Business Law: Ch 10

Business Law: Ch 10Legal Purpose and Proper FormWhich Agreements are illegalAgreements that involve contracting for an illegal act generally are void and unenforceable

Which Agreements are illegalIllegal LotteriesThree elements Prize something of value for one or more winnersChance winner decided solely by luckConsideration payment is required to participateWager is a bet on the uncertain outcome of an event

Legalized forms of GamblingCasinos permits traditional games such as keno, blackjack, roulette and the likePari-mutuel betting form of betting where the winner of the horse race share the total prize poolState-run lotteries winner split the jackpotBingo games and pull-tab betting Which Agreements are illegalAgreements to pay usurious interestLenders of money may not charge more than a specified interest rate18% is the common maximum but it may vary from state to stateUsury lending money at a rate higher then state allowsState allow higher rates for payday loans under $1500.

Which Agreements are illegalAgreements involving illegal discrimination

Agreements that obstruct legal procedures Pay non-expert witnesses in a trial to testify or pay for false testimonyBribe jurorsCompound a Crime Refrain from informing on or prosecuting an alleged crime in exchange for money

Which Agreements are illegalAgreements made without a required competency licenseLicense required for people of certain occupations and businesses must pass examPerson who lacks license may not enforce the contracts that make Revenue Raising License license people who raise moneyContracts are valid

Which Agreements are illegalAgreements that affect marriage negativelyPay someone to promise to marry youPay someone not to marryPay someone to divorce

Which Agreements are illegalAgreements that restrain trade unreasonablyPrice Fixing Competing firms agree on the same priceUnenforceableBid Rigging Competitors agree that one bidder will have the lowest bidResale Price Maintenance Allocation of Markets divide the market are illegal and unenforceable

When will courts enforce illegal agreementsProtected VictimsThe Excusably Ignorant Can enforce legal part of contract or obtain restitution Excusably ignorant is:Does not know the contract is illegalThe other party knows the transaction is illegalThe illegality is minorRescission Prior to Illegal ActDivisible Contracts Contain combination of legal and illegal provisionsUnconscionabilityOccurs when there is a grossly unfair contract parties under ordinary circumstances would not acceptTo show UnconscionabilityThe victim must show:He or she was presented with a take it or leave it contractThe other party had overwhelming bargaining powerThere is no viable alternative in the marketplaceInjustice can only be avoided by holding certain terms or the whole contract unconscionable.Contracts within Statute of FraudRequired to be in writingContracts to buy and sell goods for a price over $500Contracts to buy and sell real property or any interest in real propertyContracts that require more than one year to completePromises to stand good for the debts of another or of an estatePromises to give something of value in return for a promise of marriageExecuted ContractsA contract that has been fully performedBoth parties have done all they promised to do

Executory ContractsContract that has not been fully performedSomething agreed upon remains to be doneIf the contract falls within statute of fraud in unenforceableAny consideration exchanged can be recovered by suing based on Quasi-ContractQuasi-ContractExists when some element of an enforceable contract is missing, yet the courts award money to prevent the unjust enrichment of one partyRequirements of the WritingWriting need not utilize any special form to satisfy the Statute of Frauds as long as the writing contains certain key elementsStatute of Frauds RequirementsNames of the partiesA description of the subject matterPricesQuantitySignatureOther essential termsTime or method of deliveryTerms of paymentMethod of financingDate for transfer of possessionUCC RequirementsThe quantity of goodsThat a contract has been created between the parties

Special Rules for SignaturesUnder the Statutes of Frauds, only the parties whose signatures actually appear on the contract may be sued for enforcementUnder the UCC, a contract proposal in writing signed by one party and sent to the other is enforceable against the other party unless the other party objects to the terms within 10 days of receipt.Statute of Frauds ContractsContract for the Sale of Goods for $500 or moreModification of a contract that was below $500 and now the total price is above $500, then it must be in writingStatute of Frauds ContractsUCC exceptions to the Statute of Frauds:When goods are ordered to be specially manufactured and they are not suitable to be sold to othersWhen goods have been ordered and paid for and the seller has accepted paymentWhen goods have been received and accepted by the buyerWhen the party against whom enforcement is sought admits during legal proceedings that an oral contract was madeStatute of Frauds ContractsContracts to Sell an Interest in Real PropertyIncludes land and buildings permanently attached to the landTransfer of title, ownership of real property, or of lesser interests, must be in a properly signed writing to be enforceable.Exception: Made partial or full paymentOccupied the landMade substantial improvements to the landStatute of Frauds ContractsContracts that require more than one year to completeBegins at the time the contract is made, not at the time contractual performance is to begin

Statute of Frauds ContractsContracts to pay a debt or answer for anothers debt or the debt of an estateCollateral Promise Promise to pay a debt or default of anotherPrimary Promise Promise to pay anothers debt that is not conditioned upon the other persons failure to pay.Exception: Main Purpose Rule Third party is responsible for an oral promise that serves the promisors own interestStatute of Frauds ContractsContracts for which the consideration is marriageA signed writing is required for agreements in which one party promises to marry in return for something more than the others promise to marry.If one party breaches either an oral or written contract to marry, the victim of the breach may successfully sue for damagesHow are Contracts InterpretedAcknowledgement of Final AgreementIssues develop involving preceding oral agreements not reflected in the ultimate contract.Contract clause stating both parties agree that the terms in the written contract constitute the entire and final agreementHow are Contracts InterpretedSpecific Rules of InterpretationCourt will interpret the contract in terms of the parties principal objectiveCourt can see which clauses should prevail over othersIf agreement can be interpreted in two ways, the courts will choose the way that renders the agreement a contractHow are Contracts InterpretedConflicting TermsIf there is a conflict between a printed form contract and something typewritten or handwritten theron, the later writings, not the conflicting typeset print, determines the contracts meaningHow are Contracts InterpretedWordsThe plain and normal meaning of ordinary words will be used to determine the meaning of the contractPrior relationships may indicate how the words should be interpretedHow are Contracts InterpretedAmbiguities Things that can be understood in two or more possible waysCourts will interpret against the party who drafted the contract

How are Contracts InterpretedImplied ReasonablenessContracts often include implied terms as a matter of reasonablenessWhen no time for performance is mentioned, a reasonable time is allowedHow are Contracts InterpretedParol Evidence RuleMakes the final writing the source of evidence about the terms of the contractHow are Contracts InterpretedExceptions to Parol Evidence Rule: To clarify ambiguities in the written agreementIf the written contract was not intended to be a complete agreementIf a condition necessary to the existence of the contract never occurredTo show the parties reached another agreement or terminated the contract under consideration after executing the written contractTo show that the contract is voidable because a party lacked contractual capacity