Business Law exam 1 review

1. Offer and acceptance

- Mutual assent - Meeting of the minds: agreeing to same bargain at same time

Discharge by Agreement of the Parties

-Mutual Rescission: For mutual rescission to take place, the parties must make another agreement that also satisfies the legal requirements for the contract. -Substituted contract: A substituted agreement does not involve a third party and arises over a genuine dispute over the obligations under an existing contract. -Accord and Satisfaction: In accord and satisfaction, the parties agree to accept a performance that is different from the performance originally promised. Discharge by accord and satisfaction "discharges" the original contractual obligation -Novation: When both parties agree to substitute the old contract for a new one with different terms. Novation would be used if a new party takes over the responsibilities of an original party to the contract.

Legally Sufficient Value Consideration Promises

1. a promise to do something that you don't have a pre-existing duty to do 2. The performing of an action you otherwise weren't obligated to undertake 3. Refraining from an action you have the legal right to undertake (called a forbearance)

Express Contract

A contract in which the terms of the agreement are fully and explicitly stated in words, oral or written.

Implied Contract

A contract that comes about simply from actions/conduct of the parties. (customer entering restaurant and orders food is expected to pay for said food)

Frustration of Purpose

A court-created doctrine under which a party to a contract will be relieved of his or her duty to perform when the objective purpose for performance no longer exists (due to reasons beyond that party's control). Like an event occurring that decreases the value of what a party receives under the contract.

Contract

A legal promise or a set of promises for the breach of which the law gives a remedy. It's an agreement that can be taken to court.

Bilateral Mistake of Fact

A mistake by both contracting parties about one or more material facts generally entitles either party to rescind

Unilateral Mistake of Fact

A mistake made by one of the contracting parties. Generally, a unilateral mistake will not excuse the performance of the contract unless: (1) the other party to the contract knew or should have known of the mistake; or (2) the mistake is of mathematical error

Merchant

A person who makes money by selling goods, these people specialize in sales and are known as wholesalers, retailers, and manufacturers. You can return goods to merchants, but cannot return goods to inexperienced sellers that are not merchants (like a garage sales).

Damages

A sum of money paid in compensation for loss or injury in a civil case (always ask for a lot of damages)

Voidable Contract

A valid contract may be legally avoided at the option of one or both of the parties. (Could be when minors enter a contract)

Requirements of a valid contract

Agreement: (offer and acceptance), consideration, contractual capacity, and legal purpose

Merchant's Firm Offer

An offer made by a merchant in a signed writing that assures the buyer the offer will remain open for a specific period of time. It does not require consideration to be binding. (Used usually to set the price of something that fluctuates a lot, like oil. For a period you will be able to buy it for a given price that isn't fluctuating)

2. Consideration

Any promises made by the parties to the contract must be supported by legally sufficient and bargained-for consideration (something of value received or promised, such as money, to convince a person to make a deal).

3. Contractual Capacity

Both parties entering into the contract must have the contractual capacity to do so. The law must recognize them as possessing characteristics that qualify them as competent parties.

Partial Acceptance

Buyer may pay at the contract rate for any goods accepted.

Types of Damages

Compensatory: Dollar-for-dollar compensation Consequential: Damages that occurred foreseeably in a contract breach and now you owe the indirect losses) Punitive: Damages are remedied in court by setting an example of the person who breached the contract and punishing the wrongdoing, in these cases they usually involve fraud. Nominal: Damages that are remedied in court by recognizing wrongdoing even if no monetary loss is shown. Awards are usually small to the innocent party.

Warranties

Guarantees made by a seller that an article, good or service will conform to a certain standard or will operate in a certain manner

4. Legal Purpose

In contract law, the requirement that the object of, or reason for, the contract must be legal.

void ab initio

Invalid from the beginning, from the time something started.

Minors and Contracts

Minor can enter into any contract that an adult can, except contracts prohibited by law for minors like buying alcohol and tobacco. However, a contract entered into by a minor is voidable at the option of that minor, but subject to certain exceptions. (When you deal with a minor you deal at your own peril).

Uniform Commercial Code (UCC)

Section of law that governs the sale of goods (these laws are much more lenient and relax contract law, the courts find a contract if there is one in order to stimulate the economy)

Material Breach of Contract

The breach is material when performance is not at least substantial. The non breaching party is excused from the performance of contractual duties and can sue the breaching party for damages resulting from the breach.

Right of Inspection

The buyer has an absolute right to inspect the goods before making payment.

Mistakes of Fact

These are errors regarding the facts of a contract, these can make contracts voidable unlike mistakes of value or quality.

What are Goods?

Under the uniform commercial code, goods are classified as physical (tangible) goods that can be literally moved around. Uniform commercial code does not deal with real estate, but can sell goods that belong to the land like oil, gas, and wood once it is severed from the land and becomes a tangible good.

Accord and Satisfaction

an agreement made and executed in satisfaction of the rights one has from a previous contract. (The agreement is the accord, and the satisfaction is an alternative performance that removes pre-existing duty between both parties. Say originally you have to paint Bill's house but cannot finish the project, the accord and satisfaction is paying Bill an amount he agrees on to satisfy the accord of not finishing)

Anticipatory Repudiation

before either party to a contract has a duty to perform, one of the parties may refuse to carry out his or her contractual obligations. (anticipating the repudiation carried out by the other party)

Bilaterial Contract

contract that occurs when a promise is made in return for a promise by other party (favored in contract law over unilateral contract)

Mistakes of Value or Quality

either party can enforce the contract "Free to make your own bad deal" example: You sell a violin on FB marketplace that you think is worthless and later find out after the sale—it was very valuable. CANNOT RESCIND (undo) the sale

Warranties of Title

implied warranty that title to the goods is good and transfer is proper (ownership of goods)

Agreements that lack consideration

preexisting duty (officer responding to call), past consideration is no consideration, illusory promises (promises that are merely illusion contracts, like saying "I will give you ten dollars if i feel like it")

Unilateral Contract

promise in exchange for an act (A one sided contract, the consideration is the act itself and is unfavored in contract law)