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136 Cards in this Set
- Front
- Back
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Elements of a Contract (three from notes, two from book)
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notes
Mutual assent - offer acceptance or meeting of the minds (agreement) Consideration - giving something or giving up something (something of legal value given in exchange for a promise); something of legal value (can consist of money, property, the provision of services, forbearance of a right, or anything else of value) No contract defenses - contracts can appear where you don't really expect them (must be lawful) book: Contractual capacity - ex: insane people do not have this Lawful object - can't be dealing with illegal shenanigans |
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Examples of defenses
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genuineness of assent - no duress, influence, fraud
writing and form - certain contracts be in writing or in a certain form |
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Online contracts - language
B2B; B2C; C2C |
1. B2B: business to business
-requires a transaction involving an electronic change -EX: Wal-Mart has highly technical inventory system where inventory is automatically taken out of the store when the item is scanned for purchase…they have all kinds of data they can pick up (i.e. to see what is picked up the most, what the weather is like, what the consumers are like based on the products they buy)…this is all done with inventory control…they continue to use this to connect with their suppliers…“laundry basket affect” 2. B2C: business to consumer -ex: amazon.com takes order in and then they send message out electronically to whoever the supplier is and then the shipment goes to the customer 3. C2C: consumer to consumer -EX: e-bay |
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Bilateral Contracts
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-promises in exchange for another promise
-most contracts are bilateral -EX: McDonald's employee contracts |
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Unilateral Contracts
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-promise on one side in exchange for an act or action on another
EX: Rewards -handmade sign that says $500 dollar reward for a lost dog -the address is right behind your house & decide to try and find dog -promise? no -neighbor does not care who finds their dog or who they pay the money too -other side of contract: person finding their dog -action: finding dog -once the action is started, you have to be allowed to finish & contract is set |
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Quasi contract AKA implied-in-law Contract
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-Situation where you don't really have a contract, but you are going to go to court and pretend that one is in place
-used when situation does not perfectly fit any of the aforementioned contracts and the lawyer wants to pretend that in reality, there should be -imposed when one person confers a benefit on another who retains the benefit and it would be unjust not to require that person to pay for the benefit received -Four Requirements! (1) should have benefits from contract (2) reasonable expectations (3) benefits have come at consent of someone (4) question of whether there would be unjust enrichment on one side of contract EX: lightning storm -party A is out of town and lightning cuts down tree that crashes through A's roof and there is sufficient water damage -party B notices damage and knows that A is out of town -B calls tree service co & window co -A returns to home with $3000 worth of bills to pay for services performed -A must pay despite an actual contract (mutual assent, etc.) because requirements are met (1) both companies conferred benefits on homeowners (2) prices for services are reasonable (3) benefits have come at consent of the neighbor (4) if homeowner received these benefits for free, there would be unjust enrichment because B was looking out for you EX 2: car accident -person A is in a car accident and is taken to hospital by good Samaritan while unconscious -receives medical bills -person does not want to pay bills -doctors/hospital's lawyers would utilize quasi-contract -would have to see if unjust enrichment would occur |
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Void Contract
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No contract exits
-EX: contract to commit a crime; if a contract is void, neither party is obligated to perform & neither party can enforce the contract EX: notes -guy's wife is having an affair -tells boyfriend she wants husband killed & boyfriend says he wants car in return -attempts to kill him four times -finally: boyfriend tries to kill him with bow & arrow -pretend that boyfriend has been successful and woman didn't give him the car -he wants to sue her for breech of contract... clearly the court is not going to give any say to the contract & it is void |
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Voidable Contract
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contract for which a party has the option of voiding or enforcing the contract
-with certain exceptions, contracts may be voided by minors, insane people, intoxicated people, people acting under duress or under influence or fraud, and in cases involving mutual mistake MINORS -if under a non-necessity, say for a car, then someone over 18 must sign contract with you, if minor totals the car & wants to void the contract the seller must pay the minor back in full despite state of car -necessities: basic food, clothing, shelter etc. EX: 17 year old who rents an apartment -landlord overcharges him $100 -youngin runs out of money after first month -he can get out of it despite how much time paces since he is a minor -since it was a necessity, landlord is required to pay $100 back |
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Unenforceable Contract
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A contract that cannot be enforced because of a legal defense
-means you have a perfectly valid contract, but you can't go to court to enforce it EX: book -if a contract is required to be in writing under the Statute of Frauds but is not, the contract is unenforceable -parties may voluntarily perform a contract that is unenforceable EX: notes -you want to sell your terrible car for $2500 -offer to sell it to a poor college student -offer to sell it but there is nothing in writing -bring car and title, student brings $2500 cashiers check -over the weekend you decide not to sell the car -Monday comes, you tell the student you aren't selling it and since you never put anything in writing it is not enforceable -if you went through the exchange, then it is a perfectly valid contract but it is still not enforceable in court |
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Executed Contract
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A contract that is fully performed on both sides
"I executed the contract yesterday" - two meanings (1) I entered into the contract yesterday (2) to perform the contract promises An "executed contract" (noun) is a contract where all promises have been fulfilled |
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Executory Contract
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A contract that is not fully performed by one side of the contract
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Equity
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A doctrine that permits judges to make decisions based on fairness, equality, moral rights, and natural law
-courts of law and equity have been merged into one court -in an action "in equity" the judge decides the equitable issue -there is no right to a jury trial in an equitable action -sometimes applied in contract cases |
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Form Contracts
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Eventually, sellers began using form contracts that offered their goods to buyers on a take-it-or-leave-it basis
Majority of contracts in this country today are form contracts |
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Common Law of Contracts
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Developed from early court decisions that became precedent for later decisions
Majority of common law has been developed from state court decisions |
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UCC
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Uniform Commercial Code
-Creates a uniform system of commercial law among 50 states and normally takes precedence over the common law of contracts |
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Restatement of the Law of Contracts
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Is advisory only; is not law
a compilation of contract law principles as agreed upon by the drafters currently in its second edition -Restatement (Second) of Contracts lawyers and judges often refer to it for guidance in contract disputes because of its stature |
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Theories of Contract Law
Classical vs. Modern |
Classical vs. Modern laws of contracts:
Classical theory - parties were free to negotiate contract terms without government interference Modern theory - parties may negotiate contract terms subject to government regulations |
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Objective Theory of Contracts
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holds that the intent to enter into an express or implied-in-fact contract is judged by the reasonable person standard
-Would a hypothetical reasonable person conclude that the parties intended to create a contract after considering (1) the words and conduct of the parties and (2) the surrounding circumstances? under the objective theory of contracts, the subjective intent of a party to enter into a contract is irrelevant |
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Parties to a Contract
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Offeror - party who makes an offer to enter into a contract
Offeree - party to whom the offer is made |
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Formal and Informal Contracts
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Formal contract = requires a special form or method for creation
Informal contract = requires no special form or method for creation |
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Mutual Assent
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One party makes an offer that is accepted by another party
-without MA, no contract -may be expressly evidenced by the oral or written words of the parties or implied from the conduct of the parties |
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Agreement
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manifestation by two or more persons of the substance of a contract
-requires an offer and an acceptance process- -prior to entering into a contract: parties may engage in preliminary negotiations about price, time or performance, etc. -during negotiations: one party makes an offer (offeror-->offeree) -offer sets terms under which the offeree is willing to enter into the contract -offeree has the power to create an agreement by accepting offer |
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Offer
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manifestation by one party of a willingness to enter into a contract
three elements required (1) offeror must OBJECTIVELY INTEND to be bound by the offer (2) terms of the offer must be definite or reasonable CERTAIN (3) offer must be COMMUNICATED to the offeree |
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Objective Intent
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Intent to enter a contract is determined using the objective theory of contracts
-whether a reasonable person viewing the circumstances would conclude that the parties intended to be legally bound |
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Definiteness of Terms
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terms of an offer ust be definite so that the agreement between the parties can be determined
-terms of an offer must be clear enough for the offeree to be able to decide whether to accept or reject the terms of an offer -indefinite terms are not enforceable or determinable for an appropriate remedy for breach of contract by the courts Definite term requirements (1) identification of the parties (2) identification of the subject matter and quantity (3) consideration to be paid (time of performance) -complex contracts usually state additional terms |
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Implied Terms
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reasonable terms may be implied
-court can supply a missing term if a reasonable term can be implied definition of reasonable depends on circumstances; ex: -time or performance -price -parties or subject matter usually cannot be implied if an item/service is unique or personal (construction of a house/performance of a professional sports contract) |
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Communication
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offer must be communicated to the offeree from the offeror
-can be communicated to the offeree by a representative or an agent of the offeror |
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Advertisements
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notes:
under common law, ads were not offers, just an invitation to make an offer for something; only viewed as offers when they are targeted to a specific group of people; EX: -ad to give away fur to first five people -one of the first was a man & store would not include him in the offer because of gender -under law of contracts, he is included since the ad was geared towards a specific group of people -ads are protected by consumer statutes EX 2: -Ad for selling a car -person doesn't call but write letter of acceptance in mail, takes two days for the letter to reach the seller -acceptance began once the letter was postmarked (dispatched) -->As the offeror, you need to make sure that you have specific condition so that you have control With e-commerce, if you are ordering software and downloading it, before you finalize your acceptance of payment, you have to click I agree (click-wrap agreement) book: for the sale of goods, even at specific prices, generally are treated as invitations to make an offer |
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Rewards
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An offer to pay a reward (e.g., for the return of lost property or the capture of a criminal) is an offer to form a unilateral contract
to be entitled to collect the reward, the offeree must (1) have knowledge of the reward offer prior to completing the requested act and (2) perform the requested act |
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Auctions
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book: At an auction, the seller offers goods for sale through an auctioneer
auction with reserve: -offer: No -is an invitation to make an offer because bidder is the offeror, seller (the offeree) may refuse to sell the gods -an auction is with reserve unless otherwise stated auction without reserve: -offer: Yes -seller is the offeror and must sell the goods to the highest bidder (offeree) -Auction is without reserve only if it is stipulated as such notes: we are the offerors... with the hand goes down, that's the acceptance of the offer |
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Revocation
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Offeror revokes (withdraws) the offer any time prior to its acceptance by the offeree
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Rejecton
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Offeree rejects the offer by his or her words of conduct
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Counteroffer
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A counteroffer by the offeree creates a new offer and terminates the offeror's offer
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Destruction of Subject Matter
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the subject matter of an offer is destroyed prior to acceptance through no fault of either party
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Death of incompetency
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prior to acceptance of an offer, either the offeror or the offeree dies or becomes incompetent
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Supervening illegality
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prior to the acceptance of an offer, the object of the offer is made illegal by statute, regulation, court decision, or other law
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Lapse of time
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an offer terminates upon the expiration of a stated time in the offer
if no time is stated, the offer terminates after a "reasonable time" |
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Acceptance
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"manifestation of assent by the offeree to the terms of the offer in a manner invited or required by the offer as measured by the objective theory of contracts"
unilateral - accepted only by the offeree's performance of the required act bilateral - accepted by an offeree who promises to perform the requested act |
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Who can accept an offer?
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acceptance of the offer by the offeree creates a contract
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Mirror-image rule
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an offeree must accept the terms offered by the offeror to create a contract
-any change in terms by the offeree constitutes a counteroffer, not an acceptance -offeree's acceptance must be unequivocal (offeree must accept the terms stated) Examples: (1) "Okay, I'll take the car, but I sure wish you would make me a better deal" -enforceable contract -if certain conditions are added, acceptance is equivocal (2) "I accept, but only if you repaint the car red" -no acceptance |
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Silence as Acceptance
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silence not usually considered acceptance, even if stated by offeror
-intended to protect offerees from being legally bound to offers because they failed to respond silence DOES constitute acceptance if: (1) offeree has indicated silence as acceptance; "if you don't hear from me by friday, ship the order" (2) offeree signed an agreement indicating continuing acceptance until further notification; book of the month club memberships (3) prior dealings between parties indicating silence as acceptance (4) offeree takes the benefit of goods or services provided by the offeror even though he has the opportunity to reject them but fails to do so and knows the offeror expects to be compensated -homeowner who stands idly by and watches a painter whom she has not hired mistakenly paint her house owes him compensation |
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Time of acceptance; acceptance upon dispatch
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Acceptance upon dispatch/mailbox rule
-unless otherwise provided in the offer, acceptance is effective when it is dispatched by the offeree EX: ad car for sale -person doesn't call, but writes letter of acceptance in mail -takes two days for letter to reach offeror -acceptance is effective once letter was mailed (dispatched) |
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Proper dispatch rule
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acceptance must be properly addressed, packaged, and have prepaid postage or delivery charges to be effective when dispatched
-generally, improperly dispatched acceptances hare not effective until actually received by the offeror express authorization: stipulation in the offer that says the acceptance must be by a specified means of communication -if stipulated, and offeree uses an unauthorized means of communication, the acceptance is not effected most offers do not expressly specify the means of communications required for acceptance resulting in implied authorization -may be inferred from what is customary in similar transactions, usage of trade, or prior dealings between the parties |
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Consideration
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notes:
-benefit to promisor OR legal detriment to promisee -for a contract, consideration must be from both sides (both sides must give up or receive something) EX: McDonalds -both customer & McDonalds are promisors (both making promises) -customer's POV: customer promises to pay, McDonald's promises to make & provide food -McDonald's POV: they promise to give you food & you promise payment -benefit to customer is food -legal detriment to customer is loss of money -legal detriment to McDonald's for making food -benefit to McDonald's is money book: -def: something of legal value given in exchange for a promise -many forms, ex's: tangible payment (money, property), performance of an act (services), forbearance of a legal right (accepting an out of court settlement to drop a lawsuit), non-economic forms (refraining from "drinking, using tobacco, swearing etc. for a specified time period) -written contracts are supported by consideration |
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Requirements of consideration
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Legal Value
-contract is considered supported by legal value if (1) the promisee suffers a legal detriment or (2) the promisor receives a legal benefit McDonalds ex: legal detriments: -customer: payment obligation -McDonalds: providing food |
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Bargained-for exchange
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contract must arise from bargained-for exchange to be enforceable
-exchange that parties engage in that leads to an enforceable contract |
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Gift promises
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-also called gratuitous promises
-unenforceable because they lack consideration -to change a gift promise into an enforceable promise, promisee must offer to do something in exchange EX: mom promises son $100 and then rescinds the promise -son has no recourse because it was a gift promise that lacked consideration -if mom promised the money in exchange for an A in a class, the contract would be enforceable -completed gift promises cannot be rescinded for lack of consideration EX: mom promises to give daughter $100 and follows through -mom cannot recover money from daughter despite lacked consideration because it is a completed promise |
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Illegal Consideration
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contract cannot be supported by a promise to refrain from doing an illegal act
-contracts based on illegal consideration are void "I will burn your house down unless you agree to pay me $10,000" -not enforceable even if the threatened party agrees to make the payment |
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Illusory Promises/Contracts
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if one or both parties to a contract can choose not to perform their contractual duties, the contract lacks consideration
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Moral Obligation
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promise made out of a sense of moral obligation, honor, love, or affection lacks consideration
ex: deathbed promises |
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Preexisting Duty
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A promise to perform an act or do something that a person is already under and obligation to do lacks consideration
-unenforceable because no new consideration has been made Promise is enforceable if (1) the parties rescind the contract and enter into a new contract or (2) there are unforeseen difficulties. |
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Past Consideration
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a promise based on a party's past consideration cannot be the basis for a contract
EX: An employee has worked for the Acme Co for 30 years, is retiring. President of Acme says, "Because you were such a loyal employee, Acme will pay you a bonus of $25,000." The corporation refuses to pay the $25,000. Unfortunately for the employee, the contract is unenforceable because it is based on past consideration. |
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Settlement of Claims
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Accord & Satisfaction (compromise) is a compromise agreement in which the parties agree to settle a contract dispute and do so.
-accord=compromise agreement -satisfaction=if the accord is performed -promotes the voluntary settlement of disputed claims -saves judicial resources and serves the interests of the parties entering into the settlement |
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Promissory Estoppel or Detrimental Reliance
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BOOK:
-Policy-based equitable doctrine that prevents a promisor from revoking his or her promise even though the promise lacks consideration NOTES: -estoppel means stop (fancy old english word) -substitute for consideration -stops entity from denying their promise EX: -person A calls channel 9 and pledges a certain sum of money to a charity -A has car troubles the next day and doesn't have the money to pay pledge and decides that pledge was a gift -in the past, A would not have to pay his pledge and charitable institutions would not sue -today, the charitable institution can claim to count on a pledge for their business/charity -judge would rule that there was promissory estoppel Requirements 1. must be a clear and definite promise 2. promisee must justifiably rely on the promise 3. reliance normally must be of a substantial definite character 4. justice will be served by the enforcement of the promise (injustice will result if not enforced) |
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Contracts dealing with Minors
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NOTES:
voidable contracts -minors can disaffirm a contract entered into with adults with no special formalities at any time with adults until they reach the age of majority and for a reasonable time after (infancy doctrine) necessity vs. non-necessity -necessity (food, clothing, medical, shelter): can get out of contract but has to pay the reasonable value of what the minor used (not necessarily contract price); landlord overcharging example -non necessity: example of minor buying car, even if car is totaled, minor can disaffirm contract and be compensated 100% of money despite state of car |
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Adjudged Insane
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-an interested party may institute a legal action to have someone declared legally insane
-court will make that person a ward of the court and appoint a guardian to act on that person's behalf (given legal authority to enter into contracts for person) -contracts entered with those adjudged insane are void |
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Insane but Not Adjudged Insane
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-Contract is voidable by the insane person
-competent party cannot void the contract |
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Intoxicated Persons
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-contracts entered with intoxicated persons are voidable
-only voidable if the person was so intoxicated when the contract was entered into that he or she was incapable of understanding or comprehending the nature of the transaction -contract is not voidable by the other party if that person had contractual capacity |
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Fraud
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Elements
-misrepresentation (lie) of a fact & is material (important) -made with scienter or guilty mind (intent to deceive) -justifiable reliance (would a reasonable person have been fooled?) -injury to innocent party (economic injury) ex: selling a car with a broken odometer thousands of miles after odometer broke Types: 1. Inception- nature of act/ignorant of what he is signing (void) 2. Inducement- fraudulent reason behind contract 3. Concealment- material fact hidden 4. Silence as Misrepresentation- if nondisclosure causes bodily injury or death, fiduciary relationship (trust & confidence) between parties or federal and state statutes require disclosure |
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Usury Laws
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NOTES:
-state laws -first place in history that we have evidence about usury statutes: the code of Hammurabi (2000 BC), predating Rome & Greece -requirements: need to know lender, who borrower is & the purpose, or reason of loan Example: -let’s say that by law, the most you can charge is 15% interest on someone’s loan -a bank decides that to charge more than that, 18%; what would court do with this? -the court could rewrite it at 15%, so the rest of the loan would be 15% interest -or, since the person was cheated by 3%, the new interest rate would be 12% -or, the new loan would be at 0% interest BOOK: -set an upper limit on the annual interest rate that can be charged on certain types of loans -vary from state to state -protect borrowers from loan sharks, etc. |
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Sabbath Laws
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NOTES:
-found primarily in the South and the Bible Belt states -can't work/operate on Sundays -Demise: women started working & if both parents are working throughout the week, then you need K-Mart open on Sundays to get your shopping done -Car dealerships - all have an agreement amongst themselves to be closed on Sundays |
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Contracts to Commit Crimes
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void & illegal
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Contracts Contrary to Public Policy
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-illegal & void & unenforceable
-a contract whose objective is the commission of an act that is considered immoral by society is illegal notes: -public policy can be anything the judge wants it to be -in some states, this can be statutory, but in others it could be public policy -example: contract with someone to destroy evidence or sway jury, violation of public policy |
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Gambling Statutes
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Makes certain types of gambling illegal
Example: -states determine which activities under gambling are illegal, which ones are okay & if there are any exceptions to these activites -giveaways (cereal box offers) are sometimes illegal because you have to pay money to enter the contest, others specifically state if you want to enter freely by mailing in to get an entry form are okay |
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Difference between insurance & gambling
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Insurance protects from a risk that already exists
Gambling creates risk that wasn't there before |
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License Statutes
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Purpose:
-protect public (regulatory statutes) -another form of tax (revenue raising statutes) Examples: -protection: if health officials are not licensed, it definitely endangers the public, so that would be a big deal -tax: bike license and wanting to sell it without the license…would contract be okay? YES since Kirkwood just wants to get $10…it’s not for the purpose of protecting the public |
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Restrictive Covenant not to compete clauses
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-idea is to prevent people from getting trade secretes, etc. by preventing competition: goes against public policy of competition
-these can’t be stand alone…have to be with another contract and have consideration -see them with employment contract and geographical contract Example: employment -hair stylist decides they want to open their own salon who has a following of customers -decides to sell business, but then wants to open new salon across the street -buyer of salon won't get as many benefits since the seller's new salon would be so close -buyer of salon should add geographical distance stipulation in the contract -if someone is working for a company, the co isn't going to want them to start their own business doing the same thing, thereby competing against their old employers: will these non compete clauses be effective? -->Courts on East Coast tend to enforce these and West Coast don’t; based on the philosophies about work: whether or not the courts deem it fit to tie someone’s hands on the types of living they can do -->Example: H&R block - they aren't considered a tax school, but a taxing firm, so there is a clause in the employment contract that you can't do taxes with another company if you quit |
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Contracts in Restraint of Trade
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because the general economic policy favors competition, so contracts that unreasonably restrict trade are unlawful
ex: companies of a similar trade agreeing to fix prices of goods sold in a specific place |
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Exculpatory Clauses
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contractual provision that relieves one or both of parties to a contract from tort liability
-about signs and means of people getting out of legal responsibility for injury or losses while on or using someone else's property -do not need to be reciprocal -When is this this enforced? -->often found in leases, sales contracts, ticket stubs to sporting events (rain check), parking lot tickets, service contracts, recreational activity (parachute jumping=liability clause) -When is it not enforceable? -->willful conduct, intentional torts, fraud, recklessness, gross negligence -->generally, if both parties do not have equal bargaining power |
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Unconscionable Contracts
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NOTES:
-concept that gives judges a lot of power; judge can look at contract as a whole and if he thinks the contract as a whole is unconscionable, then he can throw it out Determining considerations of unconscionable contracts: -unequal bargaining power -uneducated; language or reading difficulties -poverty -elderly -fraud -hidden terms -high pressure sales Example: -urban ghetto where single parent needs a refrigerator to keep food in during the summer -parent goes to ghetto furniture store & pays $2000 for a $500 machine because she did not realize she was being cheated -free lawyer finds out & when court looked at the contract as a whole, determined that to uphold it would be unconscionable Book: since dominant parties sometimes take advantage of weaker parties, some otherwise lawful contracts are so unfair that they are unjust. -doctrine of unconscionability is developed to prevent the enforcement of unjust contracts Elements to prove contract unconscionable -parties possessed severely unequal bargaining power -dominant party unreasonably used such power to obtain oppressive or unfair contract terms -adhering party has no reasonable alternative -often involves door-to-door sales & sales over the phone |
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Remedies for Unconscionability
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-refuse to enforce contract
-refuse to enforce the unconscionable clause but enforce the remainder of the contract -limit the applicability of any unconscionable clause so as to avoid any unconscionable result |
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Unilateral Mistakes
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occur when only one party is mistaken about a material fact regarding the subject matter of a contract
legal consequences: 1. General Rule - mistaken party is not permitted to rescind the contract 2. Exceptions - mistaken party can rescind the contract is -other party knew or should have known of the mistake and took advantage of it -mistake occurred because of a clerical or mathematical error that was not the result of gross negligence -mistake is so serious that enforcing the contract would be unconscionable |
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Mutual Mistakes
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MM of fact - both parties are mistaken about the essence/object of a contract; either party may rescind the contract
MM of value - both parties know the object of a contract but are mistaken as to its value; neither party may rescind the contract |
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Undue Influence
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occurs when one person takes advantage of another person's mental, emotional, or physical weakness and unduly persuades that person to enter into a contract
-cannot be enforced Elements: -fiduciary or confidential relationship existed between the dominate and servient parties -dominant party unduly used their influence to persuade the servient party to enter into a contract Presumption -if there is a confidential relationship between persons, any contract by the servient party that benefits the dominatn party is presumed to have been entered into under undue influence -> position is a rebuttable presumption overcome through proper evidence -voidable by innocent party -wills are often challenged as having been made under undue influence |
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Duress
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-occurs when one party threatens to do some wrongful act unless the other party enters into a contract; unenforceable
types: -physical duress -extortion -economic duress: occurs when on party to a contract refuses to perform his contractual duties unless the other party pays an increased price, enters into a second contract, etc. duressed party must prove that he had no alternative |
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Writing requirement
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Statute of frauds requires that a number of contracts be in writing
-ensures that the terms of important contracts are not forgotten, misunderstood, or fabricated -generally, an Executory Contract that is not in writing even though the statute of fraud requires it to be is unenforceable |
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Sale of goods
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$500 was minimum for those sale of goods that needed proof of contract in writing
-now, some states have changed this to $5000 |
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Contracts involving interests in land
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leases (generally speaking), sales agreements, options to buy real estates, etc. must be in writing
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One year rule
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if contract can possibly be performed within a year, then they do not have to be in writing
if cannot possibly be completed in one year, then the contract must be in writing -intention: prevent disputes that may arise at end of long term contract -example: business guy has a successful career, daughter is a dumb, she finds a nice, smart guy, father is elated, says he will give the guy a job for life -does the contract have to be in writing? No, because the guy could possibly die within the next year, -is possible to be performed within a year therefore, the contract does not have to be in writing |
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Debt of others
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under suretyship (agreement where a person binds himself for another already bound, either in whole or in part, as for his debt, default or miscarriage)
-“If X does not pay, then Y will” -first you have to sue the person who made the contract, then you can go after the “Y” in the statement -example: 18 year old offers to purchase a car on credit, but has no credit history; dealer will agree to sell the car to her only if there is a guarantor; father signs guaranty contract & becomes responsible for any payments his daughter fails to make under co-signer; joint and several liability, example: two people are co-signing for a credit card application (husband and wife) -co-signer #1, the husband, lists his assets and his liabilities and then signs, same thing goes for wife, co-signer #2 -marriage goes downhill, and they divorce -judge says wife has to pay entire credit card bill in settlement -no payments, so visa sues only the husband; does only the husband have to pay? -when they co-signed, they made joint and several liability, so visa can only go after the husband -however, the husband can then turn around and go after the wife to get the money |
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Marriage
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-unilateral promise to pay money or property in consideration for a promise to marry must be in writing
-things in exchange for marriage other than marriage itself -ex: promise for marriage in exchange for deed to a ranch; prenuptial agreements |
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Non-possessory security interest in property
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mortgage
example: -person buys house, but bank has non-possessory security interest in the property; must make payments on it -person buys car; signs a security interest in the car by signing contract about car repossession; bank does not own car, so therefore it is non-possessory & must be in writing |
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Contract involving intangibles
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property cannot be seen or picked up, etc.
-ex: contracts involving stocks or patents |
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Past performance exception
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permits the specific enforcement of oral contracts for the sale of land when they have been partially performed to avoid injustice
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Main purpose exception
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permits enforcement of oral collateral promises if the main or leading purpose of the collateral promise is to benefit the guarantor
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Agents' contracts
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require that agents' contracts to sell real property be in writing to be enforceable
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Promissory Estoppel - under the Statute of Frauds
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-prevents the Statute of Frauds
-permits the enforcement of oral contracts that should otherwise be in writing under the Statute of Frauds to prevent injustice or unjust enrichment |
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Monetary Damages - five types
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1. Compensatory: most common; intention is to place the innocent party in the same position as if the contract was fully performed by restoring the "benefit of the bargain"; two types:
-actual damages: out-of-pocket expenses -pain and suffering: very subjunctive; normally comes down to acting ability of trial attorney 2. Consequential: indirect damages; consequence of of action, party is responsible for results; must show that both sides understood that breech A could lead to B to C (must be foreseeable) 3. Nominal: damages awarded against the breaching party even though the nonbreaching party has suffered no actual damages because of the breach -"moral victory": normally awarded in a small amount, but you can advertise it to show that you won *examples: -trade disparagement (form of defamation with people lying about your product) - you may send out info about the case and use that in advertising to help with your "defamed" reputation -celeb shoving paparazzi due to them being in celeb's face, paparazzi can sued him and decided that celeb was 25% at fault & owed 20 cents per push 4. Liquidated: agreement by the parties in advance that sets the amount of damages recoverable in case of breach; damages are lawful if they do not cause a penalty; example: prenuptial agreement - if marriage fails, we already agree to specific damages 5. Punitive: product liability cases; if it finds that the defendant's conduct was committed with intent or reckless disregard for human life -meant to punish defendants & send a message that such behavior is not tolerated -based on case law or statute whether punitive damages are even applicable -normally defendant is being punished more severely than other cases to set an example -in MO, clear and convincing evidence is needed in order to receive punitive damages (more than a preponderance of evidence) |
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Examples of Punitive Damages
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Stella vs. McDonald’s
-goes through drive through to get coffee but then hands hot coffee to little girl as they drive out -Stella then puts it between her legs, goes over a bump and gets badly burned…her medical bills were $800 -after receiving the bill, she asks for compensation from McDonald’s, but they say no -sues them on the basis of negligence, asking for a jury trial -jury sided with Stella, awarding her $200,000 in compensatory damages; $800 actual; $159,200 pain and suffering -found Stella to be 20% at fault, so actual amount was $40,000 -jury also asked the judge what the daily coffee sales revenue is for McDonald’s -judge got them the information, which resulted in an award to Stella of over 2 million dollars in punitive damages --this is big problem for restaurants because insurance does not cover punitive damages, --could be a big hit for the company BMW - repainted and passed off a car as new and without scratches, court determined that by being repainted, it lowered the worth from $40,000 to $36,000; supreme court remanded the case because the punitive damages resulting from initial case were too great, so no guidelines were given as expected State Farm vs. Campbell -set guidelines for punitive damages -Campbell passed six cars in a row on a two lane highway resulting in an accident -Campbell was responsible for numerous deaths -Campbell sued State Farm for not properly representing him in the case -State farm appealed and went all the way to the Supreme Court where the monetary compensation was reduced from 145 to 1 million dollars |
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What does the court look for when deciding justifiability for the defendant's conduct?
court reform |
- what they looked at was the reprehensibility of the defendant's conduct?
- what's the ration of punitive damages to compensatory damages? -court reform since Campbell vs. State Farm case: putting caps on punitive damages, enforcing special rules for what happens to the money -punitive damages are now taxable |
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Injunctive Order
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court order that prohibits a person from doing a certain act
-usually written in the negative -only limited by the law and by the judges imagination (ex: neighbor can ask for an injunction of neighbor's Christmas deco; lights must be off at a certain time, can only be so loud, etc.) |
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Specific Performance
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orders the breaching party to perform the acts promised in a contract
-courts may award this remedy of unique subject matter example: -you enter into a contract with an artist to paint a family portrait -when painting is half done, the artist moves to Tahiti to become a beach bum -may go to court to get an order SP, however, the judge technically cannot directly order him to paint the picture -instead, he will mandate that the artist may not do any other work until he finishes the a painting acceptable to the customer |
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Action for accounting
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seen in cases of divorce or where a business is splitting up
-situation: one partner does not trust the other & is thinking about hiding assets, court supervision over assets insures that all assets come out on the table & are split up fairly example: -two business partners have different personalities, but complement eachother well -partner A's wife is a CPA and was going through some papers and realizes the numbers do not match up -partner B handled the money, so it was evident that he had stolen money & hid things from partner A -partner A needs an accounting court order so that all funds and assets would be clarified and nothing would be overlooked/hidden |
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Tortes
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defined as any civil wrong, excluding breech of contract and crimes
-protects a variety of injuries and provides remedies for them -what opens you up to potential liability? -->driving a car, most common; followed by premises liability (someone getting hurt on your proprerty); followed by malpractice; small percentage are products liability & the rest are miscellaneous |
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Passive tobacco smoke
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if people smoke in the workplace & other workers later become diagnosed with emphysema, the workplace is now liable for that illness
-also, smoking in the home and with landlords not making sure previous tenants did not contaminate the apartment with carcinogens |
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Direct & Vicarious Liability
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Bob is shot at Hardees by Fred, who is responsible?
-Direct liability: Fred -Vicarious liability: who can is subsequently liable? Hardees is not liable unless Bob can prove two things - agency relationship & action within the scope of the agency |
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Intentional torts
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defendant possessed intent to dot he act which caused the plaintiff's injuries
-occurs when a person has intentionally committed a wrong against another person or their character or another person's property three types: 1. specific- you are walking across the street and your ex decides to run you over with his car and is successful 2. transferred- instead of hitting you he hits a person you are walking with 3. general intent- someone shoots a gun, not aiming at anything (good chance they might hit someone) |
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Battery
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unauthorized and harmful or offensive physical contact with another person
-can be direct (punching) or indirect (hit with purse) -interest protect is each person's reasonable safety -even if the action is meant to be a joke, it is considered battery if it is without permission -medical malpractice and rape are other forms of battery |
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Assault
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different definitions in tort law than in criminal law
-assault is any direct or indirect action that poses a threat or that results in reasonable apprehension or harm -actual physical contact is not required -usually is more than words (ex: step forward, making a fist) -reason: people should not have to feel threatened -must actually feel threatened: toddler saying to an adult "I'm gonna beat you up" is not considered threatening because it is a weaker party trying to threaten a more dominant party |
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False Imprisonment
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forcing someone to stay against their will
affects business in the area of shoplifting -how can you hold shoplifters for questioning without breaking the law? -shopkeeper's privilege (exception to false imprisonment)- if merchant has reasonable belief that a person is shoplifting, the merchant can detain the shoplifter in as peaceful a way as possible & call the police -if impolite, for example, by calling him a bad name, then he can sue you for defamation of character if wrong -must have Reasonable Grounds for the suspicion, suspects can only be detained for a Reasonable Time, and investigations must be conducted in a Reasonable Manner |
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Defamation
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Person's reputation is a valuable asset, so every person is protected from false statements made by others during their lifetime
-defamation of character: defendant made an untrue statement of fact (NOT OPINION) about the plaintiff and the statement was intentionally or accidentally published (can mean heard, saw, made known etc.) to third party -slander: oral defamatory statement -libel: false statement that appears in letter, newspaper, magazine, book, photo, movie, video, etc. -trade disparagement: defaming of product or company -fraud -interference: encouraging an entity to breech contract -stealing trade secrets -alienations of affections - wife sues husband's mistress for luring him away from her |
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Misappropriation of the Right to Publicity
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refers to appropriating another person's name or identity for commercial purposes without the person's consent
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Invasion of the Right to Privacy
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the unwarranted and undesired publicity of a private fact about a person
-fact does not have to be untrue -truth is not a defense |
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Intentional Infliction of Emotional Distress
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also known as tort of outrage
-involves extreme and outrageous conduct intentionally or recklessly done that causes severe emotional distress -some states require that the mental distress be manifested by physical injury |
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Malicious Prosecution
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successful defendant in a prior lawsuit can sue the plaintiff if the first lawsuit was frivolous
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Trespass to land
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interference tiwh an owner's right to exclusive possession of land
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Trespass to personal property
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occurs when one person injures another person's personal property or interferes with the person's enjoyment of his personal property
ex: breaking another's car window |
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Conversion of personal property
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occurs when a person deprives a true owner of the use and enjoyment of his or her personal property by taking over the property and exercising ownership rights over it
-also occurs when someone who originally is given possession of personal property fails to return it; ex: fails to return a borrowed car |
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Negligence
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unintentional tort, a person is liable for harm that is the foreseeable consequence of his or her actions
-defined as the omission of doing something which a reasonable man would do, or doing something which a reasonable man would not do Four elements: 1. defendant owed a duty of care to the plaintiff 2. defendant breached this duty 3. plaintiff suffered injury (damages) 4. defendant's negligent act was the proximate cause (legal cause) of the plaintiff's injuries; defendant is liable only for the foreseeable consequences of the negligent act |
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Duty (of care)
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refers to the obligation people owe to each other - that is, the duty not to cause any unreasonable harm or risk
each person owes a duty to drive his/her car carefully, not to shove people on escalators, not to leave skateboards on the sidewalk, etc. -courts decide whether duty is owed by applying reasonable person standard or reasonable profession standard |
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Breech of duty
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once court finds that a defendant actually owed the plaintiff a duty of care, it determines if a breach was made
-breach of duty is a failure to exercise care through an action (throwing lit cigarette on the forest ground causing a fire) or failure to act when necessary (firefighter refusing to put out forest fire) good samaritan statute - encourages people with medical training to stop and help without fear of legal action by comparing those with medical experience to what a reasonable person would do in that specific emergency situation |
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Proximate Cause
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aka probable cause
two parts: 1. "but for" clause - but for A happening, B would not have happen (too broad, could be accountable for anything) 2. foreseeability - asks the reasonable person if A happens, do you think B is possible? |
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Damages
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there has to be damages for a cause for action in order for negligence to occur
ex: highway & reckless driving |
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Contributory Negligence
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if plaintiff who is partially at fault for his own injury cannot recover against the negligent defendant
ex: religious cult laying on black pavement with black capes who are run over by kid who was seeing how fast his new car could go last clear chance rule: one major exception; defendant has a duty under the law to avoid the accident if at all possible |
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Comparative Negligence
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has in many states replaced the contributory negligence rule
-blame on both sides -jury assigns percentage of blame to each party so that the percentage the plaintiff is at fault can be deducted from the award -$100,000 worth of damages -plaintiff is 20% at fault so he receives 80% of damages, or $80,000 |
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Assumption of Risk
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assumes that the plaintiff had knowledge of the specific risk and voluntarily assumed that risk
-jet ski waiver form |
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Strict Liability
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liability without fault, a participant in a specific activity will be held liable for any injuries caused by the activity, even if he/she was not negligent
-certain activities that can place the public at risk of injury even if reasonable care is taken and the public should have some means of compensation if such injury occurs -strict liability is impost for abnormally dangerous activities: crop dusting, blasting, fumigation, burning of fields, storage of explosives, keeping wild animals as pets |
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Superseding, or intervening, Event
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a superseding event is an intervening event caused by another person that caused the plaintiff's injuries and relieves the defendant from liability
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Express Waranties
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an affirmation by a seller or lessor that the goods he or she is selling or leasing meet certain standards of quality, description, performance, or condition
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Basis of the Bargain
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buyers and lessees can recover for breach of an express if the warranty was a contributing factor--not necessarily the sole factor--that induced the buyer to purchase the product or the lessee to lease the product
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Statements of Opinion
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many express warranties arise during the course of negotiations between a buyer and a seller
-seller's statement of opinion or commendation of the goods does not create an express warranty |
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Damages recoverable for breach of warranty
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where there has been a breach of warranty, the buyer or lessee may sue the seller or lessor to recover compensatory damages
-the amount of recoverable compensatory damages is generally equal to the difference between (1) the value of the goods as warranted and (2) the actual value of the goods accepted at the time and place of acceptance. -a purchaser or lessee can recover for personal injuries that are caused by a breach of warranty |
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Implied warranty of merchantability
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implied by law in sales and lease transactions; requires that goods:
1. be fit for the ordinary purposes for which they are used. 2. be adequately contained, packages, and labeled 3. be of an even kind, quality, and quantity within each unit 4. conform to any promise or affirmation of fact made on the container or label 5. pass without objective in the trade 6. meet a fair or middle range of quality if the goods are fungible |
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Implied warranty of Fitness for Human Consumption
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warranty implied by law that food products are fit for human consumption
1. foreign substance test - a food is unmerchantable if a foreign object in the food caused the plaintiff's injury 2. Consumer expectation test - a food is unmerchantable is an object in the food that a consumer would not expect to be there caused the plaintiff's injury |
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Implied Warranty of Fitness for a Particular Purpose
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implied warranty by a seller or lessor that goods will meet the buyer's or lessee's expressed needs
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Warranty Disclaimers
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Express warranties - can be limited if the warranty and disclaimer can be reasonably construed with each other
Implied warranties -can be disclaimed by expressions like 'as is,' 'with all faults,' etc. -if the precedent language is not used, disclaimers of the Implied Warranty of Merchantability must specifically mention the term merchantability -may be oral or written -Implied Warranty of Fitness for a particular purpose may be disclaimed in general language, without specific use of the term fitness |
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Conspicuous Display of Disclaimer
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written disclaimers must be conspicuously displayed to be enforceable
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Full and limited warranties
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full warranty - guarantees free repair or replacement of a defective product; may have a time limit
limited warranty - limits scope of a full warranty in some way (ex: return of purchase price) |
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Product Liability
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persons injured by products, and heirs of persons killed by products, may bring tort actions to recover for
damages Six Aspects -Intent -Negligence -Strict Liability -Breach of Warranty -Breach of Implied Warranty -Statutory Violation |
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Aspects of Product Liability
-Intent |
example: someone goes into drug store & puts poison in tylenol on purpose
intentional tort on civil side good side to seek punitive damages |
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Aspects of Product Liability
-Negligence |
weren't careful enough when making product
ex: manufacturing, warning, engineering, ect. defect |
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Aspects of Product Liability
-Strict Liability |
if product leaves seller (who is in business of selling that product) and leaves in a defective state and is reasonably dangerous, then there will be strict liability against that seller for damages
-seller can be found strictly liable even though the seller exercised all possible care int he preparation and sale of the product -casual sales and transactions by nonmerchants are not covered (person selling a product to a neighbor is not strictly liable if product causes injury) -applies only to products, not services examples: -manufacture sends defected product to whole-seller, who sends it (unknowing of defective state), who sends it to retailer, who sends it to consumer who then opens it and gets hurt, then all stages of product selling have strict liability -in a medical operation that requires a blood transfusion, the operation would be the dominant element so strict liability would not apply |
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Aspects of Product Liability
-Breach of Warranty |
business who offered the warranty is responsible for the functionality and reliability of the goods for a set period of time
-ex: if June buys tires from a manufacture that expressly warrants them for 50,000 miles and one blows out after 20,000 miles, causing severe injury to June, she can recover personal injury damages from the manufacture due to the breach of warranty |
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Aspects of Product Liability
-Breach of implied warranty |
warranty for the product is implied, so if the product doesn't live up to one of the implied liabilities, then you can sue
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Aspects of Product Liability
-Statutory Violation |
many statutes and regulations, both federal and state, that legally enforce product safety
-if one of these are violated, company can be sued because they are breaking the law |
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Product Law in America compared Worldwide
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Product Law is American Law
-other places around the world hold people to be more personal responsible, so laws don't exist in those nations -good because our products are much safer, however they are also more expensive, needing more engineering, innovation, and safety requirements |
