Business Law Exam 2

Merger Clause

A clause that states the writing is intended to be the complete and final expression of the agreement

Rejection of Offer

A communicated rejection terminates the power of acceptance Counteroffer (including conditional acceptance) Death or incompetency Destruction of subject matter Subsequent illegality

Contracts

A contract is a binding agreement that the courts will enforce

Offer

A definite proposal or undertaking made by one person to another that manifests a willingness to enter into a bargain

Executor (Personal Representative) Provision

A personal representative is not liable for the debts of the deceased person unless in writing

Loss of power of avoidance

Affirmance Delay Rights of third parties

Mutual assent

Agreement Come to an understanding

Improper threats (including economic and social coercion)

Agreement is voidable Subjective standard applies Threats constituting duress are often themselves crimes or torts Blackmail

Communication of Acceptance

An offeree is generally under no legal duty to reply to an offer (silence or inaction does not normally indicate acceptance)

Contrast (Statute of Frauds)

An original promise not within the statute of frauds

Voidable

Atleast one of the two parties can get out of it Unenforceable Was previously valid but for some reason is no longer enforceable Statute of limitations Time sensitive maybe

Bilateral Contracts

Bilateral is a promise for a promise (2 promises) Offeree must always communicate acceptance to the offeror

Requirements of an offer

COMMUNICATED to offeree INTENT to enter into a contract DEFINITE and certain

Promissory estoppel

Circumstances where the court will enforce a non-contractual promise to avoid injustice

Monetary Damages

Compensatory damages Nominal damages Reliance damages Punitive (punish) damages Liquidated damages

Durable Power of Attorney

Competent person signs document while competent appointing a person

Executed Contract

Completed contract

Third parties

Consideration to support a promise may be given to a person other than the promisor if the promisor bargains for that exchange

Mental illness or deficiency

Contract is voidable

Intoxicated persons

Contract is voidable Sobered up person can validate or void

Adequacy

Court not concerned whether a bargain was a good or bad bargain

Valid

Courts will enforce

Certainty of damages

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

Intent

Determined by the words or conduct of the parties (reasonable person)

Marriage Provision

Does not apply to mutual promises to marry Does apply to promise to convey and asset if marriage proposal is accepted

Legal detriment

Doing something which one was under no prior legal obligation to do Refraining from doing something which one was previously under no legal obligation to refrain from doing

Land Contract provision (sale of real estate)

Exception: parietal or full performance

Sale of goods (over $500 (Michigan - $1,000))

Exceptions Admission of sale of goods (UCC Chapter 2) Specifically manufactured goods Mixed sale of goods and services

Express Contract

Express is written out and signed or communicated both ways verbally

Fraud in the inducement

False representation of a material fact Made with knowledge of its falsity and the intention to deceive Justifiable reliance

Limitations on Damages

Foreseeability of damages Certainty of damages

Effect of Noncompliance

Full perforamnce Statute of Frauds no longer applies Restitution Promissory Estoppel

Effective moment

Generally effective on dispatch

Intent Exceptions

Humor A promise made under obvious excitement or emotional strain Preliminary negotiations Advetisements Auctioneer does not make offers to sell the property that is being auctioned but invited offers to buy

Conservator

If no one can do the incompetent person's financial affairs, someone is appointed Mental deficiency or illness

Implied Contract

Implied contract is like eating at a restaurant no agreement is made officially but it's assumed you'll pay when you're done eating

Discharge by Operation of Law

Impossibility Bankruptcy Statute of limitations

Violations of statutes

Licensing statutes - (regulatory vs. revenue license) Gambling statutes Usury statutes High-interest rates 7% standard Sunday statutes

Discharge by Breach

Material breach Substantial performance Anticipatory repudiation

Incompetent Persons

Mental illness or deficiency Conservator Durable Power of Attorney

Minors

Minor may disaffirm a contract Minor may ratify a contract after turning 18 May ratify by express language Ratification may be implied by conduct Ratification may occur through failure to make a timely disaffirmance (In Re The Score Boards, Inc)

Election of Remedies

More than one type of remedy is generally permitted as long as they are not inconsistent

Performance by Discharge

Most contracts discharged by performance

Legality of object

Must be legal

Consideration

Must be legally sufficient (something of value) Bargained for exchange

Modification of a preexisting contract

Must be new consideration

Capacity

Must have the ability to enter into a contract Incapacitated persons not allowed to enter into a contract (age, impairment, disabilities, etc.)

Requirements of a contract

Mutual assent Consideration Legality of object Capacity

Discharge by Agreement (EXAM QUESTION)

Mutual rescission Substituted contract Accord and Satisfaction

Purpose of Contract law

Need certainty that promises will be fulfilled

Exculpatory clauses

Negligence vs. intentional or reckless Adult vs. minor

Quasi Contracts (unjust enrichment)

No contracts ata ll, but is based on restitution

Preexisting contractual contract

Not legally sufficient

Preexisting Public Obligation

Not legally sufficient (Denny v. Reppert)

Void

Not really a contract anymore

Parol Evidence Rule

Nothing to do with parole (being let out of prison) Parol evidence refers to any evidence, whether oral or in writing, which is outside of the written contract

Impossibility

Objective impossibility Subjective impossibility Death or incapacity of person who has contracted to render personal services Destruction of subject matter Subsequent illegality Frustration of purpose

Effective Moment Exceptions

Offer specifically provides otherwise Stipulated provision in offer (receive by a certain date or sent by specific means) Acceptance following a prior rejection

Executory Contract

One or both parties have yet to do something

Modification or Rescission of Contracts within Statute of Frauds

Oral contracts modifying previously existing contract is within the statute of frauds

Duress

Physical compulsion Agreement is void

One year provision

Possibility test Runs from the time the agreement is made

Unconscionable contracts

Procedural unconscionability Substantive unconscionability

Contracts within the Statute of Frauds (ON EXAM)

Promise to answer for the duty of another (surety) Executor (Personal Representative) Provision Marriage Provision Land Contract provision (sale of real estate) One year provision Sale of goods (over $500 (Michigan - $1,000))

Promises to Perform Prior Unenforceable Obligations

Promise to pay debt barred by statute of limitations Promise to pay debt discharged in bankruptcy Voidable promises Moral obligation

Remedies in Equity (non-monetary damages)

Reformation (Mistake in writing) Specific damages (Normally with something unique like a piece of real estate) Injunctions

Common law restraint of trade (non-compete agreements)

Sale of business Employment contracts

Compliance with Statute of Frauds Writing must:

Specify the parties to the contract Specify with reasonable certainty the subject matter and the essential terms of the unperformed promises Be signed by the party to be charged or by his agent

Express conditions

Subjective vs. objective satisfaction Implied-in-fact conditions Implied-in-law conditions Conditions precedent vs. conditions subsequent

Definition of Restitution

The act of returning to the aggrieved party the consideration, or its value, which he or she gave to the other party

Objective Standard

The law is concerned only with the ascent, agreement, or intentions of a party as it reasonably appears from his or her words or actions Not concerned with what a party actually thought

Fraud in the execution

The transaction is void

Purpose of the statute of frauds

To prevent perjured testimony in court from creating fraud in the proof of certain oral contracts

Minor

Under 18

Unilateral Contracts

Unilateral is a promise for an act (1 promise) Notice of acceptance usually not required Silence or inaction can be considered acceptance (ex. gift via mail)

Undue influence

Usually involves a confidentail relationship Voidable by innocent party

Consideration

What both parties are bringing to the table (money, property, etc.)