Legal Environment of Business 3 10 14 LAST CLASS CONTRACTS What is a contract A legally enforceable promise An agreement between two parties the offerer promises to do not to do something in consideration Bilateral Contract 2 way promises All promises aren t necessarily contracts 3 Elements to a Contract Agreement offer and acceptance Consideration Agreeing to do something you don t have to do Capacity over 18 TODAY Voluntary Consent 4TH ELEMENT OF CONTRACTS When there isn t voluntary consent there isn t a legal issue Agreement in which there has been a mistake doing something in error Some kind of mistakes is relevant and vice versa If irrelevant there aren t any rights and responsibilities to each other Then they decide to leave it alone and can t be taken to courts Unilateral mistakes if one party is mistaken and the other party knows should know of the error that then avoids the otherwise reason of promises contracts As a contractor you make a promise to build a building for a certain promise My secretary missed a zero Can you be forced to build the technology for the listed amount even though it is wrong NO YOU DON T HAVE TO THEY KNOW OR SHOULD KNOW IT WAS WRONG BECAUSE IT WAS A JERASTIC DIFFERENCE Bilateral mistakes Both parties are mistaken We look at the type of mistake 1 Value as When both parties are mistaken the courts do not consider it a contract Mistakes of the law both parties believe that the law is one way when in actuality it is different than what they believe it to be Ignorance of the law is not excuse Mistake pertaining to the existence identity of the subject matter one party thinks one thing while the other party thinks another AREA 2 FRAUD Lying about a fact that is relevant to the transaction When it is nowhere near the representation it is fraud If I rely on the representation some requirement that the one party doesn t act stupid and check out their representation AREA 3 CONTENT OF DURESS Person is induced to enter in a contract by violence or threats of violence Party is compelled because of threats to them or their immediate family to agree to contracts Once they are removed the try to retract that contract DURESS threats of violence blackmail Enter into contract because the other party was psychological or emotionally dominant over them Agreement to commit a crime is ILLEGAL Bounty hunters overstep the law to do a bounty Agreement that Violates Usury Laws For generations we are on a system where we encourage buying on a credit basis tp pay over time Our society encourages a credit transaction Limitations on amount of interest that can be charged on various transactions Highest amount 25 per year Charging more than that violates usury laws Over charging then makes the loan unenforceable LITIGATION ISSUE Contracts that interfere with justice Discrimination against race gender nationality age sexual orientation etc civil rights act of 1964 protects this Conflict of Interest Can t represent plaintiff and defendant in the same precedent Because there is a conflict of interest of seeing both sides One contract side has a financial say on both sides of the transaction CANT DO THAT Must be loyal to whomever you are working with Can t be the mayor of the city and hire my brother to fix all the potholes Benefits the family SECOND HALF OF CLASS Restraint trait issue Resale price agreement whatever is being sold the buyers agrees that they will sell it to the 3 rd party for a certain amount The American legal system has always functioned that the law of supply or demand should decide what the price is As the demand goes up price goes up As demand goes down price goes down The market place should make the price not the parties When this happens it invalidates the contract Can give civil penalties to the violators REATIL IS PROHIBTED Contracts that have a covenant not to compete LACK OF EMPLOYMENT Basically there is a provision in the contract that says the party can t compete with another business Limiting competition 3 6 Months before you learn all that you need to learn so that you can be a good worker When there is a justifiable reason to limit competition it is allowed Must be good reason AN EXISTING BUSINESS Buying an existence business with valuable and positive reputation must know that the seller doesn t sell and open a business doing a similar thing next to me Lil Tikes Dan Murdoph Sold to Rubbermaid There was a 2 year non compete clause 2 years and 1 da later Murdoph opened a step two Contracts that are unconcheable unCONchable Other party is more experienced Not a level playing field B Contracts that have exculpatory Parties enter contract with one another and and encounter an issue o Anticipation of a lost Losses of life and health Licensing law to earn revenue to regulate and conduct safely lack of license is fatal 6TH ELEMENT STATUE OF FRAUD sometimes element Requirement of Statues of Fraud 1 Must be written and signed by parties When a person dies before the beneficiary take lawful title to your asset you must go through Contract to pay for a probate court to make sure all debts and taxes are paid for Don t have to pay debts of dead parents unless you make that promise in writing 2 DEBT OF ANOTHER Agreement to pay debts and obligations for someone else Only enforceable if they are in writing 3 Prenuptial anti nuptial forth coming marriage that is going to happen in the future Even if they say they won t touch your belongings it doesn t count must be in writing Donald trump was worth 500 million dollars when he divorced his first wife she only got 38 million dollars from the divorce He traded in wives every 10 years 4 An agreement that can t be performed in less than one year Any agreement that takes more than a year must be in writing 5 An agreement to sell any interesting real estate If you want to sell coal water resources etc the bank will give you money must pay interest One acceptance is promissory stock or real estate Non owner buyer is in voluntary possession on the real estate has paid for the property and did some improvements to the real estate Otherwise it is not valid 6 Uniform Commercial Goods and the sale of goods Any sell exceeding 500 must be in writing Parle evidence rule when there is a written contract the pro evidence rule you cannot attack the agreement s with oral explanation YOU CAN T CONTRADICT IT The business world is not as simple as before Now may have a third party 1 Third parties are beneficiary of contract 2 Third
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