BSL Notes for all Chapters Covered.docx

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Business Law
BSL 212
Bonnie Teller

BSL 212 REVIEW CHAPTER 6: Teleology: Stipulates that acts are morally right or acceptable if they produce some desired result, such as realization of self-interest or utility Utilitarianism: Defines right or acceptable actions as those that maximize total utility, or the greatest good for the greatest number of people Deontology: Focuses on the preservation of individual rights and on the intentions associated with a particular behavior rather than on its consequences Relativist: Evaluates ethicalness subjectively on the basis of individual and group experiences Virtue Ethics: Assumes that what is moral in a given situation is not only what conventional morality requires but also what the mature person with a “good” moral character would deem appropriate Justice: Evaluates ethicalness on the basis of fairness: distributive, procedural, and interactional CHAPTER 3: CIVIL DISPUTE RESOLUTION A. SUBJECT MATTER I. FEDERAL (EXCLUSIVE) 1. Admiralty Law 2. Bankruptcy Law 3. Copyright/ Patent/ Trademark 4. Federal Crimes 5. Lawsuit against US II. CONCURRENT 1. ”Federal Question”: A law arising under the Constitution, a Federal Statute or a Treaty 2. Diversity of citizenship & $75,000 (amount in controversy) B. IN PERSONAM (IP) JURISDICTION Courts have IP Jurisdiction if minimum contact exists between the state of the court and the defendant. Otherwise, due process is offended. Minimum Contact exists when a defendant does business, advertises or has HQ in the state. CHAPTER 9: INTRO to CONTRACTS – NON-CONTRACTUAL REMEDIES A. REQUIREMENT of a CONTRACT A contract requires Mutual Assent, Consideration, Legality of Object and Capacity B. NON-CONTRACTUAL REMEDIES I. PROMISORRY ESTOPPEL Is a non-contractual doctrine in which a naked promise or gift is enforced if the following criteria are met: 1. The plaintiff and defendant took part in a non-contractual promise 2. The plaintiff reasonably relied on the promise 3. The defendant meant to induce or could have foreseen the plaintiff’s reliance 4. The plaintiff was harmed emotionally or monetarily 5. There is an unfair or unjust situation II. QUASI CONTRACT Is a non-contractual remedy that the plaintiff recovers the reasonable value of the benefit she conferred upon the defendant and is granted if met the following criteria: 1. There are benefits conferred upon the defendant 2. The defendant knowingly receives and does not refuse the benefits 3. The court decides that it is unjust to leave the situation as it is CHAPTER 10: MUTUAL ASSENT A. OFFER’S VALIDITY In order for an offer to be valid, it has to satisfy the following elements: 1. The offer has to be communicated as intended and authorized by the offeror and it is usually in words, except for silent or implied offer. 2. The offer has to manifest the intention to enter into a contract Exceptions: Jokes, Excited Utterances, General Advertisement unless it is specific to a certain group of people, Preliminary Negotiations and Auctions 3. The offer has to be definite and certain: + Common Law: Offers must be highly definite and certain. The subject matter, price, amount or quantity and term or performance have to be present and specified + UCC: Quantity is almost always required but missing and open terms are supplied by good faith and reasonableness SPECIAL CASES 1. Output Contracts: Even though quantity is not specified, output contracts are still valid because reasonableness and good faith are implied 2. Requirements Contracts: are valid offers B. DURATION of OFFERS I. LAPSE of TIME Offer remains open for the time period specified or, if no time is stated, for a reasonable period time II. REVOCATION An offer can be revoked by the offeror anytime prior to acceptance except: 1. Option Contracts: The offer is held firm for a specified time when consideration is given 2. MFO (Merchant’s Firm Offer): In the sale of goods, if the merchant makes a written offer and signs it, the offer is held open for no more than 3 months. A merchant is an expert or a seller of goods of a particular kind 3. CISG: If the offer is promised to be held open, the offer is irrevocable III. REJECTION Refusal to accept an offer terminates the power of acceptance IV. COUNTER OFFERS A counter offer that is any material departure that changes the finance terminates the original offer V. DEATH or INCOMPETENCY OF EITHER PARTY Death or Incompetency of either the offeror or the offeree terminates the offer VI. DESTRUCTION of SUBJECT MATTER Destruction of Subject Matter of an offer terminates the offer VII. SUBSEQUENT ILLEGALITY Subsequent Illegality of the purpose or subject matter of the offer terminates the offer C. ACCEPTANCE Acceptance must be communicated through writing or verbally except in the case of unilateral contracts which can be accepted through performance. Silence generally does not indicate acceptance of the offer The Mailbox Rule: An acceptance is effective upon dispatch except when: 1. The offeror specifies that the acceptance is not valid until it is received 2. The offeror mandates a method of acceptance and the method or a reasonable substitute is not followed 3. The acceptance follows a prior rejection and the first received is effective Mirror Image Rule: + Common Law: Acceptances must mirror offers in material terms + UCC: If both parties are merchants, the new additional terms in the acceptance govern unless (1)New terms materially alter old terms, (2) The offeror objects in a reasonable time to the new term, (3) The offer limits acceptance to its term. If one party is not a merchant then the offer’s terms govern. CHAPTER 11: CONDUCT INVALIDATING ASSENT I. DURESS Duress is any unlawful act that overcomes the free will. There are 2 types of duress: Physical duress which renders the contract void and Duress by threat which renders the contract voidable at the option of the innocent party. Threat of civil litigation is not duress II. UNDUE INFLUENCE Undue Influence renders the contract voidable at the option of the innocent party if it satisfies 3 criteria: 1. There is unfair persuasion 2. The influence is made by a party in the dominant position 3. It is based on a confidential relationship III. FRAUD Fraud in the execution renders the contract void Fraud in the inducement renders the contract voidable if there has been a false representation of a fact that is material made with scienter and is justifiably relied upon by the plaintiff 1. False Representation: Silence is usually not a false representation especially in an arm’s length transaction except if there is a latent defect. Silence is a latent defect if it satisfies 3 elements: (1)The person knows about the fact, (2)The person knows that the disclosure of the fact would correct a basic assumption, and (3) It is bad faith if that person does not disclose the fact 2. Of a Fact: Cannot be based on Opinion, Sales Talk or Future Prediction unless it is uttered by a true expert 3. That is Material It influences the making of decision 4. Made with Scienter Knowledge by the person who made the false representation and is not an accident, carelessness or negligence 5. Is Justifiably relied upon by the plaintiff IV. MISTAKE 1. Mutual Mistakes of a fact render the contract voidable by the innocent party 2. Unilateral Mistakes of a fact result in a valid contract unless one party is an expert and he knows or causes the mistake 3. If the mistake relates to the meaning of a term, it renders the contract void CHAPTER 12: CONSIDERATION A contract is legally binding if it has consideration which consists of either a Legal Benefit to the promisor or a Legal Detriment to the promise and it was bargained for. Adequacy of Consideration is not required where the parties have freely agreed to exchange SPECIAL SITUATIONS in CONSIDERATION I. ILLUSORY PROMISES Are promises where performance is entirely optional and have no consideration. Therefore, it results in an unenforceable contract except for Output, Requirement and Satisfaction Contracts II. PRE-EXISTING OBLIGATIONS Public duties such as those imposed by tort or criminal law are neither a legal detriment not a legal benefit III. MODIFICATION of a PRE-EXISTING CONTRACT + Common Law: Modification of a contract before performance is complete is not binding unless additional consideration is given except when modification is necessary and binding because new facts have arisen that were substantial, unforeseen and outside the contemplation of the parties + UCC: Modification of a contract before performance is complete is binding even without additional consideration as long as the modification is made in good faith + CISG: Modification of a contract before performance is complete is binding even without additional consideration IV. SETTLEMENT of DEBTS 1. Undisputed Debts: Settlement of undisputed debts for a lesser amount is unenforceable because it lacks consideration 2. Disputed Debts: Settlement of disputed debts about amount or quantity of performance for a lesser amount is enforceable and has consideration V. PAST CONSIDERATION Past consideration is no consideration because it wasn’t bargained for at the time the contract was made so any resulting agreement is unenforceable CHAPTER 13: ILLEGAL BARGAINS I. LICENSING STATUTES 1. Regulatory License: Licensing Statute that is intended to protect the public against unqualified persons; an unlicensed person may not recover for services he has performed 2. Revenue License: Licensing Statute that seeks to raise money; an unlicensed person may recover for services he has performed II. GAMBLING CONTRACTS Gambling Statutes prohibit wagers which are agreements that one party will win and the other lose depending on the outcome of an event in which their only interest is the gain or loss except in Las Vegas, Indian Reservations, Atlantic City, horse tracks and ships in international water III. USURIOUS CONTRACTS Usury Statutes establish a maximum rate of interest. A contract where the interest rate is above the usury rate or is unusually high is unenforceable IV. CONTRACTS THAT RESTRAIN TRADE Unreasonable restraints of trade are not enforceable 1. Sale of a Business: The promise by the seller of a business not to compete in that particular business in a reasonable geographic area for a reasonable period of time is enforceable 2. Employment Contracts: An employment contract prohibiting an employee from competing with his employer for a reasonable period following termination is enforceable provided the restriction is necessary to protect legitimate interests of the employer V. CONTRACTS WITH OVER-REACHING EXCULPATORY Exculpatory Clauses are enforceable to disclaim liability for harm caused by negligence but not recklessness or intent VI. UNCONSCIONABLE CONTRACTS Unfair or unduly harsh agreements are not enforceable VII. CERTAIN ADHESION CONTRACTS Adhesion Contracts that are drafted by one party and is not negotiable are enforceable but are strictly scrutinized by the courts VIII. TORTIOUS CONTRACTS An agreement that requires a person to commit a tort is unenforceable IX. CONTRACTS THAT CORRUPT PUBLIC OFFICIALS Agreements that corrupt public officials are not enforeceable EXCEPTIONS Permit one party to recover payments Party Withdrawing before Performance, Party Protected by Statute, Party not Equally at Fault, Excusable Ignorance, Partial Illegality CHAPTER 14: CONTRACTUAL CAPACITY I. AGE Contracts entered into by a minor (below age 18) are voidable at the option of the minor + Disaffirmance: is the avoidance of the contracts; may be done during minority and for a reasonable time after reaching majority + Ratification: is the affirmation of the entire contract; may be done upon reac
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