BUL3310 Exam 2 Reference Sheet One can extract value through contracts in order to gain the right to use trademarks Royalties are an example of this given per use of a trademarked logo Contract An agreement of promises made to two people that can now be legally enforceable in a court of law 2 areas of contract law 1 The common law applies to services intangibles and real estate 2 The Uniform Commercial Code UCC applies to the sale of goods UCC Does away with mirror image rule see below Will favor things outside of a contract such as what it really means Price quantity delivery terms or duration of the contracts are essential terms under common law they are considered defaults or gap fillers with the UCC All of these could be missing and it would still be an enforceable contract Certain things cannot be contracted under UCC law o Good faith o Diligence o Due Care It is important to consider clauses each should be negotiated and separated Each word should be read out Negotiation is key Common law contract 3 Elements One needs 3 elements to make a contract legally binding in a court of law Offer Acceptance Consideration may not actually be a legal offer Some seem too good to be true Fine 1 Offer print acceptance of an offer or a counter offer Terms must be exactly agreed upon a Bilateral offer When the offeree makes a promise in response to an 2 Mirror Image Rule for Acceptance Meeting of the minds Requires an exact b Unilateral offer Offer is accepted when offeree performs in response to offeror s promise offeror s promise 3 Consideration make a knowledgeable decision Negotiating party must consider the terms of the contract and It is important to consider vagueness important contract terms like price delivery and description of items are crucial This causes long detailed contracts FACT Limit to a Non Compete contract in Florida is 2 years Nominal Damages When no actual damages or financial loss results from a breach of contract and only a technical injury is involved the court may award nominal damages to the innocent party Awards of nominal damages are often small such as on dollar but they do establish that the defendant acted wrongfully Normally brought up for a matter of principle Consiquential Damages Special damages that compensate for a loss that is not direct or immediate The special damages must have been reasonably foreseeable at the time the breach or injury occurred in order for the plaintiff to collect them o Ex Someone plans to open a restaurant and requires a custom oven delivered and installed before a required date Any tardiness will result in losses The oven company signs a contract saying they will be on time They breach the contract and are late to deliver the oven She does not mention the opening of her restaurant in the contract She then puts the company on notice that the oven NEEDS to be delivered on time She could 1 Recover compensatory damages the difference between higher oven price bought from an alternative seller Difference in price would restore the benefit of the bargain 2 Recover consequential damages Lost profits due to the restaurant opening delay These losses must be foreseeable extend beyond the original bargain and are a natural consequence of the breach Duty to Mitigate Loss Injured party is duty bound to mitigate the damages caused Plaintiff has a duty to take steps to lessen the loss suffered Plaintiff need only take reasonable steps Where steps to mitigate are reasonable mitigation costs will be recoverable from the defendant Bargained for Consideration Crucial part of contract making A premise of contract law is that there is an exchange of promises and that each party gives up something in exchange for another s promise A gift is missing consideration between both parties and does not count as a contract Note the example below Donor promises to donate 10 million to FSU on June 21st FSU accepts and thanks the donor mentions him her in speeches makes plans to build a new stadium center etc This is NOT an enforceable contract because FSU did not give anything up Legal Benefit You get something in exchange for making a promise Legal Detriment You give something up in exchange for another party s promise Hamer vs Sidway Uncle promises that he will hold something in a trust for his cousin Nothing was written no objective evidence Ex A written contract is executed signed and acknowledged by both parties under terms stating payment and delivery in less than one week Buyer then adds this clause the following day in exchange for the purchase I will receive 10 off my next purchase Is this enforceable Not necessarily a new offer has been made thus changing the contract after is has been signed You need new consideration to support this new contract Ex Car for sale at 3 000 Subject to approval by Dealership Illusory promise the dealership would never approve of a car for sale at 3 000 Illegal to do at a contract law Not in good faith false promise just to get people to come in and buy Which law applies You would want a written contract UCC Consider the Concept of Good Faith You genuinely intend to do what you say promise and you will not lie or mislead The UCC relies on this Contracts of Adhesion No room for bargaining take it or leave it contracts Other Contracts Unconscionable unreasonable terms non competes take it or leave it terms waivers of liability Might be injurious to the public health safety morals or general welfare This is often seen in waivers Prey on the elderly and poor often have Might be against public policy or existing statutes Contracts Disclaiming Liability ex Landlord Disclaiming Warranty of Habitability Landlord is providing unsafe housing to poor residents and disclaiming liability through contract Alternatives to signing a contract These are all very risky o Handshake someone can lie and deny it happened o Accepting terms as offered you could have negotiated for something better o Negotiating and making a counter offer o Will work in one party s favor o Are vague terms enforceable under contract law Yes as long as no major terms Vagueness vs Specificity are missing o This can become a strategic risk management issue however There are 2 ways one can change a contract o Changing a term clause to make it vague or specific o Striking a term clause ex CEOs often try to get rid of the non compete clause entirely sometimes requires giving something up exchanging things such as vacation time for a shorter non compete agreement Sub
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