Business Law 1

Discharge by Operation of Law

• Bankruptcy • Impossibility of Performance • Death of party • Subject property is destroyed• Change in law renders performance illegal

Mortages

a specific type of loan that is used to buy real estate

Sources of Contract Laws

1. Common Law, 2. Restatement (second) of the Law of Contracts, 3. Uniform Commercial code UCC

1. Courts normally do NOT enforce the terms of click-on agreements. a) True b) False

b) False

1. Steel Mill, Inc., makes a written offer to Tom to enter into a contract to work as a mechanical engineer for a certain salary for 6 months subject to a 5-month renewal based on his performance. Tom accepts and signs the written offer. This is a valid contract because it includes: a) a duration and a termination. b) an offer and an acceptance. c) specific quality standards. d) the offerer's signature.

b) an offer and an acceptance.

Ochre holds one ton of perishable fruit in storage for Produce Corporation. if Produce does not pay for the storage under the doctrine of mitigation of damages, Ochre is held to a duty to: a) continue to store the fruit until Produce pays. b) do whatever is reasonable to minimize the damages. c) dispose of the fruit immediately. d) set an example to deter similar misconduct in the future.

b) do whatever is reasonable to minimize the damages.

1. Sloane drives into Tire Service and asks to have a tire replaced on her car. Tire Service replaces the tire, but before Sloane pays for it, any contract between them is a) executed. b) executory. c) void. d) unenforceable.

b) executory

Promises that are not considerations are:

Preexisting Duties and Past Considerations

consideration means

both parties are offering or promising something of value

The offeror can terminate the offer only by expressively revoking it. True or False

False

Acceptance of an e-contract must show that the offeree voluntarily assented to the offer's terms. True or False

True

If performance of a contract is not substantial, there is a material breach which excuses the innocent, non-breaching party from performance True of False

True

1. Sports Bar and Tasty Bakery are adjacent businesses with adjoining parking lots. Sports Bar offers Tasty a discount on purchases if the bakery will not tow the cars of Sports Bar's patrons who park in the bakery's lot. The discount is legally sufficient consideration a) because it is a promise of something of value. b) only if Sports Bar adds a cash rebate. c) only if Tasty uses it. d) under no circumstances.

a) because it is a promise of something of value.

1. All of these types of contracts must be in writing under the law of most states, EXCEPT: a) contracts that, by their terms, cannot be performed within one year b) contracts for the sale of goods for $500 or more c) contracts for the preparation of personal income tax return d) contracts for the sales of land

c) contracts for the preparation of personal income tax return

1. EcoEnergy LLC files a suit against Fiber Optics, Inc., claiming that the consideration for their contract is inadequate and that the plaintiff will not realize sufficient financial benefit from the deal to make it worthwhile. Most likely, the court will a) evaluate the fairness of the bargain b) ask how much consideration was given c) not question the adequacy of consideration. d) not determine whether consideration was exchanged

c) not question the adequacy of consideration.

A repair service enters into a contract to fix washing machines in Soapy Sud's Company's coin-operated laundries. Repair breaches the contract. Soapy is awarded compensatory damages. The purpose is to: a) establish, as a matter of principle, that Repair acted wrongfully. b) provide Soapy with funds for a loss beyond the contract. c) provide Soapy with funds for its loss of the bargain. d) punish Repair and deter others from similar acts.

c) provide Soapy with funds for its loss of the bargain.

Rita contracts to work for Social Media corporation(SMC) during April for $4,500. On March 31, SMC cancels the contract. Rita Declines a similar Job with Tech Talk, Inc. Which would have paid $3,500 Rita Files a suit against SMC. As compensatory damages, Rita can recover. a) 4,500 b) 3,500 c) 1,000 d) 0

c.) 1,000

1. Kim promises to pay Leo $500 to install a sump pump in Kim's warehouse. Leo completes the installation. Under contract law, the act of installing the pump a) imposes a moral obligation on Kim to pay Leo. b) imposes no obligation on Kim unless she is satisfied with the job. c) is not sufficient consideration because it is not goods or money. d) is the consideration that creates Kim's legal obligation to pay Leo.

d) is the consideration that creates Kim's legal obligation to pay Leo.

Foreseeability

excludes liability for harms that were sufficiently unforeseeable at the time of the signing of the contract.

Easements

the right to use land for a specific and limited purpose.

Courts will only get involved in a contract IF

there is inadequate consideration

Discharge of a Contract by Performance

-good: total performance by all parties -bad: substantial performance -ugly: material breach of the contract

Elements of a Contract

1. Agreement (offer and acceptance) 2. Legally Sufficient Consideration 3. Form (sometimes)

Most states require the following types of contracts to be in writing:

1. Contracts involving an interest in land 2. Contracts that by their own terms cannot possibly be performed within one year 3. UCC - Commercial sale of goods above $500

Typical terms required to make a valid offer

1. Identification of parties 2. subject matter (what goods/ services?) 3. Quantity (how many) 4. Price (UCC K's do not require price)

Defenses (Legality)

1. Law.• Example: Contracts to commit a crime, violation of statute (gambling, usury) 2. Public Policy• Non-compete Agreements.• Exculpatory Clauses (Waivers of Liability)

Terms of the offer must be reasonably definite so that:

1. Offerree can decide whether to accept or reject the offer 2. Courts can interpret the contract

Executed Contract

A contract that has been completely performed by both parties.

executory contract

A contract that has not yet been fully performed.

Compensatory Damages

A monetary award equivalent to the actual value of injuries or damage sustained by the aggrieved party.

What is the statute of frauds?

A state statue that requires contracts to be in writing and signed by the defendant to that it may be enforceable.

1. Larry advertises a $100 reward for the return of his lost dog. Miguel does not learn of the reward but finds and returns the dog. With respect to Miguel, Larry's ad is NOT an offer because it lacks the element of1. Larry advertises a $100 reward for the return of his lost dog. Miguel does not learn of the reward but finds and returns the dog. With respect to Miguel, Larry's ad is NOT an offer because it lacks the element of a) definite terms. b) communication. c) serious intent. d) surprise.

Communication

Defenses (Legal Capacity)

Lacking Legal Capacity: • Minors (under 18) - may enter K, but have option to void K • Intoxication (sometimes) • Mentally Incompetent

Substantial Performance

Party acted in good faith Performance must not vary greatly from performance promised in K. Omission, variance, or defect in performance can easily be remedied by $.

Discharge by Agreement

The act of ending contracts by mutual agreement ex: settlement

Painting a garage can constitute something of legally sufficient value for purposes of consideration. True or False

True

Acceptance is timely if it is effective before the offer is terminated. True or False

True (The general rule is that acceptance in a bilateral contract is timely if it is made before the offer is terminated)

1. Cindy, a real estate agent, sells her friend Doug's house without charging a commission. In return, Doug promises to give Cindy $1,000. This promise is not an enforceable contract because: a) the house has already been sold; the consideration is past. b) selling the house was the agent's preexisting duty. c) selling the house was a foreseen difficulty. d) the promise of a payment of $1,000 is illusory.

a) the house has already been sold; the consideration is past.

1. Fabien offers to sell his Graphic Signs LLC business to Hanna for $100,000. Hanna replies, "The price is too high. I will pay $75,000"; Hanna has a) accepted the offer b) made a counteroffer without rejecting the offer. c) rejected the offer and made a counteroffer. d) rejected the offer without making a counteroffer.

c) rejected the offer and made a counteroffer.

Life Estate

ownership of real property during one'slifetime, ending upon death

Leases

use of real property for specified period of time & rent