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165 Cards in this Set
- Front
- Back
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Contract |
Broadly speaking, is a promise that the law will enforce. |
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Express Contract |
A contract formed by language, oral or written, is an express contract. |
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Implied-in-Fact Contract |
A contract formed by conduct. |
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Implied-in-Law Contract or Quasi-Contract |
Not a contract at all. It is a remedy that allows a plaintiff to recover a benefit unjustly conferred upon the defendant, a remedy to prevent unjust enrichment. |
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Unilateral Contract |
One promise, which is given in exchange for performance. A contract is not formed until performance is completed. (e.g. Ann promises to give Bard $10 if Barb will wash Ann's car) |
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Bilateral Contract |
There are two promises- a promise is exchanged for a promise. (Ann promises to give Barb $10 and Barb promises to wash Ann's car) |
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Executory Contract |
A contract is executory if duties remain to be performed under the contract. A contract may be wholly executory (neither party has performed) or partially executory (one party has not performed) |
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Executed Contract |
A contract is executed if all of the duties under the contract have been performed. |
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Sources of Contract Law |
1. Common Law- generally derived from courts. Involving real estate, insurance, services, and employment (RISE) are governed by common law) 2. Uniform Commercial Code (UCC) Sales Article- Statutory law that has been widely adopted throughout the US. It's sales article governs contracts for the sale of goods. |
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Elements in General- Generally there are three requirements of a legally enforceable contract: |
1. an agreement made up of an offer and an acceptance.
2. an exchange of consideration (something of legal value) 3. a lack of defenses If these are met there is an enforceable contract and remedies are available if one party breaches. |
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Agreement- Mutual Assent |
(Offer and acceptance) agreeing to the "same bargain at the same time". A meeting of the minds. Generally one party will make a proposal and the other party will agree to it. |
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The Offer |
An offer is a statement by an offeror that creates the power of acceptance in the receivor offeree. To be an offer, the communication must create a reasonable expectation in the offeree that the offeror intends to make a contract. |
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Three questions to consider in regard to an offer |
1. Was there a manifestation of intent to contract? 2. Was there definiteness and certainty in the essential terms? 3. Was there communication of the above to the offeree? |
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Intent to Make a Contract |
"Obvious" joke is not an offer. To be valid the offer must be sufficient for a reasonable person to assume that the offer was a serious offer to contract. Contract law generally follows an objective theory. (Would a reasonable person believe this offer was serious?) |
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Advertisements |
Generally not offers. Not offers because they are not addressed to any in particular. Usually considered only to be an invitation seeking offers. Exception- Specifying Offeree "Rewards" An advertisement that limits the scope of the person who can accept will be considered an offer. (example, first five customers can buy this coffeemaker for $1) |
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Terms Must be "definite and certain" |
UCC- quantity RISE- all terms An offer for sale of goods generally need only include quantity. RISE 1. identity of the offeree and the subject matter 2. the price to be paid 3. the time of performance 4. the quantity involved. 5. the nature of the work to be performed. |
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Communication to Offeree |
-No knowledge, no acceptance |
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Termination of Offer |
To create a contract, an offer must be accepted before it is terminated. Offer can be terminated by revoke, reject, automatic. |
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May be Direct or Indirect Revocation |
Oral/written, conduct (sell to someone else) Generally it is effective when received, or in case of publication effective when published. |
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Revocation by Publication |
Offers made by publication may be terminated by publication of revocation through comparable means. |
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Limitations on Offeror's Power to Revoke |
Three exceptions to offeror's ability to revoke: 1. option contract 2. substantial start on a unilateral contract 3. merchant's firm offers under the UCC |
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Option Contract |
Offeree "buys" time. A distinct contract in which the promisor promises to keep an offer open in exchange for consideration from the promisee. |
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Unilateral Contracts |
If an offeror makes an offer to enter into a unilateral contract and the offeree begins to perform, the offeror cannot revoke and must give the offeree a reasonable time to complete performance. |
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Merchant's Firm Offers under UCC Sales |
Certain written offers by merchants are irrevocable under the UCC.
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Rejection by Offeree |
The offeree can terminate the offer by rejecting it. Once the offer is rejected, it cannot be accepted. Rejection is effective when received. |
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Counteroffer |
A rejection (which terminates the original offer) and an offer (of which the original offeror is now the offeree who may accept or reject it) |
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Lapse of TIme |
The offeree must accept the offer within the time specified or if no time period is specified within a reasonable time. An offeree's silence is generally understood as a rejection of the offer. |
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Termination by Operation of Law |
Termination by Death or Incompetency of Parties (Automatically) (An option contract is not terminated by the death of a party). Also includes Termination by Destruction of Subject Matter and termination by illegality. |
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The Acceptance |
The acceptance is the offeree's assent to enter into the contract. Acceptances need not be in writing. A simple nod or fall of a gavel can constitute an acceptance. |
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Who May Accept |
The general rule is that only the person to whom the offer was made may accept. Thus offers are not assignable. However, option contracts are assignable. Generally acceptances are effective when they are dispatched (ie mailed, e-mailed, faxed) if properly address. |
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Method of Acceptance |
Generally, acceptance may be made in any matter reasonable under the circumstances. However, if the offeror specifies a method of communication, that method must be used. A purported acceptance utilizing another method is considered a counteroffer. |
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Exception to the mailbox rule |
The offeror can opt-out of the mailbox rule by stating in the offer that the acceptances must be received to be effective. |
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Consideration |
The price of contracting. Both sides of the contract must be supported by legally sufficient consideration. There are 2 elements, there must be something of legal value given by each party and there must be a bargained for exchange. |
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Element of Legal Value |
Something is of legal vale if it constitutes either a detriment to the promise or a benefit of the promisor. The promisor's promise is supported by consideration only if the promisee agrees to do something he or she is not already obligated to do. |
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Need not have monetary value |
Consideration need not have monetary value. As long as the promisee is promising to do something that he is not already obligated to do or promising to refrain from doing something that he legally could do, there is consideration. |
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Need not flow to party |
Note that consideration need not flow to one of the parties. It is sufficient to do something or give something to a third party. |
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Courts will not inquire into adequacy |
Fairness usually not required so long as not unconscionable and it is arm's length. |
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Preexisting legal duties not sufficient |
Police- donuts A promise to perform, or performance of, an existing duty is not sufficient consideration. |
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To make a modification enforeable |
UCC- Good Faith RISE- Give consideration |
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Bargained-for-Exchange |
Something is not consideration unless it was given in exchange for other consideration. 1. gift- no exchange (unenforceable) 2. "Past" or "Moral" Consideration- "saving tim" if something had already been given or performed before the promise was made, it will not satisfy the bargain requirement. |
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Exception- "Detrimental Reliance/Promissory Estoppei" |
-Donation to charity A promise made by one party and detrimentally relied upon by another can be enforced without consideration. For the doctrine to apply the promise must be reasonably relied upon and detrimental. |
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Defenses |
Defenses can make a contract unenforceable. The innocent party's duty to perform discharged. |
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Fraud Defense |
A contracting party can establish a fraud defense if she can prove. M- misrepresentation of material fact A- actual and justifiable reliance by victim I- intended to induce the victim to rely on info D- damages S- scienter |
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Fraud in the Execution |
Occurs when a party is deceived into signing something that he does not know is a contact. This makes the contract void not voidable because there is no "meeting of the minds" |
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Fraud in the inducement |
(Voidable) The defrauded party is aware they are making a contract but terms are materially misrepresented. |
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Innocent Misrepresentation |
Has all of the elements of fraud except scienter. It is made innocently, not intentionally. No punitive. |
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Duress |
Duress arises when a party's free will to contract is overcome by an unlawful use of threat of harm. If the harm threatened is physical, the contract is void. If the harm is economic or social then the contract is voidable. |
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Undue Influence |
A party's free will to contract is overcome by the defendant's abuse of position of trust or confidence. Not arm's length so fairness required. |
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Mutual Mistake |
If both parties to a contract are mistaken as to a material fact regarding the contract, the adversely affected person can avoid the contract. It generally does not apply to mistakes in value, because value is matter of opinion. |
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Nonexistence of Subject Matter |
Contract void. Stolen/destroyed. |
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Unilateral Mistake |
Generally, a unilateral mistake (mistake by one party) is not a defense to a contact. One major exception, a unilateral mistake as to a material fact is a defense if the other party knew or should have known of the mistake. (Big 4 Bids) |
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Illegality |
Contract generally void. |
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Licensing |
If a contract is illegal because a party does not have a required license, enforceability of the contract depends on reason for the license: 1. Failure to have license required to "protect the public" makes a contract void. Even if the unlicensed party performs the contract, he cannot collect. 2. If the license is required to merely "raise revenue" the contract is enforceable. |
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Promise Not to Compete Enforceable if Reasonable |
Most promises not to compete are illegal because they violate antitrust law. However, promises not to compete in employment contracts and in the sale of a business are enforceable if they meet three tests of reasonableness: 1. promise must be reasonably needed to protect a legit business interest (no stealing trade secrets) 2. must be reasonable in duration 3. must be reasonable as to distance. |
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Minors may generally disaffirm contracts |
(cancel) A minor may disaffirm a contract anytime while a minor or even within a reasonable time after becoming an adult. The minor must generally return whatever she possesses when she disaffirms. |
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Exception to minor rule |
contracts for necessities A minor will be bound on his or her contracts for necessities of life, including food, clothing, and shelter. |
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Ratification on Reaching Majority |
(Not a minor) A person can become bound on the contracts he or she enters into as a minor upon reaching the age of majority and ratifying the contract. It can be ratified by: 1. failing to disaffirm within a reasonable time 2. expressly ratifying orally or in writiing 3. retaining or accepting the benefits |
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Intoxication |
A defense to contract only if the intoxication prevents the promisor from knowing the nature and significance of his or her promise and the other party knew of the impairment. |
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Mental Incompetency |
Incapable of Understanding Contract (Voidable) A contract made by a party after he is adjudicated mentally impaired is void. |
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Statute of Limitations |
Provides that a legal action must be commenced within a certain period of time. Four to six year- rise. Actions for breach are usually measured from the time the cause of action accrued. |
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Statute of Frauds- Six Contracts Requiring a Writing |
M- Contracts where the consideration is marriage Y-Multi-year contract L- Involving interests in land and real property E- Contacts by executors to pay estate debts out of personal funds G- for the sale of goods over $500 S- Contracts to act as surety (ie to pay the debt of another) |
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Year Contracts- Measured from the date of the contract |
Contracts that cannot be performed in one year must be evidenced by a writing. 1. Exception- possible to perform in a year 2. exception- full performance by one party. |
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Land Contracts Must be Evidenced by a Writing |
1. Exception- Leases for Less than a year 2. Exception- Full or partial performance, most states require two of the following: i. payment in whole or in part ii. making valuable improvements on the land iii. possession of the land |
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Suretyship |
A promise to pay the debt of another (example like co-signer) |
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What writing will suffice? |
Emails, Texts All that is required is some writing that provides evidence of the material terms of the contract that is signed by the person being sued. Contracts for sale of goods generally need only have a quantity term and a signature. There is no requirement that all terms be stated in a single writing. |
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Effect of Noncompliance |
Failure to satisfy the Statue of Frauds does not prevent the formation of a contract, rather, it makes the contract unenforceable by one or both parties. |
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Accord and Satisfaction and Substituted Contract |
Same parties, new agreement An accord is an agreement to substitute one contract for another and satisfaction is the execution of the accord. They discharge the original duty. Until the accord is satisfied a party may sue under the original contract of the accord. |
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Novation |
Same agreement, substituted party Available as a defense to a party who has been released from a contract. It occurs when a new contract substitutes a new party for an old party in an existing contract. All parties must agree to the release. |
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Conditions can affect a party's duty to perform |
Permissable. A condition is an event that's occurrence or nonoccurrence will end a party's duty to perform. |
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Condition Precedent |
A condition that must occur before the other party must perform. (qualify for a mortgage) |
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Conditions Concurrent |
"Store" Conditions that must occur simultaneously. The parties make the exchange simultaneously. |
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Conditions Subsequent |
"Engagement Ring" A condition that will occur after a party's duty to perform has arisen and will cut off that duty. |
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Prevention of Performance is a Breach |
"Hinders"- not cooperating with audit If one party prevents the other from performing contract duties, a material breach has occurred. The nonbreaching party is excused from performance. |
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Subsequent (After) Modifications Admissible |
Oral or written modifications made after the contract has been entered into (subsequent modifications) are admissible under the parol evidence rule. |
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Evidence Admissible to Explain Ambiguous Terms |
Even, if there is an integrated written contract, parol evidence is admissible to show the meaning of an ambiguous term. |
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Unconscionability |
A doctrine used by courts to refuse to enforce provisions of a contract or an entire contract, based on notions of fairness. It is usually used only when a clause or a contract is extremely unfair and the party having the benefit of the unfair term had substantially superior bargaining power. |
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Material or Substantial Breach |
Or Intentional "RISE". The nonbreaching party can be discharged from the contract. If the breach is only minor the nonbreaching party is not discharged, but is entitled to damages. |
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Anticipatory repudiation or early breach |
Occurs when one person unequivocally indicates in advance of the performance to another that she will not perform the contractual duties, leaves 3 options 1. treat the repudiation as a breach and immediately sue for damages 2. Ignore the repudiation, await the time for performance and then sue if the repudiating party has not performed. 3. cancel the contract |
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Damages |
Money or Specific Performance They are intended to put the nonbreaching party in as good a position as he would have been had there been no breach. |
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Compensatory Damages- Benefit of the Bargain |
The standard measure of damages for personal service contracts awards the nonbreaching party enough money to obtain substitute performance. |
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Consequential Damages |
In addition to the standard measure of damages, a party may also collect all damages that are reasonably forseeable as a result of the breach. |
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Specific Performance- Used with Land or Unique Items |
Essentially a court order that the breaching party perform or face contempt charges. In these cases, money would be an inadequate remedy. a. cannot be used for personal service contracts. b. specific performance or compensatory damages, can receive either but not both. |
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Liquidated Damages |
Damages Agreed to in the Contract. Contract specifies damages. Enforceable if the amount is reasonable in relation to the actual harm done and not a penalty. |
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Punitive Damages |
Generally are not available for breach of contract. They are available for fraud, which is a tort cause of action. |
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Rescission or Cancellation |
"Original Positions". Cancels the contract and restores the parties to their former position. Rescission or cancellation is available for mutual or unilateral mistakes, fraud, and most material contract breaches. |
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Doctrine of Substantial Performance |
Unintentional minor breach for services. |
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Quasi-Contract (Restitutional Damages) |
If parties are discharged from a contract and one party already bestowed a benefit on the other (e.g. because of full or partial performance) the court will imply a promise to return the value of the performance to prevent unjust enrichment. This remedy is also used when there is no contract but one party confers a benefit on another at the other's request and with a reasonable expectation of being compensated. |
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Limitations on Monetary Damages |
In order to fairly compensate parties for harm done, the law imposes the limitations of forseeability and mitigation on monetary damages. |
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Foreseeability |
Consequential damages are awardable only for those damages that at the time the contract was formed a party could reasonably foresee would result from a breach. |
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Third Party Beneficiary |
The general rule is that only the parties to the contract have rights under the contract (these parties are said to be in privity of contract. An exception exists for intended third party beneficiaries. |
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Intended vs. Incidental Beneficiaries |
Intended- can enforce Incidental- can not enforce At a minimum the third party must be named or specifically described in the contract. |
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The Parties |
The Intended beneficiary is either a donee beneficiary or creditor beneficiary. |
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Donee Beneficiaries |
Receive their interest as a gift |
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Creditor Beneficiaries |
Receive their interest because a party owes them something. |
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Who may the beneficiary sue? |
An intended beneficiary may sue the promisor if the promisor fails to perform. Creditor beneficiaries can also sue the promisee for failure to fulfill the original obligation. Donee beneficiaries cannot sue the promisee since the promisee was simply trying to make a gift. |
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The Action- Assignment vs. Delegation |
Technically if a party wants to give contract rights to a third party, it is called an assignment of rights. If a party wants to have a third party perform contractual duties, it is called a delegation of duties. |
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Assignment of All Rights |
An "assignment of all rights under a contract" is usually interpreted as an assignment of a contract which is both an assignment of rights and a delegation of duties. |
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What may be assigned or delegated? |
The general rule is that any contract right may be assigned or any contract duty may be delegated. The exception are when the assignment will change the obligor's risk or the delegated duty involved specialized personal services. Can not assign offers but can assign option contracts. |
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Effect of Delegation |
Both Parties Liable. A delegation does not release the original party from the contract. After the delegation, both the delegator and delegatee are liable unless there is a novation. The person to whom the duty is owed can sue either one in any order, but can only get one recovery. |
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Assumed Mortgages |
*Both parties liable Treat an assumed mortgage as an assignment. When a mortgage is assumed, both the assignor/mortgagor and the assignee are personally liable. Upon default, the mortgagee (lender) may sue either party. |
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Compare Assignee Taking Subject to the Mortgage |
If a person takes subject to the mortgage, the mortgagee can foreclose on the property and hold the assignor/mortgagor liable. However, the person who took subject to the mortgage is not personally liable. |
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Assignment of a Creditor's Rights to Receive Money |
Accounts Receivable A creditor's right to receive money is generally assignable to another, this is generally true even if the contract prohibits assignment. Once notice is given, payments must be made to the assignee. If the debtor pays the assignor instead, he will still owe duty to pay the assignee. |
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Implied Warranties of Assignor |
Owed Money An assignor impliedly warrants that she has the rights assigned and that she will not do anything to interfere with those rights. |
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No Formalities Needed |
Generally an assignment need not be made in writing and need not be supported by consideration. Notice must be given to the third party. |
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UCC- Goods movable property |
Regardless of price. (e.g. cars, cows, groceries) The following are excluded: 1. contracts for personal services and real estate 2. intangible personable property, such as stock or patent rights 3. contracts for fixtures- things attached to the land. |
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Creation of a Contract |
General rule: offers revocable before acceptance, Exceptions: options. |
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Certain offers are irrevocable without consideration. To qualify as a merchant firm offer: |
1. the seller must be a merchant 2. the offer must be in writing and signed by the merchant. 3. the offer must give assurance that it will be kept open for a certain time. Merchant's firm offers are irrevocable for the time stated. If no time is stated, for a reasonable time, but in no event longer than 3 months. |
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Mirror Image Rule Does Not Apply Under UCC |
"Goods" Minor changes, valid acceptance. Material change- counteroffer. |
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Promise to Ship or Prompt Shipment |
Under the Sales Article, an offer to buy goods for current or prompt shipment can be accepted by either a promise to ship or by prompt shipment, unless the offer indicates otherwise. |
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Shipment of Nonconforming Goods |
Both and acceptance and breach of contract. If the seller reasonably notifies the buyer that nonconforming goods are shipped only as an accommodation to the buyer, the shipment is not an acceptance. It is a counteroffer. |
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Output and Requirements Contracts |
Valid if Reasonable. In this contract a buyer agrees to buy the entire output of a seller's factory for a stated period of time. No quantity is listed in contract. |
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Modifications Enforceable without Consideration |
As long as the modification is made in "good faith" and "agreed to" |
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Defenses |
Fraud- MAIDS Statute of Limitations- 4 years |
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4 Exceptions to sale of goods over $500 must be evidenced in writing |
S- Contacts for specially manufactured goods W- A merchant sends another merchant a written confirmation of a contract, it will bind the seller and the recipient if they do not respond within 10 days. A- contracts that the parties have admitted in court P- Contracts that have been performed, to the extent that the performance has been accepted. |
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Impossibility and Impracticality |
Under UCC a contract does not need to be impossible to perform for the contract to be discharged, it can be impracticable (extremely more burdensome than anticipated because of the occurrence of an unforeseen event) |
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Failure of Agreed-upon Method of Transportation |
No defense. If the method of transportation called for in the contract is unavailable or commercially unreasonable, the seller may use a different means of transportation and the buyer must accept. |
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Delivery and Risk of Loss |
Not dependent on title. Risk of loss generally depends on the time delivery is made. |
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Step 1- For Risk of Loss to Pass, Goods Must be Identified |
Title and risk of loss cannot pass until the goods are first identified. Goods are identified when they are marked, segregated or in some manner identified as goods for a specific buyer. |
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Step 2: As Parties Agree |
Contract Terms The most important rule to remember is that if the parties designate when and where delivery will occur or risk of loss will pass, their agreement governs. |
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Step 3: Where No Specific Agreement |
In noncarrier cases the buyer will usually pick up the goods at the seller's place of business. In carrier cases the parties contemplate a common carrier will be used to ship the goods. |
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Noncarrier Cases- Rules depend on status |
If there is no carrier involved, the time of delivery is a reasonable time. The place of delivery is the seller's place of business, otherwise the seller's home. When risk of loss passes depends on whether the seller is a merchant. |
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Nonmerchant Seller |
Risk passes on tender of delivery. If the risk of seller is not a merchant, risk of loss passes to the buyer upon the seller's tender of delivery of the goods to the buyer. (i.e. garage sale) |
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Merchant Seller |
Risk passes on actual delivery. With merchant sellers, risk of loss passes only upon actual delivery to the buyer (i.e. when the buyer takes physical possession) (i.e. store) |
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Carrier Cases- Either Shipment or Destination Contract |
Shipment Contract- Risk of loss passes to the buyer when the goods are delivered to the carrier. |
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Destination Contract- Risk Passes at Destination |
With destination contracts, risk of loss passes to the buyer when the goods reach the destination and seller tenders delivery. |
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FAS- Free Along Side |
A price term that requires the seller to deliver the goods alongside of a specified vessel. Risk of loss passes to the buyer when the seller gets the goods alongside the vessel. |
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CIF- Cost, Insurance, Freight |
The term CIF means the contract price includes the cost of the goods, insurance, and freight. Risk of loss is on buyer during the shipment. |
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FOB- Free on Board |
FOB the seller's place is a shipment contract. The seller must get the goods to the carrier for risk of loss to pass. FOB buyer's place is a destination contract. The seller must get the goods to the destination and tender delivery for risk of loss to pass. |
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Effect of Breach on Risk of Loss |
If the seller sends nonconforming goods, the risk of loss remains on the seller, regardless of the shipping terms, unless the buyer accepts the defective goods. |
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Sale on Approval- Risk on seller until approval |
The sale is not final until the buyer gives his approval (i.e. trial period) Title and risk of loss remain with the seller until the buyer approves. |
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Sale or Return |
Risk on buyer until returned. A sale or return is a completed sale on delivery, buy the buyer has the right to return the goods (sometimes called sale on consignment) Risk of loss passes to the buyer when the seller completes her delivery requirements. Risk remains with the buyer until the goods are completely returned. |
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Insurable Interest when Goods are Identified |
"Buyer has". The code provides the buyer with an insurable interest in goods as soon as the seller identifies the goods to the contract. Both parties can have an insurable interest in the same goods simultaneously. |
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Title Ownership |
Title generally can pass as parties agree. But before title can pass, the goods must be identified to the contract. |
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If parties do not agree, title passes upon delivery |
If there is no agreement, title passes when seller completes her delivery requirements. |
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Buyer Rejects Goods |
Title revests with seller. |
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Warranties |
In sales, a seller must make a "perfect tender" (i.e. the goods and delivery must conform exactly to the contract without any defects) Goods must conform to following warranties: 1. express warranties (oral or written in contract) 2. implied warranty of title 3. implied warranty of merchantability 4. implied warranty of fitness for a particular purpose. |
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Express Warranties |
(in contract) Will arise from any statement of fact or promise made by the seller, any description of goods made by the seller, or any sample or model shown by the seller. The express warranty is that goods will conform to the statement of fact, to the description or to the sample or model. |
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Implied Warranty of Title |
1. Good title, no unstated encumbrances, and no infringements. 2. title and encumbrances made by any seller 3. may be disclaimed specifically or by any circumstance. |
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Warranty Protection Not Limited by Privity |
Anyone injured can sue (breach of warranty and tort). Under UCC warranty liability extends to those who are members of the buyer's household. It also extends to those expected to use, consume or be affected by the product. |
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Tort Liability |
Wrongful Act (intentional fraud or negligence) |
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Negligence- Failure to Use Reasonable Care |
Those injured by goods can sue negligent sellers. They must prove: a. seller owed them a duty of care b. seller breached the duty by failing to use due care. c. damages- the plaintiff suffered damages and d. causation- the damages were caused by the seller's negligence. |
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Strict Products Liability |
Those injured by goods can sue in tort for strict products liability. The focus is on the product and not the seller's conduct. They must prove: a. product was defective when it left seller's hands b. defect caused the plaintiff's injury c. defect made the product unreasonably dangerous d. seller was in the business of selling this type of goods. e. the product reached the user without substantial change in condition. *Privity not required and negligence not necessary. |
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Right to Demand Assurances if Reasonable Grounds Exist |
If one party has reasonable grounds to believe the other party will not perform when required, she may make a written demand for an assurance of performance from the other. Failure to give this assurance within a reasonable time is an anticipatory repudiation. |
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Punitive Damages |
Not available under the Sales Article |
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Duty to Mitigate |
Avoid Damages. Both seller and buyer have the duty to mitigate damages. They cannot recover for damages that could have been avoided. |
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Seller's Remedies |
"Buyer Breaches" 1. Seller's right to cancel and sue for damages 2. seller's right to withhold delivery and stop goods in transit. |
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Reclaim Delivered Goods for Buyer's Insolvency |
If an insolvent buyer has already received the goods, the seller may reclaim them within 10 days after receipt. The 10 day limitation does not apply if the buyer made a written misrepresentation of solvency. |
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Buyer's Right to Sue for Damages for Accepted Nonconforming Goods |
The buyer may accept nonconforming goods and sue for damages. Damages are usually the difference between the value of the conforming goods and the goods delivered plus incidental and consequential damages. |
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Cover |
The buyer can purchase comparable goods (cover) and sue the seller for the difference between the contract price and cost of cover. |
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Copyrights |
Author's Life + 70 years A federal right that gives authors of original works certain rights to control the reproduction of the work |
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What works may be protected? |
1. literary works, such as books 2. musical works and choreographic works 3. pictures, whether painted, drawn, photographed 4. films 5. sculptures 6. computer programs "source code" 7, architectural works 8. foreign language reproduction of a copyrighted work |
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What is not protected? |
Procedures, processes, concepts, etc. |
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What are the rights? |
A copyright gives owner exclusive rights to: 1. reproduce the work 2. prepare derivative works 3. distribute copies of work 4. perform or display the work publicly. |
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Limitation- Fair Use Doctrine |
Allows use of a copyrighted work without the owner's permission for purposes of: a. criticism and comments b. news reporting c. teaching |
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Copyright Rights |
Copyright protection is automatic. It arises as soon as an author/creator fixes a work in a tangible medium of expression. However, to be able to enforce copyrights in court, the copyright owner must generally register the copyright with the federal copyright office. |
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Who owns the copyright? |
Typically, the creator of a copyrighted work owns the copyright. Exceptions: 1. if the work was created by an employee for his or her employer within the scope of employment, the employer owns it. 2. if someone commissioned the work to be created (work for hire) |
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Rights Transferable if in Writing |
Ownership of a copyright may be transferred, but the transfer must be memorialized by a writing signed by the copyright owner. |
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Protection |
In a suit for copyright infringement, the copyright owner need only prove ownership and a violation of one the above rights. i. owner does not have to prove fault ii. does not have to prove the entire work was taken, just use of a substantial part. |
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Remedies |
a. Injunction b. impoundment of the offending material c. damages, including profits made by infringer d. costs of bringing the suit e. criminal fine up to $250k or 5 years imprisonment |
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How long do rights last? |
A copyright owned by an individual lasts for the author's life plus 70 years. A copyright owned by a company lasts for 95 years. |
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Patents |
GR: 20 years A federal right to protect an invention, process, or design that is novel, useful, and not obvious to a person skilled in the area. Things protected by patents are: 1. machines 2. chemical compounds 3. plants produced by asexual reproduction 4. genetically engineered bacteria 5. computer programs |
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What is not protected by patents? |
Naturally occurring substances, abstract ideas, laws of nature, and ideas. Neither may business methods. |
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US Patents |
Unlike copyrights, patent protection is not automatic. It arises only upon the issuance of a patent. The application for a patent must include design specifications that describe how the product works, drawings and an explanation of why it is patentable. |
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Who owns the patent? |
Typically the creator of the patented item owns the patent. Except: i. work that was created by an employee for his or hear employer within the scope of employment, the employee owns the patent but must use it for employer's benefit. ii. the employee was not hired to create the patented product, but used the employer's facilities to create the product. |
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Patent Remedies |
No criminal (unlike copyrights) a. injunction b. damages at least equal to a reasonable royalty for using the patent c. attorney's fees and costs |
