Business Law

Front 1

Mutual/Bilateral mistake

Back 1

When both parties are mistaken as to an existing material fact- a fact important to the subject matter of the contract. The contract is voidable by the adversely affected party and can be rescinded or canceled- contract will be unenforceable with the mistake.

Front 2

Mutual Mistake

Back 2

-Both parties are mistaken as to a material fact
- The contract is not what the parties bargained for - courts will not enforce the contract.
-no "meeting of the minds"

Front 3

Mutual mistake of value

Back 3

Courts will enforce the contract with the mistake

Front 4

Sherwin Vs. Walker

Back 4

- 1600's English Case
- Involved the sale of a cow-sold as a bearing cow, but ended up not being able to procreate.
-courts ruled that the sale was voidable, since the cow was not able to bear calfs
-courts will always test subject matter first

Front 5

Raffles Vs. Wichelhaus

Back 5

- An English case in 1864
-Wichelhaus agreed to buy a shipment of Surat cotton form Raffles, to arrive 'Peerless form Bombay'.There were two ships named Peerless sailing from Bombay India. Wichelhaus was reffering to the ship sailing in October and Raffles meant the ship traveling in December.
- courts ruled in favor of Wichelhaus(who refused to take the order), because there was a mistake of subject matter

Front 6

Elements necessary to prove fraud

Back 6

-Misrepresentation of fact
-reliance
- damage
- intent to deceive

Front 7

If one misrepresents the law, is one guilty of fraud?

Back 7

No, unless it is a professional...ie Real Estate Agent, Lawyer, Stock Broker, Judge...ect.

Front 8

Can silence be considered fraud?

Back 8

Yes. Generally neither party to a contract has a duty to come forward and disclose facts, however when the parties are in a fiduciary relationship, there is a duty to disclose material facts

Front 9

What remedy is given by the courts if undue influence or duress is used?

Back 9

Courts would use the remedy of:
Rescission; To undue the contract
Restitution; Consideration of exchange must be returned

Front 10

Undue Influence

Back 10

-Special relationship between the parties, and one that used the relationship to another into the contract
- A contrat entered into with undue influence is voidable

Front 11

Adhesion Contract

Back 11

-A "Take it or leave it" contract
-No negotiation between the parties
-If a vague or ambiguous question term is found, courts will construe that term against the party that wrote the contract, and the party signing the contract would prevail

Front 12

5 types of contracts that require writing

Back 12

-Contracts that involve an interest in Real Estate(Sale of land, Gift of land, Lease , Life Estate, Life Estate por atrie vie)
-One year rule(contracts that cannot possibly be completed in one year)
-Collateral Promises(Promise to pay the debt of another)
-Promises of consideration of marriage(Dowry, Prenup, Postnup)
- Contracts for the sale of goods of $5,000 0r more

Front 13

What elements are required to meet the requirements for the sale of goods?

Back 13

-Identify subject Matter
-Quantity
-Signed by the party to be charged

Front 14

The Parol Evidence Rule

Back 14

-If the court finds that the parties intended their written contract to be a complete and final statement of their agreement , then it will not allow either party to present parol/oral evidence
EXCEPTIONS:
-Evidence that will explain an ambiguous term
-Subsequent modifications
-Evidence to show fraud, duress, or undue influence

Front 15

Incidental Beneficiary

Back 15

The benefit they receive from a contract between two parties is unintentional, so an incidental beneficiary cannot sue to enforce the contract; they have no rights

Front 16

Donee Beneficiary

Back 16

A type of intended beneficiary . When a contract is made for the express purpose of giving a gift to a third party, the third party(the donee beneficiary) can sue the promisor directly to enforce the promise

Front 17

Creditor Beneficiary

Back 17

Contract is created to extinguish debt

Front 18

Condition Precedent

Back 18

A future event must occur before a party becomes obligated under contract

Front 19

Condition Concurrent

Back 19

Simultaneous exchange of events..parties must perform their respective duties at the same time. Ex. Escrow

Front 20

Condition Subsequent

Back 20

When a condition operates to terminate a party's absolute promise to perform; future event that will terminate a party's continued performance under the contract. "So long as" or "until" words normally used

Front 21

Satisfaction of a party

Back 21

-Satisfaction can be made a condition in a contract
-If it's personal courts will use a subjective test
-If not personal in nature, then courts will use an objective test

Front 22

Novation

Back 22

-A Discharge by agreement
-Substitution of a new/3rd party into a contract; all parties must agree, and the party that is taken out of the contract is no longer liable

Front 23

Commercial Impracticability

Back 23

Performance can be completed but is an extreme financial burden on one of the parties; it is significanltey more difficult or costly than originally contemplated at the time the contract was formed.

Front 24

Frustration of Purpose

Back 24

Can be completed, but involves an event that decreases the value of what a party receives under the contract

Front 25

Kings of Coronation Case

Back 25

When Edward the 7th was going to be coronated King of England, he became ill, and the coronation had to be postponed. Many people who had rented hotel rooms around the palace to watch the coronation, sued to get their money back... they won on the basis of 'Frustration of Purpose'

Front 26

Compensatory Damage

Back 26

-Damages to compensate for the loss of bargain
-Measurement for recovery in sale of goods is the difference between the contract price and the current market price

Front 27

Compensatory Damages in a construction contract

Back 27

-Before performance has begun; Loss of profit- Contract Price minus the cost of labor
-During Performance; A profit plus labor and materials spent to date
-Substantial Performance; Contract price minus the cost to complete

Front 28

Consequential Damages

Back 28

-Foreseeable special damages as a result of the breach of contract
-can be negotaible

Front 29

Hadley V. Baxendale

Back 29

in

Front 30

Punitive Damages

Back 30

-Punishes individuals for malicious conduct
-Exemplary damages; designed to set an example for society

Front 31

Nominal Damages

Back 31

-Breach of contract with no actual damage sustained
- Damage may be as little as $1

Front 32

Mitigation of Damages

Back 32

-Non-breaching party always has a duty to mitigate
-Mitigate is to keep the damages down to a minimum

Front 33

Liquidated Damage

Back 33

-Amount stated in the body of the contract
-If a breach occurs that amount will be paid
-Found in two types of contracts; Construction and New Business- because consequential damages are not recoverable; loss is not foreseeable

Front 34

Equitable Remedies

Back 34

-Rescission;Undue a contract
-Restitution; Giving back consideration exchange
-Reformation; Courts will re-write a contract that is imperfectly written
-Implied in Law; No agreement the court will create a contract to avoid unjust enrichment (Quantum Meruit)