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60 Cards in this Set
- Front
- Back
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Four Elements of a Contract:
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1. Agreement – one party must make a valid offer, and the other party must accept it
2. Consideration – there has to be bargaining that leads to an exchange between parties. 3. Legality – the contract must be for a lawful purpose. 4. Capacity – The parties must be adults of sound mind. |
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Bilateral and Unilateral Contracts
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In a bilateral contract, both parties make a promise. In a unilateral contract, one party makes a promise that the other party can accept only by doing something.
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Ardito v. City of Providence
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involves police officers being guaranteed a job after completion of academy and examinations, then that was revoked and the courts ruled in Ardito’s favor.
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express contract
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the two parties explicitly state all important terms of their agreement. The great majority of binding agreements are express contracts. Some express contracts are oral and some are written.
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implied contract
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the words and conduct of the parties indicate that they intended an agreement.
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Executory and Executed Contracts
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A contract is executory when one or more parties have not fulfilled their obligations. A contract is executed when all parties have fulfilled their obligations.
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promissory estoppel
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the defendant made a promise that the plaintiff relied on. Even when there is no contract, a plaintiff may use promissory estoppel to enforce the defendant’s promise if he can show that: 1) the defendant made a promise knowing that the plaintiff would likely rely on it, 2) the plaintiff did rely on the promise, and 3) the only way to avoid injustice is to enforce the promise.
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quasi-contract
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the defendant did not make any promise, but did receive a benefit from the plaintiff. Even when there is no contract, a court may use quasi-contract to compensate a plaintiff who can show that: 1) the plaintiff gave some benefit to the defendant, 2) the plaintiff reasonably expected to be paid for the benefit and the defendant knew this, and 3) the defendant would be unjustly enriched if he did not pay.
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Uniform Commericial Code
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created in 1952, the drafters intended the UCC to facilitate the easy formation and enforcement of contracts in a fast-paced world. UCC Article 2 governs the sale of goods. “Goods” means anything movable, except for money, securities, and certain legal rights.
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Meeting of the Minds
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Two parties can form a contract only if they have had a meeting of the minds. Meaning they 1) understood each other and 2) intended to reach an agreement.
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Termination of Offers:
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1. Revocation – In general, the offeror may revoke the offer any time before it has been accepted.
2. Rejection – If an offeree rejects an offer, the rejection immediately terminates the offer. 3. Counteroffer – A counteroffer is a rejection. 4. Expiration – when an offer specifies a time limit for acceptance, that period is binding. If the offer specifies no time limit, the offeree has a “reasonable” period in which to accept. |
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Mailbox rule
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difference between acceptance and rejection on the timing
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Mirror Image Rule
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The common law mirror image rule requires that acceptance be on precisely the same terms as the offer.
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Lucy v. Zehmer:
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* One person was intoxicated but they drafted a sales agreement on a napkin, and the court held that there WAS intent and that it was a valid contract.
* Terms must be reasonably definite and should include: 1. parties involved 2. object or subject matter 3. proper consideration 4. time of payment, delivery, or performance |
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Baer v. Chase
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involves Chase writing the original script for the Sopranos and signed a contract with a producer that didn’t have definiteness so the court ruled by summary judgement that it was not a valid contract, so Chase lost big time.
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AMEX v. Joe
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courts held that Joe id not have to pay his excessive bill for prostitution because the activity was illegal.
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Jimenez v. Protective Life Insurance
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Jimenez sells motorcycle to Kevin for $5500 plus 10% interest. Jimenez buys life insurance policy on the guy that just bought the motorcycle. Court: illegal contract, you can only buy life insurance policies for someone that you have a close relationship with.
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Consideration
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onsideration is a required element of any contract. Consideration means that there must be bargaining that leads to an exchange between the parties. If one party makes a promise without some kind of bargaining, there is generally no contract. The thing bargained for can be another promise or action. So the thing bargained for can be action, rather than a promise. Also, the thing bargained for can be a promise to do something or a promise to refrain from doing something.
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illusory promise
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is best illustrated through an example: Annabel calls Jim and says, “I’ll sell you my bike for $325. Interested?” Jim says, “I’ll look at it tonight. If I like what I see, I’ll pay you the money in the morning.” At sunrise, Jim shows up with the $325 but Annabel refuses to sell. Can Jim enforce their deal? No. He said he would buy the bike if he liked it, keeping for himself the power to get out of the agreement for any reason at all. He is not committing himself to do anything, and the law considers his promise illusory, that is, not really a promise at all.
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Haner v. Sidway
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Uncle promises to pay nephew money if he doesn’t drink, etc until 21. Uncle dies, nephew tries to collect money, estate refused. Court held that it WAS consideration and a valid contract. Nephew had to be paid.
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Offer + acceptance + consideration =
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Valid contract
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Exculpatory Clauses:
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* An exculpatory clause is one that attempts to release you from liability in the event of injury to another party. Exculpatory clauses are common. Is such a clause valid? Sometimes. Courts often — but not always — ignore exculpatory clauses, finding that one party was forcing the other party to give up legal rights that no one should be forced to surrender.
* An exculpatory clause is generally unenforceable 1. when it attempts to exclude an intentional tort or gross negligence. 2. when the affected activity is in the public interest, such as medical care, public transportation, or some essential service. 3. when the parties have greatly unequal bargaining power. 4. unless the clause is clearly written and readily visible. |
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Unconscionable Contracts
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An unconscionable contract is one that a court refuses to enforce because of fundamental unfairness. Historically, a contract was considered unconscionable if it was “such as no man in his senses and not under delusion would make on the one hand, and as no honest and fair man would accept on the other.” The two factors lead a court to find unconscionability are 1) oppression, meaning that one party used its superior power to force a contract on the weaker party, and 2) surprise, meaning that the weaker party did not fully understand the consequences of its agreement.
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Capacity
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* Capacity is the legal ability to enter into a contract. Two groups of people usually lack legal capacity: minors and those with a mental impairment.
1. Minors – A minor is someone under the age of 18. A voidable contract may be canceled by the party who lacks capacity. 2. Disaffirmance – A minor who wishes to escape from a contract generally may disaffirm it; that is, he may notify the other party that he refuses to be bound by the agreement. 3. Restitution – A minor who disaffirms a contract must return the consideration he has received, to the extent he is able. Restoring the other party to its original position is called restitution. * Reality of Consent – You may choose to rescind, which means you cancel the agreement. You can argue that when you signed the contract you did not truly have consent because you lacked essential information. |
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Misrepresentation and Fraud
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Misrepresentation occurs when a party to a contract says something that is factually wrong. If the owner believes the statement to be true and has a good reason for that belief, he has made an innocent misrepresentation. If the owner knows that it is false, the statement is fraudulent misrepresentation. Innocent and fraud misrepresentation make a contract voidable. To rescind a contract based on misrepresentation or fraud, a party must show three things:
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puffery
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when a reasonable person would realize that it is a sales pitch, representing the exaggerated opinion of the seller. Puffery is not a statement of fact and is never a basis for recission.
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Mistake
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1. Bilateral Mistake – a bilateral mistake occurs when both parties negotiate based on the same factual error. If the parties contract based on an important factual error, the contract is voidable by the injured party.
2. Conscious Uncertainty – No rescission is permitted where one of the parties knows he is taking on a risk — that is, he realizes there is uncertainty about the quality of the thing being exchanged. 3. Unilateral Mistake – Sometimes only one party enters a contract under a mistaken assumption, a situation called unilateral mistake. To rescind for unilateral mistake, a party must demonstrate that she entered the contract because of a basic factual error and that either 1) enforcing the contract would be unconscionable or 2) the non-mistaken party knew of the error. |
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The statute of frauds:
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A plaintiff may not enforce any of the following agreements, unless the agreement, or some memorandum of it, is in writing and signed by the defendant.
1. For any interest in land 2. that cannot be performed within one year 3. to pay the debt of another 4. made by an executor of an estate 5. made in consideration of marriage 6. for the sale of goods worth $500 or more. |
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Parol Evidence
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Parol evidence refers to anything (apart from the written contract itself) that was said, done, or written before the parties signed the agreement or as they signed it.
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The parol evidence rule:
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When two parties make an integrated contract, neither one may use parol evidence to contradict, vary, or add to its terms.
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Hernandez v. Arizona Board of Regents
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frat party, underage drinkers, car crash, someone died. Court held: there was a duty of care towards the innocent bystander.. Basically – you can be liable if you let people get too drunk and they cause injury.
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Faverty v. McDonald’s
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Someone falling asleep at the wheel from working too much and not sleeping.. Does McDonalds have a duty of care? Yes.
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Wiener v. Southcoast Childcare Centers
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Court holds differently than first case listeted. Someone deliberately drove into a playground at a childcare center. Could the childcare center prevent the harm? No, they could not reasonably foresee someone doing this. No duty of care.
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Sawyer v. Mills
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Look this shit up
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Wior v. Anchor Industries, Inc.
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Anchor offers Wior a job in Indiana, Wior didn’t want to move to Indiana, they said if you move to Indiana, we will employee you for 20 years or until you retired. He gets fired after 3 months. Lawsuit came. Anchor stated that the contract was not in writing so can not be enforceable. Summary judgement was granted, the appellate court repealed it saying that if he died it could happen within a year. State supreme court reversed again and agreed with Anchor Industries.
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(Jacob & Youngs, Inc. V. Kent)
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Jacob built house for Kent. Built entire house, in the contract agreement they specified what pipes must be used in the house. Kent said they weren’t getting any more money and they had to fix it (demolish the house) or give all the money back. The court established substantial ruling here because they found that Jacob tried in good faith to fulfill the contract. Damages were based on the cost of what was used versus what it should have cost. The court would base it on the intangible value of the “Redding” pipes, so Kent was awarded damages but the contract was paid in full.
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Shah v. Cover-It, Inc.
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* Shah had to work 35 hours per week for the contracted period (5 years). If Cover-It, Inc. breaches, cover-it would pay the full 5 years. Shah didn’t perform and breached his part of the contract. Cover-it was able to terminate the contract and not pay Shah because Shah breached it
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Discharge of a Contract by Agreement
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Rescission
* Basically return to where you were before the contract. What has to happen is there has to be a new contract (written or non written) - Novation * You agree to substitute a third-party. All three have to agree and form a new contract. 4 recquirments o Valid obligation o All three come to an agreement o Previous contract is not going to exist anymore o New contract had valid offer, acceptance, and consideration. - Substituted Agreement * Forgot terms, etc. Doesn’t need to be a new contract, just both of you agree to it being a substituted agreement. No offer, acceptance, consideration. - Accord and Satisfaction * Accord is a new offer. You already have a contract, you enter a new contract in order to satisfy the first contract. Both parties agree that they are going to take something in place of the original contract. Satisfaction is when you accomplish the new accord’s offer. |
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Contract Discharge by Operation of Law
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Alteration
* If someone alters a contract (without consent, etc), the contract can be made invalid by law. The courts can either set it back to the terms of the original contract, may fine the alterer, or award damages. - Statute of Limitations * Based on how long of time you have to file a lawsuit (varies by State). - Bankruptcy * If someone is bankrupt, all of the debtors will present their charges and the court decides what everyone should get paid. The contract is officially void by law. - Impossibility/Impracticable * Iannuccillo v. Material Sand and Stone Co. Iannuccillo had a lot and wanted to build a house on it. Ian.. wanted to not pay the full amount so they worked out an arrangement where Material would just take all the rock and would make their money that way. The agreement said ”to excavate what is existing rock now exposed”. Then they found a giant rock that was really expensive to remove. Material didn’t want to go through with the contract. Was this impossible or impracticable? Court held it was impracticable because he used the words “all rock exposed.” Courts discharged the contract. - Frustration of Purpose * Only if the purpose is known. If the purpose does not exist anymore, you do not have to pay. In writing based on the Statute of Frauds. |
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Damages
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Compensatory – You are compensated for direct costs if the contract is breached.
- Consequential – It’s what happens after the breach, they will cover indirect losses or damages because of the breach of contract. The person who is breaching has to know that they are going to cause some sort of foreseeable issue for the other party. * Hadley v. Baxendale – Hadley owned a flower mill, a major piece of equipment broke. They hired Baxendale to take it to the repairer. Hadley TOLD Baxendale that it had to be done in a timely manner. The court held that there should have been damages, but Hadley did not state that it was their only part and would ruin the mill and have proof of that. They did not forsee the circumstances, so Baxendale did not have to pay. * Bi-Economy Market, Inc. v. Harleysville Ins. Co. – The insurance company should have known the effects of a breach of contract. Court ruling: Harleysville had to pay. * Lawrence v. Will Darrah & Associates, Inc. – Lawrence had his car stolen, he filed a claim and Will Darrah offered a lower amount than the actual value, so Lawrence took him to court. Insurance company should know that by not having his only truck, he would lose money. So there were foreseeable costs. - Punitive – damages meant as punishment * Also see Andre v. Pace University - Nominal – recognize a wrong-doing but there is no money is involved. Mitigation of Damages – you need to try to make up the damages in another way, you can’t just sit back and wait to win the lawsuit. The damaging side would have to pay the difference. Liquidated Damages – prevalent in construction. Like punitive, but not meant to punish, for every day you are late, you have to pay some reasonable amount of money (must be in original contract). |
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Creating an Agency Relationship
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In an agency relationship, someone (the agent) agrees to perform a task for, and under the control of someone else (the principal). To create an agency relationship, there must be:
1. a principal 2. an agent 3. who mutually consent that the agent will act on behalf of the principal and 4. be subject to the principal’s control 5. thereby creating a fiduciary relationship. * Consent – to establish consent, the principal must ask the agent to do something, and the agent must agree. * Control - An agent and principal must not only consent to an agency relationship, but the principal must also have control over the agent. * Fiduciary Relationship – The beneficiary places special confidence in the fiduciary who, in turn, is obligated to act in good faith and candor, putting his own needs second. Agents have a fiduciary duty to their principals. * Elements not required for an Agency Relationship 1. a written agreement 2. a formal agreement 3. consideration |
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Ratification
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* If a person accepts the benefit of an unauthorized transaction or fails to repudiate it, then he is as bound by the act as if he had originally authorized it. Even if an agent acts without authority, the principal can decide later to be bound by her actions as long as these requirements are met:
1. The “agent” indicates to the third party that she is acting for a principal 2. the “principal” knows all the material facts of the transaction 3. the “principal” accepts the benefit of the whole transaction, not just part. 4. The third party does not withdraw from the contract before ratification. |
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Norris-LaGuardia Act
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This is the act that allowed unions to organize. Prior to this, you could not unionize. It protects peaceful strikes, picketing, and boycotts.
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Burlington Northern Santa Re Railway Co. v. Teamsters
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Burlington (plaintiff) had a contract with company called Eagle, it was a subcontract. Burlington terminated their contract with Eagle, 53 employees were fired. Then Burlington started using another company for subcontract. The new company was NOT a union company. Teamsters get involved and say “could you please ask the new subcontractor to hire the old subcontractors. And could you unionize this as well?” Burlington said no to both, so Teamsters sued. Teamster started peacefully picketing, Burlington sought an injunction for the picketing to stop. Court ruled that as long as the picketing was peaceful, it was allowed. This was one of the first cases that enabled organization by employees.
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National Labor Relations Act (NLRA – “Wagner Act”)
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* Created the National Labor Relations Board (NLRB). Three important things:
1. allows employees to form unions 2. allows them to engage in collective bargaining 3. confirms again that the union may strike 4. the NLRB are supposed to be nonpartisan, which makes a ruling which is binding but can be appealed. The NLRB can issue complaints against both sides: unions and “management”. |
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Labor-Management Relations Act (Taft-Hartley)
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Protects both employers and employees. Union did not want this act to be passed. Three important provisions:
1. closed shop – illegal now, you would have to be a member of the union to get the job 2. union/open shop – basically means that you have 60 days to join the union, but you have to become a member and pay fees 3. right-to-work laws – some states (not MA) means that you may not make it a requirement to join the union, but you won’t receive any benefits of the union. It cannot be a condition of employment. |
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Labor-Management Reporting & Disclosure Act (Landrum-Griffin)
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Established an employee bill of rights and reporting requirements for union activities. The reason behind the act was to prevent corruption. In the past, unions may elect a president very , now there has to be specified election days and they had to be secret ballots. They also made the union officials personally responsible for their responsibilities for the union. Everyone can attend a meeting, etc. Reporting requirements – everyone had to know what was going on at all times.
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Procedures of a Complaint
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1. union/employee files a charge with a regional office of the NLRB – the company can do it as well.
2. the charge is investigated 3. if it is deemed unfair, the regional director files a complaint. 4. an Administrative Law Judge hears the complaint and rules on it 5. the NLRB reviews the ruling and if they find a violation, it may issue remedial orders 6. the NLRB decision may be appealed to Court of Appeals |
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Forming and Starting a Union
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* Employees decision – you have to have Authorization Cards signed by 30% of the employees (you would like 50% or more). You then go to the boss who may recognize the union or he may deny it and send it to an election (secret ballot). Once a union is formed, the next part is collective bargaining; they will take the contract and discuss it with management. Key requirement is that you have to have an appropriate bargaining unit
* appropriate bargaining unit (ABU) – as long as you have the same skills, same pay, etc, you can be a part of an ABU. If employees are vastly different, there has to be multiple unions. It also has to be in appropriate proximity. * union election – union hasn’t formed until this happens. NLRB supervises it. |
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Rights of Employer
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has the upper hand. Management can talk about whether you should or shouldn’t join a union during work time while employees cannot do it during the middle of their work. Employers may show anti-union materials and require employees to listen to it. Management can prohibit outsiders, limit time, limit place. The one key distinction is if they want to allow outsiders to express their views, they have to let the union come in too.
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Rights of Employees
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allowed to distribute pro-union materials on non-working time
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Associated Rubber Co. v. NLRB
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There were two workers, Leroy (supporter) and Tim (nonsupporter). He was basically pressured into voting for the union. Court held that something as simple as a supporter coercing a non-supporter is enough to negate the election.
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management election campaign
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two things they cannot do: make a threat, cannot make any type of speech 24 hours before the election.
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National Steel Corp. v. NLRB
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what it held was that privacy does include hidden cameras and it does have to be bargained about.
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Illegal Strikes
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violent, mass picketing (physically stopping someone from “crossing the line” set by the union), sit-downs (you go into work and you just sit down and don’t do your work), secondary boycotts (when a strike is brought to a third-party that is affiliated with the employer), wildcat strike (a bunch of random people strike and just leave, not the union as a whole), strike where you have a contract and then later you try to strike and management reminds you that you can’t strike based on your previous agreement. Certain industries have to give notice before striking (a “cooling off period”). Repercussions of illegal strikes – management doesn’t have to bargain anymore.
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Replacement Workers
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always legal. There are times when they have to be replaced and times where they don’t. If it’s an “economic” strike, the company does not have to rehire you. If it’s an unfair labor practice (ULP), if it falls under that category, you have to be rehired.
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Citizens Publishing & Printing Co. v. NLRB
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what was held that because the terms of employment were changed, they HAD to rehire the people that were out on strike.
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Progressive Electric, Inc. v. NLRB
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court held that it was an ULP because you discriminated against union members.
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Canteen Corp v. NLRB –
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Canteen took over food services of a medical center, they said that they would agree to negotiate a new contract with the union. They told all employees that wages were cut. NLRB stepped in and said that since there was already a collective bargaining agreement, that Canteen was in the wrong. The court held that if there is a valid collective bargaining agreement, the new employer has to follow the agreement.
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Rights of a Non-Union employee
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you have many of the same rights of a union member. They are allowed to go and strike and bargain with management, but it has to be a concerted effort (which means that all non-union members have to strike).
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