Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
69 Cards in this Set
- Front
- Back
Contract
|
A promise (or set of promises) for breach of which the law gives a remedy.
|
|
Bilateral Contract
|
A contract with 2 promises.
Ex. I'LL sell you my car for $500 IF YOU buy the car on Friday. |
|
Unilateral Contract
|
-A contract with 1 promise.
-Usually for rewards -Any party can accept the contract + complete the act -Ex. If you give me info on this missing person, I'll give you a $1,000 reward. |
|
If you don't follow the stipulations requested in the offer, you are...
|
-Rejecting the original offer + counter-offering!
|
|
Express Contract
|
A written or oral contract in which all of the elements are specifically stated.
|
|
Implied Contract
|
-Non-spoken and non-written understandings.
-Existence of the contract is assumed. -Ex. going to the dentist - if you accept services, it is IMPLIED that you will pay for them. |
|
Merchant's Firm Offer
|
-UCC sec. 2, 205
-An offer by a merchant in writing states that it will be kept open (and irrevocable) for up to 3 months (90 days). |
|
Are advertisements offers?
|
NO.
|
|
How can an offer be terminated or responded to? (2)
|
1) rejection
2) counteroffer |
|
Mirror Image Rule
|
Under Common Law, you can't change a word of the offer, it must be the "mirror image" of what was offered to you to be a valid contract.
|
|
Mailbox Rule
|
-A timing rule in contract ACCEPTANCE that provides that: acceptance is effective upon mailing (if done properly)
-Once the acceptance is in the mailbox (or faxed over) it's effective! - Even if the offeror doesn't know about it yet! |
|
Void vs. Voidable
|
VOID
-Neither side can enforce the contract legally, usually because it's a contract to do something illegal. (ex. a contract to kill someone or buy drugs) VOIDABLE -To get out of the contract, one must prove that one of the elements weren't there. |
|
Executed Contract
|
Contract has been 100% performed/completed.
|
|
Executory Contract
|
A contract that is partially performed and waiting on more to be completed.
|
|
2 Sources of Contract Law:
|
1) Common Law - old way - for real estate, copyrights, personal service contracts, insurance, employment contracts, etc. (ex. crown @ dentist, lease, mortgage,...)
2) Uniform Commercial Code - applies to tangible, moveable objects. (Ex. buying a car, selling a horse,...) |
|
Who are the parties involved in a contract? (2)
|
1) Offeror
2) Offeree |
|
What are the 5 Elements of a Contract:
|
1) Offer
2) Acceptance 3) Consideration (both parties give something) 4) Capacity 5) Legality |
|
Defenses to getting out of a contract: (6)
|
-Capacity
-Misrepresentation -Fraud -Illegality -Undue Influence -Duress |
|
Capacity (Defense) and 3 types/limits:
|
-Both parties must have capacity, which includes age (18+) and mental capacity in order to have a valid contract.
1) Intoxication 2) Mental Illness 3) Minor |
|
VOID OR VOIDABLE?
-Intoxication -Mental Illness -Minor |
-Intoxication = voidable
-Mental illness = void (IF declared by judge) -Minor = voidable @ option of minor only |
|
Age Capacity:
|
-voidable ONLY at option of the minor, the adult cannot get out of the contract
-They must disaffirm the contract BEFORE they are 18. -Before 18, they're called an "infant" or "minor" -Necessities of life must still be paid for!!! (ex. student loans, food, etc.) |
|
Mental Capacity:
|
-If they were just in a weird mental state (in and out of lucidity) - that's voidable, must be able to prove!
-If declared legally incompetent by the judge = void. |
|
Misrepresentation
|
-Misstatement of a material fact.
-Reliance -Damages -Remedy can be rescission= contract is set aside. -Not for opinions (ex. "you didn't make this room hollywood-esque!") |
|
Fraud
|
-Intentional misrepresentation of a physical entity.
-voidable -Intentional failure to disclose info -Intentional use of false info |
|
Illegality
|
-VOID.
-Ex. contract to have someone killed. -Contracts in violation of licensing statutes must be competency-based as opposed to revenue-raising for contracts to be void. (licensed professionals need to be competent in their field. must have license at time service is performed) -Regulatory-based are void. -Contracts in violation of Usury Laws (charging over legal limit for interest) -Contracts in violation of public policy. |
|
Exculpatory Clauses:
|
-Full liability elimination is generally invalid.
-You sign it when you valet your car, go sky-diving, etc. -They can't be excused from EVERYTHING. |
|
Duress
|
-When the party is deprived of a meaningful choice.
-Physical threats - void -Social or economic threats - voidable -Has right to rescission |
|
Undue Influence
|
- When there is a dominant relationship over someone causing them to sign the contract.
- Contract is voidable. - Must have confidential relationship (ex. atty/client, nurse/patient) |
|
What is the Statute of Limitation for a felony?
|
There is none.
|
|
Concurrent Condition
Precedent Condition Subsequent Condition |
Concurrent - performed at the same time.
Precedent - there is a preceding condition that must be met in order to perform. Subsequent - ex. if you don't like it in 30 days, you can return it. |
|
When is performance excused? (2)
|
1) Impossibility of performance - ex. truckers over frozen lakes... - Commercial Frustration is not excused! (Airport example)
2) Commercial Impracticability - basic assumptions parties made are no longer realistic. |
|
Novation
|
The two original parties agree to substitute a performance or a new party in the contract. (subleases are not novation unless all three parties are in agreement, usually the landlord doesn't know/agree.)
|
|
Compensatory vs. Consequential Remedies:
|
Compensatory = putting the party in the same position they would have been without the contract problem.
Consequential = damages experienced in relation to 3rd parties. Late fees or loss of income for delays. |
|
Statute of Frauds
|
-Says that writing is required for contracts of real estate, contracts that can't be performed in 1 year, and contracts to pay the debt of another.
-Under UCC, sale of goods $500+ must be in writing to be enforced in court. -Contract doesn't have to be on formal paper - it can be pieced together on a Publix bag. |
|
Parol Evidence Rule
|
-Prevents parties from using evidence that contradicts with the existing contract.
-Doesn't matter if that wasn't what you meant, the contract is unambiguous. -Exceptions: fraud, misrepresentation, ambiguities, can testify for typos, etc. |
|
London International Court
|
-Often used in international disputes.
-Ex. in a dispute between US and Mexico, they often would go to London International Court instead of US or Mexico's court to be more fair. |
|
3 Decisions Courts can make on a breached contract:
|
1) Jail/fine
2) Award $$$ 3) Injunction (make them turn it over) |
|
What are the 7 Main types of Business Organizations?
|
1) Sole Proprietorship
2) General Partnership 3) Limited Partnership 4) Limited Liability Partnership 5) Limited Liability Company 6) Corporation 7) Sub Chapter S |
|
How can you pierce the "corporate veil?"
|
With the "alter-ego" rule.
|
|
How much time does an S Corporation have to file with the IRS before they get double-taxed?
|
90 Days
|
|
What is the most popular type of organization filed in the US today?
|
LLC's.
|
|
Who elects the board of directors?
|
Shareholders
|
|
How many shares can an S Corporation have?
|
100 or less.
|
|
Flow-Through Tax
|
-Organization doesn't pay tax, it "flows-through" to the individual.
|
|
Taxed, Not Taxed, Double Taxed?
-Corporations -Limited Partnerships -Sub Chapter S -Partnerships |
-Corps = double taxed
-Limited Partnerships = not taxed -Sub Chapter S = not taxed -Partnerships = not taxed |
|
VOID OR VOIDABLE?
-Illegal, Physical Duress, Fraud, Social or Economic Duress, Incompetent (by judge), Minor, Capacity. |
-Illegal = Void
-Physical Duress = Void -Fraud = Voidable -Social/Economic Duress = Voidable -Incompetent by Judge = Void -Minor = Voidable -Capacity = Voidable |
|
When partners share property, who owns it?
|
-THE PARTNERSHIP, not the person on the title.
|
|
If someone offers to sell you their car on Friday for $400, is that a valid offer? Yes/No.
If you say, "no, I'll buy it for $375." It's a(n) ___________. |
Yes!
Counteroffer and rejection of the original offer. |
|
What does the mailbox rule apply to?
|
ACCEPTANCES, not offers.
|
|
Business Judgement Rule
|
-The directors of a corporation must make their managing decisions in good faith and in the best interests of the corporation.
|
|
Under which law does the mailbox rule apply?
|
UCC
|
|
FORMATION of:
Sole Proprietorship, Partnership, Limited Partnership, Corporation, S Corp, Limited Liability Company, Limited Liability Partnership |
Sole Proprietorship = no formal requirements
Partnership = Articles of partnership (40/60%, 50/50%) Limited Parnership = Filing articles of partnership Corporation = formal filing of articles of incorporation S Corp = Formal filing, special IRS filing LLC = formal filing of articles of organization LLP = Filing of articles of LLP |
|
FUNDING for:
Sole proprietorship, Partnership, LP, Corp, S Corp, LLC, LLP |
Sole Prop = provided by individual
Partnership = capital contributions by partners LP = capital contributions by general + limited partners Corp = Debt (bonds) + equity (shareholders) S Corp = Debt (bonds) + equity (shareholders) LLC = capital contributions of members LLP = capital contributions of partners |
|
MANAGEMENT OF:
Sole prop, partnership, LP, corp, S corp, LLC, LLP |
Sole Prop = Individual
Partnership = partners (or delegated to one) LP = general partners only - NOT limited partners Corp = board of directors + officers + exec. committee S corp = board of directors + officers/exec. committee LLC = no centralized mgmt. All members manage (or delegated to one) LLP = all partners (or delegated) |
|
TRANSFER CONTROL of:
sole prop, partnership, LP, corp, S corp, LLC, LLP |
Sole prop = no transfer
partnership = transfer interest, but not partner status LP = transfer interest, but not partner status (except RULPA) Corp = shares are easily transferred S corp = restrictions on transfer to comply with s corp LLC = no transfer without majority's consent LLP = no admission without majority's consent |
|
TAXES on:
Sole prop, partnership, LP, Corp, S corp, LLC, LLP |
Sole prop = individual
Partnership = partner takes profits/losses on individal return (flow-through) LP = partners take profits/losses on indiv. return (flow through) Corp = double-taxed! (corp pays and shareholders pay) S corp = shareholders pay taxes on profits; take losses LLC = flow-through LLP = flow-through |
|
TERMINATION of:
sole prop, partnership, LP, corp, s corp, LLC, LLP |
Sole prop = death or voluntary
Partnership = death or withdrawal of partner LP = death or withdrawal of partner Corp = dissolved ONLY if limited in duration or shareholders vote to dissolve S corp = ONLY if limited in duration or shareholders vote to dissolve LLC = death or bankruptcy LLP = death or bankruptcy |
|
LIABILITY of :
sole prop, partnership, LP, corp, s corp, LLC, LLP |
sole prop = individual
partnership = partners are personally liable LP = general partners are liable, LP's to extent of contribution Corp = no shareholder personal liability UNLESS watered or corporate veil is pierced! S corp = ^^^ LLC = only liable to extent of capital contribution LLP = varies by state. liable for acts of partners is limited |
|
Sole Proprietorship
|
-Formed by an INDIVIDUAL!
-No requirements to form -Individual manages, provides funding, pays tax, and is liable. -Can be sold -Can have a fictitious name (which may have to be published) |
|
Partnerships
|
-An association of 2+ persons to carry on as co-owners of a business for profit.
-Can include corporations + natural persons -Voluntarily formed by agreement. -Must draw up 'articles of partnership' -Partners split NET not gross profits. Not entitled to a wage. -Personal assets are reachable if partnership assets run out! -DOES NOT PAY TAXES. -Uninimous consent required for most decisions. -Fiduciary relationship + duties (no competing, best interest of partnership) |
|
UPA + RUPA
|
-Uniform Partnership Act
-In absence of a partnership agreement, UPA controls. -RUPA = revised version!! *** -ULPA = Uniform Limited Partnership Act (+ RULPA) |
|
Limited Partnerships
|
-1+ general partners and 1+ limited partners
-general partners manage + are fully liable -limited partners are liable only for their capital contributions (up to $100,000), but CANNOT manage -must meet statutory requirements -must file 'certificate of limited partnership' -Taxed the same as general partnerships - on individual returns) |
|
Corporations
|
-Legal existence, unlimited duration, double-taxed!
-Limited liability (shareholders liability generally limited to amount of investment or full liability once corporate veil is pierced) -Centralized management -Board of Directors (manage, elected by shareholders, held to "business judgement rule") -Can sue and be sued -Domestic = in state of incorporation, Foreign = out of state -Model Business Corporation Act (statute) |
|
Sub Chapter S (aka S Corporation)
|
-Limits on size (no more than 100 shareholders)
-Corporate liability protection -Partnership tax status (not taxed) |
|
Limited Liability Companies (LLC)
|
-Most popular type filed today!!!! ****
-General partnership -Has 'MEMBERS' -No centralized management, all members vote -Shield -Costs $150 -Good for real estate |
|
Limited Liability Partnership (LLP)
|
-General partnership with limited liability
-Usually accountants |
|
In a partnership, what happens if a partner dies?
|
-Dissolution of partnership.
|
|
When property is shared in a partnership, who owns the property?
|
THE PARTNERSHIP.
Not the person on the title. |
|
UCC - Battle of the Forms
|
-If acceptance conditions are expressly conditional, it is a counteroffer, not an acceptance.
-"If performance is accepted after the counteroffer, even without express acceptance, under 2-207(3), a contract will exist under only those terms on which the parties agree, together with UCC gap-fillers." -Wikipedia |