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LST 240: Exam 3
Terms in this set (34)
What is consideration?
an inducement to make a promise enforceable
A's son is in the hospital. B is the doctor who will operate on him. A tells the doctor that if he successfully operates on her son she will give him $200,000. The operation is successful. Is A legally bound to pay B the $200,000? What kind of promise did A make?
A is not legally bound to pay $200,00 because the doctor is simply doing his job by successfully operating on the child. The doctor has a preexisting contractual duty, and there was no consideration. A made a gratuitous promise which is not generally legally enforceable.
A goes to the dentist for an operation. Dentist bills patient for $10,000 due on April 1. On April 2 A sends a check to dentist for $5,000with a note that by cashing the check the dentist agrees to the full discharge of the debt. Can the dentist deposit the check and later sue A?
He can deposit the check and later sue A because it was not a disputed debt. WIth a disputed debt, the debt is not discharged.
A gets a phone call from a collection company saying that he owes $8,000 for a credit card debt that the collection company bought from the credit card company. A tells collection agency that the debt to credit card company was $4,000. Credit card company is unable to provide paperwork proving the amount. A offered to pay $6,000 to settle the claim with the collection company. Can the collection company cash the check and sue for the balance owed? Why?
No, the debt was disputed and disputed debts discharge a balance.
What is an illegal agreement?
An agreement that does not meet legal standards for a contract making it void.
A is a medical doctor from Romania. He failed the exams required for practicing medicine in the US and is therefore not licensed to practice medicine in Kentucky. A does liposuction on B at a hotel pursuant to a legal agreement between the two. B liked the results of the operation but refuses to pay. Can A sue B to collect? What kind of licenses are medical licenses?
A cannot sue B to collect because he does not have a medical license. Medical licnese are regulatory licenses because they are in the public interests.
A is a pharmacist who worked for a pharmacy B in a small town. A is laid off from her work. A's former employer reminds her that for three years from the end of her employment with B, A cannot get a job as a pharmacist in a pharmacy within 4 miles of B's pharmacy? Is this provision enforceable? Why?
The provision is enforceable because there is a legitimate business reason and has reasonable scope and duration.
Contracts with minors are voidable. What should a merchant do to protect its interest when entering a contract with a minor?
They should require the minor to have an adult co-signer to avoid the minor finding a way out of the contract.
A is under guardianship by court order. B learns that A wants to sell her house. If A and B enter into a contract for the sale of the house, what is the legal effect of this contract?
This contract is void.
What does the start of frauds require?
Certain contracts must be in writing to be enforceable.
What are the five kinds of within the statute of frauds?
Promises to answer for the duty of another, promises of an executor or administrator to answer personally for a duty of the decedent whose funds he is administering., agreements up for consideration of marriage, agreements for the transfer of an interest in land, agreements not be performed within one year.
What is the parole evidence rule?
It excludes inconsistent prior and contemporaneous oral and written agreements not incorporated into an integrated contract
What is the choice of law provision?
It allows those entering a contract to determine which state's laws they will use to implement the rules of the contract if any later issues arise.
Can the parties have in the contract a provision that in the event of a breach of contract that the aggrieved party can get attorney's fees?
Yes, they would be considered liquidated damages that put the aggrieved party in the same financial position as if the contract were fulfilled
What is the primary objective of contract remedies?
To compensate the injured party for the loss resulting from the breach of contract
How do we calculate compensatory damages from a breach? Which damages expose the breaching party to the biggest and most uncertain liability?
Compensatory damages must put the injured party in the same position as they would have been if the contract were fulfilled. Market values are estimated by experts in the market. Consequential damages expose the most uncertain liability because they are damages not arising directly out of a breach but as a foreseeable result of the breach.
Are punitive damages allowed in contract action? What does the conduct constituting the breach have to be in order for an aggrieved party to get punitive damages.
Punitive damages are not allowed. The conduct has to include tort to have punitive damages.
What is a penalty?
Penalties are a form of punishment. Penalties are not allowed in contract law; only compensatory or liquidated damages are allowed within reason
A signs a contract with a cell phone company for one year contract and gets a free cell phone. The company has a provision in the contract that should A cancel the service before the end of the contract term. A would owe the company $300. Is this a penalty? Can company enforce this provision in the event of a breach by A?
This is not a penalty. The company can enforce this provision because it is liquidated damages.
A buys a ticket for the super bowl. A week before the game, stadium management calls to tell him that the ticket he has is for a section that has not been finished yet. A gets angry and books a hotel and plane ticket to go to the fame any way. In a lawsuit against the stadium, can A recover the cost of the hotel and plane ticket?
No because he had a duty to mitigate and he did not avoid losses.
Which remedy requires the defaulting party to perform her contractual obligations? In what kind of contracts courts will not grant such a remedy?
Specific performance is a court degree ordering the breaching party to render promised performance. They will not grant specific performance if it is a personal service because they will not force labor.
A signed an agreement with a valid covenant not to compete. If A breaches this provision, what should the aggrieved party do?
THe aggrieved party should reach out to A first. If he does not listen, the party should contact A's potential employer. If they do not listen, the party should go to court and file for injunction (court order prohibiting a party from doing a specific act).
Why is "sales" the most common and important of all commercial transactions?
Because in an exchange economy like ours, sales are the essential means by which the various units of production exchange their outputs, thereby providing the opportunity for specialization and enhanced productivity. Everyone is a buyer or seller of some type of good.
What is a good, sale, and lease?
Goods are moveable personal property. sales are transfers of titles to good from seller to buyer for a price. Leases are transfers of rights to possession and use of goods in return for consideration.
Which law governs the sale of goods?
The Uniform Commercial Code, the UCC Article 2 covers the sale of goods. The UCC Article 2A covers leases. If the UCC is not implemented in the state (Louisana), common law dictates.
What is performance?
fulfillment of a contractual obligation
What is the place of tender of the goods?
It depends. If none is specified, place for delivery is the seller's place of business or if he has no such place, his residence.
What if the seller has no place of business, where is the place of tender of goods?
The tender's residence
What is a shipment contract? A destination residence?
Shipment contract- the seller is required to tender delivery of goods to a carrier for delivery to buyer
Destination contract- seller is required to tender delivery of the goods at a named destination
A buys goods from B. Goods are on a ship in route to be delivered to B. The ship sinks. Who bears the loss?
It depends on the FOB. FOB place of shipment makes the buyer liable for delivery. FOB place of destination makes the seller liable for delivery.
What is a negotiable instrument? Negotiability?
Negotiable instruments include drafts, checks, promissory notes, and certificated of deposit. Negotiability invests instruments with a high degree of marketability and commercial utility by conferring upon certain good faith transferee's immunity from most defenses to the instrument.
Can a bank cash a postdated check before it's date? When would the bank be liable?
A bank can cash a postdated check before its date and is liable for cashing a postdated check if they have been notified not to cash the check
What is a promissory note? What does a not have to be negotiable?
A promissory not is a written promise by a maker(issuer) to pay a payee. To be negotiable, the note must be in writing, signed, contain a promise or order to pay, be unconditional, be for a fixed amount, be for money, contain no other undertaking or instruction, be payable on demand or at a definite time, and be payable to order or to bearer
Negotiable instruments are drafts and check?
False, that is some of the elements but not all
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