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Exam 3 Review Sheet - Legal Environment of Business | BULE 303, Exams of Business and Labour Law

George Mason University (GMU)Business and Labour Law
Prof. Yvonne Demory

Material Type: Exam; Professor: Demory; Class: Legal Environment of Business; Subject: Business Legal Studies; University: George Mason University; Term: Fall 2018;

Typology: Exams

2017/2018

Uploaded on 10/31/2018

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THE LEGAL ENVIRONMENT OF BUSINESS
SPRING SEMESTER 2018
EXAM #3 REVIEW SHEET
CHAPTERS: 2, 10 and 11
INSTRUCTOR: Wambui Mungai, Professor of Business
___________________________________________________________________________
CHAPTER 10: CONTRACT FORMATION
K = contract
An Overview of Contract Law
oObjective Theory of Contracts => the theory is that a party’s intention to enter into a
contact is judged by outward, objective facts as interpreted by a reasonable person,
rather than by the party’s own secret, subjective intentions. (Remember Lucy v.
Zehmer)
Elements of a Contract
oRequirements of a valid contract
Agreement
Offer and acceptance
Consideration
Contractual Capacity
Legality
oDefenses to the Enforceability of a Contract
Genuineness of assent aka voluntary consent (see more of this in Chapter 11)
Form (most K do not require any special form, but some K must be in
writing => Statute of Frauds ( “MY LEGS” categories”)
Types of Contracts
oBilateral (promise for promise) => contract formed when offeree accepts the offer.
oUnilateral (promise for an act) => contact formed when offeree takes action. The
conduct (action) is the acceptance.
Revocation of Offers for Unilateral contracts
In contract law, offers are normally revocable (capable of being
taken back, or cancelled) until accepted. The modern day view is
that once performance of the K has been substantially undertaken,
the offeror cannot revoke the offer.
oExpress K – words/written
oImplied K - conduct
Contract Performance
oExecuted v. Executory contract
Contract Enforceability
oValid contract
oVoidable contract: a K that can be legally rescinded (cancelled) at the option of one
or more parties if they give the court a reason why (see more of this in chapter 11
when voluntary consent is discussed)
oUnenforceable contract: the K is unenforceable by some statute or law. Remember
the Statute of Frauds & “MY LEGS” categories.
oVoid Contract: A K having no legal force or binding effect.
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Download Exam 3 Review Sheet - Legal Environment of Business | BULE 303 and more Exams Business and Labour Law in PDF only on Docsity!

THE LEGAL ENVIRONMENT OF BUSINESS

SPRING SEMESTER 2018

EXAM #3 REVIEW SHEET

CHAPTERS: 2, 10 and 11

INSTRUCTOR: Wambui Mungai, Professor of Business

___________________________________________________________________________

CHAPTER 10: CONTRACT FORMATION

K = contract  An Overview of Contract Law o Objective Theory of Contracts => the theory is that a party’s intention to enter into a contact is judged by outward, objective facts as interpreted by a reasonable person, rather than by the party’s own secret, subjective intentions. (Remember Lucy v. Zehmer )  Elements of a Contract o Requirements of a valid contract  Agreement  Offer and acceptance  Consideration  Contractual Capacity  Legality o Defenses to the Enforceability of a Contract  Genuineness of assent aka voluntary consent (see more of this in Chapter 11)  Form (most K do not require any special form, but some K must be in writing => Statute of Frauds ( “MY LEGS” categories”)  Types of Contracts o Bilateral (promise for promise) => contract formed when offeree accepts the offer. o Unilateral (promise for an act) => contact formed when offeree takes action. The conduct (action) is the acceptance.  Revocation of Offers for Unilateral contracts  In contract law, offers are normally revocable (capable of being taken back, or cancelled) until accepted. The modern day view is that once performance of the K has been substantially undertaken, the offeror cannot revoke the offer. o Express K – words/written o Implied K - conduct  Contract Performance o Executed v. Executory contract  Contract Enforceability o Valid contract o Voidable contract: a K that can be legally rescinded (cancelled) at the option of one or more parties if they give the court a reason why (see more of this in chapter 11 when voluntary consent is discussed) o Unenforceable contract: the K is unenforceable by some statute or law. Remember the Statute of Frauds & “MY LEGS” categories. o Void Contract: A K having no legal force or binding effect.

Agreement: o Offer & Acceptance o Requirements of Offer:  1) Offeror’s serious intention  Intent is determined by what a reasonable person in the offeree’s position would think the offeror’s words and conduct meant.  Offers made in obvious anger, jest, or undue excitement do not meet the intent test because a reasonable person would realize that a serious offer was not being made.  Lucy v. Zehmer Case o Intoxication does not negate contractual intent. o Need to look at the actions of the parties to determine seriousness of intention. o Reinforces the objective theory of contracts  What are NOT offers? o Expression of opinion. o Statement of future intent. o A request to negotiate.  2) Definite terms – All K need certain terms to be considered complete such as:  Identification of parties  Identification of the object/subject matter  Consideration to be paid  Type of payment, delivery, or performance.  3) Communicated o Termination of the Offer  Unless the offer is irrevocable (it has already been accepted), it can be revoked by the offeror at any time prior to acceptance.  The offeror can revoke the offer by an express repudiation (“I withdraw my previous offer”) or by acts that are inconsistent with the existence of the offer and are made known to the offeree.  The offeree may reject the offer. A rejection of the offer is usually accomplished by words or conduct evidencing an intent not to accept the offer. The offeree may respond to the offer with a counteroffer. A counteroffer by the offeree is a rejection of the original offer and making of a new offer.  Termination of an offer can occur by operation of law  Lapse of time  Destruction of specific subject matter  Death or incompetence of offeror or offeree  Supervening illegality of proposed contract o Acceptance  Acceptance is a voluntary act (either words or conduct) by the offeree that shows assent (agreement) to the terms of an offer.  Acceptance must be unequivocal and must be communicated to the offeror.  Silence is NOT acceptance unless there is a prior course of dealing between the parties.  Mirror image Rule – Acceptance must “mirror” the offer exactly. No deviations permitted. If there are any new or different terms with the acceptance, then that is a counteroffer (as explained above)  Mode and timeliness of acceptance:  Mailbox rule

Fraudulent Misrepresentation (K voidable)  The elements are (1) misrepresentation of a material fact , (2) an intent to deceive, and (3) the innocent party’s justifiable reliance on the misrepresentation o Remember: an opinion is NOT an offer, nor a contract term, nor fraud. Also “puffery” is not actionable. o Reliance on Misrepresentation: The deceived party must justifiably rely on the misrepresentation, and the misrepresenta- tion must be an important factor in inducing the party to contract. Reliance is not justified if the innocent party knows the true facts or relies on obviously extravagant statements. o Injury to Innocent Party: A showing of injury may not be required in an action to rescind a contract, but in an action to recover damages, proof of injury is required.  Undue Influence (K voidable) o Undue influence occurs in relationships in which one party can greatly influence another, thus overcoming the other’s free will.  Duress (K voidable) o Duress involves conduct of a coercive nature, such as forcing a party to contract by threatening the party with a wrongful or illegal act. Duress is a defense to the enforcement of a contract and a ground for rescission  The Statute of Frauds – Writing Requirement  Certain contracts must be in writing. Remember “MY LEGS” categories o Exceptions: doctrine of promissory estoppel & quasi contract may allow parties to recover under oral (verbal) contracts that would otherwise be unenforceable under the Statute of Frauds, because of detrimental reliance.  Third Party RightsAssignment of Rights: The act of transferring to another all of one’s rights arising under a contract. The assignor (the party assigning their rights) is usually no longer responsible under the contract.  Delegation of Duty: The transfer of a contractual duty to a third party. The party delegating the duty (the delegator) to the third party (the delegatee) is still obligated to perform the contract should the delegatee fail to perform.  Third Party Beneficiaries: One for whose benefit a promise is made in a contract but who is not a party to the contract. o Intended – Have rights under the K and can enforce the K. o Incidental beneficiaries – have no rights under the K and cannot enforce the K.  Performance & Discharge  A party may be discharged from a valid contract by: o Full or substantial performance. o Performance to the satisfaction of another. o Material breach by the other party. o A condition occurring or not occurring. o Anticipatory repudiation. o Agreement of the parties. o Operation of law.  Conditions of Performance o Condition Precedent: An event that must occur that triggers the performance of a legal obligation or terminate an existing obligation under a contract. (ie: Leasing land with an option to purchase. The

condition is that you pay the rent on time for 6 months, and if you do, you can then exercise the option to purchase the land. If you are late in paying the rent, then you no longer have that option to purchase. Paying the rent on time is the condition precedent to the option to purchase the land.) o Condition Subsequent : A future event, the occurrence or nonoccurrence of which will trigger the performance of a legal obligation or terminate an existing obligation under a contract. (ie: A contract to rent a banquet hall for a wedding reception. The wedding/marriage is the condition subsequent that must occur for the contract to rent the banquet hall to be enforceable/binding).  Discharge by Performance o The contract comes to an end when both parties fulfill their respective duties by performing the acts they have promised.  Complete Performance & Substantial Performance  Performance to the satisfaction of another  Material breach of contract  Anticipatory repudiation of contract (treated as a material breach)  Remember – any breach allows the non-breaching party to sue for damages, but only material breaches will discharge performance.  Discharge by Agreement o Rescission  Process by which a contract is cancelled or terminated and the parties are returned to the positions they occupied prior to forming it.  Oral rescission is generally enforceable unless the original contract was a contract for a sale of goods and required written rescission. Contracts that are executory on both sides can be rescinded solely by agreement.  Contracts that are executed on one side can be rescinded only if the party who has performed receives consideration to call off the deal. o Novation (you can do this instead of an assignment or delegation)  Novation substitutes a new party for an original party by agree- ment of all the parties. Novation requires (1) a previous valid obligation, (2) an agreement of all the parties to a new contract, (3) the extinguishment of the old obligation (discharge of the prior party), and (4) a new valid contract o Settlement Agreement  A compromise, or settlement agreement may be substituted as a new contract, and revoke and discharge the obligations under the prior contract.  Old K is gone, can only sue on the settlement agreement. o Accord and Satisfaction  Parties agree to accept performance that is different from the performance originally promised. An accord is a contract to perform some act to satisfy the existing contractual duty. A satisfaction is the performance of the accord agreement.  Old K is still in place until the accord has been satisfied. Once the accord takes place, the old K is gone. o Discharge by Operation of Law