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Legal Detriment

(1) doing (or undertaking to do) that which the promisee was under no prior legal obligation to do or (2) refraining from doing (or undertaking to refrain from doing) that which he was previously under no legal obligation to refrain from doing.

Requirements of Agency

- no particular formality usually is required in a contract of agency, although appointments of agents for a period of more than one year must be in writing

Elements of Consideration

-Legal Sufficiency (something of value) and bargained for exchange. -Consideration is only present when both parties intended to make an exchange

When Agent is Liable

1 Partially disclosed or undisclosed principal 2. Agent agrees to be liable 3. If agent didn't have authority or exceeds their authority.

Wrongful threat

1. Crime/Tort 2. Public Policy A. threat to criminally prosecuted (ex: work for someone that catches you steal and makes you sign a contract to pay money or will file criminal charges) B. Deep Disgrace- threat to making something known (ex: women gets everything or will tell the kids about the affair) C. Economic Duress- other party of contract that deliberately puts the other in economical threat oPhysical Violence- VOID oViolence other than physical- VOIDABLE

Statute of Limitations

4 years...waited too long to sue

Undue Influence

"Confindential relationship" one person is in the position to dominate the other. Unfair persuasion

Quasi Contract

An obligation not based on contract that is imposed to avoid injustice

Fair Labor Standards Act 1938

Applies to any company of: Interstate commerce $500,000 gross annual sales

Equal Pay Act 1963

Based on discrimination of gender. Prohibited employers from paying less for the same work.

Joint Venture

Basically a partnership between two companies for certain products

Foreign Corrupt Practices Act

Aimed at bribery - bribery of foreign countries by American corporations Grease payment OK to do Considered a bribe if up to officials if they are to get the license or not

Informal Contract

All contracts other than formal contracts

Exclusive Dealing Contract

Grant to a franchise or licensee by a manufacturer of the sole right to sell goods in a defined market

Defenses of reasons to pay different

Seniority system Merit A professionally developed ability test Performance results Occupational qualifications (ex: education)

Fraud in the Execution

Signed something that you don't know what it is about. Excusable and VOID.

Violations of Statues

The courts will not enforce an agreement declared illegal by statute.

Illegal Bargains are unenforceable

The illegal bargain is made unenforceable (1) to discourage such undesirable conduct and (2) to preclude the inappropriate use of the judicial process in carrying out such socially undesirable bargains.

Bilateral Contracts

The parties exchange promises. Thus, each party is a promisor and a promisee. Ex: I promise to pay Bob to mow my lawn for $20, Bob promises me to mow his lawn

Capacity

The parties to a contract must have contractual capacity. Certain persons, such as those adjudicated (judicially declared) incompetent, have no legal capacity to contract, while others, such as minors, incompetent persons, and intoxicated persons, have limited capacity to contract. All others have full contractual capacity.

Mutual Assent

The parties to a contract must manifest by words or conduct that they have agreed to enter into a contract. The used method of showing mutual assent is by offer and acceptance.

Remedy of Quasi Contract

The plaintiff recovers the reasonable value of the benefit she conferred upon the defendant

Legality of Object

The purpose of a contract must not be criminal, tortuous, or otherwise against public policy.

Rejection

The refusal to accept an offer that generally terminates the power of acceptance. Goes into effect when received. When gives a condition, it is a rejection.

Effect of Illegality

Unenforceability- neither party may recover under an illegal agreement where both parties are in pari delicto (in equal fault)

Mistakes are held when

Unilateral Assumption of Risk Mistake of law of your state

Fraud in the Inducement

VOIDABLE to the victim. 1. Misrepresentation of Material Fact (not opinion) 2. Scienter- intent to defraud or reckless in ignoring truth 3. Reliance- Have to have relied on it when enter into agreement 4. Damage

Assignment of Rights

Voluntary transfer to a third party of the rights arising from a contract so that the assignor's right to performance is extinguished

Output Contract

Where one agrees to sell all of output. Must be in good faith.

Duress

Wrongful threat that deprives someone of his or her free will Must have both threat and deprivation of free will.

Mental Illness or Defect

a contract entered into by a mentally incompetent person (one who is unable to understand the nature and consequences of his acts) is voidable

Intoxicated Persons

a contract entered into by an intoxicated person (one who cannot understand the nature and consequences of her actions) is voidable

Bilateral Contract

a contract in which both parties exchange promises

Third Party Beneficiary Contracts

a contract in which one party promises to render a performance to a third person (beneficiary)

Unilateral Contract

a contract in which only one party makes a promise

Implied contract

a contract in which the agreement of the parties is inferred from their conduct.

Executed Contract

a contract that has been fully performed by all of the parties

Executory Contract

a contract that has been fully performed by all of the parties

Injunction

a formal court order commanding a person to refrain from doing a specific act or to cease engaging in specified conduct

Minors Liability for Necessaries

a minor is liable for the reasonable value of necessary items (those that reasonably supply a person's need)

Minor's Liability on Contracts

a minor's contracts are voidable at the minor's option

Independent Contractor

a person who contracts with another to do a particular job and who is not subject to the other control over the manner and means of conducting the work.

Sunday Statutes

a prohibition of certain types of commercial activity on Sunday (also called Blue Laws)

Nominal Damages

a small sum awarded where a contract has been breached but the loss is negotiable or unproved.

Donee Beneficiary

a third party intended to receive a benefit from the contract as a gift

Creditor Beneficiary

a third person intended to receive a benefit from the agreement to satisfy a legal duty owed to her

General Rule of Acceptance

acceptance effective upon dispatch unless the offer specifically provides otherwise or the offeree uses an unauthorized means of communication.

Unathuroized Means of Acceptance

acceptance effective when received, provided that it is received within the time within which the authorized means would have arrived.

Ratification

affirmation of the entire contract; may be done upon reaching majority

Requirement Contract

agreeing to buy as much supply as needed

Corrupting Public Officials

agreements that corrupt public officials are not enforceable

Formal Contract

an agreement that is legally binding because of its particular form or mode of expression

Expressed Contract

an agreement that is stated in words, either orally or in writing

Tortious Conduct

an agreement that requires a person to commit a tort is unenforceable

Employment Contracts

an employment contract prohibiting an employee from competing with his employer for a reasonable period following termination is enforceable provided the restriction is necessary to protect legitimate interests of the employer

Rights of Intended Beneficiaries

an intended done beneficiary may enforce the contract against the promisor; an intended creditor beneficiary may enforce the contract against either or both the promisor and the promisee

Unliquidated debt

an obligation disputed as to either its existence or its amount. A promise to settle a validly disputed claim in exchange for an agreed payment or other performances is supported by consideration.

Liquidated debt

an obligation the existence or amount of which is undisputed.Under common law, the partial payment of a sum of money in consideration of a promise to discharge a fully matured, undisputed debt is legally insufficient to support the promise of the discharge.

Compensatory Damages

are for the purposes to compensate for loss. Contract damages placing the injured party in a position as good as the one he would have held had the other party performed; equals loss of value minus loss avoided by injured party plus incidental damages plus consequential damages

Liquidated Damages

are stipulated in the contract. "If you breach the damages will be for X amount of dollars". If amount set is viewed as reasonable estimate, courts will enforce. If amount is way beyond, the court will ignore it and you'll have to prove it.

Auctions "without reserve"

as long as a bid is made, bidder is entitled

Disaffirmance

avoidance of the contract; may be done during minority and for a reasonable time after reaching majority.

Partnership

co owner business for profit Sharing of profits= prima facir evidence of partnership Whenever sharing profits, both parties are liable (prima facir evidence). Also liable for what other partners do in the scope of the business.

Agency

consensual relationship authorizing one party (the agent) to act on behalf of the other party (the principal) subject to the principal's control

Legal Sufficiency

consists of either a benefit to the promisor or a detriment to the promisee. In other words, in return for the promise the promisee must give up something of legal value or the promisor must receive something of legal value

Novation

contract, to which the obligee is a party, substituting a new promisor for an existing promisor, who is consequently no longer liable on the original contract and is not liable as a delegator

Person Under Guardianship

contracts made by a person placed under guardianship by court order are void

Specific Performances

court order to make the other party to perform the contract. Can only do when unqiue

Delegator

delegator is still bound to perform original obligation

Defective Acceptance

does not create a contract but serves as a new offer.

Partially Disclosed Principal

don't know party on the other sided of contract. Principal-liable, third party-liable, agent-liable

Comparable Worth

equal pay for jobs that are of equal value to the employer

Usury Statutes

establish a maximum rate of interest

Licensing Statutes

every jurisdiction has laws requiring a license for those who engage in certain trades, professions, or businesses. Some licensing statues require schooling and/or examination, while others require only financial responsibility and/or good moral character.

Expressed Warreaty

explicitly made contractual promise regarding contract rights transferred

Acceptance following a Prior Rejection

first communication received by the offeror is effective

Corporation

formed by the state Shareholders are the owners Corporation is a legal separate entity. Double taxation (Corporation and shareholders pay taxes) Shareholders are not personally liable for debt of corporation. However, if the shareholder is the person who committed the tort, her is liable. In a small corporation with little assets, the bank can make you guarantee which would make you liable. Shareholders elect Board of Directors The board of directors elect officers who do day to day business.

Revocation

generally an offer may be terminated at any time before it is accepted, subject to the following exceptions: Option Contract- contract that binds offeror to keep an offer open for a specified time Firm Offer- a merchant's irrevocable offer to sell or buy goods in a signed writing ensures that the offer will not be terminated for up to three months.

Punitive Damages

generally cannot get for breach of contract. Typically for intentional torts. Purpose is to punish the defendant. Purpose also to encourage defendant not to do again.

Liability of the Principal

generally employers are liable for the actions of employees. Independent contractors- normally contractors are not liable for principals (the individual would be liable)

Scope of Agency Purposes

generally, whatever business activity a person may accomplish personally he may do through an agent

The victim of damages

has the duty to mitigate damages (lessen damages)

Minors Liability for Tort Connected with Contract

if a tort and a contract are so intertwined that to enforce the tort the court must enforce the contract, the minor is not liable in tort

Implied Warreaty

imposed by law upon the assignor of a contract right

Defenses against Beneficary

in an action by the intended beneficiary of a third party contract to enforce the promise, the promisor may assert any defense that would be available to her if the action had been brought by the promisee

Requirements of an Assignment

include intent but not consideration

Disclosed Principal

know who party is on the other side of contract. Principal is liable. Third party liable and Agent is NOT liable.

Regulatory License

licensing statute that is intended to protect the public against unqualified persons; an unlicensed person may not recover for services she has performed.

Revenue License

licensing statute that seeks to raise money; an unlicensed person may recover for services he has performed.

Exculpatory Clauses

the courts generally disapprove of contractual provisions excusing a party form liability for her own tortuous conduct

Considerations

the inducement to enter into a contract. An inducement to make a promise is enforceable

Adequacy

the law will regard consideration as adequate if the parties have freely agreed to the exchange.

The Sale of Business

the promise by the seller of a business not to compete in that particular business in a reasonable geographic area for a reasonable period of time is enforceable

Subsequent Illegality of offers

the purpose or subject matter of the offer terminates the offer. Example: Made the offer, then the law changed.

Requirements of a Quasi Contract

A court will impose a quasi contract when (1) the plaintiff confers a benefit upon the defendant, (2) the defendant knows or appreciates the benefit, and (3) the defendant's retention of the benefit is inequitable

Unilateral Contracts

A promise is exchanged for a completed act or a forbearance act to act. Ex: I promise to pay Bob to mow my lawn for $20

UCC- intent to enter into a contract

Must have Subject Matter, Clear Intent, and Quantity

Void Contract

No contract at all; without legal effect

Acceptance of Offers

Normally takes effect when dispatched UNLESS: -Offer states acceptance must be received -Accept by unreasonable means -If rejection is dispatched

Mistakes are not held when

Palpable (Obvious) Mutual Mistake of Fact Law of other state

Assignor

Party making agreement

Asignee

Party to whom contract rights are assigned

Damages

Primary remedy for contracts

Restitution

Return of consideration

Minors

persons who are under the age of majority (usually 18 years)

Liability for Misrepresentation of Age

prevailing view is that a minor may disaffirm for contract

Gambling Statutes

prohibit wagers, which are agreements that one party will win and the other party will lose depending upon the outcome of an event in which their only interest is the gain or loss.

Illusory Promises

promise the imposes no obligation on the promisor. The following are NOT illusory: Output Contract, Requirements Contract, Exclusive Dealing Contract, Conditional Promise

Auctions "with reserve"

seller has the right to withdrawl

Promises Made Enforceable by Statute

some gratuitous promises have been made enforceable by statute, the Code makes enforceable (1) contract modifications (2) renunciations and (3) firm offers.

Destruction of subject matter of an offer

terminates the offer

Authorized Means of Acceptance

the Restatement and the Code provide that unless the offer provides otherwise, acceptance is authorized to be in any reasonable manner

Unconscionable Contracts

unfair or unduly harsh agreements are not enforceable

Violation of Public Policy

unreasonable restraints of trade are not enforceable

Revocability of Assignment

when the assignee gives consideration the assignor may not revoke the assignment without the assignee's consent

Restitutuon only available

when unique (land, painting, shares in a small corp). Where can't reasonably substitute.

Power of Attourney

written, formal appointment of an agent

Voidable

A contract capable of being made void. When you're trying to protect someone •Minors •Fraud (infraudant) the victim can decide (the minor or fraudant)

Unenforceable

A contract for the breach of which the law provides no remedy

Promissory Estoppel

Doctrine that prohibits a party from denying her promise when the promisee takes action or forbearance to his detriment reasonably based upon the promise

Undisclosed Principal

Don't know who is on the other side of contract. A, T, and P are all liable

Consideration

Each party to a contract must intentionally exchange a legal benefit or incur a legal detriment as an inducement to the other party to make a return exchange.

Common Law Contracts

Everyone has to agree to the contract

Delegability

Most contracts duties may be delegated except: oDuties that are personal oDuties that are expressly nondelegable oDuties whose delegation is prohibited by statute or public policy

Innocent Misrepresentation

Like Fraud, except there is no scienter. Misrepresented, but didn't mean to do it. Has Misrepresentation of Material Fact, Reliance, and Damage

Limited Liability Corporation (LLC)

Makes most sense for smaller companies Must go through state government Not double taxed There are members (instead of shareholders)

Legal Benefit

means the obtaining by the promisor of that which he had no prior legal right to obtain.

Limited Partnership

must go through state government Atleast one general partner + Limited partners

When Principal is liable

oAgent had authority 1. Expressed Authority 2. Implied Authority. If the agent had apparent authority actually no authority

Most contract rights are assignable except

oAssignments that materially increase the duty, risk, or burden upon the obligot oAssignments of personal rights oAssignments expressly forbidden by the contract oAssignment prohibited by law

Essentials of an Offer

oIndication of willingness to enter into a contract oCommunication- offeree must have knowledge of the offer and the offer must be made by the offeror to the offeree. oIntent- determined by an objective standard of what a reasonable offeree would have believed oDefiniteness- offer's terms must be clear enough to provide a court with a basis for giving an appropriate remedy

Treaties

oTrade issues World Trade Organization (WTO) oGATT General Agreements of Trade "most favorable nation status" oGATT says you will treat all nations on the list the same EXCEPT: Free trade zones and developing nations (can treat better)

Death or Insanity

of either offeror or offeree terminates the offer

Duration of Offer - Lapse of time

offer remains open for the time period specified or, if no time is stated, for a reasonable period of time

Employment Relationship

one in which the employer has the right to control the manner and means of the employees performance of work

Sole Proprietorship

one person starts as business. Owner gets profits Easy to form Owner=business, so any debt of the business is debt of the owner

Conditional Promise

one where the obligations are contingent upon the occurence of a stated event

Substantive Unconscionability

oppressive or grossly unfair contractual terms

Obligor

party owing duty to the assignor under the original contract

Obligee

party to whom a duty of performance is owed under contract

Intended Beneficiaries

third parties intended by the two contracting parties to receive a benefit from their contract

Incidental Beneficiary

third party whom the two parties to the contract have no intention of benefiting by their contract and who acquires no rights under the contract

Creation of Agency

though agency is a consensual relationship that may be formed by contract or agreement between the principal and agent, agency may exist without consideration

Partial Assignment

transfer of a portion of contractual rights to one or more assignees

Delegation of Duties

transfer to a third party of a contractual obligation

Procedural Unconscionability

unfair or irregular bargaining