Basic Business Law (BPP432/80) 2006 Fall Quarter Instructor: David Oliveiri Week 3: Facilitating Exchange; Fairness, Capacity, Legality as Affecting Mutual Assent

Conduct/Status Affecting/Invalidating Assent Presumptions: Freedom (No Coercion), Self- Knowledge (Reasonable Clarity on Preferences), and Information (Subjective Knowledge) Suspicious Circumstances –Unfair and “Unconscionable Situations –Illegal Bargains –Lack of Capacity

Unfair & “Unconscionable” Situations Duress – Physical Compulsion, Improper Threats [S&R11 – Problems 4, 20] Undue Influence [S&R 11 – Problem 9] Fraud [S&R 11 – Problems 2, 6] –In the Execution [Britney Spears Autograph] –In the Inducement = False Representation of a Material Fact + Knowledge of Falsity + Intent to Deceive + Justifiable Reliance Nonfraudulent Misrepresentation [S&R 11 – Problem 17] Mistake [S&R 11 – Problems 3,7,8,12]

Conduct Invalidating Assent – Effect on Ability to Contract

Illegal Bargains Violations of Statutes – Common Examples: Licensing Statutes, Gambling Statutes, Usury Statutes [S&R 13 – Problem 2] Violations of Public Policy [S&R 13 – Problems 1,5] –Common Law Restraint of Trade and Reasonableness Sale of Business Employment Contracts and Non-Compete Agreements –Exculpatory Clauses –Unconscionable Contracts = Absence of choice + Unreasonable advantage Illegal Contracts Unenforceable

Contractual Capacity Minors [S&R 14 – Problems 1,2,5,6] –Liability on Contracts Depends Upon DisaffirmanceRatification –Liability for Necessaries Incompetent Persons [S&R 14 – Problem 8] Intoxicated Persons [S&R 14 – Problem 9]

Contractual Incapacity – Effect on Attempt to Contract Reason for Incapacity Effect on attempt to make a contract MinorityVoidable Mental illness or defectVoidableIntoxicationVoidable Guardianship for incompetency Void

Summary; Q&A Contracts Require a “Meeting of the Minds,” Defined Through Mutual Assent Rules Suspicious Circumstances May Neutralize Mutual Assent