's house. Bob steals a flat-screen TV and laptop, does significant damage to the property. Fortunately, Vice has a state-of-the-art security system and captures excellent images of Bob, who is soon caught by police. Assume two legal actions follow, one civil and one criminal. Who is responsible for bringing the ivic case? What will be the outcome if the jury believes that Bob burgled Vince's house? Who will be responsible for bringing the criminal case? What will be the outcome if the jury believes that Bob burgled Vince's house?

civil case is brought by Victim, and the outcome of a successful case against Bob would be some type of monetary award such as restitution. Criminal case is brought by state prosecutors and the outcome would be imprisonment for Bob

partnership forming a partnership

courts will consider if parties: intend to make a profit share the profits share the losses share management have an oral or written partnershiop agreement

conversion and theft major differences

defendant can go to prison for theft defendant may have to compensate the original property owner in conversion

employee Zankel v. United States of America, the defendant should argue that

defendant should argue that Dreyer had abandoned the principal's business. If Dreyer had abandoned the military base, then he was not within the scope of his employment and therefore the principal is not liable.

corporation A manager who engages in self-dealing is automatically liable to the corporation and the shareholders true/false

false

force ajeure clause Courts always enforce a force majeure clause true/false

false

indictment At an indictment, the prosecutor and the defense attorney present evidence to the grand jury. true/false

false

business crimes four major crimes that commonly affect businesses?

fraud arson larceny embezzlement

RICO Which of the following are potential remedies for a plaintiff in a civil RICO suit?

injunctions attorney's fees treble (triple) damages

quasi-contract Company pays all employees 10 percent commission on new business they develop. Company compensates each employee when the new customer pays its first bill. After Leandro obtains three new clients, Company fires him. When the new customers pay their bill, Company refuses to pay Leandro a commission because he is no longer an employee. Leandro sues.

is a case of quasi-contract because the company benefited and should reasonably expect to pay.

life estate

ownership of property for the lifetime of a particular person

Congress creates a new statute with the president's support, it must pass the idea by a ____________ majority vote in the house and the Senate.

simple

Executive power

the authority to enforce the laws

gift

a voluntary transfer of ownership from one person to another, without consideration

agency relationship - what is not required?

a written agreement, compensation and formal agreement

employee An employer is generally liable for a physical tort committed by an employee _______________ and a nonphysical tort of an employee _____________ .

acting within the scope of employment acting with authority

Adjudication

agencies hold hearings and decide issues. Adjudication generally begins with a hearing before an administrative law judge and may involve an appeal to the full agency or federal c ourt

agent's liability for a contract

agent is not liable for any contract she makes on behalf of a fully disclosed principal. The principal is liable. Unidentified or undisclosed principal, both the agent and the principal are liable on the contract

Agent's Liability for Torts

agents are always liable for their own torts

plea bargain

an agreement in which the defendant pleads guilty to a reduced charge, and the prosecution recommends to the judge a relatively lenient sentence

Illusory promise

an agreement where one party has no obligation to perform receives all the benefits (is not consideration)

Judicial restraint

an attitude that courts should leave lawmaking to legislators and nullify a law only when it unquestionably violates the constitution

stock treasury

Stock that a company has sold, but later bought back

mortgagor

an owner who gives a security interest in property in order to obtain a loan

Judicial activism

a court's willingness to decide issues on constitutional grounds

mortgage

a security interest in real property

The Administrative Procedure Act

controls how agencies do their work

corporation shareholder rights plan, or poison pill, protects a company from a takeover by

diluting the value of shares once an outsider acquires more than a certain percentage of company stock.

warrant not required to:

find out what websites you have visited find out whom you have emailed perform a DNA test on anyone they have arrested for a serious crime search your online chat messages

good fairth

good faith performance is reqired in all contracts

Promisor

makes a promise to a promisee

Williams act

regulates the activities of a bidder in a tender offer for stock in a publicly traded corporation.

incidental damages

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

Checks and balances

the principle that each of the three branches of government has power over the other two

Ratification

words or actions indicating an intention to be bound by a contract

Restitution means giving back. true/false

true

Congress interprets the law. true/false

false

inter vivos gift

A gift made during the donor's life, with no fear of impending death

Gift Causa Mortis

A gift made in contemplation of death. If the donor does not die of that ailment, the gift is revoked.

invitee

A person who has a right to enter another's property because it is a public place or a business open to the public

Constitution - what part addresses the most basic liberties?

Amendments

assault

An act that makes a person reasonably fear an imminent battery

express contract

An agreement with all the important terms explicitly stated

president What are three of the Presidents key areas of power?

Appointments, Legislation and Foreign policy

reply

An answer to a counter-claim

debt Jamila dies, leaving her best friend Anna as the executor of her estate. Luxury Motors Corp. (LMC) demands $22,000 that is it owed by Jamila, but her estate does not have the money to cover the debt. Anna promises LMC that she will use her own money to cover Jamila's debt, but then fails to do so. Why will LMC not be able enforce Jamila's promise?

An executor's promise to use her own funds to pay a debt of the deceased must be in writing to be enforceable. Because LMC did not get Anna's promise in writing, it will not be enforceable.

racketeering acts

Any of a long list of specified crimes, such as embezzlement, arson, mail fraud, wire fraud, and so forth

Alternative dispute resolution

Any other formal or informal process used to settle disputes without resorting to a trial

contract carrier

A company that transports goods for particular customers

contract Stephen Muka owned U.S. Robotics. He hired his brother Chris to work in the company. His letter promised Chris $1 million worth of Robotics stock at the end of one year, "provided you work reasonably hard and smart at things in the next year." (We should all have such brothers.) Chris arrived at Robotics and worked the full year, but toward the end of the year, Stephen died. His estate refused to give Chris the stock, claiming their agreement was a personal satisfaction contract and only Stephen could decide whether Chris had earned the reward. Comment.

Has Chris worked for the length of time required by the contract? Yes In assessing the quality of a promisor's work in personal satisfaction contract the court applies a subjective standard. For an agreement to be a personal satisfaction contract the contract must state explicitly that it is a personal satisfaction contract The law favors objective standards because it helps prevent an imbalance of power within a contract Does the language "provided you work reasonably hard and smart at things in the next year" create a personal satisfaction contract? No, it requires only that Chris' performance be reasonable Now that Stephen has passed away, who can decide if Chris' work was reasonable? The court What does the laguage "provided you work reasonably hard and smart at things in the next year" create? a condition precedent Chris can argue that the conduct of Stephen's estate indicates that they are not acting in good faith Stephen's estate is arguing that his death makes the contract void due to true impossibility.

unilateral contract Mrs. Martin tells some neighborhood kids that she will pay $100 if any of them mows her lawn. Jake goes to a hardware store, purchases a lawnmower for $60, and then mows Mrs. Martin's lawn. Jake has entered into what types of contract?

Jake has made a unilateral contract with Mrs. Martin and a bilateral contract with the hardware store.

compliance program

a plan to prevent and detect improper conduct at all levels of the company

quasi-contract

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

Principal's Liability for Contracts

a principal is liable for the contracts of the agent if the agent has express, implied, or apparent authority

court's statutory interpretation - three main steps

1) Plain meaning rule 2) Legislative History and Intent 3) Public Policy

state statutes

Most states have passed laws to deter hostile takeovers.

corporation fiduciary duty

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

tithing Historical influence of Business partnerships

Tithing

lost property

property accidentally given up

cuty of due care

the defendant has a legal responsibility to the plaintiff

battery Sam sneaks up on Tom, hits him with a baseball bat, and knocks him unconscious. Tom never saw Sam coming. He wakes up with a horrible headache.

Battery

judicial review Marbury v. Madison

Established judicial review

Emotional Distress

Intentional infliction of emotional distress involves extreme and outrageous conduct that causes serious emotional harm

Speech

protected under First Amendment

Malice

public personalities can win defamation suit only by proving actual malice

principal is liable for the acts and statements of his agent

the agent had authority the principal ratified the acts of the agent

Taylor v. Kjaer the court based its decision on

the Restatement

Implied contract

the words and conduct of the parties indicte that they intend an agreement

Writing

while verbal agreements are often contracts, some types of contracts must be in writing to be enforceable

offer The Johnsons decided to sell their summer cabin on Beech Lake. They sent flyers out to all who previously had expressed an interest in buying the cabin stating that they were planning on selling their cabin. The flyer described the location of the property, the size of the lot, and the price. If one of the recipients responds by sending a letter accepting, an agreement

will not be formed because the flyer was sent out as an invitation to make an offer.

contract tortious interference plaintiff must show to demonstrate interference with a prospective advantage

Defendant's conduct was independently unlawful Plaintiff had a definite expectation of obtaining an economic advantage Plaintiff had a reasonable expectation of obtaining an economic advantage

condition subsequent If Marco's injury occurs in the scope of his employment he must see a doctor within 15 days or his employer is not liable

condition subsequent defendant must prove the condition occured

changing order

court order granting a third party the right to receive a share of partnership profits

pre-existing Courts will enforce a contract for a pre-existing duty if the promisor agrees to provide _________________

additional work

administrative agencies The day-to-day work of enforcing statutes is handled by:

administrative agencies

contract Sometimes the parties discharge a contract by _________. For example the parties may agree to ________ their contract, meaning that they terminate it by mutual agreement

agreement rescind

Statute of Fraud

allows a party to cancel future obligations but not undo past actions once contract is fully executed it makes no difference that is was unwritten

negligence Bunny gets into a terrible car accident while driving her brand new sedan. Because Bunny is severely overweight, the driver's seat collapses backwards during the accident and causes her further injury. The car manufacturer knew that this particular model had a risk of collapsing in accidents if the driver or passengers were considerably overweight. Bunny's best chance of recovery against the car manufacturer is a claim for

failure to warn

Each state has a legislature, which passes statutes for that state and for the nation true/false

false

tenant To be able to prove that a landlord violated the implied warranty of habitability, a tenant must vacate the premises. true/false

false

fraud Marcel sells Andrew a quarter of an acre of farm land for $7,000. Andrew is delighted. Andrew does not realize that Marcel never actually owned the land, so it was not his to sell. In fact, Marcel has already "sold" that particular parcel of land to two other unsuspecting people. Marcel has committed

fraud

bystander As he is walking down the street, Arlo ses a child lying in the road who seems to have been hit by a car. Since Arlo cannot be sure, he ignores the child and goes out for dinner. Unattended, the child dies in the street. What terms describe Arlo's actions?

immoral, but legal

Common law principle

implied contract promissory estoppel quasi-contract

stare decisis benefit

is its ability to: make the law predictable

Foreign Corrupt Practices Act, once you have been granted a visa, it is ________ to pay a government official to process it faster.

legal

Can the judge in a civil tort case send the defendant to jail?

no

Motions

.

law Miranda v. Arizona

1966 Supreme Court decision that began a major reappraisal of the state's police powers, and the rights of criminals

Adequacy

The courts examine whether consideration exists, but will seldom inquire if it was enough consideration or a smart financial deal. This is the "peppercorn rule."

strict performance What is required to enforce strict performance?

the contract expressly demands it and it is reasonable

adverse possession Nome 2000, a partnership, owned a large tract of wilderness land in Alaska. The Fagerstrom family had used the property for camping and holidays since about 1944. In 1966, Charles and Peggy Fagerstrom marked off an area for a cabin and brought material to build the cabin, but never did so. In about 1970, they built a picnic area on the land, and in about 1974, they placed a camper trailer on the land, where it remained until the lawsuit. In 1987, Nome 2000 sued to eject the Fagerstroms from the land. The Fagerstroms had used the land only during the summer months. No one lived in the area during the winter months, when it was virtually uninhabitable. Has the family adversely possessed the land from Nome 2000?

To prove adverse possession, the Fagerstroms must establish that they used the land (1) exclusively (2) openly and notoriously (3) continuously for the statutory period and (4) in a manner adverse to Nome 2000. There is nothing to indicate that anyone other than the Fagerstroms used this land. By marking off the space for the cabin, and placing a picnic table and camper on the property, the Fagerstroms' use was also open and notorious, as Nome 2000 would have been aware that its title was contested had it visited the property while these things were there. Since the Fagerstroms first began using the land in an unambiguously open and notorious manner with the marking of the land for a cabin in 1966, they achieved adverse possession as of this claim in 1987 if the statutory period is 20 years or less. In addition, although the Fagerstroms only used the land seasonally for these 20 years, their use qualifies as continuous because a true owner of this land would also only use it seasonally, because it is uninhabitable during winter months. Had other families joined the Fagerstroms in camping on this land, the Fagerstroms would not be able to claim adverse possession of the land because its use was not exclusive. The Fagerstroms would, however, be able to establish a prescriptive easement. This would entitle the Fagerstroms to continue to use the land for camping purposes and leave the related improvements on the land, but would not give the Fagerstroms an ownership interest in the land.

tenant Tom is renting an apartment from Brady. After Tom fails to pay rent for three months, Brady sends Tom a notice that he is in breach of the lease for nonpayment of rent. The next month, Tom again fails to pay any rent. Brady places Tom's belongings in storage, changes the locks to the apartment, and leases the apartment to a new tenant. If Tom sues Brady for a wrongful eviction, who will win?

Tom, because brady did not follow the proper eviction procedures A tenant has a duty to pay rent to the landlord. When a tenant fails to pay rent, a landlord may apply the security deposit to the unpaid rent, sue the tenant for nonpayment of rent, or evict a tenant through the proper legal proceedings. Typically, to evict a tenant for nonpayment of rent, a landlord must serve notice of termination on the tenant and have a court hearing. Brady notified Tom that he had not paid rent, but did not provide notice of termination and did not have any sort of court hearing regarding the eviction. Therefore, Brady wrongfully evicted Tom by failing to follow proper eviction procedures

gratuitous agent Zephyr agrees to mow his brother Zeke's lawn for free while Zeke recovers from a broken leg. Zeke tells Zephyr not to use the mower if its warning light turns on, but Zephyr ignores the warning. The engine overheats, ruining the lawnmower. Is Zephyr liable for the damage?

Yes, because Zephyr's conduct was grossly negligent Zephyr was acting as a gratuitous agent. Gratuitous agents are not liable for negligence, but they are liable for gross negligence. Because Zephyr ignored Zeke's specific warning about the lawnmower, Zephyr's conduct was gross negligence and he is liable.

gratuitous agent Alissa accepts a six-month unpaid internship at Jonah's dental practice. After one month, Alissa wants to quit but knows that if she does it will cost Jonah a lot of time and money to find and train someone new. Can she quit before the end of the six months?

Yes, because she is a gratuitous agent Alissa is working for free so she is a gratuitous agent. This means she is free to quit whenever she would like without liability, regardless of her agreement with Jonah.

franchise Mack is the local owner of a restaurant franchise. Though the national chain is known for its hotdogs, Mack wants to sell vegetarian burritos. Must Mack get permission from the franchisor?

Yes, if the franchise agreement demands it The requirements and restrictions imposed on a franchisee by a franchisor are set forth in the franchise agreement, and there are not default rules governing these arrangements. Therefore, Mack must seek the franchisor's approval if the franchise agreement demands it (which it likely does)

franchise Kristine bought a Rocky Mountain Chocolate Factory franchise. Her franchise agreement required her to purchase a cash register that cost $3,000, with an annual maintenance fee of $773. The agreement also provided that Rocky Mountain could change to a more expensive system. Within a few months after signing the agreement, Kristine learned that she would have to buy a new cash register that cost $20,000, with annual maintenance fees of $2,000. Does Kristine have to buy this new cash register? Did Rocky Mountain act in bad faith?

Yes, she had to buy it—the agreement permitted Rocky Mountain to change systems. It was not a bad faith decision, as bad faith involves a subterfuge or evasion of contractual duties.

employoee An elementary school custodian struck a teenager who wrote graffiti on the school's wall. Is the school district liable for this employee's intentional tort?

Yes, the school district is liable if the custodian intended to serve some purpose of the school when he struck the student. In this scenario, the custodian committed an intentional physical tort. The custodian is an agent of his employer, the school district. A principal may be held liable for the intentional physical tort of an employee if the employee intended to serve some purpose of the employer by committing the tort. Therefore, if the custodian struck the student intending to serve some purpose of the school, the school district will be liable

Congress passes a bill, but the president vetoes it. Can the bill still become a statute?

Yes. If 2/3 of members of both the house and senate vote in favor. The bill will then become a statute

civil case, a plaintiff wins a lawsuit if he is 51 percent convincing, and collects 100 percent of his damages. In a criminal case the prosecutor must prove his case beyond a reasonable doubt. Why is there such a significant difference in the burden of proof between civil and criminal cases?

The burden is higher in a criminal case because the consequences that the defendant faces are more severe

If a victim wants to be compensated for tortious conduct, how does he go about doing that?

file a civil lawsuit

1st amendment Prior to Miller v. California, obscenity received constitutional protection true/false

false

restitution

.

The origin of judicial review _____________________________

? It was created in the Marbury v. Madison case

contract On Friday, Billy mails Andrew an offer, which Andrew receives on Monday. On Tuesday, Billy mails Andrew a revocation, which Andrew does not receive until Thursday. Andrew takes no action when he receives the revocation. Meanwhile Andrew mailed Billy an acceptance on Wednesday that Billy receives on Friday. Is a contract formed, and if so, on what day?

A contract was formed when Andrew mailed his acceptance on Wednesday

partnership - right to withdraw

A partner always has the power to leave a partnership but may not have the right.

incoporation

A series of Supreme Court cases extended virtually all of the important constitutional protections to all levels of national, state and local government

jointly and severally liable

All members of a group are liable. They can be sued as a group, or any one of them can be sued individually for the full amount owed. But the plaintiff cannot recover more than the total she is owed.

commerce clause What are three of the Founders main goals in creating the Commerce Clause?

Bring coordination and fairness to trade among the states. Stop states from imposing harmful taxes and regulations Create a unified voice for regulating commercial relations and foreign governments

Full Payment notations

In most states, payment by a check that has a "full payment" notation will create an accord and satisfaction unless the creditor is an organization that has notified the debtor that full payment offers must go to a certain officer.

damages Ike is building a water park in Charleston, South Carolina, with attractions that are larger and more extravagant than anything in the area. Ike cannot afford delays in its construction and is nervous about his contractor's ability to finish the project on time. What can Ike do protect himself?

Include a liquidated damages clause in the contract

employee Tylice tumbles down a flight of stairs and breaks both wrists. Jordan stands at the top of the stairs watching and then walks away. Under the case of Carey v. Davis, Tylice is most likely to be successful in a suit against Jordan if:

Jordan is her employee

Antifederalists

Patrick Henry Powers corrupts and should be dispersed States should retain maximum authority People should have individual liberty

supreme court When Congress passes a statute, who has the power to declare the statute unconstitutional?

The Supreme Court

gap-filler provisions

UCC rules for supplying missing terms

agent Can an agent ever work for two principals whose interests conflict

Yes, as long as the principals know about the conflict and consent to the agency relationship.

harmless error

a mistake by the trial judge that was too minor to affect the outcome

novation

a new contract

Pre-existing duty

a promise to perform an obligation that the promisor is already legally required to perform

duty of care, while on the job a person must act as

a reasonable person in her profession

offer Generally, an advertisement is _______________________. If an advertisement includes ___________________ it can be considered an offer.

a request for offers very specific terms

Probable cause

a warrant will be issued only if there is probable cause, meaning that it is likely that evidence of a crime will be found in the place to be searched

tenant joint tenants have a/an__________________ to partition the property

absolute right

president has nominated Judge Mukae to be a federal judge. Before Judge Mukae can be confirmed (that is, officially appointed) she must be _____________ as a result of our system of ____________________.

approved by the Senate, checks and balances

Some congressional committees have more power and influence than others true/false

true

condition precedent Nora is to receive $2,000 following Anna's death

condition precedent plaintiff must prove that the condition occured

accord and satisfaction As the court's holding in Henches v. Taylor demonstrates, a creditor who alters a debtors "full payment" or similar notation on a check before depositing the check

does not prevent accord and satisfaction and loses his right to recover any more money from the debtor.

tenant Joint tenants each own a percentage of the __________ property

entire

Entrapment

government induces the defendant to brea the law, the prosecution must prove beyond a reasonable doubt that the efendant ws predisposed to commit the crime

contract In assessing the validity of a contract, the court will consider ____________________

how the parties' conduct would be interpreted by a reasonable person

15th century, courts would permit suits based on a broken promise

if one party had paid some amount of money

Implied Authority

includes authority to do acts that are incidental to a transaction, usually accompany it, or are reasonably necessary to accomplish it

common law predictability advantage

it makes the law knowable, and allows people to plan accordingly

tort When an award of punitive damages is made, it is generally in a case involving a(n)

intentional tort The idea behind punitive damages is that certain behavior is so unacceptable that society must make an example of it. A large award of money should deter the defendant from repeating the mistake and others from ever making it.

Battery

intentional touching of another person in a way that is unwanted or offensive.

trespass

intentionally entering land that belongs to someone else or remaining on the land after being asked to leave

Acceptance

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

contract If a party fully accomplishes what the contract requires, his duties are discharged. But what if his obligations are performed poorly, or not at all?

performance and discharge

adverse possession One of the elements of adverse possession requires the user to take physical ________________ of the land. In addition, the user must have _________________ possession, meaning she is the _____________ person occupying the land. If any other person, including the ____________ occupies the land, this element is not satisfied

possession exclusive only true owner

Parliament ___________ the Statute of Frauds because it concluded the statute was _______________________

repealed helping people commit fraud

contract In a mixed contract, UCC Article 2 governs only if ___________________ was ______________

the primary purpose the sale of goods

quiet enjoyment

the tenant's right to be free from interference from the landlord with respect to how the property is used

bench trial

there is no jury; the judge reaches a verdict

Revoked offer

when the offeror "takes it back" before the offeree accepts

Exculpatory clause generally unenforceable?

when the parties have unequal bargaining power when it covers public transportation section 14-3b

agency relationship Is it possible for Colleen to owe a fiduciary duty to Bobby without Bobby controlling Colleen?

yes, but it is not an agency relationship

Contract law is based on the notion that ___________________

you are the best judge of your own welfare

res ipsa loquitor criteria for a court to apply res ipsa loquitor

The defendant must have had exclusive control of the thing that caused the harm The harm normally would not have occurred without negligence The plaintiff had no role in causing the harm

Federal Sentencing Guidelines

The detailed rules that judges must follow when sentencing defendants convicted of crimes in federal court

Commerce Clause

Under the commerce Clause, Congress may regulate any activity that has a substantial effect on interstate commerce

partnership Default rules among partners

Unless they agree otherwise, partners: share profits equally, share losses according to their share of profits, are not entitled to any payment beyond their share of profits, even if they perform work for the partnership, have no right to use or sell specific partnership property except for the benefit of the partnership, each have an equal vote, regardless of their contributions to the partnership, and each have an equal right in the management of the business.

noncompetition agreement

a contract in which one party agrees not to compete with another (courts usually enforce these clauses)

voidable

a contract that may be canceled by the party who lacks capacity

Federalism

a double-layered system of government, with the national government and state governments each exercise important but limited powers

trespasser

a person on another's property without consent

donee

a person who receives a gift of property

exlusionary rule

evidence obtained illegally may not be used at trial

tenancy by entirety

form of joint tenancy ownership for husband and wife no independent right to convey; interest passes to spouse upon death

Foreign Corrupt Practices Act

illegal for any employee or agent of a U.S. company (and some foreign companies) to give anything of value to any foreign official for purposes of influencing an official decision (unless the payment was merely intended to facilitate a routine governmental action)

remedy

the method a court uses to compensate an injured party

cover

to make a good faith purchase of goods similar to those in the contract

Mr. W. Fireworks v. Ozuna the court decided in favor of Ozuna, declaring the contract ____________

void

1st Amendment

.

Express Authority (Actual Authority)

principal grants express authority by words or conduct that, reasonably interpreted, cause the agent to believe that the principal desires her to act on the principal's account

proximate cause

It was foreseeable that conduct like the defendant's might cause this type of harm

offer Jack mails an offer to Joan that states, "I offer to sell you my car for $2000. If I don't hear from you in 10 days, I will assume you are willing to buy the car for the stated price." Jack hears nothing by the deadline and assumes he has a deal. What is the result?

Joan is not bound. Generally an offeree must say or do something to accept an offer.

natural law Martin Luther King, Jr. disobeyed an injunction in Birmingham, Alabama that prohibited him from speaking publicly because he was African-American. He was jailed for his disobedience. King argued that the law in Birmingham was invalid because it was unjust. Which theory of jurisprudence was he applying?

Natural law

Common law is made up of the accumulation of:

Precedent, gathered in case after case. Precedent is made up of older cases, and may be binding on new cases dealing with the same issue

compensatory damages may be awarded in a civil suit for?

Reduced ability to interact socially with family and friends Future emotional injury and mental anguish Future medical expenses Future lost earning capacity Past emotional injury and mental anguish

Iroquois Native American Historical influence of Federalism

Sachems and the League of Iroquois

health care The individual mandate of the Patient Protection and Affordable Care Act was upheld under the ___________________

Taxing and Spending Clause of Article 1, section 8. Congress is allowed to tax individuals who do not purchase health insurance.

de facto corporation

The promoter has made a good faith effort to incorporate and has actually used the corporation to conduct business

1st amendment Did the Supreme Court in Texas v. Johnson find that flag burning constituted "speech?"

Yes, because the conduct was intended to convey a particular message

Bill

a proposed statute, submitted by Congress or a state legislature

Rulemaking

agencies may promulgate legislative rules, which generally have the effect of statutes, or interpretive rules, which merely interpret existing statues

5th Amendment

bars the government from forcing any person to provide evidence against themself

tenant To be enforceable, a long-term residential real estate lease must .

be in writing

Political speech

by both people and organizations is protected unless it is intended and likely to create imminent lawless action

substantive unconscionability

A contract with extremely one-sided and unfair terms

judgment non obstante veredicto

A judgment notwithstanding the jury's verdict

complaint

A short, plain statement of the facts alleged and the legal claims made

Delaware's Chancery Court

Delaware has a special court (called "Chancery Court") that hears nothing but business cases and has judges who are experts in corporate law. In other states, judges who practiced in fields such as criminal law or divorce also hear corporate cases. In an emergency involving, say, a hostile takeover, Delaware judges will hear cases and reach decisions on short notice. This preferential treatment is typically not available in other states.

Federalists

Central government must be able to tax, regulate commerce and control borders. Extending democracy too far risks mob rule Strong central government Alexander Hamilton

articles of confederation What major issues arose under the Articles of Confederation?

Central government: had no power to regulate commerce between states, could not tax the states, had no way to raise money

Cheryl is a bank teller. She figures out a way to steal $99.99 per day in cash without getting caught. She takes the money daily for eight months and invests it in a catering business she is starting with Floyd, another teller. When Floyd learns what she is doing, he tries it, but is caught in his first attempt. He and Cheryl are both prosecuted.

Cheryl and Floyd both committed embezzlement, which refers to fraudulently taking money that was properly in their possession. Floyd did it once, but a RICO conviction requires two or more racketeering acts—Floyd has not violated RICO. Cheryl embezzled dozens of times and invested the money in a legitimate business. She is guilty of embezzlement and RICO

In determining the extent of a person's duty to other people, the court generally applies a test of

foreseeability

6th Amendment

guarantees criminal defendants the right to a lawyer, demands fair treatmet for defendants in criminal prosecutions

Landowners have a _______ duty to invitees than they do to licensees. A(n) _______ is someone who has a right to be on the property because it is a public place or a business. A(n) ________ is someone on the land for her own purposes but with the owner's permission. A(n) _________ is considered a licensee whereas a(n) ___________ is an invitee.

higher invitee licensee social guest store customer

corporation by estoppel

if a party enters into a contract believing in good faith that the corporation exists, he cannot later take advantage of the fact that it does not

negligence Beryl is injured in a car accident. The jury finds her 30% liable and awards $100,000 in damages. The suit takes place in a comparative negligence jurisdiction. How much money will she receive?

$70,000

gambling Cesar vs. Soheil Sadri, it is reasonable to infer that the California court

is very skeptical of gambling In its decision, the California court stresses its desire to help protect "pathological gambler" to the extent it can, and expresses its hope that gambling debts will never be enforced in the state, even if public attitudes toward gambling shift. The courts tone is one of deep skepticism.

permanent injunction

issued when it appears that the plaintiff has been injured and is entitled to relief after trial.

condition If a contract makes no mention of a condition

it can still be clear that the parties implied one

In the surrogacy suit between Mary Beth Whitehead and William and Elizabeth Stern, the court awarded the baby to the sterns because ________________________

it was in the baby's best interest

justification

A defendant in a suit regarding tortious interference with a contract can claim that special circumstances made its conduct fair.

Interstate Commerce

A state may not regulate commerce in any way that will interfere with interstate commerce

Procedural Due Process

required whenever the government attempts to take liberty or property. The amount of process that is due depends upon the importance of the liberty or property threatened.

UCC Certain particular types of contracts and rules of consideration are governed by the UCC. Which of the following are items that are governed by the UCC?

requirement contracts output contracts modifiation of sale of goods contract

Indemnification of Directors and Officers

requires a company to pay the legal feels of directors who are sued for actions taken on behalf of the corporation

fixture A tenant's personal property will become a fixture and belong to the landlord if its removal would

result in substantial harm to the landlord's property

damage

tenant is liable to landlord for any significant damage caused to property

Legality

the contract must be for a lawful purpose

UCC The Uniform Commercial (UCC) code makes ___________________________

the law of sales more flexible

partnership term partnership

the partners have agreed in advance how long the partnership will last.

Contract A medical insurance contract is a(n) ___________ contract, because the insurance company agrees to pay for treatment if the policyholder goes to the doctor. If the policyholder does not go to the doctor, the insurance company does not pay

unilateral

government regulation

Nuisance law, zoning ordinances, and eminent domain all permit a government to regulate property and in some cases to take it for public use.

deponent

The person being questioned in a deposition

promissory estoppel To enforce promissory estoppel, must show what 4 things

The plaintiff did rely on the promise. The defendant made a promise to the plaintiff. The defendant knew the plaintiff would likely rely on the promise The only way to avoid injustice is to enforce the promise

preponderance of the evidence

The plaintiff's burden of proof in a civil lawsuit

agent may compete with her principal once the agency relationship ends.

Once an agency relationship ends, an agent may compete with her principal, but she may not use confidential information she learned during the agency relationship.

stock authorized and issued

Stock that has been authorized and sold also called outstanding

stock Authorized and unissued stock

Stock that has been authorized, but not yet sold

health care National Federation of Independent Business v. Sebelius, the Supreme Court held _____________________________

The federal government does not have the power to order people to buy health insurance, but the have the power to impose a tax on those without health insurance

offer Which of the following are generally considered to be legal offers?

a note scribbled on a restaurant napkin that includes the details of the offer

appellant

a person who files an appeal

Gambling contracts

are illegal unless it is a type of wagering specifically authorized by state statute

bystander The "bystander effect" is a term used by sociologists to mean that people in a crowd __________________________________.

are much less likely to help others, because responsibility is diffused

Future interests

are presently existing nonpossessory rights that may or may not develop later

real property Miraval takes her son for a picnic. They believe the land they are on is part of a public park, but in fact it is owned by a private party. She and her son

are trespassing

Legal Realism

argues that lawmakers cannot overcome personal bias

Statutes can cover any topic _______________________

as long as they do not violate The Constitution

Jury trials

both plaintiff and defendant may demand a jury in any lawsuit for money damages

non-economic damages

pain, suffering, loss of a limb

mislaid property

property intentionally placed somewhere by the true owner but then forgotten

Free trade is the basis of the U.S. economy, and any bargain that restricts it is _________

suspect

contract A minor can disaffirm a contract by

telling the other party verbally, or in writing, or simply by refusing to perform his contractual obligations

employee WingIt is a major distributer of birdseed. With promises of higher salaries and bonuses, the company lures two top executives from Starling, Inc., a much smaller competitor. Starling sues. WingIt should argue that

the employees did not have contracts with Starling

reversion

the right of an owner (or her heirs) to property upon the death of a life tenant

conspiracy If the police discover a plot to commit a crime, they

they can arrest the defendants before any harm has been done. It is illegal to conspire to commit a crime, even if that crime never actually occurs.

Trespassing

lowest level - adults mid-level - children higher level - licensees highest level - invitee

information asymmetry

one party has more information than the other party

strict liability examples

A brand new toaster that explodes in a homeowner's face A tiger kept in a secure cage, surrounded by two fences in a residential community A facility that stores toxic chemicals

writ of certiorari

A petition asking the Supreme Court to hear a case

usery law KwikKash is a payday loan company that gives cash to borrowers for a large fee. KwikKash recently loaned Claudette $1000 and required that she pay back $1500 within 30 days. Claudette fails to repay the loan and KwikKash sues. What is the most likely result?

Claudette will win because the loan violates usury laws.

Regulations

Created by Administrative agencies

feudalism Historical influence of High regard for land

Feudalism

precedent Historical influence of Precedent

On the Laws and Customs of England

subagents

Someone appointed by an agent to perform the agent's duties

honest service fraud Skilling v. United States, the Supreme Court

The Court held that the honest-services statute was not vague with respect to the prosecution of bribes and kickbacks, but it refused to allow the prosecution of a wider range of offensive conduct under the act. Because the government did not allege that Skilling solicited or accepted side payments from a third party, the court held that Skilling had not committed honest-services fraud.

Sovereign

The recognized political power, whom citizens obey

tenancy for years

a lease for a stated, fixed period

Investigation

agencies have broad investigatory powers and may use subpoenas and, in some cases warrantless searches to obtain information

stockholder is entitled to

approve dissolution

Nominal damages

are a token sum, such as one dollar, given to an injured plaintiff who cannot prove damages

time of the essence

clauses result in strict enforcement of contract deadlines merely including a date for performance does not make time of the essence

strict performance Courts __________ strict performance because it ______________________

dislike enables one party to benefit at the other's expense

principal is liable for an employee's intentional physical torts

employee intended to serve some purpose of the employer employer was negligent in supervising the employee employer was negligent in hiring the employee

Judges are slightly more apt to enforce a(n) _________ clause in a ______________ case because any harm is to _____________ and not to ____________

exculpatory bailment property persons

8th amendment Courts are generally sympathetic to claims made under the Eighth Amendment. true/false

false

Apparent authority can be created by the conduct of the agent. true/false

false

agency relationship automatic termination of

if principal or agent no longer can perform the required duties or if a change in circumstances renders the agency relationship pointless

Freedom of Speech

includes symbolic acts.

self-dealing rule

is designed to prevent managers from forcing their companies into unfair deals

preliminary injunction

is issued early in a lawsuit to prohibit a party from doing something during the course of the lawsuit.

contract Unconscionable contract

is one that a court refuses to enforce because of fundamental unfairness

corporation duty of care

managers must make legal, informed decisions that have a rational business purpose.

compensatory damages

money intended to restore a plaintiff to the position he was in before the injury Compensation awarded for harm that flowed directly from the breach of contract

Subpoena duces tecum

requires a person to produce certain documents or things

slander per se topics

sexual behavior professional abilities contagious disease crimes

corporation ways a corporation can adopt a contract executed by the promoter prior to the formation of the corporation

taking a formal vote to adopt the contract and acting as if the corporation adopted the contract

1677, British legal system was structured in a way _________

that made it susceptible to witnesses laying on the stand

Voir Dire

the process of selecting jurors in order to obtain an impartial panel

profit

the right to enter land belonging to another and take something from it

peremptory challenges

the right to excuse a juror for virtually any reason

auction If an item is being sold at auction without reserve _________________________________

the seller must sell it to the highest bidder, even if it means selling the item for significantly less than it is worth

Jurisprudence is ___________________ law

the theory and study of law, the philosophy of law

Contract law varies from state to state true/false

true

Duty of care A person at work has a heightened duty of care true/false

true

tort is a violation of a duty imposed by civil law. true/false

true

Natural Law

vague and sometimes difficult to determine

contract Informal contracts often fail to satisfy the Statute of Frauds because they are

vague or incomplete

noncompete To be _________, an agreement ___________ must be ____________ to a legitimate bargain.

valid not to compete ancillary

dissociation

when a partner leaves a partnership

briefs

written arguments on the case

exculpatory clauses

Exculpatory clauses, seeking to relieve a bailee of liability for damage to the goods, may be enforced between two corporations of equal bargaining power but are seldom enforced against a consumer.

partnership What is not necessary to create a partnership?

Execution of a written partnership agreement

consideration Melnick built a house for Gintzler, but the foundation was defective. Gintzler agreed to accept the foundation if Melnick guaranteed to make future repairs caused by the defects. Melnick agreed but later refused to make any repairs. Melnick argued that his promise to make future repairs was unsupported by consideration. Who will win the suit? Is either party acting unethically? Which one, and why?

Gintzler should, and did. The consideration to support Melnick's promise of repairs was Gintzler's acceptance of the defective foundation. He was under no obligation to accept a house in that condition. Gintzler v. Melnick, 116 N.H. 566,364 A.2d 637 (1976).

LLP Wanda, Derek, and Mitchell formed B. Flowers, LLP three years ago. A year ago, Derek and Mitchell decided that the company was ready to open a new location and had B. Flowers take out a loan from a bank for the extra capital needed to expand. The new location has not performed well, and B. Flowers is unable to pay the remaining $50,000 owed to the bank. Is Wanda liable to the bank for the debt?No, unless the partners have not complied with the LLP statutory filing requirements.

In an LLP, the partners are not liable for the debts of the partnership. However, partners in an LLP will lose this protection and will be treated as general partners (who are personally liable for the debts of the partnership) if they do not comply with every statutory filing requirement for LLPs. If, for instance, Wanda, Derek, and Mitchell did not properly renew the LLP's registration statement annually, they may have lost their status as an LLP and will be treated as a general partnership, in which case they are all personally liable for the business' debts. Therefore, Wanda is not liable to the bank unless the partners have not complied with LLP statutory filing requirements

Unilateral and Bilateral Contracts

In bilateral contracts, the parties exchange promises. In a unilateral contract, only one party makes a promise, and the other must take some action—his return promise is insufficient to form a contract.

libel Jane writes an article for a newspaper reporting that Ann was arrested for stealing a car. The story is entirely false. Ann is not a public figure.

Libel

contract Lewis signed a contract for the rights to all timber located on Nine-Mile Mine. He agreed to pay $70 per thousand board feet ($70/mbf). As he began work, Nine-Mile became convinced that Lewis lacked sufficient equipment to do the job well and forbade him to enter the land. Lewis sued. Nine-Mile moved for summary judgment. The mine offered proof that the market value of the timber was exactly $70/mbf, and Lewis had no evidence to contradict Nine-Mile. The evidence about market value proved decisive. Why? Please rule on the summary judgment motion.

Motion granted. Nine Mile may have breached the agreement, but there is no evidence that Lewis lost money. To win he must demonstrate a difference between the contract price and the market value of the timber. There was no difference, and he recovers nothing. Lewis v. Nine Mile Mines, Inc., 886 P.2d 912, 1994 Mont. LEXIS 283 (Mont. 1994).

United States v. Nosal case, the primary issue was whether:

Nosal had aided and abetted his former colleagues in violating the CFAA.

implied contract Olivia agrees that she will bring Desiree a cherry pie every Monday for a month in exchange for $15 per week. Olivia delivers a pie to Desiree for four weeks, and Desiree pays her each time. Olivia continues to deliver Desiree pies every Monday, and Desiree continues to pay for another five weeks. On the tenth week, Olivia brings a pie and Desiree refuses to pay. Olivia sues for payment. What result?

Olivia will win. The court will rule that they had an implied contract.

corporation tender offer is an offer from an acquirer to

One of the ways to acquire control of a company is to buy stock from the acquired company's shareholders. This method is called a tender offer because the acquirer asks shareholders to "tender," or offer their stock for sale. As long as shareholders tender enough stock, the acquirer gains control. Typically, the bidder makes an offer at a price above market value. This offer is usually contingent—that is, if a certain percentage of the shareholders do not tender, the offer terminates automatically.

stock Does par value matter? Did it ever?

Par value does not matter much, except that choosing the wrong one could cost the company more money. The original purpose of par value was to protect shareholders from unscrupulous managers who wanted to issue stock at below market value. Now, it has no purpose other than as the basis for state filing fees. The only issue for modern entrepreneurs is to set it low enough that it does not trigger a higher-than-necessary filing fee.

eminent domain

Power of a government to take private property for public use.

tenant Quick, Onyx, and Nash were deeded a piece of land as tenants in common. The deed provided that Quick owned one-half the property and Onyx and Nash owned one-quarter each. If Nash dies, the property will be owned

Quick 1⁄2, Onyx 1⁄4, Nash's heirs 1⁄4

You and a partner in Turkey plan to open a store in Chicago selling rugs imported from Turkey. You are wise enough to insist on a contract establishing the rights and obligations of both parties and would prefer a clause requiring alternative dispute resolution (ADR) of any conflicts that arise under the contract. You want to be sensitive to your partner's culture and do not to propose a clause that will alienate him. What is the best way you can accomplish all of this?

Research Turkish law and hire a mediator familiar with Turkish customs

damages Seventeen-year-old Ruby buys an inflatable bounce house from SplurgeZone for $2,500 dollars. SplurgeZone buys its products from the manufacturer for $1000 each. The bounce house is great fun for a year, and then it rips in several places and is ruined. Ruby wants her money back. Assume she is in a state that follows the status quo rule. Will Ruby be able to recover any money from SplurgeZone?

Ruby will receive $1,500 from SplurgeZone

executory contract

Statute of Frauds prevents the enforcement of the parties have not fulfilled their obligations not legal

conversion

Taking or using someone's personal property without consent

Business judgment rule

The business judgment rule provides that managers are not liable for decisions they make in good faith: without a conflict of interest, with the care that an ordinarily prudent person would take in a similar situation, and in a manner they reasonably believe to be in the best interests of the corporation.

offer Dick offers to sell Jane his 1955 Thunderbird convertible. Before Jane can accept the offer, lightning strikes the car and it is totally destroyed. Which of the following is true?

The offer is terminated by law.

joint and severral liability

The partnership and the partners are all individually liable for the full amount of the debt, but the creditor cannot collect more than the total amount he is owed.

employee While drunk, the driver of a subway car plows into the back of the car ahead of him, killing a passenger. It was against the rules for the driver to be drunk. Is the subway authority liable for the negligence of its employee?

The subway authority is liable.

law Three areas of law in which common law still predominates?

Tort, Agency and Contract law

warrant What was the primary issue in United States v. Jones?

Were the police required to obtain a warrant before attaching a GPS to Jones's Car?

partnership - after dissociation

When one or more partners dissociate, the partnership can either buy out the departing partner(s) and continue in business or wind up the business and terminate the partnership.

5th amendment taking clause David Lucas paid $975,000 for two residential lots on the Isle of Palms near Charleston, South Carolina. He intended to build houses on them. Two years later the South Carolina legislature passed a statute that prohibited building on property that lay within a certain distance of the ocean's high water mark, and Lucas's property fell in the prohibited zone. Lucas claimed that his land was now useless and that South Carolina owed him its value. Should he win?

Yes, based on the Fifth Amendment Taking Clause

corporation s corp Fitness World is a corporation with 75 shareholders that are individuals who all hold common stock. At an annual meeting, the shareholders unanimously voted that Fitness World should register as an S corporation with the IRS so that the shareholders may enjoy the flow-through tax benefits. Is Fitness World eligible to register as an S corp.?

Yes, if all of the shareholders are U.S. citizens or residents The Internal Revenue Code requires that S corps: (1) have only one class of stock; (2) have no more than 100 shareholders; (3) have individuals, estates, charities, pension funds, or trusts, not partnerships or corporations, as shareholders; and (4) have only shareholders that are citizens or residents of the United States, not nonresident aliens. In addition, all shareholders must agree that the company should be an S corporation. Registration as an S corp and qualification as a close corporation under state law are separate matters that do not affect one another, although many of the qualifications may overlap. Fitness World satisfies all of the S corp requirements if all of the shareholders are U.S. citizens or residents.

Personal property

all tangible property other than real property

sole proprietorship

an unincorporated business owned by one person

Appeals

appeal to a higher court. appeals court may: affirm - upholding lower courts decision modify - changing verdict but leave the same party victorious reverve - transform the loser into the winner remand - send back to lower court

Common law is judge-made law. It is the sum total of all cases decided by ____________________.

appellate courts - by state. Common Law of New York etc. created by precedent judge-made law in an attempt to achieve predictability and flexibility Two hundred years ago, almost all law was made by common law. Today, most new law is statutory

Precedent A court is set to hear Miller v. Walnut, Corp., in which the plaintiff is suing because of a severe allergic reaction he suffered after eating soup from a mislabeled can. Five years earlier, the same court decided Washington v. SnackCo involving a plaintiff who had an allergic reaction to some cookies that were mislabeled in a similar way. Based on the principle of stare decisis, the Miller judge will likely

apply the same legal rules used in Washington

statute of limitations begins to run __________ and will limit the time within which the injured party may file suit. Failure to file suit within the time limit __________ .

at the time of injury discharges the party who breached the contract

auctions The number one source of consumer complaints about online fraud is

auctions

UCC contracts made under the UCC _____________________; offers under the common law _______________________________

can be indefinite must be definite

tenant Cameron and Mitchell own a commercial office building as joint tenants. Mitchell transfers his interest in the building to his sister Claire. A year later, Claire dies. Who receives Claire's 50 percent interest in the office building?

claire's heirs receive claire's interest A joint tenancy is severed when a joint tenant transfers his interest in the property, and the right of survivorship is lost. The new tenant becomes a tenant in common with all of the remaining owners. Here, Claire became a tenant in common with Cameron when Mitchell transferred his interest in the office building to Claire. When a tenant in common dies, her interest in the property passes to her heirs.

Money Laundering

consists of taking profits from a criminal act and either using them to promote crime or attempting to conceal their source

criminal law The government itself prosecutes the wrongdoer in a case involving behavior so threatening that society outlaws it. This kind of case involves:

criminal law

statutes (almost all) are created by administrative agencies true/false

false

strick liability To win a strict liability claim involving a defective product, the plaintiff must have bought the product directly from the defendant. true/false

false

defamation Elements the plaintiff must prove in a defamation suit

falsity defamatory statement injury communication

Equal Protection Clause

generally requires the government to treat people equally. Courts apply strict scrutiny in any equal protection case involving race, ethnicity, or fundamental rights; intermediate scrutiny to any case involving gender; and minimal scrutiny to an economic or social regulation.

14th Amendment

guarantees equal protection of the law and rights of citizenship to all people born or naturalized in the USA, including former slaves.

1st amendment Marcel is picnicking in a crowded local park. He decides he would be more comfortable naked, so he takes off all his clothes. He can enjoy only a few more bites of his lunch before he is arrested for violating city ordinances about public nudity. Marcel sues. If the court finds that Marcel's actions do not warrant First Amendment protection, it is probably because:

his nudity was not intended to convey a particularized message

Immigration Law

illegal to knowingly employ unauthorized workers

piercing the veil

in a corporation: A court may hold a corporation's shareholders personally liable if they fail to observe legal formalities, commingle assets, inadequately capitalize the organization or use it to commit fraud. In a LLC a court may hold members of the LLC personally liable for the debts of the organization

scope of employment An act is within the scope of employment, even if it is expressly forbidden, if it is__________ or __________ .

incidental to the conduct authorized of the same general nature as that authorized

injunction Ever since a large manufacturing plant opened a quarter mile from Stanley's house, he has been bothered by air pollution and loud noises coming from the plant. Tired of the problems the plant is causing, Stanley goes to civil court seeking a(n) __________________ which is a(n) _________________ requiring the plant to stop.

injunction; court order

material breach

is the only kind that will discharge a contract; a trivial breach will not

Why did the court indicate that judicial determinations of good faith could be dangerous?

it introduces uncertainty into business transactions

contract Davis v. Mason was typical of disputes at that time. The court took a ________________ approach, declaring that parties had _______________________ and would have to live with the consequences. The law had gone from _____________ most promises to _______________ nearly all.

laissez-faire freedom to contract ignoring enforcing

Hensley and Boyer have been negotiating for several months over issues related to the purchase and sale of some real estate. They draft a letter of intent that

may or may not be an offer, depending on the exact language and whether the document indicates that the parties have reached an agreement.

Statutes that Congress and the president may create:

must be related to a power listed in Article I, Section 8 of the constitution must not infringe on the liberties in the Bill of Rights

consideration The court in Hamer v. Sidway found

nephew because he had refrained from engaging in certain lawful actions In Hamer v. Sidway, the nephew refrained from "drinking liquor, using tobacco, swearing, and playing cards or billiards for money until his twenty-first birthday," because, on his 15th birthday, his uncle promised him he would pay him $5,000 if he did. The court found, that the nephew's promise to forbear from drinking, smoke, and gambling (all of which he was legally entitled to), qualified as consideration and that the nephew and the uncle had a contract.

contract When hearing a case involving an illegal and void contract, a court will:

not intercede to assist either party

slander

oral defamation

business judgment rule - goals it accomplishes

permits directors to do their jobs encourages directors to serve keeps judges out of corporate management

offeree

person to whom an offer is made

tenant landlord evicts a tenant when the landlord does which of the following?

physically prevents the tenant from possessing the premises or substantially interferes with the tenants use and enjoyment of the premises

plea When there is no __________ the case must go to trial.

plea bargain

single recover principle Under the single recovery principle, the court must decide at trial the full extent of

present and future damages

defamation It is easier for a ______________ to win a suit for defamation than it is for a _________ to succeed in a similar suit because ____________ do not have to prove __________

private individual public official private individuals actual malice

Takings Clause

prohibits a state from taking private property for public use without just compensation.

Criminal law

prohibits and punishes conduct/behavior that threatens public safety and welfare

8th Amendment

prohibits excessive fines and cruel and unusual punishments

Lanham Act

prohibits false statements in commercial advertising or promotion

corporate oppportunity doctrine

prohibits managers and controlling shareholders from excluding their companies from favorable deals

Civil law

regulates the rights and duties between private parties

punitive damages award guideposts (3)

reprehensibility of the defendant's conduct 9-to-1 ratio civil penalties imposed in similar cases damages that are intended to punish the defendant for conduct that is extreme and outrageous generally not available in contract cases

specific performance

requires both parties to perform the contract ordered only in cases of land or a unique asset

real property zoning board will consider which of the following when deciding whether or not to grant a variance?

response of the community, the nature of the community, the reason the owner claims to be harmed by the ordinance

Prime Investments Corporation sues one if its executives, Stewart, for embezzling client funds. At trial, Prime calls several of Stewart's colleagues to the stand, who testify that Stewart is a bad person with no integrity and they were not surprised to hear that he was accused of stealing money. Typically opinions of this type are not admissible in court. The jury finds Stewart liable to Prime for $1 million in stolen money. If Stewart appeals, the appellate court will probably

reverse the decision due to the trial judge's legal error

tenant The defining feature of a joint tenancy is the ______________________, which means when one joint tenant dies, his or her property interest passes to _____________________ .

right of survivorship the remaining joint tenants

contract - valid

satisfies all of the law's requirements, a court will enforce it

Felony

serious crime for which a defendant can be sentenced to one year or more in prison

substantial performance

substantial performance is generally sufficient to entitle the promisor to the contract price, minus the cost of defects in the work

substantive Due Process

substantive due process analysis presumes that any economic or social regulation is valid, and presumes invalid any law that infringes upon a fundamental right.

damages Hawkins v. McGee, what formula did the court provide for calculating the plaintiff's damages?

the difference between the value of a perfect hand and the value of his hand in its present condition The court held that the plaintiff's damages were the difference in the value to him of a perfect hand and the hand in its current condition, including any incidental consequences fairly within the contemplation of the parties when they made their contract. The court did not think it just to include in the damages the pain that the plaintiff suffered in the ordinary course of surgery, since he had consented to it when he planned to have the surgery. However, he did not consent to having a hairy hand, so he was entitled to damages for that unfortunate outcome.

act, forbearance, or promits

the item of value can be either an act or a forbearance

negligence comparative negligence jurisdiction, the relative negligence of the plaintiff and the defendant will be determined by

the jury

criminal Statutory rape is a crime in which a defendant has sexual intercourse with a person who is too young to be able to give legal consent for sex. In a criminal case involving an alleged statutory rape, the age of the victim at the time of the offense is an issue to be determined by:

the jury in a trial court

Bailor

the person giving up possession of personal property

precedent When a judge refers to the doctrine of precedent, he is referring to:

the principle that decisions in current cases should be based on previous rulings

contract A state trial court held that Raynes Inviolated its contract with Cranwell Management. Raynes appealed the decision to the state appellate court. If the appellate court remands the case, it is most likely because:

the trial court failed to admit necessary evidence

beyond a reasonable doubt

the very high burden of proof in a criminal trial, demanding much more certainty than required in a civil trial. government's burden in a criminal prosecution

reverse and remand

to nullify the lower decision and return the case for reconsideration or retrial

1835, French aristocrat Alexis de Tocqueville observed that in the U.S. most political questions become lawsuits. true/false

true

The law expects and allows businesses to compete aggressively. true/false

true

UCC Under the UCC, two parties can make a contract for the sale of goods and omit the price and the contract will still be upheld. true/false

true

contract To form a contact, there must be a meeting of the minds true/false

true

contract When ruling on common law contract claims, state judges are under no obligation to follow the precedent of other states true/false

true

law The court in Salib v. City of Mesa held that the city's Sign Code, which prohibited the covering (including advertising signs) of more than 30 percent of a store's windows, was:

valid because the Code directly advanced a substantial governmental interest and was narrowly tailored

contract Problems with capacity and consent make a contract ____________. _________ means the ability of a party to enter a contact in the first place. __________ refers to whether a contracting party truly understood the terms of the contract and whether she made the agreement voluntarily

voidable capacity consent

unilateral mistake

when the party relied upon a basic factual error enforcing the contract would be unconscionable the non-mistaken party knew or had reason to know of the error the mistake is mathematical or mechanical along

parol evidence rule

when two parties make an integrated contracted, neither party may use parol evidence to contradict, vary, or add to its items

tenant David Delta rents an apartment on the second story of a building. The landlord leases space on the first floor below David's apartment to a cleaning company that mixes its cleaning chemicals in the leased space. The fumes from the company's chemical mixing drift up into David's apartment, even when the windows are closed. They cause David to suffer severe nausea and headaches, and he cannot sleep in the apartment. David's girlfriend and friends also refuse to come over due to the strong odors. If David brings a claim for nuisance, is he likely to win?

yes, and the court will order an abatement A nuisance is an unprivileged interference with a person's use and enjoyment of his property. A court will balance the utility of the action causing the problem against the harm suffered by the property owner in a nuisance case. Here, David is experiencing a substantial interference with his use and enjoyment of the apartment as his residence: he cannot sleep there; he suffers physical symptoms when in the apartment; and, he cannot entertain guests or have visitors there. The cleaning company may need to mix chemicals, but likely has other methods or locations for doing so. Therefore, the court will likely find that a nuisance exists here. When courts find a nuisance exists, they will order an abatement. An abatement is an order requiring the property owner to eliminate the nuisance.

precedent In 1994, when theArizona Supreme Court decided the case of Hernandez v. Arizona Board of Regents, it found a duty of care to avoid providing alcohol to underage consumers. If in 2017 a plaintiff from Flagstaff, Arizona brings a lawsuit in an Arizona state trial court against a student group at an Arizona university for providing alcohol to members under the legal drinking age, will the Hernandez v. Arizona Board of Regents case serve as precedent (assuming no court has overturned it)?

yes, it will be used as precedent and it is binding

federal question

A case in which the claim is based on the United States Constitution, a federal statute, or a federal treaty

grand jury

A group of ordinary citizens who decides whether there is probable cause the defendant committed the crime with which she is charged

discharged

A party is discharged when she has no more duties under the contract

licensee

A person on another's land for her own purposes but with the owner's permission

donor

A person who gives property away

Summary judgment

A ruling by the court that no trial is necessary because some essential facts are not in dispute

Long-arm statute

A statute that gives a court jurisdiction over someone who commits a tort, signs a contract, or conducts "regular business activities" in the state

partnership Mark and Shania are students who also have a business on the side selling baskets of fruit and vegetables that are cut to look like flowers. They advertise that all ingredients are organic. One day, Mark is in a hurry, and instead of driving across town to the organic food co-op, he purchases ingredients from the closest grocery store, Unsafeway. Hannibal has a chemical allergy, so when he eats fruit from Mark's basket, he becomes ill. He sues Mark and Shania and is awarded $10,000 in damages. Is Shania personally liable?

Although Mark and Shania are students, they also run a business for profit and, therefore, are partners for purposes of that business. The partnership is liable for Mark's actions because he was acting in the ordinary course of the partnership business. Hannibal must first try to recover the judgment from the partnership. Only if the partnership has no assets can he recover from Mark or Shania individually. At that point, Hannibal has the right to recover from Shania, even though she personally did nothing wrong.

corporation 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?

Answer: 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.

diversity jurisdiction

Applies when (1) the plaintiff and defendant are citizens of different states and (2) the amount in dispute exceeds $75,000

law What are the two prerequisites for a state law to be valid under the Supremacy Clause?

Congress does not intend to dominate the issue. There is no conflicting federal law

partnership Seventy-Three Land, Inc., sued Maxlar Partners for the balance due on a note made by the partnership. Max, a partner, asked the court to dismiss the claim against him personally because the plaintiff had not first tried to collect against the partnership. Does Max have a valid argument?

Creditors with contract claims against a partnership must first exhaust partnership assets before proceeding directly against individual partners. Seventy-Three Land v. Maxlar Partners, 270 N.J. Super 332, 637 A.2d. 202, 1994 N.J. Super. LEXIS 51 (N.J. Super. Ct. App. Div. 1994).

employee Beatrix is a diamond dealer who also works as a jewelry designer at Bunny Mayhew Designs (BMD). Beatrix arranges to have one of her own company's salesmen meet with a BMD representative to try to sell some of Beatrix's available stock. May Beatrix do this?

Yes, but Beatrix must tell BMD that the salesman works for her. Beatrix may not become a party to one of BMD's purchases without BMD's knowledge, so Beatrix must disclose to BMD the nature of her relationship with the salesman. It is BMD's right as Beatrix's principal to know that Beatrix is the one selling the diamonds.

common carriers

Generally, a common carrier is strictly liable for harm to the bailor's goods. A contract carrier incurs only normal bailment liability.

corporation manager liability

If a manager violates the business judgment rule, she has the burden of proving that her decision was entirely fair to the shareholders. If it was not entirely fair, she may be held personally liable and the decision may be rescinded.

presumption of negligence

Once the bailor has proven the existence of a bailment and loss, a presumption of negligence arises, and the burden shifts to the bailee to prove adequate care.

eviction

an act that forces a tenant to abandon the property

tort Courts award punitive damages in most tort cases. true/false

false

LLC members could personally be liable for the liabilities of the LLC if:

members fail to provide adequate capital members fail to treat the LLC like a separate organization members commingle assets members commit fraud

single recovery principle

requires a court to settle the matter once and for all by awarding a lump sum for past and future expenses

offer offeree accepts by saying or doing __________________.

something that a reasonable person would understand to mean he wants to take the offer

Bystander Rule

the common-law rule holds, generally, no one has a duty to assist someone in peril unless the bystander himself created the danger.

criminal procedure

the process by which criminals are investigated, accused, tried, and sentenced. Designed to protect the accused and ensure that criminal trials are fair

Judicial power

the right to interpret laws and determine their ability

damages What is a major difference between the UCC and common law's approach to contract remedies?

the seller of goods is not entitled to consequential damages under the UCC

Fraud - must show

the statement was material, the plaintiff justifiably relied on the statement the defendant knew the statement was false or made the statement recklessly

Personal Jurisdiction

A court's authority to bind the defendant to its decisions

Remedies

Relief a court will award to a party injured by a breach of contract.

Constitution

The Constitution is a series of compromises about power

indictment

The government's formal charge that the defendant has committed a crime and must stand trial

Minute book

a book that contains a summary of a coproations offical actions

joint venture

a partnership for a limited purpose

lease

an agreement in which an owner gives a tenant the right to use property

Subpoena

an order to appear at a particular place and time.

Embezzlement

fraudulent conversion of property already in the defendants possession

Specific performance is always available in real estate contracts. true/false

true

easement Martin owns a piece of land with a bike path that runs along its western boundary. Martin subdivides the property into two parcels, an eastern parcel and a western parcel. Martin continues to live on the eastern parcel and sells the western parcel to Marjorie, reserving an easement over the edge of the western parcel so that Martin can continue to access the bike path. Years later, Martin sells the eastern parcel to Miriam. Does Miriam have an easement over Marjorie's land to access the bike path?

yes, because easements appurtenant run with the land Martin created an easement appurtenant when he reserved the right to use the edge of the western parcel to access the bike path when he sold the parcel to Marjorie. Martin's parcel (the eastern parcel) is the dominant tenement, which receives the benefit of the easement, and Marjorie's parcel (the western parcel) is the servient tenement burdened by the easement. Easements appurtenant run with the land, so Miriam purchased the easement over Marjorie's land when she purchased the western parcel from Martin.

LIquidated Debt

A liquidated debt is one in which there is no dispute about the amount owed. For a liquidated debt, a creditor's promise to accept less than the full amount is not binding.

counterclaim

A second lawsuit by the defendant against the plaintiff

agent If an agent hires subagents, is the principal liable for the acts of the subagent?

If the agent is authorized to hire a subagent, the principal is as liable for the acts of the subagent as he is for the acts of the regular agent.

Partnership - ending

If the partners decide to end the partnership business, they must take three steps: dissolution, winding up, and termination.

agency relationship If Dirk consents to being Percival's agent, an agency relationship will not be created

In order to be his principal, Percival must have control over Dirk. If Percival does not have control over Dirk there is no agency relationship, but Dirk does not need to have control over Percival, and neither party needs to be compensated.

corporation re S. Peru Copper Corp. Shareholder Derivative Litig. involved a transaction between

In this case, Grupo Mexico was the controlling shareholder of Southern Peru Copper Corporation (SPC). Grupo also owned 99 percent of the Minera Mexico's stock. Grupo offered to sell its Minera stock to SPC for $3.1 billion of SPC shares. Therefore, the transaction was between the controlling shareholder of SPC (Grupo) and SPC.

finding statutes

Laws that govern found property. Also known as estray statutes

challenges for cause

a claim that a juror has demonstrated probable bias

bylaws

a document that specifies the organizational rules of a corporation or other organization, such as the date of the annual meeting and the required number of directors

contract court would likely apply the substantial performance doctrine to:

a jazz trio that plays at a party the construction of a well on residential property a cleaning crew that is hired to tidy up a movie theater

motion to dismiss

a request that the court terminate a case without permitting it to go further

reversion Joey, a successful entrepreneur, has acquired many properties. His ailing grandmother finds the sound of crashing waves soothing, so he gives her his favorite beach house "for life". Joey has _________________ in the beach house

a reversion When an owner of real property conveys the property to someone else "for life", that person gains a life estate in the property and the owner retains a reversion in the property. Upon the death of the holder of the life estate, the property automatically returns to the original owner.

written consent

a signed document that takes the place of a shreholders or directors meeting

injunction

court order that requires someone to do something or refrain from doing something

assumption of risk plaintiff does NOT have to prove when he alleges that the defendant was engaged in an ultrahazardous activity?

breach duty foreseeble harm

articles of incorporation must include

name of the corporation's registered agent name of each incorporator number of authorized shares

law Josh and Colin are driving down the highway in Josh's new convertible. Josh steps on the gaas and accelerates to 110 MPH, almost double the 60 MPH speed limit. Colin urges Josh to slow down, say "The law is the law, and you should follow it even if you think its unfair." Josh respons, "Its unjust to have a law about how fast people can drive their own cars. Let's see how fast I can go!" In this scenario, Josh and Colin's differing legal philosophies seem to adhere most closely to:

natural law for Josh, legal positivism for Colin

negligence Which of the following are the three most common claims made by plaintiffs in a product liability case?

negligent design negligent manufacture failure to warn

partnership Cobb, Inc., a partner in TLC Partnership, assigns its partnership interest to Bean, who is not made a partner. After the assignment, Bean asserts the right to 1) participate in the management of TLC and 2) Cobb's share of TLC's partnership profits. Bean is correct as to which of these rights?

neither 1 or 2

due process

requires fundamental fairness at all stages of the case

mirror image rule

requires that acceptance be on precisely the same terms as the offer

Fundamental Rights

rights so basic that any governmental interference with them is suspect and likely to be unconstitutional

landlord

the owner of a freehold estate who allows another person temporarily to live on his property

tenancy at sufferance Jasmine signs a lease for a residential apartment for 2 years. Jasmine does not renew the lease, but when the lease expires she does not want to move out. Instead, Jasmine remains in the apartment and sends the landlord that month's rent. The landlord returns the rent to Jasmine and tells her to sign a new lease or leave. What kind of tenancy does Jasmine currently have?

tenancy at sufferance Jasmine has a tenancy at sufferance because she has remained in the premises after the expiration of a true tenancy against the wishes of the landlord. The landlord has not consented to Jasmine staying in the apartment, so this cannot be a tenancy at will. A periodic tenancy is formed after the expiration of a tenancy for years if the tenant remains, pays rent, and the landlord accepts the rent. Jasmine's landlord rejected the rent, so a periodic tenancy was not formed.

rent

tenant is obligated to pay the rent, and the landlord may evict for nonpayment. modern trend is to require a landlord to mitigate damages caused by a tenant who abandons the premises before lease expires

mortgagee

the party acquiring a security interest in property

easement

the right to enter land belonging to another and make limited use of it

president vetoes a proposed statute and the Congress wishes to pass it without his support, the idea must pass by a _____________ majority vote in the House and Sentate

two-thirds

principal is liable for the nonphysical torts of an employee

when the employee acted with apparent authority when the employee acted with express or implied authority

Concurrent Estates

when two or more people own real property at the same time In both a tenancy in common and a joint tenancy, all owners have a share in the entire property. The primary difference is that joint tenants have the right of survivorship, meaning that when a joint tenant dies, his interest passes to the other joint tenants. A tenant in common has the power to leave her estate to her heirs.

contract The case involving Tuppela and Embola demonstrates how courts

will enforce a contract that is supported by consideration, regardless of the economic fairness of the contract's terms

Tortious Interference

with business relations involves the defendant harming an existing contract or a prospective relationship that has a definite expectation of success

Requirement and output contracts

Under sales law, requirement and output contracts are valid. Although one side controls the quantity, its agreement to make demands in good faith is consideration.

Preexisting Duty

Under the doctrine of preexisting duty, a promise to do something that the party is already legally obligated to perform is generally not consideration.

George and Susan open a dry cleaning business together, but do not execute any documents or perform any formalities other than obtaining a "d/b/a" certificate for their business name: "G & S Clean". One day, when George is out for lunch, Susan burns a large hole in a customer's fur coat while cleaning it. Who is liable for the cost of the coat?

G & S Clean is liable and both Susan and George are personally liable George and Susan have formed a general partnership, as they are two people operating a business together as co-owners for profit, and have not agreed otherwise. In a general partnership, each partner is personally liable for the debts of the enterprise whether or not he caused them. Thus, a partner is liable for any injury that another partner or an employee causes while on partnership business. Susan caused the damage to the coat in the course of normal dry cleaning business, so the partnership and all of its general partners can be held liable.

Iggy verbally agreed to sell frozen hotdogs to Hachiro. He sent a signed memorandum to Hachiro, which read, "Pursuant to our conversation, this is to confirm your order of 100,000 frozen hotdogs for $0.15 each, which you will pick up at my manufacturing plant on November 1 of this year." Upon receiving the memorandum, Hachiro called Iggy and told him the deal was off. On November 1, Hachiro did not collect any hotdogs. If Iggy sues what will be the result?

Hachiro is bound by the memorandum because he never objected to it in writing.

Identity theft

Identity Theft and Assumption Deterrence Act of 1998 prohibits the use of false identification to commit fraud or other crime and it also permits the victim to seek restitution in court The aggravated identity theft statute imposes a mandatory additional sentence of two years on anyone who engages in identity theft during the commission of certain crimes

scope of employment Daisy was the founder of an Internet start-up company. Jay was her driver. One day, after he had dropped her at a board meeting, he went to the car wash. There, he told an attractive woman that he worked for a money management firm. She gave him money to invest. On the way out of the car wash, he was so excited that he hit another customer's expensive car. Who is liable for Jay's misdeeds?

In this case, Daisy is liable for the damage to the car because that was a physical tort within the scope of employment. But she is not liable for the investment money because Jay did not have authority (express, implied, or apparent) to take those funds.

contract Yasmine is negotiating to buy Stewart's house. She asks him what condition the roof is in. "Excellent," he replies. "It is only 2 years old, and should last 25 more." In fact, Stewart knows that the roof is 26 years old and has had a series of leaks. The parties sign a sales contract for $600,000. A week before Yasmine is to pay for the house and take possession, she discovers the leaks and learns that the mandatory new roof will cost $35,000. At the same time, she learns that the house has increased in value by $60,000 since she signed the agreement. What options does Yasmine have?

Indeed, it does matter. Stewart's fraud makes the contract voidable by Yasmine. She has the right to terminate the agreement and pay nothing. However, she may go through with the contract if she prefers. The choice is hers—but not Stewart's.

commerce clause In the 1950s, Illinois enacted legislation requiring trucks to have curved mud flaps. There was no federal law about mud flaps at the time, but the Illinois statute was enacted because state legislators asserted that the curved mud flaps were more effective in preventing accidents than the straight mud flaps. Several trucking companies brought suit, because the Illinois statute conflicted with the laws of other states that required straight mud flaps. Was the Illinois statute constitutional?

No because it violated the Commerce Clause

employee You begin work at Everhappy Corp. at the beginning of November. On your second day at work, you wear a political button on your coat, supporting your choice for governor in the upcoming election. Your boss glances at it and says, "Get that stupid thing out of this office or you're history." You protest that his statement violates your constitutional rights. Are you right?

No, because an employer has the right to regulate how employees look at work

noncomepete Guyan Machinery, a North Carolina 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 North Carolina for a two-year period. Later, Voorhees left Guyan and began working at Polydeck Corp., another North Carolina 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 noncompete clause?

No, because it is not essential to the employer

corporation Data Management, Inc. is interested in acquiring DocuWorld Corp., but the DocuWorld board is not interested in selling or merging. DocuWorld's shareholders authorized blank check preferred stock in the corporate charter. Will Data Management be able to bypass the resistance of the DocuWorld board by making a tender offer to DocuWorld shareholders?

No, because the DocuWorld directors can issue the preferred stock as a poison pill The board may greatly impede the success of a tender offer. In this case, the DocuWorld directors can turn to the blank check preferred stock, which is a class of stock that shareholders have already authorized with its characteristics left blank for the directors to fill in upon issuance. The DocuWorld directors may therefore issue this preferred stock as a poison pill that will dilute the value of the shares if more than a certain percentage (say, enough to gain a controlling interest in DocuWorld) is purchased. The poison pill does not make it completely impossible for Data Management to complete a takeover, but would make it much more expensive for Data Management to purchase a controlling interest in DocuWorld.

principal The Fellowship is a not-for-profit corporation whose primary purpose is promoting goodwill among churches and synagogues. Its annual meeting featured various vendors with display booths. Keener, a church representative, approached the booth of Chris's Cars and Trucks (CCT) about buying a bus for his church. While Keener was test-driving one of CCT's buses, the brakes malfunctionedand Keener was killed in the resulting crash. If CCT is liable for the accident, could The Fellowship also be liable as CCT's principal?

No, because there was no control or consent between CCT and The Fellowship.

agency relationship The German-American Vocational League was formed in New York during World War II to serve as a propaganda agency for Nazi Germany. Under U.S. law, all foreign agents were required to register, but neither the Vocational League nor its officers did so. When they were charged with violating U.S. law, they argued that they were not agents of the German government because they had no formal agency agreement. Is this a strong argument?

No. A formal contract is not necessary to establish an agency relationship

Dr. James Leonard wrote Dr. Edward Jacobson to offer him the position of chief of audiology at Jefferson Medical College in Philadelphia. In the letter, Leonard stated that this appointment would have to be approved by the promotion and appointment committee. Jacobson believed that the appointment committee acted only as a rubber stamp, affirming whatever recommendation Leonard made. Jacobson accepted Leonard's offer and proceeded to sell his house and quit his job in Colorado. You can guess what happened next. Two weeks later, Leonard sent Jacobson another letter, rescinding his offer because of opposition from the appointment committee. Did Leonard have apparent authority?

No. Leonard had told Jacobson that he did not have authority. If Jacobson chose to believe otherwise, that was his problem.

employee Claus Scherer worked for Rockwell International making over $300,000 per year. Rockwell fired Scherer for alleged sexual harassment of several workers, including his secretary, Terry Pendy. Scherer sued in United States District Court, alleging that Rockwell's real motive in firing him was his high salary. Rockwell moved for summary judgment, offering deposition transcripts of various employees. Pendy's deposition detailed instances of harassment, including comments about her body, instances of unwelcome touching, and discussions of extramarital affairs. Another deposition, from a Rockwell employee who investigated the allegations, included complaints of Scherer's harassment by other employees. In his own deposition, Scherer testified that he could not recall the incidents alleged by Pendy and others. He denied generally that he had sexually harassed anyone. The district court granted summary judgment for Rockwell. Was its ruling correct?

Scherer is the plaintiff Terry Pendy is a witness This is a civil case This case is being heard by a federal court. If there is no federal question involved in this case: 1) Scherer must be claiming at ,list $75,000 in damages 2) there must be diversity of citizenship Summary judgement is a ruling by the court that: trial is not necessary because no essential facts are in dispute The court may grant summary judgment: if there is some evidence supporting each side of a key factual dispute Should the court have granted summary judgement in this case: No, because some key facts are in dispute.

fruit of the poisonous tree doctrine At trial, the judge refuses to admit very strong evidence against the defendant, because the evidence is "the fruit of the poisonous tree." This likely happened because

The "fruit of the poisonous tree" doctrine refers to physical evidence that was obtained in the process of an illegal search, and is impermissible at trial. The rule is designed to discourage the government from engaging in impermissible activity: If they cannot use the evidence, there is little reason to conduct the prohibited search.

defects

The bailor must keep the property in suitable repair, free of any hidden defects. If the bailor is in the business of renting property, the bailment is probably subject to implied warranties.

liable Caudle worked at Betts Lincoln-Mercury dealer. During an office party, many of the employees, including president Betts, were playing with an electric auto condenser, which gave a slight shock when touched. Some employees played catch with it. Betts shocked Caudle on the back of his neck, and chased him around. The shock later caused Caudle to suffer headaches, pass out, feel numbness, and eventually to require nerve surgery. He sued Betts for battery. Betts defended by saying that it was all horseplay and that he had intended no harm.

The court held that it was irrelevant that Betts had shown no malice toward Caudle nor intended to hurt him. Betts intended the physical contact with Caudle, and even though he could not foresee everything that would happen, he is liable for all consequences of his intended physical action

life insurance When White's wife died, he filed a claim with Boston Mutual for $10,000 death benefits under her insurance policy. The insurer rejected the claim, saying that his wife had misrepresented her medical condition in the application form. The company sent White a check for $478.75, which it said represented "a full refund of all applicable premiums paid" for the coverage. White deposited the check. Had the parties reached an accord and satisfaction?

The insurer merely stated that its check was a refund of premiums. Nowhere did the company indicate that the check was full payment of its disputed obligation. The company should have made it clear that it would not pay any benefits and that this payment was all that it would offer. There was no accord and satisfaction.

Principals remedies in the event of a breach

The principal has three potential remedies when the agent breaches her duty: recovery of damages the breach has caused, recovery of any profits earned by the agent from the breach, and rescission of any transaction with the agent.

promissory estopel Phil Philanthropist called PBS during a fund drive and pledged to donate $100,000. PBS then planned and began to produce a Fourth of July Sesame Street special, counting on the large donation to fund it. Later, Phil changed his mind and said he had decided not to donate the money after all. PBS sued because without the money, it would not be able to complete the show. Will PBS win the lawsuit?

There is no "regular" consideration here because Phil received no measureable benefit and PBS did not act or forbear. But PBS can likely make a strong case that a great injustice will be done if the money is not paid. A judge might well decide to apply the doctrine of promissory estoppel and require Phil to make the donation.

partnership share transferring

Without the approval of the other partners, a partner cannot sell her share. She can only transfer the right to receive profits and losses. A new partner can be admitted to a partnership only by unanimous consent of the other partners.

commerce clause To be considered a part of "interstate commerce" a good must physically travel from one state to another true/false

false

Reformation

the process by which a court will (occasionally) rewrite a contract to ensure that it accurately reflects the parties' agreement and/or to maintain the contract's viability but the courts are generally reluctant to reform a contract because doing so introduces unpredictability into contracts In general, courts are reluctant to reform contracts because doing so introduces unpredictability into contractual relationships. Parties are allowed to form contracts so that they can set the terms of the agreement and know what to expect. When a court rewrites an agreement, it makes it difficult for parties to anticipate the outcome and implications of the contract. Whenever possible, courts like to give parties the freedom to write the contract of their own design, and to live with its consequences.

UCC The majority of states hold that if a seller's form contract and a buyer's form contract contradict one another _____________________________

there is a contact and the contradicting terms cancel each other out. Neither term is included in the contract. Instead, the neutral, gap-filler terms from the UCC are "read into" the contract

contract To validly accept an offer, a party must agree to the terms unconditionally true/false

true

warrant If your roommate gives the police permission to search your house, that search is legal. true/false

true

fixtures Paul and Shelly Higgins had two wood stoves in their home. Each rested on, but was not attached to, a built-in brick platform. The downstairs wood stove was connected to the chimney flue and was used as part of the main heating system for the house. The upstairs stove, in the master bedroom, was purely decorative. It had no stovepipe connecting it to the chimney. The Higginses sold their house to Jack Everitt, and neither party said anything about the two stoves. Is Everitt entitled to either stove? Both stoves?

A buyer normally takes all fixtures. The downstairs stove was permanently attached to the house and used as part of the heating system. The owner who installed it intended that it remain, and it was a fixture; Everitt got it. The upstairs stove was not permanently attached and was not a fixture; the sellers could take it with them.

common carrier

A company that transports goods and makes its services regularly available to the general public

partnership opportunity

A partner may not take an opportunity away from the partnership unless the other partners consent.

LLC - Limited Liability Company Alan Dershowitz, a law professor famous for his prominent clients, joined with other lawyers to open a kosher delicatessen, Maven's Court. Dershowitz met with greater success at the bar than in the kitchen—the deli failed after barely a year in business. One supplier sued for overdue bills. What form of organization would have been the best choice for Maven's Court?

A sole proprietorship would not have worked, because there was more than one owner. A partnership would have been a disaster because of unlimited liability. An LLP was a possibility, as long as the owners did not anticipate selling their shares. A limited liability partnership would have worked, too. An S Corp would have been possible because the owners could have deducted their losses on this investment from their (substantial) other income and still enjoyed limited liability. The owners would probably not have been troubled by the restraints of an S Corporation—only one class of stock, for example—but the technicalities involved in forming and maintaining an S Corporation can be vexing. Like many start-ups today, Maven's Court probably would have been an LLC.

exculpatory clause When Alistair drops off his tuxedo at Whett Dry Cleaners for dry-cleaning, he signs Whett's standard exculpatory clause, which releases Whett from all liability in the event that any item of clothing is damaged, lost, or stolen while in its care. When Alistair returns to pick up his tuxedo, he is informed that the garment tore during the dry cleaning process. Alistair sues. Which of the following results is most likely?

Alistair loses because this is a valid exculpatory clause

Partners liability for the debts of the partnership

All partners are personally liable for all debts of the partnership incurred while they were members of the partnership. Partners have joint and several liability for partnership obligations. A partner's liability for debts incurred before she became a partner is limited to her investment in the partnership.

law When courts interpret statutes, they ask _____________________

All of the following: 1- what the words in the statute ordinarily mean 2- which political parties endorsed the law 3- what Congress intended the law to do 4- whether or not the law supports good public policy

contract What did the court consider when it held in O'Brien v. Ohio State University that the basketball coach's breach was not material?

All of the following: the extent of the damage to OSU's reputation The strength of the OSU basketball team the next season The burden introduced by OSU's self-imposed sanctions

option contract

An interested purchaser buys the right to have the offer held open. The offeror may not revoke an offer during the option period.

personal injury

At common law, a landlord had very limited liability for injuries on the premises, but today many courts require a landlord to use reasonable care and hold her liable for foreseeable harm.

contract Eagle ran convenience stores. He entered into an agreement with Commercial Movie in which Commercial would provide Eagle with DVDs for rental. Eagle would pay Commercial 50 percent of the rental revenues. If Eagle stopped using Commercial's service, Eagle could not use a competitor's services for 18 months. The agreement also provided: "Commercial shall not be liable for compensation or damages of any kind, whether on account of the loss by Eagle of profits, sales or expenditures, or on account of any other event or cause whatsoever." Eagle complied with the agreement for two years but then began using a competitor's service, and Commercial sued. Eagle claimed that the agreement was unenforceable for lack of consideration. Please rule.

Commercial's promise was illusory. The company was free to walk away from the deal at any time. Commercial could never be held liable. Commercial gave no consideration, and there was no binding contract for either party to enforce.

discovery British discovery practice differs from that in the United States. Most discovery in Britain concerns documents. The lawyers for the two sides, called solicitors, must deliver to the opposing side a list of all relevant documents in their possession. Each side may then request to look at and copy those it wishes. Depositions are rare. What advantages and disadvantages are there to the British practice?

Discovery is more efficient in Britain, since the solicitors are honor-bound to notify the opposing side of relevant documents. The fighting over discovery motions that drains time and money in the United States is uncommon there. However, the absence of depositions means that the parties go into court with less information about the opponent's case, making trials more open to surprise

offer What two questions determine if a statement is an offer?

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

tentant Leo rents an apartment from Donna for $900 per month, both parties signing a lease. After six months, Leo complains about defects, including bugs, inadequate heat, and window leaks. He asks Donna to fix the problems, but she responds that the heat is fine and that Leo caused the insects and leaks. Leo begins to send in only $700 for the monthly rent. Donna repeatedly phones Leo, asking for the remaining rent. When he refuses to pay, she waits until he leaves for the day, then has a moving company place his belongings in storage. She changes the locks, making it impossible for him to reenter. Leo sues. What is the likely outcome?

Donna has ignored the legal procedures for evicting a tenant. Instead, she engaged in actual eviction, which is quick, and in the short term, effective. However, by breaking the law, Donna has ensured that Leo will win his lawsuit. He is entitled to possession of the apartment, as well as damages for rent he may have been forced to pay elsewhere, injury to his possessions, and the cost of retrieving them. He may receive punitive damages as well. Bad strategy, Donna.

partnership - earnings outside

Each partner must turn over to the partnership all earnings from any activity that is related to the partnership's business.

Mediation, a form of dispute resolution, has its roots in the laws of?

England - in the tenth century, England was divided into shires, and the day-to-day administrative task were carried out by a "shire reeve." later becoming sheriff. One of the shire reeve's responsibilities was acting as a mediator between feuding families

origin of the American legal system is:

English law

UCC 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 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 is movable—one might say "super-movable." The UCC will control Derrick's suit. Repairing windmills is primarily a service. Kendrick's lawsuit is governed by the common law of contracts.

legislative bodies Thomas Jefferson believed that the most solid basis for a "free, durable and well-administered republic" was to _____________________

Have two legislative bodies.

damages Hector is outraged by the Ellsworth Elementary School charity auction when the school invalidates his winning bid on a trip to Paris, refunds his money, and refuses to give him the plane tickets he won. He suffers no real harm because a group of sympathetic parents pool their money and buy him a comparable trip, but the breach by the school still stings, so he sues. What result is most likely?

Hector will win nominal damages

corporation Cumulative voting enables a shareholder with less than a majority of the company's shares to singlehandedly elect a director by allowing the shareholder

If a corporation has ten directors on its board, under regular voting a shareholder could vote for as many as ten different candidates, but cannot aggregate her votes; that is, she cannot cast multiple votes for any one candidate. Therefore, a single shareholder must own at least one more than half of all of the company's stock in order to ensure that a particular candidate is elected. Under a cumulative voting system, however, a shareholder may aggregate his shares and vote them all for the same person. Using a formula, a shareholder can determine how many shares she must own in order to ensure that her candidate is elected.

equal dignities rule

If an agent is empowered to enter into a contract that must be in writing, then the appointment of the agent must also be written

scope of employment While on a business trip, Trevor went sightseeing on his day off. Although company policy forbade talking on a cell phone while driving, Trevor did answer his phone while in his car. Distracted, he crashed into Olivia's house, causing substantial damage. Was his employer liable for the damage?

In a similar case, the court ruled that the employer was liable because it is foreseeable that travelling employees will go sightseeing and, therefore, companies should include this potential liability as a cost of doing business.Footnote The fact that the employer's policy prohibits talking on a cell phone does not protect the company from liability if an employee violates that policy. The employer should not have hired such a disobedient worker.

agent

In an agency relationship, the person who is acting on behalf of a principal

contracts - 3 basice quesstions important to analyzing contracts

Is it certain the defendant promised to do something? If the defendant did promise, is it fair to make her honor her word? If the defendant did not promise, are there unusual reasons to hold her liable anyway?

judicial review This chapter is filled with examples of statutes that have been struck down by the courts. A Texas law banning flag burning was rejected by the Supreme Court, as was a Louisiana death penalty statute. Where does the Supreme Court get its power to strike down congressional statutes as unconstitutional?

Marbury v. Madison

revoke offer In general, an offeror can revoke an offer any time before it has been accepted. true/false

true

The Charter

Required Provisions A corporate charter must include the company's name, address, registered agent, purpose, and a description of its stock and it must be signed by the incorporator. Optional Provisions A company's charter may include a number of optional provisions, such as cumulative voting and indemnification for directors.

sole proprietorship Mrs. Meadows opened a biscuit shop called The Biscuit Bakery. The business was not incorporated. Whenever she ordered supplies, she was careful to sign the contract in the name of the business, not personally: The Biscuit Bakery by Daisy Meadows. Unfortunately, she had no money to pay her flour bill. When the vendor threatened to sue her, Mrs. Meadows told him that he could only sue the business because all the contracts were in the business's name. Will Mrs. Meadows lose her dough?

The Biscuit Bakery was a sole proprietorship. No matter how Mrs. Meadows signed the contracts, she is still personally liable for the debts of the business.

corporation stakeholders

The Unocal case and equivalent state statutes permit managers to consider the interests of stakeholders.

contract Cozette hires Baldrick to cook dinner for her family three nights per week for an entire year. Nine months into the agreement, Baldrick dies of food poisoning. Baldrick's estate sues Cozette for Baldrick's salary for the rest of the year. What result?

The agreement will be discharged due to true impossibility This is a personal services contract, so Baldrick's death renders the agreement truly impossible. The agreement will be discharged and neither party will have any future obligation to each other.

bailee's rights

The bailee is always entitled to possess the property, is frequently allowed to use it, and may be entitled to compensation.

bailee's duty of care

The bailee is obligated to exercise due care. The level of care required depends upon who receives the benefit of the bailment: if the bailee is the sole beneficiary, she must use extraordinary care; if the parties mutually benefit, the bailee must use ordinary care; and if the bailor is the sole beneficiary of the bailment, the bailee must use only slight care.

pleadings

The documents that begin a lawsuit, consisting of the complaint, the answer, and sometimes a reply

found property

The finder of property must attempt to locate the true owner unless the property was abandoned. State estray statutes have made some changes in the common law, but the following principles generally govern: Abandoned property—the finder may keep it. Lost property—the finder generally has rights superior to everyone but the true owner, except that if she found it on land belonging to another, the property owner generally is entitled to it. Mislaid property—generally, the finder has no rights in the property. Treasure trove—generally, the finder may keep it.

Agency Limitations

The four most important limitations on the power of federal agencies are statutory control in the enabling legislation and the APA; political control by Congress and the president; judicial review; the information control created by FOIA and the Privacy Act

Enforceability

Valid contracts are fully enforceable. An unenforceable agreement is one with a legal defect. A voidable contract occurs when one party has an option to cancel the agreement. A void agreement means that the law will ignore the deal regardless of what the parties want.

contract 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 that provided 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?

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.

contract The more complex a contract, the more likely it is that _______________

at least one party will perform imperfectly

contract Coworkers Mindy and Jerome agree that Mindy will drive them to work every weekday for one month, and then Jerome will drive them both to work every weekday the following month. This arrangement is a(n) ___________ , ______________ agreement.

bilateral; executory

bill of rights Many of the protections for those accused of a crime are found in the

bill of rights

Conduct Outlawed

language of criminal statutes must be clear and definite

reversed

nullified

American Express v. Assih

the court declined to apply Utah law to the dispute because New York follows the substantial relationship approach

conspiracy It is illegal to conspire to commit a crime even if that crime never actually occurs. true/false

true

contract O'Brien v. Ohio State University, Coach O'Brien would have committed an anticipatory breach if he had

told OSU he knew that giving a loan to an OSU player would violate his contract but he was going to do it anyway An anticipatory breach occurs when a party makes it clear that he will not honor the contract. If Coach O'Brien told OSU that he planned to violate his contract by giving a loan to an OSU player, this would be an anticipatory breach.

contract Mental impairment is usually

voidable contract

contract On January 8, Quastrar, Inc. sent Hylavian Company a letter offering to sell $10,000 in restaurant supplies. On January 18, Hylavian mailed a letter to Quastrar accepting the offer. Quastrar received the acceptance letter on January 20. On January 17, Quastrar sent a letter revoking the offer. Hylavian received this letter on January 21. A contract between Quastrar and Hylavian

was formed on January 18.

adverse possission In 1985, Susannah Jones purchased a farm and several acres of land. An old wooden fence stood 200 yards south of the actual southern boundary of the plot of land that Jones purchased, but Jones thought that the fence ran along the southern boundary of her land. Jones installed a new, electrified fence, cleared the land on "her" side of the new fence, and began to graze cattle there. In 2000, Sam Kerry purchased the land that bordered the other side of the fence. In 2007, Kerry had the property surveyed and discovered that the true property boundary lay 200 yards north of the fence. The statutory period for adverse possession is 20 years. If Jones files suit the same year seeking a declaration that she now owns the 200 yards between the legal boundary and the fence, will Jones win?

yes because ones has adversely possessed the land To establish adverse possession, a user must prove: (1) entry and exclusive possession; (2) open and notorious possession; (3) a claim adverse to the owner; and (4) continuous possession for the statutory period. Here, Jones had exclusive physical possession of the property because she fenced it off and no other party occupied the land at issue. Grazing cattle qualifies as open and notorious use, as anyone who visited the property would be aware that it was occupied. Jones never received permission from the true owner to use the land, making her claim adverse; an express demand from the owner to vacate is not necessary. Finally, Jones' use of the land was uninterrupted for the statutory period of 20 years. The continuousness of the owner's ownership of the land is irrelevant. Jones has satisfied all of the elements of adverse possession and a court would therefore declare her the owner of this piece of land

Principal's duties to the agent

1. Compensation 2. Reimbursement and indemnification 3. Cooperation

bailment requirements

1. Intent 2. Possession 3. Physical control delivery of personal property to the intended bailee and possession by the intended bailee

conspiracy defendant can be convicted of taking part in a conspiracy if:

1. the defendants knew about the conspiracy and 2. a conspiracy existed and 3. some member of the conspiracy voluntarily took a step toward implementing it

If information requested under fOIA is not exempt, an agency has _____________ to comply with the request

10 days

law Brown v. Board of Education

1954 case that overturned Separate but Equal standard of discrimination in education.

evidence While driving his SUV, George struck and killed a pedestrian. He then fled the scene of the crime. A year later, the police downloaded information from his car's onboard computer which they were able to use to convict him of the crime. Should this information have been admissible at trial?

A California court ruled that Xinos did have a reasonable expectation of privacy and the data was not admissible in court because the computer had simply been recording his movements on a public road. People v. Xinos, 192 Cal. App. 4th 637 (Cal. App. 6th Dist. 2011).

involuntary bailment

A bailment that occurs without an agreement between the bailor and bailee

strict liability

A branch of tort law that imposes a much higher level of liability when harm results from ultra hazardous acts or defective products

contract Ahn, an interior designer, is working on a hotel project. In the annual catalog of a furniture wholesaler, she sees that sofa beds cost $3,000. Based on the catalog, she sends an order for 100 sofa beds to the wholesaler. The wholesaler notifies Ahn that the price has gone up to $4,000.

A price quote is generally not an offer. Ahn's order for 100 sofas was the offer, and the company was free to reject it. Ahn loses.

Creating an Agency Relationship

A principal and an agent mutually consent that the agent will act on behalf of the principal and be subject to the principal's control, thereby creating a fiduciary relationship.

tenancy at sufferance

A tenancy that exists without the permission of the landlord, after the expiration of a true tenancy

Articles I, II and III

Article 1 of the Constitution creates the Congress and grants all legislative power to it. Article II establishes the office of president an defines executive powers Article III creates the Supreme Court and permits lower federal courts; the article also outlines the powers of the federal judiciary

Walter runs a small museum that displays antique VW busses. Shane sells Walter a VW bus, telling him it has a brand new engine and will run well for another few years. Walter finds out that the engine is 15 years old, but is not permitted to rescind the contract. Why not?

Because Walter did not rely on Shane's statements

war In our nation's history there are several examples of presidents sending troops abroad without consulting Congress. For example, President Woodrow Wilson sent troops to Mexico without Congressional approval and President Harry Truman sent troops to Korea without consulting Congress. Why were these actions controversial?

Because only Congress has the power to declare war

congress government agencies (most) are created by:

Congress

Tim's Lumber Co. agrees to provide Deckbuilders, Inc. with all of the wood that Deckbuilders requires for the next five years. Deckbuilders agrees not to buy wood from any other vendors. What is the primary restriction on how much wood Deckbuilders may demand?

Deckbuilders' demand for wood must be made in good faith.

LLC Huatuco case demonstrates the danger of An LLC is not required to execute an operating agreement, but this document can be exceedingly helpful, as Jeffrey Horning learned in the opening scenario to this chapter. The flexibility of an LLC is both the good news and the bad. Members have great choice in how to run their organization but they are also forced to live by their (careless) choices if they have a bad operating agreement or none at all, because courts are reluctant to interfere.

Dr. Aibar Huatuco signed an operating agreement that made it possible for either of the two members of the LLC to prevent the dissolution of the LLC. Had he thought about the practical implications of this provision, he would have realized that this may not serve his interests, as if the two become deadlocked there is no way for either to exit the LLC.

life insurance Over her objections, Carlene's husband Silvio borrows $10,000 from his friend Evan so that he can achieve his dream of swimming with great white sharks in South Africa. Carlene knows Silvio has a reputation for being reckless, but she still finds it pretty alarming that Evan and Silvio's friend Constantine and Silvio's business partner Persephone each take out a life insurance policy on Silvio a month before his trip. Who can legally have an insurance policy on Silvio?

Evan, Persephone and Carlene.

Unliquidated Debt

For an unliquidated debt, if the parties agree that the creditor will accept less than the full amount claimed and the debtor performs, there is an accord and satisfaction and the creditor may not claim any balance.

4th, 5th and 6th amendments When a defendant stands accused of a crime, he will look to the:

Fourth, Fifth and Sixth Amendments

partnership at will

If partners do not have an agreement about the duration of their partnership, it is called a partnership at will, and any of them can leave at any time for any reason.

contract When will a court generally discharge a party from an agreement?

If performing a contract is truly impossible or if the other party committed a material breach.

corporation Dickens, Inc. is a bookstore incorporated in Nevada. From its warehouse in Montana, it ships books to all 50 states. The company's owner lives in New York, and its web designer lives in California. Where is Dickens a domestic corporation? Where must it qualify to do business?

It is a domestic corporation in Nevada. It must qualify to do business in Montana, because it has a permanent presence there. If the web designer in California is a full-time employee, it would also have to register there.

contract Chef Jacquie is scheduled to teach a cooking class to three students. The class tuition is $1,100 per student. In the class, each student cooks a French meal under Jacquie's expert supervision and receives a cookbook (worth $30) and a cooking pan (worth $150). Tory, one of the students, tells Jacquie the day before the class that she will be unable to attend and requests a refund. Jacquie denies the refund and Tory sues. Tory claims that the UCC should govern the contract, and Jacquie argues that it should be covered by the common law. Who is right?

Jacquie, because the class is primarily a service.

contract Lewis hires Ricky to make some repairs to his sailboat. Repairs of this nature generally take eight months, but Ricky has a difficult time finding two pieces of equipment necessary for the job and it ends up taking him just over a year to finish the job. When Ricky is done, Lewis refuses to pay him saying that the contract is not enforceable. Is Lewis correct?

Lewis is wrong. Agreements that cannot be performed within one year must be in writing to be enforceable. Ricky and Lewis' contract took longer than a year to be completed but because it could possibly be performed within a year, the contract does not need to be in writing.

mediation Claudia and Patrick would like to dissolve their business partnership. They are confident that they can work collaboratively on the terms of the settlement, but they do not have much money to spend on the process and are nervous about the prospect of the terms being decided by a third party who is unfamiliar with them and their industry. Which of the following legal processes is a good choice for them?

Mediation

assumption of risk For a thrill, Isabel goes to a water park with steep waterslides. While waiting in line for the waterslide, she is bitten by a raccoon. Will the water park be able to avoid liability on the basis of the assumption of risk doctrine?

No, Isabel did not assume the risk of getting bitten by an animal

illusory promise Lisa makes hand-crafted beads. Lisa approaches Julia, a successful jewelry maker, and offers to sell her beads exclusively to Julia if Julia agrees to buy all of the beads that Lisa makes. Julia agrees to buy all of the beads Lisa produces each month if, after inspecting them, Julia thinks they will sell well. Do Lisa and Julia have an enforceable contract?

No, Julia has made an illusory promise

At Business University, semester enrollment begins at midnight on April 1. Jasper asked his roommate, Alonso, to register him for an important required course as a favor. Alonso agreed to do so but then overslept. As a result, Jasper could not enroll in the required course he needed to graduate and had to stay in school for an additional semester. Is Alonso liable to Jasper?

No, because Alonso was not grossly negligent.

liable Ramsay, the CEO of a large corporation, was indicted for tax fraud. The government accused him of hiding a vast amount of the company's assets. However, he was found not guilty at trial. Can the company still be liable for Ramsay's conduct?

No, because Ramsay was found not guilty.

Other Remedies

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 recover Quasi-Contract requires that the defendant received a benefit, knowing that the plaintiff would expect compensation, and it would be unjust not to grant it

Jurisdiction

The authority of a court to hear a case

Redelivery

The bailee is strictly liable to redeliver the goods to the bailor.

bailment Shannon borrows Marty's car, but when she returns the auto, she hands the keys to Scott, who claims he is Marty's brother. Scott offers a driver's license and passport to reassure Shannon. Scott is actually a con artist. Marty sues Shannon. Outcome?

The bailee is strictly liable to redeliver the goods to the bailor. There are no excuses. The "reasonable person" standard does not apply. Marty will win

duty to protect kuehn v Pub Zone, the court ruled:

The bar had a duty to protect its patrons from reasonably foreseeable harm

contract Williams v. Walker-Thomas Furniture Co.

The court acknowledged that the defendant signed the contract, but was skeptical that this amounted to consent because the defendant had "little bargaining power, and hence little real choice" and because the contract was commercially unreasonable and the defendant had little or no knowledge of all of its terms.

corporation Re Bigmar

The court found that the directors did not meet the Bigmar's requirements when resolving to sell shares to the bank and fire May. The directors did not have a quorum for their meeting nor did they have unanimous consent for a resolution by written consent, as required by the bylaws. The court noted that the directors likely acted in good faith that their actions were necessary to save the company, but added that "good faith is not sufficient to validate a procedurally invalid proceeding."

employee Mayo v. North Carolina State University

The court held that Dr. Mayo did not have to repay any part of his salary. The court found that the parties intended the employment documents to be a final integration of the employment agreement and because nothing in the agreement was ambiguous, NCSU could not admit parol evidence.

agent Pure Power Boot Camp, Inc. v. Warrior Fitness Boot Camp LLC, the court held that

The court held that an agent owes the principal a duty of loyalty even when the agent is an at-will employee and no express contractual relationship exists. The court stated that an employee may make preparations to compete with his employer while still working for the employer, but he may not do so at the employer's expense.

corporation The Resolution Trust Corp. (RTC) sued the directors of the Commonwealth Savings Association seeking to recover from them personally $200 million that the bank lost in bad real estate loans. The directors approved the loans after state and federal regulatory agencies had issued reports criticizing the bank's loan practices. The directors failed to implement policies and procedures to prevent problems with the loan portfolio and failed to monitor loan officers adequately. There was no evidence that the directors knowingly committed illegal acts or acts outside their authority. Under Texas law, the RTC could recover for the directors' negligence only if their acts were ultra vires. Were these acts ultra vires?

The court ruled that the directors' activities were ultra vires only if they had deliberately committed illegal acts themselves. Resolution Trust Corp. v. Norris, 830 F. Supp. 351, 1993 U.S. Dist. LEXIS 3902 (S.D. Tex. 1993).

14th amendment Andre is in 11th grade at his local public high school. He wants to take the school's ballet class as one of his required electives but the school allows only girls to enroll in the class. Andre sues under the 14th Amendment. How will a court determine the result?

The court will apply intermediate scrutiny and the school will have to demonstrate that the rules is substantially related to an important government interest

examples of what a defendant may show in order to establish a defense of justification

The defendant was protecting an economic interest The existing contract could be terminated at will The defendant was acting in the public interest

contract Large numbers of employees have signed mandatory arbitration agreements in employment contracts. Courts usually uphold these clauses. Which of the following is not an advantage of using arbitration in place of litigation?

The employees will lose their rights to a class action

bystander Monica is walking down a busy sidewalk. To her dismay, a piano falls out of a nearby window and crushes a man standing five feet away from her. Name the two best reasons Monica could offer in support of her argument that she owes the man no duty?

The holding in Union Pacific Railway Co. v. Cappier and Osterlind v. Hill

Trial and Appellate Courts

Trial courts determine facts and apply the law to the facts; appeals courts generally accept the facts found by the trial court and review the trial record for errors of law.

bill If a bill is vetoed, it may still become law if it is approved by __________________.

Two-thrids of the Congress

statute of limitations

a statutory time limit within which an injured party must file suit

Iroquois Native Americans and the League of the Iroquois system of government was the inspiration for our government by providing an example of a(n):

a two-level government, each with its own specific powers

consideration 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 coins 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?

all of the agreements

offer

an act or statement that proposes definite terms and permits the other party to create a contract by accepting those terms

Administrative Law Judge

an agency employee who acts as an impartial decision maker

Warrant required for:

attach a GPS device to your car Intercept email in transit read private facebook profiles and postings search your personal computer

deprivation of property interest One example that would be considered a deprivation of a property interest is ________

being fired from a government job

tenant Bob and Marsha co-own a house. In what situation are they tenants in common?

bob and marsha bought the house as a married couple and are now divorced or they inherited the house from their aunt laurel, who left the house in her will to bob and marsha or marsha bought the house with jon as joint tenants, and jon sold his interest in the house to bob

employee employment contract that does not specify the duration of the employment

can be terminated at any time by either party

contract good faith Brunswick Hills Racquet Club Inc. v. Route 18 Shopping Center Associates, what constituted good faith?

conduct that does not violate community standards of decency, fairness or reasonableness

damages Under the UCC, the buyer of goods is entitled to ___________________ provided that _______________________

consequential damages the seller cold reasonably have foreseen them

pre-existing duty Courts will enforce a contract for a pre-existing duty if the promisor agrees to provide ____________________. This is called the _______________.

consideration pre-existing duty rule

Contracts __________________ is the inducement, price, or ______________ that causes a person to enter into ______________ and forms the basis for the parties' exchange. If one side gets all the _______________ of the exchange, then the agreement is not a(n) ____________ contract.

consideration promise contract benefit enforceable

negligence elements a plaintiff must prove in order to win a negligence case

damages breach factual cause proximate cause duty of care

The ____________bears the burden of proving _________________ that the defendant acted ___________, that is, that the defendant was forced to commit a crime.

defendant by a preponderance of the evidence under duress

damages In states that distinguish between economy and non-economic damages, the jury may award any amount for __________ damages but _______________ damages are generally capped.

economic non-economic

contract On the first day of the baseball season, Dean orders a new Cardinals hat from Amazon. At the moment he submits his order, Dean and Amazon have an ______________ contract. Two days later, Amazon delivers the hat to Dean's house. At this point, Dean and Amazon have an __________________ contract.

executory; executed

UCC The UCC was drafted in order to

facilitate the easy formation and enforcement of contracts

Clickwrap terms are never binding. true/false

false

constitution provides individuals with certain protections, mostly from harm done by corporations or other individuals true/false

false

contract An injured plaintiff can never recover without a contract. true/false

false

contract If a contract for the sale of goods specifies that modifications must be made in a writing signed by the parties, a verbal agreement by the parties to different terms may be enforced. true/false

false

contract The vast majority of contracts are unilateral contracts true/false

false

contract When a party breaches a contract, the court can only award the injured party monetary damages. true/false

false

contract A party can reject an obligor's performance if he is not personally satisfied, even if the contract makes no explicit mention of applying a subjective standardd true/false

false

contract It is always easy to tell if a party to a contract has acted in good faith true/false

false

contract contains a simple error, a court is obligated to reform the contract, rather than refuse to enforce it. true/false

false

partnership can be held liable for the negligence of a partner in the ordinary course of the partnership's business, but not for any intentional torts of a partner. true/false

false

partnership must make a formal filing with the Secretary of State containing basic information about the entity. true/false

false

peppercorn rule Pursuant to the "peppercorn rule", courts will refuse to enforce contracts that are economically unfair if the parties did not have equal bargaining power. true/false

false

tenancy at sufferance, a landlord is entitled to either evict a tenant or receive rent from the tenant. true/false

false

contract In early 20th century, courts increasingly began to analyze the basic fairness of a contract. What change lead to this shift in the common law? ________________

farms and small businesses were being replaced by corporations

time is of the essence clause

generally make contract deadlines strictly enforceable. Merely including a date for performance does not make time of the essence The court articulated its reluctance to meddle with business between experienced commercial parties, and acknowledged that judicial rulings on issues of good faith introduce uncertainty into contractual relationships. However, the court was unwavering in its belief that parties must adhere to a minimum level of good faith and public policy could not allow otherwise.

Exculpatory clause

generally unenforceable unless the clause is clearly written and readily visible a contract provision that attempts to release one party from liability in the event the other is injured

Contract - Personal satisfaction contract

iA contract in which on party must be personally satisfied by the performance of the other party is an enforceable agreement based on the promisee's subjective satisfaction Personal satisfaction contracts are enforceable, and allow the promisee to use her own subjective analysis in determining if the promisor has fulfilled his obligations. This gives the promisee some flexibility in determining if the promisor has successfully upheld his end of the bargain, and can put the promisor in a vulnerable position. However, a personal satisfaction clause must be explicit in the contract; if it is not the court will apply an objective standard.

Supremacy Clause

if there is a conflict between federal and state statutes, the federal law preempts. even without conflict, federal law preempts if Congress intended to exercise exclusive control

Silence - when it amounts to misrepresentation

if there is a relationship of trust between the parties if the defendant previously made an incorrect assertion if the other party was relying on a basic mistaken assumption if the other party was relying on a mistaken assumption about a writing

level of scrutiny Greenville College, a public community college, has a policy of admitting only male students. If the policy is challenged under the Fourteenth Amendment, ________________ scrutiny will be applied.

intermediate

personal satisfaction

interpreted under an objective standard, requiring reasonably ground for dissatisfaction, unless the work involves personal judgment and te parties intended a subjective standard

consumer expectation test, the court will find a product manufacturer liable for defective design if

it is less safe than a reasonable consumer would expect

Article I, section 8 is a critically important part of the constitution because ____________________

it lists the 8 types of statutes that Congress is allowed to pass, such as imposing taxes,declaring war, and coining money

corporation self-dealing transaction valid

it was entirely fair to the corporation disinterested shareholders approve it a special committee of disinterested directors approve it

Judicial power 1997, the Supreme Court declared unconstitutional a provision of a federal gun control law that required state and local governments to conduct a background check on prospective gun purchasers. Under what legal authority did the Supreme Court have the right to declare the provision unconstitutional?

judicial power

precedent Two major factors courts consider when deciding whether to follow a decision from an earlier case?

jurisdiction, similarity of facts

Verdicts

jury's decision in a case. Losing party may ask trial judge to overturn the verdict, seeking JNOV or a new trial. judges seldom grant either

larceny Martin owes Vlad $1,000. Because he is seeing Vlad that afternoon, he withdraws $1,000 from the bank and puts it on his kitchen counter so he can give it to Vlad later that day. Martin's houseguest Alexandra sees the money on the counter and takes it for herself. Alexandra is guilty of

larceny

consumer protection statute

laws protcting consumers from fraud

legal positivism Under the ______________ theory of Jurisprudence, the law is what the sovereign says it is.

legal positivism

legal realism Sam, a prosecutor, dreads trying a case in front of Judge Brainard, because the judge is a former defense attorney. In assuming that Judge Brainard is unable to overcome any pro-defense biases that she may have, Sam is applying which theory of jurisprudence?

legal realism

property Craig finds a rare 1955 double-date penny, worth $4,000, on a city sidewalk outside a coin collectors' convention. The penny is _________________property. If the true owner cannot be found, then the penny will belong to ________________ .

lost craig

Agent's Duties to the Principal

loyalty, obey instructions, care and to provide information

contract court will not find that a party violated a contract if the breach was not ________

material

contract frustration of purpose

may occur when an unexpected event renders a contract completely useless to one party.

Frustration of purpose

means that some event has occurred that neither party anticipated and the contract now has no value for one party

contract Marley breached her contract with Jose, but she is convinced that he could have reduced the extent of his injury if he had ___________ his damages. If Marley proves her theory at trial, Jose _______________________ .

mitigated will be unable to recover for the harm he could have avoided

security deposits

money that can be used to pay for repairs if a tenant damages the property. Many landlords fail to promptly return security deposits who leave no damage. Tenants are often able to sue for as much as three times their secuirty deposit

negligence per se If the legislature passes a statute creating an elevated duty of care for a particular activity in order to protect a particular subset of the population, any defendant who violates this statute is most likely guilty of

negligence per se

illusory promise When a one party makes an illusory promise

neither pary can enforce the deal When a party to a contract makes an illusory promise, she gives herself the opportunity to get out of the deal at any time, which is not adequate consideration. Because the deal is not supported by consideration there is no contract and, therefore, neither party can enforce the agreement.

negligence If an armed gunman comes into a book store and shoots all the customers, can the customers recover against the bookstore owner?

no, because generally there is no obligation to protect against the wrong-doing of a third person

contract Mariko wants to buy one of Clare's rowboats so the two draft a contract for its sale. The contract reads: "Binding Agreement: Mariko will buy one of Clare's small rowboats in February. Mariko will pay cash, and Clare will deliver the rowboat to Mariko." If both parties signed the agreement, will it satisfy the Statute of Frauds?

no, because it is too vague

contract Can a defendant who is being sued for breach of contract escape liability by arguing that the contract was void because it lacked the plaintiff's signature?

no, if the defendant signed the contract the agreement is valid

clickwrap Specht v. Netscape Communications Corporation, the plaintiffs were

not bound by the clickwrap agreement because a reasonably prudent offeree would not necessarily know of all the terms

property community property states, spouses have an equal interest in

only property earned by either spouse during the marriage Community property states allow the husband and wife to maintain separate ownership of assets they bring to the marriage or inherit. Those assets are called separate property. They remain the private property of each spouse during the marriage. Either spouse may convey separate property to another person during the marriage and may leave the separate property to anyone he or she wishes. But income or assets that either party earns during the marriage are considered community property, which must be equally shared during the marriage, regardless of who earns it. Neither party may convey community property without the consent of the other.

pre-existing duty is no valid for promises to perform an act the promisor is already obligated to perform. This is called the .

pre-existing duty rule

nonphysical torts

principal is liable for nonphysical torts of an employee (whether intentional or unintentional) only if the employee was acting with express, implied or apparent authority (one that harms only reputation, feelings or wallet)

apparent authority

principal is liable for the acts of an agent who is not, in fact, acting with authority if the principals conduct causes a third party reasonably to believe that the agent is authorized

agent Doe v. Liberatore

principal was not negligent in hiring the agent the agent's criminal behavior was not within the scope of his employment

promissory estoppel In __________ cases, a court will generally award ___________ damages, but courts are reluctant to impose _________ damages in cases where there is no contract.

promissory estoppel reliance expectation

abandoned property

property knowingly and intentionally discarded by the owner

bill When legislators perceive that social changes have led to new criminal act, they may:

propose a new bill

motion for a protective order

request that the court limit discovery

UCC Fallsview Glatt Kosher Caterers, Inc. v. Rosenfeld the court found that the UCC did not govern the contract because ______________________

the contract did not specify any quantity of goods

UCC Zazzles Jewelry sells Chic Boutique 150 necklaces. Zazzles sues when Chic defaults on its payments, and the court finds that some of the repayment terms in the contract are unconscionable because they place undue burdens on Chic. Zazzles is willing to make the repayment terms more favorable to Chic but wants the rest of the contract enforced. What is likely to occur?

the contract is governed by the UCC,so the court may choose to enforce the remainder of the contract

debt Agreements to accept less than full payment of liquidated debt are not binding because _______________________

the debtor has given no consideration in exchange for reducing the debt

UCC contract requirements

the defendants signature the quantity of goods being sold

voidable contract

the law permits one party to terminate the agreement

Congressional committees hold hearings to investigate:

the need for new legislation

unenforceable agreement

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

partnership winding-up process

the partners have the right to complete unfinished transactions and do whatever is necessary to terminate the business. They do not have the right to take on new business. The assets of the partnership are paid out: First, to creditors of the partnership, including creditors who are partners. Second, to partners.

plaintiff

the party that initiates a lawsuit

corporation quorum

the percentage of stock that must be represented in order for a meeting to count

Bailee

the person accepting possession

Burden of Proof

the plaintiff's burden of proof in a civil lawsuit is preponderance of evidence (meaning its version of facts must be at least slightly more persuasive than the defendants) In criminal prosecution, government must off proof beyond a reasonable doubt in order to win a conviction

corporation If a manager engages in self-dealing, what answer will not protect him from a finding that he violated the business judgment rule?

the transaction was of minor importance to the company

grand jury's job to determine whether

there is probable cause that this defendant committed the crime with which she is charged. Just because a defendant is indicted does not mean she is guilty. Rather, an indictment is the government's formal charge that the defendant has committed a crime and must stand trial.

The purpose of procedural due process is ____________________

to ensure that before the government takes anyone's liberty or property, the affected person has a fair chance to oppose the action

disaffirm

to notify the other party to a contract that you refuse to be bound by it

rescind

to terminate a contract by mutual agreement (formal cancellation)

1st amendment The government may regulate the time, place and manner of protected speech true/false

true

bill To pass Congress, a bill must get a simple majority vote from both The House and Senate true/false

true

commerce clause The dormant Commerce Clause holds that a state statute that discriminates against interstate commerce is almost always unconstitutional. true/false

true

contract tortious interference Tortious interference can occur even when there is no contract. true/false

true

corporation Courts generally give managers wide latitude when determining whether a business decision had a rational business purpose. true/false

true

corporation Directors and officers are both corporate managers. true/false

true

debt Pursuant to the UCC, a creditor who cashes a check on which a debtor has written "full settlement" generally loses the right to claim any more money from the debtor. true/false

true

defamation The New York Times v. Sullivan rule now includes all public figures, like actors, and professional athletes, even if they are not involved in politics. true/false

true

defamation A person speaking in a legislative hearing can say whatever he wants and not be sued for defamation. true/false

true

detainment Under certain circumstances, it is legal for a store employee to detain a customer in a back office of the store. true/false

true

double jeopardy The double jeopardy rule prohibits the government from prosecuting a defendant for the same particular crime more than once. true/false

true

eminent domain Under eminent domain, the government may take property from a private citizen and give it to a private party in order to stimulate economic development in the area true/false

true

employee When an employee suffers a serious injury on the job, the employer has a duty to assist the employee true/false

true

moral consideration Critics of "moral consideration" argue that it gives judges leeway to enforce promises whenever they feel that it is just. true/false

true

partnerhsip Historically, partnerships were the only form of organization available to professionals, such as accountants, lawyers, and doctors, but that is no longer the case today. true/false

true

principal In general, a principal cannot rescind contracts entered into by the agent. true/false

true

stock in a series has the same rights, and all series in a class are fundamentally the same except for minor distinctions. true/false

true

tenant Unless the parties specifically indicate otherwise, a court will treat co-owners of property as tenants-in-common. true/false

true

contract needs more than an offer and acceptance. true/false

true both parties must also provide consideration

Tenancy in Common

two or more people holding equal interest in a property, but with no right of survivorship may convey to third party; interest passes to heirs upon death

Palmore v. Sidoti, the state had refused to give child custody to a mother because her new spouse was racially different from the child. This practice was declared ________________. The state mad a classification based on _________________, which is presumed ___________________, and the government had ________________ to make such a ruling.

unconstitutional race invalid no compelling need

slander per se

when oral statements relate to criminal or sexual conduct, contagious diseases, or professional abilities, they are assumed to be harmful to the subject's reputation

easement appurtenant runs with the land, meaning a buyer of a dominant tenement acquires the easement with the purchase of the real property. true/false

true

condition precedent Andy agrees to buy Charlotte's house. The purchase and sale agreement states that if the house passes an inspection, the parties are obligated to go through with the deal. The clause about the inspection is:

A condition precedent A condition precedent is an event that must occur before a duty arises. Andy has no duty to pay Charlotte for the house unless and until it passes an inspection, so this is a condition precedent.

void agreement

A contract that neither party can enforce, because the bargain is illegal or one of the parties had no legal authority to make it

Franchise Disclosure Document (FDD)

A disclosure document that a franchisor must deliver to a potential purchaser

exculpatory clause

A lease clause that relieves a landlord of liability for injuries

Damages

Copensatory damages are the normal remedy in a tort case. Punitive damages to punish the defendant the plaintiff has actually been hurt or has actually suffered a measurable loss

consideration For consideration to exist, there must be:

For consideration to exist, there must be:

corporation duty of loyalty

Managers may not enter into an agreement on behalf of their corporation that benefits them personally unless the disinterested directors or shareholders have first approved it. If the manager does not seek the necessary approval, the business judgment rule no longer applies, and the manager will be liable unless the transaction was entirely fair to the corporation. In the case of self-dealing by a controlling shareholder, a court will always examine the fairness of the transaction

class action

One plaintiff represents the entire group of plaintiffs, including those who are unaware of the lawsuit or even unaware they were harmed

Adjudicate

to hold a formal hearing about an issue and then decide it

Illegal agreements fall into two categories

those that violate a statute those that violate public policy

consideration two basic elements of consideration

bargained-for exchange value

defendant

the party being sued

contract If Louisa hires Chaz to restore an antique urn and the contract requires him to do the work "at a level of excellence high enough to meet Louisa's personal standards" they have created a contract ___________________

with a personal satisfaction clause

1st amendment Basic liberties guaranteed by the First Amendments include:

Free press, free speech and free exercise of religion (constitutional amendments)

Tammy-Lynne playfully ruffles her cousin Allan's hair at Thanksgiving. Allan hates it when people touch his hair, and he faints. Has Tammy-Lynne battered Allan?

No, because a reasonable person would not be offended by this.

The formation of larger manufacturing enterprises during the Industrial Revolution required greater capital investments, leading to

the separation of businesss ownership and management in many cases Before the Industrial Revolution in the 18th and 19th centuries, a business owner typically supplied both capital and management. However, the cash needs of the great manufacturing enterprises spawned by the Industrial Revolution were larger than any small group of individuals could supply. To find capital, firms sought outside investors, who often had neither the knowledge nor the desire to manage the enterprise. Investors without management skills complemented managers without capital.

contract If Ella and Declan have a contract that falls apart, can Tyrone sue to enforce the agreement

third-party interests

real property examples

shed, vacant parking lot, a kitchen faucet, field of crops, buildings

bailment

A bailment is the rightful possession of goods by one who is not the owner, usually by mutual agreement. The one who delivers the goods is the bailor, and the one in possession is the bailee. To create a bailment, the bailee must assume physical control with intent to possess.

restitution Desmond has been a fan of Crispin's paintings for years and is thrilled when the artist promises to give him painting lessons. The two agree that Crispin will provide Desmond with five weekly lessons for $1,000 each, payable once the lessons are complete. After teaching Desmond two lessons, Crispin dies of a heart attack. Crispin's estate sues Desmond for the $5,000 payment for the art lessons. What result?

Crispin's estate will be able to recover $2,000 in restitution. Crispin's estate will be able to recover $2,000 of restitution damages; because that is the value of the benefit Desmond received before Crispin's death discharged the contract. The parties had a valid contract, the agreement was discharged solely as a result of Crispin's death, and his estate should be able to recover the benefit of the value he conferred

mitigation Ambrose hires Bierce for $25,000 to supervise the production of Ambrose's crop, but then breaks the contract by firing Bierce at the beginning of the season. A nearby grower offers Bierce $23,000 for the same growing season, but Bierce refuses to take such a pay cut. He stays home and sues Ambrose. How much money, if any, will Bierce recover from Ambrose, and why?

Even if he had mitigated, Bierce would have lost $2,000. He is entitled to that sum. However, he cannot recover the remaining $23,000. After Ambrose breached, Bierce had identical work available to him, but he failed to take it. His failure to mitigate is fatal.

stict liable Farmer Jake is extremely distressed when he goes to his state-of-the-art chicken facility one morning and finds that all 300 of his prized chickens have died overnight. A veterinarian determines that the chickens have all died of heart attacks. Video surveillance reveals that the chickens all went into distress and died around 4:15 am. Farmer Jake knows that Dahlia's Dynamite Co. had been hired to do some underground blasting in the area that morning. Farmer Jake sues Dahlia's. What result?

Farmer Jake will win, because the court will hold Dahlia strictly liable.

Bill of Rights - two facts

Guarantees liberties to individual citizens. Contains the first 10 amendments

restitution Racicky was in the process of buying 320 acres of ranchland. While that sale was being negotiated, Racicky signed a contract to sell the land to Simon. Simon paid $144,000, the full price of the land. But Racicky went bankrupt before he could complete the purchase of the land, let alone its sale. Which of these remedies should Simon seek: expectation, restitution, specific performance, or reformation?

He should, and did, seek restitution. Expectation damages will be unavailable since Racicky is bankrupt. Specific performance is impossible because Racicky does not own the land. Reformation is irrelevant. Simon gets restitution, since he has conferred a benefit on Racicky and it would be unjust for the defendant to keep it. Racicky v. Simon, 831 P.2d 241, 1992 Wyo. LEXIS 60 (Wyo. 1992).

Appeals Courts

Higher courts that review the trial record to see if the court made errors of law

principal

In an agency relationship, the person for whom an agent is acting

bailment Lonny Joe owned two rare 1955 Ford Thunderbird automobiles, one red and one green, both in mint condition. He stored the cars in his garage. His friend Stephanie wanted to use the red car in a music video, so Lonny Joe rented it to her for two days, for $300 per day. When she returned the red car, Lonny Joe discovered a long scratch along one side. That same day, he noticed a long scratch along the side of the green car. He sued Stephanie for harm to the red car. Lonny Joe sued an electrician for damage to the green car, claiming that the scratch occurred while the electrician was fixing a heater in the garage. Explain the different burdens of proof in the two cases.

Lonny Joe had no bailment with the electrician because the electrician never assumed control of the car. To win that case, Lonny Joe must prove that the electrician behaved unreasonably and caused the scratch. However, when Lonny Joe rented Stephanie the red car, the parties created a bailment, and the law presumes Stephanie caused the damage unless she can prove otherwise. That is a hard burden, and Stephanie will likely lose.

contract Arabella sells Ann all of her bowling equipment for $1,100. The next day Arabella regrets the deal and tries to rescind the contract. Arabella argues that the agreement is invalid because it should have been in writing, and therefore she has to refund Ann the money, and Ann has to return the bowling equipment to Arabella. Is Arabella correct?

No, because the contract is fully executed.

law To protect Native Americans, the Federal government passes a law prohibiting their taxation. Oklahoma amends its own tax law, adding a small tax on Native Americans. Is the Oklahoma law constitutional?

No, the statute violates the Supremacy Clause

agent Lionel is the personal assistant to the head coach of a professional football team. At the end of the football season, a football player's wife gives Lionel front row tickets to the opera. What must Lionel do?

Tell his boss about the tickets. His boss may choose to keep the tickets for himself.

joint tenancy

Two or more people holding equal interest in a property, with the right of survivorship may convey to third party during life; interest passes to other tenants upon death

corporation takeover defenses

Under common law, shareholder welfare must be the board's primary concern when establishing takeover defenses. If it is clear that the company will ultimately be sold, the board must auction the company to the highest bidder; it cannot give preferential treatment to a lower bidder.

landlord-tenant

When an owner of a freehold estate allows another person temporary, exclusive possession of the property, the parties have created a landlord-tenant relationship.

damages Master Mfg., Inc. contracted with Accur Computer Repair Corp. to maintain Master's computer system. Master's manufacturing process depends on its computer system operating properly at all times. A liquidated damages clause in the contract provided that Accur would pay $1,000 to Master for each day that Accur was late responding to a service request. On January 12, Accur was notified that Master's computer system had failed. Accur did not respond to Master's service request until January 15. If Master sues Accur under the liquidated damage provision of the contract, Master will:

Win, unless the liquidated damages provision is determined to be a penalty

Defamation

a defamatory statement that is false, uttered to a third person, and caused an injury. Opinion and privilege are valid defenses

adjudicated incompetent

all of his future agreements are void

The Founders wanted the Constitution to last for centuries, and understood that would only happen if the document was _____________

changeable

damages Reliance interests (damages)

difficult to win difficult to quantify courts reluctant to award damages that are based on vague or subjective calculation, instead, courts prefer to calculate damages based on figures in a contract puts the injured party in the position he would have been in had the parties never entered into a contract focuses on the time and money the injured party spent in performing his part of the agreement if no agreement, court may still award reliance damages under a theory of promissory estoppel

Damages A manufacturer delivers a new tractor to Farmer Ted on the first day of the harvest season. But, the tractor will not start. It takes two weeks for the right parts to be delivered and installed. The repair bill comes to $1,000. During the two weeks, some acres of Farmer Ted's crops die. He argues in court that his lost profit on those acres is $60,000. If a jury awards $1,000 for tractor repairs, it will be in the form of __________ damages. If it awards $60,000 for the lost crops, it will be in the form of ____________ damages.

direct; consequential

Fill in the blanks with the word(s) that best complete the statement. For a contract to be ____________, seven requirements __________ ________ present

enforceable must be

partners as agents

every partner is an agent of the partnership for the purpose of its business. a partnership is liable if a partner acts with actual, implied or apparent authority

The Exclusionary Rule

evidence acquired illegally (or any info obtained as a result of this illegal behavior) many not be used at trial

judicial review Kennedy v. Louisiana Justice Kennedy's decision relied heavily on ______________________

evolving standards of decency Is an example of judicial review; the power of federal courts to declare a statute or government action unconstitutional or void.

false imprisionment

the intentional restraint of another person without reasonable cause and without consent

corporation corporate charter must include regarding the company's stock

number of shares par value classes and series

procedural unconscionability

one party uses its superior power to force a contract on the weaker party

partnership tort liability of partnership

partnership is responsible for the intentional and negligent torts of a partner that occur in the ordinary course of the partnership's business or with the actual authority of the partners

administrative regulation Union organizers at a hospital wanted to distribute leaflets to potential union members, but hospital rules prohibited leafleting in areas of patient care, hallways, cafeterias, and any areas open to the public. The National Labor Relation Board, a government agency, ruled that these restrictions violated the law and ordered the hospital to permit the activities in the cafeteria and coffee shop. What kind of law was it creating?

Administrative regulation

radification

Acceptance of the benefit of an unauthorized transaction or failure to repudiate it, thereby making the transaction binding as if it had been authorized.

partnership Blackriver Partnership is in the process of winding up. It has three partners: Jason, Kiera, and Lancelot. The partnership has assets of $90,000, but debts of $60,000, including $30,000 it owes to Jason. Who gets what?

Each partner receives $30,000.

contract When Tremaine arrived in Cincinnati, he rented an SUV from a car rental company in the airport terminal. A month after the trip, he noticed that the charge on his credit card for the SUV was much higher than he anticipated because the rental company had charged him $30 per gallon to refill the gas tank. He reviewed the eleven-page rental contract and noticed on page seven a provision about the gas charge. He saw another provision on page ten stating that in order to file a dispute with the company he would be charged a $750 "Investigation Fee" for his claim to be reviewed. Tremaine sues the rental company. Which of the following outcomes is most likely?

Tremaine will win because the contract was procedurally and substantively unconscionable.

Stare Decisis

"let the decision stand" - once a court has decided a particular issue, it will generally apply the same rule in future cases

gifts

A gift is a voluntary transfer of property from one person to another without consideration. The elements of a gift are intention to transfer ownership immediately, delivery, and acceptance

offer Seth told the salesperson at Outdoor Times that he wanted the sleeping bag that was advertised in the Sunday paper; one that would keep him comfortable if the temperature drops to 10 degrees Fahrenheit. The salesperson told Seth they were sold out of that bag, but there were two other styles that would meet his needs and were the same price. Seth insisted he wanted the advertised bag and threatened to sue for breach of contract. Which is true?

Seth will not prevail, as the advertisement was simply a request for offers

Regulation of Speech

The government may regulate the time, place and manner of speech

tenant Thomas, aged 80, has spent a lifetime accumulating unspoiled land in Oregon. He owns 16,000 acres, which he plans to leave to his five children. He is not so crazy about his grandchildren. Thomas cringes at the problems the grandchildren would cause if some of them inherited an interest in the land and became part-owners along with Thomas's own children. Should Thomas leave his land to his children as tenants in common or joint tenants?

Thomas is better off leaving the land to his children as joint tenants. That way, when one of his children dies, that child's interest in the land will go to Thomas's surviving children, not to his grandchildren. (There are other approaches Thomas could take, such as creation of a trust, and they are discussed in Chapter 44, on planning for the future.)

corporation Dr. Warfield hired Wolfe, a young carpenter, to build his house. A week or so after they signed the contract, Wolfe filed the charter to form Wolfe Construction, Inc. Warfield made payments to the corporation. Unfortunately, the work on the house was shoddy; the architect said he did not know whether to blow up the house or try to salvage what was there. 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? Does it matter if Wolfe signed the contract in his own name or in the name of the corporation?

Wolfe is personally liable on any contract signed before the charter was filed, 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.

Vinita is preparing to put her house on the market. She knows that some of the insulation in the house contains asbestos. When the house was built, asbestos was commonly used in insulation, but it is no longer allowed today, because we now know that when asbestos is disturbed it can create a very serious health hazard. The asbestos is unlikely to be discovered unless it is inspected by a professional. Must Vinita tell potential buyers about the presence of asbestos in the house?

Yes, because it will not be revealed by a basic inspection of the house.

agent Wyatt, a Certified Public Accountant, misinterprets a basic provision of the tax code when filing a client's taxes, and the error ultimately costs his company several thousand dollars to fix. Is Wyatt liable?

Yes. Wyatt was not the client's agent, but he is an agent of his company, and all agents owe their principal a duty to act with at least reasonable care. Here, Wyatt is a Certified Public Accountant, which means that he has special skills and will be held to a higher duty of care. Wyatt breached this duty of care by misinterpreting the tax statute.

unilateral contract

a contract in which one party makes a promise that the other party can accept only by actually doing something

Void

a contract that is illegal from the beginning and may not be enforced

ultra vires doctrine

a corporation cannot undertake any transaction unless its charter permits it

Ultra Vires Doctrine

a corporation cannot undertake any transaction unless its charter permits it. Corporate officers understandably chafed at this restriction. To avoid problems of ultra vires, most companies now use a very broad purpose clause such as "to engage in any lawful act or activity for which corporations may be organized."

corporation domestic corporation

a corporation operating in the state in which it is incorporated

default judgment can be entered __________________________

a defendant fails to file an answer to a plaintiff's complaint on time

Misdemeanor

a less serious crime, often punishable by less than a year in a county jail

letter of intent

a letter that summarizes negotiating progress

agent Nick agrees to work for Carmine until Carmine's baseball card business sells $7,000 worth of cards. What type of agency agreement is this?

a term agreement for achieving a mutual purpose

warrant As a general rule, before conducting a search the police must have

a warrant

principal's liability for torts

an employer is liable for a physical tort committed by an employee acting within the scope of employment and a nonphysical tort of an employee acting with authority

respondeat superior

an employer is liable for a physical tort committed by an employee acting within the scope of employment and a nonphysical tort of an employee acting with authority

condition subsequent

an event that must occur after a particular duty arises

agency agreement power and right to terminate an agency agreement

both parties have the power to terminate an agency relationship, but they may not have the right. If termination violates the agency agreement and causes harm to the other party, the wrongful party must pay damages

right to jury Marshall claims that Victor breached their contract and sues him in district court, seeking $80,000 in damages. If the trial is being held without a jury it is most likely because:

both parties waived their right to jury

Development

development of contract law stretches into the distant past. Before 15th century, courts rarely enforced promises at all. By 1600s, courts enforced many mutual promises, and by 1900, most promises containing the seven elements of a contract were strictly enforced

precedent

earlier decisions by the state appellate courts on similar or identical issues

embezzlement Martin owes Vlad $1,000. He knows that his friend Alexandra is having coffee with Vlad that afternoon, so he gives Alexandra $1,000 and asks her to give it to Vlad when she sees him. Alexandra agrees, and then keeps the money for herself. Alexandra is guilty of

embezzlement

agent Ann becomes Bruno's agent if Ann does something for Bruno, even if Ann has not consented to act as an agent. true/false

false

contract Courts require specific works and phrases to create an enforceable condition in a contract true/false

false

contract voidable A party in a voidable contract may retain the benefits of the agreement while repudiating its obligations true/false

false

eniment domain If a property owner rejects the government's offer of a "fair price" for property being taken by eminent domain, then the owner waives his right to compensation for the property. true/false

false

Ours was the first nation in modern history founded on the idea that the people could ______________________

govern themselves democratically

liable The judge in Palsgraf based his decision on the fact that

harm to the plaintiff was not foreseeable The court held that the railroad was not liable for the injuries to Mrs. Palsgraf because no one could have foreseen her injury. Justice Cardozo wrote that it did not matter if the railroad employees had been careless because even the most cautious mind would not imagine that a package wrapped in a newspaper would spread wreckage throughout the station.

corporation generally do not count as "doing business" for a corporation

holding meetings isolated transactions opening a bank account

Dormant Aspect of Commerce Clause

holds that a state statute that discriminates against interstate commerce is almost always invalid

Williams Act

if shareholders offer more stock than the bidder wants, it must purchase shares pro rata

Conspiracy

illegal to conspire to commit a crime, even if that crime never actually occurs

Making false statements

illegal to make false statements or engage in a cover-up during any dealings with the U. S. Government

partnership - dissociated partner

is liable to outsiders for debts incurred during her term as a partner, but the partnership must indemnify her for these debts. A dissociated partner is liable for the debts of the partnership incurred within two years after she leaves, but only if the creditor reasonably believes she is still a partner. The partnership must indemnify her for these debts.

contract Peter says to Carolina: "My property is about 2 acres, and I'll need you to clean it up. I pay the going rate. Start work at some point next week." This job offer probably

is not valid because it is not definite

UCC Under the Uniform Commercial Code, a seller ________ generally entitled to recover consequential damages, and a buyer _______ generally entitled to recover consequential damages.

is not; is

Noncompete factors that favor upholding the agreement

it is ancillary to a legitimate bargain it is fair to the employee it involves trade secrets it is not overly broad it is harmless to the public

warrant will be issued only if there is probably cause. Probable cause means that, based on all the information presented,

it is likely that evidence of a crime will be found in the place to be searched

gratuitous agent

someone not paid for performing duties

Letters of intent are ________________ binding

sometimes

The Exxon Valdez decision may not be particularly influential on future cases because

the case involves maritime law

cross-examine

to ask questions of an opposing witness

entrapment case, the goal is to separate the case

where the defendant was innocent before the government tempted him from those where the defendant was only too eager to break the law

preliminary injunction four prerequisites to preliminary injunctive relief mentioned in Milicic v. Basketball Marketing Company, Inc.?

1 - Injunctive relief was necessary to prevent immediate and irreparable harm that could not be adequately compensated by monetary damages 2 - Greater harm would be caused by denying the injunction than from granting the injunction 3- Preliminary injunction restored the parties to the status quo that existed prior to the wrongful conduct The parties' original contract contained a concurrent condition 4-Milicic's complaint was likely to succeed at trial

bill - chronological order of steps it takes before it goes to the President:

1) congressperson proposes a bill 2) Congressional Committees hold hearings 3) Committee votes in favor of the bill 4) Full body approves the bill 5) Other house approves the bill 6) Conference committee resolves differences 7) Both houses pass the same version of the bill

1st amendment What are the three general steps outlined in Miller v. California to determine if a creative work is obscene?

1) whether the average person would find the work appeals to a prurient interest 2) whether the work depicts or describes sexual conduct in a patently offensive way 3) whether the work lacks serious literary, artistic, political or scientific value

Contracts: Definition and Elements

A contract is a legally enforceable promise (agreement). Analyzing whether a contract exists involves inquiring into these issues: offer, acceptance, consideration, capacity, legal purpose, consent, and sometimes, whether the deal is in writing

foreign corporation

A corporation must register in every state in which it is doing business.

partnership by estoppel

A judicially created partnership that may, at the court's discretion, be imposed for purposes of fairness. When: 1) someone tells other people they are a partner or allows people to say, without contradiction, that they are 2) a third party relies on this assertion 3) the third party suffers harm

administrative agency Congress passes The Nylon-Free Water Act, a statute making it a crime for commercial fisherman to use nylon fishing nets in water where manatees are found. Now that the Act has passed Congress, who will create regulations for implementing it?

An administrative agency

contract Franklin hires Angela to paint his portrait. She is to be paid $50,000 if the painting is acceptable "in Franklin's sole judgment." At the big unveiling, 99 of 100 attendees think that Angela has done a masterful job. Franklin disagrees. He thinks the painting makes him look like a toad. Franklin refuses to pay, and Angela sues Franklin. Who wins and why?

Angela loses because this is a personal satisfaction contract ngela loses because this is a personal service contract and Franklin did not like the painting. A contract that requires work to be "acceptable" is a satisfaction contract with a subjective evaluation of the performance. See the "Performance" section

general partnership Alan and Ivan opened a kosher delicatessen, Main Court, which failed after barely a year in business. One supplier sued for overdue bills. Alan and Ivan will be liable to the supplier if Main Court was which of the following types of organizations?

General Partnership In a general partnership each partner is personally liable for the debts of the enterprise whether or not she caused them.

contract Lisa assigns a contract to buy a used Chevy "as is" from Alejandro. Shortly after, the car's alternator needs to be replaced and Lisa sues Alejandro. Will Lisa be able to admit evidence that Alejandro told her the car had a brand new alternator?

Generally, a party to a fully integrated contract will not be able to introduce parol evidence at trial. However, when one party is alleging fraud, the court will probably allow her to testify about the alleged fraudulent statements.

Splash is a California corporation that develops resorts. Lawrence, a Splash executive, is hoping to land a $700 million contract with a country in Southeast Asia. He seeks your advice. "I own a fabulous beach house in Australia. What if I allow a government official and his family to stay there for two weeks? That might be enough to close the resort deal. Would that be wrong? Should I do it?"

If Lawrence gives anything of value (such as rent-free use of his house) to secure a government contract, he has violated the FCPA. It makes no difference where the property is located or the deal signed. He could go to jail, and his company could be harshly penalized. Ethically, his gift would exacerbate corruption in a developing nation and mean that the agreement was determined by a bribe, not the merits of Splash. Other companies might do a superior job employing local workers, constructing an enduring resort, and protecting the environment, all for less money. The loan of the house would be legal if the official was simply in charge of turning on utilities in the area where the resort would be built.

scope of employment An employee is acting within the scope of employment if the acts are

Is one that employees are generally responsible for is similar to the one the principal authorized takes place during hours that the employee is generally employed

agent Malik asks Petra, an expert in sports collectibles, to help him find a buyer for his collection of autographed baseballs. Petra finds a buyer who is willing to pay $5,000 for the collection, but Malik scoffs at the offer and insists it is worth at least double that amount. He says he would not even consider selling for less than $7,500. The next week, someone offers to pay $1,000 for the collection. Must Petra tell Malik about the offer?

No. If Petra has no reason to believe that Malik would be interested, she does not have to pass the offer on to him. An agent has a duty to provide the principal with any information in her possession that she has reason to believe the principal wants to know. Under these facts, it seems extremely unlikely that Malik would have any interest in the offer, so Petra does not have to tell him.

contract Silas has agreed to dig five wells on Noreen's property over the next month, working each weekday. One Friday, after Silas has completed three wells for Noreen, he informs Noreen that on Monday he is going to start a project digging sixty wells for Romeo and that job will take him about a year. What does this mean for Noreen?

Silas has committed an anticipatory breach. Noreen is discharged and may immediately hire someone else to dig the wells. She may also sue Silas for breach of contract. Silas has made it unmistakably clear that that he will not honor his contract with Noreen, so he has committed an anticipatory breach. Noreen is discharged and may immediately hire someone else to dig the wells - she does not have to wait until Monday. She may also sue Silas for breach of contract

partnership The rules governing liability of the partnership under the Uniform Partnership Act (UPA)

Under the UPA, the rules governing the liability of the partnership to outsiders are mandatory. Partners may not change them. In contrast, most of the rules governing the relationship among partners are default provisions, meaning that the partners can change these rules if they desire.

motion

a formal request to the court that it take some step or issue some order

notice to quit

a landlord's notice terminating a tenancy

De facto

a latin phrase meaning "in fact"

escalator clause

a lease clause allowing the landlord to raise the rent for specified reasons

promissory estoppel

a possible remedy for an injured plaintiff in a case without a valid contract, when the plaintiff can show a promise, reasonable reliance and injustice

intentional torts

a principal is not liable for intentional physical torts of an employee unless: 1) employee intended to serve some purpose the employer of the employer or 2) the employer was negligent in hiring or supervising this employee

de jure corproation

a promoter has substantially complied with the requirements for incorporation but has made some minor error

termination of corporation

a three-step process requiring 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 if it is insolvent or if its directors and shareholders cannot resolve conflict over how the corporation should be managed.

due process Eloise plans to build an addition on her house that she will operate as a bed and breakfast. The town rejects her plans on the grounds that she must first purchase from the town an expensive commercial building permit. Eloise argues that she is just modifying her own residence and that she owned the residence before the commercial permit legislation was passed; she argues that, therefore, does not need the expensive permit. At the court hearing on her case, the town mayor serves as judge. This is:

a violation of procedural due process requirements

absolute privilege

a witness testifying in a court or legislature may never be sued for defamation

integrated contract

a writing that the parties intend as the final, complete expression of their agreement

Requirement contract

an agreement under which a buyer purchases 100% of goods from a single seller, and the seller provides for buyer's reasonable needs

condition precedent

an event that must occur before a duty arises

express contract Burt agrees in writing to sell Red 100 lobsters for $15 each, payable by credit card, in exactly 30 days. When the lobsters fail to arrive, Red sues.

an express contract because all terms are clearly stated.

Tortious interference with a contract

an intentional tort in which the defendant improperly induced a third party to breach a contract with the plaintiff

terminated offer

an offer that can never be accepted

If the government finds that a company has hired illegal workers (that is, individuals who are unauthorized to work in the United States) the government may

arrest both the employees and the employer

employee What if Scherer refused to testify about the alleged harassment and offered no evidence that he did not harass Rockwell employees? However, he did testify and provide emails showing that a Rockwell executive told Scherer several times that Scherer's salary was too expensive and the company would have to make a "difficult decision" soon if something did not change. Rockwell produced the same deposition transcripts regarding Scherer's conduct, and claimed that the emails Scherer submitted to the court were fake. Rockwell moved for summary judgment.

based on this evidence, could the court conclude that Scherer harassed Rockwell employees? Yes, because Scherer has not presented any evidence to dispute the facts supported by Rockwell's evidence Should the court grant summary judgement on the entire case? No, because there is a dispute about essential facts, Rockwell's motives regarding Scherer's salary.

strict liability Alonzo decides to have a yard sale to sell some of his personal items. At the sale, Alonzo sells Ralph a big screen television for $40. Ralph is very pleased with the deal until an electrical issue in the television causes the television to catch fire two days later. The resulting fire burns Ralph's house to the ground. Ralph sues Alonzo alleging strict liability. Why does Ralph lose his suit?

because Alonzo is not in the business of selling TV

consideration Seth finds a lost dog and returns her to her owners. The overjoyed owners promise Seth $500, but never send him the money. Seth

cannot collect the money because it was offered in response to something Seth had already done Seth cannot recover the money. The owners offered the money once Seth had already found and returned the dog, so it was a promise based on past consideration and therefore the promise lacks consideration.

mirror-image rule Under the ______________, the ____________ rule means that an acceptance that adds to or contradicts an offer is generally considered a(n) _________________ and it ______________ the original offer.

common-law mirror-image counteroffer rejects

negligence Most states adhere to the theory of ___________________ because the earlier version of the rule was considered unreasonable.

comparative negligence

corporation At trial, judges look to see if, at the time of the alleged crime, the corporation had a(n) ______________ in place. If so, it could result in a major ___________ in any potential fine

compliance program reduction

Administrative Agencies

congress creates federal administrative agencies with enabling legislation.

damages Hadley v. Baxendale, the court held that the injured party may recover _________________ only if the breaching party ___________________________________

consequential damages should have foreseen them when the two sides formed the contract

easement by prescription A person seeking to establish an easement by prescription must prove that her use of the real property has been _____________________________

continuous for the period required by local statute and open and notorious and adverse to the true owner

stock features of stocks that may be defined in different ways for different classes and series

conversion rights redemption rights dividend rights preemptive rights liquidation rights voting rights

corporation Generally, courts will protect managers who make informed decisions

even if the decision ultimately harms the company Generally, courts will protect managers who make an informed decision, even if the decision ultimately harms the company. Making an informed decision means carefully investigating the facts. However, even if the decision is uninformed, the directors will not be held liable if the decision was entirely fair to the shareholders.

damages To win _________________ damages, the injured party must prove the breach of contract caused damages that can be quantified with reasonable certainty. _________ damages concern the time and money the injured party spent performing his part of the agreement, which is ________ to establish

expectation reliance easier

judicial review From 1950s to 1970s, the Supreme Court exercised considerable judicial restraint, and was reluctant to decide social issues on constitutional grounds true/false

false

negligence If a defendant fails to prove one element of his negligence claim he can still win the case. true/false

false

libel per se elements

falsity defamatory statement communication

Toscano v. Greene Music, the plaintiff's case would have been strengthened most if .

he had an employment contract with Fields through 2017 The appellate court vacated Toscano's future earnings award on the grounds that he had not provided sufficient evidence that he had a definite expectation of continued employment with Fields. The court held that Toscano's intentions were not relevant, since Fields had the right to terminate his employment at any time and this made Toscano's case too speculative. If Toscano had an employment contract with Fields through 2017 then he would have been able to establish that he had a legitimate expectation of employment and the appellate court would have been more likely to enforce the trial court's award.

search Which of the following are circumstances under which police may conduct a search without a warrant?

lawful arrest viewing tweets on twitter emergencies consent evidence is in plain view automobiles no expectation of privacy stop and frisk digital camera

periodic tenancy

lease for a fixed period that automatically renews

Legal Positivism

leaves no room for questions of morality

contract Hancock Life Insurance Co., the appellate court held Hoosier

liable because the impossibility doctrine never justifies failure to make a payment The appellate court held Hoosier liable, reasoning that the impossibility doctrine never justifies failure to a make a payment because financial distress differs from impossibility. The court reasoned that the financial distress could have been and was foreseen and therefore impossibility was no defense for Hoosier.

Treaties with foreign nations are:

made by the President Ratified by the Senate Binding upon all citizens as any federal statute

real property A property owner who borrows money to buy the property is a _______________ . The lender who loans the property owner the money is the _______________ . This lender takes a ______________ in the real property, which places a _______________ on the property and entitles the lender to ______________________ if the property owner/borrower fails to pay back the loan.

mortgagor mortgagee security interest lien foreclose

Contract A condition is an event that ___________________________. If the condition fails, the party is ________________

must occur before a party becomes obligated under a contract discharged

corporation Carly is a director at Dazzle, a corporation that operates a chain of stores that sell fancy shoes and handbags. Zeb approaches Carly about partnering with him in his new business selling leather handbags with large buckles and other metal accents. Carly brings Zeb's offer to the Dazzle board of directors and shareholders, but they turn it down because Zeb's bags are too casual and do not fit in with the rest of their stores' merchandise. Carly loves Zeb's bags, though, so she decides to personally invest with him. Has Carly violated her fiduciary duty to Dazzle?

no, because Dazzle turned down the opportunity to work with Zeb Pursuant to the duty of loyalty, managers cannot compete with the corporation without its consent. To avoid liability, a manager must first offer an opportunity to disinterested directors and shareholders, and only if they turn it down, does the manager have the right to take advantage of the opportunity herself. Here, Carly offered the opportunity to partner with Zeb to Dazzle, who declined. Carly is therefore free to partner with Zeb on her own without breaching her fiduciary duty to Dazzle.

single recovery principle When Mary Louise has an accident, the court awards her $50,000 for future lost wages. It turns out she is unable to work for much longer than her doctor anticipated, and her lost wages amount to $225,000. Can she sue the defendant again for the unforeseen losses?

no, because of the single recovery principle

quasi-contract If a plaintiff can show that he has been injured, but does not have a contract, he can sometimes still recover under certain theories. In ______________ cases, the defendant received a benefit from the plaintiff. In _____________ cases, the defendant made a promise that the plaintiff relied on.

quasi-contract; promissory estoppel

quasi-contract When a court relies on the theory of ____________, the damages awarded to the plaintiff are called _______________, which means that the plaintiff gets "as much as he deserves." This is a form of _______________

quasi-contracts quantum meruit judicial activism

intermediary agent

someone who hires subagents for the principal

Life insurance policies, who can you take one out on?

someone whom have an insurable interest business partner, father, wife, yourself, mother, your children, immediate family, an acquaintance who owes you money

corporation Kurt owns 55 percent of the New England Lumber Company (NELC) stock and is also the CEO. Kurt also owns two percent of the Boston Homes stock. Boston Homes is a construction company that builds houses throughout New England. Kurt wants NELC to provide Boston Homes with all of the lumber Boston Homes needs and to give Boston Homes a ten percent discount on all of its large orders. Four NELC board members who have no interest in Boston Homes form a special committee and approve the deal. If a NELC shareholder challenges the deal between NELC and Boston Homes in court, how should the court rule?

strike down the deal unless it is entirely fair to NELC A corporate officer's duty of loyalty prohibits unfair self-dealing, which means an officer generally cannot make decisions that benefit himself or another company in which he has an interest. Some self-dealing transactions are permitted if approved by a group of disinterested directors, called a special committee. However, in the case of self-dealing by a controlling shareholder of the company, a court will always examine the fairness of the transaction, no matter how the special committee votes. Kurt is a controlling shareholder in NELC, so the court will uphold the deal between NELC and Boston Homes only if it was entirely fair to NELC.

Roe and Doe v. Mills, the Court weighed most heavily

the defendants' conduct might be considered outrageous The Court held that because an average person might well consider the defendants' conduct outrageous, the plaintiffs were entitled to a trial. The Court made no determination as to whether or not the conduct was actually outrageous, but instead held that the behavior seemed outrageous enough to entitle the plaintiffs to a trial.

contract When a defendant claims that a contract is commercially impracticable because of an unexpected event, the court may choose not to enforce the contract if ________________

the event was truly unexpected For a defendant to succeed on a claim of commercial impracticability due to an unexpected event, the event must be truly unexpected. A defendant will not succeed simply because an event has made performance more difficult or caused a financial burden, the event must also be truly unexpected. A contract may still be enforceable if the promisor has died; it is only when the promisor in a personal services contract dies that the contract will be discharged.

contract Milicic v. Basketball Marketing Company, Inc., the plaintiff was likely to succeed in his suit because .

the manner in which Milicic withdrew from the contract appeared to be consistent with Pennsylvania law The appellate court thought it likely that Milicic would prevail in his claim against BMC. In order for Milicic to win, he simply had to prove that he was no longer bound by any contractual obligation to BMC. Milicic was sixteen years old when he formed the contract, and he withdrew from the deal less than two weeks after his eighteenth birthday. The appellate court reasoned that because Milicic behavior conformed with time-honored Pennsylvania law, it was very likely that Milicic would win his suit against BMC.

incorporator

the person who signs the charter and files it with the secretary of state

Oculist's Case (1329)

the plaintiff voluntarily sought medical care

corporation common scenarios in a hostile takeover

the target has assets the bidder genuinely wants a speculatro plans to resell all or part of the target at a profit when an outside shareholder acquires more than a certain percentage of company stock, a poison dilutes the value of these shares. For example, a company could issue preferred stock with the stipulation that if a shark purchases more than, say, 15 percent of company stock and subsequently merges with the company, this preferred stock can be converted into 10 shares of the acquiring company. Thus, for each share of the company that the shark buys, he also has to give away 10 of his own shares, making the takeover much more expensive for him. No wonder this tactic, is called a "poison pill;" it could certainly prove fatal to a shark. Note that, by adopting a poison pill, a board is effectively limiting how large a block of stock an investor can buy. The United States is the only developed country that allows boards this power.

negligence If a plaintiff fails to prove proximate causation, even though the defendant's conduct was the factual cause of her injury it probably means that

there was a superseding cause To establish the causation element of a negligence claim, the plaintiff has to show that the defendant's conduct was both the actual cause and the proximate cause of her injury. If the plaintiff fails to show that the conduct was the proximate cause of her injury, it probably means that her injury was the result of a superseding cause.

noncompete agreements As reflected in the holding in Snider Bolt & Screw v. Quality Screw & Nut, the current majority view on non-compete agreements is that

they are supported by consideration in the form of continued employment by the employer in exchange for the employee's promise not to compete.

The Founding Fathers divided governmental power into three branches becausee

they did not want power to be centralized

12th and 13th centuries, courts did not consider promises binding unless ______________________

they were in writing and sealed

consequential damages

those resulting from the unique circumstances of this injured party

adverse possessor of land must make use of the land in an open and notorious manner so that the true owner is put on notice that his title to the land is contested true/false

true

agency relatioinship Unless they agree otherwise in advance, the agent or the principal can terminate the agency relationship at any time. true/false

true

auction The law assumes that an auction is with reserve unless the auctioneer clearly states otherwise. true/falseq

true

consideration A promise to act or forbear in the future counts as consideration true/false

true

consideration A property owner hires a contractor to renovate a building, which both believe does not have asbestos, a hazardous material. After beginning the project the developer discovers asbestos in the walls. A subsequent agreement that the property owner will pay additional money to the contractor for asbestos removal is enforceable. true/false

true

contract is a promise that the law will enforce

true

corporation Sometimes target companies will simply buy back a shark's stock in the target at a premium price to regain control of the company. true/false

true

corporation A manager may take advantage of business opportunities in the same type of business as her corporation if she offers the opportunity to disinterested directors and shareholders and they turn it down true/false

true

principal Generally, a principal is not liable for the physical torts of an independent contractor. true/false

true

search The court in Floyd v. New York City found that the police department's aggressive stop and frisk policy was unconstitutional. true/false

true

Warrant

written permission from a neutral officer to conduct a search. as a general rule, the police must obtain a warrant before conducting a search, but there are seven circumstances under which a search warrant is not needed: 1) plain view 2) stop and frisk 3) emergencies 4) automobiles 5) lawful arrest 6) consent 7) no expectation of privacty

flow-through tax entity

An organization that does not pay income tax on its profits but passes them through to its owners who pay the tax at their individual rates

Fraud

a variety of crimes, all of which involve the deception of another person for the purpose of obtaining money or property. Contract can be rescinded and sue for damages

strict performance

Requires one party to perform its obligations precisely, with no deviation from the contract terms

Right to a Jury

a criminal defendant has a right to a trial by jury for any charge that could result in a sentence of six months or longer

consideraion Jack Tallas came to the United States from Greece in 1914. He lived in Salt Lake City for nearly 70 years, achieving great success in insurance and real estate. During the last 14 years of his life, his friend Peter Dementas helped him with numerous personal and business chores. Two months before his death, Tallas dictated a memorandum to Dementas, in Greek, stating: PETER K. DEMENTAS is my best friend I have in this country, and since he came to the United States, he treats me like a father and I think of him as my own son. He takes me in his car grocery shopping. He drives me to the doctor and also takes me every week to Bingham to pick up my mail, collect the rents, and manage my properties. For all the services Peter has given me all these years, I owe to him the amount of $50,000 (Fifty Thousand Dollars). I will shortly change my will to include him as my heir. Tallas signed the memorandum, but he did not in fact alter his will to include Dementas. The estate refused to pay, and Dementas sued. Was there consideration? In the case, Tallas wrote his memo after Dementas had been providing services for 14 years. What if, in addition to the writing the memo above, Tallas wrote the following memo 14 years ago: Peter Dementas is my new friend and a very kind person. He has agreed to take me in his car to the grocery store, to the doctor, and on other personal and professional errands as needed for as long as I live in Salt Lake City. Because I do not want to take advantage of my new friend, I will pay Peter $5,000 for fair consideration of these services, which I will leave to him in my will. Over the years, Tallas and Dementas become dear friends and, although Dementas would have continued to provide the same services for no additional fee simply because he enjoyed spending time with Tallas, Tallas writes the memo included in the case above two months prior to his death. Tallas' estate refuses to pay Dementas any money.

1. The primary issue in this case is: .past consideration 2. In the memo, Tallas provides as consideration. a promise to act 3. The estate's strongest argument is that there is no valid consideration for Tallas' promise to pay Dementas $50,000 because: . Deentas had already performed the services for which Tallas Promised to pay 4. Would Dementas be entitled to the $50,000 if he can prove that he continued to provide his services during the two months after the memorandum was written, until Tallas' death? no 5. Under what circumstances may the court grant Dementas the $50,000 using promissory estoppel? Dementas took out a $50,000 loan the week after Tallas' death because he believed he would be able to pay off the loan with the money promised 6. Which of the following promises are provided as consideration under the terms of the memo written 14 years ago? a promise to pay an agreed upon amount and a promise to provide driving services for an indefinite period of time 7. What is the strongest argument that Tallas' estate can make against the enforcement of the memo written two months prior to Tallas' death? Demantas was already under a legal duty to provide the services to Tallas under the first memo 8. Does the writing of the earlier memo 14 years ago make the more recent memo enforceable? No, because the earlier memo obligated Dementas to provide the driving services and a person cannot receive additional consideration for acts the are already required to perform 9. Dementas is entitled to .$5000

damages Pamela was injured in an auto accident by an uninsured driver. Pamela filed a claim with her insurer, American Mutual, for $2,000 under her "uninsured motorist" coverage. American Mutual told her that if she sought that money, her premiums would go "sky high," so Pamela dropped the claim. Later, after speaking with an attorney, Pamela sued. What claim was her attorney likely to make?

A claim for punitive damages Her attorney will probably make a claim for punitive damages, based on American Mutual's bad faith in discouraging Pamela from filing a claim for money to which she was entitled. She does not have a claim for equitable damages because she is seeking money. She will be unable to obtain specific performance because the damage she suffered concerns an insurance policy, which is not a unique item. She has no claim for liquidated damages because any liquidated damage clause in her premium is not relevant to this dispute.

State of Incorporation

A company may incorporate in any state. A business that will be operating primarily in one state typically selects that state for incorporation. However, if it intends to operate in several states, it may choose to incorporate in a jurisdiction known for its favorable corporate laws, such as Delaware or Nevada.

exculpatory clause

A contract clause that attempts to relieve one of the parties from future liability

executed contract

A contract in which all parties have fulfilled their obligations

condition precedent Odessa is a mechanic at Bob's Autobody, and she repeatedly tells her friend Frank that if she ever becomes a manager she will hire Frank as a mechanic. Frank wants to get the deal in writing. What kind of contract will he draft?

A contract with a condition precedent.

close corporation

A corporation with a small number of shareholders whose stock is not publicly traded and whose shareholders play an active role in management - it is entitled to special treatment under state law.

gift causa mortis Julie does good deeds for countless people, and many are deeply grateful. On Monday, Wilson tells Julie, "You are a wonderful person, and I have a present for you. I am giving you this baseball, which was the 500th home run hit by one of the great players of all time." He hands her the ball, which is worth nearly half a million dollars. Julie's good fortune continues on Tuesday, when another friend, Cassandra, tells Julie, "I only have a few weeks to live. I want you to have this signed first edition of Ulysses. It is priceless, and it is yours." The book is worth about $200,000. On Wednesday, Wilson and Cassandra decide they have been foolhardy, and both demand that Julie return the items. Must she do so?

A gift causa mortis is one made in fear of approaching death, and this rule applies to Cassandra. Such a gift is revocable any time before the donor dies, so Cassandra gets her book back. A gift inter vivos is one made without any such fear of death. Most gifts fall in this category, and they are irrevocable. Wilson was not anticipating his demise, so his was a gift inter vivos. Julie keeps the baseball.

guilty

A judge or jury's finding that a defendant has committed a crime

tenant Doris Rowley rented space from the city of Mobile, Alabama, to run the Back Porch Restaurant. Her lease prohibited assignment or subletting without the landlord's permission. Rowley's business became unprofitable, and she asked the city's real estate officer for permission to assign her lease. She told the officer that she had "someone who would accept if the lease was assigned." Rowley provided no other information about the assignee. The city refused permission. Rowley repeated her requests several times without success, and finally she sued. Rowley alleged that the city had unreasonably withheld permission to assign and had caused her serious financial losses as a result. Comment.

A landlord is allowed to evaluate a prospective assignee, including its financial stability and intended use of the property. Mobile could not do that because Rowley provided no information about the proposed assignee. Mobile wins.

conflict of interest

A partner has a conflict of interest whenever the partnership does business with him, a member of his family, or a business partly or fully owned by him. Unless the other partners consent in advance, the conflicted partner must turn all profits over to the partnership.

tenant

A person given temporary possession of the landlord's property

law Roe v. Wade

The 1973 Supreme Court decision holding that a state ban on all abortions was unconstitutional. The decision forbade state control over abortions during the first trimester of pregnancy, permitted states to limit abortions to protect the mother's health in the second trimester, and permitted states to protect the fetus during the third trimester.

Offer Star Struck, a Hollywood talent agency, employs Puneet as one of its young agents and Max as a part-time delivery boy. Puneet's contract is for one year. She earns $5,000 per month, payable on the last day of each month. After she has worked at the firm for four months, a Star Struck executive says to her, "We are having cash flow problems. We cannot pay you this month, and will probably fall about two months behind. However, if you will agree to do Max's job for the next few months, we can pay you on time." Puneet cheerfully agrees to the deal. However, after a few weeks of the extra labor, Puneet confesses that she is overwhelmed and can no longer do Max's job. Star Struck fires her. Puneet sues. Was there a binding agreement for Puneet to do Max's work?

A promise to do what a party is already obligated to do is not consideration. Star Struck was required to pay Puneet every month, so its "offer" included no consideration. Without consideration, there can be no agreement. Puneet was not obligated to do Max's job, and she will win this lawsuit.

intentional infliction of emotional distress

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

partnership When Chase, Bailey, and Zack started working together to build a house, they signed a document stating, "The undersigned expressly agree that they are not partners." If they continued to work together, sharing the profits and the management, would they be partners?

The document would have had no impact. So long as they act like partners, they are partners.

tenant Kenmart Realty sued to evict Mr. and Ms. Alghalabio for nonpayment of rent and sought the unpaid monies, totaling several thousand dollars. In defense, the Alghalabios claimed that their apartment was infested with rats. They testified that there were numerous rat holes in the walls of the living room, bedroom, and kitchen, that there were rat droppings all over the apartment, and that on one occasion, they saw their toddler holding a live rat. They testified that the landlord had refused numerous requests to exterminate. Please rule on the landlord's suit.

A tenant typically has a duty to pay rent in the amount and at the time agreed upon in with the landlord. A landlord, in turn, has a duty (among other things) to provide a space that is fit for human habitation and in compliance with the building code. This so-called warranty of habitability is implied by the law, even if it is not directly stated in a lease. When a landlord breaches the warranty of habitability, a tenant is entitled to a reduction, or abatement, in the rent. In this case, the Alghalabios have a strong case that Kenmart Realty breached the warranty of habitability by refusing to address the rat infestation, because the infestation appears to have been considerable and rats pose health risks because they are carriers of many germs and diseases. Therefore, a court will likely find that the Alghalabios are entitled to a reduction in rent due to their living conditions, although the Alghalabios will remain responsible for paying any remaining balance if the court only partially reduces their rent. If, in addition to filing a suit to recover the unpaid rent, Kenmart Realty moved the Alghalabios' belongings out of the apartment and changed the locks, Kenmart would be liable for a wrongful eviction. Even if a tenant fails to pay rent, a landlord must go through specific eviction procedures in order to properly evict a tenant. If a landlord fails to do so, the landlord is liable to the tenant for moving costs, the costs of finding alternate housing, and, in some states, punitive damages.

Federal Courts

The federal courts adjudicate cases and also exercise judicial review, which is the right to declare a statute or governmental action unconstitutional and void.

property The government accused Carlo Francia and another person of stealing a purse belonging to Frances Bainlardi. A policeman saw Francia sorting through the contents of the purse, which included a photo identification of Bainlardi. Francia kept some items, such as cash, while discarding others. At trial, Francia claimed that he had thought the purse was lost or abandoned. Besides the fact that Francia's accomplice was holding burglary tools, what is the weakness in Francia's defense?

Abandoned property is something that the owner has knowingly discarded because she no longer wants it. The burden is on the finder to prove that the property was abandoned, which will be impossible in this case since no one would throw away cash and credit cards. Because the purse contained photo identification, Francia could easily have located its owner. He made no attempt to do so, and his defense is unpersuasive.

property During the Great Depression of the 1930s, the federal government's Works Progress Administration hired artists to create public works of art. The goal was to provide employment and beautify the nation. The artist James Daugherty painted six murals on the walls of the public high school in Stamford, Connecticut. During the 1970s, the city began to restore its high school. The architect and school officials agreed that the Daugherty murals should be preserved. They arranged for the construction workers to remove the murals to prevent harm. By accident, the workers rolled them up and placed them near the trash dumpsters for disposal. A student found the murals and took them home, and later notified the federal government's General Services Administration (GSA) of his find. The GSA arranged to transport the murals to an art restorer named Hiram Hoelzer for storage and eventual restoration, when funds could be arranged. Over 19 years went by before anyone notified the Stamford School system where the murals were. In the meantime, neither the GSA nor anyone else paid Hoelzer for the storage or restoration. By 1989, the murals were valued at $1.25 million by Sotheby's, an art auction house. Hoelzer filed suit, seeking a declaration that the murals had been abandoned. Were they abandoned? What difference would that make when determining ownership?

Abandonment is a vital issue because if Stamford abandoned the murals, Hoelzer probably owns them. An owner abandons property only by deliberately relinquishing all right in it. A court will never presume abandonment. Here, the court concluded that Stamford had never intended to abandon ownership, largely because the city did not know where the murals were. Stamford still owned them. Hoelzer v. City of Stamford, Conn., 933 F.2d 1131, 1991 U.S. App. LEXIS 10830 (2d Cir. 1991).

accession

Accession occurs when one person uses labor, materials, or both to add value to personal property belonging to another. If the improver knows he is making accessions without authority, the owner may generally take the improved property without compensating for the work done. If the improver mistakenly believes that he is entitled to add accessions, the owner probably has to pay for the increased value.

Contract 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 soda 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 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, which is his least expensive bling. "How about this?" "Deal," the kid says, handing over two quarters. Is the kid entitled to keep the luxury watch?

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 measureable value. So there is consideration to support this deal, and 50 Cent would not get his watch back.

corporation Clean Earth, Inc. is a Delaware benefit corporation that produces cleaning products using 100 percent recycled, organic, and sustainably produced materials. Several years ago, it became a socially conscious organization and has fulfilled all of the reporting requirements since then. Clean Earth executives have decided to purchase its paper product supplies (such as napkins and toilet paper) from a new supplier, who plants two trees for every tree it uses. Since this supplier charges five times more than Clean Earth's previous supplier, profits from Clean Earth's paper products are expected to be cut in half. If a Clean Earth shareholder challenges the decision as being unfair to shareholders how will a court likely rule?

Against the shareholders, if it finds that Clean Earth has acted in a "responsible and sustainable manner." Social enterprises pledge to behave in a socially-responsible manner, even as they pursue profits, meaning they must consider some combination of their stakeholders (employees, suppliers, customers, creditors), their community and the environment, in addition to investors. Under the Delaware statute, benefit corporations must operate in a "responsible and sustainable manner" while balancing the interests of their stockholders, stakeholders and whatever public benefit they have stated in their charter. Therefore, if Clean Earth has acted in a responsible and sustainable manner, then it has made a permissible decision even if it reduces shareholders' returns.

tenancies

any lease for a stated, fixed period is a tenancy for years. periodic tenancy is created for a fixed period, then automatically continues for additional periods until either party notifies other of termination tenancy at will has no fixed duration and may be terminated by either party at any time tenancy at sufferance occurs when a tenant remains, against the wishes of the landlord, after the expiration of a true tenancy

inter vivos gift During her second year at the Juilliard School of Music in New York City, Ann Rylands had a chance to borrow for one month a rare Guadagnini violin made in 1768. She returned the violin to the owner in Philadelphia, but then she telephoned her father to ask if he would buy it for her. He borrowed money from his pension fund and paid the owner. Ann traveled to Philadelphia to pick up the violin. She had exclusive possession of the violin for the next 20 years, using it in her professional career. Unfortunately, she became an alcoholic, and during one period when she was in a treatment center, she entrusted the violin to her mother for safekeeping. At about that time, her father died. When Ann was released from the center, she requested return of the violin, but her mother refused. Who owns the violin?

Ann does. Ann's father made a valid inter vivos gift of the violin while Ann was still a student. He intended to transfer ownership to her immediately, and made delivery by permitting her to pick up the violin. From that point on, Ann owned it. Rylands v. Rylands, 1993 Conn. Super. LEXIS 823 (Conn. Super. Ct. 1993).

partnership Brothers Sydney and Ashley were partners in a real estate partnership in Pennsylvania. They received identical salaries. Sydney moved to Florida to establish residency so that he could obtain a divorce there. His lawyer told him not to return to Pennsylvania until he had resolved his marital problems. After Sydney had been gone almost a year, Ashley decided to increase his own salary to compensate for the additional work he was doing. Does Ashley have the right to pay himself more if he is doing more work?

Ashley was not entitled to additional compensation in return for his additional work because, in the absence of an agreement to the contrary, a partner is not entitled to compensation beyond his share of the profits for services rendered by him in performing partnership matters. Altman v. Altman, 653, F.2d 755 (3rd Cir.1981).

joint venture Two general contractor firms, Atlantic Builders and North West Mechanical, form a joint venture for the purposes of completing a large construction job. They are collaborating on all phases of the project. An Atlantic Builders' employee operating a crane accidentally drops a steal beam onto a car parked near the construction site. Who is liable for the damage to the car?

Atlantic Builders and North West Mechanical are both liable A joint venture is a partnership for a limited purpose, not a separate legal entity; the participants retain their own separate identity. Joint venture participants share any liability that arises out of the joint venture's activities. The two firms were working together on all phases of the construction project, so each firm will be liable for harm caused by the other if it is related to the project. Atlantic Builders' employee was working on the project when he damaged the car and, therefore, both Atlantic Builders and North West Mechanical are liable. Because the joint venture is not a separate legal entity, it cannot be liable.

PC If you were to look online for a description of a professional corporation, you might find websites stressing that, in a PC, shareholders are still responsible for their own wrongdoing. For example: "In some states, these professionals can form a corporation, but with the distinction that each professional is still liable for his or her own wrongful professional actions." Why is this statement at best unnecessary and at worst misleading?

Because in every organization, the professional is responsible for his or her own wrongful acts.

Error of law

Because of this, the appeals court may require a new trial

Duty of Care

arises only when there is a special relationship, like doctor and patient. Doctors must exercise a standard of skill, knowledge and care possessed by members of the field under similar circumstances

corporation You are about to form a corporation. What do you have to do before filling out the form? Which provisions are boilerplate and, therefore, do not require special effort on your part?

Before filling out the form, you need to choose a name and check to make sure it is available. If you are incorporating someplace where you do not have an office, you will also have to hire a registered agent. You do not have to decide the purpose of the corporation; standard boilerplate works here. Unless you will have outside investors from the beginning, you do not have to think a lot about your capital structure—that is, the number and par value of your shares. Just authorize as many shares as you can for the base filing fee, and choose a nominal par value. It makes sense to add an exculpatory clause to protect your directors from liability, especially if you are going to be one. There is no need for cumulative voting at this stage.

corporation Jose was an employee and shareholder of Birdsong, a company that sold farm equipment. Jose showed Marta how to use the hay baler she had just bought from the company. He also gave her an instructional pamphlet that Birdsong had prepared. Unfortunately, Jose's advice was wrong, and so was the pamphlet's. Marta was injured while using the baler. It turned out that Birdsong's charter had been revoked for failure to make the required annual filings with the Arkansas secretary of state. In all other ways, Birdsong operated as a corporation. Were Birdsong and Jose liable to Marta?

Birdsong was held liable for its carelessness in preparing the pamphlet. Although Birdsong was not technically a corporation, it had operated as one. Therefore, under the theory of corporation by estoppel, Jose was not liable for that corporate wrong doing. Nor had Birdsong done anything to warrant its veil being pierced. Jose was, however, liable for his own negligence. Therefore, he was liable for the bad advice he gave Marta.

common law In the 1980s, the Supreme Court ruled that it was legal for protesters to burn the American flag because this activity counts as free speech under the Constitution. What kind of law is this?

Common Law

corporation Russell and Rachel have designed a new type of cell phone that they believe will revolutionize the market. They would like to start a company to produce, market, and sell the phone, and they know that they will need a considerable amount of up-front capital investment to develop a prototype and later to create inventory to sell. What is the best form of business for Russell and Rachel?

Corporation A corporation can best meet Russell and Rachel's needs because it protects them from personal liability if the company fails or incurs debt that it cannot pay and allows them to raise capital most easily, due to the transferability of corporate interests. A corporation, rather than an LLC, will also provide more legal certainty and will be easier to take public if their business is as successful as they anticipate.

partnership creditors' rights to partnership profits

Creditors can attach partnership profits through a charging order.

damages John sold a Vermont lakeshore lot for $115,000 to Deborah who intended to build a house on the property. John indicated the land was suitable for the project, but Deborah soon learned that a wetland protection law prevented building near the lake. Deborah sued, seeking rescission of the contract. What is the likely outcome?

Deborah will likely win restitution damages Restitution is a common remedy in contracts involving fraud, misrepresentation, mistake, and duress. In these cases, 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. Here there is a mistake, or possibly fraud, and the court will likely rule for Deborah. Specific performance is not appropriate in this case, even though this is a contract involving property, because Deborah obtained the parcel of land she intended to purchase

Trial courts

Determine the facts of a particular dispute and apply to those facts the law given by earlier appellate court decisions.

contract Dewayne hires Eva to be the nanny to her two year old daughter Sofia. They agree she will work full time for the family for two years. Unfortunately, two months into the agreement, Eva dies. Eva's estate sues Dewayne for the remainder of her salary. What result?

Dewayne will be discharged for impossibility This is a personal services contract, so Eva's death means that Dewayne's responsibility under the contract is discharged. Dewayne will not owe Eva's estate money for services she never performed.

Discovery

Discovery is the critical pre-trial opportunity for both parties to learn the strengths and weaknesses of the opponent's case. Interrogations, depositions, production of documents and objects, physical and mental examinations and requests for admission

entrapment An undercover drug informant learned from a mutual friend that Philip Friedman "knew where to get marijuana." The informant asked Friedman three times to get him some marijuana, and Friedman agreed after the third request. Shortly thereafter, Friedman sold the informant a small amount of the drug. The informant later offered to sell Friedman three pounds of marijuana. They negotiated the price and then made the sale. Friedman was tried for trafficking in drugs. He argued entrapment. Was Friedman entrapped?

Friedman argued entrapment, claiming that there was no evidence of his predisposition to traffic in drugs. The Alabama Supreme Court ruled against him. The court noted that Friedman admitted to occasional use of marijuana, that he had been able quickly to locate marijuana to resell to the agent, and that he showed a sophisticated knowledge of the drug when bargaining over the price of three pounds. The court held that there was no evidence of entrapment. Friedman v. State, 654 So.2d 50, 1994 Ala. Crim. App. LEXIS 179 (1994).

concurrent condition Arizona v. Country Life Insurance, Co., both the plaintiff and defendant present strong arguments. How might the parties have created a life insurance contract differently so that both parties can protect their interests?

Draft the agreement so that the payment for the policy is a concurrent condition of the medical exam It is reasonable for life insurance companies to obtain a person's medical information before issuing him a policy, and to make a satisfactory physical exam a condition precedent to coverage. However, in Arizona v. Country Life Insurance, Co the plaintiff raises a good point: it is unjust to accept payment before it is clear that an insurance policy will be issued; once the company has the money, it has little incentive to process the claim quickly and decide whether or not to issue the policy. Further, to say that the policy was effective on the day of payment some time later (once the medical exam results are approved) is of no use to the insured since they cannot, as Ms. Anderson's attorney points out, "die retroactively." If accepting payment and making the policy effective were concurrent conditions it would mean that the insurance company could begin processing the claim in good faith, but the insured would not have to pay for coverage until he or she actually had it. This minimizes the risk for the insured, and still allows the life insurance company to issue policies only to people it deems appropriate.

contract American Bakeries had a fleet of over 3,000 delivery trucks. Because of the increasing cost of gasoline, the company was interested in converting the trucks to propane fuel. It signed a requirements contract with Empire Gas, in which Empire would convert "approximately 3,000" trucks to propane fuel, as American Bakeries requested, and would then sell all the required propane fuel to run the trucks. But American Bakeries changed its mind and never requested a single conversion. Empire sued for lost profits. Who won?

Empire won over $3.2 million dollars, and the appeals court affirmed. Empire Gas Corp. v. American Bakeries Co., 840 F.2d 1333, 1988 U.S. App. LEXIS 2482 (7th Cir. 1988). Since this was a requirements contract for the sale of goods (the conversion units and the propane gas were the goods), it was governed by UCC §2-306. American Bakeries did have the right to reduce the number of conversions from the estimated 3,000. It could potentially reduce them even to zero, but any reduction had to be done in good faith, meaning that changed circumstances made a reduction important. Here, American Bakeries never offered any reason at all, and the jury verdict was reasonable.

U.S. Constitution is among the finest legal accomplishments in the history of the world. What influenced our Founding Fathers?

English common-law principles and The Iroquois's system of federalism

Constitution was developed by amending the Articles of Confederation

False

5th amendment Consider Kelo v. City of New London, in which a city with a revitalization plan squared off against property owners who did not wish to sell their property. The key constitutional provision was the Takings Clause in the __________ Amendment. The Supreme Court decided the city _________ use eminent domain and take the property from the landowners.

Fifth; could

employee Eliza has been working as an administrative assistant at Giant Coalmine Corp. for two years. Recently, several of her male coworkers, including some of the company's executives, have started sexually harassing Eliza by engaging in unwanted sexual advances, abusive language, and threatening behavior. Eliza has discussed this situation with her female coworkers, several of whom have experienced a similar pattern of inappropriate treatment. The women feel intimidated and worry about losing their jobs if they complain. What can Eliza and her attorney do to strengthen their case against Giant Coalmine?

File a class action lawsuit against Giant Coalmine

employee Interactive Data Corp. hired Daniel Foley as an assistant product manager at a starting salary of $18,500. Over the next six years, Interactive steadily promoted Foley until he became Los Angeles branch manager at a salary of $56,116. Interactive's officers repeatedly told Foley that he would have his job as long as his performance was adequate. In addition, Interactive distributed an employee handbook that specified "termination guidelines," including a mandatory seven-step pre-termination procedure. Two years later, Foley learned that his recently hired supervisor, Robert Kuhne, was under investigation by the FBI for embezzlement at his previous job. Foley reported this to Interactive officers. Shortly thereafter, Interactive fired Foley. He sued, claiming that Interactive could fire him only for good cause, after the seven-step procedure. What kind of a claim is he making? Should he succeed?

Foley is arguing that he has an implied contract with Interactive based on the informal discussions concerning his future and the employee handbook. His argument convinced the California Supreme Court. Foley v. Interactive Data Corp., 47 Cal. 3d 654, 765 P.2d 373, 1988 Cal. LEXIS 269 (1988). Foley had no express contract for any period, and thus he started work as an employee-at-will. But the company's repeated assurances, plus the handbook, created an implied contract.

tenant Loren Andreo leased retail space in his shopping plaza to Tropical Isle Pet Shop for five years, at a monthly rent of $2,100. Tropical Isle vacated the premises 18 months early, turned in the key to Andreo, and acknowledged liability for the unpaid rent. Andreo placed a "for rent" sign in the store window and spoke to a commercial real estate broker about the space. But he did not enter into a formal listing agreement with the broker, or take any other steps to rent the space, for about nine months. With approximately nine months remaining on the unused part of Tropical's lease, Andreo hired a commercial broker to rent the space. He also sued Tropical for 18 months' rent. Comment.

For about nine months, Andreo made no serious effort to lease the store. The court rejected his rent claim for that period, permitting him to recover unpaid money only for the period he made a genuine effort to lease the space.

Restitution

court order that a guilty defendant reimburse the victim for the harm suffered Duress - example - ? plaintiff if he did not sign the contract Fraud - example - buyer gives purchase price to seller for land that seller does not own Quasi-contract - example - a poorly drafted contract renders the contract void, but oneparty received a benefit

corporation A promoter may be released from liability from a contract once adopted by the corporation

Generally, even if the corporation adopts the contract, the promoter is still liable until the third party (in this case, the landlord) agrees to a novation, which creates a new contract between the corporation and the third party. However, if it is clear that the parties did not intend the promoter to be liable, then he is released from liability once the corporation adopts the contract.

Constitution: two most significant achievements

Guaranteeing basic liberties to all citizens, Creating a limited government of three branches

damages Harlowe purchases a watercolor painting by a prominent local artist and a RecumbentSloth brand recliner from a yard sale. She pays cash for both items, and the seller promises to deliver them next week. Two days later the seller calls Harlowe and says he no longer wants to sell the items and sends Harlowe back her money. If Harlowe sues, will she be able to get the items she bought?

Harlowe will be able to get the painting but not the chair. The painting is considered a unique item, so Harlowe will be able to demand specific performance of the contract. The item is one of a kind, so Harlowe cannot use money damages to buy another copy; therefore, the court will require specific performance and the seller will have to sell the painting to Harlowe. As for the RecumbentSloth reclinere, the chair is not a one of a kind item. If Harlowe chooses to "cover" and buy a different recliner, the seller will owe her the difference between what she paid for the chair and the purchase price of the recliner at the yard sale. If Harlowe chooses not to buy a different recliner, the seller will owe her the difference between the fair market price of a similar recliner and the contract price of the recliner at the yard sale. The UCC does not entitle Harlowe to the chair and, based on the facts, there will be no consequential damages from the breach

intentional tort

Harm caused by a deliberate action

corporation The board of Harmony, Inc., is concerned that the company may be the target of a hostile takeover. It has decided to adopt antitakeover devices.

Harmony may divest one of its divisions, as long as it does so at fair market value. Harmony may adopt a poison pill, but only if the board's primary concern is enhancing shareholder welfare, not protecting their own jobs. If it becomes clear that Harmony is going to be sold, the directors have an obligation to auction the company off to the highest bidder, even if they think that another company would be a better fit

liable Heather and her employee Emilio believe they see Ethel, a customer of Heather's clothing boutique, shoplift some mittens. Heather tells Emilio, "Lock her in the back room and don't let her out until you figure out what's going on. I have a flight to catch." Heather leaves for the airport. Emilio questions Ethel in a back office for three hours, but is unable to determine what happened with the mittens. When Ethel is finally released, she sues for the tort of false imprisonment. Assuming that Emilio's acts constitute false imprisonment, is Heather liable for the indemnification of Emilio?

Heather is liable for the indemnication of Emilio if Emilio did not realize he was committing a tort. A principal must indemnify an agent for tort claims brought by a third party if the principal authorized the agent's behavior and the agent did not realize he was committing a tort. Here, it is likely that Emilio did not realize his conduct amounted to false imprisonment and since he was following Heather's instructions, Heather will be liable

Doreen calls Peruvian Pastimes (PP) and orders three sweaters customized with the initials of her grandchildren. A week after PP starts knitting the sweaters, Doreen sends a letter cancelling her order. PP sues. What result?

If a seller orally agrees to manufacture customized goods for a buyer and begins work on the goods before the buyer cancels, the oral contract is binding if the goods cannot be sold elsewhere. Here, PP received an oral order from Doreen, and began work prior to Doreen's cancellation. Therefore, if the sweaters cannot be sold elsewhere, the order is binding once and Doreen will lose.

electronic signature not accepted on

court order, notice of foreclosure, will

Bi-Economy Market, Inc. v. Harleysville Ins. Co. of New York, the defendant argued that:

If the parties had contemplated this sort of claim, they would have negotiated the terms at the time of contract.

corporation 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 his duty to Coast?

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 before he engaged in self-dealing. 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.

UCC Under the UCC, in which of the following circumstances would additional terms in an acceptance not become part of the contract?

If the terms materially alter the contract. If the offer insisted on its own terms. If the offeror promptly rejects the new terms

contract Elaine faxes an offer to Raoul. Raoul writes, "I accept. Please note, I will charge 2 percent interest per month for any unpaid money." He signs the document and faxes it back to Elaine. Do the two have a binding contract? Assume that Elaine's offer concerns goods. Is there an agreement?

If this is an agreement for services, there is no contract. However, if this agreement is for goods, the additional term may become part of an enforceable contract. Raoul's extra term will be incorporated in a binding contract unless Elaine's offer made clear she would accept no other terms, Raoul's interest rate is a material alteration of the offer (almost never the case for interest rates), or Elaine promptly rejects the interest rate.

Statutory Interpretation

courts interpret a statute by using the plain meaning rule; then, if necessary, legislative history and intent; finally, if necessary, public policy

Trial practice is dramatically different in Britain. Each side has two sets of lawyers. Solicitors do not go into court, but they interview any witnesses before trial. Barristers are the only lawyers permitted to argue in court, but they cannot interview witnesses. They know the substance of what each witness intends to say but do not rehearse questions and answers, as in the United States. Which approach do you consider more effective? More ethical? What is the purpose of a trial? Of pretrial preparation?

In American Legal system, the work done by British solicitors is called Discovery In Britain, the barristers would be responsible for: direct examination, opening statements, closing statements and cross-examination Barristers are not allowed to interview witnesses before trial. This may make: 1) the trial less efficent and 2) the parties less likely to settle Trials on American TV are more similar to British trials than real American trials because: They often feature surprises coming out at trial In preparing for trial, lawyers have to be careful not to "coach" their witnesses to give helpful, but untrue testimony. Coaching of witnesses is probably: less likely in the British system Similar to barristers American lawyers engaged in Arbitration do not engage in discovery

corporation Simpson and Stamm in avoiding personal liability in GS Petroleum, Inc. v. R and S Fuel, Inc.?

In this case, Simpson and Stamm had made a good faith effort to comply with the incorporation requirements and had every reason to believe R and S Fuel had been incorporated as of the date Simpson signed the contract. Corporation by estoppel would protect Simpson.

employee Interactive Data Corp. hired Foley as an assistant product manager, and over the next six years, Interactive steadily promoted him. Interactive officers repeatedly told Foley that he would have his job as long as his performance was adequate. They also distributed an employee handbook that specified termination guidelines that included a mandatory seven-step pre-termination procedure. Foley learned that his supervisor was under investigation by the FBI, and he told Interactive officers. Shortly thereafter, Interactive fired Foley. He sued, claiming that Interactive could fire him only for good cause after the seven-step procedure. Who wins?

Interactive loses because it had an implied employment contract with Foley that incorporated the seven steps.

contract Ken Ward was an Illinois farmer who worked land owned by his father-in-law, Frank Ruda. To finance his operation, he frequently borrowed money from Watseka First National Bank, paying back the loans with farming profits. But Ward fell deeper and deeper into debt, and Watseka became concerned. When Ward sought additional loans, Watseka insisted that Ruda become a guarantor on all of the outstanding debt, and the father-in-law agreed. The new loans had an acceleration clause, permitting the bank to demand payment of the entire debt if it believed itself "insecure"; that is, at risk of a default. Unfortunately, just as Ward's debts reached more than $120,000, Illinois suffered a severe drought, and Ward's crops failed. Watseka asked Ruda to sell some of the land he owned to pay back part of the indebtedness. Ruda reluctantly agreed but never did so. Meanwhile, Ward decreased his payments to the bank because of the terrible crop. Watseka then "accelerated" the loan, demanding that Ruda pay off the entire debt. Ruda defended by claiming that Watseka's acceleration at such a difficult time was bad faith. Who should win?

Is there a specific definition of bad faith? There is no specific definition of bad faith. The court will analyze the Watseka's conduct in relation to public policy and other cultural norms to determine if the bank was acting in bad faith. What is a drawback of a court determining a party's behavior is bad faith: it makes contractual relationships less predictable. Generally, courts are reluctant to find that a party acted in bad faith because this sort of judicial involvement introduces uncertainty into contractual relationships. When reasonable, courts prefer to let parties enter into a contract and then live with the consequences without judicial interference. Why did Watseka insist on an acceleration clause? to protect itself when making a risky loan Watseka asked Ward to sell some of his land during the drought because it wanted to get back part of the outstanding debt Was it bad faith for Watseka to enforce the acceleration clause during the drought? No, the contract stated that Watseka could utilize the clause if it felt is was insecure, and it felft that Ward was at risk of default What did Watseka do that indicates its good faith? It gave Ward and Ruda opportunities to repay the loan before it enforced the acceleration clause

liable Jenny asked a neighbor, Tom, to water her flowers while she was on vacation. For three days, Tom did this without incident, but on the fourth day, when he touched the outside faucet, he received a violent electric shock that shot him through the air, melted his sneakers and glasses, set his clothes on fire, and seriously burned him. Tom sued, claiming that Jenny had caused his injuries by negligently repairing a second-floor toilet. Water from the steady leak had flooded through the walls, soaking wires and eventually causing the faucet to become electrified. You are Jenny's lawyer

Jenny is entitled to summary judgment because this was not a foreseeable type of injury. Even if she did a bad job of fixing the toilet, she could not reasonably have anticipated that her poor workmanship could cause electrical injuries to anyone.

assumption of risk Jeremy goes to a professional baseball game, and has priority seating very close to the field. A foul ball flies into the stands and strikes Jeremy, shattering his nose. If Jeremy sues the baseball league, what will the result be?

Jeremy will lose, because he assumed the risk by going to the game.

contract John contracts with FashionWare for the purchase of 1,000 zippers for $1 each. The agreement states that John will pay $500 when the contract is signed and the remaining $500 when FashionWare delivers the zippers. In the contract, John specifically states that he is buying the zippers for the manufacture of 1,000 windbreaker jackets for Campers' Crevasse, which he is contractually required to deliver to Campers' Crevasse in 30 days. FashionWare breaches the contract, causing John to miss his delivery date with Camper's Crevasse, which then cancels its contract with John. What remedies are available to John?J

John can recover from FashionWare the $500 he paid for the zippers, any reliance interest, and the expectation interest from his contract with Campers' Crevasse. John will be able to recover the $500 he paid FashionWare for the zippers, expectation damages, and any reliance interest he can prove. The cancellation of the Campers' Crevasse contract was foreseeable to FashionWare because John specifically explained it in the contract. Therefore, John's expectation damages include the consequential damages he suffered as a result of the contract's cancellation. The UCC generally prevents sellers of goods from recovering consequential damages, but John is buying the zippers from FashionWare, so under the UCC he is entitled to the money he would have made from his contract with Campers' Crevasse.

contract Krug International contracted with Iraqi Airways to build equipment for training pilots. Krug then contracted for Power Engineering to build the specialized gearbox to be used in the training equipment for $150,000. Power did not know that Krug planned to resell the gearbox to Iraqi Airways. When Power had almost completed the gearbox, the Gulf War broke out and the United Nations declared an embargo on all shipments to Iraq. Krug notified Power that it no longer wanted the gearbox. Power sued. Please rule.

Krug wins because of true impossibility True impossibility is generally limited to these three circumstances: (1) destruction of the subject matter; (2) death of the promisor in a ersonal services contract; and (3) illegality. Here, it became illegal for Krug to ship to Iraq. See the "Impossibility" section.

damages Bingo is emerging as a rock star. His last five concerts have all sold out. Lucia signs a deal with Bingo to perform two concerts in one evening in Big City for a fee of $50,000 for both shows. Lucia then rents the Auditorium for that evening, guaranteeing to pay $50,000. Bingo promptly breaks the deal before any tickets are sold. Lucia sues, pointing out that the Auditorium seats 3,000 and she anticipated selling all tickets for an average of $40 each, for a total gross of $120,000. How much will Lucia recover, if anything?

Lucia can easily demonstrate that Bingo's breach cost her $50,000—the cost of the hall. However, it is uncertain how many tickets she would have sold. Unless Lucia has a strong track record selling tickets to concerts featuring Bingo, a court is likely to conclude that her anticipated profits were speculative. She will probably receive nothing for that claim.

partnership In their spare time, Maisy and Roland like to build widgets together for Facebook.com. (Widgets are software applications that permit Facebook users to do cool things like post bumper stickers on their pages.) Under Facebook rules, Maisy and Roland are paid a small fee each time someone uses one of their applications. After this sideline becomes quite profitable, Maisy tells Roland that she is going to start building widgets on her own without him—she thinks she is more creative than Roland. Does Maisy have the right to exclude Roland?

Maisy and Roland do have a partnership—they are carrying on as co-owners of a business for profit. It does not matter that the word "partnership" has never passed their lips. Because there is no partnership agreement, they have a partnership at will. With this form of partnership, Maisy can withdraw at any time for any reason

offer Collector Carl displays his beer can collection at the local swap meet. Mary sees the collection and is interested in buying it. Carl says he will sell the collection for $1,500. Mary says she really likes the collection but is only willing to pay $1,000. Which of the following is correct?

Mary's counteroffer terminates Carl's offer of $1,500

level of scrutiny under the Equal Protection Clause and what is required to uphold the law:

Minimal scrutiny - Economic and Social relations - rationally related to a legitimate goal Intermediate scrutiny - Gender - substantially related to important government objectives Strict Scrutiny - Race - necessary to promote a compelling state interest

auction At an estate auction, held without reserve, Chet is high bidder on a rare violin. The seller considers Chet's bid too low and refuses to sell. Both Ahn and Chet sue, but only one will win. Which plaintiff will win, and why?

Most auctions are with reserve, meaning that the high bidder is merely making an offer. However, this one was without reserve. Chet gets the violin.

gifts Eileen Murphy often cared for her elderly neighbor, Thomas Kenney. He paid her $25 per day for her help and once gave her a bank certificate of deposit worth $25,000. She spent the money. Murphy alleged that shortly before his death, Kenney gave her a large block of shares in three corporations. He called his broker, intending to instruct him to transfer the shares to Murphy's name, but the broker was ill and unavailable. So Kenney told Murphy to write her name on the shares and keep them, which she did. Two weeks later, Kenney died. When Murphy presented the shares to Kenney's broker to transfer ownership to her, the broker refused because Kenney had never endorsed the shares as the law requires—that is, signed them over to Murphy. Was Murphy entitled to the $25,000? To the shares? Argument for Murphy: The purpose of the law is to do what a donor intended, and it is obvious that Kenney intended Murphy to have the $25,000 and the shares. Why else would he have given them to her? A greedy estate should not be allowed to interfere with the deceased's intentions. Argument for the Estate: Murphy is not entitled to the $25,000 because we have no way of knowing what Kenney's intentions were when he gave her the money. She is not entitled to the shares of stock because Kenney's failure to endorse them over to her meant he never delivered them, and that is an essential element of a gift.

Murphy gets the $25,000. There was delivery, acceptance, and adequate evidence that Kenney intended the items as gifts. Murphy is not entitled to the shares, though, because without the endorsement there is no delivery, an essential element. Kenney lived for two weeks after instructing Murphy to write her name on the shares and during that time should have endorsed them to her, or caused a broker to do so. IN RE Estate of Kenney, 1993 Ohio App. LEXIS 2481, Ohio Ct. of App., 1993).

contract Abby has long coveted Nicola's designer handbag because she saw one of them in a movie. Finally, Nicola offers to sell her friend the bag for $350 in cash. "I don't have the money right now," Abby replies, "but I'll have it a week from Friday. Is it a deal?" Nicola agrees to sell the bag. Use two terms to describe the contract.

Nicola promised to sell the bag for $350 cash, and Abby agreed to pay. Because both parties made a promise, a bilateral agreement resulted. The deal is not yet completed, meaning that they have an executory contract.

federalism Pursuant to its power under the U.S. Constitution to enact laws affecting the health and safety of its residents, New Jersey lowers its highway speed limits by 10 miles per hour in hopes of reducing traffic deaths. This is an example of what aspect of our government?

federalism

tenant Rothman's clothing store had a 20 year lease in a shopping center in Phoenix, Arizona owned by Foundation Development. In addition to monthly rent, Rothman's was obligated to pay common-area charges four times a year. The lease stated that if Rothman's failed to pay on time, Foundation could send a notice of default. Then if the store failed to pay all money due within 10 days, Foundation could evict. On February 23, Foundation sent to Rothman's the common-area charges for that quarter. Rothman's believed the bill was in error and sent an inquiry on March 18. On April 10, Foundation insisted on payment of the full amount within 10 days, but it sent the letter to Rothman's Phoenix office, which was not responsible for paying the bill. The Phoenix office forwarded the bill to the relevant executive in New York, who received it on April 20. Rothman's issued a check for the full amount on April 24 and mailed it the following day. On April 28, Foundation sued to evict. On April 29, the company received Rothman's check. Will Foundation be able to evict Rothman's?

No, based upon the "good faith" requirement The best answer is that Foundation cannot evict Rothman's based upon the good faith requirement that is inherent in all contracts. Rothman's acted in good faith, and Foundation would be acting in bad faith if it evicted Rothman's under these circumstances.

gift Holding out an envelope, Alan says, "Ben, I'm giving you these opera tickets." Without taking the envelope, Ben replies, "Why would I want opera tickets? Loser." Alan leaves, crestfallen. Later that day, a girl whom Ben has liked for some time says, "I sure wish I were going to the opera tonight." Ben scrambles, calls Alan, and says, "Alan, old buddy, I accept your gift of the opera tickets. I'm on my way over to pick them up." Does Ben have a legal right to the tickets?

No, because Ben did not accept the gift when offered

adverse possession Brother invites Sister to use his second home after Sister's apartment burns down and tells her to stay as long as she would like. If Sister lives in the home continuously for ten years, using it as a true owner would and no one else uses the property in this time, can she claim adverse possession?

No, because Brother invited Sister to stay at the house and never revoked the invitation. Sister cannot claim adverse possession of the property because Brother invited her, and therefore her claim is not adverse. To establish adverse possession, the user must demonstrate (1) exclusive possession of the property, (2) open and notorious possession, (3) continuous possession for the statutory period, and (4) a claim adverse to the true owner. By being the only person to live at the home and using it as a true owner would, Sister satisfies the exclusive and open and notorious possession requirements. In addition, her use was continuous for 10 years. However, Sister occupied the house with Brother's permission, who invited her to stay "as long as she'd like". There is no indication that Brother ever withdrew his permission, and therefore Sister's claim is not adverse.

damages Yvonne promises to sell 500 lbs of rice to Zed at market price. To secure Zed's rice, Yvonne enters into a contract with McKinley Ventures to ship the cargo. The contract stipulates that McKinley will deliver the rice to Yvonne within 48 hours. However, the rice does not arrive for 5 days, during which time the market price of rice decreases 11 percent. Because of the delay, Yvonne lost considerable profit. Can Yvonne recover her damages because of McKinley's breach?

No, because it was not foreseeable to McKinley that the shipping delay would cost Yvonne so much money. Yvonne is seeking consequential damages. A court will award consequential damages only if the breaching party should have foreseen them when the two sides formed the contract. Yvonne would be able to recover only if she can show that McKinley knew of the loss a delay would cause and if she could provide the court with enough information to calculate damages. Here, it was not reasonable for McKinley to anticipate that the shipping delay would cause Yvonne a loss of this nature. McKinley is a shipping company and cannot reasonably be expected to know the intended use of its cargo, let alone the market fluctuations in rice.

contract Ted and Aisha enter into a contract that states that Aisha will buy Ted's vintage sports car after Ted replaces the engine and fixes the transmission. The contract contains a "time is of the essence" clause, requiring Ted to have the car ready for the sale by February 13. On February 12, Ted calls Aisha and says he needs two more days to complete the repairs. Aisha declines and buys another car. Did Aisha breach the contract?

No, because the contract contained a time is of the essence clause This contract contained a time is of the essence clause, so Aisha was entitled not to perform under the agreement when Ted stated that he would not be able to perform on the agreed upon schedule.

scope of employment A soldier was drinking at a training seminar. Although he was told to leave his car at the seminar, he disobeyed orders and drove to a military club. On the way to the club, he was involved in an accident. Is the military liable for the damage he caused?

No, he was not acting within the scope of employment.

promissory estoppel Gail Norton began dating Russell Hoyt under the mistaken impression that he was single. She later learned that he was married, but he repeatedly assured her he was getting a divorce. Six years later, Hoyt convinced Norton to quit her job so that they could travel together. He promised that he would "take care of her for life." The couple lived lavishly all over the world. Hoyt rented Norton an apartment, bought her cars, and repeated his promises to divorce his wife and marry her. He did neither. After 23 years, Hoyt ended the relationship with Norton. On what theory could Norton sue Hoyt? Is she likely to win?

Norton could try to make a claim for promissory estoppel, since her only argument is that she justifiably relied on Hoyt's reasonable promise. However, her claim is weak. First, there was no definite promise. Taking care of someone for life could have many meanings—social, emotional, or financial. Second, Hoyt had proved himself a liar over the past 23 years. The man never did what he said he was going to do, so it would be unreasonable to place trust on any representation he made.

jurisdiction Miles is floating happily on a rubber raft in his swimming pool in New Jersey when the raft busts and cuts his eye. His doctor says he will need corrective surgery and may never fully regain his eyesight in the damaged eye. Miles learns that the raft was manufactured in Louisiana by Intack Inc., a company headquartered in New Mexico. Miles bought the raft from a Kidz Toyz store, a chain of stores in New Jersey that sells many Intack products. Miles sues Intack in a New Jersey federal court for $100,000. Intack files a motion to have the case moved to federal court in New Mexico, saying that New Jersey lacks jurisdiction over the case. Is Intack correct?

Probably not. Intack does a significant amount of business in New Jersey and can reasonably expect to be sued there

common law - What are the two most important goals of

flexibility and predictability

contract Omkara, a furniture manufacturer, contracts with Foam Gnome for $50,000 worth of foam, which Omkara will use for making ten sofas she has agreed to make for Duke's Furniture. A day before Gnome is going to ship the foam to Omkara, a flood destroys its entire inventory. Gnome tells Omkara it cannot send her the foam in time, but tells her that FirmFoam can supply her with an identical shipment for $65,000. This increase in price will wipe out twenty percent of Omkara's profit from her contract with Duke's. Omkara wants to get out of both contracts. Can she?

Omkara's agreement with Gnome is discharged due to true impossibility. Omkara's agreement with Duke's is not discharged and she must perform. When Gnome's foam is destroyed by the flood, the contract is discharged due to true impossibility. The destruction of the foam makes it literally impossible for Gnome to perform, so neither party has any obligation to the other. Omkara's agreement with Duke is not discharged because it is still possible for Omkara to perform. She must buy the foam elsewhere even if it is more expensive.

corporation Otto and his nephew Nick formed a corporation to operate a furniture store in Washington, D.C. Otto owned 51 percent and Nick 49 percent of the company's stock. Otto personally signed a lease with Landlord on a storefront. He then entered into a lease between himself and the furniture store at a price that was 20 percent higher than the rent he was paying Landlord. Otto also purchased a warehouse which he leased to the corporation at a fair market rent. Nick sued, alleging that the two leases were invalid. Were they?

Otto violated the duty of loyalty twice. The lease between him and the corporation for the storefront was self-dealing—it directly benefited him. When he purchased the warehouse, he took a corporate opportunity that he should have offered first to the company. He is personally liable for any damages to the corporation. The company also has the right to cancel both leases and to purchase the warehouse from him.

partnership Partner's liability to the partnership

Partners are liable to the partnership for any damages resulting from their gross negligence, reckless conduct, intentional misconduct, or a knowing violation of the law. Partners are not liable to the partnership for ordinary negligence.

contract Marco, acting in good faith, sells $1,000 of fishing equipment to Celine, a 25 year old woman who is mentally handicapped, and $1,000 of fishing equipment to Paul, a 16 year old. Paul and Celine both throw out their fishing equipment after one use and then disaffirm their respective deals. Assume their jurisdiction follows the majority approach. What result?

Paul can rescind his deal but Celine cannot.

Texaco v. Pennzoil, Texaco's position was that

Pennzoil's agreement with the Getty Museum violated Securities and Exchange Commission Rules Texaco based its argument on a SEC rule that prevents the parties in a takeover negotiation from arranging a "side deal" while an offer is pending. Texaco argued that Pennzoil's agreement with the Getty Museum violated the SEC Rule and rendered invalidated Pennzoil's entire contract with Getty. Because there was no contract, Texaco argued, Texaco could not legally have interfered.

gambling Richard and Michelle Kommit live in California, where gambling on credit is illegal. They travel to Atlantic City, where they used their credit card to withdraw cash from an ATM conveniently located in the "pit"— the gambling area of a casino. They ran up debts of $5,500 and did not pay. The California National Bank sued for the money in a California court. Who wins?

Richard and Michelle Kommit

corporation The board of directors of Athletic Stride, a successful sneaker company, votes to have the company purchase a professional basketball team for $500 million dollars. The directors are all knowledgeable about the professional sports industry, and none of them have a conflict of interest in the deal. When the shareholders oppose the purchase as being unrelated to the company's business, the board argues that, as the team's owner, Athletic Stride will have invaluable marketing and sponsorship opportunities. Would a court likely uphold the board's decision to purchase the basketball team?

Probably yes, because courts generally will support a board decision if there is even a remotely rational business purpose and no other breaches of the managerial fiduciary duties. The business judgment rule provides that managers are not liable for decisions they make in good faith - that is, within the parameters of the duty of loyalty and the duty of care. The duty of care requires that directors make decisions with the care that an ordinarily prudent person would take in a similar situation. An ordinarily prudent person would have a rational business purpose, avoid illegal behavior, and make informed decisions. In this case, there was no breach of the duty of loyalty, the directors were informed, and owning a sports team is not illegal. The directors have also presented a rational business purpose related to the marketing opportunities that team ownership will afford the company. Since courts generally are generous in finding a rational business purpose, this deal would likely be upheld if challenged

noncompete Asher and Stephen formed a corporation named "Ampersand" to produce plays. Both men were employed by the corporation. Stephen decided to write Philly's Beat, focusing on the history of rock and roll in Philadelphia. As the play went into production, however, the two men quarreled over Asher's repeated absences from work and the company's serious financial difficulties. Stephen resigned from Ampersand and formed another corporation to produce the play. Did the opportunity to produce Philly's Beat belong to Ampersand? Argument for Stephen: Ampersand was formed for the purpose of producing plays, not writing them. When Stephen wrote Philly's Beat, he was not competing against Ampersand. Furthermore, Ampersand could not afford to produce the play even if it had had the opportunity. Argument for Asher: Ampersand was in the business of producing plays, and it wanted Philly's Beat. Ampersand was perfectly able to afford the cost of production—until Stephen resigned.

Producing Philly's Beat was clearly within the scope of Ampersand's business. Although it was not clear if Ampersand could have raised enough money to produce the play, any doubt should be resolved in favor of Ampersand. Stahl was ordered to disgorge any profits from the play. Ampersand Productions, Inc. v. Stahl (Feb. 20, 1986), No. 85-435 (Dt. Ct., E.D. Pa.).

expectation damages

Puts the injured party in the position she would have been in had both sides fully performed 3 components: direct damages, which flow directly from the contract consequential damages, which result from the particular injured party (only if breaching party should have foreseen them) incidental damages, which are the minor costs an injured party incurs responding to a breach

Kurt asked his car mechanic, Quinn, for help in buying a used car. Quinn recommends a Ford Focus that she has been taking care of its whole life. Quinn was working for the seller. Which of the following statements is true?

Quinn must pay Kurt the amount of money she received from the Ford's prior owner.

consideration Rodolfo hires Tessa to paint the exterior of his house. Two days into the project, smoke from a nearby forest fire blows onto the property and stains her work. Tessa will have to start again. Tessa asks Rodolfo to pay for the additional labor and materials and Rudolfo agrees. Tessa completes the job, but Rodolfo refuses to pay the additional fee. Tessa sues. What outcome?

Rodolfo owes Tessa the additional money because Tessa promised to re-paint the stained areas of the house and needed more paint to do the job.

damages Alex contracts with Rashard to purchase thirty umbrellas. Rashard ships the umbrellas to Alex, and Alex mails Rashard payment. When the umbrellas arrive, Alex is shocked to see that the fabric canopy at the top of each umbrella is made out of paper towel and is not waterproof. Alex sues, and Rashard argues that he never indicated that the umbrellas were made out of waterproof material. What result?

Rashard will lose. The parties did not agree on the exact specifications of the umbrella, but the court will imply a condition that the umbrellas be waterproof. Alex will win. The parties did not agree on the exact specifications of the umbrella, but the court will imply a condition that the umbrellas be waterproof so that they are fit for the purpose for which they were sold.

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?

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.

restitution Rick was in the process of buying 320 acres of land when Rick signed a contract to sell that same land to Simon. Simon paid Rick $144,000, the full price of the land. Before Simon could complete the purchase of the land Rick went bankrupt. Which of the following remedies should Simon seek from Rick?

Restitution. Simon should seek restitution. Expectation damages will be unavailable since Rick is bankrupt. Specific performance is impossible because Rick does not own the land. Reformation is irrelevant. Simon gets restitution because he has conferred a benefit on Rick and it would be unjust for Rick to keep it

contract Rudolph hired Moe to walk his dog every weekday. Rudolph hands Moe a check for a month of excellent work. "Thanks!" says Moe. "This will help me pay for the silly citation I just got from the city, since I never licensed my dog walking business. They make us get licenses just to raise money for the city! What a scam." When Rudolph learns that Moe's business is unlicensed, he refuses to pay. What result?

Rudolph owes Moe money because the licensing issue is irrelevant to their agreement

contract Evans built a house for Sandra, 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 Sandra promised for the job, but Sandra refused to pay. Who wins?

Sandra wins because Evans did not substantially perform The best answer is that Sandra wins because Evans did not substantially perform. The cracked beams, freezing pipes, and poor drainage are serious issues.

employee Sarah went to an auction at Christie's to bid on a tapestry for her employer, Fine Arts Gallery. The good news is that she purchased a Dufy tapestry for $77,000. The bad news is that it was not the one her employer had told her to buy. In the excitement of the auction, she forgot her instructions. Fine Art refused to pay, and Christie's filed suit. Is Fine Arts liable for the unauthorized act of its agent? Argument for Christie's: Christie's cannot possibly ascertain in each case the exact nature of a bidder's authority. Whether or not Sarah had actual authority, she certainly had apparent authority, and Fine Arts is liable. Argument for Fine Arts: Sarah was not authorized to purchase the Dufy tapestry, and therefore Christie's must recover from her, not Fine Arts.

Sarah had apparent authority and Fine Arts is liable.

ELECTION OF OFFICERS AND DIRECTORS

Shareholders elect the directors of a corporation. The directors elect the officers.

Sophie is an accomplished plastic surgeon who has lost her medical license due to her addiction to illegal drugs. Vanessa hires Sophie for a "Filler party" in which Sophie, using a simple medical procedure designed to reduce wrinkles, injects a filler into the foreheads of Vanessa and ten of her friends. Vanessa fails to pay Sophie and Sophie sues. What result?

Sophie will lose because she does not have a medical license

legal system Imagine that Congress wants to make the American legal system more like the British system. Suppose that Congress proposed eliminating our traditional discovery process and splitting the legal process between lawyers called solicitors, who handle the trial preparation, and barristers, who only represent the client in court.

Supports argue: 1) dividing the responsibilities allows the different types of lawyers to specialize 2) this is similar to the civil law system that several U.S. states have recently adopted Opponents: 1) without discovery the parties are less likely to settle 2) it is more likely that there will be surprises at trial

Credit card interest

Supreme court ruled, they can use the interest rate of their own state, or the consumer's state, whichever is higher

LLC characteristics

flow-through tax entity different classes of stock permitted members may be corporations, partnership or nonresident aliens nontransferable interest

damages 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?

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. 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.

UCC is easier to form a valid contract than under common law

The Code does not require all of the terms of the agreement to be in writing. The UCC's purpose is to make sales easier while still preventing fraud. Courts balance the formality of the writing requirement with their own commonsense, and view the situation as a whole to determine if there is enough evidence that the parties contracted.

Hacking

The Federal Computer Fraud and Abuse Act of 1986 prohibits hacking.

tenant Howard Geib, Walker McKinney, and John D. McKinney owned two vacation properties as joint tenants with right of survivorship. The parties were not getting along well, and Geib petitioned the court to partition the properties. The trial court ruled that the fairest way to do this was to sell both properties and divide the proceeds. The two McKinneys appealed, claiming that a partition by sale was improper because it would destroy their right of survivorship. Comment.

The McKinneys lost. Any co-tenant (including a joint tenant) has an absolute right to partition. Difficulties in partitioning are irrelevant.

corporations name must

The Model Act imposes two requirements in selecting a name. First, all corporations must use one of the following words in their name: Corporation, Incorporated, Company, or Limited. Delaware also accepts some additional terms, such as Association or Institute. Both the Model Act and Delaware permit abbreviations (such as Inc. or Corp.) or equivalent terms in another language (such as S.A., which is the French abbreviation for corporation). Second, under both the Model Act and Delaware law, a new corporate name must be different from that of any corporation that already exists in that state.

recession John and Susan Verba sold a Vermont lakeshore lot to Shane and Deborah Rancourt for $115,000. The Rancourts intended to build a house on the property, but after preparing the land for construction, they learned that a wetland protection law prevented building near the lake. They sued, seeking rescission of the contract. The trial court concluded that the parties had reached their agreement under a "mutual, but innocent, misunderstanding." The trial judge gave the Verbas a choice: they could rescind the contract and refund the purchase price, or they could give the Rancourts $55,000, the difference between the sales price and the actual market value of the land. The Rancourts appealed. Were the Rancourts entitled to rescission of the contract? Argument for the Rancourts: When the parties have made a mutual mistake about an important factual issue, either party is entitled to rescind the contract. The land is of no use to us and we want our money back. Argument for the Verbas: Both sides were acting in good faith and both sides made an honest mistake. We are willing to acknowledge that the land is worth somewhat less than we all thought, and we are willing to refund $55,000. The buyers shouldn't complain—they are getting the property at about half the original price, and the error was as much their fault as ours.

The Rancourts win, and are entitled to rescission. Both parties clearly intended that the Rancourts would build a house near the lake. They cannot do so. That is a basic error of fact, and the Rancourts get their money back. The judge has no power to reshape the contract to express expectations that neither party ever held.

offer Stanley's Shoelaces sends its brochure to a dozen local shoe stores. The brochure lists all of its products and lists prices. Based on this information, the Shoe Dump orders 500 pairs of laces. _____________________ has/have made an offer(s)

The Shoe Dump

interference with a prospective advantage Pacific Express began operating as an airline in 1982. It had routes connecting western cities with Los Angeles and San Francisco, and by the summer of 1983, it was beginning to show a profit. In 1983, United Airlines tried to enter into a cooperative arrangement with Pacific in which United would provide Pacific with passengers for some routes so that United could concentrate on its longer routes. Negotiations failed. Later that year, United expanded its routes to include cities that only Pacific had served. United also increased its service to cities in which the two airlines were already competing. By early 1984, Pacific Express was unable to compete and sought protection under bankruptcy laws. It also sued United, claiming interference with a prospective advantage. United moved for summary judgment.

The U.S. District Court gave summary judgment for United, and the Court of Appeals affirmed. Pacific Express, Inc. v. United Airlines, Inc., 959 F.2d 814, 1992 U.S. App. LEXIS 5139 (9th Cir. 1992). The primary issue was whether United was genuinely trying to compete, which it had the right to do, or was simply out to destroy Pacific, which would be interference with a prospective advantage (as well as an antitrust violation). United officials testified that the expanded routes would generate new connecting traffic for other San Francisco flights. That is a competitive purpose, which is legitimate, and enough to defeat Pacific's claim.

pierce the veil 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 identification number. John and Thelma paid $17,500 to purchase 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, it 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).

contract Isaac puts together a plan to rob First National Bank, and hires Cynthia to assist him when he does it. He and Cynthia agree that Cynthia will be paid $3,000 for her help in the heist. The day before they are set to rob the bank, Cynthia backs out of the deal, saying she does not want to commit a crime. Isaac sues to enforce the agreement. What result?

The contract is void because the purpose of the deal is illegal.

principal Liam tells Emily that he wants to buy her friend Tamara's car, but does not think Tamara will sell it to him for personal reasons. Emily tells Tamara that she knows someone who would like to buy her car, and the two draw up a contract stating that Tamara will sell the car to "an undisclosed buyer" for $10,000. After Tamara has signed the contract and given Emily the keys, Emily has Liam sign the contract, agreeing to pay the $10,000 purchase price. Liam takes the car but disappears without paying. What, if anything, will Tamara be able to recover from Emily?

The contract price of the car because Liam is an unidentified principal. A principal is unidisclosed if the third party did not know of the principal's existence. A principle is unindentified if the third party knew of the existence of the principle, but did not know who it was. Here, Tamara knew that there was a third party, but she did not know who it was. Therefore, Liam is an unidentified principal. Unidentified principals and their agent are jointly and severally liable for the full amount the seller is owed, but no more. Therefore, Liam and Emily are jointly and severally liable for the contract price, but not for punitive damages.

employee Abkco Music, Inc. v. Harrisongs Music, Ltd., the court held that

The court held that even though Klein was no longer Harrison's employee, he had violated his fiduciary duty because he had used confidential information that he had gained during the course of his employment. Klein violated his fiduciary duty to Harrison

tenant Lisa Preece rented an apartment from Turman Realty, paying a $300 security deposit. Georgia law states: "Any landlord who fails to return any part of a security deposit which is required to be returned to a tenant pursuant to this article shall be liable to the tenant in the amount of three times the sum improperly withheld plus reasonable attorney's fees." When Preece moved out, Turman did not return her security deposit, and she sued for triple damages plus attorney's fees, totaling $1,800. Turman offered evidence that its failure to return the deposit was inadvertent and that it had procedures reasonably designed to avoid such errors. Is Preece entitled to triple damages? Attorney's fees?

The court held the defendant liable for $900 (treble damages) and an additional $900 in attorney's fees. The rationale for treble damages is that, historically, landlords often willfully refuse to refund security deposits, knowing that most tenants would not bother to sue. That was obviously unethical. By trebling the damages, state legislatures have given landlords a financial incentive to be fair. By permitting attorney's fees, such laws ensure that injured tenants have access to court and a remedy. Preece v. Turman Realty Co., Inc., 228 Ga. App. 609, 492 S.E.2d 342, 1997 Ga. App. LEXIS 1216 (Ga. App. 1997).

moral consideration Mary pledges $30,000 to a school for the blind. In reliance on Mary's promise, the school hires an architect to build a cafeteria. Two month later Mary takes back her promise. The school sues and the judge will likely rule that __________________________________

The court is likely to uphold Mary's promise with "moral consideration" The school provided no consideration, but the court could uphold Mary's promise under promissory estoppel because the school relied on it. Courts also have upheld promises to charities when permitting a breach would be unjust, under the doctrine of "moral consideration."

libel Lou DiBella was an executive responsible for programming boxing shows on HBO cable network. DiBella signed Bernard Hopkins, the then-middleweight world boxing champion, to participate in a fight televised by HBO. After DiBella's departure from the network, he and Hopkins entered into an agreement in which Hopkins paid $50,000 for DiBella's promotional services. Months later, Hopkins publicly accused DiBella of taking bribes and "selling" spots in HBO fights, calling him greedy, filthy, and unethical. DiBella sued Hopkins for libel. What did DiBella have to prove to be successful in his claim?

The district court found for DiBella. It found he was a public figure by virtue of his success in boxing, but that the statements had been made with malice. The court also found that Hopkins had made a defamatory statement that was false and communicated to others. The Second Circuit affirmed and the Supreme Court denied cert.

corporation Wallace, Inc. adopted a poison pill. Five years later, Moore Corp. offered to buy all Wallace's stock for $56 a share, which was 27 percent over the existing market price. However, the offer was contingent upon the Wallace board eliminating the poison pill. Wallace consulted with its investment banker, which advised the company that the offer was inadequate but did not indicate what the shares were really worth. Moore then raised its offer price to $60 per share, and again the bankers opined that the offer was inadequate. Both the board and its banker believed that Wallace's recently adopted corporate strategy would lead to an increased stock price. Indeed, the company's recent financial results had been better than expected. Despite these improved results, more than 73 percent of Wallace shareholders offered their shares to Moore. When Wallace refused to remove the poison pill, Moore filed suit. Was the board's refusal to remove the poison pill a violation of the business judgment rule?

The court ruled for Wallace, on the grounds that the board had a good faith belief that the offer was inadequate. The board was in a better position to assess the offer than shareholders. In the end, though, the shareholders were right. Eight years later, Wallace agreed to merge with Moore at a price that was $5 per share less than originally offered. In the interim, the stock market had gone up by 20 percent.

defamation Benzaquin had a radio talk show. On the program, he complained about an incident in which state trooper Fleming had stopped his car, apparently for lack of a proper license plate and safety sticker. Benzaquin explained that the license plate had been stolen and the sticker fallen onto the dashboard, but Fleming refused to let him drive away. Benzaquin and two young grandsons had to find other transportation. On the show, Benzaquin angrily recounted the incident, and then described Fleming and troopers generally: "we're not paying them to be dictators and Nazis"; "this man is an absolute barbarian, a lunkhead, a meathead." Fleming sued Benzaquin for defamation. Comment.

The court ruled in favor of Benzaquin because a reasonable person would understand the words to be opinion and ridicule. They are not statements of fact because most of them could not be proven true or false. A statement like "dictators and Nazis" is not taken literally by anyone

corporation Rodriguez v. Loudeye Corporation

The court stated, "Shareholder claims involving a corporation's internal affairs are governed by the law of the state in which the corporation was incorporated. Thus, because Loudeye is a Delaware corporation, Delaware law applies here." could only be found liable if they acted with an actual intent to do harm.

While George travels for two months, Mary agrees to housesit and care for George's three horses at her stables. The parties agree that Mary will pick up the horses on the first day of George's trip and George will pay Mary when he returns. George returns home from his travels and finds that Mary never picked up the horses. George sues. What result?

The court will apply common law and Mary will lose.

damages Anna worries that her brother Nick does not have good health insurance, so she writes a contract stating that if he mows her lawn on the last Saturday of every month she will buy him an expensive insurance policy that he could not otherwise afford "for at least the next six months, and longer if necessary." The next week, Nick gets a great job at an investment bank, which provides him health insurance coverage. Anna congratulates Nick and revokes the deal. The breach of contract infuriates Nick, who sues his sister. What result?

The court will award Nick nominal damages. Technically Anna breached the contract when she stopped paying for Nick's health insurance without completing her six-month obligation. However, Nick will be unable to prove that he suffered any injury, since he never went a day without health insurance. The court will award him nominal damages, a tiny amount to represent his "moral victory."

corporation Dominique is the CEO of a pharmaceutical company and must decide whether to continue the company's research into a new skin treatment. Originally, the company had hoped the treatment would help burn victims recover quickly, but two years and $5 million in testing has revealed that it is only useful in relieving very dry skin if applied hourly. In addition, projections show that it will be so expensive to produce the treatment that the company will have to charge $100 a day for it in order to make a profit. However, the researcher in charge of the project is Dominique's best friend, so Dominique approves another $5 million to be spent on continued research of the treatment. If the company's shareholders challenge Dominique's decision, how will a court rule?

The court will rescind Dominique's decision and hold her liable for any losses suffered by the company as a result of the decision, unless Dominique can show the transaction was entirely fair to the shareholders. Corporate officers have a fiduciary duty to both the corporation and its shareholders, which includes a duty of loyalty and a duty of care. Dominique violated the duty of loyalty because she had a conflict of interest in this decision based on her close relationship with the research director and violated her duty of care because she could not have reasonably believed that spending $5 million more on this research was in the best interests of the corporation. If a manager's act breaches her duty of loyalty or care, then she has the burden of proving that her decision was entirely fair to the shareholders. If it was not entirely fair, she may be held personally liable and the decision can be rescinded.

contract For the past seven years, Sommerset Storage, Inc. has hired Mountbattan Tax Associates to prepare its annual tax return. This year the parties agree to their usual $1,000 fee, but Mountbatten finds a loophole in the tax code and gets Sommerset a refund four times the usual amount. Mountbattan then requests that Sommerset pay $4,000 to reflect the increased tax refund. There is nothing in their contract about increased fees, but Mountbatten argues it would be unjust for Sommerset not to pay extra. Sommerset refuses and Mountbatten sues. What result?

The court will uphold the original contract and Mountbatten will lose.

Summons

The court's written notice that a lawsuit has been filed against the defendant

corporation You are the CEO of an app company. You will only allow your engineers to create apps for iPads, not for Android or Microsoft tablets because you think iPads are cooler. Some of your shareholders disagree with this policy. Is your decision protected by the business judgment rule?

The courts are very generous in defining a rational business purpose. They would probably uphold your decision as long as it was not in some way personally benefitting you, for example, as long as you are not a major shareholder of Apple.

factual cause

The defendant's conduct actually caused the injury

ADR - Alternative Dispute Resolution

formal or informal process to settle disputes without a trial

damages Over spring break you go to Florida and accidentally spend too much on your checking account's debit card. When you get back to school, you are shocked to see you owe your bank $220, which you pay back immediately. However, you have not even had time to recover from your sunburn before the bank informs you that, pursuant to the liquidated damages clause in the contract you signed when you opened the account, you are being charged a $55 "overdraft fee" for every transaction you made on your debit card after your balance was $0. Unfortunately, you made nine such transactions, which means you owe the bank an additional $495 in fees (9 x $55 = $495). What is your best argument against the overdraft fees?

The fee is too high and the bank is simply imposing a penalty A court will enforce liquidated damages if (1) at the time of creating the contract, it was very difficult to estimate actual damages, and (2) the liquidated amount is reasonable. If this is not established, the liquidated damage will be considered an unenforceable penalty. You should argue that the $55 fee is disproportionate to the harm suffered by the bank, and thus constitutes an unenforceable penalty. Financial institutions routinely charge overdraft fees, so there is no guarantee that you will prevail against your bank. However, the argument that the liquidated damage is simply a penalty is your best chance.

partnership While Warren was representing Betty in divorce proceedings, she inherited $60,000. Warren suggested Betty invest her money in a corporation of which he was president. Although he promised her a substantial return, the company went bankrupt shortly thereafter. Warren was a partner in a law firm. The firm was not in the business of giving investment advice, it did not know that Warren was giving such advice, nor did it receive any fee from Betty for the "investment service." Is the law firm liable for Betty's loss?

The firm was not in the investment advisory business, so Warren was not acting within the ordinary course of business. He did not have actual authority, but he might have had apparent authority, in which case the firm would be liable.

tenant Kenmart Realty sued to evict Mr. and Ms. Armondo from a residential apartment for nonpayment of rent and sought the unpaid monies, totaling several thousand dollars. In defense, the Armondos claimed that their apartment had toxic mold. They testified that there were large patches of dark mold in the walls and floor of the living room, bedroom, and kitchen, that there was a foul odor from the mold and that they had begun to suffer frequent headaches. They testified that the landlord had refused numerous requests to remove the mold. Please rule on the landlord's suit, assuming that they reside in a jurisdiction with the implied warranty of habitability.

The landlord will lose because the conditions violate the warranty of habitability. The landlord will lose because the condition of the apartment violated the warranty of habitability, which requires the landlord to meet all standards set by the local building code or the premises be fit for human habitation. The building code would specify that the space must be free of harmful mold, and in any case, an apartment infested with toxic mold is not considered fit for human habitation. Furthermore, Kenmart was on notice of the problem. Unlike a constructive eviction, a tenant does not need to vacate the property to demonstrate a violation of the warranty of habitability. The remedy for a breach of the warranty of habitability is a rent abatement, or reduction. Therefore, Kenmart Realty will not be able to recover the unpaid rent and will lose in this case

innkeepers

The liability of an innkeeper is regulated by state statute. A guest intending to store valuables with an innkeeper must follow the statute to the letter.

risk utility test five main factors examined by a court in a risk-utility test

The likelihood that such a danger will occur The gravity or seriousness of danger The mechanical feasibility of a safer alternative design The value of the product The adverse consequences of an alternative design

damages a plaintiff is required to prove before a court will enforce a contract for liquidated damages

The liquidated amount was reasonable and At the time the contract was formed, it was very difficult to estimate actual damages

contract Lewis signed a contract for the rights to all timber over thousand board feet ($70/mbf). As he began work, Nine-Mile became convinced that Lewis lacked sufficient equipment to do the job well and forbade him from entering the land. Lewis sued. Nine-Mile moved for summary judgment. The mine offered proof that the market value of the timber was exactly $70/mbf for which Lewis had no contradicting evidence. The court granted summary judgment. Why?

The market value evidence shows that Lewis suffered no harm and therefore had no claim. If the seller breaches, the buyer is entitled to the difference between the contract price and the market value of the goods the buyer agreed to purchase. The buyer here, Lewis, can take his money elsewhere and purchase the lumber. This assumes that that the lumber is not unique, and therefore the buyer is not entitled to specific performance. The buyer is not entitled to punitive damages because the seller did not commit fraud.

consideration Hamer v. Sidway, if the court had agreed with the uncle that his promise was not supported by consideration, what would be legal consequence?

The nephew and the uncle would not have an enforceable contract

contract An aunt saw her eight-year-old nephew enter the room, remarked what a nice boy he was, and said, "I would like to take care of him now." She promptly wrote a note, promising to pay the boy $3,000 upon her death. Her estate refused to pay. Is it obligated to do so?

The nephew gave no consideration. He did not promise to do anything. He committed no act or forbearance. Without consideration, there is no enforceable contract. The estate wins.

UCC In March, Louisa's Hamburger Stand contracts with HydrationCorp to buy 100 bottles of lemonade for $100 and an additional 100 bottles of lemonade for $115 on May 1. After the purchase and delivery of the 100 lemonades in March, Louisa speaks with a HydrationCorp representative and they agree that on May 1 HydrationCorp will instead sell Louisa 100 bottles of iced tea for $115. What result?

The new terms may be binding because an oral modification may be binding under the UCC.

appellee

The party opposing the appeal

quasi-contract What must a plaintiff prove to win a quasi-contract claim?

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

Veto

The power of the president to reject legislation passed by Congress

contract Honeywell, Inc., and Minolta Camera Co. had a contract providing that Honeywell would give to Minolta various technical information on the design of a specialized camera lens. Minolta would have the right to use the information in its cameras, provided that Minolta also used certain Honeywell parts in its cameras. Honeywell delivered to Minolta numerous technical documents, computer software, and test equipment, and Honeywell engineers met with Minolta engineers at least 20 times to discuss the equipment. Several years later, Honeywell sued, claiming that Minolta had taken the design information but failed to use Honeywell parts in its cameras. Minolta moved to dismiss, claiming that the UCC required lawsuits concerning the sale of goods to be filed within four years of the breach and that this lawsuit was too late. Honeywell answered that the UCC did not apply, and that therefore, Minnesota's six-year statute of limitations governed. Who is right?

The primary purpose of this agreement was not the sale of goods, but rather the exchange of technical data, ideas, designs, and so forth. The common law governs the contract, and Honeywell's suit may go forward.

Exculpatory clause A producer shot a low-budget horror movie and then delivered 10 reels of negative film to Filmprocess Corp. for processing. Filmprocess lost the reels. The producer sued for $5 million, the cost of production. Filmprocess based its defense on an exculpatory clause in the parties' contract, which stated that the producer accepted the full risk of loss for any film delivered to Filmprocess and that the producer would insure against such loss. Who will win the lawsuit?

The producer will lose its claim for $5 million. Both parties were corporations, with roughly equal bargaining power, and the exculpatory clause is valid. There was no intentional tort or gross negligence, so the clause will be enforced.

adverse possession Must an adverse possessor believe he or she actually owns the property being used?

The states are divided on the question of whether a user must be believe he or she has a title to land in order to adversely possess it, or simply act as though he or she had title to the land. Many states focus only on the adverse acts of the user: It is sufficient if his conduct indicates he is the sole owner, regardless of what he thinks. This is the modern trend. But other states require a mistaken belief that the user has title to the land. For example, some states require that the user demonstrate "color of title," meaning that he has some document that he believed gave him good title to the land, though in reality it never did.

contract Davis v Mason case factors cited by the court:

The terms were not necessarily unreasonable The parties exchanged fair consideration The public was unlikely to be injured by the agreement

property In 1944, W. E. Collins conveyed land to the Church of God of Prophecy. The deed said: "This deed is made with the full understanding that should the property fail to be used for the Church of God, it is to be null and void and property to revert to W. E. Collins or heirs." In the late 1980s, the church wished to move to another property and sought a judicial ruling that it had the right to sell the land. The trial court ruled that the church owned a fee simple absolute and had the right to sell the property.

The trial court was wrong. The church held a fee simple defeasible. The moment the church ceased to use the property as a church, the land reverted automatically to Collins and his heirs. Collins v. Church of God of Prophecy, 304 Ark. 37, 800 S.W.2d 418, 1990 Ark. LEXIS 566 (1990).

agency relationship Jonah tells his friend Derek that he would like to go parasailing. Derek suggests that they try an outfit called Wind Beneath Your Wings because he has heard good things about it. Derek offers to arrange everything. He makes a reservation, puts the $600 fee on his credit card, and picks Jonah up to drive him to the Wings location. What a friend! But the day does not turn out as Jonah had hoped. While he is soaring up in the air over the Pacific Ocean, his sail springs a leak, he goes plummeting into the sea and breaks both legs. During his recuperation in the hospital, he learns that Wings is unlicensed. He also sees an ad for Wings offering parasailing for only $350. And Derek is listed in the ad as one of the company's owners. Was Derek Jonah's agent? Has he violated his fiduciary responsibility?

There is an agency relationship: Derek had agreed to help Jonah; it was Jonah who set the goal for the relationship (parasailing); the purpose of this relationship was for one person to benefit another. It does not matter if Derek was not paid or the agreement not written. Derek has violated his duty to exercise due care. He should not have taken Jonah to an unlicensed company. He has also violated his duty to provide information: He should have told Jonah the true cost for the lessons and also revealed that he was a principal of the company. And he violated his duty of loyalty when he worked for two principals whose interests were in conflict.

contract tortious interference elements a plaintiff must establish to win a suit for tortious interference with a contract

There was a contract between the plaintiff and a third party There was injury to the plaintiff The defendant improperly induced the third party to breach the contract or made performance of the contract impossible The defendant knew of the contrac

UCC Will bought simple wood furniture and custom-painted it for sale to interior designers. He entered into a written agreement to buy all the furniture he needed, for two years, from Wood Knot, Inc. Wood Knot agreed to supply Will with all the furniture he requested. During the second year, Will's business grew, and he requested 28 percent more furniture than in the first year. Wood Knot would not deliver unless Will would pay a higher price per unit, which Will would not. Will sued. What kind of a contract was this? Will Will win? Why or why not?

This was a requirements contract because Will agreed to purchase all his furniture from Wood Knot. Under the UCC, requirements contracts are enforceable, provided the buyer makes his demands in good faith. Will's increased order was a result of his booming business. Indeed, he entered into this agreement to protect his ability to grow his company. He made the request in good faith, the contract is enforceable, and yes—Will will win.

fee simple absolute

full ownership privileges in a property

Sole proprietorships work best for small businesses because

debt is generally the only source of generating capital The owner of a sole proprietorship has limited options for financing her business. Debt is generally her only source of working capital because she has no stock or memberships to sell. For this reason, sole proprietorships work best for small businesses without large capital needs.

law Kennedy v. Louisiana

decided death penalty for rape of a child where the victim did not die is "cruel and unusual punishment"

partnership Tom is a bully. He and Penelope start a test prep business. The partnership agreement specifies that Penelope is entitled to 30 percent of the profits, but that Tom is the managing partner with the right to run the day-to-day affairs of the business. Because students love Penelope's gentle demeanor, the business flourishes. A large university offers the partnership a contract to provide test prep services to all of its students. Tom decides to take that business himself without telling Penelope. He also decides to reduce her payments from the partnership. She asks for data on the partnership's profitability, but Tom refuses to give it to her. He also moves the business into a shabbier, cheaper building that Penelope hates. What rights does Penelope have?

Tom does have the right to move the partnership into a different building, but he cannot take the opportunity to provide services to the university without telling Penelope. She is entitled to see the books and records of the partnership.

impossibility

True impossibility means that some event has made it impossible to perform an agreement. It is typically caused by destruction of the subject matter, the death of an essential promisor, or intervening illegality.

punitive damages goals

deter similar conduct punish the defendant

Rules of Evidence

determine what questions may be asked during trial, what testimony may be given, and what documents may be introduced

contract Most contracts are discharged by _______________

full performance

alternative dispute resolution You plan to open a store in Chicago, specializing in rugs imported from Turkey. You will work with a native Turk who will purchase and ship the rugs to your store. You are wise enough to insist on a contract establishing the rights and obligations of both parties and would prefer an ADR clause. But you do not want a clause that will alienate your overseas partner. What kind of ADR clause should you include, and why?

Try blending ADR mechanisms. Have the ADR clause state that in the event of a dispute, the parties will negotiate it in good faith, and take no further steps for 30 days. If negotiation fails, an additional 30-day cooling-off period follows. The next step could be a mini-trial in front of three people, two of whom represent the parties, respectively, and the third who acts as a neutral mediator. Finally, if the mini-trial fails to produce a settlement, the parties will hire an arbitrator. You might require that the arbitrator be a national of neither Turkey nor the United States. You must specify the law to be applied and where the arbitration will take place. List any claims that are not arbitrable, such as antitrust or securities claims. This should preserve a working relationship while ensuring that disputes will be settled rapidly.

partnership Bryan was giving flying lessons to Edward. With both men standing on the ground, Edward cranked up the engine of the airplane. The throttle was set too far open, so the plane began to move. Edward chased the plane on foot, grabbed its left wing, and swung the airplane in a semicircle, crashing it into Helen's new car, which was in the parking lot. Bryan operated his flying business under the name Bryan-Carl Air Service. Bryan and Carl were not partners, but Helen sued them both on a theory of partnership by estoppel. She argued that they had used a name for their business that sounded like a partnership. She had never heard of their business until the collision. Is Carl liable to Helen as a partner by estoppel?

Two of the three elements are there—Brian and Carl held themselves out as partners and Helen suffered harm. But Carl was not a partner by estoppel because, before the accident, Helen did not know that Carl had held himself out as Bryan's partner. She had not relied on their representation.

corporate opportunity

Under the duty of loyalty, a manager must first offer an opportunity to disinterested directors and shareholders, and only if they turn it down, does the manager have the right to take advantage of the opportunity himself.

auction Vivian goes to an auction and sees a rare antique lamp that is an identical match to one she already has. At the proper time she bids on the lamp and is the highest bidder. Even though she is the highest bidder, the auctioneer refuses to accept her bid and withdraws the lamp from the auction. Can the auctioneer do that?

Unless otherwise stated, the auctioneer had the right to withdraw the item before the fall of the hammer.

duty an agent owes to his principal

duty to provide information duty of care duty to obey instrucstions duty of loyalty

precedent The doctrine of precedent is beneficial because it:

ensures predictability in the court system

While negotiating with Stewart to purchase his house, Yasmine asks him about the condition of the roof. "Excellent," he replies. "It is only 2 years old, and should last 25 more." In fact, Stewart knows that the roof is 26 years old and has had a series of leaks. The parties sign a sales contract for $600,000. A week before Yasmine is to pay for the house and take possession, she discovers the leaks and learns that a new roof will cost $35,000. What kind of contract exists between Yasmine and Stewart?

Voidable by Yasmine

exclusionary rule Under the ________________ any evidence the government acquires illegally may not be used at trial.

exclusionary rule

bailment Jack arrives at Airport Hotel's valet parking area in a Ferrari, just as Kim drives up in her Smart Car. A valet drives Kim's car away, but the supervisor asks Jack to park the Ferrari himself, in the hotel's lot across the street. Jack parks as instructed, locking the Ferrari and keeping the keys. During the night, both vehicles are stolen. The owners sue for the value of their vehicles—about $10,000 for Kim's Smart Car and $350,000 for Jack's Ferrari. Each owner will win if there was a bailment but lose if there was not. Can either or both prove a bailment?

When the valet drove Kim's car away, the hotel assumed control with intent to possess. The parties created a bailment, and the hotel is liable. But Jack loses. The hotel never had physical control of the Ferrari. Employees did not park the vehicle, and Jack kept the keys. Jack's was a "park and lock" case, with no bailment.

corporation If a company is using a scorched earth strategy to defend against a hostile takeover, it will

sell off the assets the shark most wants

tenant Owners of real property must ___________ intend to create a joint tenancy, otherwise a tenancy in _________ is created.

expressly common

Gambling on credit is always illegal true/false

false

assumptioin of risk defendant who exercised extreme care while engaged in an ultrahazardous activity will not be held liable for any damage that results true/false

false

damages Courts do not grant restitution damages in instances where a party conferred a benefit but there was no valid contract. true/false

false

LLC Wilma is one of five equal members of Polar, LLC. This year, Polar generates $5 million in profits. The company reinvests $4 million into the company, leaving $1 million to be divided equally among the members. How are federal income taxes paid on Polar's profits?

Wilma (and each of the members) pays taxes on their $1 million share ($5 million divided by 5) of profits. LLCs are flow-through tax entities, which means that their profits are not taxed. Rather, LLCs pass profits along to their members, who then pay taxes at their individual income tax rates for their portion of the LLCs' profits whether or not they are actually distributed. Therefore, Wilma will be taxed on her $1 million share of the LLC's total profits at her individual income tax rate even though she receives a distribution of only $200,000.

corporation Power Wind is a corporation that specializes in designing and manufacturing windmills. Power Wind has a manufacturing plant in Colorado and offices throughout the southwestern United States. NRGreen, a provider of a variety of renewable energy design and installation services, has offered to buy Power Wind at a favorable price. However, because NRGreen's business model does not involve any manufacturing, it will close the Colorado plant immediately after acquiring Power Wind. May Power Wind's directors decline NRGreen's offer in order to keep the plant open?

Yes if they are in a state that has codified Unocal Traditionally, directors' fiduciary duty to shareholders required them to analyze business transactions, such as mergers, only with respect to shareholders' best interest. However, in the Unocal decision, the Delaware Supreme Court explicitly permitted directors to consider the best interests of other stakeholders, including employees and local communities, when making business decisions. Therefore, if Power Wind is incorporated in a state that has codified Unocal (as many states have), it can reject Power Wind's offer based on the interests of the employees and the local community of the Colorado plant.

unilateral contract Central Maine Power Co. (CMPC) made a promotional offer in which it promised to pay a substantial sum to any homeowner or builder who constructed new housing with electric heat. To qualify for the offer, Motel Services, Inc. (MSI) decided to install electrical heat in a housing project it was constructing in Waterville, Maine. MSI built the units and requested payment for the full amount of the promotional offer. Is CMPC obligated to pay? Why or why not?

Yes, CMPC is obligated to pay because this was a unilateral contract and MSI performed.

consideration Richard hires Paul to paint his kitchen in two eight-hour days of work for $500. At the end of the first day, the kitchen is 85 percent complete. Richard asks Paul to stay late and finish. Paul agrees to stay and complete the painting if Richard pays him a total of $750 for the job. Richard agrees. Does Richard owe Paul the additional $250?

Yes, Paul provided the additional consideration of working overtime and completing the work in a shorter time period than originally agreed Under the original agreement, Richard agreed to pay Paul $500 in exchange for Paul painting his kitchen in two eight-hour days of work. Although at the end of the first day Paul had a pre-existing duty to finish painting the kitchen, he had no duty to continue working past the eighth hour of work on the first day. Paul therefore provided additional consideration in the form of additional hours of work in a single day and an accelerated completion of the job, for which Richard promised to pay Paul an additional $250. The facts do not indicate that the parties required any amendment to the terms be made only in writing.

fixture Mrs. Rosenberry enters into an agreement for the sale of her mansion to Mr. Green. The house has a very large decorative gas fireplace, which Mrs. Rosenberry had specially designed. The fireplace is connected to the gas line in the house; it can be removed and replaced by a professional in a matter of hours, but may result in damage to the wall and floor surrounding the fireplace. The agreement does not specify whether the fireplace is included in the sale of the mansion. Does Mr. Green's purchase of the mansion include the fireplace?

Yes, because the fireplace is a fixture. The fireplace is a fixture and, as such, is included in the sale of the mansion. Fixtures are goods that have become attached to real property. Generally, an object is a fixture if a reasonable person would consider the item to be a permanent part of the property. A reasonable person would typically expect that a large fireplace is a permanent part of the house it is in. A court will consider attachment, adaptation, and other manifestations of permanence when determining if an object is a fixture. In this case, the fireplace can be removed without great difficulty, but doing so could cause damage to the property. More importantly, the fireplace was specially designed for this particular mansion, meaning it was adapted for this house specifically and also indicates that Mrs. Rosenberry intended for it to remain in the house. Therefore, the fireplace is a fixture and it is transferred with the mansion regardless of whether the agreement expressly says it is.

business judgment rule An appraiser valued a subsidiary of Signal Co. at between $230 million and $260 million. One month later, Burmah Oil offered to buy the subsidiary at $480 million, giving Signal only three days to respond. The board of directors accepted the offer without obtaining an updated valuation of the subsidiary or determining if other companies would offer a higher price. Members of the board were sophisticated, with a great deal of experience in the oil industry. A Signal Co. shareholder sued to prevent the sale. Is the Signal board protected by the business judgment rule?

Yes, because they acted in good faith The business judgment rule provides that managers are not liable for decisions they make in good faith, that is, within the parameters of the duty of loyalty and the duty of care. The duty of care requires officers and directors to act in a manner they reasonably believe to be in the best interests of the corporation, among other things. In this case, the board had a reasonable belief that the offer was in the best interests of the corporation, as it was over $200 million higher than the company's recently appraised value. There is no indication that the board had a conflict of interest leading to a breach of the duty of loyalty. Therefore, the Signal board's decision will be protected by the business judgment rule.

express condition Do courts ever refuse to enforce an express condition in a contract?

Yes, if the condition is against public policy A court will refuse to enforce an express condition if it is unfair and harmful to the general good. Such conditions are deemed against public policy and courts will not uphold them, even if they are expressly written in a contract.

property When partitioning property, courts will first seek to sell the property and divide the proceeds from the sale equally among the co-tenants. true/false

false

tort intentional tort A person must actually intend to cause harm to the plaintiff to be liable for an intentional tort. true/false

false

corporation Sammy's, Inc. is a publicly traded company. Sammy's board of directors appointed Jeb as CEO. Jeb has made a number of blunders, which drove Sammy's deeply into debt. In its first meeting in six years, the board of directors votes for Sammy's to file for bankruptcy. Has the board committed any violations?

Yes, the board breached its duty of care The Sammy's board of directors has breached its duty of care. Directors are shielded from liability by the business judgment rule only when they fulfill their fiduciary obligations under the duty of loyalty and the duty of care. The duty of care requires officers and directors to act in the best interests of the corporation and to use the same care that an ordinarily prudent person would in a similar situation. An ordinarily prudent person would have a rational business purpose, avoid illegal behavior, and make informed decisions. The board, having not met for six years, was clearly not informed about what was happening at Sammy's and did not conduct any reasonable information gathering to make decisions. A similar situation occurred in RSL Communications v. Bildirici, and the court found against the directors, stating "[d]irectors may not seek the protection of the business judgment rule on the ground that they made no decisions and took no actions."

property Frank Deluca and his son David owned the Sportsman's Pub on Fountain Street in Providence, Rhode Island. The Delucas applied to the city for a license to employ topless dancers in the pub. Did the city have the power to deny the Delucas' request? Argument for the Delucas: Our pub is perfectly legal. Further, no law in Rhode Island prohibits topless dancing. We are morally and legally entitled to present this entertainment. The city should not use some phony moralizing to deny customers what they want. Argument for Providence: This section of Providence is zoned to prohibit topless dancing, just as it is zoned to bar manufacturing. There are other parts of town where the Delucas can open one of their sleazy clubs if they want to, but we are entitled to deny a permit in this area.

Yes, the city could use its zoning powers to deny the license. Earlier zoning ordinances had allowed topless dancing in the section of the city where the pub was located, but the current ordinance prohibited such dancing in that section. The city had no obligation to grant a variance for the Delucas and denied the request. Jonathan Saltzman, "License Is Denied for Topless Dancing at Downtown Pub," Providence Journal-Bulletin, July 11, 1995, p. 2C.

contract Riley, age 16, and Samuel, age 36, enter into a contract in which Riley will sell Samuel his car for $11,000. The next day, Samuel decides he no longer wants the car and tries to get out of the contract. Samuel argues that because Riley is a minor, the contract is void. If Riley wants to enforce the contract, will he be able to?

Yes, the contract is voidable and only Riley can cancel it.

pierce the veil In order to obtain limited liability, Tom and Doris properly formed a limited liability company (LLC) to operate their catering business. They sometimes deposited the proceeds from catering jobs into their personal checking accounts and if they needed to pay personal bills and were short of funds, they used the business account. If creditors of the business cannot get payment for their invoices, will a court order Tom and Doris to pay the creditors using their personal assets?

Yes, the court can pierce the veil of an LLC because Tom and Doris commingled assets. Limited liability is one of the great advantages of an LLC, and, as members of an LLC, typically Tom and Doris would be protected from personal liability for the debts incurred by the catering business. However, the members of an LLC may be held liable if they do not observe the formalities required for the business. Here, Tom and Doris were mingling business and personal funds. Courts would therefore be likely to pierce the veil of the LLC and hold Tom and Doris personally liable for the business debts.

contract 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 the apartment. 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? Argument for Stevens: Mr. Stevens is willing to pay the Chesneys exactly the amount he agreed to pay: nothing. The parties never contracted for the Chesneys to fix up the apartment. In fact, they never even discussed such an agreement. The Chesneys are making the absurd argument that anyone who chooses to perform certain work, without ever discussing it with another party, can finish the job and then charge it to the other person. If the Chesneys expected to get paid, obviously they should have said so. If the court were to allow this claim, it would be inviting other tenants to make improvements and then bill the landlord. The law has never been so foolish. Argument for the Chesneys: The law of quasi-contract was crafted for cases exactly like this. The Chesneys have given an enormous benefit to Stevens by transforming the apartment and enabling him to rent it at greater profit for many years to come. Stevens saw the work being done and understood that the Chesneys expected some compensation for these major renovations. If Stevens never intended to pay the fair value of the work, he should have stopped the couple from doing the work or notified them that there would be no compensation. It would be unjust to allow the landlord to seize the value of the work, evict the tenants who did it, and pay nothing.

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.

employee Claus Scherer worked for Rockwell International and was paid more than $300,000 per year. Rockwell fired Scherer for alleged sexual harassment of several workers, including his secretary, Terry Pendy. Scherer sued in United States District Court, alleging that Rockwell's real motive in firing him was his high salary. Rockwell moved for summary judgment, offering deposition transcripts of various employees. Pendy's deposition detailed instances of harassment, including comments about her body, instances of unwelcome touching, and discussions of extramarital affairs. Another deposition, from a Rockwell employee who investigated the allegations, included complaints by other employees as to Scherer's harassment. In his own deposition, which he offered to oppose summary judgment, Scherer testified that he could not recall the incidents alleged by Pendy and others. He denied generally that he had sexually harassed anyone. The district court granted summary judgment for Rockwell. Was its ruling correct?

Yes. The court of appeals affirmed. Scherer v. ockwell International Corp., 975 F.2d 356, 1992 U.S. App. LEXIS 22080 (7th Cir. 1992). "When questioned about the specific instances of sexual harassment, he did not deny that the incidents occurred, but instead stated that he could not recall. In other sections of his deposition, he stated that he generally denied having sexually harassed any coworker... . Scherer may not defeat Rockwell's properly supported summary judgment motion without offering any evidence from which a jury could determine that the alleged sexual harassment did not actually occur and by merely asserting that the jury might disbelieve Rockwell's witness because of Rockwell's motive and desire to get out of the contract."

promissory estoppel The Hoffmans owned and operated a successful small bakery. Lukowitz, an agent of Red Owl Stores, told them that for $18,000 Red Owl would build a store and fully stock it for them to operate. The Hoffmans sold their bakery and purchased a lot on which Red Owl was to build the store. Lukowitz then told the Hoffmans 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. Can the Hoffmans recover any money?

Yes. They can most likely recover damages based on promissory estoppel.

corporation You are the CEO of Bubble Gum, Inc., a publicly traded company. Pink Co. has just made an offer to buy Bubble. Pink is particularly interested in Bubble's farmland, on which grows the corn for the sweetener used in the gum. You despise the CEO of Pink and know if Pink takes over the company, you will be fired. Your friend at ChewCo says his company would be interested in buying Bubble, but at a lower price than Pink is willing to pay. You are convinced that the company is better off long-term with ChewCo. What can you do immediately to protect Bubble (and yourself) from Pink?

You cannot simply agree to a sale to ChewCo—once it is clear that the company will be sold, you must auction it to the highest bidder. You could try an asset lockup—selling off the company's farmland. Perhaps that would discourage Pink from making the purchase.

agent The Sisters of Charity was an order of nuns in New Jersey. Faced with growing healthcare and retirement costs, they decided to sell off a piece of property. The nuns soon found, however, that the world is not always a charitable place. They agreed to sell the land to Linpro for nearly $10 million. But before the deal closed, Linpro signed a contract to resell the property to Sammis for $34 million. So, you say, the sisters made a bad deal. There is no law against that. But it turned out that the nuns' law firm also represented Linpro. Their lawyer at the firm, Peter Berkley, never told the sisters about the deal between Linpro and Sammis. Was that the charitable—or legal—thing to do?

You know that an agent is not permitted to act for two principals whose interests conflict. Here, Berkley was working for the nuns, who wanted the highest possible price for their land, and Linpro, who wanted the lowest price. Berkley has violated his duty of loyalty.

Conditon

an event that must occur before a party becomes obligated. May be stated expressly or implied, and no formal language is necessary to create one

duress

an improper threat made to force another party to enter into a contract

double jeopardy

a criminal defendant may be prosecuted only once for a particular criminal offense

default judgment

a decision that the plaintiff wins without trial because the defendant failed to answer in time

Voluntary Act

a defendant is not guilty of a crime if committed under duress. However, t he defendant bears the burden of proving by a preponderance of the evidence that they acted under duress

counter offer

a different proposal made in response to an original offer

De jure

a latin phrase meaning "by law"

interest

a legal right in something. The first step that a court takes in choosing a remedy is to decide what interest it is protecting

Iroquois Native Americans

a nomadic tribe that had detailed written laws during the fifth and sixth centuries A.D.

mitigation

a party injured by a breach of contract may not recover for damages that he could have avoided with reasonable efforts

specific performance unique assets for which a court will order specific performance of a contract

a patent, heirloom, secret formula, an apartment

agency relationship Either party in an agency agreement has the power to terminate the agreement but not the right

a person can be fined for terminating an agency relationship but cannot be prevented from leaving it.

Parties who might be required to make restitution if they rescind a deal

a person with brain injury a minor

directed verdict

a ruling that the plaintiff has entirely failed to prove some aspect of her case

mailbox rule

acceptance is generally effective upon dispatch. Terminations are effective when received

corporation Pursuant to the Model Act, under which of the following circumstances may a corporation not have any directors

all shareholders sign an agreement that eliminates the board the corporation has 50 or fewer shareholders

agency relationship not required

an agency relationship can exist without either a written agreement, a formal agreement or compensation

Output contract

an agreement under which a seller sells 100% of products made by the seller to a single buyer, and the buyer accepts the full quantity

respondeat superior,

an employer is liable for the misbehavior of his employee even if the employer tried to prevent the employee from misbehaving.

advantages of incorporating in Delaware

an established body of law that makes outcomes predictable an efficient court system flexible laws that favor management a neutral arena

corporation Ocean View Inns recently purchased 5 percent of Seaside Resorts' stock. Seaside Resorts' board of directors fears that Ocean View Inn is going to attempt to take control of the company in order to acquire Seaside Resorts' hotel in California; it is the only Seaside Resorts location that directly competes with Ocean View Inns. Although it takes a considerable amount of business away from Ocean View Inns, it accounts for only five percent of Seaside Resorts' earnings. The Seaside Resorts' board suspects that Ocean View Inns would retain the California location and sell off the rest of the Seaside Resort assets in pieces. Although the Seaside Resorts' board has a good faith belief that a takeover by Ocean View Inns is not in the shareholders' best interests, it does not believe that a majority of the shareholders will work with them to resist a takeover. What antitakeover device is the board's best option?

asset lockup In an asset lockup, or scorched earth strategy, the target sells off the assets that the shark most wants. In this case, Ocean View Inns is primarily interested in Seaside Resorts' hotel in California. If Seaside Resorts sells this hotel to another purchaser, Ocean View Inns will lose its primary incentive to acquire Seaside Resorts. Since this hotel does not comprise substantially all of the company's assets, Seaside Resorts will not need to seek shareholder approval to sell it.

assumption of risk Under what principle is a plaintiff barred from recovery when he voluntarily puts himself in a situation that has an obvious danger?

assumption of risk

UCC Every state has adopted ____________________

at least part of the UCC

Lanham Act A political group publishes some very misleading advertisements about a senator's voting record. Why is the politician prohibited from filing suit under the Lanham Act?

because the act covers commercial speech only

Legislation

bills originate in congressional committees, then to full House of Representives, then to Senate. (ability to create new laws) If both houses pass the bill, the legislation normally goes to a Conference Committee to resolve differences between two versions. compromised version from Conference Committee goes back to both houses. If passed by both, goes to president to sign bill, becoming a statuete. if president vetos it, Congress can override with 2/3 majority vote in each house

bilateral contract

both parties make a promise, a contract in which each party has made a promise to do something A promise made in exchange for another promise

consent

certain kinds of trickery and force can prevent the formation of a contract

The Founding Fathers gave each of the three branches of government power over the other two branches, a concept called:

checks and balances

civil, first amendment to the constituion When Sonya Celebrity reads an embarrassing article about herself in Fame magazine, she becomes very worried about damage to her reputation. During her lawsuit against Fame, the magazine's lawyer argues that his client's rights are protected by the Constitution, specifically the right to free press. Is this a civil or criminal lawsuit? On what part of the Constitution is Fame magaine's lawyer basing his argument?

civil, first amendment to the constitution

necessaries

clothing, food, medical care, housing, legal advice, tuition, automobiles

Several states have amended their corporate laws to bring them more in line with those of Delaware in order to

collect more filing fees and corporate taxes

corporation The court in Atze, Inc. v. Auto Collection, Inc. was willing to pierce the corporate veil with respect to Steven because he did

commingled assets failed to observe corporate formalities treated the company as his alter ego

Contract Law - sources

common law - anything but sale of goods uniform commercial code - sale of goods

negligence Under _________________ , a plaintiff may generally recover even if she is partially responsible. Under _________________ , if the plaintiff is even slightly negligent, she recovers nothing.

comparative negligence contributory negligence

Constitution is based on _____________________

compromises about power

UCC When analyzing any contract problem, it is important to determine whether the UCC governs the dispute. It probably does if the contract ______________________

concerns the sale of goods

contract Taylor v. Kjaer, the appellate court held that the contract created

concurrent conditions The court held that because the contract did not stipulate otherwise, the performance of each party's obligation was to occur simultaneously. Therefore, the fulfillment of each obligation was a concurrent condition to the other. The Sellers failed to perform their obligation, which entitled Taylor to restitution for the benefit he conferred.

tenant A tenant may be fined for violating a lease covenant, but may be evicted for violating a ________________________

condition A lease is a contract that creates a landlord-tenant relationship. A well-drafted lease generally includes many provisions, called covenants and conditions. A covenant is simply a promise by either the landlord or the tenant to do something or refrain from doing something. For example, most leases include a covenant concerning the tenant's payment of a security deposit and the landlord's return of the deposit. Generally, tenants may be fined but not evicted for violating lease covenants. A condition is similar to a covenant, but it allows for a landlord to evict a tenant if there is a violation. In many states, conditions in leases must be clearly labeled as "conditions" or "evictable offenses."

statute of Frauds and UCC difference is that __________ does not require __________________ terms of the agreement to be in writing. The code ______________________________

the code all of the specifice looks for an indication that the parties reached an agreement

negligent Marcello is driving negligently and rear-ends Lisa. Lisa sues, claiming that her doctor said the collision may result in her suffering from severe back pain in a few years. If Lisa wins her case it most likely because she persuaded that court that she suffered harm that is ________ rather than ___________

genuine speculative

partnership Partner's obligation

good faith and fair dealing to each other and to the partnership.

bilateral agreement can be for ________________________

goods, services, or almost any other purpose Vast majority of contracts are bilateral contracts

contract If a party is discharged they ____________________

have no more duties under the contract

Corporate Liability

if a company's agent commits a criminal act within the scope of her employent and with the intent to benefit the corporation the company is liable

parol evidence permitted

if court determines contract is ambiguous or incomplete, for fraud, misrepresentation or duress

dram shop Many states now have "dram shop acts" that

impose liability on bars that sell alcohol to intoxicated individuals who later cause harm

implied contract Today, the most hotly contested disputes about implied contracts arise ___________________________ .

in an employment setting

imlied contract Company handbook, given to all new hires, states that no employee will be fired without a hearing and an appeal. Company fires Delores without a hearing or appeal. She sues.

is an implied contract, similar to the DeMasse case, based on the handbook.

Court Systems

many court systems, one federal and one in each state. Federal courts hear cases involving federal questions or diversity jurisdiction

treasure trove

money concealed by an owner so long ago that its likely the true owner has died

negligence Cole is severely injured when he falls down some wet stairs at a bar. The jury finds that he was 5% responsible for his accident and awards $100,000 in damages. The suit takes place in a contributory negligence jurisdiction. How much money will Cole receive?

no money

If a defendant is engaging in conduct that is obviously dangerous, but his actions harm a plaintiff in a way that is not foreseeable, can the plaintiff still recover?

no, because the conduct was not the proximate cause of injury

offer John owns a thoroughbred horse named Prince Charming that just ran in the Kentucky Derby. Prince Charming came in last, much to John's frustration and embarrassment. John exclaims in a loud voice, "I'm selling that horse to the first person who hands me $100!" John has

not made an offer because under the circumstances a reasonable person would not conclude that John had intent to make an offer.

output contract Sarah, a fashion designer, enters into an output contract with a department store under which the department store will pay Sarah $100 per dress for one year. Six months later, a local boutique offers to pay Sarah $150 per dress. Sarah may

not sell to the boutique because, pursuant to the output contract, Sarah must sell 100 percent of her dresses to the department store. In an output contract a seller must sell 100 percent of the goods the seller produces to a single buyer, and the buyer must accept the full quantity of the seller's goods. Sarah therefore may not sell the dresses she makes to any entity other than the department store for the term of the output contract, even if another buyer offers to pay a higher price. In addition, although modifications of existing contracts are permitted under the UCC, Sarah may not unilaterally change the price under the output contract; she must receive the department store's consent.

accord and satisfaction Under the UCC, which of the following are ways that organizations can prevent accord and satisfaction?

notifying debtors that offers to settle for less than the full debt must be made to a particular official Within 90 days of cashing a "full-payment" check, repaying the same amount to the debtor

corporation Suppose that Internet Start-up, Inc. has 2.8 million shares outstanding and eight directors. Without cumulative voting, how many shares would you have to purchase to be sure of electing yourself to the board? If the company's charter required cumulative voting, how many shares would you have to buy to achieve this goal?

number of shares outstanding / number of directions being elected +1 that number + 1 Without cumulative voting, you would have to buy 1 share more than 1.4 million shares. With eight directors, you would have to buy 1 share more than 311 million.

firm offer

offer, signed in writing by a merchant, that promises to remain open for a period up to three months; offeree need not pay for the option to remain open

RICO (Racketeer Influenced and Corrupt Organizations Act)

one of the most powerful and controversial statutes ever written prohibits using two or more racketeering acts to accomplish any of these goals: 1) investing in or acquiring legitimate businesses with criminal money 2) maintaining or acquiring businesses through criminal activity or 3) operating businesses through criminal activity

general partner

one of the owners of a general partnership

contract To form a meeting of the minds _______________________

one party must make an offer and the other must make an acceptance

If Congress disagrees with a judicial interpretation of a statue, the legislators may:

pass a new statute to modify or undo the court decision

Statutes

passed by congress - a law created by a legislature

adverse possession

permits the user of land to gain title if they can prove entry and exclusive possession, open and notorious possession, a claim adverse to the owner, and continuous possession for the required statutory period

corporation Unocal decision is significant because the Court:

permitted directors to consider the interests of stakeholders when making business decisions, whereas previously directors could only consider the corporation's shareholders' interests. Traditionally, the law required the officers and directors of a company to focus solely on the interests of the corporation and its shareholders. But, in the 1980s, came a wave of hostile takeovers and communities began to realize that, when a company was acquired, they were hurt, too. A plant might be shuttered, or headquarters moved. It was not just laid-off employees who suffered; real estate prices, tax receipts, charitable giving - everything did. In Unocal Corp. v. Mesa Petroleum Co., Delaware's Supreme Court responded by explicitly permitting the board to consider the interests of stakeholders over those of some shareholders. Commentators have described this case as "the most innovative and promising case in our recent corporation law."

offeror

person who makes an offer

promoters

personally liable for contracts they sign before the corporation is formed unless the corporation and the third party agree to a novation or it is clear that the parties to the contract did not intend the promoter to be liable

defamation The Court's reasoning in New York Times Co. v. Sullivan emphasized the importance of

preserving free debate To win a defamation suit, a public official must prove that the harmful statement was made with actual malice. The Court stated that "debate on public issues should be uninhibited, robust, and wide-open" and stressed that allowing public officials to recover for defamation in all instances would deter free speech. Public officials are required to prove actual malice in a defamation suit, so that citizens may engage openly in political discourse, even if their opinions are critical or inaccurate.

adverse possession The law allows a user to tack years of occupancy with those of previous possessors of the property to satisfy the continuous possession requirement of adverse possession, as long as the previous users have ________________ with the current user

privity, or legal relationship One of the requirements to achieve adverse possession of land is that the user maintain continuous possession of the land for a statutory period. A user may be able to meet the statutory period by tacking, which permits her to add on to her years of occupancy any years certain predecessors were in possession. The predecessors must have been in privity with the current user, meaning there was some legal relationship.

Litigation

process of filing claims in court and ultimately going to trial

Usury laws

prohibit charging excess interest on loans a lender who charges usurious rates of interest could forfeit: the illegal interest, all interest and/or the entire loan

4th Amendment

prohobits the government from making illegal searches and seizures of individualls, corporations, partnerships and other organziations

Collateral promise

promise to pay a debt or default of another does need to be in writing to be enforceable promisor makes promise to pay out of self-interest, does not need to be in writing under the Leading object rule

Consideration requires a legal benefit to the ____________ or a legal __________ to the ___________ . Legal benefit means receiving something ______________ .

promisor detriment promisee of measurable value

partnership Uniform Partnership Act (UPA)

provides many default rules that apply to a partnership unless the partners agree otherwise Traditionally, general partnerships were regulated by common law, but a lack of consistency among the states became troublesome as interstate commerce grew. To solve this problem, the National Conference of Commissioners on Uniform State Laws drafted the Uniform Partnership Act (UPA). More than two-thirds of the states have now passed the latest revision. Many of the rules in the UPA are so-called default rules, meaning that they apply unless the partners reach a different agreement.

contract To provide juries with more ________________________ about whether or not a contract existed, Parliament passed the __________________. It required that several types of cases, contracts had to be __________. One category was contracts involving interests in _________

reliable evidence Statute of Frauds in writing land

restitution interest

returns to the injured party a benefit that he has conferred on the other party, which it would be unjust to leave with that person. can be awarded in the case of a contract created by fraud, or in a case of quasi-contract where the parties never created a binding agreement

UCC Governed by the UCC

sale of goods negotiable instruments secured transactions

corporation Courts generally allow directors to take defensive measures against takeovers, as long as

shareholder welfare is the board's primary concern in cases where the company will ultimately be sole, the board considers factors other than price alone when selecting a bidder

Something is bargained for if it is _________________________

sought by the promisor and given by the promisee in exchange for their respective promises

adhesion contracts

standard form contracts prepared by one party and presented to the other on a "take it or leave it" basis

1st amendment In determining whether or not a creative work is obscene, the burden of proof lies with the ________________

state

corporation pay filing fees and franchise taxes in

state of incorporation any state in which it has ongoing business

disturances

tenant must not disturb other tenants

tenant The Smith family is renting a house from Barry Becker in Maine under a one year lease running from September to September. During the first week of February, the house's water heater breaks during a blizzard, leaving the family with no hot water. After the Smiths repeatedly call Becker, he arrives one week later to fix the water heater. While working at the house, he accidentally causes an electrical failure and cannot get the power to turn back on. Although the water heater is functioning when Becker leaves, it breaks the next day. An electrician comes to the house ten days later and turns the power back on. On the ninth day without power, the Smiths moved to a hotel and stayed there for one week until they could find a new house to rent. Becker sues the Smiths for nonpayment of rent and the Smiths countersue for their moving fees and hotel bill. Who wins?

the Smiths, because they were constructively evicted from the house The Smiths were constructively evicted from the house because Becker so greatly interfered with their use and enjoyment of the house that they had no realistic choice but to leave. The family was left without hot water or electricity for nine days during the winter in Maine, and Becker was aware of the situation. Under these circumstances, the Smith family could not reasonably use the house as their residence. The Smiths were entitled to terminate the lease and be compensated by Becker for the damages they incurred in connection with vacating the premises.

arson Most arson occur primarily because

the arsonist hope to recover on insurance policies to help with financial difficulties

auction If an auction receives no offers, it means ___________________

the auction received no bids

cover If a seller breaches a contract for the sale of goods, is a buyer required to "cover" by purchasing substitute goods?

the buyer is under no obligation to "cover" by purchasing substitute goods. If the buyer does purchase substitute goods, he can recover from the breaching seller the difference between what he paid for the substitute goods and the original price under their contract. Note that the buyer must make his cover purchase in good faith. If the buyer chooses not to cover, he can recover from the breaching seller the difference between the market value of the goods and the purchase price in their contract. When one part perceives that the other has breached or will breach the contract, the injured party must try to prevent unnecessary loss and to keep damages as low as he is able. However, this does not require a buyer to cover, it simply means he must make a reasonable effort to avoid any additional damages.

cover Two possible outcomes for the buyer when the seller breaches a contract for the sale of goods

the buyer may decline to purchase similar goods from another seller, and the breaching party will pay the buyer the difference between the contract price and the market value of the goods or the buyer may purchase similar goods from another seller and the breaching party will pay the difference between the cover price and their original contract price

specific performance Shantelle enters into a contract to buy a rare antique car. The seller breaches the contract by refusing to sell the car to Shantelle. What is Shantelle's best argument for obtaining the car?

the car is so rare it is considered an irreplaceable piece of art Shantelle wants the car and is not interested in money damages, so she needs to convince s the court to order both parties to perform their contractual duties. This is called specific performance, and is available to plaintiffs only when the court considers the item to be unique, because monetary damages cannot properly compensate an injured plaintiff who is deprived of an irreplaceable item. Generally courts will only aware specific performance in cases involving real estate, art, heirlooms, patents, and other unique items, and even then courts are reluctant to impose specific performance. However, if Shantelle can demonstrate the car's uniqueness - for instance, by showing the impossibility of procuring a similar car anywhere else - the court may be willing to enforce the contract. If Shantelle can prove that she had contracted to sell the car at a profit and that the defendant knew this at the time of their contract then she may be entitled to consequential damages but she will not be entitled to specific performance. The UCC also does not provide specific performance of this contract and a showing of the defendant's bad faith will not result in specific performance, either

exculpatory clause For 20 years, Art's Flower Shop relied almost exclusively on advertising in the Yellow Pages to bring business to its shop in a small West Virginia town. One year, the Yellow Pages printer accidentally did not print Art's ad, and Art's suffered an enormous drop in business. Art's sued for negligence and won a judgment of $50,000 from the jury. The printing company appealed, claiming that under an exculpatory clause in the contract, the company could not be liable to Art's for more than the cost of the ad (about $910). Art's claimed that the exculpatory clause was unconscionable. Please rule.

the clause is unenforceable because it is unconscionable

condition precedent Arizona v. Country Life Insurance, Co. the parties disagree on whether ___________________________

the condition precedent violated public policy Country Life Insurance issued Donald Anderson a policy effective the day he paid for it, provided that he passed a routine physical. Passing the physical was a condition precedent to receiving coverage. Anna Mae Anderson contends that the condition precedent violated public policy, because they accepted payment but then still had not rendered a decision about Donald's policy by the time he passed away a few weeks later. Country Life argued that it is impossible for them to operate any other way because offering life insurance without knowing the health of the insured is an unsustainable business model.

breach

the defendant breached her duty of care or failed to meet her legal obligations (one party fails to perform a duty without a valid excuse)

corporation Anderson v. Bellino

the defendant breached his duty of loyalty A corporate officer or director has the burden of establishing that his competition with the corporation was done in good faith and did not harm the corporation or deprive it of business and A corporate officer or director may compete with his corporation under certain circumstances

res ipsa loquitur

the facts imply that the defendant's negligence caused the accident shifts the burden of proof from the plaintiff to the defendents

corporation The most common punishment for a corporation is a fine. However, a major criticism of this practice is that

the fines are too small to make an impact on the business

criminal case, when _________________________ induces the defendant to break the law, ________________must prove __________________ that the defendant ______ predisposed to commit the crime.

the government the prosecution beyond a reasonable doubt was

offer If the offer specifies no time limit _____________________

the offeree has a reasonable period in which to accept

stock preferred

the owners of preferred stock have preference on dividends and also, typically, in liquidation

discovery During discovery, lawyers for the defense find out that the plaintiff was hospitalized in a psychiatric facility last April. If the court grants the defense access to the plaintiff's full medical records from that hospitalization, it is most likely because:

the plaintiff's mental condition is relevant to the case

Presidential Powers

the president's key powers include making agency appointments, proposing legislation, conducting foreign policy, and commander in chief of the armed forces

principal three obligations imposed on a principal under his duty to cooperate with his agent

the principal cannot unreasonably interfere with the agent's ability to accomplish his task the principal must perform her part of the contract the principal must furnish the agent with the opportunity to work

Independent Contractor

the principal is liable for the physical torts of an independent contractor only if the principal has been negligent in hiring or supervising him

license

the right to temporarily enter land belonging to another

If a jury returns a verdict for the prosecution and the defendant is fined, the money goes to

the state

Who may challenge a validity of a de facto corporation

the state

larceny

the trespassory taking of personal property with the intent to steal it

social enterprises

these organizations pledge to behave in a socially responsible manner even as they pursue profits

modify

to affirm the outcome but with changes

contract Today, courts enforce the majority of contracts true/false

true

contract When one party breaches a contract, the other party has no obligation to perform and may sue for damages. true/false

true

corporation The first set of a corporation's directors are elected by the incorporators. All others are elected by shareholders true/false

true

corporation Adopting supermajority voting makes it more difficult for a shark to acquire control of a company, primarily by making the process take longer. true/false

true

corporation can be found guilty of a crime based on the conduct of anyone acting on its behalf. true/false

true

agency relationship principal will not be liable to a third party for a tort committed by an agent:

unless the tort was committed within the scope of the agency relationship.

accord and satisfaction requirements

unliquidated debt creditor agrees to accept as full payment a sum less than the amount creditor claims detor pays the agreed upon amount

contract A sitcom actor, exhausted after his 10-hour workweek, agrees to buy a briefcase full of cocaine from Lewis for $12,000. Lewis and the actor have a(n)__________ contract.

void

adoption

when a corporation accepts legal responsibility for a contract

Kelo v. City of New London, Connecticut Justice O'Connor expressed her concern that the decision ______________________

would be used to exploit people with few resources

Court Orders

written by judges

libel

written defamation

tort Can a person who commits a tort be sent to jail as a result of his conduct?

yes The victim may file a civil suit for money damages, and the state may prosecute which can result in a fine and/or a prison sentence.

tenant Mark leases a house to Julia. When Julia mentions that the bedroom door is difficult to close, Mark comes to the house and fixes the door. Unfortunately, Mark leaves a sharp edge on the door that Julia catches her foot on, making a deep cut requiring multiple stitches. Julia sends Mark her medical bills associated with the injury. Under the common law rules, must Mark pay?

yes because Mark negligently performed a repair Under the common law rule, a landlord is responsible for informing a tenant about latent defects, maintaining common areas, properly performing any repairs the landlord volunteers to perform, and maintaining areas that are used for public use. The repair was made in Julia's premises, not a common area, so under the common law Mark was not responsible for the repair. However, Mark nevertheless volunteered to make the repair and was therefore responsible for performing the repair properly. Mark negligently left a sharp edge on the door that caused Julia's injury and is liable for the damages Julia incurred as a result of his negligent repair work