Business Law Exam #2

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product liability

Back 1

the liability of manufacturers, sellers, and others for the injuries caused by defective products

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negligence

Back 2

a tort related to defective products in which the defendant has breached a duty of care and caused harm to the plaintiff

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intentional misrepresentation (fraud)

Back 3

a tort in which the seller or lessor fraudulently misrepresents the quality of a product and a buyer is injured thereby

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strict liability

Back 4

a tort doctrine that makes manufacturers, distributors, wholesalers, retailers, and others in the chain of distribution of a defective product liable for the damages caused by the defect, irrespective of fraud

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chain of distribution

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all manufacturers, distributors, wholesalers, retailers, lessors and subcomponent manufacturers involved in a transaction

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punitive damages

Back 6

monetary damages that are awarded to punish a defendant who either intentionally or recklessly injured the plaintiff

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product defect

Back 7

something wrong, inadequate, or improper in the manufacture, design, packaging, warning or instructions about a product

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defect in manufacture

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a defect that occurs when a manufacturer fails to (1) properly assemble a product, (2) properly test a product, or (3) adequately check the quality of the product

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defect in design

Back 9

a defect that occurs when a product is improperly designed

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crashworthiness doctrine

Back 10

a doctrine that says automobile manufacturers are under a duty to design automobiles so they take into account the possibility of harm from a person's body striking something inside the automobile in the case of a car accident

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failure to warn

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a defect that occurs when a manufacturer does not place a warning on the packaging of products that could cause injury if the danger is unknown

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defect in packaging

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a defect that occurs when a product has been placed in packaging that is insufficiently tamperproof

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failure to provide adequate instructions

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a defect that occurs when a manufacturer does not provide detailed directions for safe assembly and use of a product

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generally known dangers

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a defense which acknowledges that certain products are inherently dangerous and are known to the general population to be so

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government contractor defense

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a defense which provides that contractors that manufacture products to government specifications are not usually liable if such a product causes injury

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abnormal misuse

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a defense that relieves a seller of product liability if the user abnormally misused a product

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supervening event

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an alteration or a modification of a product by a party in the chain of distribution that absolves all prior sellers from strict liability

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statute of limitations

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a statute that requires an injured person to bring an action within a certain number of years from the time that he or she was injured by a defective product

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statute of repose

Back 19

a statute that limits the seller's liability to a certain number of years from the date when the product was first sold

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intellectual property

Back 20

patents, copyrights, trademarks and trade secrets

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trade secret

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a product formula, pattern, design, compilation of data, customer list, or other business secret

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Economic Espionage Act

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a federal statute that makes it a crime for any person to convert a trade secret for his or her own or another's benefit, knowing or intending to cause injury to the owners of a trade secret

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Federal Patent Statute

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a federal statute that establishes the requirements for obtaining a patent and protects patented inventions from infringement

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patent

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a grant by the federal government upon the inventor of an invention for the exclusive right to use, sell, or license the invention for a limited amount of time

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U.S. Court of Appeals for the Federal Circuit

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a special federal appeals court that hears appeals from the Board of Patent Appeals and Interferences and federal courts concerning patent issues

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utility patent

Back 26

a patent that protects the functionality of an invention

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one-year "on sale" doctrine (public use doctrine)

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a doctrine that says a patent may not be granted if the invention was used by the public for more than one year prior to the filing of the patent application

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provisional application

Back 28

an application that an inventor may file with the PTO to obtain three months to prepare a final patent application

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patent infringement

Back 29

unauthorized use of another's patent. A patent holder may recover damages and other remedies against a patent infringer.

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design patent

Back 30

a patent that may be obtained for the ornamental nonfunctional design of an item

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copyright

Back 31

a legal right that gives the author of qualifying subject matter, and who meets other requirements established by copyright law, the exclusive right to publish, produce, sell, license, and distribute the work

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Copyright Revision Act

Back 32

a federal statute that (1) establishes the requirements for obtaining a copyright and (2) protects copyrighted works from infringement

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copyright infringement

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an infringement that occurs when a party copies a substantial and material part of a plaintiff's copyrighted work without permission. A copyright holder may recover damages and other remedies against the infringer.

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fair use doctrine

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a doctrine that permits certain limited use of a copyright by someone other than the copyright holder without the permission of the copyright holder

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No Electronic Theft Act (NET Act)

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a federal statute that makes it a crime for a person to willfully infringe on a copyright

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Digital Millenium Copyright Act (DMCA)

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a federal statute that prohibits unauthorized access to copyrighted digital works by circumventing encryption technology or the manufacture and distribution of technologies designed for the purpose of circumventing encryption protection of digital works

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mark

Back 37

any trade name, symbol, word, logo, design, or device used to identify and distinguish goods of a manufacturer or seller or services of a provider from those of other manufacturers, sellers, or providers

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Lanham (Trademark) Act

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a federal statute that (1) establishes the requirements for obtaining a federal mark and (2) protects marks from infringement

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(R)

Back 39

a symbol that is used to designate marks that have been registered with the U.S. Patent and Trademark Office

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TM

Back 40

a symbol that designates an owner's legal claim to an unregistered mark that is associated with a product

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SM

Back 41

a symbol that designates an owner's legal claim to an unregistered mark that is associated with a service

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trademark

Back 42

a distinctive mark, symbol, name, word, motto, or device that identifies the goods of a particular business

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service mark

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a mark that distinguishes the services of the holder from those of its competitors

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certification mark

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a mark that certifies that a seller of a product or service has met certain geographical location requirements, quality standards, material standards, or mode of manufacturing standards established by the owner of the mark

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collective membership mark

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a mark that indicates that a person has met the standards set by an organization and is a member of that organization

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distinctive

Back 46

being unique and fabricated

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secondary meaning

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a brand name that has evolved from an ordinary term

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trademark infringement

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unauthorized use of another's mark. The holder may recover damages and other remedies from the infringer.

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generic name

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a term for a mark that has become a common term for a product line or type of service and therefore has lost its trademark protection.

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Federal Trademark Dilution Act (FTDA)

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a federal statute that protects famous marks from dilution, erosion, blurring or tarnishing

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legally enforceable contract

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a contract in which if one party fails to perform as promised, the other party can use the court system to enforce the contract and recover damages or other remedies

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offeror

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the party who makes an offer to enter into a contract

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offeree

Back 53

the party to whom an offer to enter into a contract is made

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common law of torts

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contract law developed primarily by state courts

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Uniform Commercial Code (UCC)

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a comprehensive statutory scheme that includes laws that cover aspects of commercial transactions

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Restatement of the Law of Contracts

Back 56

a compilation of model contract law principles drafted by legal scholars

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objective theory of contracts

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a theory that says the intent to contract is judged by the reasonable person standard and not by the subjective intent of the parties

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electronic commerce (e-commerce)

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the sale and lease of goods and services and other property and the licensing of software over the Internet or by other electronic means

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electronic contract (e-contract)

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a contract that is formed electronically

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bilateral contract

Back 60

a contract entered into by way of exchange of promises of the parties; "a promise for a promise"

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unilateral contract

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a contract in which the offeror's offer can be accepted only by the performance of an act by the offeree, a "promise for an act"

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formal contract

Back 62

a contract that requires a special form or method of creation

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informal contract (simple contract)

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a contract that is not formal. Valid informal contracts are fully enforceable and may be sued upon if breached.

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valid contract

Back 64

a contract that meets all the essential elements to establish a contract; a contract that is enforceable by at least one of the parties

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void contract

Back 65

a contract that has no legal effect; a nullity

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voidable contract

Back 66

a contract in which one or both parties have the option to void their contractual obligations. If a contract is voided, both parties are released from their contractual obligations.

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unenforceable contract

Back 67

a contract in which the essential elements to create a valid contract are met but there is some legal defense to the enforcement of the contract

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executed contract

Back 68

a contract that has been fully performed on both sides; a completed contract

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executory contract

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a contract that has not been fully performed by either or both sides

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express contract

Back 70

an agreement that is expressed in written or oral words

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implied-in-fact contract

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a contract in which agreement between parties has been inferred by their conduct

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quasi-contract (implied-in-law contract)

Back 72

an equitable doctrine whereby a court may award monetary damages to a plaintiff for providing work or services to a defendant even though no actual contract existed. This doctrine is intended to prevent unjust enrichment and unjust detriment.

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equity

Back 73

a doctrine that permits judges to make decisions based on fairness, equality, moral rights, and natural law

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agreement

Back 74

the manifestation by two or more person of the substance of a contract

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offer

Back 75

the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it

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implied term

Back 76

a term in a contract that can reasonably be supplied by the courts

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advertisement

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an invitation to make an offer or an actual offer

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reward

Back 78

an award given for performance of some service or attainment. To collect a 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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auction with reserve

Back 79

an auction in which the seller retains the right to refuse the highest bid and withdraw the goods from sale. Unless expressly stated otherwise, an auction is an auction with reserve.

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auction without reserve

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an auction in which the seller expressly gives up his or her right to withdraw the goods from sale and must accept the highest bid

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revocation

Back 81

withdrawal of an offer by the offeror that terminates the offer

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rejection

Back 82

express words or conduct by the offeree to reject an offer. This terminates the offer.

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counteroffer

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a response by an offeree that contains terms and conditions different from or in addition to those of the offer. This terminates the previous offer.

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supervening illegality

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the enactment of a statute, regulation, or court decision that makes the object of an offer illegal. This action terminates the offer.

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lapse of time

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a stated time period after which an offer terminates. If no time is stated, an offer terminates after a reasonable time.

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acceptance

Back 86

a 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

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mirror image rule

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a rule which states that for an acceptance to exist, the offeree must accept the terms as stated in the offer

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acceptance-upon-dispatch rule (mailbox rule)

Back 88

a rule which states that an acceptance is effective when it is dispatched, even if it is lost in transmission

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proper dispatch

Back 89

the proper addressing, packaging, and posting of an acceptance

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implied authorization

Back 90

a mode of acceptance that is implied from what is customary in similar transactions, usage of trade, or prior dealings between the parties.

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express authorization

Back 91

a stipulation in the offer that says the acceptance must be by a specified means of communication

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consideration

Back 92

something of legal value given in exchange for a promise

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legal value

Back 93

support for a contract when either (1) the promisee suffers a legal detriment or (2) the promisor receives a legal benefit

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bargained-for exchange

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exchange that parties engage in that leads to an enforceable contract

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gift promise (gratuitous promise)

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a promise that is unenforceable because it lacks consideration

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illegal consideration

Back 96

a promise to refrain from doing an illegal act. Such a promise will not support a contract.

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illusory promise (illusory contract)

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a contract into which both parties enter but in which one or both of the parties can choose not to perform their contractual obligations. Thus, the contract lacks consideration.

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preexisting duty

Back 98

something a person is already required to do

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past consideration

Back 99

a prior act or performance. Past consideration will not support a new contract. New consideration must be given.

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output contract

Back 100

a contract in which a seller agrees to sell all of its production to a single buyer

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requirements contract

Back 101

a contract in which a buyer agrees to purchase all of its requirements for an item from one seller

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best-efforts contract

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a contract which contains a clause that requires one or both of the parties to use their best efforts to achieve the objective of the contract

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accord

Back 103

an agreement whereby the parties agree to accept something different in satisfaction of the original contract

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satisfaction

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the performance of an accord

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promissory estoppel (detrimental reliance)

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an equitable doctrine that prevents the withdrawal of a promise by a promisor if it will adversely afect a promisee who has adjusted his or her position in justifiable reliance on the promise

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minor

Back 106

a person who has not reached the age of majority

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infancy doctrine

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a doctrine that allows minors to disaffirm (cancel) most contracts they have entered into, when they are adults

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disaffirm

Back 108

the act of a minor to rescind a contract under an infancy doctrine. This may be done orally, in writing, or by the minor's conduct.

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duty of restoration

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a rule that states that a minor is obligated only to return the goods or property he or she has received from the adult in the condition it is in at the time of disaffirmance

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duty of restitution

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a rule that states if a minor has transferred money, property or other valuables to the competent party before disaffirming the contract, that party must place the minor in status quo (return them to the state they were in before the contract)

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ratification

Back 111

the act of a minor after the minor has reached the age of majority by which he or she accepts a contract entered into when he or she was a minor

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emancipation

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the act or process of leaving home and living apart from his or her parents

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necessaries of life

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food, clothing, shelter, medical care, and other items considered necessary to the maintenance of life. Minors must pay the reasonable value of these goods for which they contract.

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legal insanity

Back 114

a state of contractual incapacity, as determined by law

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adjudged insane

Back 115

declared legally insane by a proper court or administrative agency. A contract entered into by a person adjudged insane is void.

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insane but not adjudged insane

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being insane but not having been adjudged insane by a court or an administrative agency. A contract entered into by such person is generally voidable. Some states hold that such a contract is void.

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intoxicated person

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a person who is under contractual incapacity because of ingestion of alcohol or drugs to the point of incompetence

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lawful contract

Back 118

a contract that has a lawful object

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illegal contract

Back 119

a contract that has an illegal object. Such contracts are void.

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usury law

Back 120

a law that sets an upper limit on the interest rate that can be charged on certain types of loans

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gambling statutes

Back 121

statutes that make certain forms of gambling illegal

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effect of illegality

Back 122

a doctrine that states that the courts will refuse to enforce or rescind an illegal contract and will leave the parties where it finds them

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in pari delicto

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a situation in which both parties are equally at fault in an illegal contract

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contract contrary to public policy

Back 124

a contract that has a negative impact on society or that interferes with the public's safety and welfare

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immoral contract

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a contract whose objective is the commission of an act that society considers immoral

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contract in restraint of trade

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a contract that unreasonably constrains trade

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licensing statute

Back 127

a statute that requires a person or business to obtain a license from the government prior to engaging in a specified occupation or activity

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regulatory licensing statute

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a licensing statute enacted to protect the public

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revenue-raising statute

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a licensing statute with the primary purpose of raising revenue from the government

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exculpatory clause (release of liability clause)

Back 130

a contractual provision that relieves one (or both) of the parties to a contract from tort liability for ordinary negligence

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covenant not to compete (noncompete clause)

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a contract that provides that a seller of a business or an employee will not engage in a similar business or occupation within a specified geographical area for a specified time following the sale of the business or termination of employment

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unconscionable contract

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a contract that courts refuse to enforce in part or at all because it is so oppressive or manifestly unfair as to be unjust