Business Law 10-16

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Gambling Contract

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is a transaction wherein the parties stand to win or to
lose based on pure chance.

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Sunday Contract

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generally are not enforceable anymore due to the
amount of business conducted on Sunday’s.

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There are many types of contracts declared illegal by statute but the
common ones are:

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Gambling

Sunday contracts (Blue laws) out dated

Usurious contracts

Contract of an unlicensed operator

Contracts for the sale of prohibited articles

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Usury Law

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are state laws that limit the rate of interest that may be
charged for the use of money.

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Maximum Contract Rate

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is the highest rate that may be charged; any
above that is usurious.

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Legal Rate

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is somewhat lower than the
contract rate, applies to all situations in which interest may be charged
but in which the parties were silent as to the rate.

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Contracts of an Unlicensed Operator

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This statutes makes it illegal to operate certain types of businesses or
professions without a license.

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Contracts for the Sale of Prohibited Articles

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A contract to sell illegal goods is void

Seller cannot sue to collect purchase price of contract to sell stolen
goods.

You cannot recover on a contract if, you sell beer or cigarettes to a minor.

The courts will not interfere to protect either party (buyer or seller).

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Written Contract

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has advantages over an oral contract, in that,
provided it includes all the terms and provisions of the agreement.

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Statute of Frauds

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list certain classes of contracts that could not
be enforced unless their terms were evidenced by a written
document. Applies only to executory contracts.

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The Statute of Fraud provides the following types of agreements
must be in writing:

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Agreement to sell land or any interest in or concerning land

Agreement the terms of which cannot be performed within one year
from the time it is made

Agreement to be responsible for the debts or default of another

Agreement of an executor or administrator to personally pay the
debts of the estate

Agreement containing a promise in consideration of marriage

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Agreement to sell land or any interest in or
concerning land

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General Rules – Contracts for the sale or transfer of land or any interest
must be evidenced by a sufficient writing to be enforceable.

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Agreement the terms of which cannot be
performed within one year from the time it is made

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General Rules:

A contract that cannot be fully performed within one year from the date it
is made must be evidenced by a writing.

The one year period begins the day after a contract is made (not when work is to
begin) and concludes the day performance will be completed.

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Agreement to be responsible for the debts or
default of another

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A promise to pay a debt or to perform an obligation of another party if that
party fails to do so, is required to be evidenced by a sufficient writing to
be enforceable.

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Agreement of an executor or administrator to
personally pay the debts of the estate

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A promise by an executor and administrator to pay a debt of an estate
out of the executor’s or administrator's personal fund must be evidenced
by a writing to be enforceable.

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Agreement containing a promise in
consideration of marriage

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A promise made in consideration for a person’s promise to marry another
person is required to be evidenced by a sufficient writing to be
enforceable.

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The Statute of Frauds requires that a writing:

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State the terms (subject matter, parties, price, financing, etc) AND

Signed by the party who is using the Statute of Fraud as a defense to
having to perform the contract.

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Parol Evidence

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means oral statements.

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Parol Evidence Rule:

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Terms of a final, complete written contract
cannot be added to, modified, or contradicted by evidence of oral
statements or writing made before or at the same time, a written
contract was made.

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Third-party Beneficiary

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party whom contracting parties intend to directly
benefit by a contract.

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Creditor Beneficiary

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Third-party beneficiary who is a creditor of a
contracting party and whose obligation will be paid by performance of the
contract.

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Donee Beneficiary

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third-party beneficiary to whom a party intends to
give a benefit as a gift.

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Incidental Beneficiary

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party who may incidentally (indirectly) benefit
from a contract even though the parties do not intend to contract for the
benefit of that party.

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Novation

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is an agreement by which a contract between two parties is
terminated and substituted in its place is a new contract between one of
the original contracting parties and a new party.

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Assignment

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transfer of legal rights. An assignment transfers a contract
right from a contracting party to a third party (Assignee).

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Delegation

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transfer of a contractual duty alone without a transfer of
rights.

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There are five common methods by which contracts may be
terminated include:

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Performance of the contract

Operation of Law

Voluntary Agreement of the Parties

Impossibility of Performance

Acceptance of a breach of Contract

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Performance

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an executed contract. All terms of the contract
have been fulfilled. Parties are discharged from further liability as
soon as they have done all that they have agreed to do.

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Several factors determine whether there has been performance:

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1. Time of performance
2. Tender of performance
3. Tender of payment
4. Satisfactory performance
5. Substantial performance

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Time of Performance

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If time of performance is stated in a contract:

The party should perform within the set time before it elapses.

“Time is of the Essence” means the party can enforce a contract only if
the party performs their duties within the time stated on contract.

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Tender of Performance

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an offer to perform an obligation in satisfaction
of the terms of the contract.

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Tender of Payment

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an offer to perform an obligation in satisfaction
of the terms of the contract.Refusal to accept a party’s tender of payment: 1) does not
terminate the duty to pay and 2) does stop further interest and
it enables the party to avoid liability for court costs that are
incurred following the tender (offer).

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Satisfactory Performance

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If a person promises to perform to the satisfaction of a party regarding a
matter of personal taste or judgment, then performance is satisfactory and a duty is discharged only if
the party is actually satisfied.

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Substanial Performance

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Basically, when most of the job/contract is done, performance is met
unless a breach occurs.

A party who substantially performs contract duties can enforce a contract
and can recover the contract price less damages caused by imperfect
performance.

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Sometimes, the law will cause a discharge of the contract or at least
the law will bar all right of action. Most common conditions are:

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Discharge in Bankruptcy

Statute of Limitations

Alteration of Written Contract

Impossibility of Performance

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Statute of Limitations

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time runs out to enforce contract

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Alteration of Written Contract

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One party intentionally alters the
original contract w/o approval of the other party

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Impossibility of Performance – Unable to perform duties due to
(causes):

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Destruction of the subject matter

New laws making the contract illegal

Death or physical incapacity

Act of other party

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Voluntary Agreement of the Parties

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The contract can be cancelled unless otherwise stated.

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Breach

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failure or refusal to perform contractual obligations.

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Anticipatory Breach

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One party announces it does not plan on fulfilling
its obligations

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If a breach of contract occurs, the innocent party has three
courses of action that may be followed:

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1. Sue for Damages
2. Rescind the Contract
3. Sue For Specific Performance

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Nominal Damages

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Small award for breach without harm.

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Compensatory Damages

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Compensation for exact amount lost.

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Punitive Damages

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Punishment award more common in tort law

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Liquidated Damages

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Sum fixed in contract when breach occurs must be
reasonable and should only be provided when actual damages cannot be
measured.

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Rescind the Contract

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One party may want to cancel their
obligations or sue to recover what has already been done.

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Sue for Specific Performance

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Making the other party fulfill their
obligations in the contract

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Specific Performance

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the injured party’s remedy under these
circumstances is a suit in equity to compel. Carrying out the terms of
the contract.

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A party can obtain specific performance of a contract to buy:

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Real property or any interest in land

Unique or Rare goods

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Malpractice

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Failure to perform (Professionals) with ability and care
normally exercised by people in the profession.

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Goods may be sold to:

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Sale

A Contract to sell

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Contract for Goods

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movable personal property (all physical items
except real estate – i.e. food, vehicles, clothing, etc.), constitute the
largest class of contracts in our economic system.

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Article II of the Unifor Commercial Code (UCC)

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governs sales of moveable property.

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Sale

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present transfer of title to goods made in consideration for a price.

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Contract of Sell

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Contract by which title to goods will be transferred at
the future time in consideration for a price.

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Sales off Goods & Conttrractt Forr Serrviices

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If a contract requires a party to both sell of goods and perform a service,
the contract is classified as a sales or service contract according to the
contract’s predominant factor.

If the sale of goods is dominant and the service is incidental, it is contract
for the sale of goods.

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Price

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consideration in a sale.

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A sales contract does not need to expressly state the price to be paid.

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The price to be paid is 1)the price expressed and 2) if no price is stated,
a reasonable price.

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Future Goods

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A party can only make a contract to sell a future good. A
future good is one that does not exist or is not owned by the seller, at the
time of contracting. i.e. – providing a family a casket.

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Bill of Sales

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Writing that evidence title to goods. Although a bill of sale
is not necessary to pass title to goods, it may help a buyer prove that
they own certain goods.

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Illegal Sales

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A contract for a sale of goods that are prohibited by law is
generally illegal. If an illegal contract is executory, the contract will not be
enforced.

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International Sales of Contracts

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The United Nations Convention on
Contracts for the International Sale of Goods governs contracts for the
sale of goods if the parties are from different countries that have adopted
this agreement.

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Existing Goods

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are ones
that physically exist and are owned by the seller at the time of
contracting.

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Identified Goods

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are ones that have been designated as being for a
particular buyer.

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>Consignee

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one to whom goods are shipped by common carrier.

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>Consignor

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one who ships goods by common carrier.

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>Contract

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an agreement between two or more competent persons which is enforceable by law.

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>Contract to Sell

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an agreement where in a seller agrees to transfer title of goods to buyer for a consideration (price), at future time.

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>Confractual Capability

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the necessity that the parties desiring to enter into contracts meet all requirements.

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>Executory Contracts

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those contracts in which the terms have not been completely executed or fulfilled.

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>Existing Goods

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those goods which are at the time of the contract in existance and owned by the seller.

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>Express Authority

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the authority of an agent stated in the document or agreement creating the agency

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>Express Contract

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a contract in which the parties express their intentions, either orally or in writing, at the time of the agreement.

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>Express Warranty

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the actual and definite statement of a seller, either verbally or in writing guaranteeing a standard or level of performance.

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>Fraud

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inducing another to contract as a result of an intentionally or recklessy false of a matter fact.

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>Future Goods

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those goods which are not in existence at the time a contract is agreed.

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>General Agent

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one who is authorized to execute the principals business of a particular kind or all the principal's business at a particular place, if not all of one kind.

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>General partner

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an individual actively and openly engaged in the business and held out to everyone as a partner.

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>Goods

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movavble tangible personal property.

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>Holder

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one in possession of commercial paper.

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>Identified Goods

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the goods specified by the buyer and seller.

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>Implied Contract

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one in which terms of the contract are implied by acts or conduct of the parties.

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>Implied Warranties

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a warranty imposed by law, arising automatically because the sale has been made.