Business Law Final - contracts

How does an implied contract arise?

1. A person renders services under circumstances indicating that payment for them is expected and 2. the other person, knowing such circumstances, accepts the benefits of those services. Ex: emergency repairs. An implied contract cannot arise when there is an existing express contract on the same subject. However, it does not bar recovery on an implied contract for extra work that was not covered under the express contract.

What do formal contracts include?

1. Contracts under seal where a person's signature or a corporation's name is followed by a scroll, the word seal, or the letters L.S. 2. Contracts of record, which are obligations that have been entered before a court of record, sometimes called a recognizance. 3. Negotiable instruments.

The Equal Employment Opportunity Commission (EEOC)

A five-member body appointed by the president to establish equal employment opportunity policy under the laws it administers. It supervises the agency's conciliation and enforcement efforts.

Unilateral mistake

A mistake by only one of the parties as to a fact does not affect the contract when the mistake is unknown to the other contracting party.

Liquidated debt

A promise to pay part of an amount that is admittedly owed is not consideration for a promise to discharge the balance. It will not prevent the creditor from demanding the remainder later.

What is a valid contract?

An agreement that is binding and enforceable.

What is a contract based on?

An agreement.

What are express contracts?

An express contract is one in which the terms of the agreement of the parties are manifested by their words, whether spoken or written.

What are implied contracts?

An implied contract is one in which the agreement is shown not by words, written or spoken, but by the acts and conduct of the parties.

Firm Offer

An offer that states that it is to be irrevocable, or irrevocable for a stated period of time. Under the Uniform Commercial Code, this doctrine of firm offer applies to a merchant's signed, written offer to buy or sell goods but with a maximum of three months on its period of irrevocability.

Definiteness

An offer, and the resulting contract, must be definite and certain.

Angel v. Murray

Angel and other citizens sued Murray and Maher for return of the additional $20,000 paid to Maher to remove trash. They said that Maher was already obligated by his contract to perform the work for the contract sum and there was no consideration for the payment of the increased compensation. Courts will not enforce an agreement that has been procured by coercion or duress and will hold the parties to their original contract regardless. Courts should enforce agreements modifying contracts when unexpected or unanticipated difficulties arise during the course of performance. Good faith adjustment: 1. the promise modifying the original contract was made before the contract was fully performed 2. the underlying circumstances which prompted the modification were unanticipated 3. the modification is fair and equitable.

Title VII Exceptions

Bona fide occupation qualification exception (not unlawful for an employer to hire employees on basis of religion, sex, or national origin in instances where it is a bona fide occupational qualification), testing and educational requirement exception (must bear relationship to job performance), and the seniority system exception.

Consumer negligence

Consumers who sign contracts without reading or understanding what is in them are still bound. When the contract signed by the consumer clearly states one thing, the consumer cannot introduce evidence about statements the merchant made if the contract terms are clear. Consumers must exercise reasonable care and cannot blindly trust consumer protection law to rescue them.

What are restitution damages?

Damages received when one party performed services for the benefit of the other party and the court requires payment of the reasonable value of services to avoid the unjust enrichment of the party receiving the services without paying for them. Some courts refer to this situation as an action or recovery in quantum meruit (as much as he or she deserved).

Contracts minor cannot avoid

Educational loan, a contract for medical care, a contract made while running a business, a contract approved by the court, a contract made in performance of a legal duty, and a contract relating to bank accounts, insurance policies, or corporate stock.

What are formal contracts?

Enforced because the formality with which they are executed is considered sufficient to signify that the parties intend to be bound by their terms.

Physical/economic duress

Enter into a contract to avoid threatened danger.

Disparate impact

Exists when an employer's facially neutral employment practices, such as hiring or promotion examinations, although neutrally applied and making no adverse reference to race, color, religion, sex, or national origin, have significantly adverse or disparate impact on a protected group. (Ex: height requirement that adversely effects women)

Disparate treatment

Exists where an employer treats some individual less favorably than others because of their race, color, religion, sex, or national origin. (Ex: Hiring based solely on gender)

What is an offer?

Expresses the willingness of the offeror to enter into a contractual agreement regarding a particular subject. It is a promise that is conditional upon an act, a forbearance, or a return promise.

Electronic Signatures in Global National Commerce Act (E-Sign)

Federal law that recognizes digital signatures as authentic for purposes of contract formation.

Fragante v. City and County of Honolulu

Fragante brought suit alleging that the defendants had discriminated against him on the basis of his national origin in violation of Title VII of the Civil Rights Act. An adverse employment decision may be predicated upon an individual's accent when it interferes materially with job performance.

Gonzalez v. Wilshire Credit Corp.

Gonzalez filed suit against Wilshire and U.S. Bank for deceptive and unconscionable practices in violation of the Consumer Fraud Act (CFA). In fashioning and collecting a loan a lender or its servicing agent cannot use unconscionable practices in violation of the CFA.

Griggs v. Duke Power

Griggs and other black employees of Duke Power challenged requirements of a high school diploma and passing standardized general intelligence tests in order to transfer to more desirable jobs. Both of these requirements were adopted without meaningful study of their relationship to job performance ability. Good intent or absence of discriminatory intent does not redeem employment procedures or testing mechanism that operate as built-in headwinds for minority groups and are unrelated to measuring capability.

Holmes v. Petrovich

Holmes filed a lawsuit for sexual harassment, retaliation, wrongful termination, violation of right to privacy, and intentional infliction of emotional distress. Constructive discharge only occurs when coerced. Did not have a right to privacy because it was a company computer.

What is a quasi contract?

In some cases, a court will impose an obligation even though there is no contract. It is an obligation imposed by law. It is not a true contract reflecting all of the elements of a contract set forth previously. The court is not seeking to enforce the intentions of the parties. Rather, when a person or enterprise receives a benefit from another, even in the absence of a promise to pay for the benefit, a court may impose an obligation to pay for the reasonable value of that benefit to avoid unjust enrichment.

Tort of appropriation

Involves taking an image, likeness, or name for purposes of commercial advantage.

U.S. v. King

King while staying at an air base connected to the base network which required a signed agreement to monitoring. Pornographic materials were discovered not by "special means" because everyone had the same access. Appealed conviction of possession of child pornography on grounds of illegal search and seizure of his computer and files. Authorities conducted a search of the military network and his files were a part of that network.

Varrenti v. Gannett

Local police officers filed suit against Gannett who posted allegedly defamatory comments about them by anonymous sources who used code named. Court ordered Gannett to provide identifying information. 1st Amendment protects anonymous speech, however defamatory speech is not protected. Distinguish between opinion and fact: 1. specific language is precise or understood 2. capable of being proven true or false 3. context signals to readers that it is likely opinion not fact. Court concludes statements were considered opinions. Protected opinion because opinions cannot form the basis of a defamation claim, and Gannett does not have to reveal the identities.

Fraud

Making of a material misrepresentation (or false statement) of fact with 1. knowledge of its falsity or reckless indifference to its truth 2. the intent that the listener rely on it 3. the result that the listener does so rely and 4. the consequence that the listener is harmed. A statement of opinion may be fraudulent when the speaker knows of past or present facts that make the opinion false.

Affirmative Action Plans

May undertake special recruiting and other efforts to hire and train minorities and women to help them advance within a company.

McCarthy v. Tobin

McCarthy brought action for specific performance against Tobin claiming that the parties created a binding contract when they signed an offer to purchase (OTP) form. The OTP adequately described the property to be sold and the price to be paid. The remaining terms covered by the purchase and sale agreement were subsidiary matters which did not preclude the formation of a binding contract. The OTP employs familiar contractual language. This was a firm offer, the acceptance of which bound Tobin to sell and McCarthy to buy the subject property. The fact that minor, ministerial, and nonessential terms are left for future determination does not make an agreement too vague to be a contract.

Williams v. Ormsby

Merely moving into a home with another while engaged in a romantic relationship is not consideration for the formation of a contract giving a half-interest in the property. The elements of an inter vivos gift: 1. an intention on the part of the donor to transfer the title and right of possession to the donee 2. delivery by the donor to the donee 3. relinquishment of ownership, dominion, and control over the gift by the donor 4. acceptance by the donee. Gift is a voluntary transfer without any consideration or compensation. An agreement to give for the consideration of love and affection, neither transfers the property to the donee, nor secures him a right by suit to compel a completion of the contract.

Schmidt v. Prince George's Hospital

Michelle Schmidt, 16, was in a car accident and received treatment at the Hospital. She was covered by her father's insurance benefits (Erie Insurance Group). However, the check issued was not used to pay the hospital bill but rather to buy her a new car. After her 18th birthday, and failure to pay, the hospital brought suit against her. By common law, persons, under the age of 21, are not bound by their contracts, except for necessaries, nor can they do any act, to the injury of their property, which they may not avoid, when arrived at full age. In their contract for necessaries, such as board, apparel, medical aid, teaching and instruction, etc. they are absolutely bound and may be sued and charged in execution. The father's refusal to apply the insurance proceeds to the debt owed is a clear indication of his unwillingness to pay. As an adult, the petitioner is liable for the medical treatment expense which she incurred while a minor.

Parties in e-contracts must:

Negotiate their obligations in clear and unambiguous language, including such terms as quantity, quality, and price as well as warranties, indemnification responsibilities, limitations on liability, and termination procedures.

Effect of acceptance

Neither party can subsequently withdraw from or cancel the contract without the consent of the other party.

Title VII

Of the Civil Rights Act of 1984 is the principal law regulating equal employment opportunities in the US. Seeks to eliminate employer and union practices that discriminate against employees and job applicants on the basis of race, color, religion, sex, or national origin.

Termination of Offer

Offers may be terminated by revocation, counteroffer, rejection, lapse of time, death or disability of a party, or subsequent illegality.

What is an executed contract?

One that has been completely performed. One under which nothing remains to be done by either party.

Who does a contract bind?

Only the parties directly named in the contract. It cannot place an obligation on a third party (Eminem/record label example).

Section 707 of Title VII

Permits the EEOC to sue employers when it has reasonable cause to believe they are engaged in a pattern or practice of unlawful employment discrimination.

Pregnancy Discrimination Act (PDA)

Prevents employers from treating pregnancy, childbirth, and related medical conditions in a manner different from the manner in which other medical conditions are treated. Also protects women from termination or other employment actions due to pregnancy.

Electronic Communications Privacy Act (ECPA)

Prohibits the unauthorized access of "live" communications (listening devices).

The Stored Communication Act (SCA)

Prohibits the unauthorized interception of electronic communications, generally meaning stored communication, not ongoing such as text.

Gifts

Promises to make a gift are unenforceable promises under the law of contracts because of lack of consideration. A completed gift cannot be rescinded for lack of consideration.

Who are the parties to a contract?

Promisor, the person who makes a promise, and the promisee, the person to whom the promise is being made.

Children Online Privacy Protection Act (COPPA)

Protects children from websites collecting information.

Deceptive advertising

Provide remedies for consumers who are deceived or misled by ads. Consumer protection statutes do not require proof of intent.

Internet Tax Freedom Act

Provides that states and local governments cannot tax internet access. To tax internet sales, the seller must have some physical presence in the state or a pattern of distribution of doing business there.

Postal Reorganization Act

Provides that the person who receives unordered mailed merchandise from a commercial sender has the right to retain, use, discard, or dispose of it in any manner the recipient sees fit without any obligation whatsoever to the sender.

Novare Group v. Sarif

Purchasers cannot assert justifiable reliance on statements made by sellers that directly contradict clear and specific terms of their written contracts. Sarif and 7 other purchasers bought a unit in a condominium. They sued the developers and brokers for fraud in the inducement and negligent misrepresentation. Future promises are not sufficient to sustain fraud-based claims. Purchasers are not entitled to back out of a written agreement whose terms expressly contradict the oral representation on which Purchasers claim to have relied.

City of Ontario v. Quon

Quon, a member of the Ontario SWAT team, used texting services provided by the city. The policy was use for businesses purposes and could be monitored or recorded. He went over the text limit and refused to pay. When it happened again, his supervisor requested an audit of the texts. Revealed abuse of work time and sexual content. Officers disciplined challenged as a violation of 4th amendment rights. Although warantless searches are per se unreasonable under the 4th amendment, there are a few exceptions including the workplace.

What are informal contracts?

Simple contracts without regard to whether they are oral or written. These contracts are enforceable, not because of the form of the transaction but because they represent agreement of the parties.

What is an executory contract?

Something remains to be done by one or both parties.

Negligent Misrepresentation

Speaker failed to exercise due care regarding material information communicated to the listener but did not intend to deceive.

Sexual Harassment

Tangible employment action: situations in which a supervisor performs an "official act" of the enterprise, such as discharge, demotion, etc. because of employee's refusal to submit to sexual favors. Hostile work environment: Occurs when a supervisor's conduct does not affect an employee's economic benefits but causes anxiety.

Contractual Capacity

The ability to understand that a contract is being made and to understand its general meaning. It can exist even though a party does not understand every provision of the contract.

Acceptance

The assent of the offeree to the terms of the offer.

Extent of recovery

The customary method of calculating damages in construction contract cases is actual job cost plus an allowance for overhead and profits minus amount paid.

What mandates parity between paper and electronic contracts?

The federal Electronic Signatures in Global and National Commerce Act (E-Sign) and the Uniform Electronic Transactions Act (UETA).

Communication of Offer to Offeree

The offer must be communicated but also it must be communicated by the offeror or at the offeror's direction.

What is a unilateral contract?

The offeror may promise to do something or to pay a certain amount of money only when the offeree does an act. Ex: reward offered, contest announced, or changes to employee manual. The offeree does not accept the offer by express agreement but rather by performance.

EEOC administers

Title VII, Equal Pay Act (EPA), the Age Discrimination in Employment Act (ADEA), Section 501 of the Rehabilitation Act (discrimination against persons with disabilities) and Title I (employment provisions) of Americans with Disabilities Act (ADA).

Necessaries

Were limited to those things absolutely necessary for the sustenance and shelter of the minor. Relaxed now to health, education, and comfort.

Lapse of Time

What constitutes a reasonable time depends on the circumstances of each case - that is, on the nature of the subject matter, the nature of the market in which it is sold, the time of the year, and other factors of supply and demand.

Consideration

What each party to a contract gives up to the other in making their agreement. It is the bargained for exchange between the parties. Or a benefit determinant approach whereby a benefit received by the promisor or a detriment incurred by the promisee.

Restore status quo ante

When a minor still has what was received from the other party, the minor, on avoiding the contract, must return it to the other party or offer to do so. The minor must put things back to the original position.

Reverse discrimination

When an employer's AAP is not shown to be justified or "unnecessarily trammels" the interests of nonminority employees.

Wigod v. Wells Fargo Bank

Wigod alleged that she complied with the requirements set forth by Wells Fargo but they refused to grant a permanent modification. Wells Fargo contended that the Trial Period Plan contained no valid offer. When the promisor conditions a promise on his own future action or approval, there is no binding offer. But when the promise is conditioned on the performance of some act by the promisee or the third party, there can be a valid offer. When Wells Fargo executed the TPP, its terms included an unilateral offer to modify Wigod's loan conditioned on her compliance with the stated terms of the bargain.

What is an option contract?

The parties may make a contract that gives a right to one of them to enter into a second contract at a later date. If one party has an absolute right to enter into the later contract, the initial contract is called an option contract.

What is privity?

The parties to a contract are said to stand in privity with each other, and the relationship between them is termed privity of contract.

Undue influence

Whenever the dominating person obtains any benefit from a contract made with the dominated person. The contract is then voidable.

What is a voidable contract?

An agreement that is otherwise binding and enforceable, but because of the circumstances surrounding its execution or the lack of capacity of one of the parties, it may be rejected at the option of one of the parties. Ex: forced to sign a contract.

Employee email is

Candid, spontaneous, and discoverable

"do or die" loans

Car title loans, home loans, and pay day loans, have extensive disclosure requirements on interest rates, payments, and effects of default.

Basic purchasing principle

Caveat emptor - buyer beware!

Compensatory damages

Compensate consumers for the loss.

What must a contract have?

Definite and certain terms.

Legal issues of cyberspace

Employment, user, appropriation/competition, and contract.

Reformation

If after an oral agreement, in the process of writing something is left out, the aggrieved party may petition the court to reform the contract to reflect the actual agreement.

Death or Disability

If either the offeror or offeree dies or becomes mentally incompetent before the offer is accepted, the offer is automatically terminated.

Illusory Promise

If one party's promise contains either no obligation or only an apparent obligation obligation to the other. Fails or lacks mutuality.

Counteroffer

If the offeree purports to accept an offer but in doing so makes any change to the terms of the offer.

What is a bilateral contract?

If the offeror extends a promise and asks for a promise in return and if the offeree accepts the offer by making the promise, the contract is called a bilateral contract. One promise is given in exchange for another, and each party is bound by the obligation.

Who is the obligor/obligee?

If the promise is binding, it imposes on the promisor a duty or obligation, and the promisor may be the obligor. The promisee who can claim the benefit of the obligation is called the obligee.

Factual Incapacity

May exist when because of a mental condition caused by medication, drugs, alcohol, illness, or age, a person does not understand that a contract is being made or understand its general nature.

What can a court not do?

May not rewrite the agreement of the parties in order to make it definite.

Aon Risk Services Inc. v. Meadors

Meadors sued his employer for breach of unilateral contract when he did not receive bonus-pool money. The employer's defense was that the memo was not sufficiently definite to constitute an offer. An offer cannot be accepted so as to form a contract unless the terms are reasonably certain. To bind the employer, an offer must be definite in form and must be communicated to the offeree. The interdependency memo in this case does not merely set out general goals and philosophies of compensation. It sets out specific percentages of premiums. Therefore, it is not indefinite.

What is unjust enrichment?

1. A benefit conferred on the defendant, 2. the defendant's knowledge of the benefit, and 3. a finding that it would be unjust for the defendant to retain the benefit without payment. The burden of proof is on the plaintiff to prove all of the elements. Ex: college tuition but received no credit would not be appropriate.

What is a contract?

A legally binding agreement or an agreement creating an obligation. Each party is legally bound to do or to refrain from doing certain acts. "A contract is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty."

Punitive damages

Additional damages beyond compensatory damages and may be a percentage of the company's net worth. Under antitrust statutes consumers can collect these damages for a violation.

What is an agreement?

An agreement arises when one person, the offeror, makes an offer and the person to whom the offer is made, the offeree, accepts. There must be both an offer and an acceptance.

Consumer Product Safety Act of 1972

Authorizes any interested person to bring a civil action to enforce a consumer product safety rule and certain orders of the Consumer Product Safety Commission.

What is the intent?

Because a contract is based on the consent of the parties and is a legally binding agreement, it follows that the parties must have an intent to enter into an agreement that is binding.

"best efforts" clauses

Best effort must be put into following through with the contractual obligation.

What constitutes ratification?

Consists of any words or conduct of the former minor manifesting an intent to be bound by the terms of a contract made while a minor.

Mailbox Rule

A properly addressed, postage-paid mailed acceptances takes effect when the acceptance is placed into the control of the U.S. Postal Service or, by judicial extension, is placed in the control of a private third-party carrier. The acceptance is effective upon dispatch even before it is received by the offeror. May avoid by stating it may only take effect by receipt.

Output Contract

The contract of a producer to sell the entire production or output to a given buyer.

Cosigner

The cosigner is bound independently of the minor. If the minor disaffirms the contract, the cosigner remains bound by it.

Employers monitor employees by

Key stroking, blocking software, monitoring/searching emails, and checking blogs/social media.

Exceptions to definiteness:

The indefinite term is often tied to the concept of good-faith performance or to some independent factor that will be definitely ascertainable at some time in the future. It may be tied to market price, cost to complete, production, or sales requirements.

What is the right of first refusal?

This imposes only the duty to make the first offer to the party having the right of first refusal.

Divisible Contract

When the agreement consists of two or more parts and calls for corresponding performances of each part by the parties.

Preclusion by an express contract

Where an express contract exists, it precludes an unjust enrichment claim.

What is the test for a valid, binding offer?

Whether it induces a reasonable belief in the offeree that he or she can, by accepting it, bind the offeror.

What is a void agreement?

Without legal effect. An agreement that contemplates the performance of an act prohibited by law is usually incapable of enforcement; hence it is void.

Mutual Mistake

A contract based on a mutual mistake in judgment is not voidable by the adversely affected party.

Minors

A contract made by a minor is voidable at the election of the minor.

Option Contracts

A binding promise to keep an offer open for a stated period of time or until a specified date. Must receive consideration - money - to keep the offer open.

Requirements Contract

A contract to buy all requirements of the buyer from the seller.

Disclosure of identity

Must be illegal/harmful activity. False information requires disclosure but opinions do not.

What are the elements of a contract?

1. An agreement, 2. Between competent parties, 3. Based on the genuine assent of the parties that is, 4. Supported by consideration, 5. Made for a lawful objective, and 6. In the form required by law, if any.

Status Incapacity

Minors.