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SC ACCT 324 - LAW STUDY GUIDE

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Chapter 13 Introduction to Contracts Contract a promise or set of promises for the breach of which the law gives a remedy or the performance of which the law in some way recognizes a duty Covenant not to compete restricts what an employee may do after leaving a company 1 scope 2 length 3 geography The elements of a contract agreement consideration contractual capacity and a legal object Defenses to the enforcement of a contract Lack of genuine assent a contract must be entered freely by both parties not through fraud duress undue influence or misrepresentation Lack of proper form lack of writing Contract law based on objective theory of contracts the subjective intent of the parties is not usually relevant what matters is how they represented their intent through their actions and words Important sources of contract law case law UCC CISG Case Law common law Personal service or realestate Restatement of the Law Contracts Restatement of the Law Second Contracts Second is not actually law itself but judges do cite it Contract law differs by state Uniform Commercial Code UCC Sale of 500 or more writing requirement very broad Laws governing commercial transaction some states adopted whole patchwork while others only in part Article 2 governs contracts for sale exchange for a price of goods tangible movable objects Article 2A governs contracts for the lease of goods Example buy and sell land common law Buy and sell trailor on land UCC Classification of contracts All contracts are either bilateral or unilateral Bilateral a promise in exchange for a promise Gary promised to paint Shannon s car for 1000 dollars Ebay bidding is bilateral Unilateral wants the offeree to DO something not promise Most common example is a reward The offeree is under no obligation to actually person the act called by the offeror the offeror may revoke the offer at any time before performance This caused problems because the offeree could get out of the offer half way during the performance now the courts hold that if a offeree begins the performance the offeror must hold the offer open for a reasonable time to allow completion Hold up for whole world to either except or reject Contracts can be either express or implied Express contracts are all clearly set forth in either written or spoken words Implied contracts arise from not words but from the conduct of the parties Doctor working on a half dead patient after car wreak he is not awake but the doctor and patient have an implied contract to save his life without the patient saying so 3 conditions to an implied contract implied in fact contract 1 plaintiff provided some property or service to the defendant 2 plaintiff expected to be paid for such property or service and a reasonable person in the position of the defendant would have expected it 3 the defendant had an opportunity to reject the property or service but did not Quasi contracts sometimes called implied in fact contracts are NOT actually contracts in order to prevent one party from being unjustly enriched at the expense of another the courts impose contractual obligations on one of the parties as if that party had entered into a contract Example man sees workers about to pave his driveway instead of stopping them he goes down and lets them finish when bill comes he refuses to pay saying he didn t ask for it since he didn t stop it and knew it was going on the court might impose quasi contracts If guy was out of town when this happened then he would have an obligation to pay Valid contains all legal elements usually enforceable Sometimes it can be valid but unenforceable Statue of frauds says must be evidenced in writing according to Statue of limitations mandates that an action for breach of contract must be brought within a set period of time thereby limiting enforceability Void is in effect not a contract either illegal or it has some defect so serious that it is not a contract Contract is voidable if one or both parties have the ability to either withdraw from the contact or enforce it If duties were being preformed due to contract and a party decides to terminate a voidable contract the parties bust return everything that the contract has entailed so that the conditions are restored to the time they entered the contract Errors can make the contract voidable enter the contract to protect a minor fraud duress or undue influence Executed once all the terms have been performed Executory unperformed if terms have yet to be performed down payments Either formal or informal Formal 1 contracts under seal Wax stamp or LS locus sigilli in place of seal US states do not require seal 10 states still allow contract without consideration to be enforced if under seal 2 recognizances Person acknowledges in court that he or she will perform some specified act or pay a price upon failure to do so A bond used for bail 3 letters of credit agreement by the issuer to pay another party a sum of money on receipts of an invoice and other documents UCC governs letters of credit 4 negotiable instruments Unconditional written promises to pay the holder a specific sum of money on demand or at a certain time Checks notes drafts and certificates of deposit Governed by the UCC Informal contracts simple contracts May in fact be very complex but called simple because of lack of formality Just as important and legally binding as formal Baum vs Helget Gas Products proved that handwritten notes can be considered an enforceable employment contract Plain Meaning rule states that if a writing or a term in questions appears to be plain and unambiguous on its face we must determine its meaning just from the four corners of the document without resorting to outside evidence and gove the words their ordinary meaning Nudum Pactum nake promise ill love you forever not binding Contract of adhesion forced upon someone not binding Oral contracts Hard to show evidence Law Chapter 14 Agreement First element of contract is the agreement An agreement is made up of an offer and an acceptance Offeror makes offer to Offeree Elements of an offer Intent Definite and Certain Terms Communication to the Offeree Intent Courts interpret the parties words and actions the way a reasonable person would interpret them joking and speaking in anger generally don t count Preliminary Negotiations invitation to negotiate not an offer Advertisements example rocking chairs only cost 250 in first week Because the ad does not specify how many chairs are available or if


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