The Legal Environment of Business - Midterm

4 sources of American Law (primary sources)

1. Constitutional Law 2. Statutory Law 3. Administrative Law 4. Case and Common Law Doctrines

What are damages?

A remedy at law typically in the form of monetary sums awarded to a party whose interests have been injured

Definition of opinion

A statement by a court (appellate or reviewing) expressing the reasons for its decision in a case

Trial case titles - ________ v. _______ - who is plaintiff and who is defendant?

First name listed is the plaintiff and the second name listed is the defendant Plaintiff = a person who brings a case against another in a court of law Defendant = the individual or entity being accused of crime or code

A promise to do something that one has no prior legal duty to do is not legally sufficient consideration.

False; Legally Sufficient Value may be established by promising to do something that the promisor has no prior legal duty to do (e.g., promising to pay money for the promisor goods)

Contracts are enforceable even where there is no consideration due to value being in the eyes of the beholder (T/F)

False; When contracts lack the promised or expected consideration, they become invalid or unenforceable by law because one of the components that makes the contract is "consideration" and "meeting of the minds/mutual assent"

A contract calls for an action contrary to public policy is illegal but not unenforceable. (T/F)

False; a contract this is tortious or call for an action contrary to public policy is illegal and unenforceable.

T or F: The study of business law does not involve an ethical dimension.

False; it does involve an ethical dimension.

Shrink-wrap terms are enforceable even if the buyer does not discover them until after entering into a contract. (T/F)

False; shrink wrap terms are not enforceable when a buyer didn't discover them until after the parties entering into the contract.

T or F: There is one right answer to every legal question.

False; there can be many!

A contract is discharged by performance when there is (check all that apply)

Substantial or complete performance; material breach

Raj defends against a breach-of-contract suit by Student Loan Corporation by claiming that consideration (a student loan)

The adequacy of the consideration is not for the court to determine

Definition of statutory law

The body of law enacted by legislative bodies Statutory law includes: - federal and state statutes - a federal statute is passed by Congress and applies to all states. - a state statute is passed by a state legislature and applies only within the state's borders

Definition of Civil Law

The branch of law dealing with the definition and enforcement of all private or public rights, as opposed to criminal matters. Civil law spells out the rights and duties that exist between persons and between persons and their governments as well as the relief available when a person's rights are violated.

Definition of criminal law

The branch of law that defines and punishes wrongful actions committed against the public

Sources of Contract Law

The common law governs all contracts except when it has been modified or replaced by statutory law, such as the Uniform Commercial Code (UCC), or by administrative agency regulations. The UCC governs contracts for the sale or lease of goods.

Mistakes of value or quality do not render a contract voidable by a court of law (T/F)

True

T or F: In the United States, the law consists of written laws and court decisions.

True

T or F: The doctrines and principles announced in court decisions govern all areas not covered by statutory or administrative law.

True

minority status may be terminated by:

- Marriage (in some states) - A minor's emancipation

What is the role or effect of stare decisis

-makes law more stable and predictable -helps the courts to be more efficient

What are the two aspects of stare decisis?

1. A court should not overturn its own precedents unless there is a compelling reason to do so. 2. Decisions made by a higher court are binding on lower courts.

The 4 requirements of a valid contract

1. Agreement (offer and acceptance) 2. Consideration (both parties are giving and getting something of value) 3. Contractual Capacity (all parties must be capable of understanding the terms) 4. Legality (purpose of the contract must be to accomplish some goal that is legal and not against public policy)

Doctrine of Stare Decisis

A common law doctrine under which judges are obligated to follow the precedents established in prior decisions

Architect LLC enters into a contract with Barn & Silo Inc. to provide designs for a certain number of farm buildings. Architect provides fewer than half of the designs by the time specified in the contract because the firm is busy with other projects. Architect's performance is most likely

A material breach

Drain Equipment Inc. contracts to sell its assets to Excavation Corporation. Before either party has performed, rescission of this contract requires

A mutual agreement to rescind

The objective theory of contracts

A theory under which the intent to form a contract will be judged by outward, objective facts (what the party said when entering into the contract, how the party acted or appeared, and the circumstances surrounding the transaction) as interpreted by a reasonable person, rather than by the party's own secret, subjective intentions. - in contract law, intent is determines by the objective theory of contracts

The definition of contract is:

An agreement that can be enforced in court

Steel Mill Inc. makes an offer to Teri to enter into a contract to work as an metallurgical engineer for a certain salary for one year subject to a five-year renewal based on his performance. Teri accepts the offer. This is a valid contract because it includes

An offer and an acceptance

Primary Sources of Law include (but not limited to)

Case law

Raj agrees to work as a freight broker for Shipping Inc. In determining whether a contract has been formed, an element of prime importance is the parties' ___________________.

Intent

Definition of Ethics

Principles governing what constitutes right or wrong behavior

The serious intent on the part of an offeror is determined by his/her subjective intentions, beliefs and assumptions (T/F)

The first requirement for an effective offer is a serious intent on the part of the offeror. Serious intent is not determined by the subjective intentions, beliefs, and assumptions of the offeror. Rather intention is determined by what a reasonable person in the offeree's position would conclude that the offeror's words and actions meant.

Renew Inc. contracts to resurface the pools at Swim Park by June 1. Renew knows that if performance is not timely, Swim Park will have to delay its seasonal opening. Renew finishes the job June 15. In a suit for breach, Swim Park can recover

The loss of profit from the delayed opening

Define appellee

The party against whom the appeal is taken — that is, the party who opposes setting aside or reversing the judgement

Define appellant

The party who takes an appeal from one court to another

Define reasoning

The process by which a judge harmonizes his or her opinion with the judicial decisions in previous cases

Definition of Case Law (Common Law)

The rules of law announced in court decisions; case law governs all areas NOT covered by statutory law or administrative law and is part of our common law tradition. * Case law, also used interchangeably with common law, is law that is based on precedents, that is the judicial decisions from previous cases, rather than law based on constitutions, statutes, or regulations. Case law uses the detailed facts of a legal case that have been resolved by courts or similar tribunals *

Definition of precedent

The ruling in an earlier case that is applied to a subsequent case when facts or legal principles involved are similar or the same

A click-on agreement can indicate the acceptance of an online offer. (T/F)

True

Acceptance is timely if it is effective before the offer is terminated. (T/F)

True

By supplying procedures for enforcing private agreements, contract law provides an essential condition for the existence of a market economy. (T/F)

True

Consideration must provide the basis for the bargain struck between contracting parties. (T/F)

True

Contracts entered into by a minor are voidable at the option of that minor. T/F

True

The party on whom duress is exerted can choose to avoid the entire transaction. (T/F)

True; Duress refers to a situation where one person makes unlawful threats or otherwise engages in coercive behavior that causes another person to commit acts that they would otherwise not commit. The person being coerced can choose to avoid this transaction entirely.

A contract to do something that is prohibited by statute is

Unenforceable

State University provides housing on campus and in some adjacent off-campus neighborhoods. To lease a university house or apartment, a person must be a student at State. This requirement is

a condition

How can a business action be legal but not ethical?

a legal decision is consistent with the law while an ethical decision is about right vs. wrong, or, morals. Just because something is not technically illegal, does not mean it is ethical

An award of damages is

a payment of money or property

Jamal and Keri enter into a contract for Jamal to renovate Keri's house by a certain date. Jamal never performs. After the applicable limitations period has passed, Keri decides to bring a suit against Jamal for breach. This suit

can no longer be brought

Megan contracts to sell Nonny her horse for $4,000. This contract will be fully discharged when Megan and Nonny

exchange the horse for the money

Fess convinces Gwyn to enter into a contract for the purchase of a Falafel Waffle Food Cart by knowingly misrepresenting a number of material features about the facility and the business. Most likely, Gwyn can rescind the contract on the basis of

fraudulent misrepresentation

In civil case, the object is to:

obtain a remedy to compensate the injured party

To induce the sale of an auto parts business, Carmel fraudulently represents the worth of the inventory to Drew, who offers an inflated price. They enter into a contract to close the deal. On closer inspection, the buyer learns the true value of the goods. Drew can

rescind the contract

Cass agrees to sell her Daily Donut shop to Ernie. In the agreement, there is a covenant not to compete that prohibits Cass from operating a donut shop within a certain distance. If the restriction is unreasonable, a court will most likely

reform the covenant — convert the terms to be more reasonable

The basis of all law in the US is

the US constitution

In the US, the law consists of:

written laws and court decisions