Bus Legal 2

  1. The Statue of Frauds
    Parliament enacted the Statute of Frauds in 1677. It required written evidence before certain classes of contracts would be en-forced. Although the possibility of fraud exists in every contract, the statute focused on contracts in which the potential for fraud was great or the consequences of fraud were especially serious.
  2. My LEGS
    Marriage, one year, land, executor, goods, surety; or Marriage, one year, land, executor, guarantor, sale.
  3. Oral Contracts
    contract that terms of which have been agreed by spoken communication, in contrast to a written contract, where the contract is a written document. There may be written, or other physical evidence, of an oral contract � for example where the parties write down what they have agreed � but the contract itself is not a written one.
  4. Written Contracts
    Most states require only a memorandum of the parties� agreement; they do not re-quire that the entire contract be in writing. Essential terms of the contract must be stated in the writing. The memo-randum must provide written evidence that a contract was made, but it need not have been created with the intent that the memorandum itself would be binding.
  5. The Parole Evidence Rule
    Substantive common law rule in contract cases that prevents a party to a written contract from presenting evidence that contradicts or adds to the written terms of the contract that appears to be whole
  6. Promissory Estoppel and the Statue of Frauds
    • enable some par-ties to recover under oral contracts that the statute of frauds would ordinarily render unenforceable.
    • to some extent provides evidence of the existence of a contract between the par-ties, since it is unlikely that a person would materially rely on a nonexistent promise.
  7. Nature of Conditions
    One issue that frequently arises in the performance stage of a contract is whether a party has the duty to perform. Some duties are uncondi-tional or absolute� that is, the duty to perform does not depend on the occurrence of any further event other than the passage of time.
  8. Conditions of Precedent
    A condition precedent is a fu-ture, uncertain event that creates the duty to perform. If the condition does not occur, performance does not be-come due. If the condition does occur, the duty to per-form arises.
  9. Conditions Subsequent
    A condition subsequent is a future, uncertain event that discharges the duty to per-form. When a duty is subject to a condition subsequent, the duty to perform arises but is discharged if the future, uncertain event occurs.
  10. Concurrent Condition
    When the contract calls for the parties to perform at the same time, each person�s per-formance is conditioned on the performance or tender of performance ( offer of performance) by the other. Such conditions are called concurrent conditions.
  11. Express Condition
    A condition subsequent is a future, uncertain event that discharges the duty to per-form. When a duty is subject to a condition subsequent, the duty to perform arises but is discharged if the future, uncertain event occurs.
  12. Implied-in-Fact Condition
    An implied- in- fact condi-tion is one that is not specifically stated by the parties but is implied by the nature of the parties� promises.
  13. Constructive Conditions
    Constructive conditions ( also known as implied- in- law conditions) are conditions that are imposed by law rather than by the agreement of the parties. The law imposes constructive conditions to do justice between the parties. In contracts in which one of the parties is expected to perform before the other, the law normally infers that performance is a constructive condi-tion of the other party�s duty to perform.
  14. Excuse of Conditions
    most situations in-volving conditional duties, the promisor does not have the duty to perform unless and until the condition occurs. There are, however, a variety of situations in which the occurrence of a condition will be excused. In such a case, the person whose duty is conditional will have to perform even though the condition has not occurred.
  15. Excuse for Nonperformance
    Although nonperformance of a duty that has become due will ordinarily constitute a breach of contract, there are some situations in which nonperformance is excused because of factors that arise after the formation of the contract.
  16. Impossibility
    in the legal sense of the word means � it cannot be done by anyone� rather than � I cannot do it.� Thus, promisors who find that they have agreed to per-form duties that are beyond their capabilities or that turn out to be unprofitable or burdensome are generally not excused from performance of their duties.
  17. Illness or Death of Promissory
    Incapacitating illness or death of the promisor excuses nonperformance when the promisor has contracted to perform personal services.
  18. Destruction of Subject Matter of the Contract
    If something that is essential to the promisor�s performance is destroyed after the formation of the contract through no fault of the promisor, the promisor is excused from performing.
  19. Impracticability
    a promisor must be able to establish that the event that makes performance impracticable oc-curred without his fault and that the contract was made with the basic assumption that this event would not occur. This basically means that the event was beyond the scope of the risks that the parties contemplated at the time of contracting and that the promisor did not expressly or impliedly assume the risk that the event would occur.
  20. Types of Contract Remedies: Legal Remedies (money damages)
    The usual remedy is an award of money damages that will compensate the injured party for his losses.
  21. Types of Contract Remedies :Equitable Remedies
    remedies that had their origins in courts of equity rather than in courts of law.
  22. Types of Contract Remedies :Restitution
    which requires the defendant to pay the value of the benefits that the plaintiff has conferred on him.
  23. Legal Remedies: Compensatory Damages
    calculating the compensatory remedy, a court will attempt to protect the expectation interest of the injured party by giving him the � benefit of his bar-gain� ( placing him in the position he would have been in had the contract been performed as promised).
  24. Legal Remedies: Nominal Damages
    are very small damage awards that are given when a technical breach of contract has occurred without causing any actual or provable economic loss.
  25. Legal Remedies: Liquidated Damages
    The parties to a contract may ex-pressly provide in their contract that a specific sum shall be recoverable if the contract is breached.
  26. Legal Remedies: Punitive Damages
    Damages awarded in addition to the compensatory remedy that are designed to punish a defendant for particularly reprehen-sible behavior and to deter the defendant and others from committing similar behavior in the future.
  27. Specific Performance
    Equitable remedy whereby the court orders the breaching party to perform his contractual duties as promised.
  28. Injunction
    An equitable remedy that is employed in many different contexts and is sometimes used as a remedy for breach of contract. An injunction is a court order requiring a person to do something ( mandatory injunction) or ordering a person to refrain from doing something ( negative injunction).
  29. 19th Century Product Liability Law
    The rules governing suits for defective goods were very much to manufacturers and other sellers advantage. This was the era of let the buyer beware. Defective good: no liability unless the seller had made an express promise to the buyer and the goods did not conform to that promise.
  30. 20th Century Product Liability Law
    To pro-tect consumers, modern courts and legislatures effectively intervene in private contracts for the sale of goods and sometimes impose liability regardless of fault. As a result, sellers and manufacturers face greater liability and higher damage assessments for defects in their products.
  31. Express Warranty
    • 3 ways: If an affirmation of fact or promise regarding the goods becomes part of the basis of the bargain ( a re-quirement to be discussed shortly), there is an express warranty that the goods will conform to the affirmation or promise.
    • Any description of the goods that becomes part of the basis of the bargain creates an express warranty that the goods will conform to the description.
    • Assuming it becomes part of the basis of the bargain, a sample or model of goods to be sold creates an express warranty that the goods will conform to the sample or model.
  32. Implied Warranty of Merchantability
    the plaintiff argues that the seller breached the warranty by selling unmerchantable goods and that the plaintiff should therefore recover damages. Under section 2� 314, such claims can succeed only where the seller is a merchant with respect to goods of the kind sold.
  33. Implied warranty of Fitness for a Particular Purpose
    1) the seller has reason to know a particular purpose for which the buyer requires the goods; ( 2) the seller has reason to know that the buyer is relying on the seller�s skill or judgment for the selection of suitable goods; and ( 3) the buyer actually relies on the seller�s skill or judgment in purchasing the goods. If these tests are met, there is an implied warranty that the goods will be fit for the buyer�s particular purpose.
  34. Section 402A Requirements
    • The seller must be engaged in the business of selling the product that harmed the plaintiff. Thus, section 402A binds only parties who resemble UCC merchants be-cause they regularly sell the product at issue.
    • The product must be in a defective condition when sold, and also must be unreasonably dangerous because of that condition. The usual test of a product�s defective condition is whether the product meets the reasonable expectations of the average consumer. An unreasonably dangerous product is one that is dangerous to an extent beyond the reasonable contemplation of the average consumer.
  35. Section 402A Application
    covers retailers and other middlemen who market goods containing defects that they did not create and may not have been able to discover. Even though such parties often escape negligence liability, courts have held them liable under section 402A�s strict liability rule.
  36. The Magnuson-Moss Act
    apply to sales of consumer products costing more than $ 10 per item. A consumer product is tangible personal property normally used for personal, family, or house-hold purposes. If a seller gives a written warranty for such a product to a consumer, the warranty must be des-ignated as full or limited. A seller who gives a full war-ranty promises to ( 1) remedy any defects in the product and ( 2) replace the product or refund its purchase price if, after a reasonable number of attempts, it cannot be re-paired. 4 A seller who gives a limited warranty is bound to whatever promises it actually makes. However, neither warranty applies if the seller simply declines to give a written warranty.
  37. Statutes of Limitations
    express and implied warranty claims is four years after the seller offers the defective goods to the buyer ( usually, four years after the sale). In tort cases, the applicable statute of limitations may be shorter, de-pending upon applicable state law. It begins to run, how-ever, only when the defect was or should have been discovered� often, the time of the injury.
  38. Damage in Product Liability Suits
    Punitive, consequential, basis-of-the-bargin
  39. Punitive damages
    punitive damages are not designed to compensate the plaintiff for harms suffered ( even though the plaintiff typically becomes entitled to collect any punitive damages assessed against the defendant). Puni-tive damages are intended to punish defendants who have acted in an especially outrageous fashion, and to deter them and others from so acting in the future.
  40. Consequential Damages
    personal injury, property damage ( damage to the plaintiff � s other property), and indirect economic loss ( e. g., lost profits or lost business reputation) result-ing from a product defect.
  41. Agency Relationship:
    Agency is a two- party relationship in which one party ( the agent) is authorized to act on behalf of, and under the control of, the other party ( the principal).
  42. Agency Relationship: Termination of Agency
    An agency can terminate in many ways that fall under two general headings: ( 1) termination by act of the parties, and ( 2) termination by operation of law.
  43. Agency Relationship: Gratuitous Agent
    Agency is a two- party relationship in which one party ( the agent) is authorized to act on behalf of, and under the control of, the other party ( the principal).
  44. Agency Relationship: Subagent
    agent of an agent. More precisely, a subagent is a person appointed by an agent to perform tasks that the agent has under-taken to perform for his principal.
  45. Agency Relationship: Employees and Independent Contractors
    Although many employees perform physical labor or are paid on an hourly basis, corporate officers who do no physical work and receive salaries usually are employees as well. Professionals such as brokers, accountants, and attorneys often are independent contractors of their clients, although they are employees of the brokerage, accounting, or law firms that pay their salaries. Consider the difference between a corporation represented by an attorney engaged in her own practice ( an independent contractor) and a corporation that maintains a staff of salaried in- house counsel ( employees).
  46. Agency Relationship: Respondent Superior
    a legal doctrine which states that, in many circumstances, an employer is responsible for the actions of employees performed within the course of their employment
  47. Agency Relationship: Termination by Operation of Law
    situations where it is reasonable to believe that the principal would not wish the agent to act further, or where accomplish-ment of the agency objectives has become impossible or illegal.
  48. Agency Relationship: Authority
    agent can bind his principal on a contract or other matter only when the agent has authority to do so. Authority is an agent�s ability to affect his principal�s legal relations. It comes in two main forms: actual authority and apparent authority. Each is based on the principal�s manifested consent that the agent may act for and bind the principal. For actual authority this consent must be communicated to the agent, while for apparent authority it must be communicated to the third party.
  49. Partnership
    The partners assume personal liability for all the obli-gations of the business. All the debts of the business are the debts of all the partners. Likewise, partners are liable for the torts committed in the course of business by their partners or by partnership employees. If the assets of the business are insufficient to pay the claims of its credi-tors, the creditors may require one or more of the part-ners to pay the claims using their individual, nonbusiness assets. Thus, a partner may have to pay more than his share of partnership liabilities.
  50. Limited Partnership
    has one or more general partners and one or more limited partners. General partners have rights and liabilities similar to partners in a partnership. They manage the business of the limited partnership and have unlimited liability for the obligations of the limited partnership.
  51. Corporation
    owned by share-holders who elect a board of directors to manage the business. The board of directors often selects officers to run the day- to- day affairs of the business. Conse-quently, ownership and management of a corporation may be completely separate: No shareholder has the right to manage, and no officer or director needs to be a shareholder.
  52. Limited Liability Company
    intended to combine the nontax advantages of corporations with the favorable tax treatment of partnerships. An LLC is owned by members, who may manage the LLC them-selves or elect the manager or managers who will oper-ate the business. Members have limited liability for the obligations of the LLC.
  53. Limited Liability Partnership
    identical to a partnership except that an LLP partner has no liability for most LLP obligations; how-ever, an LLP partner retains unlimited liability for his own wrongful acts, such as his malpractice liability to a client.
  54. S Corporation
    the corporation and its shareholders are taxed nearly entirely like a partnership: Income and losses of the business are reported on the shareholders� individual federal income tax returns. A corporation electing S Cor-poration status may have no more than 100 shareholders, have only one class of shares, and be owned only by in-dividuals and trusts.
  55. Sole Proprietorship
    the sole proprietor has the right to make all the management decisions of the business. In addition, all the profits of the business are his. A sole proprietor assumes great liability: He is personally liable for all the obligations of the business.
  56. Professional Corporation
    identical to a business cor-poration in most respects. It is formed only by a filing with the secretary of state, and it is managed by a board of directors, unless a statute permits it to be managed like a partnership. The rigid management structure makes the professional corporation inappropriate for some smaller professional practices.
Card Set
Bus Legal 2