BA 390 - part A

Cengage Learning: Introduction to Business Law, 5th Edition

Online Law Dictionary

Flashcards

The Spring 2015 students music on Soundcloud

Milton Tan (one of spring 2015 students) took a ton of photographs on our field trip. He produced the most amazing video to capture the highlights.

1 - Introduction to Law - Key Concepts

3 key ideas about Business Law

1. Knowledge is Power

2. Law is important to successfully navigate "Life"

3. Law is fascinating! (well at least to me, anyway! but y'all know I'm a geek)

Sources of Law

Federalism: A double-layered system of government, with the national and state governments each exercising important but limited powers

US Constitution: The supreme law of the land

1. Establishes the national government of the US with its 3 branches (legislative, executive, judicial)

2. Creates a system of checks and balances among the branches

3. Guarantees many basic rights to the American people

Statutes: A law passed by Congress or by a state legislature

Common law: binding legal ideas that come from the courts

Stare decisis: The principle that precedent is binding on later cases, literally "let the decision stand"

Court Orders: place binding obligations on specific people or companies (e.g. injunction)

Administrative Law: Regulations are created by government agencies (e.g. FAA)

Treaties: Agreements made by President with foreign nations - must be ratified by 2/3 Senate vote - then, binding on all citizens

Classifications of Law

Criminal Law: Concerns behavior so threatening that society outlaws it altogether

Civil Law: Regulates the rights and duties between parties

Analyzing a Case

Plaintiff: Person who is suing

Defendant: Person being sued

Facts: Background to the lawsuit

Issue: What the court had to decide

Holding: Court's decision 

Reasoning: Explains why the court reached its decision

Reverse: Declare the lower court's ruling wrong and void

Remand: Send a case back down to a lower court

Affirm: Uphold a lower court's ruling

2 - Business Ethics and Social Responsibility - Key Concepts

Law: Dictates how a person MUST behave

Ethics: governs how people SHOULD behave

Life Principles: Rules by which you live your life. Develop them now, and you will prepared when facing ethical dilemmas in the future

Why bother to act ethically at all?

- Society as a whole benefits from ethical behavior

- People feel better when they behave ethically

- Unethical behavior can be very costly

- Ethical behavior is more likely to pay off

Sarbanes-Oxley Act of 2002

Utilitarian versus Deontological Ethics

Utilitarian Ethics : John Stuart Mill - 1863 - A correct decision is one that tends to maximize overall happiness and minimize overall pain - e.g. risk-management and cost-benefit analyses

Deontological Ethics: Immanuel Kant - The ends do not justify the means - A sense of duty or obligation is the best justification for any action

Stakeholder Ethics

The Shareholder Model: Milton  Friedman - Corporations have 2 primary responsibilities: 

1. They must comply with the law

2. They must make as much money as possible for shareholders

If stakeholder and shareholder interests conflict, then company should act in best interest of shareholders

The Stakeholder Model: The company must look out for, not only shareholders but also, employees, customers, communities, society, and the environment

Organization's ethical responsibility to its employees - layoffs, outsourcing etc

Organization's ethical responsibility to its customers - customers first

Organization's ethical responsibility to overseas contract workers - industrialization

When, if ever, is lying acceptable?

In some specific circumstances, intentional deception is tolerated

3 - Courts, Litigation, and Alternative Dispute Resolution - Key Concepts

3 Fundamental areas of law:

1. Structure of our court system (one federal and one for each state) 

2. Litigation: Process of resolving disputes in court through filing claims in court, trying the case, and living with the court's ruling

3. ADR - Alternative Dispute Resolution: Resolving disputes out of court, through formal or informal processes - cheaper and faster than litigation

Mediation: Form of ADR in which a neutral third party guides the disputing parties toward a voluntary settlement - strongest "win-win" potential

Arbitration: Form of ADR in which a neutral third party has the power to impose a binding decision 

Trial Courts: Determine the facts and apply to them the law given by appellate courts

Jurisdiction: Court's power to hear a case - There are 2 types:

1. Subject Matter Jurisdiction: Court has authority to hear a particular type of case

2. Personal Jurisdiction: Court has legal authority over the defendant to require the defendant to stand trial, pay judgments, and the like.

Personal Jurisdiction generally exists if:

- Defendant is a resident of the state in which a lawsuit is filed; or

- Defendant files documents in court, e.g. answer to a complaint; or

- Summons is served on defendant (Summons is court's written notice that a lawsuit has been filed against defendant - must be delivered to the defendant when she is physically in the state in which lawsuit is filed); or

- Long-arm statute applies - when someone who does not live in a state but commits a tort, signs a contract, causes foreseeable harm, or conducts "regular business activities" there - minimum contacts - Due Process Clause - International Shoe Co. v. State of Washington

Appellate Courts: Higher courts which generally accept the facts provided by trial courts and review the record for legal errors.

Appellant: Party filing an appeal of the trial verdict

Appellee: Party opposing an appeal

Federal Courts: Established by US Constitution - limited jurisdiction - 2 kinds of cases:

Federal Question Case: Claim based upon US Constitution, federal statute, or federal treaty

Diversity Case: Lawsuit in which the plaintiff and defendant are citizens of different states AND the amount in dispute exceeds $75,000

Litigation

Pleadings: Documents that begin a lawsuit, consisting of a complaint, the answer, and sometimes a reply

Complaint: Pleading that starts a lawsuit - short statement of the facts alleged by the plaintiff, and her legal claims

Answer: Defendant's response to the complaint

Default judgment: Decision that the plaintiff in a case wins without going to trial

Class Action: Suit filed by a group of plaintiffs with related claims

Discovery: allows the two sides in a lawsuit to obtain documentary and other evidence from the opponent before trial - Parties are entitled to discover anything that could reasonably lead to valid evidence

Types include:

- Interrogatories: written questions that opposing party must answer, in writing, under oath

- Depositions: one party's lawyer questions the other party or witness (deponent), under oath

- Production of documents and things: each side may ask the other to produce for inspection and copying

- Physical and mental examination: if condition is relevant

Motion: formal request to the court

Pre-trial motions: Class Action and Summary Judgment

Motion to compel discovery: request to court for order requiring other side to answer discovery

Motion for a protective order: request to court, for good cause shown, where justice requires to protect a party from unreasonable annoyance, embarrassment, oppression, burden or expense

e-discovery: electronic discovery

Summary Judgment: Ruling that no trial is necessary because essential facts are not in dispute

Stinton v. Robin's Wood, Inc

Jones v. Clinton

Trial

Adversary System: based on the assumption that if two sides present their best case before a neutral party, the truth will be established

Jury Selection

Right to a jury trial: not always, but generally where money damages are involved (Judge's instructions) 

Opening statements: summarize proof lawyer expects to offer, plaintiff going first

Plaintiff's Case

Burden of Proof: Obligation to convince the jury that a party's version of the case is correct

 - Preponderance of the evidence: civil suit - plaintiff's version is slightly more likely than defendant's (51-49)

- Beyond a reasonable doubt: criminal case - government, or prosecution, must demonstrate the defendant is guilty beyond a reasonable doubt

Direct examination: when a lawyer asks questions of her own witness

Cross examination: when a lawyer asks questions of an opposing witness

Defendant's Case

Closing argument: both lawyers sum up their case 

Deliberation

Verdict

Appeals

Precedent: earlier decisions by a court on similar or identical issues, on which subsequent court decisions can be based

Affirm: to allow a court decision to stand as is

Modify: to let a court decision stand, but with changes

Reverse and remand: to nullify a lower court's decision and return a case to trial

Reverse: to rule that the loser in a previous case wins, with no new trial

4 - Constitutional, Statutory, Administrative, and Common Law - Key Concepts

Constitutional Law

The Constitution is a series of compromises about power

Separation of Powers

To limit power - 3 branches (independent and equal) - each a check on the others

Federalism

Limited power - Congress has enumerated powers

Power Granted

Congressional power - Article 1 - creates Congress with 2 houses - Senate and House of Representatives

Interstate Commerce

Commerce clause: gives Congress the power to regulate commerce with foreign nations and among states

"The Congress shall have the power to regulate commerce with foreign nations, and among the several states."

Executive power - Article 2 - basic job of the President is to enforce the nation's laws

3 key powers: 

Appointment - of heads of administrative agencies

Legislation - propose bills to Congress - veto power

Foreign policy - conducts nation's foreign affairs - treaties - Commander in Chief of Armed Forces

Judicial power - Article 3 - creates Supreme Court - permits Congress to establish lower courts within federal court system

Federal courts - 2 key functions

- Adjudicating cases: criminal and civil cases

- Judicial review: power of federal courts to declare a statute or governmental action unconstitutional and void

Kennedy v. Louisiana

Protected Rights

1791 - Bill of Rights - first 10 Amendments added to Constitution

First Amendment: guarantees rights of free speech, free press, and religion - "Congress shall make no law... abridging the freedom of speech..." - Government may regulate the TIME, PLACE, and MANNER of speech - speech includes symbolic conduct

Fourth Amendment: protects against illegal searches

Fifth Amendment: ensures due process - Due Process and the Takings Clause - "No person shall be ... deprived of life, liberty, or property without due process of law; nor shall private property be taken for public use, without just compensation."

Procedural due process: ensures that before the government takes liberty or property, the affected person has a fair chance to oppose the action - the type of hearing the government must offer depends upon the importance of the property or liberty interest

The Takings Clause: prohibits a state from taking private property for public use without just compensation - A regulation that denies all beneficial use of property is a taking and requires compensation

Sixth Amendment: demands fair treatment for defendants in criminal prosecutions

Fourteenth Amendment: guarantees equal protection of the law - "No State shall ... deny to any person within its jurisdiction the equal protection of the laws."

The Equal Protection Clause: requires that the government must treat people equally - regulations based on gender, race, or fundamental rights are generally void

Texas v. Johnson

Citizens United v. Federal Election Commission

Statutory Law

Statutes: Laws passed by Congress or state legislatures

Bill: A proposed statute

Common Law

Judge-made law - legal precedents created by appellate courts - common law evolves in awkward fits and starts because courts attempt to achieve two contradictory purposes: predictability and flexibility

Stare decisis: "let the decision stand" - describes a court's tendency to follow earlier cases - once a court has decided a particular issue, it will generally apply the same rule in future cases

Bystander Rule: The common-law bystander rule holds that, generally, no one has a duty to assist someone in peril unless the bystander himself created the danger - courts have carved some exceptions during the last 100 years, but the basic rule still stands

Administrative Law

Administrative agencies, e.g. FAA, make rules - Congress creates federal administrative agencies to supervise many industries - agencies promulgate rules and investigate and adjudicate cases

Agencies promulgate 2 rules: Legislative and Interpretive

Legislative Rules: have full effect of a statute

Interpretive Rules: Agency's interpretation of what the law already requires

Investigation

Subpoena: An order to appear at a particular time and place

Subpoena duces tecum: requires the person to produce certain documents or things

Adjudication

Adjudicate: to hold a formal hearing about an issue and then decide it

Administrative Law Judge: (ALJ) An agency employee who acts as an impartial decision maker

5 - Intentional Torts and Business Torts - Key Concepts

Tort: violation of a duty imposed by the civil law - "wrong" - e.g. libel, negligence, interference with a contract - the injured party must seek compensation

Intentional Torts: involve harm caused by deliberate action

Defamation: concerns false statements that harm someone's reputation

Libel: written defamation

Slander: oral defamation

Element: fact that a plaintiff must prove to win a lawsuit

Elements of Defamation:

1. Defamatory Statement: statement likely to harm another person's reputation

2. Falseness: statement must be false

3. Communicated: To at least one person other than the plaintiff

4. Injury: Plaintiff generally must show some injury

Slander per se: slander cases that involve false statements about sexual behavior, crimes, contagious diseases, and professional abilities - law assumes injury without requiring plaintiff to prove it

(libel too)

Opinion: cannot be proven true or false - generally a valid defense in a defamation suit

Public personalities: less protection from defamation (play in the open) - to win, a public figure or public official must prove actual malice by the defendant

New York Times Co. v. Sullivan

Actual malice: defendant in a defamation suit knew his or her statement was false, or acted with reckless disregard of the truth

False Imprisonment: intentional restraint of another person without reasonable cause or consent

Generally, a store may detain a customer or worker for alleged shoplifting provided there is a reasonable basis for the suspicion and the detention is done reasonably

Battery and Assault:

Battery: harmful or offensive bodily contact - intentional touching of another person in a way that is harmful or offensive

Assault: action that causes another person to fear an imminent battery

Trespass: intentionally entering land that belongs to someone else or remaining on the land after being asked to leave - you don’t have to be aware that the land belongs to someone else - also trespass if you have some object, let’s say a car, on someone else’s property and refuse to remove it

Conversion: taking or using someone’s personal property without consent

Fraud: injuring someone by deliberate deception

Intentional Infliction of Emotional Distress: extreme and outrageous conduct that causes serious emotional harm

Jane Doe and Nancy Roe v. Lynn Mills

Damages

Compensatory Damages: intended to restore the plaintiff to the position he was in before the defendant's conduct caused injury

Single recovery principle: requires a court to settle a legal case once and for all, by awarding a lump sum for past and future expenses

Punitive damages: punish the defendant for conduct that is extreme and outrageous - court must consider 3 guideposts:

1. reprehensibility of the defendant's conduct

2. ratio between harm suffered and the award (generally, not more than 9 times the compensatory award)

3. difference between punitive award and any civil penalties used in similar cases

Boeken v. Philip Morris, Inc.

Tort reform and Exxon Valdez

Economic damages: lost wages, medical expenses, and other measurable losses

Non-economic damages: pain and suffering and other losses that are difficult to measure

Business torts

Tortious interference with a contract: occurs when a defendant deliberately harms a contractual relationship between two other parties

Four elements:

1. contract between plaintiff and a third party

2. defendant knew of contract

3. defendant improperly induced third party to breach contract or made performance of contract impossible

4. injury to plaintiff

Intrusion: (into someone's private life) tort if a reasonable person would find it offensive

Commercial exploitation: prohibits the unauthorized use of another person's likeness or voice for business purposes

6 - Negligence and Strict Liability - Key Concepts

Negligence: harm that arises by accident - unintentional

Palsgraf v. Long Island Railroad

5 elements of negligence:

1. Duty of Due Care: defendant has a legal responsibility to plaintiff - each of us has a duty to behave as a reasonable person would under the circumstances

Hernandez v. Arizona Board of Regents

Special duty: Landowner's Liability

- lowest liability - trespassing adults - trespasser is anyone on property without consent - landowner liable only for intentionally injuring him or some other gross misconduct

- midlevel liability - trespassing children - if there is some manmade thing on land that may be reasonably expected to attract children - landowner probably liable for nay harm

- higher liability - licensee - person on property for her own purposes, but with the owner's permission - eg social guest - entitled to warning of hidden dangers that owner knows about (hidden dangers are NOT obvious ones!)

- highest liability - Invitee - person who has a right to be on property because it is a public place or a business open to the public - owner has a duty of reasonable care - owner must conduct inspections of property to make sure no condition is becoming dangerous

Special duty: Professionals

while on the job must act as a reasonable person in her profession

Special duty: Hiring and retention

companies can be liable for hiring or retaining violent employees 

2. Breach: defendant breached her duty of care or failed to meet her legal obligations

defendant breaches his duty of due care by failing to behave the way a reasonable person would under similar circumstances

3. Factual cause: defendant's conduct actually caused the injury

defendant's breach led to the ultimate harm

4. Proximate cause: it was foreseeable that conduct like the defendant's might cause this type of harm

refers to a party who contributes to a loss in a way that a reasonable person could anticipate - for defendant to be liable, the type of harm must have been reasonably foreseeable

superseding cause: event that is entirely unforeseeable

res ipsa loquitur: "the thing speaks for itself" - refers to cases where the facts imply that the defendant's negligence caused the harm - dramatically shifts burden of proof from plaintiff to defendant - applies only when

1. defendant had exclusive control of the thing that caused the harm

2. harm normally would not have occurred without negligence AND

3. plaintiff had no role in causing the harm

5. Damages: plaintiff has actually been hurt or has actually suffered a measurable loss

Ra v. Superior Court

Defenses

Assumption of the risk: a person who voluntarily enters a situation of obvious danger cannot complain if she is injured

Contributory negligence: plaintiff who is even slightly negligent recovers nothing

Comparative negligence: plaintiff may generally recover even if she is partially responsible

Strict Liability

A high level of liability assumed by people or corporations who engage in activities that are very dangerous

Defective products: generally lead to strict liability

Ultra-hazardous activities: defendant engaging in such acts is virtually always liable for resulting harm

New Jersey Department of Environmental Protection v. Alden Leeds, Inc

7 - Crime - Key Concepts

Criminal Law is a balancing act - between making society safe and protecting us all from false accusations and unfair punishment

Crime has an enormous impact on business!

Only the government can prosecute a crime and punish someone by sending him or her to prison

Restitution: when a guilty defendant must reimburse the victim for the harm suffered

Burden of proof: In a civil case -> preponderance of the evidence

In a criminal case -> beyond a reasonable doubt (demanding much more certainty than required in a civil trial)

Right to a jury: criminal defendant has right if charge could result in sentence of 6 months or longer

Felony: serious crime, for which a defendant can be sentenced to one year or more in prison

e.g. murder, robbery, rape, drug dealing, money laundering, wire fraud, embezzlement

Misdemeanor: less serious crime, often punishable by less than a year in a county jail

e.g. public drunkenness, driving without a license

Criminal procedure: process of investigating, interrogating, and trying a criminal defendant

Guilty: a judge or jury's finding that a defendant has committed a crime

Voluntary act: defendant is not guilty of a crime if she was forced to commit it - i.e. she is not guilty if she acted under duress

Entrapment: when the government induces the defendant to break the law, the prosecution must prove beyond a reasonable doubt that the defendant was predisposed to commit the crime

Gathering evidence - Fourth Amendment - prohibits government from making illegal searches and seizures of individuals, corporations, partnerships, and other organizations

Warrant: must specify with reasonable certainty the place to be searched and the items to be seized

Probable cause: based on all info presented, it is likely that evidence of a crime will be found in the place to be searched

Exclusionary rule: evidence obtained illegally may not be used at trial

Searches without a Warrant: seven circumstances under which police may search without a warrant:

1. Plain View

2. Stop and Frisk

3. Emergencies

4. Automobiles

5. Lawful Arrest

6. Consent

7. No Expectation of Privacy 

Self-incrimination - Fifth Amendment - bars government from forcing any person to provide evidence against himself - accused cannot be forced to testify at trial

Miranda v. Arizona

Right to a lawyer - Sixth Amendment - at all important stages  of the criminal process

The Patriot Act: sweeping antiterrorist law - permits FBI to issue a national security letter (NSL) to communications firms e.g. Internet service providers (ISPs) and telephone companies - must furnish its customer records to government without divulging to customers

After arrest

Indictment: government's formal charge that the defendant has committed a crime and must stand trial

Grand jury: group of ordinary citizens that decides whether there is probable cause the defendant committed the crime with which she is charged

Arraignment: clerk reads formal charges of indictment - defendant must enter a plea

Plea bargain: agreement in which the defendant pleads guilty to a reduced charge, and the prosecution recommends to the judge a relatively lenient sentence

Trial and appeal

Double jeopardy: criminal defendant may be prosecuted only once for a particular criminal offense

Punishment: Eighth Amendment prohibits cruel and unusual punishment

Crimes that harm business

- Larceny: trespassory taking of personal property with the intent to steal it

- Fraud: deception of another person for the purpose of obtaining money or property from him

Wire fraud and mail fraud: involves use of interstate mail, telegram, telephone, radio or television to obtain property by deceit  

Theft of honest services: prohibits public and private employees from taking bribes or kickbacks 

- Arson: malicious use of fire or explosives to damage or destroy real estate or personal property

- Embezzlement: fraudulent conversion of property already in the defendant's possession

Crimes committed by business

Corporate liability: If an agent commits a criminal act within the scope of his employment and with the intent to benefit the corporation, the company is liable

Commonwealth v. Angelo Todesca Corp.

Selected crimes committed by business

RICO: Racketeer Influenced and Corrupt Organizations Act - powerful Federal statute originally aimed at organized crime now used in many criminal prosecutions and civil lawsuits

RICO prohibits using two or more racketeering acts to accomplish any of these goals:

1. investing in or acquiring legitimate businesses with criminal money

2. maintaining or acquiring businesses through criminal activity OR

3. operating businesses through criminal activity

Racketeering acts: any of a long list of specified crimes e.g. embezzlement, arson, mail fraud, wire fraud 

Money laundering: using the proceeds of criminal acts either to promote crime or conceal the source of the money

Hiring illegal workers: I-9 must be complete within 3 days of hiring

Punishing a corporation

Fines

Compliance program: plan to prevent and detect criminal conduct at all levels of a company

Federal Sentencing Guidelines: detailed rules that judges must follow when sentencing defendants convicted of federal crimes

8 - International Law - Key Concepts

The world is now one vast economy, and negotiations quickly cross borders.

Trade Regulation: The Big Picture

Export: to ship goods or services out of a country

Import: to ship goods or services into a country

Export controls: AECA: Arms Export Control Act - prohibits the export of specific weapons

Import controls: Tariff: tax imposed on goods when they enter a country - aka a duty

EU: European Union

Classification: The Customs Service decision about the precise nature of imported goods

Totes-Isotoner Co. v. US

Valuation: The Custom's Service's determination of the tariff, based on the value of the goods - duty aka ad valorem

Dumping: selling merchandise at one price in the domestic market and at a cheaper, unfair price in the international market

Quota: limit on the quantity of a particular good that may enter a nation

Treaty: President makes with foreign nation - 2/3 Senate approves - 3 important ones:

1. General Agreement on Tariffs and Trade (GATT): massive internaitonal treaty designed to eliminate trade barriers and bolster internaitonal commerce - GATT created World Trade Organization (WTO) to resolve trade disputes, an international court that may order compliance from any nation violating GATT and penalize by imposing trade sanctions

2. Regional Agreements: North American Free Trade Agreement (NAFTA): treaty between Mexico, Canada, and the US designed to eliminate almost all trade barriers among the three nations

3. European Union (EU): 27 countries belong - eliminate trade barriers - establish common tariffs - permit free movement of citizens across borders - common currency (Euro)

International Sales Agreements: 2 key issues: the sales contract and letters of credit

Sales Contract: 3 conflicting laws may govern

1. United Nations Convention on Contracts for the International Sale of Goods (CISG): uniform, international law on trade that has been adopted by the US and most of its principal trading partners

2. Seller's law 

3. Buyer's law

Choice of forum: where disagreements will be resolved

Additional choices: language for contract and currency for payment

Letter of credit: for greater assurance of payment - confirmed by other party's bank to spread risk

Centrifugal Casting Machine Co. Inc. v. American Bank and Trust Co.

International Trade Issue

Extraterritoriality: power of one nation to impose its laws in other countries

Subsidiary: company controlled by a foreign company

Carnero v. Boston Scientific Corporation

Foreign Corrupt Practices Act (FCPA): prohibits an American business person from giving anything of value to a foreign official to influence an official decision - 2 principal requirements are bribes and recordkeeping - a grease or facilitating payment is legal

9 - Introduction to Contracts - Key Concepts

Elements of a Contract: legally enforceable agreement - promise that the law will enforce

- Offer

- Acceptance

- Consideration: bargaining that leads to an exchange between parties

- Legality: for a lawful purpose

- Capacity: parties must be adults of sound mind

- Consent: without certain kinds of trickery and force

- Writing: some contracts MUST be in writing to be enforceable

Remedies: court will award money or other relief to party injured by breach of contract

Types of contracts:

Bilateral contract: both parties make a promise

Unilateral contract: one party makes a promise that the other party can accept only by doing something

Executory contract: binding agreement in which one or more of the parties has not fulfilled its obligations

Executed contract: agreement in which all parties have fulfilled their obligations

Valid contract: contract that satisfies all the law's requirements

Unenforceable agreement: contract where parties intend to form a valid bargain but a court declares that some rule of law prevents enforcing it

Voidable contract: agreement that, because of some defect, may be terminated by one party, such as a minor, but not by both parties

Void agreement: agreement that neither party may legally enforce 

Mr. W Fireworks, Inc. v. Ozuna

Express contract: agreement with all important terms explicitly stated

Implied contract: where the words and conduct of the parties indicate that they intended an agreement

Demasse v. ITT Corporation

Promissory Estoppel: doctrine in which a court may enforce a promise made by the defendant even when there is no contract - even when there is no contract, a plaintiff may use promissory estoppel to enforce the defendant's promise if he can show that:

1. defendant made a promise knowing that plaintiff would likely rely on it

2. plaintiff did rely on promise AND

3. the only way to avoid injustice is to enforce the promise

Quasi-contract: legal fiction in which, to avoid injustice, the court awards damages as if a contract had existed, although one did not - even when there is no contract, a court may use a quasi-contract to compensate a plaintiff who can show that:

1. plaintiff gave some benefit to defendant

2. plaintiff reasonably expected to be paid for the benefit and defendant knew this AND

3. defendant would be unjustly enriched if he did not pay

Quantum meruit: "As much as he deserved" - damages awarded in a quasi-contract case

Novak v. Credit Bureau Collection Service

Sources of Contract Law

- Common law: crafted by courts

- Uniform Commercial Code (UCC): created in 1952 - drafters intended the UCC to facilitate the easy formation and enforcement of contracts in a fast-paced world - Every state has adopted at least part of USS to govern commercial transactions within that state - UCC governs many aspects of commerce, including:

1. the sale and leasing of goods

2. negotiable instruments

3. bank deposits

4. letters of credit

5. investment securities

6. secured transactions

7. other commercial matters

Goods: things that are moveable, other than money and investment securities and certain legal rights - UCC Article 2 governs - in a mixed contract (both services and goods) look to primary purpose

Agreement: meeting of the minds - offer and acceptance

Offer: act or statement that proposes definite terms and permits the other party to create a contract by accepting those terms

Offeror: party in contract negotiations who makes the first offer

Offeree: party in contract negotiations who receives the first offer

Note: invitation to bargain is NOT an offer

Baer v. Chase 

Termination of Offers:

- Revocation: taken back before offeree accepts

Nadel v. Tom Cat Bakery

- Rejection: offeree clearly indicates he does not want the offer

- Counteroffer: party responds to an offer with a new and different proposal

- Expiration: offer specifies time limit for acceptance

- Destruction of subject matter: 

Acceptance: offeree must say or do something to accept

Mirror image rule: (common law rule) contract doctrine that requires acceptance to be on exactly the same terms as the offer

UCC and Battle of the Forms: (UCC2-207) under the UCC, an acceptance that adds additional or different terms often WILL create a contract - and additional terms will often become part of the contract

1. for sale of goods - most important factor is whether parties believe they have a binding agreement - if conduct indicates it, then they do

2. if offeree ADDS NEW TERMS to offer - acceptance by offeror generally creates a binding agreement

3. if offeree CHANGES terms of offer - court will probably rely on UCC to create a fair contract

4. if a party wants a contract on its terms only - with no changes - it must clearly indicate that

Communication of Acceptance: 

offeree MUST communicate acceptance for it to be effective

Method and manner of acceptance: if an offer demands acceptance in a particular method or manner, the offeree must follow those requirements - if the offer does not specify a type of acceptance, the offeree may accept in any reasonable manner and method

Method: whether acceptance is done in person or by mail, telephone, email, or fax

Manner: whether offeree accepts by promising, by making a down payment, by performing,and so forth

Time of Acceptance: The Mailbox Rule - an acceptance is generally effective upon dispatch, meaning the moment it is out of the offeree's control (Note: terminations are effective when received) 

Sarah Nilsson, J.D., Ph.D., MAS

602 561 8665

sarah@sarahnilsson.org

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