Mgt 340 Exam 2

Front 1

Contracts

Back 1

• Agreements that are reached
• Are a constitutional right

Front 2

A contract

Back 2

• Is a set of voluntary promise that the law will enforce

Front 3

Bilateral Contract

Back 3

• Two parties make a promise. Ex. A promises to give B $20 if you promise me you will wash my car. (promise for a promise)

Front 4

Unilateral Contracts

Back 4

• One party makes a promise and the other party act on the promise. Ex I’ll give you $20 dollars if you wash my car on Saturday.

Front 5

Express Contracts

Back 5

• A party expresses an intent to inter an agreement. (stated in words or spoken.)

Front 6

Implied In-fact contract

Back 6

• The circumstances show there is an implied contract. (when you go to the dentist you don’t have to sign a contract, but you are going there for the service and you expect to pay although nothing was said.)

Front 7

Implied In-Law

Back 7

• Is also called a Quasi contract. This is when a court treats someone as if a contract existed. (Ex. I live at 1200 N-brodway and someone comes up in a truck and starts painting your house and you didn’t ask for it, but they painted the wrong house, but you didn’t stop them. The court can say you saw them do it but you didn’t stop it.)

Front 8

Void Contract

Back 8

• There is no contract because there are elements missing

Front 9

Voidable Contract

Back 9

• Is a good contract but it can be avoided (someone is declared incompetent)

Front 10

Unenforceable contract

Back 10

• A good contract but can not be enforced
o Ex. Some contracts must be in writing

Front 11

Executed Contract

Back 11

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• One party has done an act and been paid

Front 12

Excutory Contract

Back 12

• One party has done an act but not been paid

Front 13

Requirements for the Formation of a Contract

Back 13

• 1. Must be an agreement between parties
o Meeting of the minds

• 2. Consideration
o The parties need to bargin for something of legal value

• 3. Capacity
o A person has to have the capacity to enter a contract

• 4. Must be genuineness of a ascent
o Parties must be on the same page

• 5. Legality of purposes
o The purpose has to be legal

Front 14

The Agreement

Back 14

• Consist of two things, an offer and an acceptance
• For the offer to be valid you have to have the intent, can’t be joking

Front 15

o Counter Offer

Back 15

• When the original offer is rejected but they respond with another offer

Front 16

• The Offer

Back 16

o Identifies the party or parties

o Identifies the subject matter (the house on N. Broadway)

o Identifies the price, when you will do it and how you will do it.

o Must be communicated

o The duration of the offer is:
• The offer can be revoked before it is accepted.

o May specify how long the offer will be open

o Expires be a rejection

Front 17

Paid for Option

Back 17

• Cannot be revoked, Ex. Putting a down payment on something

Front 18

o Under the Uniform Commercial Code

Back 18

• When a merchants firm makes an offer that something will be open for a certain amount of time them must stick it.

Front 19

o Mailbox Rule

Back 19

• Only refers to the acceptance. Once the acceptance is placed in the mail you have a contract.

Front 20

o Mirror Image Rule

Back 20

• The acceptance must reflect the offer
• Only the offeree can accept

Front 21

Consideration

Back 21

• Something of legal value

• Something that distinguishes a gift from a contract

• A gift is not a contract

• Courts will not look to see if the person got a good deal or not, but they will look to see if there was consideration
o However, the amount of consideration can indicate that there was fraud

Front 22

Legal Detriment

Back 22

• Doing something you don’t have to do.

Front 23

Promissory Estoppels

Back 23

• When someone makes an offer, the other party accepts and then suffers some detriment and changes their mind
o About to graduate, a company offers you a job and you accept, then 6 months later the revoke it.

Front 24

Contract Form

Back 24

• Can either been oral of in writing

• However, there are certain contracts that require a written form contract, and they are:
o Sell of land (real estate)
o A sell of goods of $5,000 or more
o Contracts in consideration of marriage
o A contract that cannot possibly be performed within a year

Front 25

Parol Evidence Rule

Back 25

• Once you have something in writing, you cannot use anything extrinsic that contradicts what you agreed to.
o Hence, once its in writing you cannot change it.

Front 26

Guinness of ascent

Back 26

• If a party is forced to do something there is no ascent there

• Misrepresentation
o When there is a material fact that is disclosed. Ex. Seller doesn’t tell someone that there is a crack in the engine.
• Fraud
o When a person knowingly gives you false information

Front 27

Duress

Back 27

• When someone forces you to do something.

Front 28

Undue Influence

Back 28

• Someone you trust convinces you to do something that ends up causing you physical or financial harm

Front 29

Legality of Purpose

Back 29

• You can’t inter a contract that is illegal.

Front 30

Unconscionable Contract

Back 30

• A contract that is so one sided that it shocks the judge/jury and the say they will not honor it.

Front 31

Condition Precedent

Back 31

• Ex. I will buy your house on the consent that the bank will loan me the money.

Front 32

o Compensatory Suit

Back 32

• Compensating someone for the money they lost, or could have made

Front 33

o Consequential

Back 33

• Ex. I agreed to buy something for $1 per unit and already had a buyer willing to pay $1.5 per unit. You sue to get the money

Front 34

Liquidated Damages

Back 34

• They are preset damages. They are damages that are hard to compute so they will have in contract, if you mess this up you will have to pay.

Front 35

Specific Performance

Back 35

• Tell the court to make the party do what they said they will do

Front 36

Principal Agency Relationship

Back 36

• When someone has a agent act for the principal

Front 37

• General power of attorney

Back 37

o Giving someone power to do something that you can do

Front 38

• Specific Power of Attorney

Back 38

o Giving someone power to do something that you cannot do yourself
• Ex Accountant

Front 39

• Implied Authority

Back 39

o It is not specifically given, but in-order to do the task they must have the authority.
o Someone gives a manager authority to take care of the business, although they don’t mention all the task involved

Front 40

Apparent Authority

Back 40

o When someone thinks they have authority, but they don’t actually have authority.
o Ex. An owner gives a manager authority to purchase inventory up to $1,000 dollars but the manager goes against their authority and purchases $1,200. In this case the whole seller would not know that there was a limit on how much they could sell to the company, they believed there was “apparent authority.”

Front 41

• Estoppels

Back 41

o A person makes someone believe they have authority to do something when they don’t. You could have an estoppel on the contract.

Front 42

• Authority created on ratification

Back 42

o You tell someone they can make a decision up to $5,000 dollars, but they make a decision on something that is $40,000 because it is a good deal

Front 43

• Fiduciary

Back 43

o The relation between the agent and principal should be on complete honesty and trust.
o Even after the relationship has ended the agent should not disclose any information that is valuable to the principal

Front 44

• Duty of Care

Back 44

o The agent is supposed to use their best ability at all times and be reasonable.
o Must inform the agent of what they need to know to do their job to the best of their ability
o Compensation

Front 45

• Torts

Back 45

o When you damage someone or their property
o Principals are always liable for the torts or agents.

Front 46

• Termination of the relationship

Back 46

o Can be stated In a contract
o Can be fired at any time

Front 47

Three stages before you can sell a stock

Back 47

• Pre filing period
• Waited period
• Post-effective period

Front 48

• Pre filing period

Back 48

o The time they are getting everything together

Front 49

• Waited period

Back 49

o They wait for the “ok” to sell stock. During this waiting period they cannot sell stock, but they can let people know that they are going to sell stock from this corporation

Front 50

• Tombstone Adds

Back 50

 They can run a add letting people know they will be selling stock soon.

Front 51

Two types of Underwriters

Back 51

o 1) Best efforts underwriters
o 2) Firm Commitment underwriter

Front 52

Best efforts underwriters

Back 52

• Underwriters who sell stock to people for the corporation for a commission

Front 53

Firm Commitment underwriter

Back 53

• Someone who purchases a stock at a discount and resells it for a profit. Usually done by companies.

Front 54

Two types of exemption for the 1933 act

Back 54

• Exemption Securities
• Transactions

Front 55

• Exemption Securities

Back 55

o Do not have to go through the long process of the SEC Registration.
o Any securities issued by any government agencies
o Banks do not have to file an SEC registration

Front 56

• Transactions

Back 56

o Are transactions that don’t have to go through the SEC regulations

Front 57

o Intra state

Back 57

Stocks must be sold in state, when any corporation has 80% income or assets within one state, or when 80% or the proceeds are used in state.

Front 58

o Small Offering Under Regulation A

Back 58

• When a corporation is going to sell securities under 5-Million dollars and within a 12month period, but you do have to file a simplified statement.
• The majority of the stock must be sold to a credited investors.

Front 59

o Credited Investors

Back 59

• Are people who invest a lot, wealthy people, banks, people working for the company.
• Must have the income of at least $200K a year for at least two years.

Front 60

Securities Exchange Act of 1934

Back 60

• Governs the resale of stock, the purpose is full disclosure
• Secondary Market
• Requires a one time registration for the company.
• Then the registered company must file registered reports
• They can suspend trading of stock of any company if they think there may be some sort of fraud

Front 61

State Security Laws

Back 61

• Referred to as the Blue Sky laws
o They make sure people don’t get coned into buying things they should not.
o It offers protection

Front 62

Merger

Back 62

• When two or more corporations combine to make one entity and one of the companies keeps going.

Front 63

Horizontal Mergers

Back 63

• When two competitors merge

Front 64

Vertical mergers

Back 64

• EX. When a wholesaler and a retailer merge

Front 65

Consolidation

Back 65

• When two or more corporations combine and they form a brand new company

Front 66

Tender Offer

Back 66

• When there is a public offer to buy the shares of stock, someone is trying to pay more for shares of stock in order to take over a company.

Front 67

Two types of Tender Offer

Back 67

o A Friendly Offer
o A Hostel Offer

Front 68

o A Friendly Offer

Back 68

• Someone wants to buy the shares for more, and the board thinks it would be a good deal to the shareholders.

Front 69

o A Hostel Offer

Back 69

• When the company does not want to be taken over but the person contacts the shareholders on their own.