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94 Cards in this Set
- Front
- Back
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Agency is defined as
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A relationship between a principal and an agent
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Define Agency Relationship
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Agent is authorized to act for and on behalf of the principal, who hires the agent to represent him or her
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Agency relationships are consensual relationships that can be formed by one of two methods, what are these?
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1) Informal Oral Agreement
2) Formal Written Contracts |
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An agency relationship exists only when
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The principal takes action to ask another individual to act on behalf of the principal
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When can an agency relationship be created?
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1) Only for lawful purpose
2) Almost anyone can act as agent |
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What are the four forms of authority that agency relationships can be created based on?
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1) Expressed agency (Agency by Agreement)
2) Implied Authority 3) Apparent Agency (Agency by Estoppel) 4) Ratification |
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Define expressed agency
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When parties form an agency relationship by making a written or oral agreement, most common type of agency
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If a principal agrees to hire no other agent for a period of time or until a particular job is done, the principal and agent have entered into a(n) _______
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Exclusive Agency Contract
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What are two examples of expressed agency and what are the exceptions to agency agreements in writing?
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Power of attorney, durable power of attorney, enter K that statue of frauds requires to be in writing, power of attorney
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Define power of attorney
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A document that gives an agent authority to sign legal documents on behalf of the principal
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Define durable power of attorney
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A written document, created by a principal, expressing his or her wishes for an agent's authority not to be affected by the principal's subsequent incapacity
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What is the main difference between implied agency and agency by estoppel?
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Key to agency by estoppel is third party
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Define agency by estoppel
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According to the principal's conduct, the agent has apparent authority to act; thus, the principal is estopped from denying the individual is an agent
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What are the two requirement for agency by ratification and what are the two additional requirements for ratification to be effective?
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1) Individual must misrepresent himself or herself as an agent for another party
2) The principal accepts or ratifies the unauthorized act 1) The principal must have complete knowledge of all material facts regarding the K 2) Principal must ratify the entirety of the agent's act. |
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Define the employer-independent contractor relationship
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A person who contracts with another to do something for him but who is not controlled by the other nor subject to the other's right to control with respect to his physical conduct in the performance of the undertaking
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What are the principal's duties to the agent?
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1) Duty of compensation
2) Duty of reimbursement and indemnification 3) Duty of Cooperation 4) Duty of safe working conditions |
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What are the agent's duties to the principal?
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1) Duty of loyalty
2) Duty of notification 3) Duty of performance 4) Duty of obedience 5) Duty of accounting |
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What are the principal's rights and remedies against the agent?
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1) Constructive trust
2) Avoidance 3) Indemnification 4) Contract, tort |
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What is constructive trust?
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An equitable trust imposed on one who wrongfully obtains or holds legal right to property he or she should not possess
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What are the agent's rights and remedies against the principal?
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1) Tort and Contract Remedies
2) Demand for an accounting 3) Specific performance |
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What is the equal dignity rule and when is it used?
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When express authority is granted for an agent to enter into a contract legally required to be in writing, most states require that the grant of authority also be in writing
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What are the two exceptions to the equal dignity rule?
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1) Executive officer
2) Presence of principal |
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Implied authority is most commonly applied in
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Custom of trade
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Identify the three classifications of the principal and define them
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1) Disclosed- Third Party knows principal exists and his identification
2) Partially Disclosed- Third party knows principal exists, ID unknown 3) Undisclosed- Third party does not know of principal |
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What liabilities are involved with the three classifications of principal disclosure?
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1) Disclosed- Principal liable, agent not liable
2) Partially Disclosed- Principle liable, agent possibly liable 3) Undisclosed- Principal liable, agent liable IN ALL CASES, PRINCIPAL LIABLE IN SOME CAPACITY |
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In the case of the third party believing the agent has authority, who is liable? and how are they liable under each of the principal classifications?
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Agent is liable, principal is not.
1) Undisclosed- liability based on breach of K 2) Partially Disclosed or Disclosed- Liability based on breach of warranty and not breach of K |
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In the case of the third party believing the agent is mistaken about his authority, who is liable?
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Neither the agent nor the principal
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If the agent commits tortious conduct, who is liable?
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Agent always liable, principal generally liable
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When is the principal liable for tortious conduct?
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1) Principal authorizes conduct
2) Principal ratifies conduct 3) Fails to provide proper tools, instructions, employ competent agents, and so on 4) Respondeat superior hold principal/employer liable vicariously for acts of the agent 5)Intentional torts and respondeat superior -Generally, liability results because of negligent hiring or retention |
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What is respondeat superior in terms of agency relationships and what is the complication involved with it?
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hold principal/employer liable vicariously for acts of the agent, complications arise from Deviations from employer’s mission, however Employer has right of indemnification from employee
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What happens in the case of agent misrepresentation? Who is liable?
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Principal liable if the principal authorized the act
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In general, who is liable when an independent contractor commits tortious conduct?
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Principal is not liable because the agent is not an employee so respondeat superior does not apply
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What is the exception the independent contractor tortious conduct rule?
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Under the doctrine of strict liability, the principal is liable to the agent’s acts if the agent engaged in an ultra-hazardous activity
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In the case of an agent committing a crime, who is liable why?
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Agent is liable, unless principal authorized the act. Because of intent.
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Upon termination of an agency relationship, notice given must fit what two characteristics?
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Actual and constructive
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What sorts of events qualify an agency relationship termination as termination by acts of the parties?
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Lapse of time
Fulfillment of purpose Occurrence of a specific event Mutual agreement of the parties Revocation of authority Renunciation by the agent Agencies coupled with an interest |
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What sorts of events qualify an agency relationship termination as termination by operation of law?
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Death
Insanity Bankruptcy Changed circumstances Change in the law Impossibility Disloyalty of agent War |
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In contracts between merchants, added terms are ok unless?
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1) Offer expressly limits acceptance to offeror’s terms
2) Additional terms materially alter the original offer 3) Objection within a reasonable time |
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How does contract modification relate to consideration?
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No consideration exists, must be made in good faith
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What are the two exceptions to the statute of frauds in sales and lease contracts?
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1) Sale of $500 or less
2) Lease of $1000 or less |
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What is the parole evidence rule?
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When a written agreement exists that is intended to be a final expression, neither party can provide additional evidence that alters or contradicts the written contract
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What are the exceptions to the parole evidence rule?
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Consistent additional terms
Course of performance Course of dealing Usage of trade |
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What is the plain meaning rule?
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When interpreting words in a contract, these should be given their ordinary meaning
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What is unconscionability?
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When one party has so much more bargaining power than another party that he or she dictates the terms of an agreement and eliminates the other party's free will
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If unconscionability exists, what happens to the commercial contract?
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Refuse to enforce contract or only enforce some parts
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What are the chapters of bankruptcy?
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Chapter 7 Liquidation
Chapter 11 Reorganization (liquidation possible) Chapter 12 Farm Bankruptcy Chapter 13 Consumer Bankruptcy |
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What is an automatic stay?
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After bankruptcy has been filed, the automatic stay acts as a shield to prevent creditors from taking further action against the debtor or his or her property
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What is a secured party?
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The party who holds the interest in the secured property
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Most exceptions to bankruptcy discharge are given to whom?
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Debts to those who are in a weak bargaining position with the debtor
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Possible objections to bankruptcy discharge include what?
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1) Debtor has concealed or destroyed property in an attempt to defraud the creditors
2) Debtor has concealed or destroyed financial records 3) Debtor fails to account for a loss of assets |
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What is a reaffirmation agreement?
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An agreement in which the debtor agrees to pay the debt even though it could be discharged
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What is cramdown?
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Court confirms Chapter 11,12, or 13 plan despite creditor opposition
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What is the test of voluntary or involuntary bankruptcy?
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Is debtor paying debts as they come due
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Define preferential payments (preferences) in bankruptcy
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3 mos, 2 yrs reachback if insiders
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Define fraudulent transfers (conveyances) in terms of bankruptcy
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Actual or constructive fraud, but all made with intent to defraud creditors and/or provide less than reasonable equivalent value of assets assets
1 year reachback |
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Define identification
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Gives buyer the right to insure the goods and title and ROL cannot pass until goods are identified.
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What are the different times when the passing of title can occur?
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Shipment- when goods are delivered to the carrier
Destination- when the goods are tendered at the destination Delivery without movement- if document of title exists, when title is delivered or if no document of title, but identified, when and where contract is made |
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Define good, void, and voidable title
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Good title- Title that is acquired from someone who already owns the goods free and clear
Void title- Not true title. Someone who purchases stolen goods, has void title. Voidable title- The contract between the original parties would be void but the goods have already been sold to a third party |
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When passing a void title, what is irrelevant?
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Good faith
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What is the entrustment rule?
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If an owner entrusts the possession of goods to an merchant who deals in goods of that kind, the merchant can transfer all rights in the goods to a buyer in the ordinary course of business.
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Recourse under the UCC depends on what four concepts?
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1) Ownership- When does title transfer?
2) Encumbrance- When can you sell or use the goods for collateral? 3) Loss- Who is responsible for risk of loss? 4) Insurable interest- When can you insure the goods? |
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What is a simple delivery contract?
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Occurs when the purchased goods are transferred to the buyer from the seller at either the time of the sale or some time later by the seller's delivery
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What is a common-carrier delivery contract?
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Occurs when the goods are delivered to the buyer via a common carrier, such as a trucking line
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What is a goods-in-bailment contract?
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Occurs when the purchased goods are in some kind of storage under the control of a third party, such as a warehouseman.
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What is a conditional sales contract?
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Occurs when the sale itself is contingent on approval
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How title, risk of loss, and insurable interest work in a simple delivery contract?
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1) Title transfers to the buyer on the goods' being identified to the contract (K is executed)
2) Risk of loss transfers to the buyer when the buyer takes possession 3) Insurable interest is created in the buyer when the goods are identified to the contract |
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What does FOB mean?
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Free on board, the selling price includes transportation costs, and the seller carries the risk of loss to either the place of shipment or the place of destination
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What does FAS mean?
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Free alongside, the seller, at seller's expense, delivers the goods alongside the ship before the risk passes to the buyer
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What is CIF?
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Cost, insurance, and freight. The seller puts the goods in possession of a carrier before the risk passes to the buyer. Contracts are usually shipment contracts rather than destination contracts
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What is delivery ex-ship?
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Risk of loss passes to the buyer when the goods leave the ship
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If a goods-in-bailment contract exists and the terms are negotiable, when do title and risk of loss transfer from the seller to the buyer?
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As soon as the negotiable instrument is endorsed
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If a goods-in-bailment contract exists and the terms are nonnegotiable, when do title and risk of loss transfer?
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Title passes with document, risk of loss transfers when bailee is notified and reasonable time
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If a goods-in-bailment contract exists but no document exists, when do title and risk of loss transfer?
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Title passes on signing of K, but risk of loss does not transfer until bailee is notified and acknowledges
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What is a sale-on-approval contract, and under it when do title and risk of loss transfer?
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A conditional contract, the seller allows the buyer to take possession of the goods before deciding whether to complete the K by making the purchase, title and risk of loss remain with the seller until the buyer notifies the seller about the approval of the contract
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What is a sale-on-return contract, and under it when do title and risk of loss transfer?
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A conditional contract, the buyer and seller agree that the buyer may return the goods at a later time, title and risk of loss depend on whether the goods are in bailment, delivered by common carrier, or delivered by the seller himself.
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What is the good faith requirement of sales and lease contracts?
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Honesty in fact and observance of fair dealing
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What are the seller obligations of a sales or lease contract according to the UCC?
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1) Perfect tender of conforming goods
2) Place of Delivery |
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What is tender of delivery/ perfect tender rule?
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Requirement that the seller/lessor have and hold conforming goods at the disposal of the buyer/lessee and give the buyer/lessee reasonable notification to enable him or her to take delivery
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What are the exceptions to the perfect tender rule and describe them
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1) Usage of trade- Any practice that members of an industry expect to be part of their dealings
2) Agreement of parties 3) Cure- Fix problems with nonconforming goods, must exercise within contract time for performance or under reasonable grounds 4) Destroyed goods, either total or partially 5) Substantial impairment- installment K or buyer revokes goods 6) Commercial impracticability- delay in delivery or non delivery not a beach in circumstances where performance impracticable because a contingency has occurred not contemplated when parties signed K |
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If nonconforming goods are unacceptable because they are only partially destroyed, what are the buyers two remedies?
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1) Treat the contract as void
2) Ask the seller for a reduction of the contract price and then accept the damaged goods |
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What is the basic obligation of buyers according to the UCC?
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Inspection, payment, and acceptance
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What is anticipatory repudiation in terms of performance and obligation of K's, and how are they treated?
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Actions that reasonably indicate a rejection of an obligation, can be treated as a breach of K or can wait to see if they will perform
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What are the seller's remedies to a buyer's breach if the seller is in possession of the goods?
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1) Right to cancel K
2) Right to withhold delivery 3) Right to resell or dispose of goods 4) Right to recover the purchase price, where seller is unable to sell or dispose 5) Right to recover damages |
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If the seller is in possession of unfinished goods, and the buyer breach's the K, what are the seller's options?
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1) Cease manufacture
2) Finish choice made in good faith |
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Atropine: General effects mnemonic
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Blocks DUMBBELSS
D: Diarrhea U: Urination M: Miosis B: Bronchospasm B: Bradycardia E: Excitation of skeletal muscle L: Lacrimation S: Salivation S: Sweating |
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If the buyer breaches the contract and the goods are in transit, what are the requirements for the seller to stop delivery of goods?
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1) Timely notification
2) Solvency |
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What are the seller's remedies upon buyer's breach of contract if the goods are in the buyer's possession?
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1) Right to recover purchase price
2) Right to reclaim |
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If a seller refuses to deliver, what are the buyer's remedies he may execute?
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1) Right to cancel the K
2) Right to recover the goods 3) Specific performance 4) Right of cover 5) Right to recover damages |
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When can a buyer not enforce specific performance if the seller refuses to deliver?
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If they can't identify specific performance
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If the seller provides nonconforming goods, what are the buyer's remedies?
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1) Right to reject
2) Right to recover damages for acceptance of nonconforming goods |
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What are the exceptions to liability in an undisclosed agency relationship?
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1) K expressly excludes principal from contract
2) Agent enters into K that is a negotiable instrument 3) 3P enters into a K with the agent such that the performance of the agent is required 4) Principal or agent knows a 3P would not enter into a K with the principal if the principal's identity were disclosed but agent enters into K anyway |
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What do articles 2 and 2(A) of the UCC respectively focus on?
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Article 2- K's for the sale of goods
Article 2A- K's for the lease of goods |
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What are the "open terms" in a sales or lease K and how does the UCC say they should be filled if left open?
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Price- "Reasonable price" supplied at time of delivery
Payment- Due at time and place at which the buyer is to receive the goods Delivery- Place for delivery is seller's place of business Time- K must be performed w/in a reasonable time Duration- The party that wants to terminate an ongoing contract must use good faith and give reasonable notification Quantity- Courts generally have no basis for determining a remedy |
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What is a firm offer?
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An offer made in writing and giving assurances that it will be irrevocable for a period of time not longer than three months despite a lack of consideration for the irrevocability
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