TodayUpper Division B-Law CoursesFour Elements of a ContractArchitecture FirmMedical ClinicBurrito Express v. Kansas DOLIllegality AnalysisChapter 15MistakeMutual Mistake – ExampleUnilateral Mistake – AnalysisUnilateral Mistake – ExampleWhich Mistakes?Risk of MistakeCutting and Pasting ExampleRetail Sales – ExampleUnited AirlinesDog Track RacesNext ClassToday•Upper division business law courses•Finish chap. 14 (four elements of a contract)•Begin chap. 15: mistake, misrepresentationUpper Division B-Law Courses•Commercial Law•Employment Law•International Business Law•Law and Entrepreneurship•LSB 4403 (T/TH, 3:30 – 4:45)•Law and innovation/creativity•Starting and operating your own business•IP, stock (venture capital, crowdfunding), real estate…Four Elements of a Contract•Agreement•Consideration•Capacity•LegalityArchitecture Firm•Not always as obvious as criminal action•OK architecture firm •Bid to build UAE embassy in Washington, D.C.•Enforceable contract?•Court: no contract (public policy concern over safety)Medical Clinic•Medical clinic in Illinois•Medical license vs. corporate registration•Enforceable non-compete agreement?•Court: yes, enforceable contract (no public policy concern over safety)Burrito Express v. Kansas DOL•Agreement at $6 per hour•50 hours worked would equal $300 per week•Actually paid $50 per week•Court: enforceable contract •Public policy: company must pay for work performed •Purpose: immigration laws not designed to invalidate employment contractsIllegality Analysis•More than obvious criminal violations•Public policy: does the illegality relate to public safety?•Purpose: is the illegality related to the contract issue?Chapter 15•Mistake and fraud in contracts•Both parties consent to the same bargain?•Genuine meeting of the minds?Mistake•Mutual mistake: either party can rescind•Unilateral mistake: enforceable against the mistaken party, except for three exceptionsMutual Mistake – Example•Elena selling a jet ski to Chin•Price: $2,500 in email correspondence•Contract: $250•Contract: $25,000•Both parties knew of mistake, so court will correct or rescind the contractUnilateral Mistake – Analysis•Usually, courts don’t undo unilateral mistakes•But, in three situations, contracts are not enforceable against mistaken party1)Other party knew or should have known2)Results in unconscionable outcome3)Substantial, inadvertent mathematical errorUnilateral Mistake – Example•Jet ski for $2,500 or $1,500?•Analysis:•Knew or should have known? Obvious mistake?•Unconscionable?•Mathematical error vs. typo?Which Mistakes?•Not mistakes regarding market value•Yes mistakes as to what you were buying•But not if you bear the risk of the mistakeRisk of Mistake•How does a party bear the risk of mistake?1) Item sold “as is, where is” can waive defense of mistake2) Conscious ignorance (example of locked metal box)Cutting and Pasting Example•Forum selection: OK firm usually opts for OK or TX•But makes an exception for FL for large customer…•Then, didn’t read the contract with VA company•Court: unilateral mistake. Must read the contract.•Three exceptions don’t apply•Not obvious, not unconscionable, not math errorRetail Sales – Example•Shoe store mistake ($259, $159, $9)•Airline tickets mistake•$24.98, SF to Paris, instead of $1,500•150 people purchased at mistaken price•Loss of $221,250United Airlines•Three elements of contract analysis1) Should have known? Obvious?2) Unconscionable?3) Math error or typo?•Also, non-legal factors?Dog Track Races•Offer says the jackpot is $825,000•Mistakenly read “$” as “8” ($25,000 was intended)Contextual analysis•Obvious mistake?•Unconscionable?•Mathematical error?Next Class•Finish chapter 15 (mistake, fraud,