Definitions
Define the Mirror Image Rule (Common Law)
the acceptance's terms must exactly match the offer's terms, or else the acceptance is deemed a counteroffer
If the person has been legally declared incompetent, the contract is ______
If person is not legally incompetent and has either a lucid period or sufficient mental capacity to understand, the contract is _____
Even if not legally incompetent, if the person doesn't have the mental capacity to understand that he/she is signing a contract or the consequences of doing so, the contract is ______
void, valid, voidable
Inflation is an unforeseen difficulty, so if a contractor wants to raise the price of his performance due to rising material prices, his customer has to pay whatever the new price is
FALSE, inflation is a foreseen difficulty so the customer does not have to pay, especially if the customer is getting nothing more for paying more
Give an example of a Bilateral & Unilateral Contract
Bilateral: "I promise to deliver my pen to you if you promise to bring me $1"
Unilateral: "O'Malley tells Parker that if Parker carries a package across the Brooklyn Bridge, O'Malley will give him $20"
Describe the difference between Express & Implied Contracts
express: terms are stated (verbally/written)
implied: terms are made clear by the parties' behavior
What is the Mailbox Rule AND its 2 exceptions?
acceptance is effective when SENT, regardless if ever received unless...
1. if offer specifies acceptance has to be received by a deadline
2. if offeree sends a rejection, then sends an acceptance. Whichever arrives first is effective!
If (1) Person A ____________ (2) on Person B's ______ (3) in a way that causes Person A ______, then (4) Person B is __________ the promise.
1. reasonably relies
2. promise
3. harm
4. estopped from not fulfilling
*Person B has to keep the promise*
If a promise is not supported by consideration, it may still be enforceable if the other party has relied on it to its detriment
TRUE, this is detrimental reliance/promissory estoppel
Give an example of Preexisting Duty
What are the 3 elements of a Quasi Contract?
1. defendant received a benefit from plaintiff (not through own mistake or misconduct)
2. plaintiff reasonably expected to be paid for the benefit
3. and the defendant would be unjustly enriched if it kept the benefit without paying the plaintiff
Define Undue Influence
because of a relationship, one party manipulates the other so that they are not exercising free will
Exculpatory Clauses: provisions releasing a party from liability regardless of fault
________ if party who benefits has business necessary for society (e.g. utilities, banks, public transportation)
________ if between parties with equal bargaining power (e.g. skydiving)
________ if violates public policy (one party is dependent on other, resulting in unequal bargaining power) (e.g. employers, landlords)
unenforceable, enforceable, unenforceable
A bilateral mistake can be rescinded if both parties are mutually mistaken about a material fact but there is no relief if one party is mistaken (unilateral mistake of fact)
TRUE
Give an example of an exception of misrepresentation by silence
raid on in house (sellers must disclose information about a serious defect if a buyer cannot reasonably discover it)
What are the elements of fraud under Section 10(b)?
1. the defendant made a misrepresentation of a fact
2. the defendant's misrepresentation was of a material fact
3. the defendant made the misrepresentation of fact with the intent to deceive the plaintiff or with reckless disregard for the truth
4. the plaintiff relied on the defendant's misrepresentation of material fact
5. the plaintiff's reliance on the defendant's misrepresentation of material fact caused the plaintiff harm
6. the defendant's misrepresentation of material fact was made in connection with the purchase or sale of a security
Define majority and minority rule
majority: minor can get a full refund even if has damaged or lost the goods
minority: other states require restitution-->restoring other party to position he/she was in before entered contract
Licensing Statuates: validity depends on type of license at issue
_____ if license is to ensure proper skills or character, and party is unlicensed.
Contracts with unlicensed party are enforceable if purpose of license is to _______________.
VOID *regulatory license*
raise revenue for state/locality *revenue license*
Revocation is effective when sent and must be communicated in the same way as the offer
FALSE, effective when RECEIVED
Give an example of when an offer can be terminated
anything having to do with expiration, destruction of the subject matter, or revocation by the offeror
What are the 4 requirements of Corporate Governance under Sarbanes-Oxley Act of 2002?
1. board audit must be comprised solely of independent directors
2. at least one member must be a financial expert
3. audit partner must rotate off the client every 5 years *don't need to change companies, just staff*
4. auditors must report to the audit committee and cannot have a close relationship with the CFO, accounting staff or other executives
Insiders are:
2. is a director or officer of the issuer of the security (e.g., executive officers, chief financial officers, etc.)
Covenants not to compete: contracts that restrict outgoing business owner or employee from engaging in similar business
1. must protect _______________
2. restrictions in terms of _______________ must be reasonable
1. legitimate business purpose
2. time, geography, and scope of activity
In Fraudulent Misrepresentation:
rescinding a contract and restoring to its original position refers to a TORTE CLAIM while enforcing the contract and seeking damages for injuries resulting from the fraud refers to a CONTRACT CLAIM
FALSE, rescind to og position is contract while enforcing contract and seeking damages is torte
Create a scenario that involves a promise, legal detriment, and inducement (identify all aspects)
Zoe promises Joe $25 after he mows her lawn
What constitutes a short swing profit?
1. any profit from 2 or more transactions made within a 6 month period (whether buy then sell or sell then buy)
2. profits legally belong to the company
3. enforced by civil actions, not SEC (by corporation or shareholders)