Business Law Combined Chapters 9, 11-15

Chapter 9 What is Bait and Switch?  Using understocked, low-prices “come- on” to lure prospective buyers out but are directed to a more expensive item.  Not illegal if they state how many of the item they have or that the supply is limited.

What is Price Fixing?  Individuals and companies enter into agreements to control or fix prices in order to eliminate competition.

What is cease and desist?  An order requiring the company to stop the specified conduct. If they refuse, heavy penalties may be awarded.

Chapter 11 What is consideration?  The promise or action that one person gives in exchange for the promise or action of another person.

Why is consideration required?  For a valid and enforceable contract.  Must be mutual-both people must give and get consideration.  If one party doesn’t give consideration, the other has no duty to perform as promised.

What is sufficient consideration?  It is unimportant as long as the contracting parties have voluntarily agreed.  Depends on many variables such as: Supply and Demand Personal needs and desires Individual’s ability to evaluate  Courts will question if there is evidence of fraud or duress—grossly inadequate as to shock the court.

Is an Existing obligation consideration?  No  A person sometimes promises to do something that he or she has already done in a prior contract.  If they have already fulfilled the contract then they cannot demand further compensation.

Is past performance consideration?  An act that has already been performed cannot serve as consideration for a promise made now.  You can’t go and mow someone’s lawn and then go up to the door and ask to be paid!

Exceptions to the requirement of mutual consideration…  Promises of Financial Support to Charitable Organizations.  Promissory Estoppel -- Page 218  Commercial Paper  State Statutory Exceptions

What is a Gift?  A voluntary transfer of ownership of property without receiving consideration in return.  If you give property as a gift-you cannot get it back.

Chapter 12 What is duress?  If one person compels another to enter into it through coercion-threat of force or an act of violence.

What is undue influence?  When one person insidiously, or by wrongful persuasion and control over the free will of another, gets the other to make a contract that is unfavorable.

What is ratification?  The approval of a voidable contract in its entirety. An express new promise to perform as agreed Silence, or the failure to disaffirm, for an unreasonably long time after attaining majority. Any act-continued use of the property that clearly indicates the person’s intention to be bound.

What is Usury?  Lending money at a rate higher than the state’s maximum rate.  The penalty for usury is that the lender cannot collect some or all of the interest.

Chapter 13 What is the Statute of Frauds?  Designates statutes enacted by all states that require certain contracts to be evidence by a signed writing in order to be enforceable in court.  Contracts in writing is more likely to be enforced in court than oral contracts.

Express and implied contracts…  Express: stated in words—written or spoken.  Implied: Not stated in words –express intent by conduct that is appropriate under the circumstances. Example: Putting money into a vending machine and expecting the product to come out of it.

Chapter 14 Assignment/Delegation  Assignment: Transfer of contractual rights. As long as performance isn’t changed or altered. (getting less than what you paid for).  Delegation: Routine contractual duties may be transferred to another party. A building contractor delegates to someone else—electrical, or plumbing.

Discharged/Terminated Contracts..  A Termination of obligation s that occurs when the parties perform as promised. It may also take place when a party is released from contractual responsibilities by action of the other party of by law. Generally, contracts are discharged by full performance; most parties perform as promised. Partial performance does not suffice.  Contracts may also be discharged by: Agreement Impossibility of performance Operation of law

What is a breach of contract?  Failure to perform in accordance with the contractual terms is a breach of contract; this gives the other party the right to cancel. Sometimes a party who defaults (i.e., fails to perform) notifies the other party to a contract before the time of performance has arrived that he or she will not perform.

What is Performance?  Performance is the fulfillment of contractual promises as agreed. Frequently, assignments of future wages are prohibited or limited by statute.

Chapter 15 What are Statute of Limitations?  A creditor may lose a legal right of action against a debtor by waiting too long before filing suit. Statutes in all states deny creditors a right of action for damages for breach of contract after the lapse of a specified time. These statues of limitation prevent harassment of debtors by means of lawsuits and other efforts to collect stale claims.  Statues of limitations ordinarily do not discharge debts. Instead, they merely bar the remedies of the injured parties. The bar may be waived and the right of action may be revived if the debtor makes a new promise. Since the new promise is a waiver, it need not be supported by consideration.