BUSI 53 Lichter-Heath Exam 3

For Exam 3
Created Oct 24, 2010
by j_rocamora
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A promise for a promise
Bilateral contract
A promise for an act (acceptance is the completed performance of the act)
Unilateral contract
Requires a special form for creation
Formal contract
Requires no special form for creation
Informal contract
Formed by words (oral, written, or combination)
Express contract
Formed by the conduct of the parties
Implied in fact contract
A fully performed contract
Executed contract
The contract has the necessary contractual elements: agreement (offer and acceptance), consideration,...
Valid contract
One party has the option of avoiding or enforcing the contractual obligation
Voidable contract
A contract exists, but it cannot be enforced because of a legal defense
Unenforceable contract
No contract exists, or there is a contract without legal obligations
Void contract
Advertising that APPEARS to be based on factual evidence but in fact is not reasonable supported...
Deceptive advertising
The advertisement info is true but incomplete, thus it leads consumers to a false conclusion
Half truth
Advertising a very low price for a particular item that will likely be unavailable to the consumer,...
Bait-and-switch advertising
List the four things the FTC says that must occur in order to have bait-and-switch advertising.
1. The seller refuses to show the advertised item2. Fails to have a reasonable quantity of...
What are the 3 guidlines provided by the FTC for advertising?
1. Must be truthful and not misleading.2. Any claims made in an ad must have evidence to back...
What does "clear and conspicuous disclosure of any qualifying or limiting information" mean?
Online advertisers should place any disclosures as close as possible to the claim being qualified...
What does the FTC do when it concludes that a given advertisement is unfair or deceptive?
Drafts a formal complaint and sends it to the alleged offender
What are a company's two options once they receive the complaint?
1. Agree to settle the complaint without further proceedings.2. Have a hearing conducted by...
cease-and-desist order
If the FTC succeeds in proving an advertisement is unfair or deceptive, they can require the...
Counteradvertising
When the FTC requires the guilty company to inform the public about the earlier misinformation
Multiple product orders
Enforced by the FTC. Requires a firm to cease and decist from false advertising in regard to...
Prohibits telephone solicitation using an automatic telephone dialing system or prerecorded...
Telephone Consumer Protection Act (TCPA)
Makes it illegal to transmit ads via fax without first obtaining the recipient's permission
Telephone Consumer Protection Act
How can a person recover from a violation of the Telephone Consumer Protection Act?
1. Can recover actual losses resulting from a violation2. Receive $500 in damages for each...
What three things does the Telemarketing Sales Rule of 1995 enforce?
Requires the telemarketer to identify:1. The seller's name2. Describe the product being sold3....
What is the Do Not Call registry?
A list of consumers who have placed their names on it asking for telemarketers to not call...
What is the name of the act that enforces rules about labels on food?
The Fair Packaging and Labeling Act
What 5 things does the Fair Packaging and Labeling Act require food labels to identify?
1. The product2. The net quantity of the contents, and if the number of servings is stated,...
The Nutrition Labeling and Education Act of 1990
Requires standard nutrition facts on food labels
Who enforces the Nutrition Labeling and Education Act?
The Department of Health and Human Services
Regulation Z
Governs credit provisions associated with sales contracts
What is a cooling off period?
Permits the buyers of goods sold door-to-door to cancel their contracts within a specified...
The FTC Mail or Telephone Order Merchandise Rule of 1993
Provides specific protections for consumers who purchase goods over the phone, through the...
Postal Reorganization Act of 1970
When something in the mail gets sent to you on accident, you're not obligated to return it....
Truth-in-Lending Act (TILA)
Requires sellers and lenders to disclose credit terms or loan terms so that individuals can...
Regulation Z
Applies to any transaction involving an installment sales contract that calls for payment in...
What amended the Truth-In-Lending Act?
The Equal Credit Opportunity Act (ECOA)
What does the Equal Credit Opportunity Act enforce?
Prohibits:1. denial of credit solely on the basis of race, religion, national origin, color,...
What...1. Limits the liability of a cardholder to $50 per card for unauthorized charges made...
Credit card rules under the truth in lending act
What provides protection for consumers who lease automobiles and other goods?
The Consumer Leasing Act of 1988
The Consumer Leasing Act of 1988 only applies if...
1. The goods are priced at $25,000 or less2. The lease term exceeds 4 months
Provides that consumer credit reporting agencies may issue credit reports to uses only for...
The Fair Credit Reporting Act
Whenever a consumer is denied credit of insurance on the basis of his/her credit report or...
The Fair Credit Reporting Act
Established a national fraud alert system so that consumers who suspect that they have been/may...
Fair and Accurate Credit Transactions Act
Requires major credit report agencies to provide consumers with free copies of their own credit...
Fair and Accurate Credit Transactions Act
Requires account numbers of credit card receipts to be truncated 
Fair and Accurate Credit Transactions act
Protects consumers against adulterated and misbranded foods and drugs
The Federal Food, Drug, and Cosmetic Act
Requires the Food and Drug Administration to ensure that drugs are safe before they are marketed...
The Federal Food, Drug, and Cosmetic Act
Regulates medical devices, such as pacemakers and other health devices/equipment and to withdraw...
The Federal Food, Drug, and Cosmetic Act
A person having duty created by his/her undertaking to act primarily for another's benefit...
Fiduciary (noun)
A relationship involving trust and confidence
Fiduciary relationship
_____ law has a broader reach than ____ law does
AGENCY law has a broader reach than EMPLOYMENT law does
What is an authoritative summary of agency law and is often referred to by judges in their...
The Restatement of Agency
Employment laws (state and federal) only apply to what kind of relationship?
Employer-employee relationship
What is fiduciary duty?
Utmost duty of loyalty and care
Employee or independent contractor:How much control does the employer exercise over the details...
Employee: Considerable control over the details of the work/day-to-day activities of the workerInd....
Employee or independent contractor:Is the worker engaged in an occupation or business distinct...
Employee: NoIndep. contractor: Yes
Employee or independent contractor:Is the work usually done under the employer's direction,...
Employee: Under employer's directionIndep contractor: Specialist without supervision
Employee or independent contractor:Does the employer supple the tools at the place of work?
Employee: YesIndep contractor: No
Employee or independent contractor:For how long is the person employed?
Employee: Long timeIndep contractor: Until the deed is done
Employee or independent contractor:What is the method of payment?1. By time period2. Completion...
Employee: By time periodIndep contractor: Completion of job
What degree of skill is required of the worker?
Indep. contractor: Great degree of skill
How does the IRS decide if a worker is an employee or independent contractor?
By how much control the employer has over the employee.
WORK FOR HIRE:Who owns the copyright to a copyrighted work made by an employee?Who owns the...
1. Employer2. Independent contractor, UNLESS the parties agree in writing that the employer...
Agency relationships are ______. This means they can happen by voluntary consent and agreement...
CONSENSUAL
To be a principal, you need _____.
Contractual capacity
To be an agent, you need ______.
Nothing.
What are the 4 ways agency relationships can be created?
1. Agreement of parties2. By ratification3. By estoppel4. By operations of law
Most agency relationships are based on _____ or ____ agreements.
expressed or implied
What is agency by ratification?
When someone who is NOT an agent wants to make a contract (question of intent). If the prinicipal...
What is agency by estoppel?
A principal tells Person B that Person A is his agent. Person B believes the principal and...
What is an agency by operation of the law?
When agency relationships are formed without formal agreement.
What are an agent's 5 duties to the principal?
1. Performance2. Notification3. Loyalty4. Obedience5. Accounting
What are a principals 4 duties to the agent?
1. Compensation2. Reimbursement and indemnification3. Cooperation4. Safe working conditions
What are an agent's 3 rights/remedies against the principal?
1. Tort and contract remedies2. Demand for an accounting3. No right to specific performance
What are a principal's 3 rights/remedies against the agent?
1. Constructive trust2. Avoidance3. Indemnification
An agent's authority can be either ____ or ____.
Actual (expressed/implied)Apparent
This requires that if the contract being executed is or must be in writing, then the agent's...
Equal Dignity Rule
What is an exception to the Equal Dignity Rule in relation to executive officers of a corporation?
If an executive officer is merely conducting ordinary business work, they are NOT required...
Power of Attorney is an _______ authority.
EXPRESS authority
An agent who holds power of attorney.
An attorney in-fact
A written document that is notarized by a notary public figure authorized to attest the authenticity...
Power of Attorney
A power of attorney can be _____ or _____.
Special or general
_____ Authority:When an agent is allowed to do what is reasonably necessary to carry out express...
Implied
_____ Authority:Authority acquired after an agent occupies a certain position.
Implied
_____ Authority:What the principal makes clear to the agent.
Actual
_____ Authority:What the principal causes a third party to believe that the agent has the authority...
Apparent Authority
____ is when a principal accepts responsibility for an agent's unauthorized act.
Ratification
In order to have ratification, a principal must ____________.
know all of the terms.If a principal ratifies a contract without knowing all of the facts,...
What are the three different types of principals?
Disclosed, partially disclosed, and undisclosed
A principal whose identity is known by a third party at the time the contract is made by the...
disclosed principal
A principal whose identity is unknown by the third party, but the third party knows that the...
Partially disclosed principal
A principal whose identity is totally unknown by the third party, and the third party has no...
Undisclosed principal.
If a principal is ____, an agent has no contractual liability for the nonperformance of the...
Disclosed
3 things a principal can be responsible for under tortious conduct
1. Giving improper instructions2. Authorizing the use of improper materials/tools3. Establishing...
Respondeat Superior
Says that the principal/employer is responsible for any harm caused to a third party by an...
Vicarious Liability
Responsibility without regard to the personal fault of the employer for torts/crimes committed...
What are the 7 factors that courts will consider in determining whether a particular act...
1. Whether the employee's act was authorized by the employer.2. The time, place,...
Who is responsible?Servant "takes a detour" from his master's business
Master is responsible
Who is responsible?Servant was on a "frolic of his own" and not in any way "on his master's...
Servant
Under Respondeat Superior, an employer can be held liable for an employee's intentional...
1. It is committed within the scope of employment2. The employer knows that the employee...
Who is responsible for the negligence of an independent contractor?
The independent contractor, NOT the employer
Why is the employer NOT responsible for physical harm done to a third party by the negligent...
Because the employer doesn't have THE RIGHT TO CONTROL the details of an independent contractor's...
Who is liable for an agent's crimes?
The agent himself
An agency may be terminated by either _____ or ______.
An act of the partiesOperation of law
What are the 6 ways an agency relationship can be terminated by act of the parties?
1. Lapse of time2. Purpose achieved3. Occurrence of a specific event4....
An agent backing out of an agency agreement is _____
Renunciation of authority
A principal backing out of an agency agreement is ____
Revocation of authority
What are the 5 events that automatically terminate an agency by operation of law?
1. Death or insanity2. Impossibility3. Changed circumstances4. Bankruptcy5....
What is the name of the directory of lawyers that you could use to find a lawyer for your company?
Martindale-Hubbell Law Directory
What is it called when a client pays the attorney a fixed amount every month, and the attorney...
Attorney on retainer
Liability of a GENERAL PARTNERSHIP
NO limited liability
In a partnership, if one partner dies, what happens to the business?
The partnership dies.
What is the money a partner gets when he leaves the partnership?
Partnership interest
What is it called when a new partner joins a partnership, or when one partner leaves the partnership?
Dissolution
What is it called when you want to sell your partnership, and you have to pay back for all...
Winding Up
When you have a business with limited liability, your ____ assets are protected
personal assets
In what type of partnership is each partner personally liable for the debts and obligations...
General partnership
What type of liability does a limited partnership have?
Limited liability
Who is liable of the partnership's obligations in a limited partnership?
One general partner
What is a franchise tax?
Annual taxes imposed for the privilege of doing business in a state
What type of business is required to pay a lot of taxes?
Corporation
Double taxation
A corporation has to pay a corporate income tax on its profits, AND the shareholder-owners...
When profits are passed through to the partners or members and are taxed only on their individual...
Pass through taxes
A corporation's continuity of life
Usually lasts, even if it survives its owners, unless there is an unusual event that the corporate...
What happens when a shareholder of a corporation dies?
Their ownership interest is just passed onto his/her heirs
Partnership continuity of life
Wil not terminate if a partner dies or withdraws, unless the partners have expressly stated...
What are the articles of incorporation
A charter agreement for starting a corporation
What is an operating agreement?
A charter agreement for starting an LLC
What are the owners of an LLC called?
Members
A person who seeks out promising enterprises and funds them in exchange for equity stakes
Venture capitalist 
Can you enforce a contract is an officer of a corporation has apparent authority?
yes
What is UCC 2-205/a firm offer?
If a person makes an offer, he/she is to honor it. They can't change it after they offered...
Who is liable for overall management of a corporation?
The board of directors
What type of business deals with piercing the veil?
Corporations
What are the 4 things that can cause piercing the veil?
1. Ignoring corporate formalities: not filing state corporate law2. Commingling person and...
What does caveat emptor mean?
Buyer beware
What did the Securities Exchange Act of 1934 do?
Created the SECProhibits short swing - purchase/sale of a stock within a 6 month period
What is short swing?What is it from?
Purchase/sale of a stock within a 6 month periodSEC Act of 1934, Sect. 16
Rule 10b-5
Prohibits any act or omission resulting in fraud or deceit in connection with the purchase...
S corporation
the corporation's income or losses are divided among and passed through to its shareholders.The...
A quasi contract is also known as
implied-in-fact
A quasi contract is 
a contract that should have been formed, even though in actuality it was not
What are some causes for termination of a contract?
Death, incompetency, illegality, mutual mistake, etc.
undue influence
 is an equitable doctrine that involves one person taking advantage of a position...

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