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258 Cards in this Set

  • Front
  • Back
What are contracts in their most general definition
A PROMISE OR SET OF PROMISES FOR THE BREACH OF WHICH THE LAW GIVES A REMEDY OR THE PERFORMANCE OF WHICH THE LAW IN SOME WAY RECOGNIZES A DUTY
2 parties in a contract
Offeror, Offeree
Who initiates the contract?
Offeror makes offer to offeree
What can the offerree do with the contract initially?
OFFEREE THEN HAS POWER TO CREATE CONTRACT BY ACCEPTING OFFER
OR TO REJECT OFFER, ACCEPTANCE OF THE OFFER MUST BE UNEQUIVOCAL
What is the mirror image rule?
OFFER AND ACCEPTANCE MUST MATCH EXACTLY.
ANY CHANGE TO OFFER BY OFFEREE IS A REJECTION OF THE OFFER AND A COUNTEROFFER BY THE OFFEREE
Contracts developed from what originally?
English Common Law
What laws and theories were contracts originally based on?
BASED ON LAISSEZ FAIRE, LITTLE IF ANY GOVERNMENT INTERFERENCE;
PRODUCED OBJECTIVE RULES;
BASED ON FACE TO FACE DEALINGS, AT LEAST THEORETICAL EQUAL BARGAINING POWER
What spurred the advent of form contracts?
WORKED MORE OR LESS WELL UNTIL INDUSTRIAL REVOLUTION

DEVELOPMENT OF LARGE CORPS DESTROYED CONCEPT OF EQUAL BARGAINING POWER;
CHAIN OF DISTRIBUTION CHANGED: NO MORE FACE TO FACE DEALINGS, AND NOT ALWAYS CHANCE TO INSPECT BEFORE SALE

ADVENT OF FORM CONTRACTS
What does the modern law of contracts incorporate?
SO GOVTS ENACT STATUTES AND COURTS AND PROFESSORS DEVELOP THEORIES TO PROTECT CONSUMERS, CREDITORS, OTHERS FROM UNFAIR
CONTRACTS:
MODERN LAW OF CONTRACTS: SUBSTANTIAL GOVT REG OF CONTRACTS
What determines if a contract is bilateral or unilateral?
DEPENDS ON WHAT OFFEREE MUST DO TO ACCEPT OFFEROR’S OFFER

IF OFFEE MUST MAKE PROMISE, THEN BILATERAL CONTRACT
(“ A PROMISE FOR A PROMISE”) NO PERFORMANCE NECESSARY TO FORM A BILATERAL CONTRACT

IF OFFEE MUST PERFORM , THEN UNILATERAL CONTRACT
(“A PROMISE FOR AN ACT”) NO CONTRACT IS FORMED UNTIL OFFEE DOES REQUIRED ACT
When can a unilateral contract not be accepted?
CANNOT BE ACCEPTED BY PROMISE TO PERFORM (ALTHOUGH THAT MIGHT UNDER CERTAIN CIRCUMSTANCES BE CONSTRUED AS A COUNTER-OFFER)
When do problems arise with a unilateral contract?
WHEN OFFOR TRY TO REVOKE AFTER OFFEE BEGIN PERFORMANCE
When can an offeror retract a unilateral contract?
OFFOR CAN REVOKE ANY TIME BEFORE OFFEE BEGIN PERFORMANCE, BUT NOT AFTER OFFEE HAS BEGUN OR SUBSTANTIALLY COMPLETED PERFORMANCE
What is the objective theory of contracts?
INTENT TO ENTER INTO EXPRESS OR IMPLIED IN FACT CONTRACT JUDGED BY REASONABLE PERSON STANDARD
WOULD HYPOTHETICAL REASONABLE MAN CONCLUDE THAT PARTIES INTENDED TO CREATE CONTRACT AFTER CONSIDERING (1) WORDS AND CONDUCT OF PARTIES AND (2) SURROUNDING CIRCUMSTANCES
What is the OBJECTIVE MANIFESTATION THEORY OF CONTRACTS?
OUTWARD MANIFESTATION OF ASSENT
SUBJECTIVE INTENT IRRELEVENT
What are express contracts?
K's STATED IN ORAL OR WRITTEN WORDS
What are implied-in-fact contracts?
K's IMPLIED FROM CONDUCT OF THE PARTIES
What are the elements of implied-in-fact contracts?
: (1) PL PROVIDED PROPERTY OR SERVICES TO D
(2) PL EXPECTED TO BE PAID, DID NOT PROVIDE GRATUITOUSLY
(3) D WAS GIVEN OPPORTUNITY TO REJECT, DID NOT DO SO
When does the law allow for recovery of a breach of an implied-in-fact contract?
WHEN RECIPIENT OF A VALUABLE IDEA ACCEPTS AND USES THE INFORMATION WITHOUT PAYING FOR IT, EVEN THOUGH HE KNOWS COMPENSATION IS EXPECTED.
What are quasi-contracts?
FOUNDED IN EQUITY, PREVENT UNJUST ENRICHMENT AND UNJUST DETRIMENT, ONLY APPLIES IF THERE IS NO ENFORCEABLE EXPRESS CONTRACT
When do quasi-contracts apply?
1) ONE PERSON CONFERS BENEFIT ON ANOTHER, AND
2) IT WOULD BE UNJUST NOT TO REQUIRE PERSON TO PAY FOR BENEFIT RECEIVED
3) No enforceable express contract exists
What is the difference between executed and executory contracts?
CONTRACT IN WHICH PERFORMANCE COMPLETED--- EXECUTED, CONTRACT IN WHICH PERFORMANCE NOT COMPLETED BY BOTH SIDES--- EXECUTORY CONTRACT
What are the requirements for a valid contract?
1) AGREEMENT BETWEEN ALL PARTIES;
2) SUPPORTED BY CONSIDERATION;
3) PARTIES HAVE CONTRACTUAL CAPACITY; AND
4) HAS A LAWFUL OBJECT.
What is a void contract?
HAS NO LEGAL EFFECT, NEITHER PARTY OBLIGATED TO PERFORM, NEITHER CAN ENFORCE
What is a voidable contract?
AT LEAST ONE PARTY HAS OPTION TO VOID OR PERFORM
What is the difference between a void contract and a ratified contract?
IF VOID, BOTH PARTIES RELEASED
IF RATIFY, BOTH PARTIES MUST PERFORM.
What is an unenforceable contract?
SOME LEGAL DEFENSE TO ENFORCEMENT OF CONTRACT
(E.G. STATUTE OF FRAUDS, SET OFF)
What are the general requirements of a contract?
1) AGREEMENT
2) CONSIDERATION
3) CONTRACTUAL CAPACITY
4) LAWFUL OBJECT
What are the terms of agreement in a contract?
MEETING OF MINDS

MUST HAVE OFFER AND ACCEPTANCE, AND THEY MUST BE MIRROR IMAGE OF EACH OTHER

OFFER MUST:
1) OFFEROR MUST OBJECTIVELY INTEND TO BE BOUND
2) REASONABLY CERTAIN

ASCERTAINABLE

CLEAR ENOUGH FOR OFFEREE TO BE ABLE TO DECIDE WHETHER TO ACCEPT OR REJECT

(IN GENERAL, OFFER---AND K--- MUST HAVE IDENTITY OF PARTIES, IDENTITY OF SUBJECT MATTER AND QUANTITY, CONSIDERATION, AND TIME OF PERFORMANCE)
3) COMMUNICATED TO OFFEREE

CANNOT BE ACCEPTED IF NOT COMMUNICATED TO OFFEE BY OFFOR OR AGENT OF OFFOR
What is the reasonable person standard in a contract agreement?
ADVERTISING IS INVITATION TO MAKE OFFER
When can an offer be terminated by action of the parties?
REVOCATION CAN BE BY COMMUNICATION TO OFFEE BY OFFOR OR 3P
“ CAN BE BY OFFOR’S EXPRESS STATEMENT OR BY ACT INCONSISTENT WITH OFFER
OFFOR MAY REVOKE PRIOR TO ACCEPTANCE
What is the majority rule of terminating contracts?
REVOCATION NOT EFFECTIVE UNTIL RECEIVED BY OFFEE
Under what conditions can a contract be terminated?
1) Action of the parties
2) If offee rejects
3) Counteroffer by offee
4) Operation of law
5) If subject matter of offer is destroyed
6) At death or incompetency of either party
7) If prior to acceptance subject matter becomes illegal (video poker) "supervening illegality"
What are the conditions of an offer being rejected by the offeree?
1) SUBSEQUENT ATTEMPT TO ACCEPT IS NEW OFFER BY OFFEE
2)REJECTION MAY BE EXPRESS OR IMPLIED BY CONDUCT.
3)REJECTION NOT EFFECTIVE UNTIL RECEIVED BY OFFOR
4)COUNTEROFFER BY OFFEE SIMULTANEOUS TERMINATES OFFER AND IS NEW OFFER.
What are the terms of a termination of contract by operation of law?
OFFERS CAN TERMINATE BY OPERATION OF LAW THROUGH LAPSE OF TIME
OFFER MAY SAY ONLY OPEN UNTIL CERTAIN DATE, IN WHICH CASE OFFER OPEN FROM DATE RECEIVED UNTIL TIME PERIOD EXPIRES
(OR OPEN 10 DAYS FROM DATE OF OFFER, ETC.)
If no time period is stated for termination of the contract is stated, what is the rule on how long the time lapse for termination is?
IF NO TIME PERIOD IN OFFER, THEN OPEN FOR REASONABLE TIME.
STOCK EXCHANGE: REASONABLE TIME IS A FEW MOMENTS
HOUSE MAY BE A FEW DAYS
What is an option contract?
OPTION CONTRACT: CONTRACT IN WHICH OFFOR AGREES TO KEEP OFFER OPEN FOR CERTAIN PERIOD OF TIME FOR SOME TYPE OF CONSIDERATION.
What is the right of first refusal?
a contractual right that gives its holder the option to enter a business transaction with the owner of something, according to specified terms, before the owner is entitled to enter into that transaction with a third party.
What is the definition of a contract acceptance?
MANIFESTATION OF ASSENT BY OFFEE TO TERMS OF OFFER IN MANNER INVITED OR REQUIRED BY THE OFFER, AS MEASURED BY OBJECTIVE THEORY OF CONTRACTS
What happens if a contract is offered to multiple persons?
OFFER MADE TO TWO OR MORE PERSONS, EACH HAS POWER TO ACCEPT; WHEN ONE DOES, OFFER TERMINATES AS TO ALL OTHERS, OFFER MADE TO TWO OR MORE PERSONS JOINTLY MUST BE ACCEPTED JOINTLY
What are the three conditions of contract acceptance?
ACCEPTANCE MUST BE UNEQUIVOCAL; MUST MATCH ALL TERMS OF OFFER

“MEETING OF THE MINDS”

MIRROR IMAGE RULE
What is the mailbox rule?
ACCEPTANCE EFFECTIVE WHEN OFFEE DISPATCHES BY AUTHORIZED MEANS OF COMMUNICATION (LIKE PUT IN MAILBOX)
What is the acceptance on dispatch rule?
K EFFECTIVE ON DISPATCH EVEN IF LOST IN MAIL., OFFER CAN SIMPLY SAY ACCEPTANCE EFFECTIVE UPON OFFOR’S RECEIPT OF ACCEPTANCE
What happens if an offeree changes their mind on their decision to reject? (Mailbox rule)
IF OFFEE SEND REJECTION, THEN SEND ACCEPTANCE, OFFER REJECTED AND ACCEPTANCE IS CONSIDERED COUNTEROFFER
What is the definition of consideration, and how does this apply to written contracts?
VALUE GIVEN IN EXCHANGE FOR A PROMISE, WRITTEN CONTRACTS PRESUMED TO BE GIVEN IN EXCHANGE FOR CONSIDERATION
What are the two requirements for consideration?
1) SOMETHING OF LEGAL VALUE MUST BE GIVEN (LEGAL BENEFIT RECEIVED BY PROMISOR OR LEGAL DETRIMENT SUFFERED BY PROMISEE); AND
2) THERE MUST BE A BARGAINED-FOR EXCHANGE (EACH PARTY RECEIVE SOMETHING IN EXCHANGE)
What is the rule on gifts, and what is the proper name for this circumstance?
GRATUITOUS PROMISES (GIFTS)
UNENFORCEABLE BECAUSE NO CONSIDERATION
PROMISEE MUST DO SOMETHING IN EXCHANGE FOR THE PROMISE
What type of contracts lack consideration?
1) Illegal consideration
2) Illusory promises
3) Moral obligation
4) Past consideration
5) Preexisting duty
Example of illegal consideration
I'll kill your wife for $4000
What is an illusory promise?
CONTRACT IN WHICH ONE OR BOTH PARTIES CAN CHOOSE NOT TO PERFORM
What is moral obligation?
CONTRACT ON WHICH STATUTE OF LIMITATIONS HAS RUN
What is past consideration?
NOT VALID CONSIDERATION
NOT ENFORCEABLE UNLESS NEW CONSIDERATION GIVEN
What is preexisting duty?
IF ALREADY UNDER DUTY TO PERFORM, THEN NO VALID CONSIDERATION HAS BEEN GIVEN
What is the UCC article 2 and what does it apply to?
UCC ART 2 ESTABLISHES WARRANTIES WHICH APPLY TO SALE OF GOODS

UCC ART 2A ESTABLISHES WARRANTIES WHICH APPLY TO LEASE TRANSACTIONS
], applies to all goods but real estate is not a good
What is the problem with UCC article 2, and what case observed this?
Problem is that the definition of goods becomes blurred. This was observed in the chandelier case
What is contractual capacity?
POWER TO ENTER CONTRACTS
What is the age for capacity?
MINORS DO NOT HAVE CONTRACTUAL CAPACITY

21 TRADITIONAL AGE OF MAJORITY
18 NOW AGE OF MAJORITY IN MOST STATES
Who bears the burden of proof in a lack of capacity argument?
Party asserting incapacity
What is the infancy doctrine?
ALLOWS MINORS TO DISAFFIRM (OR CANCEL) CONTRACTS ENTERED WITH ADULTS
What is the infancy doctrine based on? What is it's purpose?
BASED ON PUBLIC POLICY, TO PROTECT MINORS FROM UNSCRUPULOUS BEHAVIOR OF ADULTS
What are the stipulations of the infancy doctrine?
K IS VOIDABLE BY MINOR (MINOR HAS CHOICE WHETHER TO PERFORM)

ADULT BOUND BY MINOR’S DECISION

IF BOTH PARTIES ARE MINORS, EITHER CAN DISAFFIRM

NO FORMALITIES REQ’D FOR DISAFFIRMATION

DISAFF CAN BE AT ANY TIME UP TO AGE OF MAJORITY PLUS REASONABLE TIME (CASE BY CASE BASIS)
What compensations must be given for a minor's disaffirmation of a contract?
IF EXECUTORY AND NEITHER PARTY HAS PERFORMED, NO PROBLEM

COMPETENT PARTY’S DUTY OF RESTITUTION
MUST PLACE MINOR IN STATUS QUO (RETURN CONSIDERATION OR CASH EQUIVALENT)

MINOR’S DUTY OF RESTORATION OR RESTITUTION
RETURN CONSID TO ADULT IN CONDITION AT DISAFF
(GIVES INCENTIVE TO ADULTS NOT TO DEAL WITH MINORS)
THIS IS MINOR’S DUTY OF RESTORATION
What is the minor's duty of restitution in the case of a disaffirmation of a contract?
1) MINOR’S INTENTIONAL CONDUCT OR GROSS NEGLIGENCE CAUSED LOSS OF VALUE OF PROPERTY; OR
2) MINOR MISREP’D WAS AN ADULT WHEN HE ENTERED THE K
When is a minor's contract ratified, despite desire to disaffirm?
IF MINOR NO DISAFF BEFORE MAJORITY OR WITHIN REASONABLE TIME THEREAFTER, K IS RATIFIED
What happens if a minor's contract is ratified, despite desire to disaffirm?
MINOR IS NOW BOUND BY K, RIGHT TO DISAFF IS LOST
How can the ratification of contract be stated, and how does it relate to the contract itself?
RATIFICATION CAN BE EXPRESS OR IMPLIED AND RELATES BACK TO INCEPTION OF K
What are the requirements as it pertains to minors of "necessaries of life"?
MINORS ARE BOUND TO PAY FOR NECESSARIES OF LIFE
NECESSARIES GREATER FOR MARRIED MINOR THAN FOR UNMARRIED MINOR
SELLER’S RECOVERY IS BASED ON EQUITY, QUASI CONTRACT RATHER THAN CONTRACT ITSELF
MINOR HAS TO PAY REASONABLE VALUE (NOT PRICE INCLUDING PROFIT)
What are the two types of mentally incompetent persons in relation to a contract?
1) ADJUDGED INSANE
2) INSANE, BUT NOT ADJUDGED INSANE
What are the conditions of a contract for someone who is adjudged insane?
IF ADJUDGED INSANE (DECLARED LEGALLY) INSANE, PERSON BECOMES WARD OF COURT, COURT APPOINTS GUARDIAN,
K BECOMES VOID (NO K EXISTS),
GUARDIAN IS ONLY ONE WHO HAS LEGAL AUTHORITY TO ENTER K’S ON BEHALF OF INSANE PERSON
What are the conditions of a contract for someone who is insane but not adjudged insane?
ANY K’S VOIDABLE BY INSANE PERSON,
OTHER PERSON DOES NOT HAVE OPTION TO AVOID UNLESS HE DOES NOT HAVE CONTRACTUAL CAPACITY,
PERSON WHO CONTRACTS WITH INSANE PERSON MUST PUT INSANE PERSON IN STATUS QUO ANTE,
MOST STATES: PERSON WHO DIDN’T KNOW DEALING WITH INSANE PERSON MUST BE PUT IN STATUS QUO UPON AVOIDANCE OF K,
INSANE PERSONS LIABLE BASED ON EQUITABLE DOCTRINE OF QUASI-K FOR REASONABLE VALUE OF NECESSARIES
What is the law on intoxicated persons entering a contract?
MOST STATES: K BY INTOXICATED PERSON VOIDABLE BY INTOXICATED PERSON
What are the conditions of an intoxicated person who entered into a contract voiding it?
NOT VOIDABLE BY OTHER PERSON IF OTHER PERSON HAD K CAPACITY,
MOST STATES: ONLY VOIDABLE BY INTOXICATED PERSON IF SO INTOXICATED THAT INCAPABLE OF UNDERSTANDING NATURE OF K, EVEN IF INTOXICATION SELF-INDUCED,

AMOUNT WHICH HAS TO BE CONSUMED VARIES FROM PERSON TO PERSON
PERSON WHO DISAFFIRMS ON BASIS OF INTOXICATION MUST BE RETURNED TO STATUS QUO,

INTOXICATED PERSON MUST RETURN CONSIDERATION TO OTHER PARTY AND RETURN HIM TO STATUS QUO
INTOXICATED PERSON ONCE SOBER CAN RATIFY K HE ENTERED WHILE INTOXICATED
INTOXICATED PERSON IS LIABLE IN QUASI-K FOR REASONABLE VALUE OF NECESSARIES THEY K FOR
What is the law on legality of contracts?
OBJECT OF K MUST BE LAWFUL

K TO PERFORM ILLEGAL ACT IS ILLEGAL K

ILLEGAL K’S ARE VOID; NEITHER PARTY CAN ENFORCE
What are some conditions of a lawful contract?
K’S ARE PRESUMED TO BE LAWFUL; BURDEN IS ON PERSON WHO ASSERTS K’S ILLEGALITY

IF ILLEGAL K IS PERFORMED, COURTS USUALLY LEAVE PARTIES WHERE THEY FIND THEM

K’S TO PERFORM ACTIVITY PROHIBITED BY STATUTE ARE ILLEGAL K’S
What are state usury laws in regards to the legality of a contract?
STATE STATUTES SET UPPER LIMIT ON INTEREST RATE (PROTECT FROM LOAN SHARKS)
What are Sabbath (Blue) Laws?
NO COMMERCIAL ACTIVITIES ON SUNDAYS (COULD STILL GET NECESSARIES, CHARITABLE DONATIONS, ETC.)
What are licensing statutes in regards to an illegal contract?
CERTAIN PROFESSIONS MUST BE LICENSED.,
GENERALLY, UNLICENSED PERSONS CANNOT RECOVER PAYMENT FOR SERVICES THAT A REGULATORY STATUTE REQUIRES A LICENSED PERSON TO PROVIDE
What is a contract contrary to public policy?
IF K HAS NEGATIVE IMPACT ON SOCIETY
OR
INTERFERE W PUBLIC’S SAFETY AND WELFARE,
E.G. IMMORAL K’S, K’S IN RESTRAINT OF TRADE, CERTAIN COVENANTS NOT TO COMPETE, AND SOME EXCULPATORY CLAUSES
What are contracts in restraint of trade?
ECONOMIC POLICY OF THIS COUNTRY FAVORS COMPETITION
E.G. K’S TO FORM OR ENFORCE MONOPOLY
What is a contract not to compete, or a "noncompete clause"?
SUCH A K PROHIBITS EMPLOYEE FROM COMPETING WITH HIS EMPLOYER FOR A CERTAIN TIME PERIOD AFTER LEAVING EMPLOYMENT
MUST BE LIMITED AS TO TIME AND SCOPE (INDUSTRY AND AREA)
What is the definition of status quo?
the existing state or condition.
What is Genuineness of Assent?
 The requirement that a party’s assent to a contract be genuine
 May be missing due to mistake, fraudulent misrepresentation, duress, or undue influence
What is Recission?
 Recission is an action to undo the contract
 The law permits rescission of some contracts made by mistake
What are the two types of mistakes made in a contract?
Unilateral mistake-mistake made on one party's behalf, Mutual mistake- mistake made by both parties
Contract cannot be enforced due to unilateral mistake in 3 situations
 Other party knows or should know of mistake
 Clerical or math error not result of gross negligence
 So serious enforcement unconscionable
How does a mutual mistake affect a contract, and what types of mutual mistakes exist?
 If mutual mistake, K may be rescinded because no K formed, no “meeting of the minds”
Types:  Mutual mistakes of a past or existing material fact,  Mutual mistake of value (if allowed rescission, almost all K’s would be rescinded)
What does  Raffles v. Wichelhaus (the case of the Peerless) touch on?
a leading case on mutual mistake in the English law of contract. The case established that when both parties to a contract are mistaken as to an essential element of the contract, the Court will attempt to find a reasonable interpretation from the context of the agreement before it will void it.
The case's fame is bolstered by the irony contained within: each party had in mind a particular ship, with no knowledge of the other's existence, yet each ship was named Peerless, a literal fallacy.
What is a misrepresentation?
 An assertion that is made that is not in accord with the facts
What are the types of misrepresentation?
 Intentional misrepresentation (fraudulent misrepresentation, fraud); assent of innocent party not genuine, K is voidable by innocent party
 Innocent misrepresentation (still will be basis of mistake)
 Either rescind K or enforce K and sue for damages
What are the elements of fraud?
 1) The wrongdoer made a false representation of material fact
 2) The wrongdoer intended to deceive the innocent party
 3) The innocent party justifiably relied on the misrepresentation
 4) The innocent party was injured
What are the types of fraud?
 1) Fraud in the inception (or fraud in the factum): innocent pty decieved as to nature of his act, does not know what he signing; K is void
 2) Fraud in the inducement; innocent pty knows what he signing but fraudulently induced
 3) Fraud by concealment; 1 pty takes specific action to conceal material fact from other pty


 Innocent misrepresentation: still can be basis of mistake
What is duress?
 Occurs where one party threatens to do a wrongful act unless the other party enters into a contract; assent not voluntary, K not enforceable
What is a threat of criminal action as it pertains to duress in a contract?
Extortion
What is economic duress?
1pty threaten not to perform unless increased price, 2nd K, etc.; threatened plaintiff must show had no choice but to perform
What is providing undue influence?
 1) A fiduciary or confidential relationship must have existed between the parties; if profi relationship, rebuttable presumption that K entered under undue influence
 2) The dominant party must have unduly used his or her influence to persuade the servient party to enter into a contract
What are the conditions of providing undue influence?
 Undue influence is equitable doctrine
 Persuasion by dom pty must have overcome free will of innocent pty
 K is voidable by innocent pty
 Often involve wills and K’s by old people (e.g. Anna Nicole Smith and ancient Texan)
What is the statute of frauds?
 State statute that requires certain types of contracts to be in writing (so terms of such K’s cannot be forgotten, misunderstood, fabricated)
How is the statute of frauds related to executory contracts?
 Executory K’s not in writing when SOF so require are not enforceable (but may be voluntary performed); if K executed by both pty’s, neither can rescind
What contracts are generally required to be in writing?
 Contracts involving interests in land (real prop= land +things attached+fixtures), incl. mortgages, leases, life estates, easements
 Contracts that by their own terms cannot possibly be performed within 1 year (preserve terms, so no dispute); extension of K may cause to violate SOF;
 Collateral contracts where a person promises to answer for the debt or duty of another (Guaranty; defs,)
 Promises made in consideration of marriage (pre-nups)
 Contracts for the sale of goods for more than $500 (UCC; modifications to K may trigger)
 Real estate agents’ contracts
 Agents’ contracts where the underlying contract must be in writing (equal dignity rule);
 Contracts to pay debts barred by the Statute of Limitations or discharged in bankruptcy
 Contracts to pay compensation for services rendered in negotiating the purchase of a business
What do contracts that have to do with land that are in writing consider?
 Real property
 The land itself as well as buildings, trees, soil, minerals, timber, plants, crops, and other things permanently affixed to the land
 Fixtures
 Personal property that is permanently affixed to the real property, such as built-in cabinets in a house
What transfers of other interests in real property have to be in writing?
 Mortgages
 Leases
 Life estates
 Easements
What is the one year rule?
 An executory contract that cannot be performed by its own terms within one year of its formation must be in writing
What is the equal dignity rule?
 The equal dignity rule states that agents’ contracts to sell property covered by the Statute of Frauds must be in writing to be enforceable
What is promissory estoppel, and name it's three components
 An equitable doctrine that permits enforcement of oral contracts that should have been in writing. It is applied to avoid injustice IF: 1) promise induce action or forebearance; 2) reliance foreseeable; and 3) injustice can be avoided only by enforcement of oral promise
What constitutes sufficiency of the writing of the contract?
 Formality (generally, writing contain essential terms)
 Required signature (by party against whom enforcement sought)
What is the parol evidence rule?
 Parol evidence is any oral or written words outside the four corners of the written contract
 If a written contract is a complete and final statement of the parties’ agreement, any prior or contemporaneous oral or written statements that alter, contradict, or are in addition to the terms of the written contract are inadmissible in court regarding a dispute over the contract
What are the exceptions to the parol evidence rule?
Parol evidence may be admitted in court if it:
 Shows that a contract is void or voidable
 Explains ambiguous language
 Concerns a prior course of dealing or course of performance between the parties or usage of trade
 Fills in the gaps in a contract
 Corrects an obvious clerical or typographical error
What is a covenant?
 A covenant is an unconditional promise to perform
 Non-perf of covenant gives other pty right to sue
Name the different ways to discharge a contract
 By agreement, By excuse, Force Majeure, by operation of law,
What is mutual recission of an agreement to discharge a contract?
K is still executory; both parties agree to cancel K; this 2nd agreement cancels the first
What is novation of an agreement to discharge a contract?
subs 3rd party for one of original parties; all 3 must agree; exiting party relieved of liability
What is accord and satisfaction in an agreement to discharge a contract?
like a compromise or settlement
Define accord in an agreement to discharge a contract
Agreement in which both parties agree to accept something different in satisfaction of original K; suspends original K pending satisfaction
Define satisfaction in an agreement to discharge a contract
performance of an accord; satisfaction discharges original K and accord; if accord not satisfied when due, aggrieved party can enforce either original K or accord
What is by excuse in an agreement to discharge a contract?
 Impossibility of performance: objective impossibility
What are the reasons one could discharge a contract by excuse?
 A) death or incapacity of promisor prior to performance of personal service K;
 B) destruction of subject matter prior to perf; or
 C) supervening illegality
Commercial impracticability: not recognized everywhere; unforeseeable event makes it impractical to perf– not impossible
What is force majeure as pertaining to the discharge of a contract?
Parties may agree certain events excuse nonperf
How can you discharge a contract by operation of law?
 Statutes of limitations
 Discharge in bankruptcy
What are the types of performance in a contract?
• Complete (strict) Performance
• Substantial Performance:
Material Breach (inferior performance):
Anticipatory Breach
Explain complete performance of a contract
• Exactly as req’d by K
• Fully performed K is executed K
What is tender of performance?
unconditional offer to perform; if refused, tendering party is discharged
Define substantial performance
Occurs when there is minor breach, slight deviation
What can a nonbreaching party do in a substantial performance contract situation?
1) convince other party to perform; 2) deduct cost of repair of defect; or 3) sue for cost of repair of defect if other party already paid
Define a material breach of contract
Destroys essence of K
What can the nonbreaching party do in a material breach of contract situation?
1) Rescind, seek restitution of payments already made, and be discharged; or
2) Treat K as in effect and sue for damages
What is an anticipatory breach of contract?
 A breach that occurs when one contracting party informs the other that he or she will not perform his or her contractual duties when due
What can the nonbreaching party do in a anticipatory breach of contract situation?
 Nonbreaching party’s obligations under the contract are discharged immediately
 Nonbreaching party has the right to sue immediately
What are the types of monetary damages in a contract?
 Compensatory
 Consequential
 Liquidated
 Nominal
 Punitive Damages
What are compensatory monetary damages?
Compensates a nonbreaching party for the loss of the bargain, placing him or her in the same position as if the contract had been fully performed
What are consequential monetary damages?
Compensates a nonbreaching party for foreseeable special damages
What are liquidated monetary damages?
Agreement by the parties in advance that set the amounts of damages recoverable in case of breach
What are nominal monetary damages?
Damages awarded against the breaching party even though the nonbreaching party has suffered no actual damages because of the breach
What are punitive damages?
generally not recoverable for breach of K, but may be recoverable for tortious conduct like fraud or intentionally caused damages
What does mitigation of damages mean?
 A nonbreaching party is under a legal duty to avoid or reduce damages caused by a breach of contract
What is recission and when can it be used?
 An act to undo a contract
 Available if there has been a material breach of contract, fraud, duress, undue influence, or mistake
What is restitution and when can it be used?
 Returning of goods or property received from the other party in order to rescind a contract
 If the actual goods or property is not available, a cash equivalent must be made
What are the equitable remedies of a contract?
 Specific performance
 Court orders the breaching party to perform the acts promised in the contract; subject matter of the contract must be unique

 Reformation
 Court rewrites a contract to express the parties’ true intentions; usually used to correct clerical errors

 Quasi contract
 Permits the recovery of damages for breach of an implied-in-law contract where no actual contract exists between the parties

 Injunction
 Court order that prohibits a party from doing a certain act
What are the maxims of K interpretation?
Primary Purpose Rule: If “primary purpose” of parties in entering contract can be ascertained, it will be given “great weight.”

2. If possible, all terms of a contract are construed so that they will have a reasonable, lawful, and effective meaning.

E. g. Two terms; in the first interpretation they are repetitive (or conflict), in the second interpretation they are (do) not. The second interpretation will be used.

3. Unclear or ambiguous terms will be interpreted against the draftsman.

4. Negotiated terms control over standardized (“boilerplate”) terms that have not been negotiated.

E.g. Typewritten clause added as rider to pre-printed agreement or handwritten clause inserted into typewritten agreement will control in case of conflict.
What does caveat emptor mean?
“LET THE BUYER BEWARE”
What establishes warranties that apply to the sale of goods and lease transactions?
UCC Article 2
Who is able to recover in tort in a case of breach of warranty?
IF PURCHASER, USER, BYSTANDER SUFFER INJURY FROM PRODUCT, MAY BE ABLE TO RECOVER IN TORT, UNDER NEGLIGENCE, MISREPRESENTATION, OR STRICT LIABILITY
What is products liability?
LIABILITY OF MANUFACTURERS, SELLERS, LESSORS, AND OTHERS FOR INJURIES CAUSED BY DEFECTIVE PRODUCTS
What is a warranty?
SELLER’S OR LESSOR’S ASSURANCE TO BUYER OR LESSEE THAT GOODS THAT THEY SELL OR LEASE MEET CERTAIN STANDARDS OF QUALITY.
What gives rise to an action of breach of warranty?
FAIL TO MEET STANDARD GIVES RISE TO ACTION FOR BREACH OF WARRANTY.
What is an express warranty?
OLDEST FORM
WRITTEN, ORAL, OR INFERRED
SELLER OR LESSEE AFFIRM GOODS MEET CERTAIN STANDARDS OF QUALITY, DESCRIPTION, PERFORMANCE, OR CONDITION
What two things do express warranties not need?
NO NEED FORMAL WORDS WARRANT OR GUARANTEE
CAN BE MADE BY MISTAKE
NO NEED (SPECIFIC) INTENT TO MAKE WARRANTY

NO REQUIREMENT THAT SELLERS AND LESSORS MAKE SUCH WARRANTIES
MADE TO ENTICE CONSUMERS
When is an express warranty created?
CREATED WHEN SELLER OR LESSOR INDICATES GOODS WILL CONFORM TO:
1) ALL AFFIRMATIONS OF FACT OR PROMISE MADE ABOUT THEM
2) ANY DESCRIPTION OF THEM
3) ANY MODEL OR SAMPLE OF THEM
Who can recover from a breach of express warranty, and under what conditions?
BUYER/LESSEE CAN RECOVER FOR BREACH OF EXPRESS WARRANTY IF:
WARRANTY WAS CONTRIBUTING FACTOR (NOT ONLY FACTOR)
WHICH INDUCED BUYER/LESSOR TO PURCHASE OR LEASE THE PRODUCT
What is basis of the bargain?
ALL STATEMENTS BY SELLER/LESSOR PRIOR TO SALE ARE PRESUMED TO BE PART OF BARGAINUNLESS GOOD REASON TO CONTRARY
POSTSALE STATEMENTS WHICH MODIFY CONTRACT ALSO
Who is liable for what express warranties?
RETAILER IS LIABLE FOR EXPRESS WARRANTIES OF MFGR
MFGR IS NOT LIABLE FOR EXPRESS WARRANTIES OF WHOLESALER OR RETAILER UNLESS MFGR AUTHORIZES OR RATIFIES SAME
What does not create an express warranty?
Statements of opinion, affirmation of value
What defines an implied warranty of merchantability?
1) SELLER/LESSOR MUST BE MERCHANT OF GOODS OF THAT KIND;
2) NO DISCLAIMER
What does an implied warranty of merchantability require?
A. GOODS FIT FOR ORDINARY PURPOSES FOR WHICH USED
B. GOODS ADEQUATELY CONTAINED, PACKAGED, LABELED
C. GOODS OF AN EVEN KIND, QUALITY AND QUANTITY WITHIN UNIT
D. CONFORM TO PROMISE OR AFF OF FACT MADE ON LABEL
E. QUALITY PASS WITHOUT OBJECTION IN TRADE
F. FUNGBLE GOODS MEET FAIR AVERAGE OR MID RANGE OF QUALITY
Who does the
IMPLIED WARRANTY OF FITNESS FOR HUMAN CONSUMPTION apply to>
APPLIES TO FOOD AND DRINK AND SELLERS OF SAME, RESTAURANTS, ETC.
What is the foreign substance test?
FOREIGN SUBSTANCE TEST: SOME STATES USE TO DETERMINE MERCHANTABILITY OF FOOD PRODUCTS;
FOREIGN OBJECT IN FOOD, CAUSE INJURY, THEN UNMERCHANTABLE


MODERN: CONSUMER EXPECTATION TEST:
CHICKEN BONE IN FRIED CHICKEN V CHICKEN SALAD
What is an implied warranty of fitness for a particular purpose?
BREACHED IF GOODS DO NOT MEET BUYER’S EXPRESSED NEEDS.
APPLIES TO BOTH MERCHANTS AND NON-MERCHANTS
When is an implied warranty of fitness for a particular purpose implied?
1) SELLER/LESSOR HAS REASON TO KNOW PARTIC PURP BUYER/LESSEE BUYING GOODS;
2) SELLER MAKE STATEMENT GOODS WILL MEET THIS PURP;
3) BUYER/LESSEE RELY ON SELLER’S SKILL AND JUDGMENT AND PURCHASE GOODS.
What is the Magnuson-Moss Warranty Act?
COVERS WRITTEN WARRANTIES RELATING TO CONSUMER PRODUCTS

ADMINISTERED BY FEDERAL TRADE COMMISSION
MMWA applies if..
ONLY CONSUMER TRANSACTIONS ARE COVERED
2) COST OF GOOD IS MORE THAN $10.00
3) WARRANTOR CHOOSES TO MAKE EXPRESS WARRANTY
MMWA requires that... (define the two)
MMWA REQUIRES THAT WARRANTY BE CONSPICUOUSLY LABELED EITHER
“FULL” (WARRANTOR MUST GURANTEE FREE REPAIR OR REPLACEMENT OF DEFECTIVE PRODUCT AND INDICATE IF TIME LIMIT APPLIES)
OR
“LIMITED” (LIMITS SCOPE OF FULL WARRANTY IN SOME WAY)

DISCLOSURES MUST BE IN UNDERSTANDABLE LANGUAGE
What does the MMWA not do?
MMWA DOES NOT CREATE IMPLIED WARRANTIES, BUT SELLER/LESSORS WHO MAKE EXPRESS WARRANTIES CANNOT DISCLAIM IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, AND IF LIMIT TIME PERIOD, MUST CORRESPOND TO TIME LIMIT ON EXPRESS WARRANTIES
What is product liability based on fault, and what is the problem with it?
PERSONS INJURED BY DEFECTIVE PRODUCTS MAY BE ABLE TO RECOVER DAMAGES BASED ON TORT THEORIES OF NEGLIGENCE AND MISREPRESENTATION

PROBLEM: UNDER BOTH THEORIES, MUST SHOW FAULT
What is negligence, and who is liable under it?
BREACH DUTY OF CARE: E.G. FAILING TO ASSEMBLE PRODUCT CAREFULLY, NEGLIGENT PRODUCT DESIGN, ETC.

ONLY PARTY WHO WAS NEGLIGENT IS LIABLE
What are the terms of negligence, and what is a problem with it?
PLAINTIFF AND DEFENDANT DO NOT HAVE TO BE IN PRIVITY OF CONTRACT
MACPHERSON V. BUICK MOTOR CO. HELD SUCH

PLAINTIFF BEARS BURDEN OF PROOF SHOWING D WAS NEGL

PROBLEM: VERY HARD OR IMPOSSIBLE TO PROVE, AND MAYBE THERE WAS NO NEGLIGENCE
What is intentional misrepresentation as applied to products liability, and what is the problem with it?
INTENTIONAL MISREPRESENTATION:
1) SEL/LOR AFFIRM MISREP QUAL OF PRODUCT OR
2) CONCEALS A DEFECT AND
3) VICTIM RELIED ON MISREP OR CONCEALMENT

PROBLEM: MOST SELLERS DO NOT INTEND TO DEFRAUD

NEGL AND MISREP DIFFICULT TO RECOVER
What is notable about GREENMAN V YUBA POWER PRODUCTS, INC.?
t ruled that Yuba was strictly liable for Greenman's injuries, because the company had put a defective product on the market. There was no need to prove that Yuba was careless in making the tool, the court concluded. The case established the doctrine of strict liability in tort la
What is strict liability?
LIABILITY WITHOUT FAULT, P DOES NOT NEED TO SHOW BREACH OF DUTY OF CARE

D CAN BE LIABLE EVEN IF EXERCISE ALL POSSIBLE CARE,
APPLY TO PRODUCTS, NOT SERVICES.,
ALL LINKS IN THE CHAIN OF DISTRIB ARE STRICTLY LIABLE
Who can get away in a strict liability case?
INNOCENT DFENDANT IN CHAIN CAN BRING SEPARATE ACTION AGAINST NEGLIGENT PARTY TO RECOVER IF MADE TO PAY STRICT LIABILITY JUDGMENT
Who can recover for strict liability?
TORT DOC: NO PRIVITY REQUIRED
SE/L-ORS LIABLE TO ULTIMATE CONSUMER OR USER
MOST JUDICS HAVE EXTENDED SL TO BYSTANDERS
WHY? EVEN GREATER PROTECTION THAN CONSUMER OR USER BECAUSE BYSTANDER NO CHANCE TO INSPECT GOODS OR USE REPUTABLE MFGRS
What are the damages recoverable in a strict liability case?
PERS INJURY
PROP DAMAGE IN MOST JUDICS

BUT NOT ECONOMIC LOSS

PUNITIVES IN MOST JUDICS BUT ONLY IF P SHOW D INTENTIONALLY INJURE OR ACT W RECKLESS DISREGARD

MFGR/SELLER CAN GET PRODUCTS LIABILITY INSURANCE

BUT

RAISES COST OF DOING BUSINESS
What is a defect products liability case?
PRODUCTS LIABILITY PLAINTIFF MUST SHOW PRODUCT WHICH CAUSED INJURY WAS DEFECTIVE
(BUT NOT WHO CAUSED PRODUCT TO BECOME DEFECTIVE)
What is a defect in manufacturing?
MFGR FAIL TO:
PROPERLY ASSEMBLE A PRODUCT,
PROPERLY TEST A PRODUCT, OR
ADEQUATELY CHECK PRODUCT
What is a defect in design?
COURTS EMPLOY UTILITY-RISK ANALYSIS:
GRAVITY OF DANGER POSED BY DESIGN;
LIKELIHOOD OF INJURY;
AVAILIBILITY AND COST OF SAFER ALTERNATIVE;
SOCIAL UTILITY OF PRODUCT;
ETC.
What is the crashworthiness doctrine?
SECOND COLLISION”, SO
AUTO MFGRS MUST TAKE POSSIBILITY OF SECOND COLLISION INTO ACCOUNT IN DESIGN OF AUTOS

FAILURE TO DO SO SUBJECTS MFGR TO STRICT LIABILITY
What is a defect in packaging?
DUTY TO PROVIDE SAFE PACKAGING
TAMPERPROOF,
CHILDPROOF (DRUGS)
What is a failure to warn?
CERTAIN PRODUCTS (E.G. DRUGS WITH SIDE EFFECTS) CAN NOT BE MADE SAFER, SO
MFGRS HAVE DUTY TO WARN

PROPER WARNING INSULATE MFGR AND OTHERS DOWN CHAIN OF DISTRIBUTION

FAILURE TO WARN SUPPORT STRICT LIABILITY ACTION
What are FAILURE TO PROVIDE ADEQUATE INSTRUCTIONS AND OTHER DEFECTS?
INADEQUATE TESTING, ETC.

DEFECT IS EXPANDING AREA OF THE LAW.
MANUFACTURING IS SHRINKING SECTOR OF THE ECONOMY.
COINCIDENCE?
What are some defenses to products liability?
SUPERVENING EVENT,
GENERALLY KNOWN DANGERS,
GOVERNMENT CONTRACTOR DEFENSE,
CORRECTION OF DEFECT,
ASSUMPTION OF RISK ,
MISUSE,
STATUTES OF LIMITATIONS,
CONTRIBUTORY AND COMPARATIVE NEGLIGENCE
What is the supervening event products liability defense?
MATERIAL ALTERATION OR MODIFICATION ABSOLVES ALL PRIOR SELLERS
What is the generally known dangers products liability defense?
CERTAIN PRODUCTS INHERENTLY DANGEROUS

WHAT ABOUT JOE CAMEL AND CIGARETTES?
What is the government contractors products liability defense?
PRECISE SPECS PROVIDED BY GOVT
PRODUCT CONFORMED TO SPECS
CONTROR WARNED GOVT OF ANY KNOWN DEFECTS OR DANGERS
What is the correction of defect products liability defense?
NOTIFY PURCHASERS AND USERS AND CORRECT DEFECT

REASONABLE EFFORTS REQ’D
USUALLY MAIL
What is the assumption of risk products liability defense?
APPLIES; D MUST SHOW:
PL KNEW AND APPRECIATE THE RISK; AND
PL VOLUNTARILY ASSUME THE RISK
What is the misuse products liability defense?
DEFENSE APPLIES IF ABNORMALLY OR UNFORESEEABLY MISUSED

SELLER LIABLE IF MISUSE FORESEEABLE
What is the statues of limitations products liability defense?
BEGINS TO RUN WHEN PL SUFFER INJURY
SO:
STATUTES OF REPOSE IMPOSE ABSOLUTE DEADLINE FROM WHEN PRODUCT FIRST SOLD
What was unique about the AFL?
1886 skilled workers only
What was unique about the CIO?
semi-skilled and unskilled also
In what year did the AFL and CIO merge?
1955
What are the major federal law labor statutes?
 Norris-LaGuardia Act
 National Labor Relations Act
 Labor-Management Relations Act
 Labor-Management Reporting and Disclosure Act
 Railway Labor Act
What did the Norris-Laguardia act establish?
Legal for workers to organize
What did the National labor Relations act establish?
Right of empees to form, join, assist labor orgs; bargain collectively with emplers; emplers duty to deal in good faith with unions
What did the Labor-Management Relations Act establish?
Expanded union activities; emplers free speech prior to union elections; pres can seek injunction against strike
What did the Labor-Management Reporting and Disclosure Act establish?
Fight union corruption, regulate internal affairs, rights of union members.
Regular union elections by secret ballot; no ex-cons or commies hold union office; union officials accountable for union funds and property
What is the Railway Labor Act?
Covers railroad and airline empees
What is the National Labor Relations Board (NLRB)?
5 members appointed by Pres, confirmed by Senate
Oversees union elections, prevents emplers and unions from illegal and unfair labor practices, enforces and interprets federal labor laws

Decisions of NLRB enforceable in Court.
How is a labor union organized?
 Section 7 of the NLRA gives employees the right to join together and form a union
 The group that is seeking representation is called an appropriate bargaining unit
 At least 30% workers interested, can petition NLRB to investigate and set election date;
Empler can contest, most do; NLRB supervise all contested elections.
Majority vote wins election for certification.
If empler no contest, then no supervision by NLRB: consent election.
Decertification elections must be supervised by NLRB.
How can employers restrict labor unions?
 Employers may restrict solicitation activities to the employees’ free time and to non-working areas; inaccessibility exception
What do sections 8 (a) and (b) of the NLRA do?
Section 8(a) of NLRA makes it unfair labor practice for empler to interfere in right to form and join union
Section 8(b) of NLRA prohibit union from engaging in unfair labor unfair labor practice that interfere with union election
Who can stop labor unions or inhibit them?
NLRB or courts may issue cease-and-desist order or injunction
What is collective bargaining?
 The act of negotiating contract terms between an employer and the members of a union
What is a collective bargaining agreement?
 The resulting contract from a collective bargaining procedure
 Empler and union must negotiate in good faith; no take it or leave it proposals
What is included in compulsory subjects of collective bargaining?
wages, hours, fringe benes, health benes, retirement plans, work assignments, safety rules,
 No illegal subjects like closed shops or discrimination
 Everything else is permissive subjects: supervisory force, location of plants, corporate reorgs
What is a union shop?
 An employee must join the union within a certain number of days after being hired
What is an agency shop?
 Employees do not have to be union members but must pay an agency fee (an amount equal to union dues) to the union
What is a closed shop, and what is notable about them?
 An establishment where union membership is a condition of employment
 Closed shops are illegal under the Taft-Hartley Act
When can strikes and picketing occur?
If no collective bargaining agreement can be reached, under NLRA union management can recommend strike; must be approved by majority vote.

Emplers can do employer lockout of empees that empler reasonably anticipates will strike.
What is a crossover worker?
 A person who does not honor a strike by either
 Choosing not to strike
 Returning to work after joining the strikers for a time
What is a replacement worker, or a "scab?"
 A worker who is hired either on a temporary or on a permanent basis to take the place of a striking worker
What types of strikes are illegal?
 Violent strikes
 Sit-down strikes
 Partial or intermittent strikes
 Wildcat strikes
 Strikes during the 60-day cooling
off period
 Strikes in violation of a no-strike clause
What is secondary boycott picketing, and when is it legal?
 A type of picketing where unions try to bring pressure against an employer by picketing his or her suppliers or customers
 Lawful if picket product; illegal if picket neutral empler
What is the Landrum-Griffin Act Title I: Labor’s Bill of Rights?
Gives each union member equal rights to nominate candidates, vote, participate in meetings;
Free speech and assembly, due process, initiate judicial or admin action.
Union may discipline members for participate certain activities like:
1) walk off job in non-sanctioned strike; 2) work for wages below scale; 3) spy for empler; 4)other unauth’d activities
What are the workers compensation acts?
 Compensates workers and their families if workers are injured in connection with their jobs
 Workers’ compensation is an exclusive remedy (but empees can sue 3Ps)
 Trade off of sure remedy but lower awards through admin procedure for no need to prove negligence by empler
 Empee must prove injury in course and scope of employment
What are the statutes that protect workers?
 Workers’ compensation acts
 Occupational Safety and Health Act (OSHA)
 Fair Labor Standards Act
 Employee Retirement Income Security Act (ERISA)
 Consolidated Omnibus Budget Reconciliation Act (COBRA)
 Immigration Reform and Control Act (IRCA)
 Unemployment compensation
 Social security system
 Family and Medical Leave Act
What is the Occupational Safety and Health Act? (OSHA)
 Promotes safety in the workplace
 OSHA has regulations to enforce the safety standards established by the act
 Specific duty standards: regulate e.g. hazardous chemicals, safety procedures, etc.
 General duty standards: empler has duty to provide work environment free of hazards even if no specific standards apply
 OSHA is empowered to inspect places of employment for health hazards and safety violations, issue citations which are reviewed by Occ. Safety and Health Review Commission; appeal to Fed Cts of Appeals, civil and crim penalties
What does the Fair Labor Standards Act do?
 Prohibits child labor
 Establishes overtime pay
 Establishes minimum wage
What is the Employee Retirement Income Security Act?
 Employers are not required to establish pension plans for their employees
 This statute is designed to prevent fraud and other abuses associated with private
pension funds
What is the Consolidated Omnibus Reconciliation Act "COBRA"?
 Permits employees and their beneficiaries to continue their group health insurance after an employee’s employment has ended
 Empee must pay premium
 COBRA has time limits, doesn’t last forever
What is the Immigration Reform and Control Act of 1986?
WAS SUPPOSED TO BE A ONE-TIME AMNESTY
 Makes it unlawful for employers to hire illegal immigrants; ALMOST NEVER ENFORCED
 All U.S. employers must fill out an INS Form I-9 for each employee stating that the employer has inspected the employee’s legal qualifications to work
What does it mean if an illegal is working?
IF ILLEGAL IS WORKING, SOMEONE IS COMMITTING A CRIME: EITHER THE ILLEGAL ALIEN OR THE EMPLOYER
What is social security?
WAS NOT INTENDED AS SOLE MEANS OF SUPPORT FOR ELDERLY
 Provides limited retirement and death benefits to covered employees and
their dependents
 Employers and employees must make contributions into the Social Security fund
 Self-employed persons must pay Social Security taxes equal to the combined employer-employee amount
 Not a savings account: current contributions fund current claims
What is unemployment compensation?
 Under the Federal Unemployment Tax Act and state laws enacted to implement the program, employers are required to pay unemployment contributions (taxes)
What classes does Title VII of the Civil Rights Act of 1964 protect?
 Race
 Color
 National origin
 Sex
 Includes pregnancy
 Includes sexual harassment
 Does not include sexual preference
 Religion
What employers does Title VII of the Civil Rights Act of 1964 protect?
 Covers employers who
 Have 15 or more employees for 20 weeks in the current or preceding year
 All employment agencies
 Labor unions with 15 or more members
 State and local governments
 Most federal agencies

Indian Tribes and tax-exempt private clubs are excluded.
What employment decisions does Title VII of the Civil Rights Act of 1964 protect?
 Prohibits discrimination in:
 Hiring
 Promotion
 Demotion
 Payment of salaries, wages, and fringe benefits
 Dismissal
 Job training and apprenticeships
 Work rules
 Any other term, condition, or privilege of employment
What is disparate treatment discrimination?
 Discrimination against a specific individual because that person belongs to a protected class
What are the elements of disparate treatment discrimination?
1) person belongs to a protected class under Title VII;
2) applied for and was qualified for the employment position;
3) was rejected despite this; and
4) employer kept position open and sought applications from persons with complainant’s qualifications.
What is disparate impact discrimination?
 Discrimination that occurs where a neutral-looking employment rule causes discrimination against a protected class
 Class action suits are common
 Must show causal link between challenged practice and statistical imbalance
What is the process for procedure and remedies of discrimination?
1) Complaint must be filed with EEOC
2) EEOC can sue employer, or issue right to sue letter to plaintiff.

 Court may order payment of two years’ back pay, issue an injunction, and award reinstatement, fictional seniority, or other equitable remedy;
 If malice or reckless indifference, then compensatory and punitive damages, with limits based on size of employer
What is sex discrimination?
Sex Harassment is a form of sex discrimination.
What is sexual harassment?
 Sexual harassment is lewd remarks, touching, intimidation, posting pinups, and other verbal or physical conduct of a sexual nature that occur on the job
 Includes 2 Types: 1) Quid Pro Quo and
2) Hostile Work Environment

 Employers should be fully aware of federal and state equal employment opportunity laws and implement policies and procedures to adhere to them
What is notable about Harris v. Forklift Systems, Inc. ?
Hardy Pres of Forklift, harassed Harris
(Hostile work environment, elements of quid pro quo as well)
Harris no have severe psychological injury.
Issue: To be actionable as abusive work environment harassment, must conduct seriously affect victim’s psych. well-being?
No. Don’t need to cause nervous breakdown to have actionable claim.
What is same-sex discrimination?
 The U.S. Supreme Court has held that same-sex sexual harassment is actionable under Title VII
 State and local laws often also prohibit this form of discrimination
What are the affirmative defenses in a sexual harassment case, and what cases were landmark cases in this area?
2 U.S. Supreme Cases
Faragher v. Boca Raton
Burlington Industries v. Ellerth

In Faragher, empler had no policy against sexual harassment
In Burlington, empler had policy and complaint system which was not used by empee plaintiff.
Supremes rejected strict liability for sexual harassment, empler may raise affirmative defense. Must prove 2 elements:
1) Empler used reasonable care to prevent and correct promptly any sexual-harassing behavior; and
2) Pl empee unreasonably failed to take advantage of preventive or corrective opportunities provided by empler or to otherwise prevent harm (Remember: pl must always mitigate damages)
What is religious discrimination?
Title VII prohibits discrim on basis of religion.
Many cases involve conflict between empler work rule and empee’s religious beliefs.
Right to practice religion is not absolute.
Empler has duty to reasonably accommodate, if no undue hardship to empler.
Religious orgs may give preference to own members in employment.
What are the defenses to Title VII of the Civil Rights Act of 1964?
 Merit: must be job related
 Seniority: reward long-term empees
 Bona fide occupational qualification (BFOQ): must be job related and a business necessity
What is notable about IUUAAAIWA v. Johnson Controls ?
JC mfgr. Batteries, lead is primary ingredient in mfgring process.
Lead causes birth defects, so JC implement policy: only sterilized or non-childbearing women work at jobs with lead exposure.
Female empees sue. JC win on summ jdgmt, Ct App affirm, female empees appeal to US Supremes.
Justice Blackmun: BFOQ is written and construed narrowly.
JC cannot establish BFOQ.


So who will be liable if future female empee at JC has child with birth defect?
What is the international reach of U.S. antidiscrimination laws?
Civil Rights Act of 1991: U.S. citizens protected under Title VII from discrim by U.S. controlled empler in foreign country.
U.S. corp w office in foreign country or U.S. owned, foreign incorporated subsidiary in foreign country.
Exception protects employers from conflicting foreign laws.
Also extends international application of ADA and Age Discrim in Employment Act (ADEA).
What is the Equal Pay Act of 1963?
Protects both sexes.
Covers all levels of private-sector empees, state and local govt empees.
Fed empees exempted.

Act prohibits disparity in pay for jobs that require equal skill, equal effort, equal responsibility, and similar working conditions. (“equal and similar”)

Private action by empee against empler, for back pay and liquidated damages; wages of discriminated against empee must be raised.
What are the criteria that justify a difference in wages, according to the Equal Pay Act of 1963?
 Criteria that justify a differential in wages
 Seniority
 Merit
 Quantity or quality of product
 Any factor other than sex
Empler bears burden of proving defenses.
What is the Age Discrimination in Employment Act of 1967
 Prohibits age discrimination practices against employees who are 40 and older
 Emplers with 20+ empees, labor unions with 25+ members, all employment agencies, state and local govts (non-pol-making positions), some fed empees
What is the Older Workers Benefit Protection Act?
Prohibits age discrimination with regard to pension benefits.
What is the Americans with Disabilities Act of 1990?
 Imposes obligations on employers and providers of public transportation, telecommunications, and public accommodations to accommodate individuals with disabilities
 Title I of ADA prohibits employment discrimination against qualified individuals with disabilities.
 Now covers emplers with 15+ empees.
 Emplers must make reasonable accommodations to to individs with disabilities that do not cause undue burden on empler.
Who is a Qualified Individual with a Disability under the ADA act of 1990?
Person who with or without reasonable accommodation can perform essential function of job person holds.
Disabled person : 1. has phys or mental impairment that substantial limits major life activities;
2. has record of such impairment;
3. is regarded as having such impairment.
What is Forbidden Conduct in regards to disabilities?
Empler not allowed to inquire into or test for an applicant’s disabilities.
Can inquire into applicant’s ability to perf job-related functions

Confidential post-offer medical exams are allowed if all entering emplees subject to such exam.
What is the procedure and remedies in regards to disabilities?
Title VII style procedure, must file with EEOC, which can take action against empler or permit individ to sue.
Can get injunction, hiring or restatement, atty fees, compens and puni damages.
What is the Civil Rights Act of 1886?
 An act enacted by the Civil War that states that all persons “have the same right to make and enforce contracts … as is enjoyed by white persons”
 Prohibits racial and national origin employment discrimination
 2 reasons to bring instead of Title VII
 A) no EEOC procedural requirements; and
 B) no limitations period on recovery of back pay and no cap on recovery of compens or puni damages

Small emplers are exempt from fed equal employment opportunity laws.
What is Affirmative Action?
Otherwise known as reverse discrimination
 Policy that provides that certain job preferences will be given to minority or other protected class applicants when an employer makes an employment decision
Affirmative Action Narrowed. Affirmative action is not per se illegal, but must be narrowly tailored to meet compelling interest.

Michigan Law School case 2002 upheld affirmative action, but last year Michigan voters outlawed it, and Supreme Court has since effectively overruled Michigan Law school case.
Bankruptcy law originated where?
Move from middle east to italian city staes
What type of law does bankruptcy cover?
Only and exclusively federal law
What is Chapter 7 of Bankruptcy law?
Liquidation
What is Chapter 12 of bankruptcy law?
Farm bankruptcy
What is Chapter 13 of bankruptcy law?
Wage earner plan
What is the basic equation of bankruptcy and what does it mean?
Assets= liabilities + owner's equity. Liabilities have first claim, owner's equity has second claim
What does insolvent mean?
Liabilities outweigh assets
Who becomes the supervisor of the assets in a bankruptcy case?
The bankruptcy judge
Who is in possession of the bankruptcy assets?
The chapter 11 debtor in possession
How does the chapter 11 debtor reorganize the assets in a bankruptcy case?
1) Wind down
2) going concern
What are the three c's of bankruptcy and what do they mean?
Credit- past
Cash- present
Collateral- future
Character!!!