business law chapter 2

What do mentally ill & intoxicated owe upon disaffirmance?

Things must be restored to status quo, unless its found that one party was trying to take advantage of the other.

executed contract

when all duties have been performed

Promissory Estoppel

when cases where offeree relies on the offer being kept open, this will prevent it from being revoked

executory contract

when not all duties have been completed yet

what is the effect of lack of capacity on contract?

when one lacks capacity, the contract may become voidable. If the courts have already ruled that the party lacked capacity, the contract is void.

voidable contracts

when one or more parties has the legal right to void a contract

Gottlieb V. Tropicana

-Consideration is the focus, mainly bargained for exchange -Gottlieb went to Tropicana Casino and hotel, register for Diamond Club membership where they gave away personal information and allowed tropicana to monitor gambling habits. -In exchange got certain benfits like free roll of Million dolar wheel, and won it. -Except, when it landed on the million dollar slot, it instantly rolled again meaning that Gottlieb won two free tickets to a show instead. -Gottlieb gave up things like personal information and time that could of been spent doing other things because she had a membership that allowed her some benefits -B/c facts for both sides are stong, it had to be decided by a jury

Describe the circumstances that terminate an offer and determine whether a given offer remains "on the table"

-If an offer has a termination date it can be terminated if not accepted in time. if no time frame is presented an offer is good for "reasonable time". -Offers can be revoked at any time before its acceptance.

Margeson V. Artis

-consideration -Margeson sold a weight loss business to artis with an original purchasing contract stating the selling price at $125,000. -then Margeson compiled an addendum in which they asked for 30,000 more without promising anything more than what they did in the original contract. -therefore, was simply a price hike in favor of Margeson, meaning that the addendum was not binding

Minors

-have the ability to avoid contracts through disaffirmance any words or act by the minor that demonstrate a desire for disaffirmance will qualify. If the minor wishes to enforce the contract the adult must comply. Once the minor reaches majority age, they generally have a year to disaffirmed or else the contract will become ratified.

Timothy V. Keetch

-misrepresentation -Keetch used a breeder horse for two different collaterals of loans. -Meaning after they pledged the value of the horse to one loan, they did it again for another loan -Timothy won based on the fact that Keetch lied on several occasions and was not his duty to investigate the truthfulness of Keetch's claims

Meram V. MacDonald

-motivational speaking (MacDonald) stated to audience that if you placed a business card inside a container and stayed for the whole session you would walk out with $1 million dollars -bc Mac is a multi-millionaire and representing a multi-million dollar company, it is nor unreasonable for someone to think that is possible. -therefore, verbal contract was made and Meram could receive $1 million

when is a contract voidable because of either fraud or misrepresentation?

1) an untrue assertion was made 2) the fact asserted was material or the assertion was fraudulent 3)contract was entered because of reliance on the assertion 4) (fraud specific) reliance of complaining party was reasonable for deceit and caused injury. - if misrepresentation was innocent the fact must be established as material.

when does undue influence make a contract voidable?

1) relationship between parties is either one of trust and confidence or one in which the person exercising the persuasion dominates the person being persuaded. 2) the persuasion is unfair

Determine whether a given proposal is likely to the be considered to be an offer?

1) some objective indication of a present intent to contract on offeror's part, intent by the offeror is judged by what his words, actions and circumstances signify 2) definitiveness in the terms of the alleged offer, definitiveness requires specific details of what offeror is willing to do and what they will receive in exchange. 3)whether the offer has been communicated to the offeree, when the offeror communicates the offer to the offeree objectively shows his intent to be bound by those terms

What is a contract and why are contracts useful?

A contract is a legally enforceable promise or set of promises. It allows for legal action of any breach also help facilitate planning

Option

A separate contract where offeror agrees not to revoke offer, in exchange for valuable consideration.

Past Consideration

An act or benefit given in the past that was not given in exchange for the promise in question. since it wasn't given for new promise, it can't be a consideration.

Explain the elements of an offer under both the UCC and common law

An offer says that you if you agree to the presented terms, we have a contract.

Bilateral Contract

Both parties exchange promises and the contract is formed as soon as the promises are exchanged

Mentally Ill

Cognitively tested to see if capacity is present, if the case is too severe, it will prevent the contract from being manifested to begin with. If the contract is created after the courts have found the client adjudicated incompetent it is void. They have the right to disaffirm, but things must go to status quo and can ratify if they regain capacity.

What is consideration and its importance in the formation of a valid contract?

Consideration is legal value, bargained for and given in exchange for an act or promise. Consideration requires that the promise must pay the price that the promisor asked to gain the right to enforce the promisors's promise.

Young V. Weaver

Contracts for necessaries w/ minors are generally not voidable

Lambert V. Barron

Facts: Lambert and Barron were friends. Lambert helped Barron on some legal/business issue. Lambert expected to be paid at his normal rate, Barron wasn't having it and let him know. Lambert sues for breach Issue: Did they have a contract Result: No they didn't Reason: Friend helping friend, there was no acceptance of a contract on Barron's part. No agreement

Illusory promises

If the promise isn't based on anything and doesn't bind the promise to do, or refrain from anything, it can't be a consideration.

Intoxicated Persons

Intoxication must be so severe the parties at hand are unable to understand the contract at hand. The rights to disaffirm, ratify, duties upon disaffirmance are the same as those for mental illness.

Rogers v Household life insurance

Jason Rogers started a life insurance plan with HLIC on May 15, 2007 for his father Alan, who had Alzheimer's and dementia. His father died on June 7, 2007, and Jason wanted the $250,000 face value of the life insurance, district court ruled in favor of HLIC, jason appealed, affirmed in favor of HLIC because an adjudication that one is incapacitated is a determination that one lacks the capacity to contract as a matter of law

Pre-existing Duties

Legal value component requires that there be no previous legal duty to do something prior to the contract. Therefore you can't agree upon a pre-existing duty.

What is required to create a valid modification of a contract under both the UCC and common law

There must be some new independent consideration to the binding the agreement to modify a contract for the sale of goods requires no consideration.

applicability of Article 2 of the UCC in law of contracts

UCC: Originally created to help promote fair dealings and high standards in the marketplace. Article 2: Only applis to the sales of goods, however does not apply to real estate or the sale of stocks and bonds. Common Law: governs contracts for sale of real estate, services and intangibles - If both are needed tests are used to see which is predominantly needed.

conditions under which a contract can be rescinded due to the absence of knowing consent

When a contract is entered based on the reliance of misrepresented information. either innocent misrepresentation or fraudulent misrepresentation allows for this.

elements of mistake?

a mistake is a belief about a fact not in accord with the truth. must relate to facts present at the time of the contract. -mutual mistake: mistake relates to basic assumption on which contract was made, the mistake had material effect, party adversely affected by the mistake does not bare risk of the mistake. -unilateral mistake: non mistaken party caused or had reason to know of mistake, it would be unconscionable to perform the contract.

What is acceptance?

acceptance is the manifestation of assent to the terms of the offer made by the offeree, in the matter required by the offer. 1) The offeree intended to enter the contract 2) the offeree accepted on the terms proposed by the offeror 3) The offeree communicated his acceptance to the offeror

distinguish advertisements that are considered to be offers from those that are merely invitations to negotiate

adds that are viewed as contracts generally limit acceptance to the number of offerees, are highly specific about the number of items and what is sought in return.

Mirror image rule

attempts to change terms will be viewed as a counter offer

What do minors owe upon disaffirmance?

both adult and minors must return any considerations exchanged. if the minor can't return considerations, then the contract can still be disaffirmed and they are not obligated for restitutions. If items are deemed necessaries, minors must pay back a reasonable value, this is quasi-contractual.

What are the elements of consideration?

can either be unilateral or bilateral and an act or promise can have legal value in one or two ways. If in exchange for the promisors promise, the promise does, or agrees to do something he previously had no legal obligation to do, that provides legal value. Or if the promise agrees to refrain from something that they had the legal right to do.

Concept of Capacity?

capacity means the ability to incur legal obligations and acquire legal rights. Minors, mentally ill and intoxicated people do not have capacity.

Battle of the forms

changes mirror image rule for sales of goods, allows for variation in terms of offer and terms of acceptance. Provides that a definite and timely expression of acceptance creates a contract

Trademark Properties V. A&E Television Networks

flipping houses show, phone call with whether or not terms were agreed upon, intention to accept

unilateral contract acceptance

for the offeree to express acceptance they just have to carry out the act

when is silence acceptance

general rule is silence is not an acceptance if the circumstances of the offer impose a duty on the offeree to reject, the silence will be acceptance

when is oral acceptance effective in a situation in which the parties anticipate putting their contract in writing

if it appears that the parties had concluded their negotiations and reached agreement on all essential aspects of the transaction, considered a contract. -If an offer's acceptance standards appear ambiguous it may be accepted in any manner that appears reasonable by circumstance.

noninstantaneous acceptance

mailbox rule - proper acceptances vecome effectinve when they are dispatched, even if they are lost or never received, if it is not properly addressed, not effective until it has been received.

unenforceable contract

meets basic legal requirements for a contract, but may not be enforceable because of some other legal rule

elements of misrepresentation and fraud?

misrepresentation: when an assertion is made that is not in accord with the truth. Fraud: is the intentional version of misrepresentation. Both result in contracts that can be voided, scienter means that fraud was present.

when does a mistake make a contract voidable?

mistake must affect a basic assumption on which the contract was based for it to be voidable or when somebody receives a bargainable advantage and the other suffers loss.

unilateral

needs to complete the act offerors power to revoke is suspended for reasonable time to carry out the act

can unilateral contracts be revoked?

no

bilateral

offeree must make the promise requested by the offer

Instantaneous acceptance

offeree says I accept

stipulation acceptance

offers are effective on dispatch as long as carried out by the proper means of stipulation

Unilateral Contract

only one party makes a promise, like when a store offers a promotion

express contract

parties directly stated terms of their contract orally or in writing at time of conception

When does duress make a contract voidable?

physical compulsions will cause a contract to become void, threats are another form of duress that will make a contract voidable. 1) the contract was induced by an improper threat 2) the victim had no reasonable alternative but to enter the contract

stipulation

time period in which offer must be accepted

additional terms

treated as proposals by the offeree to the contract, if both parties are merchants additional terms become contract unless 1) the offer expressively limits itself to its own terms 2) the new terms would materially alter the offer 3) offeror gives objection to terms in a reasonable time frame

what is undue influence?

unfair persuasion, pressure asserted through persuasion rather than coercion.

implied contract

when the surrounding facts and circumstances indicate an agreement has been reached

What is duress?

wrongful coercion that induces a person to enter or modify a contract. Typically involves something that somebody can't do legally