Law for Business

1. Law for Business Mr. Bernstein Student Teaching Unit Notes October-November 2013

2. Law for BusinessMr. Bernstein 1) John Yazici: Duress and Undue Influence in Contract Law, 10/29 Definition of Rescission vs. Awarding Damages Duress Threat of Illegal Conduct Threat to Report Crimes Threats to Sue Economic Threats Undue Influence Relationship of Trust, Confidence or Authority Must Exist Examples: Elderly Parent/Child; Attorney/Client; Doctor/Patient Courts presume Undue Influence exists if contract favors dominant party Best protection Advise counterparty to consult attorney Have witnesses to conversations Contract language

3. Law for BusinessMr. Bernstein 2) Glen Thompson: Mistake, Misrepresentation and Fraud, 10/30 Unilateral Mistake Generally does not affect validity of contract, unless… Recognized Unilateral Mistake– if one party is aware of the mistake Induced Unilateral Mistake – if one party induces the other to make the mistake Mutual or Bilateral Mistakes If material, generally voids contract, whether mistake is about fact or law Misrepresentation Untrue Statement of Fact, Not Opinion, is Material, and is Reasonably Relied Upon Active Concealment or By Silence Innocent Misrepresentation: Damages are still available Fraud Misrepresentation which is Intentional or Reckless Must cause Injuries Remedies include Rescission, Damages and maybe Punitive Damages

4. Law for BusinessMr. Bernstein 3) Alex Zaczynski : Mutual Consideration, 10/31 Consideration Each party must give an act, promise or forebearance of legal value Equality of consideration not needed Legal Value Promises must be binding – cannot be illusory Promise to do existing duty is not legal consideration Past performance is not legal consideration Exceptions: Promissory Estoppel Other Terms: Statute of Limitations Open offers , modifications and the Uniform Commercial Code

5. Law for BusinessMr. Bernstein 4) Sinthya Trevino: Capacity to Contract, 11/1 Capacity Rights Minors, Mentally Incapacitated and Intoxicated Can Disaffirm non-necessities Necessities allowed but must be at fair value Organizations authorize individuals to contract Disaffirmance must occur within reasonable time Ratification prevents Disaffirmance Some contracts cannot be Disaffirmed Misrepresenting Age

6. Law for BusinessMr. Bernstein 5) Tom Chiappisi: Illegal Contracts, 11/4 Illegal Contract Categories Illegal due to specific statutes – ie usurious interest rates Obstructing legal procedures Lacking required licenses Affect marriage negatively Restrain trade unreasonably – ie price fixing, contracting “suggested prices”, allocating market areas, unreasonable non-compete clauses Our court system generally hopes to enforce contracts, but other laws and regulations take precedence

7. Law for BusinessMr. Bernstein 6) Jenna Trischitta: Enforceability of Illegal Contracts, 11/5 Common law governs services and realty Restitution available only for Protected Victims, Excusably Ignorant, Rescissions before Illegality, Divisible Contracts UCC governs sale of goods Unconscionable contracts – procedural (fine print, fraud, duress, etc) and substantive (unfair price or one-sided terms) Courts can enforce portions of contract, or can modify contracts Ordinarily, our courts do not seek to help EITHER party to an illegal agreement

8. Law for BusinessMr. Bernstein 7) Mike Florentine: Statute of Frauds, 11/6 Statute of Frauds Requires Some Contracts to be Signed Dates back to 1677 English law to prevent perjury $500+, real estate, one year or more to completion, involving a third party obligation, or involves marriage Signed contracts are called Executed Contracts What is required? Varies by state but includes Essential Terms including names of parties, subject, price, quantity and signatures Evidence of a Contract must also be in the writing UCC may allow one-party signature in many situations Always consider: Why would a party wish to avoid signing a contract?

9. Law for BusinessMr. Bernstein 8) Chris Wolfman: Interpretation of Contracts, 11/11 Parol Evidence Rule Length and detail of contract determine intent to override any verbal discussion Integration Clauses create a complete agreement Parol Evidence is the spoken words one party may feel was part of the contract; is admissible in six situations (p 188) How are Written Terms Interpreted? Custom or inserted writing overrules forms Courts will look to the parties’ principal objective Ambiguities typically interpreted against the author

10. Law for BusinessMr. Bernstein 9) Chris Vetter: Transfer of Contractual Duties, 11/14 Assigning Contractual Rights Rights can generally be assigned if performance is not changed Examples of non-assignable rights: Claims for damages, Rights to personal services where trust or confidence is involved, Future wages, Claims vs. USA, or if banned in contract language Delegating Contractual Duties When delegating, you remain responsible for performance Obligations of Obligors Following receipt of notice Obligor must perform

11. Law for BusinessMr. Bernstein 10) Derrick Wiley: How Are Contracts Satisfied?, 11/15 Contracts Are Usually Discharged By Performance Key Terms: Cancellation, Substantial Performance, Default or Anticipatory Breach How Else can Contracts Be Discharged? By Agreement – Recission, Novation (Substitute Party), Accord/Substitution/Satisfaction By Impossibility of Performance By Operation of Law – ie Bankruptcy If a Tender is made in good faith and rejected

12. Law for BusinessMr. Bernstein 11) Lauren Conroy: Remedies for Breach of Contract, 11/18 Types of Breaches and Remedies Minor vs Major Breaches Rescission and Restitution Money Damages – Compensatory, Consequential, Liquidated, Punitive and Normal Decree for Specific Performance: Equity Remedy When Money Damages are inadequate, subject matter unique, ability to supervise exists, and “clean hands” exist

13. Law for BusinessMr. Bernstein 12) Ryan Vail: Denial of Remedies for Breach of Contract, 11/19 Injured party must choose a remedy when suing Specific Performance or Rescission may not be available if damages are adequate Injured party must take reasonable steps to mitigate damages Injured party may have granted waiver (intentionally or not) Statute of limitations may have cause denial Bankruptcy may eliminate some remedies

14. Law for BusinessMr. Bernstein • Derreon Underwood: Sales Contracts, 11/20 Barter – Exchange goods for goods Vender - Seller Unconscionable – Grossly unfair and oppressive Merchants held to higher standard than casual sellers Statute of Frauds: $500 in value, must be in writing UCC covers sales of tangible goods Does not cover money, personal services, patents, real estate Sales can be made by actions showing agreement

15. Law for BusinessMr. Bernstein 14) Carlo Murillo: The Power to Transfer Ownership, 11/21 Generally, only the true owner can legally transfer ownership (ie cannot sell stolen goods) A bill of lading can be sold, transferring ownership of goods in transit (ie barrels of oil) Fungible goods – goods of a homogenous nature such as barrels of oil – ownership can pass at time of agreement, prior to delivery and inspection Always deal with solid, reputable counterparties

16. Law for BusinessMr. Bernstein 15) Ryan Weiss: Risk of Loss and Insurable Interest, 11/22 The risk of loss does not always transfer when the title transfers FOB (Free on Board) - indicates where seller must deliver and where risk transfer occurs COD (Collect on Delivery) – payment, and risk transfer, occur at delivery Auction – ownership transfers at time winning bid is acknowledged by auctioneer Bailee – takes temporary possession (ie warehouse) Buyer’s rights: Inspection, Compel delivery, Collect damages from third parties who injure goods, insure