legl 264

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legl 264
2011-02-10 21:47:13
business legal

legl midterm 1
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  1. schools of jurisprudential thought
    • 1. natural law school
    • 2. posititivist school
    • 3. historical school
    • 4. legal realism
  2. natural law school
    oldest & most significant; there is a universal law applicable to all human beings; discoverable thourgh reason and is of higher order than positive (natuonal) law; system of moral & ethical principles inherent in human nature; people have "natural rights"
  3. positivitist school
    also called national law; written law of a given society at a particular point in time; applies only to citizens of that nation or society; centered on assumption that there is no law higher than laws created by government; laws must be obeyed, even if they are unjust to prevent anarcy
  4. historical school
    stresses evelutionary nature of law & that looks to doctrines that have withstood the passage of time for guidence in shaping present laws
  5. legal realism
    school of legal thought popular druing 20s & 30s; left lasting imprint on american juriprudence; general advocated less abstract more realistic & pragmatic approach to law; take into account customary practices & circumstances in which transactions take place; strongly influenced sociological school of jurisprudence that views laws as tool for promoting social justice
  6. common law
    a body of general rules that applied throughout the entire English realm; became part of heritage of all nations that were once British colonies
  7. in personam jurisdiction
    personal jurisdiction over any person or business that resides in a certain geographic area
  8. in rem jurisdiction
    jurisdiction over the thing (where the thing is located)
  9. long arm statute
    can exercise personal jurisdiction over certain out of state defendants based on activities that took place within the state have to prove defendant had sufficient contact with state to justify jurisdiction
  10. corporate contacts
    courts use same principles to determine whether it is fair to exercise jurisidiction over a corporation; normally subject to personal jurisdiction in state in which it is incorporated, has principal office & doing business but can use minimum contact
  11. jurisdiction over subject matter
    limitation on types of cases a court can here
  12. gerneral jurisdiction
    unlimited can decide cases involving broad array of issues (state trial court or federal district court)
  13. limited jurisdiction
    limite types of matters that can be dealt with
  14. probate courts
    state courts that handle only matters relating to the transfer of a person's assets & obligations after that person's death
  15. bankruptcy courts
    federal court that handles only bankruptcy proceedings, governed by federal bankruptcy law
  16. court of original jurisdiction
    courts of the first instance or trail court such as district courts in federal court system
  17. court of appellate court
    courts only hear an appeal from an order over a judgement of trail court or other lower court
  18. federal question
    any lawsuit involving federal question comes under judicial authority of federal courts & originate in federal court
  19. diversity of citizenship
    • federal district courts also exercise original jurisdiction over cases involving 2 requirements
    • 1. plaintiff & defendant must be resident of different states
    • 2. dollar amount in controversy must exceed 75 thousand
  20. concurrent jurisdiction
    when both federal and state courts have power to hear a case
  21. exclusive jurisdiction
    • when cases can be tried only in federal courts or only in state courts
    • federal - federal crimes, bankruptcy & most patent & copyrights, suit agains US, in some areas of admiralty ( transportation on water) law
    • state - divorce and adoption
  22. venue
    concerned with the most appropriate location for a trail; reflects the policy that a court trying a suit should be in the geographic neighborhood
  23. jurisdiction in cyberspace
    difficult to figure out, courts are developing standards to use in determining when jurisdiction over a Web site owner or operator is in different state
  24. Civil Court process
    • 1. incedent
    • 2. party consults with attorney
    • 3. informal investigation
    • 4. plaintiff attorney file complaint
    • 5. defendent notified
    • 6. defendent's attorney files answer or motion to dismiss
    • 7. motion for judgement on pleadings
    • 8. discover (formal investiagion, depositions, interrogatories & other discovery request)
    • 9. motion for summary judgment
    • 10. further discover
    • 11. trail
    • 12. posttrial motions
    • 13. appeal
    • 14. step to enforce & collect judgement
  25. different types of ADR procedures
    • 1. mediation
    • 2. arbitration
    • 3. negotiation
  26. mediation advantages & disadvantages
    • oldest form of ADR, neutral 3rd party acts as mediator to work with both sides to facilitate resolution
    • is form of assisted negotion
    • advangtages - few procedural rules involved in mediation process, can be tailored to fit needs of parties, disputes often resolved far more quickly and inexpensively, not as adversarial in nature as litigation, tends to reduce antagonism between parties, mediator is selected by parties
    • disadvatnges - mediator is likely to charge fee, informality & absense of 3rd party referree, no deadline and no threat of sancations cause less likely to make concessions causing slowing of process & even failure
  27. arbitration advantages & disadvantages
    • more formal method, a 3rd parter or panel of experts hears dispute & imposes a resolution on the parties; the arbitrator makes the decision upon hearing the dispute, decision may be legally binding can olso agree to nonbinding arbitration
    • disadvantage - results can be unpredictable as arbitrators do not need to follow any previous cases, can be nearly as expensive as litigation, discovery not available
  28. negotiation advantages & disadvantages
    least formal method & involves no third parties, simplest form of ADR, parties come together to air their differences and try to reach an agreement; still have to prepare your side of case; disputes may be resolved in friendly non adversarial manner with facilitation
  29. Duty based ethics
    derived from revealed truths like religious precepts or philosophical reasoning
  30. principle of rights
    principle that human beings have certain fundamental rights. those that adhere to this believe that a key factor in determining whether a business decision is ethical is how that decision affects the rights of others
  31. utilitarisanism
    approach to ethical reasoning in which ethically correct behavior is not related to any absolute ethical or moral balues but to an evaluation of the consequences of a given action on those who will be affected by it. a "good" decision is one that results in the greatest good for the greatest number of people affected by the decision
  32. case pg 86
    Baum v Blue Moon Ventures
    • in 02 baum's brought malicious attacks in court of law with no basis in fact were sanctioned & injunction to prevent filing claims in same case
    • in 05 did the same in a bankruptcy case again with no basis in face, was found to have continuation of patter & the judge forwarded memo to previous court who found them as having continue in abusive practice & modified the injunction to include filing of any claim in any court in Texas when they appealed this the court of appeals upheld part of the injunction with exception of injunction against higher courts than the district cout.
  33. case pg 89
    Fog Cutter Capital Group vs SEC
    The company agreeded to a change in Wiederhorn's termination clause to say that if he commited a fraud he would not be terminated with cause while Wiederhorn was under investagation for fraud. When he was charged he pleaded to 2 felony counts and came to a deal with Fog that during his "leave of absence" to serve his time in prision he would keep his title, responsibilities, salary, bonuses and other benefits in addition to paying him for his leave of absense. They were removed from the Nasdaq by NASD and they appealed the decsion to the SEC. The SEC dismissed the appeal and they appealed to the District of Columbia Ciruit Court for a review of the case arguing that it was in the best interest of the Stockholders. The payments cost them 4+ million in a year that they had a loss of alomst 4 million. and they knew that he was under investigation when they agreed to the change in his contract.Their petition was denied for review because of these facts.
  34. foreign corruption
    the act of bribing foriegn officals, there is no law against payment of sums to minor officals whose duties are ministerial, can do so if such payments are lawful in the foreign country, does not prohibit payments to private foreign companies or 3rd parties expect if the company knows that the payment will be passed on to gorieng government in violation of FCPA
  35. how contracts are formed
    contracts or formed by expression or formed in part by conduct (express vs implied in fact) with or without a special form for creation (formal vs informal) with either a promise for a promise or promis for an act (bilateral vs unilateral)
  36. elements of a contract
    • 1. agreement - includes off and acceptance
    • 2. consideration - something of value received or promised to convince person to make a deal
    • 3. contractual capacity - most have to competence to be able to enter into a contract
    • 4. legality - purpose must be to accomplish a goal that is legal and not against public policy
  37. how contracts terminate
    • can be terminated either by action of the parties or operation of law
    • 1. revocation - can be revoked at any time before acceptance without liability
    • 2. rejection - offeree refuses offer
    • 3. counteroffer - rejection of orignial offer with new offer by offeree
    • 4. lapse of time - terminates at end of time period specified or reasonable time period if none stated
    • 5. destruction of the subject matter - when specific subject matter of offer is destroyed before offer accepted, offer terminates
    • 6. death or incompetence of the offeror or offeree - unless irrevocable
    • 7. supervening illegality - when statute or court decision makes proposed contract illegal, offer terminates
  38. contract contrary to statute
    • ways that may be contrary to statue & thus illegal
    • 1. contract to commit a crime
    • 2. usury - when interest rate is aboe the lawful maximum for a loan
    • 3. gambling
    • licensing statutes - entering into contract with unlicensed individual if against state law
  39. contracts contrary to public policy
    • due to negative impact having on society
    • 1. immoral act like selling a child or prohibits marriage
    • 2. contract in restraint of trade - exception for some reasonable and contained in secondary clause
    • 3. unconscionable contract or clauses - grossly unfair either by procedural (how term becomes part of contract) or substantive (portions that are oppressive or overly harse)
    • 4. exculpatory clauses - release party from liability in event of monetary or physical injury no matter who is at fault
  40. how do mistakes impact contracts
    • a mistact of fact - in bilateral mistake (can be rescinded by either party); in unilateral mistake is enforcable unless (other party knew or should have known & was due to substantial math error)
    • mistake of value - does not serve as basis for avoiding contract
  41. how do misrepresentation impact contracts
    • fraudulent misrepresentation - has misrepresent of material fact, with an intent to deceive & innocent party must justifiably rely on the misrepresentation - can defend agasint enforcement but to recover damages proof of injury is required
    • nonfraudulent misrepresenation - from innocent misrepresentation or negligent misrepresentation
    • innocent misrepresentation - make state that believes true but is misrepresentation of material facts; aggrieved party can recind byt cannot seek damages
    • negligent misrepresentaiton - make through carelessness believing true; is negligent if person fails to exercise reasonable care or lack of skill & competence required
  42. how does duress impact contracts
    • if consent to terms is not voluntary if one of the parties is forced into the agreement
    • this includeds fear created by threats; is defense to enforcement of contract and ground for rescission of contract; must have proof of threat to do something that threatening party has no right to do & must be legally or morally wrongful and render person incapable of exercising free will
  43. how does undue influence impact contracts
    • arises from special kinds of relationships in which one party can greatly influence another party overcoming that party's free will and lacks genuine assent and is voidable
    • minors & the elderly are often under this type of pressure but can be from attorney-client, physician-patient, guardian-ward, parent-child, husband-wife or trustee-beneficiary
  44. how does statute of frauds impact contracts
    • types of contracts that must be in writing; denies enforceablility to certain contracts that do not comply with requirements - require a writing
    • 1. contracts involving interests in land
    • 2. contracts that cannot by their terms be performed within 1 year from date of formation
    • 3. collateral, or secondary, contracts, like promises to answer for debt or duty of another & promise by administrator or executor of estate to pay debt of estate personally
    • 4. promises made in consideration of marriage
    • 5. under UCC, contracts for sale of goods priced $500 or more
  45. Performance: complete
    party performs exactly as agreed; when performance is perfect said to be complete; conditions in contract expressly written must be fully satisified
  46. Performance: substantial
    party who in "good faith" performs substantially all of the terms, performance must not vary greatly from contract promis, if defect can be compensated for by award decided by a court.
  47. Performance: time
    if no time is stated then a reasonable time is implied for completion of contract
  48. commercial impracticability
    when supervening events render the performance more difficult or expensive but not impossible to preform and must be extreme and unknow to parties when contract is made.
  49. commercial impossibility
    • a supervening event can make the performance impossible after the contract has been made when party cannot perform obligation and must have been unforseeable at time of writing of the contract
    • 3 basic types of situations can discharge a contract
    • 1. one of the parties dies or becomes incapacitated prior to performance
    • 2. specfic subject matter of contract is distroyed
    • 3. change in law renders the performace of contract illegal
  50. discharge by agreement
    can be discharged by agreement either by original contract or by a new contract with the express purpose of discharging the contract
  51. discharge by law
    • under certain circumstances can be discharged by operation of law
    • 1. alteration of contract
    • 2. statues of limitation
    • 3. bankruptcy
  52. alteration of contract
    allows innocent party to be discharged when other party changes the written contract materially with no notice to innocent party
  53. statues of limitations
    • restriction of time period party can sue on a praticular cause of action
    • 2-3 years for oral contract; 4 to 5 years for written contract; 10 to 20 years on recovery of judgement amounts; 4 years after a breach of sale of goods but can be agreed upon to reduce time but not to extend time
  54. bankruptcy
    after the discharge in bankruptcy (favorable action) most of the deptors contracts will bar enforcement and even if partial payment is made after the discharge it will not revive the debt.
  55. discharge by recession
    • is canceled or terminated and parties are returned to original position prior to contract; must contain
    • 1. previous valid obligation
    • 2. agreement by all parties to new contract
    • 3. extinguishing (discharging) of old obligations
    • 4. valid new contract
  56. discharge by novation
    when both parties to a contract agree to subsitute a 3rd party for one of the parties
  57. breach of contract
    the non performance of contractual duty is material when not at least substantial, if minor can sometimes be suspended until breach has been remedied
  58. different types of damages
    • monetary compensation to place wronged party back in position they would have been in if contract had been preformed; four broad categories
    • 1. compensatory - cover direct losses and costs
    • 2. consequential - cover indirect and foresseable losses
    • 3. punitive - punish and deter wrongdoing
    • 4. nominal - recognize wrongdoing when no monetary loss is shown
    • 5. liquidated- when contract specifies dollar amount of damages when not unfair and is unestimatable at time of contract
  59. liquidating damages
    provision in contract that specifies certain dollar amount in event of default or breach, differs from penalty in that it specifies certain amount to be paid and is designed to penalize the breaching party not as enforcable as the court can limit to actual damages.
  60. recission and restitution
    • recission - an action to undo, or terminate a contract that returns the parties to the position they occupied prior to the transaction
    • restitution - both parties when resinding contract to each other by returing the goods, property, or funds previously conveyed; if goods or property has been consumed then an equivalent amount of cash is made; can be made to breach of contract, tort action & other actions at law or equity, if done by mistake or due to fraud
  61. specific performance
    • performance of the act promised in the contract
    • attractive to non breaching party because; will not do for contract of personal service
    • 1. need not worry about collecting monetary damages awarded
    • 2. need not spend time seeking alternative contract
    • 3. is more valuable than the monetary damages
  62. reformation
    court rewrites the contract to reflect parties true intentions
  63. case pg 241 Hadley v Baxendale case
    this was a consequential damage case because it was common knowledge that mills had several shafts available when one broke down. When Hadley (miller) sent his shaft with Baxendale (shipper) he did not communicate that this was the only shaft and that without the replacement he would not be able to work so the mill was shut down, when Baxendale breached the contract by not getting the shaft there the next day but taking several days it did not know that harm was being done, because of common knowledge and no knowledge of specifics the judge could not compensate for the consequntaial damages
  64. case pg 244 Stainbrook v Low
    specific performance case - in this case the 2 parties Stainbrook and Low entered into contract that Low buy the property for $45,000 plus pay 11/04 taxes & have the property surveyed. Stainbrook died and the estate asked Low to withdraw offer and Low refused & got a specific performance (the turning over of the property) he had the finacing set up before the close date & had offered to pay the taxes which the estate refused to allow, the estate claims that the contract was unfair as Low was only paying $45,000 for land that was worth $121,000; since Low substancially performed his part of the deal and offered to perform the obligations the appellate court upheld the decision of specific performance
  65. UCC
    Uniform Commercial Code - a State statory law governing sales and lease transactions
  66. What is a sale?
    the passing of title from the seller to the buyer for a price; title is the formal right of ownership of property, price may be payment in money or other goods, services or realty
  67. What does UCC cover?
    if the subject matter is dispute is goods it is governed but does not deal with real estate or services and intangible property like stocks and bonds
  68. Scope of UCC
    • governs
    • 1. sales contracts - common law requirements apply (agreement, consideration, capacity & legality); doesn't deal with real estate, services or intangible property
    • 2. leases - deals with transactions that are leases but not sales of goods; defines agreement as bargain between lessor and lessee and applies to all types of leases of goods
  69. Case pg 256 Sun Coast case
    Sun sued Myron on breach of contract, sun asked Myron to submit new orders with new dates, Myron had already accepted the prior terms, sun won the case with myron applealing because the offer was acepted explanation the favored and did not prove proper guidence; In describing how a contract is formed the ruling was overturned as it could have been taken either way and it was explained as only being one way.
  70. case pg 261 Linholdm v Brant
    entrustment rule case question of who had ownership of the painting "Red Elvis" it was decided that Malmberg did and sold it to Holmes, Holmes thought orginially that Lindholm but Malmberg and the fact that sells of paintings do not come with a paper transfer of title, that Guggenheim released the painting to Holmes (they only release paintings to owners or authorized person of true owner) means that Holmes was indeed allowed to sell the painting.
  71. Risk of loss of Sales and lease Contracts
    • remains with seller until idenfication takes place and in shipping contract until delivered to buyer and in destination contract when shipped to buyer; does not necessarily pass with title determined in contract.
    • FOB sellers place, CIF (cost, insurance & freight) or C&F (cost and freight) & FAS (free along side) is all shipping contracts and the seller retains risk of loss until received by buyer
    • FOB buyers place and Delivery Ex-Ship (delivery from the carrying vessal are destinations contracts and the buyer has risk of loss once the seller puts the goods in the hands of the shipping company
  72. Remedies for breach of Sales and lease Contracts
    • generally party in breach bears the risk of loss
    • aggreived party is the seller or lessor - right to withhold deliver (or further performance); right to resell or dispose of goods; right to recover purchase price/lease payment due; right to recover damages
    • aggreived party is the buyer or lessee - right of cover; right to obtain specific performace; right to recover damages; right to reject goods; right to recover damages for accepted goods; revocation of acceptance (right to reject the goods that were accepted)
  73. Right of cover
    buying or leasing substitute goods for those under contract when seller or lessor has repudiated contract or fails to deliver the goods or buyer or lessee rightfully rejects the goods or revokes accpetance after; must act in good faith & without unreasonable delay in getting subsitute goods can recover difference between cost of cover & contract price plus incidental & consequential damages less any expenses that were saved due to breach; not required to do so & not doing so does not bar from other remedies available though might not be able to collect any consequential damages (loss of buyer/lessee that seller/lessor could have foreseen at time of contract formation and any injury resulting from contracts breach)
  74. warranties under UCC
    warrenties of title, express warranties & implied warrenties
  75. warranty of title
    have good & valid title to goods and can transfer and free of lien or infringement & free from copyright, trademark or patent claims of 3rd person; this is in exception of any disclaimer of title warranty in the contract that would say specifically different like having a lein or no title in a sherriffs sall
  76. express warrenty
    • indication of 1) affirmation of promis of fact 2) conform to any discription of good 3) can form to sample or model of goods shown.
    • this would be in the disciption of the goods in pamphlets, filers and the like or how the item looks and acts on the sales floor
  77. implied warranties
    one that law derives by inference from the nautre of the transaction or relative situation of parties; that the goods are merchantable and in certain circumstances fit a particular purpose; arise from course of dealing or usage & trade
  78. case pg 275 Webster
    case of implied warranty of merchantability - patron sued because of fish bone in fish chowder that lodged in throat and she had 2 surgeries due to this, case was found in case of patron, restraunt appealed, in the appeal the court found that it is reasonable to find a fish bone in a bowl of fish chowder as that would have been made from fish.