LGS 200 Test 2
Executed Contract
Contract that has been fully performed by all parties to it
UCC Articles 2 and 2A, which deal with sales and leases of goods
2 says a contract for the sale of goods must be in writing if the price is over $500. 2A - A lease involving payments of over $1,000 must be in writing. However, if you add on to your order and it's over $500 or $1,000 it must be in writing b/c you're making that modification again.
Implied in Fact Contract
A party provides a service that expects to be paid (not doing it as a gift), and a receiving party that had the opportunity to reject the service but didn't. EX: Someone just starts cutting your grass, and you see them doing it and don't stop them. This person expects to be paid, and you didn't stop them. You will be responsible for paying them.
One Year Rule
Anything that takes over a year to perform, any type of contract, etc. needs to be in writing so there are no disputes down the road on the terms of the contract. EX: Original supply contract is only for 3 months - technically doesn't have to be in writing. If you do a modification to the contract and extend the term to 18 months, then this modification would have to be in writing. You would acknowledge that the original contract was verbal and then make your modification in writing because it extends the contract past 1 year.
You have 3rd Party rights. Subleases, assignments, contracts where you have an intended 3rd party beneficiary. Someone that is not an original party to the contract that will take on some duties or receive a benefit from it.
Assignment EX: Landlord/tenant type situation. You and landlord have a contract - lease for property. However, say you get a job in Atlanta and want to leave after 6 months. Lease probably has an assignment clause in it. It might say, "Tenant may assign this lease if they first obtain written content from the landlord." That means tenant may assign all of their rights, duties, etc. under the contract to a 3rd party. If you do this, the tenant's rights will be extinguished. Could also be a supply agreement EX: Cisco has a contract with ABC Company. ABC Company is sold to XYZ Company. In this agreement, ABC can assign all of its duties and obligations under this to XYZ Company. ABC's are extinguished and XYZ picks them up. Landlord can then bring suit against the 3rd party for not meeting them, not against the original party.
Standard application lasts for 20 years. The book is not right because the first to file changed in 2013/14.
At the end of the 20 year period, your patent becomes part of the public domain. Any person can use your patented work without paying you some type of royalty. Each time you improve your patent that starts the 20 years of protection. Remember, patents are federally exclusive.
Classifications of contracts (not really used in the real world - theoretical)
Bilateral contract - a promise for a promise (I will give you $200 for your iPhone) Unilateral contract - a promise for an act (I will pay you $200 if you drive my car to Bham on Friday.) When you have one of these, there is no obligation to pay until the act is completed.
There are some unenforceable contracts due to a lack of consideration.
EX: Grandmother promises a kid, "I love you, and I will give you $5,000." Kid says, "I don't have to do anything?" Grandma says, "No, I just love you." Then, she takes her offer away. You can't sue on this because there is nothing you're offering of legally sufficient value in exchange for the money. This is just a give; not a give and take relationship. If it was for a 4.0 this semester and you did it, then you WOULD have legally sufficient value and a legally enforceable contract. You could sue. Can be an oral contract, too. Not necessarily written.
leas with a term over 1 year must be in writing; You prefer it (and any contract) to be in writing to protect yourself, but only has to be if it's >1 year.
EX: If it's a 20 year lease, and every 5 years there will be a rental increase, you would want that in writing.
Steps
File an application Prove one of those things Prove that your mark is distinct and has acquired (generally) a secondary meaning, if it has already been used in commerce (Distinct just means it has been used before. Secondary meaning - established words that mean one thing but have also come to mean something secondarily with your business. EX: "Just do it" is used every day in common conversation but has also come to identify Nike products.
You can also have a plant patent.
If you figure out how to create an asexually reproduced plant, you can patent it.
Public Use One Year On Sale Doctrine
If you sell your product or give it out for one year or more before you file your patent application, they can tell you they might not afford protection for the patent because you've already gone on so far using it. This is to encourage the timely filing of patent applications. If your patent is granted, you are given a patent number and you will see it on products; Patent number puts the world on notice that you have that patent for the invention. EX: Patent pending puts the world on notice that you have filed for right to that invention and no one else should use it without paying you some type of royalty.
Theory known as REVERSE ENGINEERING
If you take a product and break it down to figure out the formula, what's in it, etc. If you do this, you CAN use the trade secret. You can use it, but you can't sell it as Coke. You have to come up with your own name. You won't be liable for misappropriation of a trade secret if you do this and can prove you reverse engineered it.
Must meet 3 requirements for something you want to patent
It must be novel - new. Something the public has never seen before. It must be useful - practical. You have to be able to use the product, not theoretical. You must demonstrate that it can be used. EX - You must prove that your prescription drug actually does what you say it does. It must be non-obvious - Requires that someone in the inventions field of expertise has never seen this before, etc. EX: Forkchops were deemed to be non-obvious. Got a patent. Something deemed to be too obvious and not issued a patent - a waffle fry.
Contractual capacity
Look at this from the viewpoint of minors, intoxicated people, and incompetent/insane people. Theory of the law says that you do not have the capacity to enter into a contract if you're a minor. Not intellectual strong enough/capable to do so on your own yet. Generally <18. If you do enter into one, the contract becomes voidable. Minor and adult can enter into a contract. Minor will pay $10k and adult will give minor a car. Minor can rescind the contract b/c it's voidable. Minor can back out. However, the adult cannot rescind the contract. If the minor wants to stay in, adult can't get out on the basis of them being a minor. Only the minor can. If it doesn't happen, the minor must return the car, the adult must give him the money back, and they must be back at the same point as before the contract.
Equitable Remedies
Looking for some type of performance, not money
Certification marks
Marks that show that a product meets certain geographical standards. The most common certification mark is the Good Housekeeping Seal of Approval. If you see this, it means that the product it's on has met certain quality standards established by Good Housekeeping, and they think it's a quality product. Not defective. 2 year warranty. Etc.
If someone uses your written work without your permission, it's copyright infringement. You don't have to use the whole work, but it must be a material and substantial portion of it.
Marvin Gaye's family says that Robin Thicke used Gaye's music in his song, "Blurred Lines."Robin Thicke is denying this and says Pharrell wrote the majority of it. Gaye's family is looking for monetary gain. If someone sues you for copyright infringement or you sue them, you can be awarded the actual damages that were caused to you. Any profits the stealer makes can be awarded to the original author, they can stop you from using it in whatever form you reproduced their work through injunction, etc. These are some remedies to this.
Quasi Contract (Implied in Law)
More of an equitable doctrine; Party renders a benefit to you of some form; It would be unjust for that party not to be paid. EX: You were in a car wreck, and you have to be lifeflighted to receive life-saving treatment. The helicopter has rendered you a benefit, and it would be unjust for you not to pay them. You can't say you didn't ask for them to pick you up b/c you were probably unconscious. It's implied in law that they need to be paid.
Formal vs. Informal Contracts
Most every contract is deemed to be informal. This is because there is no rhyme or reason to them. It's up to the parties to determine what's in them; Formal - think of this like a check. You're promising to pay someone a certain amount of money.
To have an offer
Must have an objective intent by the offeror to be bound by the offer. Will be looked at under the reasonable person standard; Would a reasonable person looking at the offer think that the offeror actually intended to make the offer? Terms of the offer must be definite and reasonable. The offer must identify the parties, the subject matter, and quantity of the contract. Consideration must be included in the offer and the amount of time the offeree has to accept or reject (time of performance). The offer must be communicated to the offeree. If the offeree doesn't know you made an offer to them, how will he/she agree to it? This is important.
patents
Patents are exclusively federal. States do not deal in the patent world. A patent is a grant by the US government to an inventor for the exclusive right to use, manufacture, or sell an invention for a limited amount of time (20 years). To obtain a patent, you must file a patent application with the US Patent and Trademark Office in D.C. It's a good idea to hire a patent attorney if you have a great invention you are trying to patent.
Terms of Copyrights
Patents last for 20 years, but copyrights are differentiated b/w individuals and businesses. Individuals - Have copyrights for their lifetime plus 70 years; The person's estate will own the copyrights after their death for 70 years. Royalties have to be paid to them. However, after 70 years, it becomes part of the public domain - anyone can use it w/o author's consent and w/o paying royalties Businesses can have a copyright for the shorter of 120 years from creation or 95 years from first publication. If a document is created 1/1/2000 - 120 years later is 2120. Not published until 2005 - 95 years - 2100. Because 95 years is a shorter period of time, you would have it until 2100. Same as with individuals, once it expires it becomes part of the public domain. Anyone can use it w/o author's consent and w/o paying royalties.
Companies whose trademarks are well known and used often stand in danger of losing their trademark protection. EX: Google, Xerox
People start using their name as a commonly used word - EX: People say, "Go Google it." or "Go Xerox that document." It's becoming so commonly used/generic term that they are in danger of losing it.
Past consideration - If you've already been paid for something and
Person X has worked for a company for 25 years. In those years, they have worked and company has paid them money. The company says, "Ok, you're retiring. At your retirement, we will give you $5,000 as a bonus." By the time Person X retires, if they don't end up paying them, Person X doesn't have a valid lawsuit here, because this was basically a gift similar to the grandma case. He has already been paid for the work he did, so he can't sue the company because there is no bargain for exchange.
Sublease
Same kind of thing; Landlord → Tenant (Sublessor) → Sublessee • Difference - the rights, duties, obligations under the terms of a sublease are NOT extinguished; If they don't pay, the landlord can come after you. Landlord still has original tenant on the hook if sublessee doesn't pay, etc.
Merger/Integration Clause in contracts
Says that this is the final agreement of the parties. Any outside elements will not be considered if there is a dispute later down the road - embodies parol evidence.
Next, you have trademarks - logos, slogans, description, device, anything used to distinguish goods from one manufacturer or seller from others. EX: Nike's "Just do it," Starbucks lady, McDonald's "M," Apple's apple; all kinds of "marks"
Service marks - Marks that a service provider uses to distinguish their services they provide; AT&T's predominant business is the service is telecommunications; The little AT&T symbol is their servicemark. Same thing for "Two Men and a Truck" with their logo/picture - it's their servicemark
Now there is the Uniform Electronic Transaction Act.
So much is done by email these days. Can scan and sign and email it, and it's done. Now, a lot of contracts are done over email. This act says as soon as the offeree hits send on the email, that's the equivalence of a discharge under the mailbox rule. At that point, acceptance is deemed to have occurred and you can't reject the offer. You are now obligated to your terms under that offer, and any deviance will result in a breach of contract.
• Also have Incidental Beneficiaries
Someone accidentally receives a benefit from a contract b/w two parties. EX: Huge trees in someone's yard die and must be taken down. Have a contract with a tree removal service in town. Pay them money and in turn, they cut down their trees. Pine needles are constantly falling in his driveway. When the trees are cut down, the neighbor will receive an incidental benefit. He cannot then sue the tree removal service b/c he was never intended to receive a benefit from her contract with the service. Incidental beneficiaries DO NOT have the right to sue. Only intended beneficiaries do.
Misappropriation of a Trade Secret
Someone takes another's trade secret by improper means. Using it for your own commercial benefit and injuring the owner of the trade secret. Only afforded protection under this as the owner if you can show you have some type of protection. EX: Coca-Cola formula is written on a piece of paper in a vault underground with 15 guards. Shows that they definitely have protection. KFC spices are mixed at two different locations so the employees can't find out what 11 spices they use. Xbox dropped to the bottom of the ocean in a waterproof box and guarded by a boat when first invented.
Provisional Patent Application
Standard patent application has a 20-year lifetime. Filing this provisional patent application gives you a placeholder for 12 months. You have this long to file the regular application and get a patent. EX: Person A filed provisional patent app one day before Person B filed full patent app. Person A must file within 12 months for the standard application, or it will go to Person B. That's how it wins out in a priority battle.
Intoxicated
The same scenario as above, but you must prove that you were so intoxicated that you did not realized you were entering into this contract. The contract is voidable, again.
U.S. entered into the Berne Convention Treaty in 1989 - This said that if you are the owner of a copyrighted work/material, it did away with the requirement for having to use the circle C copyright emblem to evidence that you are the author of the copyrighted work.
The thought behind this is that if it's written down, someone obviously has a copyright on it, but it's not required. However, it would still probably be a good idea to put it on to put the world on notice that you own it.
Collective membership
These evidence someone's association with a certain organization. EX: CPA after someone's name. This evidences that someone is a member of it. ABA for lawyers, etc. Means they met certain qualifications, passed certain tests, etc.
Guaranty - must be in writing.
This means someone is accepting your duties and obligations under a contract. EX: An owner of an LLC (known as a member). LLC wants to borrow money from bank. A lot of the times the bank will only loan you the money if your owner/member gives a guaranty in writing. (A surety or security that the bank will be paid.) Bank has a promissory note with the LLC to agree to these terms. Bank also has personal guaranty agreement with owner of LLC. If LLC fails to pay, bank will go after owner personally. • EX: Bank will loan you money to buy a car, but you are only 18 and don't have credit built up. So, bank will loan you money only if your parents give a personal guaranty. You will be the borrower, and your parents will be the guarantors. They have a separate contract saying if you fail to make your payments, they will come to your parents for the money. Requires you to sign the contract. This evidences intent that both parties intend to be bound by the contract.
Dilution - someone else is using this mark and lessening the significance of the mark
Two types - blurring and tarnishment
Uniform Trade Secrets Act
Uniform means a committee has gotten together, come up with a proposed set of laws, and gone to state legislators to give them the opportunity to adopt it or parts of it. AL has adopted parts of this act. It's called the Alabama Trade Secret Act. Covered under consumer protection laws of the AL code. State laws that are the basis for a civil lawsuit for monetary damages or injunction for misappropriation of a trade secret. This act affords statutory protection to the owner of a trade secret from it being misappropriated.
If two inventors come up with the same thing...Who wins? First to invent or first to file?
Used to be first to invent if you could prove it. As of March 2013, priority is given to first to file. Person B can be afforded protection for the patent over Person A if they file their patent first.
Valid, Void, Voidable, Unenforceable
Valid - All 4 elements of the contract have been met Void - The contract has no legal effect; If you have been adjudged insane, you can't enter into a contract. Voidable - At least one party can rescind the contract. We talked about this with minors/intoxicated people. You don't have the capacity to enter into a contract. Unenforceable - All elements of a contract are met. However, it's due to some type of defense. Statute of frauds is a defense someone could use. It's a real estate contract. It's supposed to be in writing b/c of the statute of frauds and it's not - then it's unenforceable.
To have an offer, you must also have acceptance.
Voluntary consent or manifestation by the offeree to accept the offer. One requirement of acceptance is the mirror image rule - acceptance must be a mirror image of the offer. If there is any portion of the offer that is not accepted or materially changed, it becomes a counteroffer. Otherwise, you must accept exactly what was offered to you as the offeree.
Parol Evidence
When the court interprets a contract, they look at 4 corners of the language of the contract. Any outside evidence not in the language of the contract is known as parol evidence. This says anything outside of the contract is inadmissible. Prevents them from being admissible if there is a contract dispute later.
Incompetent or insane
You can be adjudged insane. This means a court has deemed that you are insane and incapable of handling your affairs on your own. Generally, people who suffer from mental illnesses such as dementia. Unable to make day-to-day or financial decisions on their own. Judge says, "Yes, you are certifiable and judged to be insane." Any contract they enter into is void/unenforceable. You also have insane but not adjudged. You can still get out of it in this case, but you must prove that you had some type of mental illness where you couldn't comprehend the contract you were entering into. Can be voidable if you prove it. Must get doctors' opinions, an independent physician, etc. Not an easy step to get it proven. Someone may be placed in charge of your financial affairs.
Contracts Based on Duress
• Some type of threat of harm/blackmail/force to make them go into the contract. If you force someone to do this, there is no genuineness of assent. You have been forced into it; not free will. Contract will be unenforceable.
Basis of the contract must be a lawful object
You can't have a contract with someone where you agree to commit a crime. This is unlawful, and the contract will not be valid. Same with the interest rate contract example. Usary law - sets a limit on what the interest rate can be. If it's higher than this, it's an unlawful object. The contract will not be enforceable/void. Anything that might have a negative impact on society will not be enforceable - pre-nups, contracts with restraint of trade (Two big domestic beer manufacturers trying to merge into one - The basis of their contract will be looked at. They are knocking out everyone else. There would be hardly no more competition in the marketplace. Because there would be no competitiveness, this could be a restraint of trade and have a hold on the market. Trying to knock out competitiveness in the market.), unconscionable contracts - extremely unfair. Also contracts with an exculpatory clause - relieves one or more parties from tort liability (Party A will not sue Party B for unintentional negligence, for example.) This is unlawful, and therefore the contract will be thrown out.
Also, a preexisting duty (lack of consideration)
You have a contract with the University to teach at least 12 hours per semester, and they have a duty to pay you in return for your services. If they come back and say you have to do X amount of hours of service requirements in addition, etc. However, you can't come back and say you won't do this because you have a preexisting duty as a faculty member to help with the college and help with those things. Therefore, there is no consideration. You must follow it.
Partial Performance Doctrine
You have an oral contract for real property but end up with a verbal conveyance. For this to be enforced, one party has to either pay part of the purchase price or take possession of the property. • EX: Mr. Smith has two children, Joe and Mary. Joe moves off to the city, but Dad tells Mary, "If you stay on the farm, you can have this property when I die." Mr. Smith dies and in his will leaves property to Joe. Mary can sue Mr. Smith's estate to employ the Doctrine of Partial Performance. She was living on the property b/c of the verbal agreement that at his death, she could have the property. After 5 years. She would use that as evidence that she had a claim on the property. Allows a verbal agreement to be specifically performed if necessary to avoid injustice.
punitive damages
You have extra punishments for these; Punitive damages or exemplary damages are damages intended to reform or deter the defendant and others from engaging in conduct similar to that which formed the basis of the lawsuit.
Executory Contract
a contract that has not been fully performed; at least one party still has duties to fulfill
contract
a promise or set of promises parties make to each other for the breach of which the law provides remedy; the law governs what happens when one of them doesn't live up to their obligations; K is short for contract in shorthand
THINGS THAT CANNOT BE PATENTED
abstractions, scientific principles (Both of these are theoretical, and you can't patent something you THINK may work.), Literary works/works of art/musical compositions - You get copyrights for these
To have a valid contract, need the following 4 elements:
agreement, consideration, contractual capacity, based on a lawful object
Express Contract
all the duties are set forth; Everyone knows what their duties are under the contract
Fair Use Doctrine
allows for the use of the author's copyrighted material without the author's consent; can be used for educational settings, reviews, legislative, judicial proceedings, satirical use, news programs, etc.
Certain marks can't be registered - You can't register a US flag or state flag as your mark, a geographical name standing along (EX: You can't try to trademark the term "North.")
any immoral or scandalous marks, any surnames standing alone (You can't go register your last name b/c there are millions of people with your last name. You could do like "Adams Markers" however.); Any mark that resembles a mark already registered with the federal trademark office; also, any generic terms (EX: Apple cannot register the word Apple, but they could do like Apple Computers.)
Private law - this is another type of law - civil law basically
common law is a subset of this
Types of performance under the contract
complete performance, substantial performance, repair and deduct, inferior performance (material breach), etc.
No Electronic Theft Act
covers copyrights material put on the Internet. Makes it a federal crime to commit digital piracy. You can be prosecuted under this law with penalties up to $250,000 per violation and prison time up to 5 years per violation.
common law (case law)
decided by a judge/jury as opposed to being statutory; an exception is the Universal Commercial Code (UCC), which dictates contracts related to the sales and leases of goods over a certain threshold amount; primary, contract law is based on common law
You can also get a design patent or ornamental patent
for designing types of things
Lanham Act
governs the registration of trademarks; Can be registered on the federal or state level; do it with the Secretary of State for your state; relatively easy; fill out forms, send in copies of your trademark; However, you are only afforded trademark protection within that state. EX: Taco Casa has registered the styles of their buildings, "Under the biggest cactus in town," items on their menu, characters, etc. So if someone starts trying to use their stuff, they can send a cease and desist order to that person and threaten to sue. However, anyone is free to use their stuff in another state. Only protected in AL. However, if you register your trademark with the USPTO on a federal level, you are protected in all 50 states.
consideration
includes something of legally sufficient value and must include a bargain for exchange. There must be some sort of give and take. I will give you this and you give me that. Must be legally sufficient value (money, property, additional promises, etc.) You can also have a forbearance agreement - you are agreeing NOT to do something. You can offer the bank to pay part of what you owe each month as long as they don't foreclose on your house, for example.
real property
land or any permanent fixture on that land (real estate)
tarnishment
linking a mark with immoral or reprehensible products, products of lesser quality, etc; EX: counterfeit goods. People who sell knockoff purses on the streets of NY could be sued for tarnishment. They are using an LV symbol for example on their goods, which are of an inferior quality, and LV could sue them. Also applies to immoral use of a trademark. EX: Victoria's Secret sued a family with the last name Mosely. They were in the adult sex toy business. They had stores called "Victor's Secret" and "Victor's Little Secret." Victoria's Secret was saying what they were selling was deemed to be immoral, and they didn't want an association of their products with that name. Sued under the Federal Dilution/Tarnishment Act of 1995. They lost though, because they were able to prove enough confusion between the products they sold and Victor's Secret. Then, it was passed (a revision to the law) that they would only have to prove a likelihood of confusion, not sure confusion, between the companies represented. They re-sued, and Victoria's Secret won. The Moselys had to quit using the Victor's Secret name.
Copyrights
literary works, artistic work, musical compositions, photos, sound recordings, sermons, poems, anything that was tangible writing is subject to copyright. It must be able to be physically seen to obtain a copyright. Gives legal rights to the owner saying they own the copyright, etc. Subject to federal law known as the Copyright Revision Act of 1976. Purpose of these is to find a financial incentive for authors to create literary works and increate the number of works out there while law encouraging others to file for copyrights. Must file for registration with the US Copyright Office in Washington, D.C. to get guidance for this. It's permissive and voluntary. You wouldn't go through the hassle of doing this for like a term paper, however.
What can be patented?
machines, processes (computer software, etc.), compositions of some type - chemical, etc. (prescription drugs), any improvement to any of the above (EX: Apple patented the iPhone originally. Now, the iOS 8 and iPhone 6S are improvements that can be patented.) These are all known as utility patents - the most common kinds.
When does acceptance become effective?
mailbox rule - acceptance occurs at the discharge of the acceptant by an authorized means of communications; General offeror tells the offeree how they want to be informed of whether they accepted the offer; can put a provision in the offer of the only means in which they must accept it. IF there's not a provision, it can be any means of reasonable communication. Discharge is when you put the acceptance in control of a certain means. EX: As soon as you put your written consent into the USPS to accept the offer. It does not have to be received by the offeror first.
Economic Espionage Act
makes it a federal crime to use someone else's trade secret for your own commercial gain/monetary benefit. Doing so and knowing you are stealing someone else's trade secret and intending to injure them by taking money from them with the use of their trade secret. You can face prison time up to 15 years per violation and be fined up to $10 million. That's for a criminal prosecution. You can also be forced to pay the owner under a civil suit. Also, if you sell their secrets to a foreign country, you will probably face double penalties and fines. EX: US. vs. Williams - Secretary at Coke in the Global Branding Dept. and had a lot of knowledge about Coke's new products; Started calling Coke's competitors and offering them information for money to the highest bidder; She called Pepsi and offered to give them info if they paid enough money; Pepsi turned her in to Coke and they notified federal authorities; FBI investigated; she was charged with conspiracy to commit theft of a trade secret under the Economic Espionage Act and got around 8 years in prison.
mortgages
must all be in writing; it's serious
agreement
mutual assent between the parties; They voluntarily consent to the contract. Main requirements of an agreement are offer and acceptance.
complete performance
o Complete performance - Everyone in the contract lives up to their duties/obligations. Everyone does as they're supposed to as it's written in the contract.
Parts of contracts (make up the language of contracts)
o Covenants - unconditional promise to perform; EX: A debtor borrows money from a bank. The bank lends them $30,000. In return, the debtor gives a promise to repay the bank the $30,000 at a certain amount of interest over x amount of years. The debtor in this case has a covenant with the bank - an unconditional promise to perform. There are no conditions on this repayment. o Conditions - You also have these. Two types: • Condition precedent - an occurrence of an act that triggers another party's performance EX: You enter into an employment contract with an employer. You're a student. The contract says they will only hire you if you graduate. Your graduation is then a condition precedent to the employer's performance. Your graduation triggers their performance under the contract. They have to hire you. • Condition subsequent - The occurrence of an act relieves another party's performance EX: You've been hired by the employer and have an employment contract that says if you have an ethics violation then we will be relieved of our duties. An occurrence of an act - having an ethics charge against you - relieves your employer of their performance in the contract.
Assignor (person moving to ATL) and the assignee (the person picking up the duties)
o In a landlord situation, they will want to consent to your assignment. They will want to approve to the party that's taking over your spot. Some states (not AL, but GA) say that if a contract is silent as to assignment, you must get landlord consent. AL doesn't have that.
inferior performance (material breach)
o Inferior Performance (material breach) to the contract. Destroys the essence of the contract. You've done something so egregious that there's no purpose for the contract any more. This is determined on a case-by-case basis. Determined by the court. If a court determines that this exists, then the contract can be rescinded. The non-breaching party can sue for damages. The contract can be cancelled. Generally looking for monetary damages:
• When you have an agreement, there has to be Genuineness of Assent.
o Meeting of the minds - Both parties must voluntarily consent to the offer. That agreement must be genuine. If there's not genuine assent, it's a defense to the enforceability of a contract. Can cause an unenforceable contract.
• A contract can be deemed unenforceable by lacking genuineness of assent. That's a defense to a contract. Types of situations:
o Mistake: • Unilateral mistake of material fact - General rule is that the contract cannot be rescinded. There are some exceptions - see last notes • Mutual or bilateral mistake of a material fact - General rule is that the contract CAN be rescinded if both parties are confused about an aspect of it. EX: big ambiguity with a boat that items were to be shipped on - two boats with same name; contract rescinded • Mutual mistake of value - General rule is that contracts cannot be rescinded. EX: Someone found a print of a Campbell's soup can in the attic and sold it for $200. It was worth $2 million because it was actually an Andy Worhol painting. They can't sue for this. It was a mutual mistake of value. Just because you sold it for too cheap, you can't come back and try to sue for more money when it's worth more later down the road. A ton of people would try to do this when value rose later down the road if so.
You can terminate an offer at any point before acceptance. If you have accepted it already, how is it terminated? Termination of a contract is known as discharge. Several ways a contract can be discharged:
o Most are discharged by complete performance of the contract. Both parties have fulfilled their duties under it. When the bank is repaid, there is complete performance. The contract is then discharged. o Discharge by Agreement - 3 options: • Mutual Rescission - Parties agree to terminate the contract before it is executed/fully performed. Must enter into a second agreement, generally known as a termination agreement, which explicitly terminates the original contract. All parties must agree. In writing is best. • Novation Agreement - A lot like assignments under 3rd party rights. All parties must consent. You have a separate document that outlines the novation. A substituted party for an original party to the original contract. You see this a lot in banking type situations. If someone can't pay their loans to the bank, someone could step in as a novation to pay their portion of the loan. Once the sub steps in, the original party is relieved of all liability. If the sub stops making monthly payments, the bank cannot go after the original party. The bank's only recourse is to go after the 3rd party who has stepped into the shoes of the original party to the original contract (look this up). • Accord and Satisfaction - You have a change in consideration. You have two parties, A and B, and A lends $8,000 to B. In return, B gives A the promise to repay $8,000 in cash. This is a valid contract. However, B could say to A, "I don't have $8,000 to give you, but in return I will give you my truck." Saying it has at least $8,000 value on it. When B makes the offer to A to change the consideration, that's known as an accord. If A accepts the accord, and once B delivers the truck to A, there has been satisfaction. Accord is a change in consideration; the satisfaction is the change in the consideration and the delivery of whatever was changed. Everyone has fulfilled their duties of the contract once you meet accord and satisfaction.
repair and deduct
o Repair and deduct - Make the repair and deduct the cost from the total contract price. Remit the balance to the builder. You would be out whatever the repair cost you as a homeowner. If you paid in full and say there was substantial performance but you paid all of it. However, you can sue them for the cost of replacing fiberglass doors w/ wood doors. Since I specified that in the original contract and we didn't follow it, I will sue you for what it costs to fix it.
substantial performance
o Substantial performance - If you have this, there's some type of minor breach. One party slightly deviates from what they're supposed to do under the contract. EX: If you 're building a house and specify you want wood doors. Then, the builder puts in fiberglass doors. You still have a door allowing you ingress/egress but there's still a breach. You got fiberglass instead of wooden doors. You can go to the builder and complain. If they agree to take out the fiberglass doors and put in wood doors at no cost to the owner of the house, you will then have complete performance. He will have eventually fulfilled all his duties under the contract.
• Also have contracts known as Intended 3rd Party Beneficiary Contracts.
o Think of it in terms of life insurance - Life insurance company and policy holder o These two parties have a contract - Policy holder pays premium ($) to company, and company issues policy to policy holder. o Beneficiary - person who at the policy holder's death receives the benefit of the policy; has the right to sue if the company doesn't fulfill its duty to pay out proceeds at death of policy holder; Whole purpose of the contract is to ensure that the beneficiary gets paid the benefits of the contract. Receiving the benefits of the contract even though they're not a party to the contract.
Discharge by Impossibility of Performance
o You can also have Discharge by Impossibility of Performance. There must be an objective impossibility. It cannot be done. Not, "I can't do it." EX: death of a party, destruction of contract subject matter, or laws being changed/passed that make the contract illegal (supervening illegality) o EX: If you hire a painter, and he dies. He's a sole proprietor. He's the only person that can fulfill the contract, and he's dead. There's no one else who can step in. If you have a contract to paint your house, and the house is destroyed by a huge tornado. Contract can no longer be performed because the subject matter of contract no longer exists. EX: A contract with 15% interest, but the law starts to change saying that 12% is the highest interest rate possible. Then, the subject of the contract (which was lawful originally), is deemed unenforceable because of discharge of impossibility. The contract cannot be performed any more.
Parties to a contract
offeror - person who makes the offer or extends it to the offeree offeree - person who accepts or rejects teh offer; the person to whom the offer was made
intellecutal property
property developed through the intellectual/creative process; intangible rights/intangible property; Unable to be physically touched; more easily susceptible to misappropriation, easier to steal music off the Internet than goods from a store, etc.
Agent Contracts
real estate, talent agent, etc. You are employing someone to act on your behalf. This needs to be in writing. This is known as the Equity Dignity Rule. You want an agent contract in writing to protect yourself so the agent doesn't act out of the scope of what you are authorizing them to do.
trade secrets
recipes, formulas, pattern designs, compilations of data, marketing strategies; Businesses can have these and don't want their competitors to know about them. EX: KFC's recipe for chicken seasoning; protect their trade secrets; or the Coca-Cola formula; Hermes pattern designs for their bags are a part of a trade secret for how they produce their products; customer lists - you want others to find their own customers, not work off your list. same way with marketing strategies - you don't want competitors to know how you sell your products
Statute of Frauds
requires that certain types of contracts must be in writing; must contain central terms of the contract (parties, delivery, where it's located, environmental issues, etc.) can be raised as defense to the enforcement of the contract; Types: real property, mortgages, leases, etc.
There are several ways an offer can be terminated
revocation - must occur before acceptance by the offeree; any time BEFORE it is accepted; offeror does this rejection - also must occur before acceptance; will be done by the offeree; If they have not accepted the offer, then they can reject it. counteroffer - generally when an offer is made, the offeree must accept all terms of the original offer. EX: The offeror offers to buy a house (buyer). Offeree is the seller and current owner of the house. The offeror says they will buy it for $200,000 but the offeree says no, I won't that that much. They reject it and say they will take $250,000. At the time the offer is rejected, it becomes a counter offer. Rejecting the original offer and creating a counteroffer. Those two parties switch places. Can happen many times. The original offer is terminated and a new offer is put in its place. lapse of time - you can put a provision in the offer that says they only have so long. This offer is only good until X day and time. At that point, the offer is no longer on the table if it hasn't been accepted or rejected. It would be terminated. options of law - Death of a party to the potential contract, destruction of the subject matter, basis of the contract becomes illegal; All of these can terminate an offer. If the offeror dies, they can no longer have objective intent and the offer can't happen. These are all BEFORE acceptance of the offer. EX: if the basis of k becomes illegal: Offer was to lend money at 15% interest. However, a law is passed saying any interest over 12% is illegal. Then the basis of the offer would become illegal. Before acceptance. Offer is terminated and no longer valid.
blurring
someone uses a famous mark in a different mark; EX: Rolex skateboards; Everyone knows that Rolex makes watches. That is their market. If a company tries to call their business Rolex skateboards, they will probably receive a cease and desist order saying, "We don't want the public to start thinking we are making skateboards now. Lessening the significance of our mark and causing confusion in the market. We don't want this."
Lanham Act also governs that you complete an application and prove one of two things:
the mark you are registering has been used in commerce OR is intended to be used in commerce in the next 6 months
Trademark Infringement
the unauthorized use of someone else's mark; claim that the use of it by the infringer causes confusion in the public as to the origin of the products the trademark user wishes to distinguish; Usually calling for an injunction not to use it any more - civil suit
4 kinds of intellectual property
trade secrets, patents, copyrights, trademarks
Fraud
• (Tort law) misrepresentation of a material fact - There is a lie about something important, essential to the terms of the contract. EX: price, shipping, condition of subject matter • Intent to deceive - The person who's lying is knowingly doing so with an intent to deceive the other party to the contract; If you're making scamming phone calls trying to get old men suffering from dementia to invest in a fraud, you have the intent to deceive. • Justifiable reliance on a misrepresentation • Some type of economic/financial injury - Someone will have to be out money for this to stand. • With these present, the contract is not valid.
o Some where genuineness of assent is lacking:
• Based on mistake - • Unilateral mistake of material fact - Material fact is something that is extremely important to the terms of the contract. EX: Delivery times, price, shipment times, etc. Not parol evidence language or other things. Central/crucial things to contract. Unilateral mistake is that one party is mistaken about a material fact. General rule is that these contracts based on this mistake cannot be rescinded. EX: Sofa that you want to sell for $2,000. Send an email with an offer to a person wanting to buy. Say, "I'll sell it to you for $1,000." You wrote that number by mistake. If this person writes back and immediately accepts the offer, you are still bounds by the terms of this agreement b/c you made a mistake. General rule - You can't rescind it. o Two exceptions: • If the party that didn't make the mistake knew or should have known about the mistake, the contract could be cancelled. EX: A friend had already told them you wanted to sell the couch for $2,000. • Mathematical errors - If a list of goods is sent for what you wanted to buy and the prices of individual items are right but the total is wrong, you can go back and realize it was a mistake. Goes back to knew/should have known that there was a mistake. • Mutual mistake of material fact • Mutual mistake of value • Fraud • Duress • Undue influence
compensatory damages
• Compensatory damages - Actual damages. What money are you actually out? Book gives an EX: Person A has an employment contract with no conditions, etc. with an employer for 3 years, $100,000 per year; They live in the state of AL. You can be fired at any time for any reason. A is fired. A files for wrongful termination. They sue for breach of contract, wrongful termination, etc. If you breach your contract with me and fire me when I was promised 3 years. A has already worked for a year and received $100,000. Still seeking $200,000 under the contract that was promised to her. As someone who was fired, she has a duty to mitigate her damages. Reduce the amount of damages you're seeking. Once A is fired, she should have started looking for a new job. If she gets a new one paying $100,000 and then wants to sue, she can only get $100,000 b/c she made up part of the $200,000 she was owed (read on this). Plaintiff has opportunity to mitigate damages.
consequential damages
• Consequential damages (special damages) will be awarded if breaching party knew or should have known that non-breaching party would be specifically injured as a result of the breach. EX: A retailer who has agreed to sell to an organization some shirts for a golf tournament. In the contract, they say, "Our golf tournament is Oct 1. And we need the shirts by then to sell them." If the retailer fails to get them the shirts by Oct. 1, the court could award them consequential damages. They're out additional money they could have made as a result of the golf tournament. They're out money b/c the goods weren't delivered on time.
injunction
• Injunction - You can ask the court to order one of the parties to STOP doing something. EX: A guy has a contract with NBA team for 5 years but then goes to sign a second contract w/ a new team. They can ask for injunction from the court for the second team he signed with because he is required to play for us for 5 years. Prohibits someone from doing something.
liquidated damages (contractual provision)
• Liquidated Damages (contractual provision) - the amount of damages are agreed upon; not always deemed lawful; must be reasonable and a situation where actual damages are hard to determine. Hard to claim actual damage if you steal my customer list and start selling to my customers and you try to start competing with me in a certain geographical area but you can try to sue under this
Undue Influence
• Someone in a dominant position taking advantage of someone's diminished mental condition, etc. EX in book: An elderly man is leaving his real estate in 1/4ths to each of his 4 children. Before his death, he has a stroke. His family hires a nurse to take care of him in his home. The nurse would be in a dominant position. She could convince him to enter into a contract whereby he could convey to the nurse his most valuable piece of real estate. The four children would do their best to prove that the nurse had some type of undue influence over the man and persuaded him against his own will to enter into that contract. EX: He really didn't want to do it but did just because he felt like he had to. Question of contractual capacity, too, and the contract might be deemed void. It depends on what the lawyers can prove. If he just decided to give the land to her, then it stands. Only void if the nurse has taken advantage of him.
specific performance
• Specific performance - You ask a court to order a breaching party to specifically do what they are obligated to do under the contract. Courts are not likely to grant specific performance unless the subject matter is unique. EX: real estate, art; Something you can't go buy identically on the marketplace. You could go to a court and ask them to order specific performance.
reformation
• You also have reformation - Raffles vs. Wiglehouse case. All parties to contract are confused as a result of ambiguity in a contract, you can ask the court for reformation. It allows the parties to go back and rewrite the contract.
