LEGL 2700 Exam 3 Q&A

Best Buy enters into a written contract with LG that states Best Buy will pay $10000 for 20 fridges but does not stipulate as to the timing of payment and delivery. Which party must perform first?

Best Buy has to pay first because the UCC gap filler will condition the seller's obligation to deliver the goods on the buyer's payment

What is the general rule for people who lack capacity

cannot be bound by the contract, voidable at their option

Brake Co enters into an agreement to supply Ford with 10000 disk brakes. Due to corona related shutdowns in China, BrakeCo is unable to provide the brakes per the contract without incurring substantial losses. What is BrakeCo's best argument to get out of the contract?

commercial impracticability sale of goods UCC rule

What applies if the contract is not for the sale of goods

common law

Bank of Athens hired Armando as a financial analyst for a 12 month contract. Bank of Athens runs into financial trouble and lays Armando off to make ends meet. Armando sues Bank of Athens for the breach of his employment contract. Bank of Athens argues that it is impossible to perform the contract because the bank is about to go bankrupt. What is the result

common law rule of impossibility would still have to pay him

Tina has a contract with baking supply company that requires them to provide all the ingredients she needs to bake specialty wedding cakes. When she places her order, she tells the company that the order is for the mayor's son's wedding and that if she fails to deliver a perfect cake, her bakery will be ruined. The company fails to deliver the ingredients on time. As a result, several of her customers cancel their orders. If tina sues the company for the additional cost to procure a contract with a new supplier, what type of damages is she seeking?

compensatory

A large law firms hires Marisa for a one year contract for 100000. A couple of weeks into the term of the contract, the law firm cancels the project and lets her go. She hits the job market again and lands a similar job with a salary of 85000. If she sues for breach of the contract, what type of damages would she be entitled to? How much?

compensatory 15000 (difference between old and new salary)

What type of conditions is this

condition precedent obligation to purchase is conditioned upon some event happening many commercial contracts will have condition precedent

What if she also sued for the cake orders that were cancelled?

consequential has to be reasonably foreseeable

Let's say that Zheng and Nate's business is taking off. They have 200 bitcoin ATMs across the southeast, but they would like to expand their operations across the country. They devise a play to buy out another bitcoin ATM operator but need hundreds of thousands of dollars to do so. What type of business entity should they consider converting to?

corporation because they are looking to bring funds in by selling shares

Contracts that require commission of a ____ or a _____ or violate accepted standard of behavior are void

crime or tort

How will the profits from the operation of the corporation be taxed?

double taxation taxed paid by corporation itself on its profits and individual shareholders also pay taxes on any profits that they earned on their shares

What steps will they need to follow to form the corporation?

draft and file charter/articles of incorporation with secretary of state

Matt and Vicki verbally agree that Vicki will redecorate Matt's home for $10000. Is this an express or implied in fact contract?

expressed

If Zhang wanted to have limited liability, what steps would Zhang and Nate need to take?

file a limited partnership certificate

When Zhang graduates from Terry, he lands a job as a risk analyst for UPS. Since he lives economically, he accumulates some savings in a few months. His friend Nate approaches him with a business proposition that would require Zhang to invest his savings and Nate will then take the money and purchase bitcoin ATMs. Zhang and Nate will make a fee on each exchange of currency for bitcoin. What type of business organization have Zhang and Nate formed?

general partnership

What is the exception to the rule of minors

necessities: food, shelter, clothing

Bernie enters into a contract to purchase a property from Irma that is conditioned upon zoning authority rezoning the property from residential to commercial. The zoning authority denies the application for rezoning. Is Bernie obligated to purchase?

no

Bernie enters into a contract to purchase a building from Irma unless the building has termites. An inspection determines the property has a terminate infestation. Is Bernie obligated to purchase the building

no, condition subsequent something relieves of his obligation to perform key word is unless

Best Buy enters into a written contract with Repair Services that states that Best Buy will pay Repair Services $200 for each repair for Best Buys' customers. The contract states that Repair services does not provide any guaranty or warranty on their work. When several of the fridges breakdown days after being repaired, best buy sues and seeks to admit evidence that repair services told them that their work would be guaranteed for 60 days. Should the court admit the evidence?

no, due to the parol evidence rule can't admit evidence of any oral agreements that would change the terms of the contract

If Sarah commits malpractice, could she use the LLP form to shield herself from paying damages?

no, they are liable for individual negligence shielded only from partner's negligence

What if Zhang and Nate paid themselves above market salaries in order to avoid paying taxes?

no, would not be okay in terms of audit perspective

Henry worked for Colonial Pipe for 30 years. After he retired, Colonial Pip told him they would send him on a trip around the world. Relying on this promise, Henry purchased thousands of dollars in gear for his trip. Under new management, Colonial Pipe informed Henry that he would not be getting the trip. What argument should Henry make?

promissory estoppel Henry could argue that the doctrine of promissory estoppel even though it is not enforceable by consideration

What is she had sat on her couch after being fired and then tried to sue for the full amount of the contract?

reasonable steps to mitigate damages (default duty) would reduce her damages by what they would have expected her to receive had she exercised reasonable care to mitigate her damages

The corporation gets audited by the IRS since they had not paid any corporate taxes since incorporation. Upon a review of the records, the IRS auditor determined that Nate and Zhang paid themselves reasonable salaries as officers of the company, maintained reasonable expense accounts, and retained a reasonable amount of earnings. What is the result?

they are okay in terms of audit perspective because everything is reasonable

Angered by the IRS audit and looking to avoid entity-level taxes, Nate, Zheng, and Li consider converting the corporation to an s-corporation? What would the entity qualify to convert?

unanimous vote of all the shareholders

Pedro offers $200 to anyone who can find his lost dog. Stacy finds his dog and returns him to Pedro. Is this bilateral or unilateral contract?

unilateral only way to accept is to show up with the dog

What is the difference between a release and a waiver

wavier is after non-performance and release is before non-performance

When faced with a contracts question, ask yourself first...

what is the subject matter of the contract

What if the contract had been for the sale of a custom rebuilt 1957 Chevrolet bel air?

would award specific performance type of subject matter in the contract that would be sufficiently unique

What if instead of buying Danielle's business, Mona had offered to buy 8 computers from Danielle's business for a reasonable price?

would be enforceable due to the UCC exception

Bill and mike enter into an enforceable contract whereby Bill agrees to buy mike's 2018 toyota camry for $22000. Mike changes his mind and decides he does not want to sell the camry. Bill sues mike for specific performance. What is the likely result?

would not be granted specific performance only available in circumstances where money damages are insufficient compensatory damages would be awarded

If Millie's graphic design business grows and she hires employees who negligence injure a third person while in the scope of their employment, could Millie be personally liable for the damages?

yes respondeat superior

What is the status that is critical for a non-profit to obtain

IRS 501(c)(3)

What if Zhang and Nate paid themselves above market salaries in order to avoid paying dividends to Li?

Li would likely win a derivative lawsuit as majority shareholders, they have to act in the best interest of the corporation

Prior to the drastic drop in the bitcoin market, Li had become disgruntled because Zhang and Nate never voted to issue dividends to the shareholders but instead paid themselves reasonable salaries, maintained reasonable expense accounts, and retained d a reasonable amount of earnings. What is the likely result if Lie sues? What is the lawsuit called?

Lli could sue in a derivative lawsuit as a minority shareholder Li would not win because there are no breach of duties and they are acting in the best interest of the corporation

What is the general rule for acceptances

Mirror Image Rule an acceptance has to be the mirror image of the offer, otherwise it is treated as a counteroffer

If Zhang and Hate take those steps, what should Zhang to do continue to be shielded from the liability of the organization?

Zhang can't be involved in the management of the organization

What is the exception to the rule for sales of goods between merchants?

additional terms are made as addition to the contract

What is the exception to the rule for the sale of goods between a merchant and an individual

additional terms are treated as suggestions not automatically added to the contract

What is the exception to the rule for offers involving the sale of goods

as long as quantity is there, anything else can be worked out later

What is the corporate form that does not provide a tax-exempt status but does allow the organization to seek profit and social goals?

benefit corporation allows the entity to have a profit and stay in a charter for the public purpose

Wanda offers to buy Steve's car for $5500. Steve accepts. Is this a bilateral or unilateral contract?

bilateral two promises being exchanged

Which terms control?

handwritten typed pre-printed

How does a Court determine competence

if the individual understands the nature and purpose of the contract

Suzie calls her stockbroker and tells her she wants to sell 200 of her stock in IMB. The stockbroker sells the stock and sends Suzie a bill. Is this express or implied in fact

implied in fact because they have a course of dealing, it is implied by their conduct

Ron hires Gina to detail his BMW while it is parked in his office parking deck. Gina details Lorena's BMW by mistake. What could a court do under these circumstances?

implied in law contract Lorena unjustly enriched, so court would determine if she has to pay Gina for the detailing that had taken place

What other form might Nate and Zheng consider converting to

limited liability corporation would be considered members instead of shareholders

Malik, Grant, and Sarah are recent law school graduates. Deciding that the big law firm life was not for them, they have decided to strike out on their own. If they are interesting in limiting their liability and avoiding double taxation, what type of entity would you recommend for them to form?

limited liability partnership

Per UGA's contract with Holder, the science center must be completed by August 1. The contract calls for damages of 10000 for each day holder is late in the delivery. What type of damages are these? Would a court enforce these damages?

liquidated damages save yourself from court has to be a reasonable estimate of the non-breaching party's damages

What types of people lack capacity

minors intoxicated mentally incompetent

What is consideration

motivation for entering into contract receipt of a legal benefit or the suffering of a legal detriment

What are the five elements of an enforceable contract

offer acceptance consideration capacity legality

On Monday, Harry offers Tanya $800000 for her condo in NYC. On Tuesday, Harry dies. What is the effect of Harry's death on the offer?

offer is automatically revoked by the death of the offeror

Millie graduates from Terry and starts on her job as a financial analyst. On the side, she starts creating custom graphic designs for organizations to use for their branding. What type of business organization has Millie formed?

sole proprietorship

On Monday, Mona offers to buy Danielle's business for a reasonable price. Danielle accepts offer on Tuesday. On Wednesday, Mona tells Danielle she has changed her mind and no longer wants to buy Danielle's business. Does Danielle have an enforceable contract?

subject matter: business not enforceable due to lack of price present

After Bridget's interview, Investco's hiring manager hands Bridget an offer letter for a one-year employment contract with an annual salary of $75000 and two-weeks of paid vacation. Bridget signs the offer letter but adds a line that says Investco will provide her with health insurance. What are the terms of the contract?

subject matter: employment contract common law, general rule applies Mirror Image Rule if acceptance changes one thing, it is a counteroffer original offer is terminated

BestBuy places an order with Dell for 600 Inspiron laptops. The purchase order states that the laptops will have a 15.6 inch display. The order confirmation says that the laptops will have a 128 GB hard drive. What are the terms of the contracts?

subject matter: laptops parties: merchants additional terms are added to the contract contract: 600 laptops, 15.6 inch display, 128 gb hard drive

UGA hired Holder Construction to build a new science center. Holder builds the science based on the plans attached to the contract except that it substituted marble for granite throughout the buildings. When Holder submits its final invoice for payment, UGA refuses to pay. What is Holder's best argument that UGA is obligated to pay?

substantial performance when a party substantially performs under the contract, the other party is required to pay UGA's remedy would be to sue for the difference in price between marble and granite

Greg places an order with Dell for 1 Inspiron laptop. The purchase order states that the laptops will have a 15.6 inch display. The order confirmation says that the laptops will have a 128 GB hard drive. What are the terms of the contracts?

suggestion not added to the contract do have an enforceable contract for 1 laptop with a 15.6 inch display

How will Millie pay taxes on the profits of her business?

taxed as part of her personal income statement business is not taxed separately

What is the general rule with respect to the specificity of offers

terms of offer must be definite and specific need price in the offer

What applies if the contract is for the sale of goods

the UCC

Zheng and Nate properly form their corporation and issue a total of 100 shares and retaining 51 shares to be owned by their limited partnership. Zheng's mother, Li, decides to invest her life savings to purchase the remaining 49 shares. As the corporation expands, Zheng, Nate, and Li mingle the corporation's assets with their personal assets. The three owners do not follow the corporate formalities provided for in the organizational documents. To fund the acquisition of the other company, the corporation takes out several million dollars in loans. The corporation never make sa single payment toward the loans due a drastic drop in the bitcoin market. The lender sues the corporation for the loan amount but the corporate account is empty. Could Zheng, Nate, and Li be held personally liable for the debts of the corporation?

yes, piercing the corporation veil type of corporation: closely held

Best Buy asks to admit evidence as to what repair means under the contract?

yes, they can admit the evidence due to the nuance

Best Buy seeks to admit evidence that repair services and best buy orally amended their agreement tin include a warranty a few days after the agreement was signed

yes, would accept the evidence due to nuance agreement occurred after, so it is treated as a modification in order for a modification for a contract to be enforceable, consideration would have to be there Best Buy would have to provide consideration for the modification that provided for a warranty for a certain amount of days

What factors should you consider when choosing a business form

· Owner liability · Cost of creation · Managerial control of decision · Tax structure · Continuity of the organization