MGMT 311 Exam III

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What are the three requirements of a release?

1. The agreement is made in good faith (honestly). 2. The release contract is in a signed writing (required in many states). 3. The contract is accompanied by consideration.

Merger clause

A clause in a written agreement within the statute of frauds which states that the written agreement accurately reflects the final, complete version of the agreement.

Exculpatory clauses

A clause that releases a contractual party from liability in the event of monetary or physical injury, no matter who is at fault.

Mirror image rule

A common law rule that requires, for a valid contractual agreement, that the terms of the offeree's acceptance adhere exactly to the terms of the offeror's offer.

Condition precedent

A condition in a contract that must be met before a party's promise can be required

Release

A contract in which one party forfeits the right to pursue a legal claim against the other party. Ex: Lupe's car is damaged in an automobile accident caused by Dexter's negligence. Dexter offers to give her $3,000 if she will release him from further liability resulting from the accident. Lupe agrees and signs the release. If Lupe later discovers that it will cost $4,200 to repair her car, she normally cannot recover the additional amount from Dexter.

Intoxicated persons

A contract is voidable if it was made by a person who was so intoxicated that his or her judgment was impaired and he or she did not comprehend the nature of the transaction and the legal consequences of entering into the contract.

Unconscionable Contract or Clause

A contract may be unconscionable if a party who is receiving an unusually greater benefit has superior bargaining power or if the contract "shocks the conscious" of the court

Informal Contracts

A contract that does not require a specified form or formality in order to be valid.

E-contracts

A contract that is entered into in cyberspace and is evidenced only by electronic impulses (such as those that make up a computer's memory), rather than, for example, a typewritten form.

Unilateral contract

A contract that results when an offer can be accepted only by the offeree's performance. Comes into existence the moment the contact is performed. Ex: Reese says to Celia, "If you drive my car from New York to Los Angeles, I'll give you $1,000." Only on Celia's completion of the act—bringing the car to Los Angeles—does she fully accept Reese's offer to pay $1,000. If she chooses not to accept the offer to drive the car to Los Angeles, there are no legal consequences.

Valid Contract

A contract that results when the elements necessary for contract formation (agreement, consideration, contractual capacity, and legality) are present.

Unliquidated debt

A debt that is not settled, fixed, agreed on, ascertained, or determined and reasonable persons may differ over the amount owed.

Promissory Estoppel

A doctrine that applies when a promisor makes a clear and definite promise on which the promisee justifiably relies. Such a promise is binding if justice will be better served by the enforcement of the promise.

Any _______________ that discharges oil into navigable waters or onto an adjoining shore may be liable for clean-up costs and damages (4 responsible parties).

1. Oil Facility 2. Oil Shipper 3. Vessel Owner 4. Vessel Operator

Clayton Act 2 illegal actions (that we will be tested on)

1. Price Discrimination 2. Exclusionary Practices

Before a court can determine if a firm has dominant market share, the relevant market must be defined, which usually consists of two factors

1. Relevant product market 2. Relevant geographic market

Agreement: Requirements of the offer

1. Serious Intent 2. Reasonably certain and definite terms 3. Communication

Vertical Restraints illegal under the federal laws

1. Territorial or Customer Restrictions 2. Resale Price Maintenance Agreements

Novation

The third person is substituted for one of the party entitled to receive the performance, while the original obligation of the prior party is extinguished and the prior party is discharged.

Frustration of purpose

a contract will be discharged if unforeseen supervening circumstances make it impossible to attain the purpose both parties had in mind when they made the contract.

Material fact

a fact that a reasonable person would consider important when determining his or her course of action

Changing market conditions

a seller may lower its price on an item in response to changing conditions affecting the market for or the marketability of the goods concerned

Impossibility of performance

A doctrine under which a party to a contract is relieved of his or her duty to perform when performance becomes impossible or totally impracticable (through no fault of either party).

What is a release?

A release discharges (or abandons) a person's or company's right of action. Releases normally must be supported by adequate consideration.

Recission

A remedy whereby a contract is canceled and the parties are returned to the positions they occupied before the contract was made; may be effected through the mutual consent of the parties, by their conduct, or by court decree.

The one-year rule

A rule that states that an executory contract that cannot be performed by its own terms within one year of its formation must be in writing. Not about probability, but possibility.

Voidable Contract

A valid contract exists but one or more of the parties has the optiom of avoiding his or her contractual obligation. The party with the option can election to void the contract or ratify it.

Unenforceable contract

A valid contract rendered unenforceable by some statute or law. Ex: If a contract needs to be in writing, and is not, it will be unenforceable unless exceptional circumstances exist

Misrepresentation of a material fact

An element of fraud that occurs when a wrongdoer makes a false representation of material fact to another person through words or actions

T/F: A benefit/enrichment of the dominant party in a fiduciary relationship does not beckon a presumption of undue influence

T/F: An accord and satisfaction can take place if a debt is liquidated

T/F: An inquiry made by an offeree constitutes rejection of the offer

T/F: An intoxicated person is not responsible to pay anything for furnished necessaries

T/F: Delay destroys the performing party's right to payment

T/F: For consideration, an economic or material loss must be incurred by the promisee, or an economic or material benefit be received by the promisor

T/F: Good reason in regard to price fixing is a reasonable defense

T/F: Ordinarily, silence constitutes acceptance

T/F: State Law supercedes E-SIGN

T/F: The contract will not be voided if the intoxication was purely voluntary

T/F: The legal guardian of a mentally incompetent person cannot void contracts made by the subject

T/F: The parties must perform the contract as originally planned even if the lapse in time has allowed for significant burden to occur

T/F: The selling of a site relieves owner of clean-up duty

T/F: The time for performance is a fairly easy argument to win

T/F: When parties have tried to use a vague term, courts will supply a reasonable term in its place

T/F: Duty already bound by a contract can serve as consideration for a second contract.

F Ex: If a teacher refuses to turn in grades unless she is given $1000, there is no legal requirement to pay her money

T/F: Monopolies in and of themselves are unethical

F, How companies go about acquiring market power and what they do with that power is what makes a monopoly bad

Toxic Tort

a theory of negligence or strict liability against those who pollute the environment with toxic substances

T/F: Most states require members of certain professions—including physicians, lawyers, real estate brokers, accountants, architects, electricians, and stockbrokers—to have licenses.

F, all states require this

T/F: An offeree can communicate a material change in addition to the terms of the original offer without rejecting the offer.

F, any change constitutes a counteroffer, implying rejection of the initial offer.

T/F: If these requirements are met, a promise may be enforced so long as the promise is enforced by consideration

F, consideration is not necessary

T/F: Failure to commence an action or suit within the period of limitation bars access to judicial remedies and extinguishes a debt or underlying obligation

F, does not extinguish debt or underlying obligation

T/F: Both parties are still bound to their contract, despite bilateral mistakes

F, either can rescind

T/F: Minors may disaffirm contracts during minority for a limited period of time

F, for a reasonable period of time

How did Rockefeller thwart the system?

He went to small gas companies, talked them into selling their companies into his in exchagne for stock in his trust. Once he had companies under his control, he fixed prices and control production. People who joined him made millions.

What kinds of companies frequently utilize exculpatory clauses?

Health clubs Racetracks Amusement parks Skiing facilities Horse-rental operations Golf-cart concessions Skydiving organizations

T/F: Even in states that permit certain types of gambling, though, courts often find that gambling contracts are illegal.

T/F: Failure to complain can mean that the delay has been waived

T/F: Gambling is regulated in all states

T/F: If the breach is a minor, nonmaterial one, the breaching party is liable for damages if the breach is not cured.

T/F: If the offer states that it will be left open until a particular date, then the offer will terminate at midnight on that day.

T/F: If the other party induced the intoxication, the contract will be voidable

T/F: Illegal monopolization requires monopoly power, and that the firm acquired or maintained that power by using exclusionary conduct

T/F: Injury/Harm only has to be proven to collect damages

T/F: Mental incompetency can be declared if the subject cannot understand or comprehend the nature and effect of a particular transaction.

T/F: Mistakes must involve some material fact

T/F: Once the temporary event ends, the parties ordinarily must perform the contract as originally planned.

T/F: Online offers must have clear and specific terms

T/F: Parties must stipulate when time is of the essence

T/F: Parties typically redraw a contract if the old one is burdensome after a lapse of time

T/F: Past Consideration is not consideration

T/F: Promissory Estoppel will protect a person who has suffered a loss after they acted according to another person's promise

T/F: Ratification can occur during a lucid interval, even after the incompetency period

T/F: Restitution is required

T/F: Silence constitutes acceptance when the offeree has had prior dealings with the offeror

T/F: Some statutes expressly provide that contracts which are made by unlicensed persons are void and unenforceable

T/F: Sometimes, the object or performance of a contract is rendered illegal by a statute after the parties entered into the contract. In that situation, the parties are considered to be discharged from their obligations by law.

T/F: The act must be wrongful or illegal to constitute duress

T/F: The court doesn't often consider the amount of consideration

T/F: The doctrine of impossibility of performance applies only when the parties could not have reasonably foreseen, at the time the contract was formed, the event that rendered performance impossible.

T/F: The intoxicated party's contract will not be voidable if they understand the consequences of the contract

T/F: The mentally incompetent party is liable for the reasonable value of furnished necessaries

T/F: The party unaware of material alteration can treat the contract as enforceable in accordance with the original terms or with the terms as altered

T/F: The presumption may be rebutted by showing that a full disclosure was made, the consideration that was received was adequate and/or competent, and independent advice was received by the weaker party

T/F: The tendering party is discharged if his tender is not accepted

T/F: There is a rebuttable presumption of undue influence when the parties are in a familiar or fiduciary relationship based on trust and confidence, and the contract is highly unfair to the dominant party

T/F: To collect damages, the innocent party must have been harmed as a result of the misrepresentation.

T/F: UETA only applies to electronic records and signatures "relating to a transaction"

T/F: When parties create a new contract at the same time of the rescinding, it is difficult to determine whether there was consideration for the new contract, or whether the parties had a preexisting duty under the previous contract.

T/F: Words or conduct can be used by minors to express intent not to be bound

T/F: the party has the option of disaffirming the contract while intoxicated and for a reasonable time after becoming sober

T/F: In general, a unilateral mistake does not give the mistaken party any right to relief from the contract.

T Ex: Elena intends to sell her jet ski for $2,500. When she learns that Chin is interested in buying a used jet ski, she sends him an e-mail offering to sell the jet ski to him. When typing the e-mail, however, she mistakenly keys in the price of $1,500. Chin immediately sends Elena an e-mail reply accepting her offer. Even though Elena intended to sell her personal jet ski for $2,500, she has made a unilateral mistake and is bound by the contract to sell it to Chin for $1,500.

T/F: Any issue of land is usually a mistake of value

T, exception would be Raffles v. Wichelhaus

T/F: A gambling contract is legal unless it is specifically prohibited by state statute.

T, however only a few states actually permit gambling

T/F: E-contracts must meet the same basic requirements as paper contracts

T, however, cases tend to center on contract terms and whether the parties voluntarily agreed to those terms

T/F: A minor exercising his or her right is required to disaffirm the entire contract

T, no cherrypicking

T/F: Being taken advantage of is the essential feature of undue influence

T, the existence of a fiduciary relationship alone is insufficient to prove undue influence.

Breach

a violation of contract that leads to liability, because both parties have duties to each other

Performance to the Satisfaction of another

a) Contract is Personal: condition precedent - must act in good faith. b) Non-Personal: generally held to reasonable person standard unless expressly stated otherwise

E-signatures

an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record

Vertical Restraints

any agreement between firms at different levels in the manufacturing and distribution process. Encompass the entire chain of production -- purchases of inputs, basic manufacturing, distribution to wholesalers, and retail sales.

Restraint of Trade

any agreement between firms that has the effect of reducing competition in the marketplace

Preexisting Duty Rule

doing something that one already has a legal duty to do or promising to do what one already has a legal duty to do is not legally sufficient consideration for another's purpose. The preexisting legal duty may be imposed by law or may arise out of a previous contract.

Contractual Capacity

each party to a contract must be recognized as being legally competent to enter into contracts

Safe Drinking Water Act

empowers the EPA to set maximum levels for pollutants in public water systems.

Bilateral contract

reciprocal promises are exchanged by the parties so that the promise of one party is exchanged for the promise of the other "Promise for a promise" Contract comes into existence the moment the promises are exchanged

If a potentially responsible party (PRP) refuses to pay the expenses of cleaning up a toxic site, the EPA may

recover costs from the PRPs

Minors

under 18

Mutual Rescission

undoing the contract: both parties agree

Accord and Satisfaction

unliquidated debts between creditor and debtor may be settled by the debtor offering to pay and creditor accepting less than the creditor originally claimed.

forbearance

(1) The act of refraining from exercising a legal right. (2) An agreement between a lender and a borrower in which the lender agrees to temporarily cease requiring mortgage payments, to delay foreclosure, or to accept smaller payments than previously scheduled.

Discharge

(1) The termination of an obligation, such as occurs when the parties to a contract have fully performed their contractual obligations. (2) The termination of a bankruptcy debtor's obligation to pay debts.

Sarvis v. Vermont State Colleges

*This is an example based on the case* Richard Wright applies for a position as a business law professor two weeks after his release from prison. On his résumé, he lies and says that he was a corporate president for fourteen years and taught business law at another college. After he is hired, his probation officer alerts the school to Wright's criminal history. The school immediately fires him. If Wright sues the school for breach of his employment contract, he is unlikely to succeed. Because Wright clearly exhibited an intent to deceive the college by not disclosing his history, the school can rescind his employment contract without incurring liability.

Suppliers of drinking water must send to every household a statement containing:

- Levels of contaminents in the water - Possible health concerns - Source of water

Exceptions to the preexisting duty rule

-Unforeseen difficulties -Rescission & New Contract

Example: Employment Contracts

1. A covenant that an employee will not start a competing business for a certain period after termination of employment. 2. Such covenant is legal so long as the time period and geographical area restrictions are reasonable. 3. California prohibits enforcement of non-compete agreements. 4. Texas requires additional consideration in exchange for signing the non-compete agreement to be enforceable.

Fraudulent Misrepresentation Elements

1. A misrepresentation of a material past or present fact 2. Intent to decieve 3. Justifiable reliance on misrepresentation

Requirements of a Valid Contract

1. Agreement 2. Consideration 3. Contractual Capacity 4. Legality

Attempts to Monopolize: requires proof of 3 elements

1. Anticompetitive behavior 2. Specific intent to exclude competition and garner monopoly power 3. "Dangerous" probability of success in achieving monopoly power

The Internet Corporation for Assigned Names and Numbers (ICANN) is a nonprofit entity that organizes Internet domain names. It is governed by a board of directors elected by various groups with commercial interests in the Internet. One of ICANN's functions is to authorize an entity to serve as a registry for certain "Top Level Domains" (TLDs). ICANN and VeriSign entered into an agreement that authorized VeriSign to serve as a registry for the ".com" TLD and provide registry services in accordance with ICANN's specifications. VeriSign complained that ICANN was restricting the services that it could make available as a registrar, blocking new services, imposing unnecessary conditions on those services, and setting the prices at which the services were offered. VeriSign claimed that ICANN's control of the registry services for domain names violated Section 1 of the Sherman Act. Using the information presented in the chapter, answer the following questions. 1. Should ICANN's actions be judged under the rule of reason or be deemed per se violations of Section 1 of the Sherman Act? Why? 2. Should ICANN's actions be viewed as a horizontal or a vertical restraint of trade? Why? 3. Does it matter that ICANN's directors are chosen by groups with a commercial interest in the Internet? Explain. 4. If the dispute is judged under the rule of reason, what might be ICANN's defense for having a standardized set of registry services that must be used?

1. Because ICANN is at a higher level of the distribution process than Verisign, it is imposing a vertical restraint. Since the vertical restraint that Verisign complains of involves restrictions on services that Verisign can offer (customer restrictions) and the setting of prices at which Verisign can sell its services (resale price maintenance agreement), ICANN's action should be judged under the rule of reason. 2. Because ICANN and Verisign are firms at different levels in the distribution of top-level domain names, the actions that Verisign complains of are a vertical restraint. ICANN, which is Verisign's superior, is allegedly placing restrictions on what services Verisign can offer, and how much it can charge for its services. This amounts to a vertical restraint. 3. If ICANN's directors were chosen by those with a commercial interest in the Internet, the directors might represent commercial interests with significant market power and restrain trade in violation of the Sherman Act. 4. ICANN's best defense is to assert that a standardized set of registry services is efficient and has the effect of promoting competition rather than suppressing it. Under the rule of reason, as long as an agreement is merely regulatory and does not unreasonably restrain trade, it should not be considered illegal.

5 requirements for promissory estoppel to be applied

1. Clear and definite purpose 2. Promisor expected the promisee to rely on the promise 3. Promisee reasonably relied on the promise by acting or refraining from some act. 4. Promisee's reliance is definite and resulted in substantial detriment. 5. Enforcement of the promise is necessary to avoid injustice.

Online acceptances

1. Click on Agreements 2. Browse-wrap terms

Two Types of behavior violate Section 2

1. Conduct pursured by a firm that is already a monopolist is condemned as a monopolization if the conduct interferes with free trade and is intented to preserve the firm's monopoly. 2. Conduct intended to capture monopoly power is condemned as an attempt to monopolize. Ex: of #2 is predatory pricing

Statute of Frauds Requirements

1. Contracts involving interests in land. 2. Contracts that cannot by their terms be performed within one year from the day after the date of formation. 3. Collateral, or secondary, contracts, such as promises to answer for the debt or duty of another and promises by the administrator or executor of an estate to pay a debt of the estate personally—that is, out of her or his own pocket. 4. Promises made in consideration of marriage. 5. Under the Uniform Commercial Code, contracts for the sale of goods priced at $500 or more.

Exceptions to applicability of E-SIGN Act

1. Court papers 2. Divorce Decrees 3. Evictions 4. Foreclosures 5. Health Insurance Terminations 6. Prenuptial Agreements 7. Wills

Impossibility of performance: 3 situations

1. Death, seious illness, incapacitation of a party who was to render services 2. Destruction of specific subject matter of contract 3. Change in law making performance illegal

Exculpatory Claims often violate public policy

1. Employment contracts relieving employer of liability for employee's on-the-job injury. 2. Rental of commercial property. 3. Residential property leases.

In what situations may intent be lacking?

1. Expression of opinion 2. Statements of intention to make a future offer 3. Preliminary negotiations, requests to negotiate 4. Invitations to bid 5. Advertisements, catalogues, circulars, price lists 6. Live and online auctions

Exceptions to the general rule of unilateral mistakes

1. The other party to the contract knows or should have known that a mistake of fact was made 2. The error was due to a substantial mathmatical mistake in addition, subtraction, division, or multiplication and was made inadvertently and without extreme negligence.

Substantial performance requirements

1. The party must have performed in good faith. Intentional failure to comply with the contract terms is a breach of the contract. 2. The performance must not vary greatly from the performance promised in the contract. An omission, variance, or defect in performance is considered minor if it can easily be remedied by compensation (monetary damages). 3. The performance must create substantially the same benefits as those promised in the contract.

The following persons may be held responsible for cleaning up the site:

1. The person who generated the wastes disposed of at the site. 2. The person who transported the wastes to the site. 3. The person who owned or operated the site at the time of the disposal. 4. The current owner or operator of the site.

3 steps to establish an implied contract

1. The plaintiff furnished some service or property. 2. The plaintiff expected to be paid for that service or property, and the defendant knew or should have known that payment was expected. 3. The defendant had a chance to reject the services or property and did not.

Rule of Reason violations: 4 factors used by the court

1. The purpose of the agreement 2. the parties power to implement the agreement to achieve the purpose 3. the effect or potential effect of the agreement on competition 4. whether the parties could have relied on a less restrictive means to achieve their purpose

Residents of Lake Caliopa, Minnesota, began noticing an unusually high number of lung ailments among the local population. Several concerned citizens pooled their resources and commissioned a study to compare the frequency of these health conditions in Lake Caliopa with national averages. The study concluded that residents of Lake Caliopa experienced four to seven times the rate of frequency of asthma, bronchitis, and emphysema as the population nationwide. During the study period, citizens began expressing concerns about the large volume of smog emitted by the Cotton Design apparel manufacturing plant on the outskirts of town. The plant had a production facility two miles east of town beside the Tawakoni River and employed seventy full-time workers. Just downstream on the Tawakoni River, the city of Lake Caliopa operated a public water works facility, which supplied all city residents with water. The Minnesota Pollution Control Agency required Cotton Design to install new equipment to control air and water pollution. Later, citizens sued Cotton Design for various respiratory ailments allegedly caused or compounded by smog from Cotton Design's factory. 1. Under the common law, what would each plaintiff be required to identify in order to be given relief by the court? 2. What standard for limiting emissions into the air does Cotton Design's pollution-control equipment have to meet? 3. If Cotton Design's emissions violated the Clean Air Act, how much can the EPA assess in fines per day? 4. What information must the city send to every household that it supplies with water?

1. To establish a common law cause of action for nuisance, each plaintiff would have to identify a distinct harm caused by the pollution that was separate from that affecting the general public. In other words, they would need to show how each of them was individually harmed by Cotton Design's emissions. 2. Major stationary sources of air pollution are required to use the maximum achievable control technology to reduce emissions. The EPA issues guidelines as to what equipment meets this standard, and the guidelines may vary depending on whether the source is new or existing and whether the area is clean or polluted. 3. $25,000 4. Under the Safe Drinking Water Act, suppliers must provide every household with: Levels of contaminents in the water, Possible health concerns, Source of water

Defenses to the Enforceability of a Contract

1. Voluntary consent 2. Form

Objective factors

1. Words - What the party said or wrote when entering into the contract 2. Actions - How the party acted or appeared 3. Circumstances - circumstances surrounding the transaction

Required terms of an offer

1. identify the parties 2. identify contract subject matter 3. consideration 4. (time of payment, delivery, performance

Termination by Operation of Law

1. lapse of time 2. destruction of the specific subject matter of the offer 3. death or incompetence of the offeror or the offeree 4. supervening illegality of the proposed contract

Voluntary consent may be lacking because...

1. mistake 2. misrepresentation 3. undue influence 4. duress

Plaintiff proves a section two case by proving...(2 things)

1. monopoly power: significant barriers for new companies to enter the market 2. intent to monopolize:

Exceptions to the writing requirements of the Statute of Frauds

1. partial performance 2. Admissions

Exculpatory clauses are sometimes enforced if:

1. they are reasonable 2. do not violate public policy 3. do not protect parties from liability for intentional misconduct 4. language used is unambiguous 5. parties have relatively equal bargaining positions

Joint Ventures

2 or more individuals in business entities join together in a particular commercial enterprise

Commercial Impracticability

A doctrine under which a seller may be excused from performing a contract when (1) a contingency occurs, (2) the contingency's occurrence makes performance impracticable, and (3) the nonoccurrence of the contingency was a basic assumption on which the contract was made.

Vertically integrated firms

A firm that carries out two or more functional phases (manufacturing, distribution, and retailing, for example) of the chain of production.

Option Contract

A form of irrevocable offer Separate contract that exists when an offeror has promised to hold the offer open and the offeree has given consideration for this promise of the offeror

Brantley v. NBC Universal

A group of consumers sued NBC Universal, Inc., the Walt Disney Company, and other broadcasters, as well as cable and satellite distributors. The consumers claimed that the bundling together of high-demand and low-demand television channels in cable and satellite programming packages violates the Sherman Act. Bundling forces consumers to pay for channels that they do not watch to have access to channels they watch regularly. The consumers argued that the defendants—through their control of high-demand programming—exercised market power that made it impossible for any distributor to offer unbundled programs. A federal appellate court ruled in favor of the defendants and dismissed the case. The court reasoned that the Sherman Act applies to actions that diminish competition and that the bundling of channels does not injure competition.

Monopoly

A market in which there is a single seller or a firm that, although not the sole seller in the market, can nonetheless substantially ignore rival firms in setting a selling price for its product or can in some way limit rivals from competing in the market

Bilateral mistake

A mistake that occurs when both parties to a contract are mistaken about the same material fact.

Unilateral Mistake

A mistake that occurs when one party to a contract is mistaken as to a material fact.

Nuisance

A person is liable if they use their property rights in a manner that unreasonably interferes with others; rights to use or enjoy their property

What is a counterclaim?

A plaintiff makes a claim. The defendant will often make a counterclaim, which is either in direct opposition to what the plaintiff is demanding or is an independent cause of action against the plaintiff.

Conditions

A possible future event, the occurrence or nonoccurrence of which will trigger the performance of a legal obligation or terminate an existing obligation under a contract. Ex: A contract to lease university housing, for instance, may be conditioned on the person's being a student at the university.

Emancipation

Act of removing minority status and is presented by status

Selleck v. Cuenca

Actor Tom Selleck contracted to purchase a horse named Zorro for his daughter from Dolores Cuenca. Cuenca acted as though Zorro were fit to ride in competitions, when in reality the horse was unfit for this use because of a medical condition. Selleck filed a lawsuit against Cuenca for wrongfully concealing the horse's condition and won. A jury awarded Selleck more than $187,000 for Cuenca's misrepresentation by conduct.

Gyabaah v. Rivlab Transportation

Adwoa Gyabaah was hit by a bus owned by Rivlab Transportation Corporation. Gyabaah filed a suit in a New York state court against the bus company. Rivlab's insurer offered to tender the company's policy limit of $1 million in full settlement of Gyabaah's claims. On the advice of her attorney, Jeffrey Aronsky, Gyabaah signed a release (a contract forfeiting the right to pursue a legal claim) to obtain the settlement funds. The release, however, was not sent to Rivlab or its insurer, National Casualty. Moreover, Gyabaah claimed that she had not decided whether to settle. Two months later, Gyabaah changed lawyers and changed her mind about signing the release. Her former attorney, Aronsky, filed a motion to enforce the release so that he could obtain his fees from the settlement funds. The court denied the motion, and Aronsky appealed. The reviewing court held that there was no binding settlement agreement. The release was never delivered to Rivlab or its insurer nor was acceptance of the settlement offer otherwise communicated to them.

US v. Apple

After Amazon.com released the Kindle e-book reader, it began selling e-book downloads at $9.99 (lower than the actual cost) and made up the difference by selling more Kindles. When the iPad entered the e-book scene, Apple and some book publishers agreed to use Apple's "agency" model, which Apple was already using for games and apps. The agency model allowed the book publishers to set their own prices while Apple kept 30 percent as a commission. The U.S. government sued Apple and the publishers for price fixing. Because the publishers involved in the arrangement chose prices that were relatively similar, the government argued that price fixing was evident and "would not have occurred without the conspiracy among the defendants." Ultimately, a federal appellate court held that Apple's agreement with publishers to raise e-book prices was a per se illegal price-fixing conspiracy. As a result, Apple was ordered to pay $400 million to consumers and $50 million in attorneys' fees.

Horizontal Market Division

Agreements to divide up the market between rival companies. This includes dividing up the territory or dividing up types of customers. Ex: AXM Electronics Basics, Halprin Servo Supplies, and Aicarus Prime Electronics compete against each other in the states of Kansas, Nebraska, and Oklahoma. The three firms agree that AXM will sell products only in Kansas, Halprin will sell only in Nebraska, and Aicarus will sell only in Oklahoma. This concerted action violates Section 1 of the Sherman Act. It reduces marketing costs and allows all three firms (assuming there is no other competition) to raise the price of the goods sold in their respective states. The same violation would take place if the three firms divided up their customers by class rather than region. They might agree that AXM would sell only to institutional purchasers (such as governments and schools) in all three states, Halprin only to wholesalers, and Aicarus only to retailers. The result would be the same.

McCullough v. Allstate Property and Casualty Insurance Co.

Allstate Property and Casualty Insurance Company issued a policy to Jerry McCullough, insuring his pickup truck. McCullough loaned the truck to an acquaintance who returned it damaged. McCullough filed a claim on the policy. Allstate treated the claim as involving multiple different claims (each with a $250 deductible) and reported these claims to Verisk Analytics Automobile Property Loss Underwriting Service (A-PLUS). Contending that the damage had resulted from only one claim, McCullough filed a suit in a federal district court against Allstate. The insurer agreed to settle the suit for $8,000. McCullough agreed to this amount, but only if Allstate corrected the report to reflect that he was making only one insurance claim and that Allstate paid nothing on that claim. (McCullough felt that the $8,000 settlement was not a payment for the damage to his truck.) Allstate's lawyer sent McCullough an e-mail agreeing to these terms, but the promise was not included in the release and settlement agreement that the parties signed. The release had a merger clause saying that there were no other agreements, verbal or otherwise, between the parties except as set forth in the contract. Later, McCullough learned that Allstate had reported to A-PLUS that it had paid $8,000 to him on his claim. He filed a suit in an Alabama state court against Allstate, seeking damages for fraud. Both parties filed motions for summary judgment. The court granted Allstate's motion and denied McCullough's. McCullough appealed. A state intermediate appellate court reversed the lower court's summary judgment in favor of Allstate, affirmed the court's denial of McCullough's motion for summary judgment, and remanded the case. Genuine issues of material fact precluded summary judgment on McCullough's claim for fraudulent misrepresentation.

Contracts to commit a crime

Always illegal, agreements are void

Mailbox rule

An acceptance is generally effective upon dispatch, meaning the moment it is out of the offeree's control. So long as it is sent before the termination of the offer, it is still valid.

resale price maintenance agreement

An agreement between a manufacturer and a retailer in which the manufacturer specifies what the retail prices of its products must be.

Price-fixing agreement

An agreement between competitors to fix the prices of products or services at a certain level.

Group Boycott

An agreement by two or more sellers to refuse to deal with a particular person or firm.

Agreement

An agreement to form a contract includes an offer and an acceptance.

Covenant not to sue

An agreement to substitute a contractual obligation for some other type of legal action based on a valid claim. Ex: If Lupe agrees not to sue Dexter for damages (if he will pay for the damage to her car), but Dexter fails to pay for the repairs, Lupe can bring an action against him for breach of contract.

Exclusionary Practices

An agreement under which a seller forbids a buyer to purchase products from the seller's competitors. Ex: In one classic case, Standard Oil Company, the largest gasoline seller in the nation in the late 1940s, made exclusive-dealing contracts with independent stations in seven western states. The contracts involved 16 percent of all retail outlets, whose sales were approximately 7 percent of all retail sales in that market. The United States Supreme Court ruled that the market was substantially concentrated because the seven largest gasoline suppliers all used exclusive-dealing contracts with their independent retailers and together controlled 65 percent of the market. Looking at market conditions after the arrangements were instituted, the Court found that market shares were extremely stable and that entry into the market was apparently restricted. Thus, the Court held that the Clayton Act had been violated because competition was "foreclosed in a substantial share" of the relevant market.

Trade Associations: Concentrated Industry

An industry in which a single firm or a small number of firms control a large percentage of market sales.

Temporary Impossibility

An occurrence or event that makes performance temporarily impossible operates to suspend performance until the impossibility ceases. Ex: War

Tender

An unconditional offer to perform an obligation by a person who is ready, willing, and able to do so.

Black v. Duffie

Annabelle Duffie was mildly mentally retarded and suffering from dementia. She had lived with her brother, Jerome, for her entire life. When Jerome died, he left Annabelle his property, including 180 acres near Hope, Arkansas, valued at more than $400,000. Less than three months later, Annabelle signed a deed granting her interest in the land to Charles and Joanne Black for $150,000. Later, when Annabelle's nephew, Jack, was appointed to be her legal guardian, he filed a lawsuit against the Blacks seeking to void the land deal because of Annabelle's lack of mental competence. The trial court ordered the Blacks to return the property to Annabelle, and a state appellate court affirmed. The evidence showed that Annabelle had been incompetent her entire life. She lacked the cognitive ability to make the complex financial decisions involved in selling property. Therefore, the contract was voidable.

Horizontal Restraint

Any agreement that restrains competition between rival firms competing in the same market.

Fraudulent Misrepresentation

Any misrepresentation, either by misstatement or by omission of a material fact, knowingly made with the intention of deceiving another and on which a reasonable person would and does rely to his or her detriment.

Procedural Unconscionability

Arises when a party's lack of knowledge or understanding of the contract terms deprived him or her of any meaningful choice

Need for Anti-Trust Laws

Arose around post Civil War Declining competition from actions of business persons legally tying themselves together in business trusts.

Lucy v. Zehmer (1954)

Background: Zehmer had a farm for generations, never selling it to anyone for any reason. Lucy offered Zehmer 50k for his farm while they were at a bar. Lucy got Zehmer to put it in writing, which they modified several times. discussed terms for 30-40 min and signed the napkin "contract." Issue 1: Is serious intent present? Issue 2: Intoxication Lucy won the case because there was mutual assent and the business was talked about long enough to not be considered joking. His claim to be too drunk was inconsistent with his ability to claim very specific details about what went down that night.

Estopped

Barred, impeded, or precluded.

Click-on agreement

Binding "I agree" button

2 ways a promisee can incur legal detriment

By doing or promising to do something that he or she (the promisee) had no prior legal duty to do By refraining or promising to refrain from doing something that he or she (the promisee) had no prior legal duty to refrain from doing

T/F: "I accept the offer, but can you give me a better price?" is not an effective acceptance.

Chapter 12: Formation of Traditional and E-Contracts

Chapter 13: Contract Performance, Breach, and Remedies

Chapter 25: Environmental Law

Chapter 27: Antitrust Law

Accord

Contract to perform some act to satisfy an existing contractual duty that is not yet discharged

Function of Contract Law

Contracts create expectations as to how parties to agreements will conduct themselves in the future If a party to a valid contract does not carry out a promise, a court will enforce the contract and provide some form of relief or remedy to the non-breaching party Contract law provides stability and predictability and is the foundation upon which more specialized areas of the law are built

Uniform Commercial Code

Contracts for the sale of goods priced at $500 or more

Discriminatory Contracts

Contracts in which a party promises to discriminate on the basis of race, color, national origin, religion, gender, age, or disability are contrary to both statute and public policy, making them unenforceable.

Weston v. Cornell University

Cornell University in New York offered Leslie Weston an associate professorship for an initial term of five years. The offer letter described the position as being "with tenure," but it stated that the offer of tenure would have to be confirmed by the university's review process after she was hired. For a variety of reasons, Weston delayed her tenure submission for five years and, when she finally submitted it, she was not awarded tenure. Cornell gave Weston a two-year extension, this time as an "associate professor without tenure," to allow her an opportunity to improve and resubmit her tenure package. Although she resubmitted her tenure request, it was again denied, resulting in her eventual termination. Weston sued Cornell for breach of contract, and lost. The court held that Cornell's two-year extension of Weston's position had clearly modified the original contract by stating that she was working as an associate professor "without tenure." Weston's subjective beliefs and unsupported arguments regarding the modification of her employment agreement were irrelevant.

Defenses to Price Discrimination

Cost justification, meeting competitor's prices, and changing market conditions

Raffles v Wichelhaus

Cotton bought and shipped and both were referring to 2 different ships with the same name. Peerless. Issue: Mutual Mistake, unusual misunderstanding

Clean Air Act

Created EPA Set emission standards for cars, and limits for release of air pollutants

John D. Rockefeller

Created Standard Oil Trust, allowing him to control almost all oil and refining distribution in the US and much of the world's oil trade by 1882

Oil Pollution Act

Creates liability for damages to natural resources, private property and local economies caused by the discharge of oil into navigable water or onto an adjourning shore. Background: Year before it was created, there was a natural disaster involving an oil spill. Driver of the ship was intoxicated. Congress regulated the means of transporting oil.

Justifiable Reliance on the Misrepresentation

Deceived party must have justifiably relied on representation. Reliance is not justified if the innocent party knows the true facts or relies on extravagant statements. Reasonable person standard applies.

Cost Justification

Defense to price discrimination. Showing a particular buyers purchase saved the seller's cost in producing the good.

US v. O'Malley

Duane O'Malley owned and operated Origin Fire Protection. Michael Pinski hired Origin to remove and dispose of 2,200 feet of insulation from a building Pinski owned in Kankakee, Illinois. The insulation contained asbestos, which Pinski, O'Malley, and O'Malley's employees recognized. O'Malley did not have a license to remove asbestos, and none of his employees were trained in complying with federal asbestos regulations. Nevertheless, Origin removed the debris and disposed of it at various sites, including a vacant lot where it spilled onto the soil, resulting in clean-up costs of nearly $50,000. In a federal district court, a jury convicted O'Malley of removing, transporting, and dumping asbestos in violation of the Clean Air Act. The court sentenced him to 120 months of imprisonment, three years of supervised release, a fine of $15,000, and $47,085.70 in restitution to the Environmental Protection Agency (EPA). O'Malley appealed. The U.S. Court of Appeals for the Seventh Circuit affirmed the lower court's judgment. The federal appellate court disagreed with O'Malley's claim that the government was required to prove that he knew the asbestos was one of the six types of regulated asbestos. "The very fact that O'Malley was knowingly working with asbestos-containing material met the mens rea requirement."

Federal Regulations

EPA, other agencies, Major environmental Statutes, Environmental Impact Statements

Federal Trade Commission

Enforces Federal Antitrust laws Can enforce the Clayton Act as civil cases

Department of Justice

Enforces Federal Antitrust laws Can prosecute violations of the Sherman Act as civil or criminal Can enforce the Clayton Act as civil cases

Mistake

Error or unconcious ignorance or forgetfulness of a past or present material fact

4 Exemptions from Antitrust Laws

Exhibit 27-2 1. Labor: Clayton Act permits unions to bargain 2. Insurance Companies 3. Exporters 4. Businesspersons and Joint Effects to Seek Governmental Actions

T/F: A mentally incompetent person's contract will never be valid if the contract was made by someone with lucid intervals

F, if the deal is made during such intervals of sufficient intelligence, judgment, and will, they will be considered to have legal capacity to enter such contracts.

T/F: If the duration of an offer is not stated, the offer lapses after 140 days

F, it lapses after a reasonable period of time, which varies depending on the subject matter

T/F: Undue influence does not pertain to parent-child situations

F, it pertains to physician-patient, husband-wife, and guardian-ward situations as well

T/F: Noncompete agreements are sufficient for new and existing employees

F, just new employees

T/F: Contracts entered into by minors are voidable at the option of the minor unless they lie about their age.

F, minors can still void contracts even if they lie about their age

T/F: All Trade Associations are illegal

F, not always. They are judged by the rule of reason.

T/F: during the specified period of option contract, a seller can change his or her mind

F, only buyers can change their minds

T/F: Any breach gives the non-breaching side the legal right to discharge

F, only material breaches allow discharge

T/F: Mistakes of fact and mistakes of value or quality make a contract voidable

F, only mistakes of fact make a contract voidable

T/F: The contract is voidable by the minor's parent/guardian

F, only the minor

T/F: Termination prior to acceptance must be made expressly

F, the offeror can terminate the offer through acts that are inconsistent with the existence of the offer and are made known to the offeree

T/F: When there is a material breach, the non-breaching party is excused from the performance of contractual duties, but cannot sue the breaching party for damages

F, they can also sue for damages resulting from the breach

T/F: Even when parties have clearly manifested their intent to form a contract, courts are never able to supply a missing term in a contract.

F, they will be willing to in certain cases, especially in regard to a sales contract

T/F: Valid contracts are always enforceable

F; certain legal defenses can prevent enforceability

Mistakes of Value

If a mistake concerns the future market value or quality of the object of the contract, the mistake is one of value, and the contract normally is enforceable. Ex: Phil Sung buys a violin from Bev Lee for $250. Although the violin is very old, neither party believes that it is valuable. Later, however, an antiques dealer informs the parties that the violin is rare and worth thousands of dollars. Here, both parties were mistaken, but the mistake is a mistake of value rather than a mistake of fact. Because mistakes of value do not warrant contract rescission, Lee normally cannot rescind the contract.

Court Declared Incompetent Persons

If a person is declared judicially incompetent, and a guardian is appointed to represent him or her, contracts entered into by him or her are void

Unforseen difficulties

If during performance of a contract, extraordinary difficulties arise that were totally unforeseen at the time the contract was formed, a court may allow an exception to the rule.

Environmental Impact Statements

If major federal action specifically affects the environment, the agency must make a statement.

Time for performance

If no time is specified, a reasonable time is implied.

Executory contract

If nobody has done anything, both parties can walk away If one party has fully performed, an agreement to cancel the original contract won't be enforceable unless there is additional consideration

What if one of the party dies or becomes incapacitated during the option period?

If the other party dies, it doesn't change the contract. Representatives are appointed to take care of this.

Duress

If the party is forced into entering into a contract by threatening a wrongful act, the contract is voidable Ex: Jacoby's barn is burned to the ground. Jacoby accuses Goldman's son of arson and threatens to have the prosecutoe bring a criminal action unless Goldman agrees to pay him $5000. Goldman agrees to pay, but later refuses to deliver the money. In this case, Goldman would not have to pay because the contract was made through a threat of criminal prosecution.

Meeting a competitor's prices

If there was a good faith effort to match a competitor

Contracts in Restraint of Trade

If two or more parties enter into an agreement in which they exchange mutual promises not to compete with each other and their only objective is to restrict competition, the agreement is VOID because it is against a strong public policy favoring free, fair competition

US v. Socony-Vacuum Oil Co

In a classic price-fixing case, independent oil producers in Texas and Louisiana were caught between falling demand due to the Great Depression of the 1930s and increasing supply from newly discovered oil fields. A group of the major refining companies agreed to buy "distress" gasoline (excess supplies) from the independents so as to dispose of it in an "orderly manner." Although there was no explicit agreement as to price, it was clear that the purpose of the agreement was to limit the supply of gasoline on the market and thereby raise prices. There may have been good reasons for the agreement. Nonetheless, the United States Supreme Court recognized the potentially adverse effects that such an agreement could have on open and free competition. The Court held that the reasonableness of a price-fixing agreement is never a defense. Any agreement that restricts output or artificially fixes price is a per se violation of Section 1.

Performance

In contract law, the fulfillment of one's duties arising under a contract; the normal way of discharging one's contractual obligations.

Revocation

In contract law, the withdrawal of an offer by an offeror. Unless an offer is irrevocable, it can be revoked at any time prior to acceptance without liability.

Form - The Writing Requirement

In order to be enforceable, some contractual promises must comply with the Stature of Frauds

EPA Violations

Include civil penalties of up to $25,000/day $5000/day for things like failure to maintain proper records Criminal penalties include fines and jail time Private citizens can sue to enforce the act and earn up to $10,000 for reporting violations

Record

Information that is either inscribed on a tangible medium or stored in an electronic or other medium and is retrievable.

Consideration

Legally sufficient and bargained-for consideration must be exchanged for contractual promises Both parties are committing to do something they don't HAVE to do for the other party.

Clean Water Act

Limits discharges of pollutants into water used for navigation, recreation, or swimming Similar fines and penalties of Clean Air Act

Territorial or Customer Restrictions

Manufacturers instituting territorial restrictions or attempting to prohibit wholesalers or retailers from reselling the products to certain classes of buyers, such as competing retailers

Discharge by Operation of Law

Material alteration of the contract Statutes of limitations Bankruptcy Impossibility of performance Commercial impracticability Frustration of purpose

Scienter

Means "guilty knowledge" Signifies that there was an intent to deceive

General Rule- Minors

Minors can enter into any contract that an adult can, so long as it is legal Ex: Still can't purchase tobacco

EPA passes regulation on:

Mobile Sources of air pollution Ex: cars Stationary sources of air pollution Ex: electric/utility plants, industrial plants

Exclusionary Conduct

Monopolistic behavior that attempts to prevent market entry and exclude competition

Why would an insurance company wish to treat one accident as having multiple different claims?

Most drivers' insurance policies have a deductible (here, a $250 deductible per claim). Hence, by processing multiple, different claims for one accident, an insurance company does not have to pay out as much to a claimant because the claimant would be paying a $250 deductible for each claim.

Factory in your town causes people to suffer smoke and soot inhalation from vibrations if the smoke factory. Economy, however, depends upon the factory.

Public nuisance Private nuisance could be filed here too for damages. Court would probably not issue an injunction because of the cost the economy would endure. They could be fined if they were found violating statutes.

Parking Co. of America v. Wilson

Mr. Wilson has contract of employment. Contract says if he quits within the first 60 months and gives a 30 day notice then he gets 1 year salary. He quits w/o notice so he gets nothing.

Settlements of Claims

Must be supported by legally sufficient consideration Claim must be settled through an accord and satisfaction, a release, or a covenant not to sue

With a bilateral contract, acceptance is (necessary/unnecessary)

Necessary

Already, LLC v. Nike, Inc.

Nike, Inc., designs, makes, and sells athletic footwear, including a line of shoes known as "Air Force 1." Already, LLC, also designs and markets athletic footwear, including the "Sugar" and "Soulja Boy" lines. Nike filed a suit in a federal district court against Already, alleging that Soulja Boys and Sugars infringed the Air Force 1 trademark. Already filed a counterclaim, contending that the Air Force 1 trademark was invalid. While the suit was pending, Nike issued a covenant not to sue. Nike promised not to raise any trademark claims against Already or any affiliated entity based on Already's existing footwear designs or any future Already designs that constituted a "colorable imitation" of Already's current products. Nike then filed a motion to dismiss its own claims and to dismiss Already's counterclaim. Already opposed the dismissal of its counterclaim, but the court granted Nike's motion. The U.S. Court of Appeals for the Second Circuit affirmed. Already appealed to the United States Supreme Court. The United States Supreme Court affirmed the judgment of the lower court. Under the covenant not to sue, Nike could not file a claim for trademark infringement against Already, and Already could not assert that Nike's trademark was invalid.

Is the agreement to pay the extra $75,000 enforceable? Ajax Contractors begins construction on a seven-story office building and after three months demands an extra $75,000 on its contract. If the extra $75,000 is not paid, the contractor will stop working. The owner of the land, finding no one else to complete the construction, agrees to pay the extra $75,000.

No, Ajax had a preexisting duty to complete the building

ABC Clothiers, Inc., has a contract with Taylor & Sons, a retailer, to deliver one thousand summer suits to Taylor's place of business on or before May 1. On April 1, Taylor senior receives a letter from ABC informing him that ABC will not be able to make the delivery as scheduled. Taylor is very upset, as he had planned a big ad campaign. Does he have to wait until the delivery date to sue for breach of contract? Could he fulfill the contract elsewhere without being obligated to two contracts?

No, due to anticipatory repudiation, Taylor has the opportunity to midigate damages either by filing suit or contracting with someone else.

Lapse of Time

Offer will eventually die on its own

Rejection of the offer by the offeree

Offeree demonstrates his or her intention not to accept offer--by words or conduct

section 1: Per se violations

Per Se: a violation of the law Court doesn't consider any redeeming quality for doing a per se violation. Ex: Price fixing; two grocery stores merge together to keep a third one from being able to compete

Substantial Performance

Performance which does not vary greatly from that is promised in the contract but is slightly less than that which reasonably could be expected

How does predatory pricing differ from price-fixing?

Price-fixing - Section 1 Violation: requires 2+ business people - Keeps potential competitors from getting in Predatory Pricing - Section 2 Violation: can be done by one person. - Kicks current competitors out

You own and live on 10 acres outside city limits. The 50-acre tract beside you sells and the new owner starts a hog operation - 50 sows, a nursery, feeding floors, etc. During the hot summer months in Texas, the stench is so strong you can barely stand to be in your own home. What can you do about it? What would you get?

Private nuisance case Plaintiff can easily show inability to enjoy property. Courts balance harm caused by the pollution -- here it's air pollution against the costs of stopping it. Important note: The problem came to you, so you will probably win. You would receive money damages because you can no longer enjoy your property or an injunction to stop the hog operation and force them to move -- depends on court.

Marabel's restaurant routinely receives shipments of produce from a certain supplier. That supplier notifies Marabel's that it is raising its prices because its crops were damaged by a late freeze. If the restaurant does not respond in any way, does the silence constitute acceptance?

Probably, yes

Contracts Involving Interests in Land

Real property includes the land and things permanently attached to it. Other interests include mortgages, minerals, oil, gas, easements, etc

Revocation occurs when the subject is (sent/received) by the offeree?

Received

Purpose of Anti-Trust Laws

Regulate business conduct to promote forms of competition that benefit society Reign in the unrestrained exercise of market power

Ocean Dumping Act

Regulates the transportation and dumping of pollutants into ocean waters

PAK Foods Houston, LLC v. Garcia

S.L., a 16 year old minor worked for KFC operated by PAK Foods Houston, LLC. PAK Foods' policy was to resolve any dispute with an employee through arbitration. S.L. signed an acknowledgment of this policy. S.L. was injured on the job, and terminated her employment. She filed a suit against PAK to recover medical expenses for the injury. PAK filed a motion to compel arbitration, which the court denied. They appealed and lost because S.L. had the right to disaffirm the agreement since she was a minor.

Collateral promises

Secondary promise made to a third party to assume the debts and obligations of the primary debtor

Differences between section 1 and section 2 of Sherman Antitrust Act

Section 1: - aimed at stopping unwielded market power - Since you can't conspire with yourself, the essence of the illegal activity is the act of joining together. - Aimed at finding an agreement that leads to the restraint of trade Section 2: - aimed at stopping unwielded monopoly power - Unilateral conduct can still violate Section 2 - Deal with the structure of a monopoly that exists in a marketplace

Sherman Antitrust Act: 2 major provisions

Section 1: Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal [and is a felony punishable by fine and/or imprisonment]. Section 2: Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony [and is similarly punishable].

Price Discrimination

Seller is offering different prices to different buyers for the exact same product. *Watch mindtap video*

Acceptance occurs when the subject is (sent/received) by the offeree?

Sent

Uniform Electronic Transactions Act (UETA)

Sets forth rules for entering into an enforceable contract using electronic means.

Major Antitrust laws

Sherman Act (1890) Clayton Act (1914) Federal Trade Commission Act (1914) *all pretty much in response to Rockefeller

Past Consideration

Something given or some act done in the past, which cannot ordinarily be consideration for a later bargain.

T/F: Even if performance actually takes more than one year, an oral contract is enforceable as long as performance was possible within one year

Statements of Opinion/Representations of future facts (predictions)

Statements that cannot be relied upon and are usually subject to debate. Not subject to claims of fraud.

Clayton Act (1914)

Strengthened the Sherman Act. Makes 4 very specific things illegal. Violations are only civil, not criminal.

Standard Oil Trust

Supreme Court ordered dissolution of Standard Oil Trust in 1892, by then Rockefeller simply created a holding company called the Standard Oil Company of New Jersey and continued to Thwart the legal system.

T/F If performance is substantial, the other party's duty to perform is excused.

T/F Once married, you legally give up 50% of your material things

T/F: A contract made by a person who is mentally incompetent can void their contracts while being incompetent

T/F: A rejection is effective when received

T/F: A revocation is effective upon being received

T/F: A statute or court decision that makes an offer illegal automatically terminates the offer.

T/F: After a decree of discharge in bankruptcy is issued by a Bankruptcy Court, a partial payment by a debtor will not revive the obligation

T/F: An acceptance may be unequivocal even if the offeree expresses dissatisfaction with the contract.

T/F: An offer is automatically terminated if the specific subject matter of the offer is destroyed before the offer is accepted

T/F: An offer may invite an acceptance to be worded in such specific terms that the contract is made definite.

T/F: An offer must have reasonably definite terms so that a court can determine if breach has occurred

T/F: Any breach gives the other side the legal right to sue

T/F: Capacity is lacking or questionable with minors, intoxicated persons, and the mentally incompetent.

T/F: Civil Penalties can include divestiture of assets and dissolution of companies

T/F: Commercial Impracticability is hard to perform

T/F: Courts rarely permit contracts to be avoided due to intoxication.

T/F: Courts sometimes refuse to enforce exculpatory clauses on the ground that they are unconscionable.

T/F: Criminal penalties must be known violations of the law

T/F: E-contracts may be formed for sales of goods and services and licensing purposes

Browse-wrap terms

Terms and conditions of use that are presented to an Internet user at the time a product, such as software, is downloaded but that need not be agreed to before the product is installed or used.

Market Power

The ability to reaise prices above those that would be charged in a competitive market

Objective Theory of contracts

The apparent intention of a party to enter into a contract is determined by the objective, outward manifestation of his or her assent as it would be interpreted by a reasonable person

Material breach

The breach is not at least substantial

section 1: rule of reason violations

The court balances the reasons for the agreement against its potentially anticompetitive effects

Gambling

The creation of risk for the purpose of assuming it. Any scheme that involves the distribution of property by chance among persons who have paid valuable consideration for the opportunity (chance) to receive the property.

Breach of contract

The failure, without legal excuse, of a promisor to perform the obligations of a contract.

Why didn't Nike file it's suit in a state court?

The federal law that most concerns trademark cases today is the United States Trademark Act, otherwise known as the Lanham Act of 1946. Consequently, trademark cases are often filed in a federal district court. While it is true that federal and state courts have concurrent jurisdiction over trademark matters, most cases are heard by federal courts.

Voluntary Consent

The knowing and voluntary agreement to the terms of a contract. Cannot be based on mistake,

Material Alteration of the Contract

The law allows an innocent party to be discharged when the other party has materially altered a written contract without consent.

Irrevocable offers

The offer is irrevocable for the period of time that is stated, or if no period is stated, for a reasonable period of time.

Communication

The offeror must have the intention of making the terms known to the offeree and those terms must be received by the offeree The offeree must have knowledge of the terms of the offer An offer may be made to a special offeree to whom it is communicated Offers can certainly be public

Intention

The offeror must manifest his or her objective, serious intention to be bound by the terms of the offer

Offeree

The party who, if interested in the offer, may accept the contract

Jacob & Youngs, Inc. v. Kent

The plaintiff, Jacob & Youngs, Inc., was a builder that had contracted with George Kent to construct a country residence for him. A specification in the building contract required that "all wrought-iron pipe must be well galvanized, lap welded pipe of the grade known as 'standard pipe' of Reading manufacture." Jacob & Youngs installed substantially similar pipe that was not of Reading manufacture. When Kent became aware of the difference, he ordered the builder to remove all of the plumbing and replace it with the Reading type. To do so would have required removing finished walls that encased the plumbing—an expensive and difficult task. The builder explained that the plumbing was of the same quality, appearance, value, and cost as Reading pipe. When Kent nevertheless refused to pay the $3,483.46 still owed for the work, Jacob & Youngs sued to compel payment. The trial court ruled in favor of Kent. The plaintiff appealed, and the appellate court reversed the trial court's decision. Kent then appealed to the Court of Appeals of New York, the state's highest court. New York's highest court affirmed the appellate court's decision, holding that Jacob & Youngs had substantially performed the contract.

Monopoly Power

The power to control prices or exclude competition in a relevant market

When does legally sufficient consideration exist?

The promisee incurs a legal detriment and/or the promisor receives a legal benefit aka Something of legally sufficient value must be given in exchange for the promise There must be a bargained for exchange

Example: Contract for the Sale of a Business

The seller of a business agrees not to open another competing store within the area of the store that he is selling The reasonableness of an ancillary covenant not to compete is determined by the nature of the business, period of duration, and geographic area covered

Usury

There is a limit to how much interest can be charged for a money loan. Usury is charging an unlawful amount of interest

What does a court mean by the term "colorable imitation"?

This term means any trademark that so resembles a registered trademark as to be likely to cause confusion or to deceive the public.

Superfund

Toxic chemicals and hazardous waste statute Regulates cleanup of disposable sites.

What is a merger clause?

Typically, a merger clause is contained in an agreement that declares the agreement to be the final and complete agreement between the parties. Therefore, no additional contractual conditions exist with respect to the performance of the agreement except those that are in the writing.

Who won the case? USS-POSCO Industries (UPI) hired Floyd Case as an entry-level laborer and side trim operator. Because UPI faced a shortage of skilled maintenance technical electrical (MTE) workers, it decided to implement an educational program for its existing employees. UPI would cover the costs ($46,000) of a program that required 135 weeks of instruction, 90 weeks of on-the-job training, and 45 weeks of classroom work. Case applied for and was accepted into the program. UPI paid his wages, benefits, and training expenses, but it did not guarantee him a position as an MTE worker. Case signed a reimbursement agreement to participate, stating that if he voluntarily left UPI within 30 months after completing the program, he would (absent a compelling hardship) refund $30,000 to UPI. Two months after completing the program and starting work as an MTE worker, Case left UPI for a position with another employer as an electrician. He refused to refund $30,000 to UPI, and UPI sued for breach.

UPI, Case argued that the reimbursement agreement lacked consideration because UPI had no obligation to keep Case employed, and thus there was no bargained-for exchange. The court disagreed. "The exchange, frankly, is obvious: Case got continued wages and fronted education costs, and UPI got Case's agreement to repay those costs if he both completed the training and left the company before it could benefit from the investment." The court enforced the agreement and ordered Case to refund $30,000 to UPI.

Promises made in consideration of marriage

Unilateral promise to pay money or give other property in consideration for a promise to marry must be in writing

Union Corporation example

Union Corporation contracts to sell its pharmaceutical division to British Pharmaceuticals, Ltd. Before the transfer is completed, Union, British Pharmaceuticals, and a third company, Otis Chemicals, execute a new agreement to transfer all of British Pharmaceuticals' rights and duties in the transaction to Otis Chemicals. As long as the new contract is supported by consideration, the novation will discharge the original contract (between Union and British Pharmaceuticals) and replace it with the new contract (between Union and Otis Chemicals).

With a unilateral contract, acceptance is (necessary/unnecessary)

Unnecessary, acceptance is affected when the performance is completed

US v. Microsoft Corp

When Navigator, the first popular geographic Internet browser, was introduced, Microsoft perceived a threat to its dominance of the operating-system market. Microsoft developed a competing browser, Internet Explorer, and then began to require computer makers that wanted to install the Windows operating system to install IE and exclude Navigator. Microsoft included codes in Windows that would cripple the operating system if IE was deleted and paid internet service prodivers to distribute IE and exclude Navigator. Microsoft was guilty of a pattern of exclusionary conduct in violation of the Sherman Act.

Undue Influence

When a party, who is in a dominant position because of a confidential relationship, secures an unfair advantage in a contract with a weaker, dominated party, the contract is voidable and may be disaffirmed by the dominated party.

Private nuisance

When an individual can identify a harm to his property rights distinct from that suffered by others

Predatory Pricing

When one firm attempts to drive its competitors from the market by selling its product at prices substantially below the normal costs of production. This eliminates the competition and then the predator rauses the prices well above the normal competitive level to recoup its loses and earn higher profits.

Public nuisance

When the harm is to the public at large

FTC v. Whole Foods, Inc.

Whole Foods was merging with another high-end organic food supermarket called Wild Oats Outlets. The FTC filed suit under Section 2 of the Sherman Act against Whole Foods. Whole Foods claimed the relevant product market should be all supermarkets and so the merger was not a monopoly, FTC said no the relevant product market is "premium natural and organic supermarkets", so, Whole Foods was in violation of Section 2 and had to sell 13 stores which were formally Wild Oats stores.

Is Amazon a monopoly?

Yes, Amazon can control prices and exclude competition

Is there a contract? Everett McCleskey, a local businessperson, is a good friend of Al Miller, the owner of a local candy store. Every day on his lunch hour, McCleskey goes into Miller's candy store and stays about five minutes. After looking at the candy and talking with Miller, McCleskey usually buys one or two candy bars. One afternoon, McCleskey goes into Miller's candy shop, looks at the candy, and picks up a $1 candy bar. Seeing that Miller is very busy, he waves the candy bar at Miller without saying a word and walks out. Is there a contract? If so, classify it within the categories presented in this chapter.

Yes, a bilateral, implied, executory contract. (Be able to deduce this)

State and Local Regulations

Zoning laws, rules for aesthetics, damages, etc

Executed Contracts

a fully performed contract

Regulatory statute

a licensing statute enacted to protect the public from unauthorized practitioners

revenue-raising statute

a licensing statute with the primary purpose of raising revenue for the government

Counteroffer by the Offeree

a rejection of the original offer and the simultaneous making of a new offer

Les agrees to install a new hard drive and software on Marilee's computer in exchange for four of her used textbooks. After he installs the hard drive, Les says he won't install the software unless Marilee gives him two more books. What legal position are the parties in now? a. Marilee can sue for breach of contract, because Les had a preexisting duty to do all of the work. b. Marilee must give Les the additional books. c. Les can receive the extra books in exchange for doing more work, as he has given good and fair consideration in exchange. d. Les will only get one more book, because two is too many more to be fair.

a. Marilee can sue for breach of contract, because Les had a preexisting duty to do all of the work.

Taco Heaven, Burrito Joint, and Fast Fajitas are competitors in the Boston area. They have a secret agreement not to purchase any beef from Northwest Beef Growers' Cooperative. Their agreement is: a. a group boycott. b. price discrimination. c. a horizontal market division. d. a tying arrangement.

a. a group boycott.

Diana tells Crystal, "I think I'll sell that camping gear I bought for hiking the Pacific Trail for $250. I'm never going to make that trip." This constitutes: a. a statement of future intent. b. an agreement to agree. c. a counteroffer. d. a valid offer.

a. a statement of future intent.

Red offers to pay Sari to deliver certain documents within thirty minutes. Sari can accept the offer only by completing the task within the deadline. If she does, Red and Sari will have a. a unilateral contract. b. a bilateral contract. c. an executive contract. d. a void contract.

a. a unilateral contract.

Megan contracts to sell Nonny her horse for $4,000. This contract will be fully discharged when Megan and Nonny a. exchange the horse for the money. b. sign a receipt. c. execute a bill of sale. d. agree that the deal is fair.

a. exchange the horse for the money.

Adrian runs a dry-cleaning business, which is considered a major polluter. He complies with all Clean Air Act regulations that relate to his activities. After thirty years in the same location, Adrian opens a new store under the same name across town. Adrian's new location will be: a. held to the higher environmental standards that are now in place, even if that results in a discrepancy in the way the two dry cleaning stores are run. b. required to emit no pollutants of any kind under current environmental regulations. c. held to the same environmental standards as the first one, because they both have the same owner. d. held to the lower environmental standards that are now in place.

a. held to the higher environmental standards that are now in place, even if that results in a discrepancy in the way the two dry cleaning stores are run.

Kibble Bites and Chow Hound, two makers of dog food, agree that Kibble Bites will sell its lamb and rice dog food in New Jersey but not in Delaware, and Chow Hound will sell its lamb and rice dog food in Delaware but not in New Jersey. Their agreement is a: a. horizontal market division. b. refusal to deal. c. resale price maintenance agreement. d. vertical agreement.

a. horizontal market division.

Kimmy owns a small scrapbooking store in her community. She sells paper, glue, and other scrapbooking items. She decides one day to lower her prices a little bit, because she wants to boost sales and market share so that she can take a vacation. She currently has a twelve percent market share. Under the Sherman Act, this likely: a. is not a violation of U.S. Antitrust laws. b. is a violation of Section 2, because she is intentionally attempting to drive her competitors out of business. c. is a violation of Section 1, because she is attempting to reduce competition. d. is a violation of Section 3 of the Clayton Act because she is attempting to exclude competitors.

a. is not a violation of U.S. Antitrust laws.

Shane and Diego have a signed contract for Shane to sell Diego some property in the mountains. Shane decides that he does not want to sell the property. Diego also decides that he does not want to buy the property. The meet to discuss it and agree in writing to rescind the contract. The rescission: a. is supported by the promises not to enforce the original contract. b. must have additional consideration in order to be valid. c. is not valid because land deals cannot be rescinded. d. is not valid because rescissions must be oral.

a. is supported by the promises not to enforce the original contract.

Waste Disposal, Inc., collects biological hospital waste and has designed a method of hermetically sealing that waste in water-tight barrels. It wants to bury it in the ocean thousands of miles offshore. Waste Disposal: a. may not engage in this business under any circumstances. b. must obtain a permit. c. may only dispose of this waste in the ocean if the EPA certifies that the containers are appropriately sealed to avoid contamination for at least 100 years. d. may dispose of this waste if more than two thousand miles from the U.S. coastline.

a. may not engage in this business under any circumstances.

Organosis is a company in the healthcare industry. The company engages in trade practices that violate antitrust laws. Organosis is subject to criminal prosecution by: a. the Department of Justice under the Sherman Act. b. the Federal Trade Commission under the Clayton Act. c. either the Department of Justice or the Federal Trade Commission under the Sherman Act. d. either the Department of Justice or the Federal Trade Commission under either the Sherman Act or the Clayton Act.

a. the Department of Justice under the Sherman Act.

Carson runs a large factory that produces air and water pollutants as it manufactures consumer goods. The government agency with which Carson will likely interact most often with regard to the pollutants is: a. the Environmental Protection Agency (EPA). b. the Army Corps of Engineers. c. the Department of Defense. d. the Food and Drug Administration (FDA).

a. the Environmental Protection Agency (EPA).

Contract

agreement enforced between 2+ parties who promise to perform or refrain from performing now or in the future

Void Contract

agreement has no legal effect and is not really a contract; no legal obligation exists on the part of either party

Contracts contrary to public policy

an agreement which injures an established interest of society or which has a negative effect on society is void and will not be enforced

Jackson offers to pay Casey $50 for his used business law textbook. Casey agrees to sell it for that amount. They agree to meet one week later to exchange the money for the book. Casey and Jackson have formed: a. a formal contract. b. a bilateral contract. c. no contract. d. a unilateral contract.

b. a bilateral contract.

Eric and Chelsea sign a contract where Eric will sell his used car to Chelsea for $400. That night, Chelsea's parents surprise her with a new car. Chelsea's friend, Andrea, needs a new car. Andrea, Chelsea and Eric sit down the next day and cross off Chelsea's name on the contract and write in Andrea's name. All three of the parties initial the changes. This is: a. a satisfaction. b. a novation. c. a rescission. d. an accord.

b. a novation.

Sinto Investments is in the process of developing a 300-mile toll road that will run through federal land. Sinto will likely need: a. a clean air act authorization. b. an environmental impact statement. c. a CERCLA certificate. d. a national environmental policy act waiver.

b. an environmental impact statement.

Ballard Corporation does business overseas. In France, which is a member of the European Union (EU), Ballard Corporation works with a French competitor to divide the markets within France to maximize sales for both companies. Ballard Corporation may: a. face charges of violating only the EU antitrust laws, because it is doing business in the EU. b. face charges of violating both U.S. antitrust laws and EU antitrust laws. c. not face charges of violating either the U.S. antitrust laws or the EU antitrust laws, because the U.S. has no jurisdiction over activities overseas, and the EU has no jurisdiction over U.S. companies. d. face charges of violating only the U.S. antitrust laws, because it is a U.S. corporation.

b. face charges of violating both U.S. antitrust laws and EU antitrust laws.

McMann Solutions, Inc., knowingly violates the Clean Water Act by discharging hazardous pollutants into a nearby river. McMann Solutions is subject to: a. fines but no criminal charges or imprisonment, because a corporation cannot be imprisoned. b. fines and imprisonment of the corporate officers. c. only imprisonment of the corporate officers for violating the Clean Water Act. d. neither a fine nor imprisonment.

b. fines and imprisonment of the corporate officers.

Luc, a vehicle dealer, offers to sell Mel a truck and trailer, which Luc claims can haul a certain weight. He knows nothing about the capability of the truck, but it is not as he asserts. Mel buys the truck. On learning the truth, Mel confronts Luc, who says he was not trying to fool Mel—he was only trying to make a sale. This is a. a valid defense to a charge of fraud. b. fraudulent misrepresentation. c. a mistake of value. d. puffery.

b. fraudulent misrepresentation.

Raj agrees to work as a freight broker for Shipping Inc. In determining whether a contract has been formed, an element of prime importance is the parties' a. subjective beliefs. b. intent. c. objectives. d. motives.

b. intent.

William runs a company that hauls toxic chemicals between factories. William is in compliance with all safety and environmental laws, but one tanker truck is in an accident and spills chemicals into a creek, which requires costly cleaning. William a. is not liable, because the driver should have taken extra care in such a situation. b. is strictly liable for all harms. c. is not liable if he acted with due diligence to see that no one was hurt. d. is liable only if he acted negligently.

b. is strictly liable for all harms.

Mary owns a trucking company that hauls goods all over the country. Wilson contracts with Marcy's company to transport ten tractor-trailer loads of goods from Ohio to Texas. Marcy has reason to believe the goods are stolen, but never asks Wilson about it. The court would likely determine the contract: a. is unenforceable unless Marcy's company can return the goods. b. is unenforceable, because the goods were stolen and Marcy's company cannot collect its fee. c. is unenforceable, and Marcy's company is now liable for the stolen goods. d. is enforceable, because Marcy's company was justifiably ignorant of the fact that the goods were stolen.

b. is unenforceable, because the goods were stolen and Marcy's company cannot collect its fee.

In a well-established market, ComBuilt produces the nation's best-selling bookkeeping software. The program is far superior to all other similar programs. ComBuilt requires all its distributors and retailers to sell the program at a specified price. This is: a. allowed by antitrust laws because it is a superior product. b. known as a price maintenance agreement and may violate Section 1 of the Sherman Act under the rule of reason test. c. exempt from antitrust laws because it does not constitute an interference with competition. d. known as a price maintenance agreement and is a per se violation of Section 1 of the Sherman Act.

b. known as a price maintenance agreement and may violate Section 1 of the Sherman Act under the rule of reason test.

Amazing Bread begins selling its bread at a loss by cutting its price by more than one-half in an attempt to gain a considerable market share over its competitors. Once its competitors are out of the picture, Amazing Bread raises the price of its bread by 300 percent. This type of action is known as: a. monopoly. b. predatory pricing. c. restraint of trade. d. price discrimination.

b. predatory pricing.

Bernie's leather tanning company generates a significant amount of hazardous waste in the form of chemicals used to tan the hides of animals into leather. In order to properly dispose of this chemical waste, Bernie must transport the waste to a hazardous waste dump in the next county. To comply with RCRA, he must: a. transport the waste on a daily basis so it is not at risk of a spill on his property. b. properly label and package the material before transport to ensure proper care is taken by all parties along the way. c. reduce the amount of waste he generates by 50% every three years. d. transport the waste no more than one time every six months to reduce the risk of a spill on the highway.

b. properly label and package the material before transport to ensure proper care is taken by all parties along the way.

Jim contracted with United Technologies to install 5,000 feet of Rocketfish Cat-5e network cable in his new office building. United installed 5,000 feet of Dynex Cat-5e network cable instead. The types of cable essentially are the same. When Jim sued for breach of contract, the court likely found that United's actions constituted: a. material breach. b. substantial performance. c. incomplete performance. d. complete performance.

b. substantial performance.

Production, Inc., owns a manufacturing plant that generates some water pollution for which it has a permit. It intends to build a new plant that also will generate water pollution and for which it intends to get a permit. The pollution reduction technology that must be used at the old plant and at the new plant is: a. the best available control technology (BACT) at both plants. b. the best practical control technology (BPCT) at the old plant and the best available control technology (BACT) at the new plant. c. the best available control technology (BACT) at the old plant and the best practical control technology (BPCT) at the new plant. d. the best practical control technology (BPCT) at both plants.

b. the best practical control technology (BPCT) at the old plant and the best available control technology (BACT) at the new plant.

Foreign Steel Exports, a company based in Brazil, colludes with other steel-export companies from around the world to agree on the price of steel sold in the U.S., which causes the price of steel in the U.S. to substantially increase. This type of agreement: a. falls outside of U.S. regulation. b. violates the Sherman Act. c. can be considered a violation only if it violates Brazil's laws. d. must be addressed by an international trade association.

b. violates the Sherman Act.

Anticipatory Repudiation

before either party to a contract has a duty to perform, one of the parties may refuse to carry out his or her contractual obligations. Also known as a present material breach of contract.

Trade Associations

businesses in the same general industry or profession organizing to pursue common interests like ad campaigns, lobbying congress, etc; judged by Rule of Reason usually.

Alonzo graduates with a 3.8 GPA in Accounting from a New York university and receives offers of employment from three of the Big Four accounting firms. While considering his options, a mid-sized firm in California calls and offers him twice the starting salary of his top offer. The only caveat is he needs to show up at the Los Angeles office within the next week to start work immediately. Alonzo excitedly decides to take the California job. He refuses the other employment offers, breaks his lease in New York, sells or gives away most of his possessions, buys a new car, and heads for L.A. the next day. When he arrives at the Los Angeles office three days later, the firm apologizes and informs Alonzo that the position is no longer available due to the loss of a major client. a. Alonzo could bring a claim against the firm on the theory of breach of contract. b. Alonzo has no potential claim. c. Alonzo could bring a claim against the firm on the theory of promissory estoppel. d. Alonzo could bring a claim against the firm on the theory of rescission.

c. Alonzo could bring a claim against the firm on the theory of promissory estoppel.

Ryan sends Michael a letter of intent for the purchase of a tract of land. The letter of intent outlines the purchase price, the legal description, and the financing terms. A paragraph is included that states that the letter of intent is a non-binding agreement and that it is an offer to enter into negotiations. a. The letter of intent is an expression of opinion and does not indicate an intention to enter into a binding agreement. b. The letter of intent is a statement of a future intent, which is not an offer. c. The letter of intent is an invitation to negotiate, which is not an offer. d. The letter of intent is an offer that may be accepted by Michael.

c. The letter of intent is an invitation to negotiate, which is not an offer.

Tiger Stripe owns and operates gasoline filling stations. Patrick's Trucking delivers fuel to Tiger Stripe's storage facility on a regular basis. On one occasion, Patrick fails to pay proper attention to his truck when he is unloading fuel into Tiger Stripe storage tanks, and one thousand gallons of fuel spills onto the ground. Soon after the spill, Tiger Stripe sells the storage facility to Roy's Fueling Stations. The EPA determines that cleanup of the site is warranted. Which of the following is true? a. Under FIFRA, Tiger Stripe, Patrick, and Roy's are all potentially responsible parties. b. Under CERCLA, Tiger Stripe and Patrick are potentially responsible parties. c. Under CERCLA, Tiger Stripe, Patrick, and Roy's are all potentially responsible parties. d. Under FIFRA, Tiger Stripe and Patrick are potentially responsible parties.

c. Under CERCLA, Tiger Stripe, Patrick, and Roy's are all potentially responsible parties.

Putnam Corporation makes a sleeping pill that is legally sold in the United States. Putnam has a contract with a chain of pharmacies to provide 4,800 cases of the sleeping pill for retail sale. One month after the contract is signed, but before any pills have been delivered, the Food and Drug Administration passes regulations that make it illegal to buy or sell the drug because it is highly addictive and has caused high levels of abuse, as well as a few deaths. Can the pharmacy chain get out of the contract? a. No, because the law has no impact on the legality of the contract. b. Yes, because performance may lead to unethical results. c. Yes, because the government's actions make it impossible to perform. d. No, because the law did make it impossible to perform; it simply increased the consequences of performance.

c. Yes, because the government's actions make it impossible to perform.

Antonio owns property on which a gasoline station once stood. Josh agrees to buy the land so that he can build an office on it. They include language in the contract making the purchase contingent on a determination that there are no environmental problems with the property. The contingency represents: a. a concurrent condition. b. a condition subsequent. c. a condition precedent. d. an implied condition.

c. a condition precedent.

Omega Sewing Machines is a nationally known manufacturer, having started in business almost 50 years ago. Omega and Betty's Sewing Store agree that Betty will be the only dealer in her state that will sell Omega machines. This type of agreement is most likely: a. prohibited by Section 1 of the Sherman Act as a per se violation. b. not allowed under the rule of reason because Betty has not demonstrated need for the restriction. c. allowed under the rule of reason. d. an attempted monopolization.

c. allowed under the rule of reason.

Rick agrees to buy twenty acres of land from Tina. Three weeks before the deal is to close, Rick calls Tina and says, "The deal is off!" In this situation, Rick's actions constitute: a. substantial performance of the contract. b. a discharge of the contract by novation. c. anticipatory repudiation of the contract. d. a reformation of the contract.

c. anticipatory repudiation of the contract.

Margie runs a manufacturing process that generates a lot of heat. In order to reduce her heat problem, Margie takes water from the river adjacent to her factory and uses the cold river water to cool down the processes. She then puts the warmer water back in to the river where it is moderated by the cold water still in the river. Margie's actions: a. do not generate any pollution. b. are not regulated by any environmental law or agency. c. are regulated by the Clean Water Act. d. are not regulated by federal law but may be regulated by state law.

c. are regulated by the Clean Water Act.

Melissa is a minor who agrees to purchase a particular car from Umberto for $10,000 one month after she turns eighteen years of age. On turning eighteen, Melissa writes to Umberto stating that she still agrees to purchase the car. Melissa's contract with Umberto is: a. unenforceable, because Melissa was a minor when she entered into the contract. b. unenforceable, because Melissa has a right to disaffirm the contract. c. enforceable, because it has been expressly ratified by Melissa. d. enforceable, because Melissa and Umberto agreed to the purchase of a car. a. subjective beliefs. b. intent. c. objectives.

c. enforceable, because it has been expressly ratified by Melissa.

Julius asks Rachel if she would like to sell her boat. Rachel privately has no interest in selling her boat and believes that Julius can't afford her boat anyway. Rachel says, "I'd sell my boat to you for $400." To Rachel's surprise, Julius responds "Ok, it's a deal." Rachel does not want to sell the boat to Julius for any price. Julius and Rachel have: a. formed a valid contract, because Julius expressed outward interest in the boat. b. not formed a valid contract, because Rachel did not want to sell the boat for any price. c. formed a valid contract, because Rachel's outward expressions showed the formation of a contract. d. not formed a valid contract, because of lack of definiteness in the contract terms.

c. formed a valid contract, because Rachel's outward expressions

DynaCorp is in the computer software market. The company's actions demonstrate an intent to monopolize the market. Under Section 2 of the Sherman Act, a firm's intent to monopolize a market a. may be demonstrated by a showing of the superiority of its product. b. may be used to rebut the presumption that it monopolized a market. c. is an element of the violation and must be proved by the party pursuing the claim. d. is irrelevant; domination of the market itself proves a violation of the act.

c. is an element of the violation and must be proved by the party pursuing the claim.

Restaurant Food Inc. intends to sell a certain quantity of beef for $1,100. In e-mail, however, the firm's sales representative mistakenly offers to sell the beef to Steak House for $1,000, Steak's manager immediately accepts. The seller a. is bound to the deal but can charge the intended price. b. can rescind the deal and recover damages for the mistake. c. is bound to the deal at the offered price. d. can rescind the deal.

c. is bound to the deal at the offered price.

Northern Manufacturers is prosecuted for antitrust violations by the Department of Justice, which wins its case. The judge agrees to impose criminal sanctions against Northern for the injuries it caused its competitor, Mini Lake, Inc. Mini Lake: a. has no additional recourse against Northern, because the criminal trial was successful. b. may also sue for punitive damages. c. may recover treble damages and attorneys' fees. d. is eligible to sue only for money damages, because the Department of Justice prevailed in the criminal action.

c. may recover treble damages and attorneys' fees.

Bee Well is one of three suppliers of portable toilets located near the border between Oregon and California. All three companies operate in both states. Bee Well charges different prices to different customers depending on the distance to the locale and the number of units rented. This is: a. a violation of Section 1 of the Sherman Act, because charging different rates is a per se violation. b. a violation of the Clayton Act, because charging different rates is a per se violation. c. not a violation of the Clayton Act, because Bee Well can justify charging the different rates. d. not a violation of Section 1 of the Sherman Act, because Bee Well can justify charging the different rates.

c. not a violation of the Clayton Act, because Bee Well can justify charging the different rates.

Platte River Meat Packing Company maintains a three percent share of the beef-packing industry in the United States. Last year, it launched an unsuccessful effort to harm its competitors and garner monopoly share of the beef-packing industry. Platte River's efforts are: a. actionable, because Platte River possessed intent to harm its competitors, regardless of whether its efforts were successful. b. actionable as a per se attempt to monopolize the beef-packing industry c. not actionable, because Platte River lacked sufficient market power to ensure a dangerous probability of success and consequent serious threat of monopolization. d. not actionable, because antitrust laws do not punish unsuccessful attempts to monopolize—only those that succeed.

c. not actionable, because Platte River lacked sufficient market power to ensure a dangerous probability of success and consequent serious threat of monopolization.

Bay City Water Commission sends its customers an annual printout of information regarding the drinking water it supplies. This information is provided as: a. a courtesy to customers. b. required by law, because its main source of water is a nearby navigable water. c. required by law, because Bay City is a water supplier. d. required by law, because it chemically treats some of its water.

c. required by law, because Bay City is a water supplier.

Seth owns and runs a small shoe factory. He finds a source of leather that is perfect for the new styles he has designed. To ensure himself a steady supply of the leather, he wants to buy the leather-processing plant. Seth's proposal is known as a: a. horizontal merger and will most likely be legal, because Seth will have over 80 percent of the market if he goes through with the merger. b. vertical merger and will most likely be illegal, because it places unreasonable restrictions on trade. c. vertical merger and will most likely be legal, because it will not prevent competitors of either the factory or the plant from competing in the market. d. horizontal merger and will most likely be illegal, because it constitutes foreclosure of the market.

c. vertical merger and will most likely be legal, because it will not prevent competitors of either the factory or the plant from competing in the market.

Farm and Ranch Supply Co. discovers a cache of an unknown herbicide in a back corner of its warehouse. Farm and Ranch repackages the product, relabeling it as "Farmer's Friend," and states on the label and in advertisements that it is a new product "guaranteed to kill all weeds." Farm and Ranch has: a. violated the RCRA and is subject to civil and criminal penalties. b. not violated any law. c. violated the FIFRA and is subject to civil and criminal penalties. d. violated the CERCLA and is subject to civil and criminal penalties.

c. violated the FIFRA and is subject to civil and criminal penalties.

Legally Sufficient Value

consideration must be something of value in the eyes of the law

Substantive Unconscionability

contracts are oppressive or overly harsh

Statute of Frauds

contracts must be evidenced by a writing and signed by a party against whom the promises are being enforced

Contracts Contrary to Statute

contracts to commit a crime, usury, gambling, licensing statutes

Big Corp. and Giant Corp. both compete in the tire manufacturing industry. The two companies want to merge. A merger between these two companies would be called: a. an attempted monopolization merger. b. a vertical merger. c. a consolidation merger. d. a horizontal merger.

d. a horizontal merger.

Trucking LLC enters into a contract to deliver a certain quantity of potatoes to United Foods's refrigerated warehouse in exchange for a specified payment. Trucking delivers the spuds to the location. United's duty to pay is a. conditioned. b. qualified. c. discharged. d. absolute.

d. absolute.

Windell Manufacturing has a pipe foundry, as well as a fleet of trucks that are used to transport the manufactured pipe to customers across the United States. The EPA has the authority to regulate air pollution arising from: a. the factory but not the truck fleet. b. the truck fleet but not the factory. c. neither the truck fleet nor the factory. d. both the factory and the truck fleet.

d. both the factory and the truck fleet.

Jin owns land between Hassan's land and the river. Hassan buys several pigs, chickens and other farm animals. Those animals create a significant amount of waste that Hassan washes into the stream that runs from his property to the river. This waste pollutes the water on Jin's land. As a result, Jin's garden dies, and Jin is afraid to drink any water from his well. If Jin wants to stop Hassan from washing this animal waste into the stream, Jin could sue for: a. violations of the Clean Air Act. b. violations of CERCLA. c. violations of RCRA. d. nuisance.

d. nuisance.

Christi Bay Water Commission sends its customers an annual printout of information regarding the drinking water it supplies. This information is provided as: a. required by law, because it chemically treats some of its water. b. required by law, because its main source of water is a nearby navigable waterway. c. a courtesy to the customers. d. required by law, because Christi Bay is a water supplier.

d. required by law, because Christi Bay is a water supplier.

Dan runs a factory that generates air pollution. He knows that there is a fine of up to $25,000 per day for violations, but for every day he exceeds the pollution limit he makes $60,000. Dan decides it is worth it to violate the limits in order to make $35,000 per day. Dan: a. will have to close down his business due to excessive violations. b. has made a good choice to maximize his income. c. will have to pay the $25,000 per day plus an additional $5,000 for other violations. d. will not be able to keep any of his benefit from the violation.

d. will not be able to keep any of his benefit from the violation.

Liquidated Debt

debt that is due and certain in amount

It is ___________ to prove that a person's judgment was so severely impaired that he or she could not comprehend the legal consequences of entering into a contract.

difficult

Relevant product market

includes all products with identical attributes and are interchangeable

Relevant geographic market

includes geographic area in which the company and competitors sell the productservices; nationwide v. local markets

Intent to Deceive (Scienter)

knowledge on the part of the misrepresenting party that facts have been falsely represented.

implied means of acceptance

offeree can accept by any reasonable means

Acceptance

offeree's indication to the offeror that the offeree agrees to be bound by the terms of the offeror's proposal.

Group boycotts are judged by (per se violations/rule of reason).

per se violations

Horizontal market divisions are judged by (per se violations/rule of reason).

per se violations

Noncompete agreement

prevents an individual from competing against a former employer for a specific period of time

Private Actions

private parties injured due to violations of the Sherman/ Clayton Acts can sue for: treble damages, attorney's fees, in some cases injunctive relief

Illusionary promises

promises that depend solely upon the whim or wish of the promisor are not enforceable Ex: "You all get a $500 bonus for working on Christmas Day if I feel like you did a good job." The owner is not at all binded to the promise, as a 'good job' is completely left to his discretion; therefore this promise is illusionary.

Statute of Limitations

provides that a person who has cause of action must bring his or her action or lawsuit within a specified time period

E-SIGN Act

provides that... 1. no contract, record, or signature may be "denied legal effect" solely because it is in electronic form 2. parties must have agreed to use electronic signatures 3. contract must be in a form that can be retained and reproduced

Bankruptcy

release of a debtor from most debts and contractual obligations

Joint ventures are judged by (per se violations/rule of reason).

rule of reason

Territorial or Customer Restrictions are judged by (per se violations/rule of reason).

rule of reason

Trade associations are judged by (per se violations/rule of reason).

rule of reason

resale price maintenance agreements are judged by (per se violations/rule of reason).

rule of reason

The Intent Requirement

second part of plaintiff's case requires intent to monopolize intent is usually seen in a powerful act to acquire or maintain monopoly power through anticompetitive means

acceptance will not be effective until the acceptance is received by offeror IF...

the acceptance is sent in a manner that is not expressly or impliedly authorized

Discharge by performance

the contract comes to an end when both parties fulfill their respective duties by performing the acts they have promised (1) Complete performance includes strict compliance with any express conditions (2) Failure to comply with an express condition and render the exact performance may discharge the party receiving the defective performance

Exception to contracts in restraint of trade

the covenant not to compete is ancillary (secondary) to an otherwise enforceable contract, reasonable based on... 1. duration of restraint 2. geographical area 3. scope: what they are restrained from

Bargained-for exchange

the item of value must be given or promised by the promisor (offeror) in return for the promisee's promise, performance, or promise of performance.

Capacity

the legal ability to enter into a contractual relationship

Offeror

the party making an offer to enter into a contract

Satisfaction

the performance of an accord agreement

Legality

the purpose and subject matter of the contract must not be contrary to law or public policy

Express Contract

the terms of the agreement are fully and explicitly stated in oral or written words

Implied Contract

the terms of the agreement are inferred from the conduct of the parties

Executory Contracts

those contracts in which the terms have not been completely executed or fulfilled

Settlement Agreement

to discharge every claim that existed in the settlement; does not involve a third party

Disaffirmance

to set aside, avoid a contract

Reformation

when a court alters the terms of a contract to prevent undue hardships or burdens.

Express authorization

when an offeror specifies how accpetance should be made Ex: overnight delivery

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