Glossary of Business Law Final 2

Start Studying! Add Cards ↓

Ethical Fundamentalism
absolutism, individuals look to a central authority or set of rules to guide them in ethical decision making. Example: Looking to the Bible
Exclusive Federal Jurisdiction
includes federal criminal prosecutions; admiralty, bankruptcy, antitrust, patent, trademark, and copyright cases; suits against the United States and cases arising under certain federal statutes.
Federal Question
any case arising under the Constitution, statutes, or treaties of the United States, no minimum dollar requirement
Diversity Jurisdiction
a civil suit where there is diversity of citizenship and the amount in controversy exceeds $75,000 (must be made in good faith)
Diversity of Citizenship
when people are from different states, different countries
State Jurisdiction
Have jurisdiction over all other matters
Long Arm Statute
jurisdiction over a person in which one state can hold trail against someone from another state in the state in which the crime was committed, minimum contacts apply
Uniform Commercial Code
governs the sale of goods besides property, includes a hybrid if a good is majority of the contract
Quasi Contract (3 rules)
an obligation imposed by law to avoid injustice, not a contract. Example: Willard delivers an unaddressed envelope to Roy with $100, intended for Lucia. Roy does not have a contract saying he has to return it, but Willard is permitted to recover the $100 from Roy. Prevents unjustness – Compensation must be reasonable, requires 3 rules:
a. A benefit conferred upon the defendant by the plaintiff
b. The defendant’s appreciation of knowledge of the benefit
c. Acceptance or retention of the benefit by the defendant under circumstances making it inequitable for him to retain the benefit without compensating the plaintiff for its value
Promissory Estoppel
not a contract, a promise that can be enforced to avoid injustice – 3 rules:
a. The promise that is made can be reasonably relied on
b. The promise is relied on
c. An injustice occurs
Bilateral Contracts
occurs when both parties make a promise. Example: Promise to mow the lawn, promise to pay you $10
Unilateral Contracts
occurs when only one party makes a promise. Example: “If you mow my lawn, I will pay you $10,” other party doesn’t have to do anything, but if they mow the lawn, promisor must pay
Void Contract
does not meet requirements of a contract, thus no contract at all. Example: promise made by someone incompetent
Voidable Contract
a contract that is defective, but still has legal implications. Example: Fraud - person who was misrepresented does not have to perform duties
Unenforceable Contract
can’t be enforced by law. Example: some contracts required to be in writing, or some have time limit
a. Advertisement is not an offer
b. Terminations
i. Offeror Retracts
ii. Offer Lapses
iii. Counter offer is made
Option Contracts
a contract by which the offeror is bound to hold open an offer for a specified period of time
i. Must give consideration
ii. Creates a separate independent contract
Firm Offers Under UCC
i. Must be a merchant in a signed writing that an offer is available
ii. Offer must stay available for the given period of time
Mirror Image Rule
acceptance must be positive and unequivocal – must directly mirror the offer, if not it’s a counteroffer which does not create a contract
Battle of the Forms
Under the UCC if there are different forms of acceptance
i. Must be between merchants
ii. If the acceptance includes new material, it becomes part of contract unless
1. it materially alters the contract
2. objection is given within 10 days
3. original contract negates counteroffers, if counteroffer is denied, a contract still exists
Mailbox Rule
occurs when a contract is accepted and replied through the mail; acceptance is valid upon proper dispatch
Physical Duress
occurs when one party compels another to manifest assent to a contract through physical force
Improper Threats
use of threats to force entrance in a contract, must leave victim with no reasonable alternative.
Undue Influence
unfair influence based on a confidential relationship, renders contract voidable
the intentional misrepresentation of material fact by one party to the other, who consents to enter into contract based on misrepresentation, renders contract voidable 5 rules:
a. A false representation
b. Of fact
c. That is material and
d. Made with knowledge of its falsity and the intention to deceive and
e. Which representation is justifiably relied on
same as fraud, but didn’t do it intentionally. Opinions can be a fact if it’s the opinion of a professional
Mutual mistake of fact not value Example: minted coin
the inducement to make a promise enforceable. Ensures that promises are enforced only where the parties have exchanged something of value in the eye of the law.
Pre-existing Duties
law does not regard the performance of a preexisting legal duty, public or private, as either a legal detriment or a legal benefit. The performance of which is not legally sufficient consideration because they did what they were legally bound to do
Disputed Debts
an obligation whose existence or amount is contested
Undisputed Debts (example)
not contested as to its existence or its amount. Example: Bill owes Jon $100, but gives him $50. Jon agrees to discharge the remaining debt. Jon still allowed to get rest of money. If Bill gives Jon a fountain pen, and Jon agrees to discharge, Jon cant get money because Bill wasn’t required to give the pen. Also, if Jon agrees to accept $50 before the due date, Jon can’t recover
Illusory Promises
a statement that is in the form of a promise but imposes no obligation upon the maker of the statement. Promise is optional. Example “I will sell you as many widgets as you want” – purchaser has the option, doesn’t have to buy any at all
Restraint of Trade
any contract or agreement that eliminates or tends to eliminate competition or otherwise obstructs trade or commerce
Covenant not to compete
an agreement to refrain from entering into a competing trade, profession, or business – enforceable if
i. The purpose of the restraint is to protect a property interest of the promisee
ii. The restraint is no more extensive than is reasonably necessary to protect that interest
iii. Example, sell your widget business; wont sell widgets anywhere within a reasonable area and time
Restraint of Sale of Business
as part of an agreement to sell a business, the seller frequently promises not to compete in that particular type of business in a defined area for a stated period of time in order to protect the business’s goodwill. Must be a reasonable area and time.
Restraint of Employment Contracts
salespeople are often required to sign a contract prohibiting them from competing with their employees during their employment and time after – Common Calling Job Rule
Exculpatory Clause
excuses one party from liability for her own tortuous conduct if its not deliberate – if one party’s superior bargaining position has enabled him to impose an exculpatory clause upon the other party, the courts will nullify the provision – doesn’t work if it’s a duty to the public; tenant/landlord case
Unconscionable Contracts
courts determine if a contract is unfair, courts may refuse a contract if they find it unconscionable
Procedural Unconscionability
involves a contract in which the procedures going in to making that contract are no good
Substantive Unconscionability
involves a contract that is so ridiculous it is no good
Contractual Capacity
the law can state that an individual does not have the capacity to form a contract
States say a minor’s contract is voidable so long as they are a minor
incapacity of a minor does not excuse him the obligation to pay for necessaries. I.E. food, shelter, medicine, clothing, that supply his needs. Minor may not have to pay agreed price, but have to pay a reasonable cost
Mental Illness
if an individual is declared incompetent, all contracts are void. If an individual suffers from phases of mental illness the contract is void so long as:
i. The other party knew or should know about the condition
ii. And the incompetent party wasn’t aware of what they were doing
Statute of Frauds
requires that certain designated types of contracts be evidenced in writing in order to be enforceable – most contracts are under this rule
Contracts of Reality
must be in writing, except down payments, and improvements to the property
One Year
contracts that can’t be performed in a year; it must be in writing, and the time begins when contract is made
When Must the Sale of Goods be in writing?
must be in writing if goods are $500 or more except when goods are specially manufactured
Parol Evidence Rule
parties may have agreed on something else in negotiations, but parties aren’t allowed to bring that to court if they signed a final written agreement that may not have included earlier provisions
where one party assigns their duty of a contract to a third party
a. Includes obligor, oblige, assignor, assignee
b. Does not have to be in writing
c. Can’t assign personal performance
d. Assignee stands in the shoes of the assignor!!!
i. English Rule – 1st assignee that gives notice without knowledge of prior assignment
ii. American Rule – 1st assignee in time wins
Delagation of Duties
can delegate duties of a contract to someone else, but you remain liable unless the obligee releases you
Intended Beneficiary (3rd party beneficiary)
is intended by the two parties to the contract to receive a benefit from the performance of their agreement; courts enforce third party’s rights to contract
Incidental Beneficiary (3rd party beneficiary)
third party is not intended to receive a benefit under the contract; courts don’t enforce the benefits of the contracts
Substantial Performance
if a party “in good faith” tries to perform a contract but doesn’t meet the exact standards of the contract
Anticipatory Repudiation
if one party breeches before the due date of the contract, the other party can act immediate; although it must be a definite breech
Objective Impossibility (Discharge by Operation of Law)
a situation in which no one could render performance
Frustration of Purpose (Discharge by Operation of Law)
a contract is discharged if supervening circumstances make impossible the fulfillment of the purpose that both parties had in mind
Commercial Impracticability (Discharge by Operation of Law)
unforeseen and unjust hardship, will excuse non-performance; based on a “basic assumption” of both parties
Compensatory Damages
damages that compensate the injured party; tries to place them in a position as good as the one he would have been in had the other party performed under the contract; compensating the injured party for the dollar value of the benefits they would have received
Consequential Damages
damages that arise as a foreseeable result of the breach. Example – if Tracy leases to Sean a defective machine that causes $4,000 in property damages and $12,000 in personal injuries, Sean may recover $16,000 as consequential damages
Liquidated Damages
a provision in a contract that predicts a breach; the amount must be reasonable – not a penalty; and the damages can not be ascertained at the time of the contract’s formation
Mitigation of Damages
the injured party may not recover damages for loss that he could have avoided with reasonable effort and without undue risk, burden, or humiliation ***review this on page 332***
Specific Performance
Provision that requires the exact performance stated in the contract; item must be unique;
formal court order commanding a person to refrain from doing a specific act or to cease engaging in specific conduct. Example: Clint enters into a written contract to give Janice the right of first refusal on a tract of land owned by Clint. Clint sells the land to Blake without offering it to Janice; court may properly enjoin Clint from selling the land to Blake
Void Title
no title at all; Example – thief
Voidable Title
one acquired under circumstances that permit the former owner to rescind the transfer and revest herself with title, as in the case of mistake, common duress, undue influence etc
where an owner of goods transfers possession of goods to a bailee for resale, or repair. Sometimes the bailee violates the entrustment and sell the goods to another person. Code protects the third party if the purchase is made in the ordinary course of business from a merchant who deals with goods of that kind. Buyer must be in good faith and have no knowledge of the entrustment. *ring to be reset hypothetical*
Shipment Contract
contract in which the risk of loss transfers when the goods are delivered to a carrier
Destination Contract
in which risk of loss transfers when the goods are duly tendered
***Risk of Loss Stays with Breacher***
Example: if seller ships goods that do not conform to the contract, the risk of loss stays with the seller until the buyer has accepted the goods or the seller has remedied the defect
Express Warranty
an explicit undertaking by the seller with respect to the quality, description condition, or performability of the goods
Warranties of Merchantability
guarantees the goods are fit for their particular purpose; has to be by a merchant
Warranties of Food and Drink
two tests; foreign object tests and reasonable expectation test
Implied Warranty of Fit for a Particular Purpose
seller must be aware of the buyer’s use and the buyer must reasonable rely on the seller’s judgment; doesn't have to be a merchant
Disclaiming Warranties
Must be in writing and conspicuous for both merchantability and specific purpose
the use of subsidies in order to sell goods at a lower cost than normal value in other countries
Gray Market Goods
legitimate goods not allowed to be marketed in certain places – courts are very split on this
Letters of Credit
Stand-by protects the buyer, confirmed protects the seller
Sovereign Immunity
says that each nation can do what they want in their own nations without worrying about other countries interfering

Add Cards

You must Login or Register to add cards