Mac 703 - Business Law - Part 5

Front 1

Contractual Capacity:

3 classes of persons limited to contract:
1. ______
2. ______
3. ______

Back 1

1. Minors
2. Incompetents
3. Intoxicated

Front 2

Minors:

Also called _____, is a person who has _______________. In most states the age is ____, by ____ (_____ is ___). A minor's contract is _______ by ____ or _______. Thus minor is in ________ by being able to ____________ contracts (even "________"). Therefore most dealings with minors require __________. Also most states recognize _________ ___ that ___________ or have ______ for _____. (examples?)

Back 2

infant; not attained the age of majority; 18; statute; 21; common law; voidable; minor; parent/guardian's option; a favorable position; disaffirm or enforce; emancipated minors; parents to co-sign; special contracts; cannot be avoided; lower age; capacity;
Ex: student loans and contracts for medical care can't be avoided

Front 3

Minors: Liability on Contracts:

Contracts are ______ at _____'s option. The exercise of this power is called ______. Upon coming of age, a minor can ______ a contract, thus _______ power of ______.

A minor may ______ a K anytime before legal age or ______________, as long as ____________. Exception: Minor cannot ______ sale of _____ until ________.

_______ may be either _____ or _____. Example? The courts are split on the minor's _____ upon _______. Majority hold that minor must _____________. ________ is _____. Other states require minor to ____________. A few require ________, or returning ________ of what has been received. FURTHERMORE, under _______ a minor can _____ and ______ property sold to ________. Under UCC, ___________.

_______ makes the contract binding _______ (_________). Minor must ______ contract as ______. ________ can occur by:
1. _________
2. _________ - by using property substantially
3. _________

Back 3

voidable; minor; disaffirmance; ratify; surrendering; disaffirmance;

disaffirm; within a reasonable time after coming of age; ratification did not take place; disaffirm; land; reaching age of majority;

Disaffirmance; express; implied; duty; disaffirmance; return property received from other party. Nothing else; required; pay reasonable amount for use or depreciation; restitution; equivalent amount; Common Law; disaffirm; recover; third party; a minor cannot.

Ratification; ab initio (from the beginning); ratify; a whole; Ratification;
1. express language;
2. implied by conduct;
3. failure to disaffirm timely.

Front 4

Minors: Liability for Necessaries

Not having ______, doesn't excuse minor from paying for ______. Minor is liable ____ for _____ price, but _____ _____. Also, minor not liabile for any necessaries not ___________ by ____. Example?

______ are _____ to _____. They are regarded as things minor needs to _______ in his ________ in life. These include essentials (ie.___, ____, ___ and _____), but also can include others (_____, _______, and ______). Luxury items are not qualified, but _______ can be, depending on whether minor needs it for _______ _______.

Liability for Misrepresentation of Age:

States disagree, majority hold that minor may ________, some hold that minor may not ______, others allow misrepresented party to ___ .

Back 4

capacity; necessaries; not; agreed; reasonable value; consumed; him/her;
Ex: Tailor makes suit for minor. Can recover reasonable value at least for suit. (only if the minor ever used it).

necessaries; difficult; define; maintain himself; particular station; food, lodging; clothes; medicine; textbooks; instruction; legal services; automobiles; business activities;

disaffirm; disaffirm; sue

Front 5

Minors: Liability for Torts

Generally, minor are held liable for torts. However, if a tort and a _____ are ______, and the courts can't enforce the ______, then the minor is not liable. Example?

Incompetent Persons:

If a person is under _______ by ______, their _____ are rendered ____. The guardian is responsible to protect the property of the _____ (or ________). However, a party may be able to recover the ________ for _______. Also, a ______ may ______ contracts for the ______ and the _____ may as well upon ______ of the ______.

If a person lacks a certain level of ________, the agreement is _______. ___________ need not be permanent. Under the traditional _______ __________, the person is considered _____ if he is unable to understand the ______, _____ or _______ of the ____. This applies even if ________ was unaware of the __________.

Back 5

contract; interwoven; contract;
Ex: if a minor rents a car, obliging him contractually to exercise care, if he damages it negligently, he is not liable because he is able to disaffirm contract.

guardianship; court order; contracts; void; ward; adjudicated incompetent; reasonable value; necessaries; guardian; ratify; ward; ward; termination; guardianship;

mental capacity; voidable; Lack of mental capacity; cognitive ability test; mentally incompentent; subject, nature, consequences; contract; the other party; lack of capacity

Front 6

Intoxicated persons

The courts generally hold that contracts entered into while intoxicated are ______, so long as the _________ acts ______ upon ___________. Individuals taking prescribed medications or involuntarily intoxicated are treated the same as ________, under the ____________.

Back 6

voidable; intoxicated party; promptly; regaining capacity; incompetents; cognitive ability test;

Front 7

An ___ contract is every way enforceable as a _____ contract, unless provided by _____. The ________ of ______ requires that certain designed ____ of _______ be _________ to be ______. This has _________ with any kind of _____. Its purpose is to _________ in the proof of certain oral contracts by ____________. It does not prevent oral contracts ________.

Statute of Frauds Contracts that must be in writing:

1. ___________ (_____)
2. ___________________
3. ____ upon __________
4. ____________________
5. ____________________

Most states require other contracts evidenced in writing (ie. __________). The _____ requires that contracts for sale of all other property over ____ be ______.

_____ and _____ have helped ensure that ______ records and _______ are not ________. They ______ _______ and ________.

Back 7

oral; written; statue; statue of frauds; types; contracts; written; enforceable; nothing to do; fraud; prevent fraud; perjured testimony in court; outside the statue;

1. Promise to answer for the duty of another (suretyship)
2. Promise of executor/administrator to answer for descendant's debts
3. Considerations upon marriage
4. Agreements for transfer of interest in land
5. Agreements over a year.

will contracts; UCC; $500; in writing;

UETA; E-Sign; electronic; signatures; legallay insufficient; exclude wills; family law documents;

Front 8

Statute of Frauds:

Suretyship provision - applies to contractual promise between a _____ (_____) to a ______ (____) to perform duties for a 3rd person (_______) if they don't perform (if X doesn't pay, I will). This must be _______. The promise is said to be a _______ in that the _____ is _______. Thus there are __ contracts, a _____ contract and a ____ contract.

_______ - if the promisor makes an ______ the the ______ doesn't apply. (I will pay for X's debt). The promise may ______.

_______ doctrine. Where the ______ of the ____ is to ________ for _____, then the promise is _____ the ____ and the contract may _____.

________ - if the ____ is made from a _____ to a _____, it is _____ and may be _____.

Executor / Administrator Provision - applies to promises made by these people to ___________ for the duty of the decedent. The promise must be _____. This does not apply to ____________ of the ____ out of ___________.

Back 8

surety (promisor); creditor (promisee); (principal debtor); in writing; collateral promise; promisor; not principally liable; 2; primary; collateral;

Original promise; original promise; statute; be oral;

main purpose; main purpose; promisor; obtain economic benefit; himself; outside; statute; oral;

Promise made to debtor; promise; 3rd party; debtor; outside the statute; oral;

answer personally; in writing; promises to pay debts; decedent; his/her estate.

Front 9

Statute of Frauds:

Marriage provision - does not apply to _____ ____ to ____. Only if _____ to ____ is made in ___________ something else
Example?

Land Contract Provision - all promises to transfer, buy, or pay for interest in land must be in writing. Examples? Exceptions:
1. ________ - _____ or ___
2. _______ - if transferee has _________ and made __________ on the ____ or ____ _____ of it. Example?
Also enforceable if seller fully performs by transferring title to land.

One year provision:
a. _________ - to determine if the contracts falls in 1 yr. provision - ask is ______ for ______ of the ______ within a year. Not _______ or _______ it will in a year. 2 examples? Contracts with _______ are excluded as well and may be ____.
b. __________ - the years runs from the time the ________. Example? However, if the agreement is to ________, or ___, it is excluded from the statue and may be ____.
c. __________ - this is enforceable under the provision even though agreement is ___ and performance ___________.

Back 9

mutual promises; marry; promise; marry; consideration of;
Ex: Adams promise to Beth of a farm if she accepts his proposal of marriage.

Ex: ownership interests, leases, mortgages, options, etc.
1. short term leases; one year; less
2. part performance; paid a portion; valuable improvements; land; taken possession;
Ex: Jane orally agrees to sell Jack land for $30. Jack pays $10 so far and builds house. Years later Jane repudiates contract. Enforceable.

a. possibility test; possible; the performance; contract; likely; probability;
Ex: Oral contract b/w X and Y to build bridge within 3 yrs enforceable, because unlikely, but possible to perform.
X orally agrees to employ Y for life, it is possible that he may die, thus enforceable.
indefinite duration; oral
b. Computation of time; agreement is made; X orally agrees to employ Y for 1 year, starting in a week. Not enforceable.
beginning the day following; could; oral;
c. Full Performance by 1 Party; oral; not possible within a year.

Front 10

UCC - Statue of Frauds

Must be _____ if over _____. Exceptions:
1. _________ - oral agreement enforceable. Some courts also hold that performing over period of time - party may implicitly ___ the existence of contract.
2. __________ - oral agreement enforceable if seller can show he made _________ of manufacture before receiving ________. This exceptions doesn't apply if the ___________ through seller's ________.
3. ______________ - this validates the contract but only for ____ / _____ accepted. Example?

Modification or Rescission of Contract within the Statue.

______ modifying previous ______ are ______ if the resulting _____________. Reverse is true: ______ modifying a contract is _______ if the resulting contract is ____________.
Examples?
UCC Examples?
Oral _____ is ______ and discharges _________. However, where _______ are ______, another _____ is needed.

Back 10

written; $500;
1. Admission; admit;
2. Specially Manufactured goods; substantial beginning; notice of repudiation; good can be resold; normal operations;
3. Delivery or Payment and Acceptance; quantity / price;
Ex: Oral agreement to buy 1000 watches for $15000. Seller ships, buyer accepts 300 watches. Oral contract enforceable only for 300 so far.

Oral contracts; contracts; unenforceable; contract is within the statue; Oral Ks, enforceable; outside the statute.
Ex: Oral - to modify 1.5 year to 2 year. NO. - to modify 2 year to 6 month / higher salary. YES
UCC EX: Oral - Motorcycle was $450, now $550 w tricked out rims. Unenforceable. - Motorcycle was $550, now $450 without rims. Enforceable.
rescission; enforceable; unperformed duties; land Ks; rescinded; contract;

Front 11

Compliance with the Statue of Frauds:

(Common Law) Note, Memorandum, or Contract must:
1. ________
2. ________
3. ________
The parties might view it as ______________. (ie. ______, _______, etc.) It may even include a ______ of the ____. If, in case of a letter, only signed by 1 party, only enforceable against 1. The _______ may be written / printed and the evidence may be ________.

UCC differences: must state the _____ of ______ (not necessarily ____). Also, ________, if 1 sends _______ of ______ to other party, the contract is _______, unless the ______ sends ____ within ____.

Non-compliance:

_______ - statute of frauds applies only to _____ Ks, not _____. After ________, nothing can be done.

________ - may recover for services rendered in an __________.

Back 11

1. specify parties
2. specify subject matter
3. be signed by party
having no legal significance; personal letter; record of books; repudiation; oral agreement; signature; within several memorandum.

quantity; goods; price; between merchants; written confirmation; goods; enforceable; other party; objection; 10 days

full performance; executory; executed; full performance;

restitution; unenforceable contract;

Front 12

_________ - After _______ K is _____, all _____ or _____ oral agreements are ______. ____ literally means _____. This applies only to an _______, which is one that parties have agreed as being the ______ and _______ _____ between them. The courts regard parties as having omitted ______ any ______ not in writing. A few exceptions to ________ rule:
- a ________ to which parties agreed orally
- agreement was ___________.
- ___ evidence admissible to explain _______ in K.
- showing contract was ____ (fraud, etc.)
- ___________

Back 12

Parol Evidence Rule; written; signed; previous; contemporaneous; excluded; parol; speech; integrated K; complete; exclusive agreement; intentionally; provision; parol evidence; condition precedent; part oral, part written; oral; ambiguous terms; void/voidable; typographical error;

Front 13

Supplemental Evidence

Written contracts can be explained/supplemented by:
1. _______ - sequence of previous conduct.
2. _______ - practice or method of dealing followed in place or vocation
3. _______ - the manner in which parties accepted tenders without objection.
4. _______, unless ______ K

Back 13

1. Course of Dealing
2. Usage of trade
3. Course of performance
4. Supplemental Evidence; integrated