BUL3310 Exam 2 Reference SheetOne 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 faitho Diligenceo Due CareIt 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 Consideration1. Offer: may not actually be a legal offer. Some seem too good to be true. *Fine print*2. “Mirror-Image Rule” for Acceptance: Meeting of the minds. Requires an exact 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 offeror’s promise.b. Unilateral offer: Offer is accepted when offeree performs in response to offeror’s promise.3. Consideration: Negotiating party must consider the terms of the contract and make a knowledgeable decision. 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 ofcontract 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 broughtup 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 timethe 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 deliveredand 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 benefitof 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 fromthe 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 inspeeches, makes plans to build a new stadium center, etc.This is NOT an enforceable contract because FSU did not giveanything 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 receive10% off my next purchase.- Is this enforceable? Not necessarily, a new offer has been made thus changing thecontract after is has been signed. You need new consideration to support this newcontract.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 Unconscionable Contracts: Prey on the elderly and poor; often have unreasonable terms (non-competes, take-it-or-leave-it terms, waivers of liability) Contracts Disclaiming Liability: Might be against public policy, or existing statutes.Might be injurious to the public health, safety, morals, or general welfare. This is often seen in waivers.ex.) Landlord Disclaiming Warranty of HabitabilityLandlord is providing unsafe housing to poor residents, and disclaiming liabilitythrough 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. Vagueness vs. Specificity o Will work in one party’s favor.o Are vague terms enforceable under contract law? Yes, as long as no major terms are missing.o This can become a strategic/risk management issue, however.- There are 2 ways one
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