Business Law Test #3

Restatement defines an agency relationship

"the fiduciary relationship that arises when one person (a 'principal') manifests assent to another person (an 'agent') that the agent shall act on the principal's behalf and subject to the principal's control, and the agent manifests assent or otherwise consents so to act."

Under the Clean Air Act, the EPA may impose civil penalties of up to:

$32,500 per day of violation.

The Electronic Fund Transfers Act imposes liability on a customer for unauthorized transfers in the maximum amount of:

$50 if the consumer notifies the financial institution within two days after learning of a loss, $500 if a consumer fails to notify a financial institution within 2 days after learning of a loss

Under the Clean Water Act, the maximum criminal penalties for knowing violations are 3 years imprisonment and:

$50,000 per day of violation

If a consumer does not report the loss or theft of his electronic funds transfer card within two days he is liable for losses up to:

$500.

Acting in reliance on X's intentional misrepresentation as to a drill press's capabilities, Y purchases the press from X for $17,000. Although the value of the press, if it had performed as promised, would be $10,000, its actual delivered value is $4,000. Under the benefit of-the-bar¬gain rule, Y could recover:

- $6,000

Foreseeability of Damages

- Compensatory or reliance damages are recoverable only for loss that the party in breach had reason to foresee as a probable result of the breach when the contract was made, test of foreseeable damages is objective

Certainty of Damages

- Damages are not recoverable for loss beyond an amount that the injured party can establish with reasonable certainty

Remedies in Equity

- If damages will not adequately compensate an injured party, the court may, in its discretion, grant a remedy in equity

Party Injured by Breach

- Restitution is available if the other party totally breaches the contract by nonperformance or repudiation.

Mitigation of Damages

- When a breach of contract occurs, the injured party may not recover damages for loss that he could have avoided by reasonable effort and without undue risk, burden, or humiliation.

Foreign Agents

- a local agent in the host country is used to provide limited involvement for an MNE

Election of Remedies

- a party is injured by a breach of contract and has more than one remedy available, he may pursue more than one remedy unless the remedies are inconsistent or the other party materially changes his position in reliance on the choice of one of them

Fraud minority of states

- all the injured party to recover out- of - pocket damages means difference between value received and value given

Damages for Misrepresentation

- basic remedy if misrepresentation is rescission of the contract of the contract, but an alternative remedy under common law and an additional remedy under the code is a suit for damages. Measure of damages depends on if misrepresentation is fraud or nonfraudulent

Compensatory Damages

- contract damages placing the injured in as good a position as if the other party had performed, amount is generally the loss of value to the injured party cause by the other party's failure to perform or by his deficient performance minus the loss or cost avoided by the injured party plus incidental damages plus consequential damages, right to recover compensatory damages is always available.

Statute of Frauds

- contract is unenforceable because of the statute of frauds, but the party has nevertheless acted in reliance on the contract, the party may recover in restitution the benefits conferred on the other in reliance on the contract.

Injunctions

- court order prohibiting a party from doing a specific act, damages for breach would be inadequate, employee's promise of exclusive personal services may be enforced by an injunction against serving another employer as long as the employee would have other reasonable means of making a living and the services are unusual in character

Consequential Damages

- damages are not arising directly out of a breach but that are a foreseeable result of the breach, such as lost profits and injury to persons or property resulting from defective performance

Incidental Damages

- damages arising directly out of a breach of contract, such as incurred to acquire the undelivered performance from another source, added to the loss of value

Loss of Value

- difference between the value of the promised performance of the breaching party and the value of the actual performance rendered by the breaching party.

Confiscation

- governmental taking of foreign-owned property without payment (or for a highly inadequate payment) or for a nonpublic purpose

Restitution interest

- interest in having restored to them any benefit they conferred on other party

Monetary Damages

- judgment awarding monetary damages most frequently granted for breach of contract

Limitations on Damages

- limits on monetary damages to ensure that damages can be taken foreseen at the time of contracting, that damages are compensatory and not speculative and that damages do not include loss that could have been avoided by reasonable efforts

Punitive Damages

- monetary damages in addition to compensatory damages awarded to a plaintiff in certain situations involving willful, wanton, or malicious conduct, punish the defendant and thus discourage him and others from similar wrongful conduct, not recoverable for a breach of contract unless the conduct constituting the breach is also a tort for which punitive damages are recoverable

Loss of Power of Avoidance

- party may lose the power of avoidance in the following cases, Affirmance, Delay, and Rights of Third Parties

Voidable Contracts

- party who has avoided a contract for lack of capacity, duress, undue influence, fraud in the inducement, nonfraudulent misrepresentation, or mistake is entitled to restitution for any benefit he has conferred on the other party

Fraud majority of states

- permit the defrauded party to recover damages based on benefit-of-the0bargain rule which is the difference between the value received and the value of the fraudulent party's performance as represented.

Liquidated Damages

- reasonable damages agreed on in advanced by both parties to a contract

Cost Avoided

- recovery by the injured party is reduced by any cost or loss she has avoided by not having to perform

Reliance damages

- reimbursement for foreseeable loss caused by reliance on the contract, results in placing the injured party in as good a position as he would have been in had the contract not been made, preferred when injured a party is unable to establish loss of profits with reasonable certainty or when the contract itself is unprofitable

Nonfraudelent misrepresentation

- restatement permits -out-of-pocket damages but not benefit-of-the-bargain damages where the misrepresentation is not fraudulent or negligent.

Restitution

- restoration of the injured party to the position he was in before the contract was made, is available 1. as an alternative remedy for a party injured by breach 2. for a party in default and 3.for a party who may not enforce the contract because of the statute of frauds,. and 4.on rescission of a voidable contract.

Nominal Damages

- small sum of money awarded where a contract has been breached but the loss is either negligible or unproved

Chapter 18

...18

If a check is for $2,500 or more,

...federal Regulation CC requires that the paying bank give special notice of nonpayment to the depositary bank by 4:00 P.M. on the second business day following the banking day on which the check was presented to the paying bank

questions

1-0000

Duty to Act Timely

A collecting bank acts timely if it acts within the midnight deadline. The midnight deadline means midnight of the banking day following the banking day on which the bank receives the item or notice of its dishonor. If a bank receives a check on Monday, it must take proper action by midnight on Tuesday. The Code allows banks to fix an afternoon hour of 2:00 p.m. or later as a cutoff hour for bookkeeping purposes in order to meet the midnight deadline

Duty of Care

A collecting bank must use ordinary care in handling an item transferred to it for collection. It must act within a reasonable time after receipt of the item and must choose a reasonable method of forwarding the item for presentment

Consumer Liability

A consumer's liability for an unauthorized electronic funds transfer is limited to a maximum of $50 if the consumer notifies the financial institution within two days after learning of the loss or theft. A consumer who does not report the unauthorized use within two days is liable for losses up to $500. A consumer who fails to report the unauthorized use within sixty days is liable for losses resulting from any unauthorized EFT that would not have occurred but for the failure of the consumer to report the loss within sixty days

Which of the following contracts are within the statute of frauds and therefore must meet its requirements in order to be enforceable?

A contract to sell half-acre lots of land in a 60-acre subdivision ,A deed granting an easement

Which one of the following statements is NOT a correct principle to be applied in determining what constitutes a material breach?

A failure to timely perform a promise is a material breach even if time is not of the essence

Liability of Financial Institution

A financial institution is liable to a consumer for all damages proximately caused by its failure to make an EFT according to the terms and conditions of an account. not be liable if (1) the consumer's account has insufficient funds through no fault of the financial institution, (2) the funds are subject to legal process, (3) the transfer would exceed an established credit limit, (4) an electronic terminal has insufficient cash, or (5) circumstances beyond the institution's control prevent the transfer. institution is also liable for failure to stop payment of a preauthorized transfer when instructed to do so in accordance with the terms and conditions of the account

Partial Assignments (split up contract with some1 else)

A partial assignment is a transfer of a portion of the contractual rights to one or more assignees

Payment of an Item

A payor bank owes a duty to its customer, the drawer, to pay checks properly drawn by her on an account that has sufficient funds to cover the items. The drawee is not liable on a check until it accepts the item. if a bank improperly refuses payment, it will incur liability to its customer from whose account the item should have been paid. If the customer had enough money on deposit and there is no other valid reason for refusing to pay, the bank is liable to the customer for wrongful dishonor. If a wrongful dishonor occurs through mistake, the bank's liability is limited to actual damages proved, including damages for arrest or other consequential damages. A payor bank is under no obligation to pay an uncertified check that is over six months old. However, a bank is not obligated to dishonor such a check. When a payor receives an item for which there are insufficient funds in the account, but which is otherwise properly payable, the bank may either (1) dishonor the item and return it; or (2) pay the item and charge the customer's account even though an overdraft is created as a result. The customer may be liable to pay a service charge and interest on the overdraft

Preauthorized Transfers

A preauthorized transfer from a consumer's account must be authorized in writing in advance by the consumer, and a copy of the authorization must be provided to the consumer when the transfer is made. A consumer may stop payment of any preauthorized EFT by notifying the financial institution orally or in writing at any time up to three business days before the scheduled transfer

Creditor Beneficiary (legal hook up)

A third person is an intended creditor beneficiary if the promisee intends the performance of the promise to satisfy a legal duty owed to the beneficiary, who is a creditor of the promise

Notice

A valid assignment does not require that notice be given to the obligor; however, such notice is advisable because an assignee will lose his rights against the obligor if the obligor pays the assignor without notice of the assignment

Automated Teller Machines

ATMs permit customers to conduct various transactions with their bank through the use of electronic terminals. After activating an ATM with a plastic identification card and a secret number, customers can deposit and withdraw funds from their accounts, transfer funds between accounts, obtain cash advances from bank credit card accounts, and make payments on loans

Full Performance

After all the promises of an oral contract have been performed by all parties, the statute of frauds no longer applies

Duty Not to Compete

An agent cannot compete with a principal or represent a competitor. An agent may compete against a former principal once an agency terminates

Duty of Good Conduct

An agent has a duty to act reasonably and to avoid actions that may damage the principal's interests

Confidential Information

An agent may not use or disclose confidential information obtained in the course of the agency for her own benefit or contrary to the interest of her principal. includes unique business methods, trade secrets, business plans, and customer lists. However, an agent may reveal confidential information that the principal is committing or is about to commit a crime

Conflicts of Interest-

An agent must act solely in the interest of the principal and not in his own interest or in the interest of another. An agent may not represent his principal in any transaction in which he has a personal interest, nor act on behalf of adverse parties to a transaction, unless the principal consents

Duty of Diligence

An agent must act with reasonable care and skill in performing agency work

Self Dealing

An agent must not be involved in a transaction with the principal without first fully disclosing the agent's interest in the matter and assuring that it is fair

Misappropriation

An agent must not use the principal's for the purposes of the agent or a third party

Duty to Inform

An agent must use reasonable efforts to give the principal information that is relevant to the affairs entrusted to her and that, as the agent knows or should know, the principal would desire to have, Notice to an agent is notice to her principal

Which of the following has occurred if, prior to the date that performance is due, a party announces that he will not perform or commits an act that renders him unable to perform?

An anticipatory repudiation

Which of the following would not be considered a discharge by agreement?

An anticipatory repudiation

Defenses Against Beneficiary

An intended beneficiary is subject to any defense that the promisor could assert against the promise

Arthur writes a letter to Bob in which he promises to pay Clark's debts if Clark doesn't pay.

Arthur's promise is a collateral promise

Sale of Goods

Article 2 statute of frauds provision is more liberal. It requires merely a writing (a) sufficient to indicate that a contract has been made between the parties; (b) signed by the party against whom enforcement is sought or by her authorized agent or broker; and (c) specifying the quantity of goods to be sold

Scope of Article

Article 4A covers wholesale funds transfers and defines a funds transfer as a "series of transactions, beginning with the originator's payment order, made for the purpose of making payment to the beneficiary of the order. The term includes any payment order issued by the originator's bank or an intermediary bank intended to carry out the originator's payment order. A funds transfer is completed by acceptance by the beneficiary's bank of a payment order for the benefit of the beneficiary of the originator's payment order

Wholesale Funds Transfers

Article 4A, Funds Transfers, is designed to provide a statutory frame-work for a payment system that is not covered by existing Articles of the UCC or by the EFTA. It provides that the rights and obligations of the parties to a funds transfer covered by the article are subject to contrary agreement of the parties

Scope of Agency Purposes

As a general rule, whatever business activity a person may accomplish personally, may be done through an agent

Rights That are Not Assignable following contract rights, are not assignable.

Assignments That Materially Increase the Duty, Risk, or Burden Assignments of Personal Rights Express Prohibition Against Assignment Assignments Prohibited by Law

Which of the following assignments of contract rights are not assignable?

Assignments that would materially increase the risk or burden on the obligor Assignments which are prohibited by law Assignments which would transfer a personal contract right

Lapse of Time

Authority conferred upon an agent for a specified time terminates at the expiration of that period. If no time is specified, authority terminates at the end of a reasonable period

Which of the following contracts need not be in writing to be enforced?

Bill Buyer agrees to buy $450 in goods from Sam Seller

An agent may be appointed to perform which of the following?

Buy or sell goods

CPA: For which of the following negotiable instruments is a bank not an acceptor?

Certificate of deposit

Admission

Code permits an oral contract for the sale of goods to be enforced against a party who in a pleading, testimony, or otherwise in court admits that a contract was made, but the Code limits enforcement to the quantity of goods the party admits

Specially Manufactured Goods

Code permits enforcement of an oral contract for goods specially manufactured for a buyer which cannot be readily resold in the ordinary course of the seller's business

Delegable Duties

Contractual duties are generally delegable, however, a delegation will not be permitted if (1) the nature of the duties are personal; (2) the performance is expressly made nondelegable; or (3) the delegation is prohibited by statute or public policy

Promise Made to Debtor

Courts have interpreted the suretyship provision NOT to include promises made to the debtor. is enforceable without writing

The Resource Conservation and Recovery Act regulates:

Current and future hazardous waste. , Transportation of hazardous waste ,Disposal of hazardous waste

Warranties

Customers and collecting banks give basically the same warranties as those given by parties under Article 3 of the Code upon presentment and transfer

Certainty of Damages

Damages are not recoverable for loss beyond an amount that the injured party can establish with reasonable certainty

Direct Deposits and Withdrawals

Direct deposits of payroll, Social Security, and other payments can be made through an electronic terminal when the deposit has been authorized in advance by the consumer. Automatic withdrawals to pay insurance premiums, utility bills, or automobile loan payments are common examples of this type of EFT

Banks may not do

Disclaim responsibility for lack of good faith, Disclaim responsibility for failure to exercise ordinary care, Limit their damages for breach

Delegation of Duties

Duties are not assignable, but their performance generally may be delegated to a third person. transfer to a third party of a contractual obligation. It does not extinguish the delegator's obligation to perform. When the delegatee accepts the delegated duty, both the delegator and the delegatee are liable for performance of the contractual duty to the oblige

Consumer Funds Transfers

Electronic Fund Transfers Act (EFTA)- "provides a basic framework establishing the rights, liabilities, and responsibilities of participants in electronic fund transfers" with primary emphasis on "the provision of individual consumer rights." act does not govern electronic transfers between financial institutions, between financial institutions and businesses, or between businesses. act is administered by the Board of Governors of the Federal Reserve System

Which of the following would be the most widely used regulatory approach by the federal government?

Establishment of standards and penalties for violations

Assignment of Rights

Every contract creates both rights and duties

Contract remedies are available to protect which of the following interests of the injured party?

Expectation interest,Reliance interest,Restitution interest

Which of the following is not a rule of contract interpretation?

Express terms, usage of trade, course of dealing, and course of performance are weighed in that order

Assignments Prohibited by Law

Federal and state statutes prohibit or regulate certain assignments, such as those of the right to future wages.

Electronic Funds Transfer

Financial institutions seek to substitute EFTs for checks to eliminate the paperwork involved in processing checks and to eliminate the "float" that a drawer of a check enjoys as a result of having the use of funds during the check-processing period between issuing the check and final payment. An electronic funds transfer has been defined as "any transfer of funds, other than a transaction originated by check, draft, or similar paper instrument, which is initiated through an electronic terminal, telephonic instrument, or computer or magnetic tape so as to order, instruct, or authorize a financial institution to debit or credit an account." EFTs have brought about considerable confusion concerning the legal rights of customers and financial institutions. A partial solution has been the enactment of the Electronic Fund Transfers Act, but important legal problems remain

First Bank pays a check over a stop payment order of its customer.

First Bank is subrogated to the rights of any holder in due course on the item against the drawer or maker, First Bank is subrogated to the rights of the payee or any other holder against the drawer or maker, First Bank is subrogated to the rights of the drawer or maker against the payee or any other holder

Securities Regulation

Foreign issuers who issue securities, or whose securities are sold in the secondary market in the United States must register them unless an exemption is available; the antifraud provisions apply where there is either conduct or effects in the United States relating to a violation of the Federal securities laws

Implied Warranties of Assignor

Four implied warranties are imposed by law upon the transferor of contract rights for value. The four warranties are (1) that he will do nothing to defeat or impair the assignment; (2) that the assigned right actually exists and is subject to no limitations or defenses other than those apparent or stated; (3) that any writing evidencing the right is genuine; and (4) that he has no knowledge of any fact that would impair the value of the assignment

A depositary bank may treat a check as having been received on Monday if the check was actually received late in the afternoon on:

Friday

An agency terminates by operation of law upon the occurrence of any of the following except:

Fulfillment of purpose

Which of the following would constitute a discharge of the contract?

Full performance by all of the parties Breach of the contract by either or both parties Agreement of the parties to rescind

In a private nuisance action, what factor(s) will a court consider before issuing an injunction?

Gravity of harm to the plaintiff ,Social value of defendant's activity ,Public interest

Arthur and Bob enter into a contract. Bob later delegates his duty of performance to Clark. Which of the following is true?

If Clark fails to perform, Bob has a duty to perform

Unauthorized Payment Orders

If a bank establishes commercially reasonable security measures agreed to by the customer for preventing unauthorized transmissions and properly follows its process, the customer must pay an order even if it was unauthorized

Delay (took to long to say no)

If a party has the power to rescind a contract but does not do so within a reasonable time, then the power of avoidance may be lost

Delay-

If a party has the power to rescind a contract but does not do so within a reasonable time, then the power of avoidance may be lost

Restitution

If a party to a contract that is unenforceable because of the statute of frauds has acted in reliance upon the contract, the party may recover in restitution the benefits conferred upon the other

Bank's Right to Subrogation on Improper Payment

If a payor bank pays an item over a stop payment order or otherwise in violation of its contract with the drawer or maker, payor bank is subrogated to the rights of (a) any holder in due course on the item against the drawer or maker; (b) the payee or any other holder against the drawer or maker; (c) the drawer or maker against the payee or any other holder. allows a bank to pay a holder in due course when the drawer's defense is a personal one not withstanding the fact that the drawer has issued a valid stop payment order

Acceptance

If a receiving bank is not the beneficiary's bank, it does not subject itself to any liability until it accepts the instrument. Acceptance by a receiving bank other than the beneficiary's bank occurs when the receiving bank executes the payment order. If a beneficiary's bank accepts a payment order, the bank is obliged to pay the beneficiary

Erroneous Execution of Payment Orders (paid too much)

If a receiving bank mistakenly executes a payment order for an amount greater than the authorized amount, the bank is only entitled to payment of the amount of the sender's correct order. The receiving bank is entitled to recover from the beneficiary of the erroneous order the amount in excess of the authorized amount

Excluded Transactions

If any part of a funds transfer is governed by the EFTA, such coverage is excluded from Article 4A coverage. Article 4A also excludes debit transactions

Remedies in Equity (if money aint enough here is equity)

If damages will not adequately compensate an injured party, the court may, in its discretion, grant a remedy in equity

Customer's Death or Incompetence

If either a payor or collecting bank does not know that a customer has been adjudicated incompetent, the bank's authority to accept, pay, or collect the item is not impaired. Neither death nor adjudication of incompetence of a customer revokes a payor or collecting bank's authority to accept, pay, or collect an item until the bank knows of the condition and has a reasonable opportunity to act on this knowledge. Even though the bank knows of the death of its customer, it may for ten days after the date of death act on the instrument unless a person claiming an interest in the account orders the bank to stop making payments

Original Promise

If the promisor makes an original promise by undertaking to become primarily liable, then the statute of frauds does not apply. The statute only applies to a collateral promise

Flow of Capital

International Monetary Fund facilitates the expansion and balanced growth of international trade, helps eliminate foreign exchange restrictions, and smoothes international balance of payments

Which of the following will not terminate an agency?

Lapse of time, Revocation of authority, Renunciation by the agent

Licensing

MNE sells a foreign company the right to use technology or information

Distributorship

MNE sells to a foreign distributor who takes title to the merchandise

Rights That are Assignable -

Most contract rights are assignable. The right to the payment of money is the most common contractual right that may be assigned

CPA: Krieg was the owner of an office building encumbered by a mortgage securing Krieg's promissory note to Muni Bank. Park purchased the building that was subject to Muni's mortgage. As a result of the sale to Park:

Muni is not a third party creditor beneficiary

To which of the following would the Clean Water Act not apply?

Navigable waters in the United States ,Interstate waters and their tributaries ,Freshwater wetlands

Parol Evidence

Neither party to a final, complete written contract is later permitted to show that the contract they made is different from the terms and provisions that appear in the written agreement

Formalities

No formality is required in a contract of agency, contract may be express or inferred from the conduct of the principal, agent's appointment to be evidenced by a writing if the agency is for more than one year or involves a sale of land

CPA: Sand orally promised Frost a $10,000 bonus, in addition to a monthly salary, if Frost would work for two years for Sand. If Frost works for the two years, will the statute of frauds prevent Frost from collecting the bonus?

No, because Frost fully performed in reliance on the oral promise

NEPA's EIS requirement applies to a broad range of types of effects within the urban environment. To which one of the following would the EIS requirement not apply?

Noise, Overburdened mass transportation systems ,Crime

Which is not true under the Competitive Equality Banking Act?

Nonlocal checks must clear in seven intervening business days

Which of the following is not a duty owed by an agent to her principal?

Obedience ,Accounting ,Information

Modification or Rescission of Contracts within the Statute of Frauds

Oral contracts modifying existing contracts are unenforceable if the resulting contract is within the statute of frauds

Promissory Estoppel

Oral contracts within the statute of frauds have been enforced where the party seeking enforcement has reasonably and foreseeably relied upon a promise, and injustice can only be avoided by enforcement of the promise

Peter listed a real estate with Ron, a realtor, pursuant to a listing agreement, which was good for 90 days. Two months later, Peter decides not to sell the property and revokes Ron's authority.

Peter has the power to revoke Ron's authority, but does not have the right to revoke it ,Peter may be liable to Ron for damages for breach of contract

Through a clerical error, an annuity policy that should be paying $500 per month is actually paying $50 per month. Upon proper proof of the error, a court of equity might elect which of the following remedies?

Reformation

Party Injured by Breach

Restitution is available if the other party totally breaches the contract by nonperformance or repudiation

Assume that S wants to sell his house and B is interested in buying it. If A is an agent who normally handles such transactions, A may represent:

S and B, but only with the informed consent of S and B

Sam Seller has a contract to provide 100 widgets to Bill Buyer at a price of $10 a widget. Delivery is to be on October 1. Due to unanticipated delays, Sam is unable to get the widgets to Bill until October 2. Bill is not harmed by the delay but sues anyway, because he is angry with Sam.

Sam's failure to deliver the goods on October 1 is a violation of the Code's perfect tender rule, even if it is not a material breach , If Bill cannot establish any incidental or consequential damages as a result of the breach, he will only be able to recover nominal damages

CPA: Kaye contracted to sell Hodges a building for $310,000. The contract required Hodges to pay the entire amount at closing. Kaye refused to close the sale of the building. Hodges sued Kaye. To what relief is Hodges entitled?

Specific performance

Which of the following would not be assignable?

Teacher assigns to her best friend her contract right to teach

Acts of the Parties

Termination by the acts of the parties may occur by the provisions of the original agreement, by the subsequent acts of both principal and agent, or by the subsequent act of either one of them

Substitute Check

The Check Clearing for the 21st Century Act (called Check 21 or Check Truncation Act) allows banks to replace checks with either (1) a substitute check (2) by agreement, information relating to the original check. Under the Act a substitute check in the correct form is the legal equivalent of an original check for all purposes, and parties cannot refuse to accept a substitute check that satisfies requirements of the Act

Customer's Duties

The Code imposes affirmative duties on bank customers and fixes time limits within which they must assert their rights. The customer is required to exercise reasonable care and promptness in examining the bank statement and items to discover an unauthorized signature or an alteration and must notify the bank promptly. The customer must examine the statement and items within a reasonable time, which in no event may exceed thirty calendar days and must notify the bank of unauthorized signatures and alterations. Any alterations or unauthorized signatures on instruments by the same wrongdoer and paid by the bank during that period will still be the responsibility of the bank, but any paid thereafter but before the customer notifies the bank may not be asserted against it. The customer must always report an alteration or unauthorized signature within one year from the time the statement or items were made available or be barred from asserting them against the bank. Any unauthorized indorsement must be asserted within three years from the time the bank statements and items containing such indorsements are made available to the customer

Express Prohibition Against Assignment

The Restatement and Article 2 of the Code say that unless circumstances indicate the contrary, a prohibition of assignment of the contract will be construed as barring only the delegation to the assignee of the assignor's duty of performance and not the assignment of rights

Interpretation of Contracts

The Restatement defines interpretation as the ascertainment of the meaning of a promise or agreement or a term of the promise or agreement. Rules for interpretation include: (1) all the circumstances are considered and the principal purpose of the parties is given great weight; (2) a writing is interpreted as a whole; (3) commonly accepted meanings are used unless a different intention is manifested; (4) technical terms are given their technical meaning; (5) wherever possible, the intentions of the parties are interpreted as consistent with each other and with course of performance, course of dealing, or usage of trade; (6) an interpretation that gives a reasonable, lawful, and effective meaning to all terms is preferred; (7) specific terms are given greater weight than general language; (8) separately negotiated terms are given greater weight than standardized terms or those not separately negotiated; (9) express terms, course of performance, course of dealing, and usage of trade are weighted in that order; and (10) where a term has several possible meanings, the term will be interpreted against the party who supplied the contract or term; (11) written provisions prevail over inconsistent typed or printed provisions, and typed provisions prevail over printed; and (12) if an amount payable is set forth in conflicting words and figures, the words control the figures.

Sales of Goods

The UCC provides that a contract for the sale of goods for the price of $500 or more is not enforceable without a writing

Duties of Principal to Agent

The agent has certain rights against the principal which result in certain duties that the principal owes to the agent

Duty to Account

The agent is under a duty to maintain and provide the principal with a true and complete account of money or other property that the agent has received or expended on behalf of the principal ,agent must also keep the principal's property separate from his own

Obtains Rights of Assignor

The assignee stands in the shoes of the assignor, but acquires no new rights. The assignee takes the assigned right with all of the defenses, defects, and infirmities that the obligor would have against the assignor. The obligor may assert rights of setoff or counterclaim. Waivers of claims or defenses against assignees are valid under the Code, but the FTC has invalidated waivers of defenses in consumer credit transactions

Express Warranties of Assignor

The assignor is bound by any explicitly made contractual promises regarding the contract rights transferred

Error Resolution

The consumer has 60 days after the financial institution sends a receipt in which to notify the financial institution of any errors that appear on the statement. The financial institution is required to investigate and report the results within ten business days. If it determines that an error did occur, it must properly correct it. Failure to investigate in good faith makes the financial institution liable for treble damages

In which of the following situations would an oral contract that should have been within the statute of frauds no longer have to be written to be enforceable?

The contract has been fully performed

Which of the following is responsible for examining a check for prior restrictive indorsements?

The depositary bank

Stop Payment Orders

The drawer of a check may issue a stop payment order. must be received by the bank in time to give it a reasonable opportunity to act on it. An oral stop payment order is binding on the bank for fourteen calendar days. customer to confirm an oral stop payment order in writing. T written order is effective for six months and may be renewed in writing. when the check is dishonored by the bank, the drawer may incur liability to the holder, particularly if the holder is a holder in due course against whom personal defenses are not effective.

Disclosure Requirements (things banks must tell u)

The federal Truth in Savings Act provides that disclosures must be made in clear and conspicuous writing and must be given to consumers when an account is opened or service is provided. The disclosure must include the following: (a) the annual percentage yield and the percentage rate; (b) how variable rates are calculated and when the rates may be changed; (c) balance information; (d) when and how interest is calculated and credited; (e) the amount of fees that may be charged and how they are calculated; and (f) any limitation on the number or amount of withdrawals or deposits

Documentation and Periodic Statements (receipt)

The financial institution must provide the consumer with written documentation of each transfer made from an electronic terminal at the time of the transfer-a receipt. receipt must clearly state the amount involved, the date, the type of transfer, the identity of the consumer's accounts involved, the identity of any third party involved, and the location of the terminal involved. The institution must also provide periodic statements for each consumer account that may be accessed by means of an EFT

General Contract Provisions

The general statutes require that the writing (1) specify the parties to the contract; (2) specify the subject matter and essential terms of the unperformed promises; and (3) be signed by the party to be charged or by her agent. The note or memorandum may be formal or informal.

Which of the following would be grounds for the EPA to require testing of a substance?

The manufacture or distribution of the substance may present an unreasonable risk of injury to health or the environment. , There is insufficient data on the effects of the substance on health and the environment and testing is necessary to develop such data

Effect of Noncompliance

The oral contract that should fall within the statute is unenforceable

Parties

The originator sends the payment order or, in a series of payment orders, it sends the first payment order. sender- party who gives an instruction to the receiving bank. The bank to which the sender's instruction is addressed is the receiving bank. originator's bank - either the bank that receives the original payment order or the originator if the originator is a bank. beneficiary's bank- bank identified in a payment order to credit the beneficiary's account and is the last bank in the chain of transfer. beneficiary - person to be paid by the beneficiary bank. A intermediary bank- is any receiving bank, other than an originator's bank or a beneficiary's bank, that receives a payment order

Party in Default

The party who has partly performed but is in default such that the other party's duty to perform is discharged is entitled to restitution for any benefit she has conferred in excess of the loss she has caused by her breach.

Party in Default -

The party who has partly performed but is in default such that the other party's duty to perform is discharged is entitled to restitution for any benefit she has conferred in excess of the loss she has caused by her breach.

Relationship Between Payor Bank and Its Customer

The relationship between a payor bank and its checking account customer is primarily the product of their contractual arrangement. A bank may not (1) disclaim responsibility for its lack of good faith; (2) disclaim responsibility for its failure to exercise ordinary care (3) limit its damages for breach of such lack or failure

Disclosure (terms and conditions)

The terms of an electronic funds transfer involving a consumer must be disclosed in readily understandable language at the time the consumer contracts for such services

Wholesale Electronic Funds Transfers

These are commonly called wholesale wire transfers and involve the movement of funds between financial institutions, between financial institutions and businesses, and between businesses

Pay by Phone Systems

These permit customers to pay bills by telephoning the bank's computer system and directing a transfer of funds to a designated third party or between accounts

Central Contracting has a contract to build an office complex for Woodmenn, Inc. A clause in the contract calls for Central to pay $2,000 a day for each day's delay after the date the contract is scheduled for completion.

This is a liquidated damages clause that may be an unenforceable penalty clause

Employment Discrimination

Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, and the Age Discrimination in Employment Act -apply to U.S. citizens employed in foreign countries by U.S.-owned or -controlled companies.

Financial institutions seek to substitute electronic funds transfers for checks for which of the following reasons?

To eliminate the float a drawer of a check enjoys and to eliminate the paperwork involved in processing checks

Bank Deposits and Collections

UCC (art 4) provides the principal rules governing the bank collection process.

Payor Banks

Under its contract with the drawer, the payor (company bank) or drawee (employee bank) agrees to pay to the payee (employee) or his order checks that are issued by the drawer, provided the order is not countermanded by a stop payment order and provided there are sufficient funds in the drawer's account. When a payor bank that is not also a depositary bank receives a demand item other than for immediate payment over the counter, it must either return the item or give its transferor a provisional settlement before midnight of the banking day on which the item is received.

Delivery or Payment and Acceptance

Under the Code, delivery and acceptance of part of the goods or payment and acceptance of part of the price validates part of the oral contract

Final Payment

Under the Code, final payment occurs when the payor bank first does any of the following: (1) pays an item in cash; (2) settles and does not have the right to revoke the settlement through agreement, statute, or clearinghouse rule; (3) makes a provisional settlement and does not revoke it in the time and manner permitted by statute, clearinghouse rule, or agreement.

Supplemental Evidence

Under the Restatement and the Code, a written contract may be explained or supplemented by course of dealing, usage of trade, course of performance, or evidence of consistent, additional terms. A course of dealing is a sequence of previous conduct between the parties that establishes a common basis for understanding. A usage of trade is a practice or method of dealing regularly observed and followed in a place, vocation, or trade. Course of performance is the manner and extent to which the respective parties have accepted successive tenders of performance by the other party without objection. Supplemental consistent evidence is admissible if it does not contradict the terms of the original agreement and would probably not have been included in the original contract

Change in Circumstances

Under the Third Restatement of Agency, an agent's actual authority terminates when the agent should reasonably conclude that the principal would not want the agent to act on the principal's behalf

Which of the following would not be an appropriate measure of monetary damages?

Unforeseeable damages

CISG

United Nations Convention on Contracts for the International Sales of Goods governs all contracts for international sales of goods between parties located in different nations that have ratified the CISG

Mitigation of Damages (could have avoided)

When a breach of contract occurs, the injured party may not recover damages for loss that he could have avoided by reasonable effort and without undue risk, burden, or humiliation.

The Rule

When a contract is expressed in a writing that is intended to be the complete and final expression of the rights and duties of the parties, the parol evidence rule, which also applies to wills and deeds, excludes evidence of prior oral or written negotiations or agreements of the parties or their contemporaneous oral agreements that vary or change the integrated written contract

Indorsements

When an item is restrictively indorsed with words such as "pay any bank," it is locked into the bank collection system. When a bank forwards an item for collection, it normally indorses it "pay any bank." This protects the bank by making it impossible for the item to stray from regular collection channels. If there was no indorsement, the bank still becomes a holder when it takes possession, if the customer was a holder at the time of delivery to the bank. If the bank meets the other requirements, it will become a holder in due course

Full Performance by One Party

When one party has fully performed, most courts hold that the promise of the other party is enforceable even if performance was not possible within one year

In which of the following instances is restitution available as a remedy for breach of contract?

When one party totally fails to perform its obligations,When a party may not enforce the contract because of the statute of frauds,Upon the avoidance of a voidable contract

drawee bank (company bank)

When the amount of the check has been collected from the payor bank

Duties of the Parties

When there has been a delegation of duties and an assumption of the delegated duties, both the delegator and the delegatee are liable to the obligee for proper performance of the original contractual duty. A delegator who desires to be discharged of the duty may enter into a novation, which is an agreement obtaining the consent of the obligee to substitute a third person in the delegator's place. The delegator is then discharged and the third party is bound to the obligee

An equitable remedy would be granted in which of the following?

Where the remedy at law is inadequate

Assignments of Personal Rights

Where the rights under a contract are of a highly personal nature, they cannot be assigned. An example would be an agreement of two persons to marry one another

Foreseeability of Damages

[Compensatory or reliance damages] are recoverable only for loss that the party in breach had reason to foresee as a probable result of the breach when the contract was made, test of foreseeable damages is objective

Implied-in-Fact Conditions

[conditions are implied] but not expressed inferred from terms of the contract, nature of the transaction, or conduct of the parties.

Contracts within the Statute of Frauds

a contract is "within" (i.e., subject to) the statute, it must comply with the requirements of the statute, i.e., a writing is necessary

An agreement between three parties to substitute a new promisee or promisor in place of an existing promisee or promisor is called:

a novation

The delegator remains bound to perform her contractual duties even after a delegation unless the delegation is:

a novation

Election of Remedies

a party is injured by a breach of contract and has more than one remedy available, he may pursue more than one remedy unless the remedies are inconsistent or the other party materially changes his position in reliance on the choice of one of them

Obligee (who is owed)

a party to whom a duty is owed under a contract

Obligor (who does)

a party who owes a duty under a contract

independent contractor

a person who contracts with another to do a particular job and is not subject to the control of the other. Although all employees are agents, not all agents are employees,

Under the Clean Water Act "any discernible, confined and discrete conveyance . . . from which pollutants are or may be discharged" is known as:

a point source

The following promises or contracts are within the statute of frauds EXCEPT:

a promise made by a father to his son by which the father will pay the son's debt in the event of his son's default

Suretyship

a promise to pay a debt or perform duties of a third person if the principal debtor fails to do so

If a contract is expressed in a writing that is intended by the parties to be the complete and final expression of their rights and duties under the contract, the parol evidence rule precludes the admission into evidence of all of the following EXCEPT:

a subsequent oral agreement between the parties to modify the terms of the contract

delegatee

a third party to whom the delegator's duty is delegated

A contract in which the promisor agrees to render a certain performance to a third person is called:

a third-party beneficiary contract

An assignee of a contract right

acquires all of the rights of the assignor

Fiduciary Duty

act with utmost loyalty and good faith.

A party seeks to introduce evidence of a subsequent oral agreement modifying a written employment contract from 2 to 3 years. The oral agreement is

admissible under the parol evidence rule, but invalid because of the statute of frauds

Uniform Electronic Transactions Act (UETA)

adopted by more than 45 states, effectively provides that, when the parties agree, electronic contracts (or electronic signatures) should not be denied enforceability due to the statute of frauds. Similarly, the federal Electronic Signatures in Global and National Commerce (eSign) generally validates electronic records (including electronic contracts) and signatures for many transactions in interstate and foreign commerce. eSign does not require the parties to agree to its application unless one of the parties is a consumer, in which case the consumer must electronically consent to conducting transactions with electronic records

Termination of Agency

agency is terminated when the consent of the principal is withdrawn or otherwise ceases to exist. On termination of the agency, the agent's actual authority ends, and she is not entitled to compensation for services subsequently rendered. Termination may take place by the acts of the parties or by operation of law

Mutual Agreement of the Parties

agency relationship is created by agreement and may be terminated at any time by mutual agreement of the principal and the agent

Renunciation by the Agent

agent has the power to put an end to the agency by notice to the principal that she renounces the authority given her by the principal. If the parties have contracted that the agency continues for a specified time, an unjustified renunciation prior to the expiration of the time is a breach of contract

Duty to Account for Financial Benefits

agent is under a duty to account to the principal for any financial benefit received by her as a direct result of transactions conducted on behalf of the principal, including bribes, kickbacks, and gifts. Also, an agent is not permitted to make a secret profit out of any transaction subject to the agency

minors and incompetents not under guardianship can act as -

agents

Mutual Rescission (Divorce type sh*t)

agreement between the parties to terminate their duties under a contract; contract to end a contract ex. We agree to sign this to end the previous contract

International Treaties

agreements between or among independent nations, such as the General Agreement on Tariffs and Trade (GATT), (now the World Trade Organization).

Fraud in minority of states

all the injured party to recover out-of-pocket damages means difference between value received and value given ex. worth - recieved

A contract in which the promisee agrees to accept and the promisor agrees to render a substituted performance in satisfaction of an existing contractual duty is called:

an accord

Operation of Law

an agency relationship is terminated by the following Death Incapacity Change in Circumstances

Conditions

an event whose happening or nonhappening affects a duty of performance.

Main Purpose Doctrine

an exception that the courts have developed to the suretyship provision. It is also known as the leading object rule. If the main purpose of the promisor/surety is to provide an economic benefit to herself, then the promise comes within the exception and is outside the statute, i.e., no writing is necessary to enforce the promise

A condition that is understood by the parties to be part of their agreement, but is not included in their express contract, is called:

an implied-in-fact condition

Tender

an offer of performance

collateral promise

an undertaking to be secondarily liable, that is, liable if the principal debtor does not perform. "If X doesn't pay, I will," is collateral, because the promisor is not the one who is primarily liable, X is. An original promise (one to become primarily liable) is not collateral

Collecting Banks

any bank, except the payor bank, handling the item for payment

Definition

any business that engages in transactions involving the movement of goods, information, money, people, or services across national borders

agent is liable for

any loss caused to the principal for breach of any of these duties

Suretyship Provision

applies to a contractual promise by a surety (the promisor) to a creditor (the promisee) to perform the duties or obligations of a third person (the principal debtor) if the principal debtor does not perform

U.S. antitrust laws

apply to unfair methods of competition that have a direct, substantial, and reasonably foreseeable effect on the domestic, import, or export commerce of the United States

Executor & Administrator Provision

appointed to settle a decedent's estate. If an executor or administrator promises to answer personally for a duty of the decedent, the promise is unenforceable unless in writing. specific application of the suretyship provision

Third-Party Beneficiary Contracts

are contracts in which one party promises to render performance to a third person

Revocability of Assignments

assignee gives consideration in exchange for the assignment, then there is a contract and the assignor may not revoke the assignment without the assent of the assignee, assignment is gratuitous, it is revocable by the assignor and is terminated by the assignor's death, incapacity, or subsequent assignment, unless effective delivery has been made

In the case of a gratuitous assignment, which of the following would not be revocable? - The donee

assignee receives payment of the claim from the obligor The donee-assignee obtains a judgment against the obligor The donee-assignee obtains a new contract with the obligor None of the above would be revocable

Assignments That Materially Increase the Duty, Risk, or Burden

assignment is ineffective where performance by the obligor to the assignee would be materially different from performance to the assignor, such as an automobile liability insurance policy

clearinghouse (regulators)

association of banks (or other payors) settle accounts on a daily basis

intermediary bank

bank involved in the collection process other than the depositary or payor bank

depositary bank (employee bank)

bank where the payee or holder deposits a check for credit

Letter of Credit

bank's promise to pay the seller, provided certain conditions are met; used to manage risks in international trade

Damages for Misrepresentation

basic remedy is rescission or an alternative remedy is a suit for damages. Measure of damages depends on if misrepresentation is fraud or nonfraudulent

Mel owns a retail store. Elizabeth is a salesclerk for Mel in the store. The relationship between Elizabeth and Mel is an example of:

both employer and employee, as well as principal and agent

Charles hires Andrew, an attorney, to represent him in a lawsuit. The relationship between Charles and Andrew is an example of:

both employer and independent contractor, as well as principal and agent

Discharge by operation of law

brought about by operation of law ex. there is a new law saying that cutting grass is illegal so I cant cut your grass any more so our contract is void

Capacity

capacity to be a principal and act through an agent depends on the capacity of the principal to do the act herself

Compensation

compensate her agent unless the agent has agreed to serve gratuitously. If the agreement does not specify a definite compensation, a principal is under a duty to pay the reasonable value of authorized services performed by her agent. An agent loses the right to compensation by (1) breaching the duty of obedience, (2) breaching the duty of loyalty, or (3) willfully breaching the agency contract

electronic agent

computer program or other automated instrumentality that independently initiates an action or response to electronic input in whole or in part without review or action by a natural person

Creation of Agency

consensual relationship that may be formed by contract or agreement between the principal and agent

Compensatory Damages

contract damages placing the injured in as good a position as if the other party had performed amount is the loss of value to the injured party cause by the other party's failure to perform or by his deficient performance minus the loss or cost avoided by the injured party plus incidental damages plus consequential damages, right to recover compensatory damages is always available.

Vesting of Rights

contract for the benefit of an intended beneficiary confers rights that the beneficiary may enforce. Until the rights vest, however, the promisor and promisee may vary or completely discharge these rights. These views include: (1) immediately upon making the contract, (2) when the third party learns of the contract and assents to it, and (3) when the third party changes his position in reliance upon the promise made for his benefit

Statute of Frauds

contract is unenforceable because of the statute of frauds, but the party has nevertheless acted in reliance on the contract, the party may recover in restitution the benefits conferred on the other in reliance on the contract.

Compliance with the Statute of Frauds

contract is within the statute of frauds, it will be enforced if there is a sufficient writing, memorandum or record that meets the requirements of the statute

Satisfaction of a Third Party

contract may condition the performance of a party on the approval of a third party

Contractual Duties

contractual duties owed by a principal to an agent are the duties of compensation, reimbursement, and indemnification

Substantial performance

contractual duty that is not finished but is basically finished. if their are any problems the party will get money for the amount of work they have don't mines the amount left they have to complete ex. build house for $500 finishes $400 worth and party changes mind, acting party will get $400

Flow of Trade

control by trade barriers. Tariff - duty or tax imposed on goods moving into or out of a country. Nontariff Barriers - include quotas, bans, safety standards, and subsidies

Flow of Labor

controlled through passport, visa, and immigration regulations

Specific Performance (do what u said)

court decree ordering the breaching party to render the promised performance, available in the case of breach of contract for the sale of personal property where the goods are rare or unique, such as for a famous painting or statue, an original manuscript, a patent or copyright, shares of stock in a closely held corporation, or an heirloom not available in contracts for personal services

Specific Performance-

court decree ordering the breaching party to render the promised performance, available in the case of breach of contract for the sale of personal property where the goods are rare or unique, such as for a famous painting or statue, an original manuscript, a patent or copyright, shares of stock in a closely held corporation, or an heirloom not available in contracts for per¬sonal services

Injunctions

court order prohibiting a party from doing a specific act, damages for breach would be inadequate, employee's promise of exclusive personal services may be enforced by an injunction against serving another employer as long as the employee would have other reasonable means of making a living and the services are unusual in character

Consequential Damages

damages are not arising directly out of a breach caused by the breach, such as lost profits and injury to persons or property resulting from defective performance

Incidental Damages

damages arising directly out of a breach of contract, such as incurred to acquire the undelivered performance from another source, added to the loss of value

Death

death of an agent terminates the agent's actual authority and the death of the principal terminates the agent's actual authority when the agent has notice of such death

where the depositary and payor banks are different

depositary bank - gives a provisional credit to its customer, transfers the item to the next bank in the chain, receiving a provisional credit or "settlement" from it, and so on to the payor bank, then debits the drawer's (employee's) account ex. check cashing place

Other Legal Relationships -

employer employee and principal independent contractor

Wholly Owned Subsidiary

enables an MNE to retain control and authority over all phases of operation

By an oral agreement entered into on January 1, 2010, A hires B to work for eleven months starting on February 1, 2010. This contract is:

enforceable because this contract is outside the statute of frauds

Under the statute of frauds provision of the UCC, if a writing that is otherwise sufficient incorrectly states the quantity term agreed upon by the parties, the contract is:

enforceable, but only to the extent of the quantity of goods stated in the writing

Condition precedent

event which must occur or not occur before performance is due. ex. don't walk into the house until after you wipe your feet

Condition subsequent

event which terminates an existing duty of performance

The parol evidence rule will bar the introduction of:

evidence of a letter written prior to the execution of the final contract stating that the price to be charged for the goods was $20.00 each rather than $21.00 as provided in the final contract

Anticipatory Repudiation (wishy washy)

ex. party was suppose to perform duty they said they couldn't do it the other party can either sue them or hire another party to do it if the original party tries to sue they cant if the party has already changed their material position by paying the new party to do the job the original party couldn't do

The Clean Air Act places responsibility on the federal government to establish national emission standards for all of the following except:

existing stationary sources

Express condition

explicitly set forth in language, exsist where performance is explicitly made contingent on the happening or nonhappening of a stated event.

Edward has agreed to buy Donna's DVD player. Edward agrees to pay Donna when the DVD player is delivered. This transaction involves:

express concurrent conditions

Arthur, a world

famous rock star, has a contract to perform at the Superdome on New Year's Eve. However, he decides he would rather spend the night with his family and friends so he informs the owners of the Superdome.- The owners of the Superdome are entitled to damages, but they are not entitled to specific performance

An agent who violates a fiduciary duty is liable to the principal:

for breach of contract, in tort for losses caused ,in restitution for profits made

Sovereign Immunity

foreign country's freedom from a host country's laws.

Performance

fulfillment of a contractual obligation ex. Completion of what was suppose to be done in a contract

An uncured material breach of contract:

gives rise to a cause of action for damages by the aggrieved party operates as an excuse for nonperformance by the aggrieved party discharges the aggrieved party from any further duty under the contract

Expropriation

governmental taking of foreign-owned property for a public purpose and with payment of just compensation.

A party with a power of avoidance may lose that power if:

he affirms the contract,he delays unreasonably in exercising the power of disaffirmance, the rights of third parties intervene

CPA: In general, a clause in a real estate contract entitling the seller to retain the purchaser's down payment as liquidated damages if the purchaser fails to close the transaction is enforceable:

if the amount of the down payment bears a reasonable relationship to the probable loss

Subjective impossibility (stop bcz now im broke)

impossible for the promisor to perform due to the financial inability for whatever reason, doesn't excuse from liability of breach of contract ex. Build me a house. can u stop building my house I have just been robbed of all my money so I cant pay you any more.

Agents who are not employees are

independent contractors

Rights of Intended Beneficiary

intended donee beneficiary may enforce the contract against the promisor only. An intended creditor beneficiary may sue either or both parties. In an action by an intended beneficiary to enforce a promise, the promisor may raise any defense that would be available if the action had been brought by the promise

Reliance Interest

interest in being reimbursed for loss cause by reliance on the contract

Restitution interest

interest in having restored to them any benefit they conferred on other party

Expectation Interest

interest in having the benefit of their bargain

Land Contract Provision

interest in land is any right, privilege, power, or immunity in real property. It includes ownership interests in land, long-term leases, mortgages, options, and easements. Under this provision, a promise to transfer an interest in land must be in writing. However, under the part performance exception, if the transferee has paid a portion or all of the purchase price and either taken possession of the property or started to make valuable improvements on the land in reasonable reliance on the contract, an oral contract is enforceable

Any bank to which an item is transferred in the course of collection, other than the depositaryor payor banks, is a(n) __________ bank.

intermediary

Regional Trade Communities

international organizations, conferences, and treaties focusing on business and trade regulation; the EU (European Union) is the most prominent

A collecting bank that transfers an item and receives settlement gives what warranty:

is entitled to enforce the instrument, All signatures are authentic and authorized

All of the following are required of a writing to satisfy the requirements of the general statute of frauds EXCEPT:

it must be signed by the party seeking to enforce the contract or his agent, it must be signed by the party to be charged or his agent

International Court of Justice

judicial branch of the United Nations having voluntary jurisdiction over nations.

Limitations on Damages (incase u do mess up here is some $$$)

limits on monetary damages to ensure that damages can be taken foreseen at the time of contracting, that damages are compensatory and not speculative and that damages do not include loss that could have been avoided by reasonable efforts

CPA: Graham contracted with the city of Harris to train and employ high school dropouts residing in Harris. Graham breached the contract. Long, a resident of Harris and a high school dropout, sued Graham for damages. Under the circumstances, Long will:

lose, because Long is merely an incidental beneficiary of the contract

Successive Assignments of the Same Right

majority rule in the United States is that the first assignee in point of time prevails over later assignees. ex. 1st in time is right minority rule, the first assignee to notify the obligor prevails. ex. who ever was assigned 1st

Requirements of an Assignment

manifestation of the assignor's intention to transfer a contract right so that the assignor's right to performance is extinguished and the assignee acquires a right to such performance, UCC imposes a writing requirement on all assignments beyond $5,000

Marriage Provision

marriage provision does NOT apply to mutual promises to marry. A writing is required only if a promise to marry is made in consideration of some other promise, such as if a man's parents promise a woman to convey title to property if she marries their son

Material Alteration of Written Contract

material fraudulent alteration of a written contract by a party to the contract or an agent of a party discharges the entire contract

A written stop payment order:

may be renewed in writing

Bankruptcy

method of discharge available to a debtor obtained by an order of discharge by the bankruptcy court.

Sam Seller contracts to sell 200 tables to Bill Buyer at a price of $50 a table. Bill repudiates the contract, whereupon Sam sells the tables to Paula Purchaser at a price of $45 a table. Sam's action in selling the chairs to another buyer is known as:

mitigation of damages

Punitive Damages

monetary damages and compensatory damages awarded to a plaintiff in certain situations involving willful, wanton, or malicious conduct, punish the defendant discourage him and others from similar wrongful conduct, not recoverable for a breach of contract unless the conduct constituting the breach is also a tort for which punitive damages are recoverable

Discharge by performance

most frequent method of discharging a contractual duty, in bilateral contract, refusal of a tender is a repudiation that discharges tendering party from futher duty to perform the contract.

Monetary Damages

most frequently granted for breach of contract based on judgment of courts

Protection of Intellectual Property

must comply with each country's requirement to obtain from that country whatever protection is available.

Concurrent conditions

mutual duties of performance are to take place at the same time

David and Sharon entered into a written contract involving the performance of some marketing services. A week later, they both changed their minds and agreed in writing to cancel the contract. This is an example of:

mutual rescission

Substituted Contracts

new contract accepted by both parties to replace the acting or old contract immediately voids the old contract

Objective impossibility (cant be don't)

no one is able to perform, generally be held to excuse the promisor or to discharge the duty of performance, destruction of the subject matter without fault of the promisor is an excusable discharge. ex. the club was burned so u cant perform any more contract ended

A promisor may be excused for failure to perform a contract on grounds of impossibility when:

no one, including the promisor, is able to perform.

Implied-in-Law Conditions

not written or implied from contract but are imposed by law in order to accomplish a just and fair result

Clara sells her house to Donald. The house has a mortgage which is held by First Bank. As part of the transaction, First Bank agrees to discharge Clara from the mortgage and to allow Donald to assume the obligation. This is a(n):

novation

Accord and satisfaction (I changed my mind.. do this instead)

oblige promises to accept a stated performance in satisfaction of the obligor's exisiting contractual duty, performance of the accord is the satisfaction. ex. Cut just the front yard, no wait cut the back yard to Deal? Deal!

Incapacity

occurs after formation of the agency terminates the agent's actual authority when the agent has notice of this event. If an agent is appointed under a durable power of attorney, the agent's authority survives or is trigged by the principal's incapacity or disability

collecting bank is an agent (responsible)

of the owner of the check until settlement becomes final (is responsible until check gets cashed)

In presenting an item for payment, a collecting bank may delay presentment for up to:

one banking day

Uncured material breach

one party discharges the aggrieved party from any further duty under the contract ex. One party fires the other party and ends contract

Prevention of Performance

one party haults or prevents performance by the other causing a material breach and discharges the other party to the contract

Agent

one who represents a principal in business dealings with third persons, may negotiate and bind the principal to contracts with third persons, an intermediary if the principal's existence and identity are disclosed

Incidental Beneficiary

one whom the parties to a contract did not intend to benefit, derive some benefit from its performance. have no rights under a contract

Payment Order

oral or written instruction of a sender to a receiving bank to pay, or to cause another bank to pay, a fixed or determinable amount of money to a beneficiary

Nonfraudelent misrepresentation restatement permits

out-of-pocket damages but not benefit-of-the-bargain damages where the misrepresentation is not fraudulent or negligent.

Discharge by Agreement of the Parties

parties can agree on canceling part of a contract, can be done by either of the following: rescission substituted contract accord and satisfaction novation

Satisfaction of a Contracting party

parties of contract may agree that performance has to be done to ones liking, obligated to perform until party is satisfied. Duty to perform - if contract doesn't clearly indicate that satisfaction is subjective law assumes an objective satisfaction standard.

An intended creditor beneficiary of a third

party beneficiary contract has rights against:- both the promisee and the promisor

Assignor (who)

party making an assignment

Loss of Power of Avoidance -

party may lose the power of avoidance in the following cases: Affirmance Delay Rights of Third Parties

Assignee (to who)

party to whom the contract rights are assigned

Voidable Contracts

party who has avoided a contract for lack of capacity, duress, undue influence, fraud in the inducement, nonfraudulent misrepresentation, or mistake is entitled to restitution for any benefit he has conferred on the other party

Affirmance (u know its bad but u still agree to it)

party who has the power to avoid a contract for lack of capacity, duress, undue influence, fraud in the inducement, nonfraudulent misrepresentation, or mistake will lose that power by affirming the contract

Affirmance-

party who has the power to avoid a contract for lack of capacity, duress, undue influence, fraud in the inducement, nonfraudulent misrepresentation, or mistake will lose that power by affirming the contract

Subsequent illegality (new law so cant do it no more)

performance becomes illegal or impractical because of a change in law, duty of performance is voided ex. I cant work on your gas tanks because now it is illegal to do so

Commercial Impracticability (we can do it but it would take a miracle)

performance can only be accomplished but only under unforeseen and unjust hardship not impossible to do

Impossibility

performance can't be done, 2 types: subjective and objective

Perfect Tender Rule

performance must strictly comply with contractual duties and any deviation discharges the aggrieved party ex. JOB MUST BE DONE PERFECTLY

Point of-Sale Systems (POS)

permit consumers to transfer funds from their bank accounts to merchants automatically. POS machines are located within the merchant's store and are activated by the consumer's identification card and code ex Cash registers and card readers

Fraud in majority of states

permit the defrauded party to recover damages based on benefit-of-the bargain rule which is the difference between the value received and the value of the fraudulent party's performance as represented. ex. lie - value recieved

principal debtor

person whose debt is being supported

Rights of Third Parties

power of avoidance is limited by the intervening rights of third parties. For example, the right to rescind may be lost where a third party good faith purchaser acquires an interest in the subject matter of the contract before the right to rescind has been exercised

Rights of Third Parties -

power of avoidance is limited by the intervening rights of third parties. For example, the right to rescind may be lost where a third party good faith purchaser acquires an interest in the subject matter of the contract before the right to rescind has been exercised

The happening or nonhappening of a condition:

prevents a party from acquiring a right deprives a party of a right

Tort and Other Duties

principal is under a duty to disclose to an agent those risks involved in the agency, of which the principal knows or should know. If the agent is an employee, the principal also owes the duty to provide an employee with reasonably safe conditions of employment and to warn the employee of any unreasonable risk involved in the employment

Reimbursement

principal is under a duty to pay back authorized payments the agent has made on principal's behalf

Indemnification (pay out for the Loss)

principal is under a duty to pay the agent for payments made for a principal and for expenses and losses incurred while acting as directed by principal

Revocation of Authority

principal may revoke an agent's authority at any time by giving the agent notification of revocation. But if such revocation constitutes a breach of contract by the principal, the agent may recover damages from the principal

CPA: Simpson, Ogden Corp.'s agent, needs a written agency agreement to:

purchase an interest in undeveloped land for Ogden

Frustration of Purpose

purpose of a contract has been frustrated by [unexpected circumstances] deprive the performance of the value attached to it by the parties; courts generally regard frustration as a discharge. ex. party gets terminally sick out of the blue cancels concert

Liquidated Damages (tells up front u mess up u pay me $$$$)

reasonable damages agreed on in advanced by both parties to a contract

Cost Avoided

recovery by the injured party is reduced by any cost or loss she has avoided by not having to perform

Reliance damages (took an L)

reimbursement for foreseeable loss caused by reliance on the contract, results in placing the injured party in as good a position as he would have been in had the contract not been made, preferred when injured a party is unable to establish loss of profits with reasonable certainty or when the contract itself is unprofitable

A principal owes an agent a duty of:

reimbursement,indemnification,compensation

Duty of Obedience

requires an agent to act in the principal's affairs only as authorized by the principal and to obey all reasonable, lawful instructions and directions of the principal ,principal has the right to control the agent's conduct regarding the subject matter of the agency ,agent that exceeds his or her actual authority is liable to the principal for the loss incurred by the principal ,agent is liable to the principal for unauthorized acts that result from the agent's misinterpretation of the principal's directions unless the instructions are ambiguous

Statute of Frauds

requires that in order to be enforceable, certain contracts must be evidenced by a written memorandum signed by the party to be charged (the one you want to sue). The statute of frauds does not relate to any kind of fraud practiced in the making of a contract but rather is aimed at preventing fraud in the proof or evidence of oral contracts by perjured testimony in court

CPA: The statute of frauds:

requires the independent promise to pay the debt of another to be in writing

CPA: To cancel a contract and to restore the parties to their original positions before the contract, the parties should execute a:

rescission

Michael pays $500 down on a new computer to be used in the office. The salesperson told him the computer has a 100,000 megabyte memory. Michael learns from other sources that this is blatantly untrue and realizes now that the salesperson induced him to enter into the contract based upon fraud in the inducement. The company refuses to return the down payment. If Michael sues, an appropriate remedy would be:

rescission and restitution

Restitution

restores injured party to the position he was in before the contract was made, is available when 1. an alternative remedy for a party injured by breach 2. for a party in default 3. for a party who may not enforce the contract because of the statute of frauds, 4. on rescission of a voidable contract.

If a check is not paid for any reason, the payor bank should:

return it to its transferor

Situations to Which the Rule Does Not Apply

rule is considered to be a substantive rule of law that defines the limits of a contract. It does not apply to the following situations: (1) a contract that is partly written and partly oral; (2) a clerical or typographical error that obviously does not represent the agreement of the parties; (3) the lack of contractual capacity of one of the parties, such as proof of minority, intoxication, or mental incompetency; (4) a defense of fraud, misrepresentation, duress, undue influence, mistake, illegality, lack of consideration, or other invalidating cause; (5) a condition precedent that was orally agreed upon at the time of the contract's execution and to which the entire agreement was made subject; (6) a subsequent mutual rescission or modification of the contract; (7) ambiguous terms are found in the contract; and (8) there was a separate, distinct contract between the same parties

Act of State Doctrine

rule that a court should not question the validity of actions taken by a foreign government in its own country

When the EPA proposes a federal action and an EIS is required, the next step in the procedure is:

scoping

Direct Export Sales

seller contracts directly with the buyer in the other country

Any credit given is provisional until

settlement becomes final at which time the depositary collecting bank changes from an agent of the depositor to a debtor of the depositor, The effect of this agency rule is that the risk of loss remains with the owner and any chargebacks go to her, not to the collecting bank

Ann is authorized to sell her principal's property for $10,000. If Ann sells it for $11,000, then:

she has a duty to account to the principal for the additional $1,000

Nominal Damages (speed bump fees)

small sum of money awarded where a contract has been breached but the loss is either so small or not a big deal to care about

CPA: A principal and agent relationship requires a:

specified consideration

One-Year Provision

statute of frauds requires that all contracts that cannot be fully performed within one year of the making of the contract must be in writing

Novation (ima leave but he gone take my spot)

substituted contract involving a new third-party promisor or promise ex. ima paint your house.. I have to leave but he will complete it for me do u agree?, I agree.. new person finishes painting house

Provisional credit

tentative credit for deposit of an instrument until final credit is given

Discharge

termination of a contractual duty ex. YOUR FIRED!

Possibility Test

test for whether a contract is within the one-year provision is whether it is possible, under the terms of the contract, for the contract to be performed within one year; the test is not whether it is likely to be performed within one year

In the absence of an expressed intention to the contrary, an assignor who receives value makes all of the following implied warranties to the assignee with respect to the assigned right EXCEPT

that the obligor will pay the assigned debt

Irrevocable Agencies

the agency is coupled with an interest of the agent (also known as a "power given as security"), it is an irrevocable agency. This occurs where the agent has a security interest in the subject matter of the agency. The authority of the agent may not be revoked by the principal. The death or incapacity of the creator of the power also will not terminate the agency unless the duty for which the security was given ter¬minates with the death of the principal. This power is terminated, however, when the secured obligation is discharged

A delegation of contractual duties will not be permitted if:

the duties are of a personal nature

employment relationship

the employer has the right to control the physical conduct of the employee

If an agent has an interest in the agency subject matter, the agent's authority terminates upon:

the mutual agreement of the parties

Monetary damages are only recoverable for losses that the party in breach had reason to foresee as a probable result of such breach at the time that:

the parties entered into the contract

delegator

the party who delegates a duty to a third party

Final payment of an item occurs during the processing of the item by:

the payor bank

Surety

the person who promises to perform

the payor bank does not pay the item

the process must be reversed so that ultimately the depositary bank charges the account of the customer who deposited the check, must then seek recovery from the drawer or indorsers

When the check is paid..

the provisional settlements become final

the duties of the agent to the principal are primarily determined by

the provisions of the contract

Agency

the relationship existing between two persons known as principal and agent through which the agent is authorized to act for and on behalf of the principal

Loss of Value

the value of the promised performance of the breaching party minus the value of the actual performance rendered by the breaching party.

appointment of an agent by a minor or an incompetent not under a guardianship and any resulting contracts ________

these contracts are voidable

Intended Beneficiary (gets the hook up from the other 2)

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

Donee Beneficiary (gets gift)

third party is an intended donee beneficiary if the promisee's purpose in bargaining for the agreement is to make a gift of the promised performance to the beneficiary. An example is the beneficiary of a life insurance policy

A life insurance policy naming a spouse as a beneficiary is a common example of a(n):

third-party donee beneficiary contract.

Statute of Limitations

time limitations within which to bring an action (sue), When the statute of limitations has run, the debt is not discharged, but the creditor cannot maintain an action against the debtor.

The effect of a party's failure to sue before the statute of limitations expires is:

to bar the right to bring an action

delegation of a duty

transfer to a third party of a contractual obligation

An invasion of land that interferes with the right of exclusive possession of the property is a:

trespass

Joint Ventures

two independent businesses from different countries share profits, liabilities, and duties

While tort liability is generally based on fault, a person may be held strictly liable if the plaintiff can show that the defendant was engaged in an activity that was:

ultrahazardous inappropriate for its locale.

Material breach

unjustified failure to substantially perform obligations in a contract

A gratuitous assignment is

valid even though not supported by consideration

Any contracts resulting from the appointment of an agent by a minor are:

voidable

Assignment

voluntary transfer to a third party of the rights arising from a contract

In a contract for the sale of goods costing more than $500, the statute of frauds provisions apply except:

where an admission has been made,where the goods have been specially manufactured,where there has been a delivery of and payment for the goods,above are exceptions to statute of frauds provisions

In a PSD area, an owner, in order to receive a permit, must demonstrate that the source:

will not add to pollution beyond the permitted increase, will utilize the best available control technology

CPA: In September 2009, Cobb Company contracted with Thrifty Oil Company for delivery of 100,000 gallons of heating oil at the price of $1.20 per gallon at regular specified intervals during the upcoming winter. Due to an unseasonably warm winter, Cobb took delivery on only 70,000 gallons. In a suit against Cobb for breach of contract, Thrifty will:

win, because the change of circumstances could have been contemplated by the parties

power of attorney

written, formal appointment of an agent ("attorney in fact"), expressly delineating the agent's authority

Breach

wrongful failure to perform the terms of a contract, basis for an action for damages by the injured party

Computation of Time

year runs from the time the agreement is made, not from when the performance is to begin