Business law ch13-16

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1. 

Contracts may be terminated by

 

(a) performance,

(b) operation of law,

(c) voluntary agreement of the parties,

(d) impossibility of performance, and

(e) acceptance of breach of contract.

 
2. 

When all the terms of a contract have been fulfilled, the contract is discharged by performance.

 

If the contract states when performance is to be rendered, the contract provisions must be followed unless performance on the exact date specified is not vital.

A tender of performance discharges the one making the tender.

If performance calls for the payment of money and one party offers in legal tender the correct amount and the tender is refused, the contract is not terminated. The one tendering payment must keep the tender good. Tender does not stop the running of interest. Also, in the event of a court action, the other party must pay the court costs.

Ordinarily, when a contract has been performed in a manner that would satisfy an ordinary, reasonable person, the terms of the contract have been met sufficiently to discharge it.

If a contract is substantially performed, the party performing may demand the full price under the contract, less the amount needed to correct the defect in performance.

 
3. 

Contracts may be terminated by operation of law.

 

Bankruptcy releases the debtor from most contracts to pay creditors.

If the innocent party in a breached contract delays too long in instituting court action, the contract is terminated by the statute of limitations.

If one party to a written contract intentionally alters a written contract in a material manner without the consent of the other party, the other party is released from the contract.

 
4. 

The parties to a contract are free to change their minds by

Whenever the parties agree not to carry out a contract's terms, the contract is

 

mutual agreement.

discharged.

 
5. 

if the act called for in a contract is impossible to perform at the time the contract is made, no contract comes into existence.

 

If the contract involves specific subject matter that is destroyed, the contract is discharged.

If an act is legal at the time of the contract but is later made illegal, the contract is discharged.

If the contract calls for personal services, death or physical incapacity of the promisor discharges the contract.

 
6. 

breach of contract.

 

When one of the parties fails or refuses to perform the obligations assumed under the contract,

 
7. 

A force majeure clause in a contract excuses performance because of an extraordinary event outside the nonperforming party's control.

 

Sue for damages. Damages may be nominal, compensatory, punitive, or liquidated.

Rescind the contract. If the innocent party has executed the contract, anything parted with may be recovered.

Sue for specific performance. This remedy is available in real estate contracts and contracts for the sale of rare articles of personal property, such as heirlooms, the value of which cannot be readily determined.

 
8. 

breaching the contract by malpractice.

 

A professional person who does not perform a contract with the ability and care normally exercised by others in the profession

 
9. 
if a contract states no time for performance, when must it be performed?
 

If a contract states no time for performance, performance must ordinarily be rendered within a reasonable time.

 
10. 
what is the effect of a tender of performance?
 

A tender of performance discharges the obligation of the one making the tender so long as the tender conforms to the agreement.

 
11. 
what must a debtor do to make a valid tender of payment?
 

In order to make a valid tender of payment a debtor must offer the exact amount due in legal tender, including interest, costs, and attorneys' fees, if any are required.

 
12. 
what is the rule the courts generally have adopted regarding whether satisfactory performance has occurred?
 

The rule the courts generally have adopted regarding whether satisfactory performance has occurred is that if the contract is performed in a manner that would satisfy an ordinary, reasonable person, the terms of the contract have been met sufficiently to discharge it.

 
13. 
what circumstances surrounding a deviation from a contract will a court weigh in determining whether there has been substantial performance of a contract?
 

In determining whether there has been substantial performance when there has been a deviation from a contract, a court will weigh the significance of and reasons for the deviation, the ease of correction, the extent to which the purpose of the contract is defeated, and the use or benefit to the owners of the work completed

 
14. 
may a debt that has been outlawed by the statute of limitations ever be revived?
 

A debt that has been outlawed by the statute of limitations may be revived by a written acknowledgment or promise to pay the debt, by part payment after the debt was outlawed, or by payment of the interest.

 
15. 
what is the effect of an intentional alteration by one party without the consent of the other?
 

The intentional alteration of a contract by one party without the consent of the other discharges the innocent party. However, the altering party can be held to either the original contract terms or the terms as altered:

 
16. 
if a singer contracts to sing at a party, is the contract released if the singer develops laringitis just before the party starts?
 

Laryngitis would impair the singer's ability to perform satisfactorily and renders the contract void because of impossibility of performance.

 
17. 
may the parties to a contract mutually agree not to carry it out?
 

Yes. Since a contract is a mutual agreement, the parties are free to change their minds by mutual agreement and agree not to carry out its terms. This discharges the contract.

 
18. 
what is the theory that the law applies in determing compensatory damages?
 

The theory that the law applies in determining compensatory damages is that an injured party should be paid for any loss that may have been sustained but should not b permitted to profit from the other party's wrongdoing.

 
19. 
why will a court normally deny an order of specific performance of a contract for personal services?
 

A court will normally not order specific performance of a contract of personal services because of the difficulty of supervision by the courts and because of the Constitution's prohibition of involuntary servitude except as a criminal punishment.

 
20. 
explain who might breach a contract because of malpractice?
 

A professional person, such as a lawyer, accountant, or doctor, who makes a contract to perform professional services has a duty to perform with the ability and care normally exercised by others in the profession. If a contract is not so performed, it is breached because of malpractice.

 
21. 

Describe the requirements for termination a contract by performance

 

A contract is terminated by performance, when all the terms of a contract have been fulfilled.

 
22. 

Recognize the circumstances that discharge a contract by operation law

 

A contract will be discharged by operation of law as a result of bankruptcy; the running of the statute of limitations; alteration of a written contract; or impossibility of performance.

 
23. 

Explain what breach of contract is and the potential remedies for breach.

 

Breach of contract is the failure or refusal of one party to perform the obligations assumed under a contract. The potential remedies for breach of contract are to sue for damages, to rescind the contract, or to sue for specific performance.

 
24. 
tender of performance
 
offer to perform in satisfaction of term of contract
 
25. 
tender of payment
 
offer and ability to pay money owed
 
26. 
legal tender
 
any form of lawful money
 
27. 
statute of limitations
 
time within which right to sue must be exercised or lost
 
28. 
force majeure clause
 
contract provision excusing performance when extrordinary event occurs
 
29. 
breach
 
failure or refusal to perform contractual obligations
 
30. 
anticipatory breach
 
one party announces intention not to perform prior to time to perform
 
31. 
damages
 
sum of money awarded to injured party
 
32. 
nominal damages
 
small amount is awarded when there is technical breach but no injury
 
33. 
compensatory damages
 
amount equal to the loss sustained
 
34. 
punitive damages
 
amount paid to one party to punish the other
 
35. 
liquidated damages
 
sum fixed by contract for breach where actual damages are difficult to measure
 
36. 
rescind
 
set aside or cancel
 
37. 
specific performance
 
carrying out the terms of a contract
 
38. 
malpractice
 
failure to perform w/ ability and care normally exercised by people in the profession
 
39. 
property
 
anything that may be owned
 
40. 
personal property
 
movable property; interests less than complete ownership in land or rights to money
 
41. 
tangible personal property
 
personal property that can be seen, touched, and possessed
 
42. 
purchase
 
ownership by payment
 
43. 
gift
 
transfer w/o consideration
 
44. 
donor
 
person who makes a gift
 
45. 
donee
 
person who receives a gift
 
46. 
accession
 
adding property of another
 
47. 
confusion
 
inseperable mixing of goods of different owners
 
48. 
creation
 
bringing property into being
 
49. 
intellectual property
 
property produced by human innovation & creativity
 
50. 
patents
 
absolute title to invention for 17 years
 
51. 
copyrights
 
exclusive rights given to author of songs, books, and compositions
 
52. 
trademarks
 
word, symbol, device, or combination of them used to identify & distinguish goods
 
53. 
trade secrets
 
secret, economically valuable info
 
54. 
abandon
 
discard w/ no intention to reclaim
 
55. 
lost property
 
property unintentionally left with no intention to discard
 
56. 
bailment
 
transfer of posession of personal property on condition property will be returned
 
57. 
bailor
 
person who gives up posession of bailed property
 
58. 
bailee
 
person who gained posession of bailed property but not the title.
 
59. 
constructive bailment
 
bailment imposed when a person controls lost property
 
60. 
pawn
 
tangible personal property left as security for a debt
 
61. 
pledge
 
intangible property serving as security for a debt
 
62. 
conversion
 
unauthorized exercise of ownership rights
 
63. 

what is property?

may only the owner use property?

 

a property is anything that may be owned

a person may enter into a contract w/ the owner to use property w/o becoming the owner of the property

 
64. 
list four ways in which property may be acquired & explain the most common way in which it is acquired.
 

Property may be acquired by purchase, will, descent, gift, accession, confusion, and creation. The most common way in which it is acquired is through purchase. This occurs when the buyer pays the seller, and the seller conveys the property to the buyer.

 
65. 
how is intellectual property protected?
 

Intellectual property is protected by giving its creator title for a period of years through patents, for 17 years, and copyrights, for the author's life plus 70 years. Intellectual property can also be protected by trademark and trade secret protection.

 
66. 
how may trade secrets be misappropriated and how may a business legally acquire them
 

Trade secrets can be misappropriated by wrongfully acquiring, using or disclosing them, but independently developing or discovering them is not misappropriation.

 
67. 
how has the internet made problems for owners of intellectual property?
 

The Internet has made problems for owners of intellectual property because it allows individuals to violate copyright law by quickly and easily copying and distributing huge amounts of intellectual property illegally.

 
68. 
what right does the finder of abandoned goods have in the goods?
 

The finder of abandoned goods has title to them, and thus has an absolute right to possession.

 
69. 
when does a bailment occur
 

A bailment occurs when one party, usually the owner, transfers possession but not the title to personal property to another party.

 
70. 
can a bailment exist when the recipient of the property does not return the actual goods?
 

A bailment can exist when the recipient of the property does not return the actual goods when the goods are to be processed in some way but the product made from the original goods is to be returned. A bailment can also exist in the case of a consignment or when property is left for repair. In these cases a bailment arises although the identical property is not returned.

 
71. 
what standard of care is required of a bailee in a bailment for the sole benefit of the bailor?
 

In the case of a bailment for the sole benefit of the bailor the bailee need exercise slight care and is liable only for gross negligence with respect to the property.

 
72. 
explain the types of special mutual-benefit bailments in which property is left as security?
 

The types of special mutual-benefit bailments in which property is left as security include pawns and pledges. In the case of pawns, tangible property is left as security. With a pledge, intangible property is left as a security.

 
73. 
Property
 

is anything which may be owned. The law protects not only the right to own property but also the right to use it. Property may be classified according to its movability. If it is movable, it is personal property.

 
74. 

Personal property is movable, physical property and rights to money. A leasehold estate in land is personal property. Personal property is divided into two classes:

 

Tangible personal property, which consists of all physical items that are not real estate

Intangible personal property, which consists of evidences of ownership of personal property, such as contracts, copyrights, checks, stocks, and savings account certificates

 
75. 

Title to personal property

 
may be acquired by purchase, will, gift, descent, accession, confusion, and creation. Use of the Internet has allowed vast quantities of intellectual property to be distributed illegally
 
76. 

lost property vs abandoned property

 

Property is considered abandoned when the owner actually discards it with no intention of reclaiming it. Property is considered to be lost when the owner, though negligence or accident, unintentionally leaves it somewhere.

 
77. 

bailment

 

the transfer of possession, but not the title, of personal property on condition that the identical property will be returned or appropriately accounted for at a future date.

 
78. 

The bailment agreement.

 
, like most other contracts, may be either express or implied
 
79. 

The delivery and the acceptance may be

 
actual or constructive.
 
80. 

The bailee

 
must return the identical goods unless there is a bailment of fungible goods, when there is a consignment, or when the property is repaired.
 
81. 

Three types of bailments exist:

 

A bailment for the sole benefit of the bailor exists when the bailee receives no benefit from the agreement. The bailee in this case must take slight care of the property.

A bailment for the sole benefit of the bailee exists when the bailor does not receive benefits from or compensation for the bailment. In this case the bailee must take great care of the property and is liable for damages caused by even slight negligence.

A mutual-benefit bailment exists when both are benefited by the agreement. In this case the bailee must exercise reasonable care. The bailee who charges a fee in a mutual-benefit bailment has as security for the fee a specific lien on the bailed property.

 
82. 

pawn

 

Tangible personal property deposited as security for a debt

 
83. 

pledge

 

intangible personal property serves as security

 
84. 

A bailee may not sell, lease, or pledge the bailed property and one who purchases bailed property from a bailee ordinarily does not get good title

 

A bailee may not sell, lease, or pledge the bailed property and one who purchases bailed property from a bailee ordinarily does not get good title

 
85. 

If the bailor permits the bailee to mislead an innocent third party into believing the bailee has title, the bailee may pass good title.

 

If the bailor permits the bailee to mislead an innocent third party into believing the bailee has title, the bailee may pass good title.

 
86. 

Discuss the types of personal property and how it can be acquired

 

Property is anything that may be owned. The two kinds of personal property are tangible and intangible property. Property can be acquired by purchase, will, descent, gift, accession or confusion.

 
87. 

Explain the difference between lost and abandoned property.

 

Abandoned property is property the owner discards with no intention of reclaiming. Lost property is property that is unintentionally left with no intention to discard it.

 
88. 
Define and give examples of a bailment.
 

A bailment is the transfer of possession, but not title, to personal property on condition that the property will be returned or appropriately accounted for. Bailments are either ordinary or extraordinary. Bailments include leaving a car with a garage for repairs and borrowing a formal to wear to a party.

 
89. 
Distinguish between the three types of bailments.
 

The three types of bailments are. for the sole benefit of the bailor, in which the bailee receives no benefits; for the sole benefit of the bailee, in which the owner/bailor of the property receives no benefit; and mutual-benefit bailments, in which both the bailor and bailee benefit.

 
90. 
A carrier
 

one engaged in the business of transporting either goods or persons, or both, for a fee.

 
91. 

Carriers are usually classified as

 

A private carrier is one that, for a fee, transports goods or persons only under special instances and special arrangements. The general law of bailments covers private carriers.

A common carrier is one that undertakes to transport goods or persons for ail who apply for that service. However, it is not required to transport any person who requires unusual attention, who intends or is likely to cause harm to the carrier or the passengers, or who is likely to be offensive to passengers. A common carrier is an insurer of the safety of transported goods.

 
92. 

A common carrier is not liable for losses arising from:

 

Acts of God

Acts of public authority

Inherent nature of the goods

Acts of the shipper

Acts of a public enemy

 
93. 
A common carrier may attempt to limit or escape the extraordinary liability imposed upon it by law. In general, the limitations upon the carrier's liability permitted by the Federal Bills of Lading Act and the Uniform Commercial Code fall into the following classes:

 

A carrier is permitted to limit by agreement its loss to a specified sum or to a specified percent of the value of the goods.

Most states permit the carriers to exempt themselves from liability due to certain named hazards.

Most states allow some form of limitation upon the carrier's liability if the loss is due to a delay over which the carrier has no control.

 
94. 

The carrier's high degree of liability lasts only during transportation. If there is a delay at the beginning or end of the shipment, the carrier is merely liable as a mutual-benefit bailee during the delay.

 

The carrier's high degree of liability lasts only during transportation. If there is a delay at the beginning or end of the shipment, the carrier is merely liable as a mutual-benefit bailee during the delay.

 
95. 

The initial carrier and the final carrier are charged with liability for loss or damage even though it occurs on a connecting line.

 

The initial carrier and the final carrier are charged with liability for loss or damage even though it occurs on a connecting line.

 
96. 

A bill of lading is a document of title, and it sets forth the contract between the shipper (consignor) and the carrier. There are two types of bills of lading:

 

Straight bills of lading. Under this type of bill of lading, the consignee alone is designated as the one to whom the goods are to be delivered.

Order bills of lading. If the goods are consigned to the order of a named person or to bearer, the bill of lading is negotiable.

 
97. 

A common carrier of persons has a duty to:

 

Provide reasonable accommodations and services

Provide reasonable protection to its passengers

 
98. 
Baggage consists
 

of those articles necessary for personal convenience while traveling.

 
99. 

A reasonable amount of baggage may be carried as a part of the passenger's fare. The liability of a common carrier for baggage is the same as that of a common carrier of goods.

 

A reasonable amount of baggage may be carried as a part of the passenger's fare. The liability of a common carrier for baggage is the same as that of a common carrier of goods.

 
100. 
hotelkeeper
 

one who supplies lodging to transients.

 
101. 

The laws of a hotelkeeper do not apply to boardinghouse keepers.

 

The laws of a hotelkeeper do not apply to boardinghouse keepers.

 
102. 

To be a hotel guest, one must be a transient, not a permanent resident.

 

To be a hotel guest, one must be a transient, not a permanent resident.

 
103. 

One who provides rooms only or room and board to permanent guests but does not advertise as being able and willing to accommodate transients is not a hotelkeeper.

 

One who provides rooms only or room and board to permanent guests but does not advertise as being able and willing to accommodate transients is not a hotelkeeper.

 
104. 

The duties and liabilities of a hotelkeeper are:

 

To serve all who apply

To protect a guest's person

To care for the guest's property

 
105. 

hotelkeeper has a lien on the baggage of guests for the value of the services rendered.

 
hotelkeeper has a lien on the baggage of guests for the value of the services rendered.
 
106. 
why are some bailments called extraordinary bailments?
 

Some bailments are called extraordinary bailments because they are mutual-benefit bailments in which the bailee, under the common law, is held to a higher than normal standard of care for the bailed property.

 
107. 
what law governs private carriers' contracts for transporting goods, and what is their liability?
 

The law of bailments covers private carriers' contracts for transporting goods and they are liable only for loss from the failure to exercise ordinary care.

 
108. 
why are common carriers regulated by the governmant as to their prices, services, equipment, and other operational policies?
 

Common carriers are regulated by the government as to their prices, services, equipment, and other operational policies because they are public monopolies and the regulation is in lieu of competition as a determinant of their prices and services.

 
109. 
what is the liability of a common carrier of goods?
 

A common carrier of goods is an insurer of the safety of the transported goods and is liable for loss or damage regardless of fault, unless the loss arises from: acts of God, acts of a public authority, inherent nature of the goods, acts of the shipper, or acts of a public enemy.

 
110. 
why does the law require every carrier to have its printed bill of lading form approved by a government agency before adoption?
 

The law requires every carrier to have its printed bill of lading form approved by a government agency before adoption because the shipper does not have any direct voice in the preparation of the bill of lading and the bill of lading limits the carrier's liability.

 
111. 
does a carriers high degree of liability last until the consignee picks up the goods?
 

A carrier's high degree of liability lasts until picked up by the consignee only if the consignee picks them up within a reasonable time after being notified by the carrier that the goods have arrived. After that time the carrier is liable only as a mutual-benefit bailee.

 
112. 
what is the difference between a straight bill of lading and an order of lading?
 

Under a straight bill of lading, the consignee alone is designated as the one to whom the goods are to be delivered. Under an order bill of lading, the goods are shipped to a designated consignee or order, or to the bearer. The order bill of lading must be presented before the carrier can safely deliver the goods. This is not true of a straight bill of lading.

 
113. 
when does the liabilty of a carrier of people for the passengers' safety begin and end?
 

The liability of a carrier of persons for the passengers' safety begins as soon as passengers enter the terminal or waiting platform and does not end until they have left the terminal at the end of the journey.

 
114. 
is a common carrier of people always liable for any injury to a passenger by an employee?
 

A common carrier of passengers is liable for injury to a passenger by an employee only when the injured passenger is without blame.

 
115. 
how may a carrier of people limit its liability for the loss of baggage?
 

A carrier of persons may limit its liability for the loss of baggage to a fixed maximum amount stated on the ticket.

 
116. 
who is a guest?
 

A guest is a transient obtaining lodging and not a permanent resident or visitor.

 
117. 
what is the liabilty of a hotel for refusing lodging for an improper reason?
 

If a hotel refuses lodging for an improper reason, it is liable for damages, including exemplary damages, to the person rejected.

 
118. 
Explain what a carrier does and name two categories of carriers
 

A carrier is engaged in the business of transporting either goods or person, or both. The two categories of carriers are private carriers and common carriers.

 
119. 

Identify the exceptions to the normal rule of a common carrier being an insurer of the safety of goods.

 

Common carriers are not liable for losses caused by acts of God, acts of public authority, inherent nature of the goods, acts of the shipper, and acts of a public enemy.

 
120. 

Discuss the difference between hotelkeepers and boardinghouse keepers; explain the special duties and liabilities of hotel keepers

 

A boardinghouse keeper is in business to supply living accommodations to permanent boarders, whereas a hotelkeeper provides lodging to transients. The duties and liabilities of a hotelkeeper are to serve all who apply, to protect guests' persons, and to care for guests' property.

 
121. 
hotelkeeper
 
one engaged in business of offering lodging to transients
 
122. 
boardinghouse keeper
 
person in business to supply accomodations to permanent lodgers
 
123. 
guest
 
transient received by hotel for accomodations
 
124. 
baggage
 
articles necessary for personal convenience while traveling
 
125. 
order bill of lading
 
contract allowing delivery of shipped goods to bearer
 
126. 
straight bill of lading
 
contract requiring delivery of shipped goods to consignee only
 
127. 
bill of lading
 
receipt & contract between a consignor & a carrier
 
128. 
common carrier
 
one that undertakes to transport w/o discrimination for all who apply for service
 
129. 
consignor
 
one who ships by common carrier
 
130. 
consignee
 
one to whom goods are shipped to
 
131. 
carrier
 
transporter of goods, people, or both