Business Law

a QuickStudy Digital Reference Guide

Linda Harrison

• Publisher: QuickStudy Reference Guides
• Year: 2019
• ISBN:
  9781423243236
• Topic: Business
• Subtopic: Business Law
• Index: Business

As a business major, entrepreneur, or professional the more essential laws relevant to business operations you know, the better. This digital guide is a perfect quick reference to review laws that are covered in a business law course, but also for professionals reviewing laws related to start-ups, business operations or as a legal primer for decisions that could drastically affect your career and your company. Designed to find many related answers at a glance you can see the landscape of law in a more complete snapshot faster and more efficiently than scrolling through a listing of sites from your Google searches.
Digital guide includes:

• Torts
• Criminal Law
• Contracts
• Business Entities
• Partnerships
• Agency
• Corporations
• Product Liability
• Uniform Commercial Code
• Ethics

Uniform Commercial Code

Sales (Article 2) SCOPE

• Transactions in goods
  1. Goods are tangible items that are moveable, such as automobiles, clothes, textbooks, etc.
  2. Requirement of good faith and a commercially reasonable manner
  3. Refer to each rule to determine applicability to merchants and/or non-merchants

FORMATION OF CONTRACTS

• Greater flexibility than common law
• Offer
  1. Includes conduct by both parties recognizing the existence of a contract
  2. Merchant’s Firm Offer Rule: Assurance that offer held open for time stated or reasonable time and not revocable for lack of consideration
  3. Gap-Filling Rule
     1. Contract does not fail for indefiniteness
     2. An open term can be read into contract
        EX: A “reasonable price” can be the market rate at time of delivery
     3. Quantity may be indefinite
        1. Output contract: Seller is bound to sell entire output to buyer
        2. Needs contract: Buyer is obligated to purchase all of its requirements from seller
     4. Other terms that can be left open include payment terms, place of delivery, time of performance, etc.
• Acceptance
  1. Any reasonable manner
  2. Battle of the Forms
     1. Definite and timely expression of acceptance creates a contract, even if there are different or additional terms
     2. Extra terms part of contract, except if expressly denied or there is evidence of material alteration
  3. Accommodation
     1. Shipment offered as replacement where goods ordered are unavailable
        1. Buyer is free to accept or reject shipment
  4. Additional terms are permitted
  5. Non-merchants
     1. Additional terms are proposed additions and become part of the contract if accepted by original offeror
     2. If additional terms are not accepted, contract is formed on basis of original terms
        EX: Buyer accepts offer to buy textbook only if DVD (proposed addition) is included; if salesman refuses, contract consists of textbook alone (original)
  6. Exceptions to Statute of Frauds
     1. Specially manufactured goods
     2. Admission in court that contract was made
     3. Part acceptance requires payment for quantity accepted
• Consideration
  1. Modification does not require new consideration
• Title
  1. Goods must be identified before title can pass from seller to buyer

PERFORMANCE

• By both parties
  1. According to terms of contract, practices of trade, or past dealings
  2. Buyer/Seller can demand assurance
     1. If not given within reasonable time, party is considered to have repudiated
  3. Excused from performance by commercial imprac­ticability
• By seller
  1. Seller’s duty to deliver
  2. Seller’s right to cure nonconforming goods
• By buyer
  1. Buyer’s right to inspect and duty to pay
  2. Buyer’s right to revoke acceptance where noncon­formity substantially impairs value
  3. Buyer’s right of rejection within reasonable time and upon proper notice
     1. Duty to follow seller’s reasonable instructions (ship back, resell, or store)

Negotiable Instruments (Article 3) DEFINITIONS

• Negotiable instruments
  1. Written promise to pay money: Promissory note and certificate of deposit
  2. Order to pay money: Drafts and checks
  3. Means of extending credit
• Negotiation
  1. Transfer of instrument where recipient becomes holder
• Holder
  1. In possession and has all necessary indorsements
• Holder in due course
  1. Has good title to instrument
  2. Paid value and acquired in good faith
  3. Takes instrument with no notice of its being overdue or dishonored, and without notice of any claims or defenses
  4. Remains subject to real defenses affecting validity
     1. Minority, incapacity, duress, illegality, fraud, forgery, material alteration
• Paper
  1. Order (payable to specific payee)
  2. Bearer (payable to bearer or cash)
• Indorsement: Signature of holder
  1. Special instructions transferring paper (order)
     EX: Indorsed; writes “Pay to the Order of Aunt Mary”
  2. Blank (bearer)
  3. Restrictive: Specific purpose
     EX: Indorsed and then writes “For Deposit Only” and account number
  4. Qualified: Disclaim or limit liability
     EX: Indorsed and then writes “Without Recourse”

CLASSIFICATION

• Promissory notes
  1. Two-party instrument (maker/payee)
  2. Unconditional promise to pay money at a particular time or on demand
• Certificate of deposit
  1. Acknowledgment of receipt of money
  2. Promise to pay money plus interest
• Drafts
  1. Three-party instrument
     1. Drawer: Party who writes order for draft
     2. Drawee: Party who must pay amount stated in draft
     3. Payee: Party who receives money
• Checks
  1. Type of draft
  2. Drawer: Checking account holder
  3. Drawee: Always a bank
  4. Payee: Person to whom check is made; payable on demand to the bank on which check is written
  5. Include ordinary checks and special checks, such as certified, cashier’s, and traveler’s checks

RISK OF LOSS

• Defined by terms of agreement
  1. Borne by breaching party
  2. Generally borne by party best able to protect against loss and most likely to be insured
• Shipment contract
  1. Risk passes to buyer when seller delivers goods to carrier
  2. F.O.B. (“free on board”): Delivered to Carrier
  3. F.A.S. (“free alongside”): Delivered alongside vessel
  4. C.I.F. (price includes cost of goods, insurance, and freight)
  5. C. & F.: Seller does not insure goods
  6. C.O.D. (collect on delivery)
• Destination contract
  1. Risk passes to buyer when seller delivers to specific destination
  2. F.O.B. (place of destination)
• Conditional sales
  1. Sale on approval: Risk of loss remains with seller until buyer accepts
  2. Sale or return: Risk of loss is with buyer while goods are in his/her possession and during return to seller
• Liquidated damages agreed upon

REMEDIES FOR BREACH

• Seller’s remedies
  1. Cancellation
  2. Withholding delivery
  3. Reselling goods
  4. Recovery of profit from buyer
  5. Recovery of purchase price
  6. Reclaim goods whe...