Business Law

Write the questions and answers down, find key terms and definitions, talk about the cases


Ethical Questions raised in Chapter 1: Are all laws moral? Are laws always just? Which is more important, morality or justice? Why is there a difference between the treatment of cases brought under civil law and those brought under criminal law? Should there be a difference?


• Identify and describe the basic functions of law.

• Distinguish between law and justice. Distinguish between law and morals.

• Distinguish between (a) substantive and procedural law, (2) public law and private law, and (c) civil law and criminal law.

• Identify the sources of law. Explain the principle of “stare decisis.”


Read and review the case Jasdip Properties v. Estate of Richardson on page 172 and answer the Critical Thinking Question at the end. Also, read the Business Law in Action at the bottom of pg 172. What do you think? Key Terms 1. Sale 12. Promisor 2. Goods 13. Promisee 3. Contract 14. Valid contract 4. Breach 15. Void contract 5. Mutual assent 16. Voidable contract 6.

Consideration 17. Unenforceable contract 7. Capacity 18. Executed contract 8. Implied in fact contract 19. Executory contract 9. Express contract 20. Promissory estoppel 10. Bilateral contract 21. Quasi contract 11. Unilateral contract 22. Tort CHAPTER OBJECTIVES –

After reading this chapter you should be able to:

1) Distinguish between contracts covered by the UCC and those covered by common law.

(2) List the essential elements of a contract.

(3) Distinguish between (a) express and implied contracts, (b) unilateral and bilateral contracts, and (c) valid, void, voidable, and unenforceable contracts, and (d) executed and executory contracts.

(4) Explain the doctrine of promissory estoppel. (5) Identify the 3 elements of an enforceable quasi contract.


Read and brief the case Thor v. Willspring on page 185-186 and answer the Critical Thinking Question and Ethical Question at the end. Key Terms 1. Objective Standard 12. Revocation 2. Offer 13. Option contract 3. Offeror 14. Firm Offer 4. Offeree 15. Rejection 5. Auction Sale 16. Counteroffer 6. Without reserve 17. Conditional Acceptance 7. Open Terms 18. Acceptance 8. Good Faith 19. Authorized means 9. Commercial Reasonableness 20. Mirror Image Rule 10. Output contract 21. Battle of the Forms 11. Requirements contract


After reading this chapter you should be able to:

1) Identify the three essentials of an offer and explain briefly the requirements associated with each.

2) State the 7 ways an offer may be terminated other than by acceptance.

3) Compare the traditional and modern theories of definiteness of acceptance of an offer, as shown by the common law “mirror image” rule and by the rule of the UCC.

4) Describe the five situations limiting an offeror’s right to revoke her offer.

5) Explain the various rules that determine when an acceptance takes effect.


Read and BRIEF the following case: Alcoa Concrete v. Stalker Bros. on page 231 and answer the Critical Thinking Question at the end. Key Terms 1. Licensing statute 7. Covenant not to compete 2. Regulatory license 8. Exculpatory clause 3. Revenue license 9. Unconscionable contracts 4. Wager 10. Procedural unconscionability 5. Usury statute 11. Substantive unconscionability 6. Restraint of Trade


After reading this chapter you should be able to:

1) Identify and explain the types of contracts that may violate a statute and distinguish between the two types of licensing statutes.

2) Describe when a covenant not to compete will be enforced and identify the two situations in which these types of covenants most frequently arise.

3) Explain when exculpatory agreements, agreements involving the commitment of a tort, and agreements involving public officials will be held to be illegal.

4) Distinguish between procedural and substantive unconscionability.

5) Explain the usual effects of illegality and the major exceptions to this rule.


Read and BRIEF the following case: a. First State Bank of Sinai v. Hyland. Key Terms 1. Contractual capacity 5. Necessaries 2. Minor 6. Guardianship 3. Disaffirmance 7. Mentally incompetent 4. Ratification

CHAPTER OBJECTIVES – After reading this chapter you should be able to:

1) Explain how and when a minor may ratify a contract.

2) Describe the liability of a minor who (a) disaffirms a contract or (b) misrepresents his age.

3) Define a necessary and explain how it affects the contracts of a minor.

4) Distinguish between the legal capacity of a person under guardianship and a mentally incompetent person who is not under guardianship.

5) Explain the rule governing an intoxicated person’s capacity to enter into a contract and contrast this rule with the law governing minors and incompetent persons.


Read and review the following cases: a. Berardi v. Meadowbrook Mall Company. Key Terms 1. Duress 9. Scienter 2. Undue influence 10. Negligent Misrepresentation 3. Fraud in the execution 11. Innocent Misrepresentation 4. Fraud in the inducement 12. Mutual mistake 5. Misrepresentation 13. Unilateral mistake 6. Concealment 14. Unconscionable 7. Fiduciary 15. Procedural Unconscionability 8. Puffing 16. Substantive Unconscionability

CHAPTER OBJECTIVES – After reading this chapter you should be able to:

1) Identify the types of duress and describe the legal effect of each.

2) Define undue influence and identify some of the situations giving rise to a confidential relationship.

3) Identify the types of fraud and the elements that must be shown to establish the existence of each.

4) Define the two types of non-fraudulent misrepresentation.

5) Identify and explain the situations involving voidable mistakes.


Read and review the following cases: a. Mackay v. Four Rivers Packing Co. on page 264 and answer the Critical Thinking Question. b. Ethical Dilemma problem. Key Terms 1. Statute of Frauds 6. Parol evidence rule 2. Suretyship 7. Integrated contract 3. Surety 8. Course of dealing 4. Collateral promise 9. Usage of trade 5. Main purpose doctrine 10. Course of performance

CHAPTER OBJECTIVES – After reading this chapter you should be able to:

1) Identify and explain the five types of contracts covered by the general contract Statute of Frauds and the contracts covered by the Uniform Commercial Code (UCC) Statute of Frauds provision.

2) Describe the writings that are required to satisfy the general contract and the UCC Statute of Frauds provisions.

3) Identify and describe the other methods of complying with the general contract and the UCC Statute of Frauds provisions.

4) Explain the Parol Evidence rule and identify the situations to which the rule does not apply.

5) Discuss the rules that aid in the interpretation of a contract.


Read and review the following cases: a. Speelman v. Pascal. Key Terms 1. Obligor 10. Implied warranty 2. Obligee 11. Express warranty 3. Assignment of Rights 12. Novation 4. Assignor 13. Third-Party beneficiary contract 5. Assignee 14. Intended beneficiary 6. Delegation of duties 15. Incidental beneficiary 7. Delegator 16. Donee beneficiary 8. Delegatee 17. Creditor beneficiary 9. Partial Assignment 18. Vesting of rights

CHAPTER OBJECTIVES – After reading this chapter you should be able to:

1) Distinguish between an assignment of rights and a delegation of duties.

2) Identify (a) the requirements of an assignment of contract rights and (b) those rights that are not assignable.

3) Identify those situations in which a delegation of duties is not permitted.

4) Distinguish between an intended beneficiary and an incidental beneficiary. 5) Explain when the rights of an intended beneficiary vest.


Read and review the following cases: a. Christy v. Pilkinton. Key Terms 1. Condition 11. Material breach 2. Express condition 12. Perfect Tender rule 3. Implied in fact condition 13. Substantial performance 4. Implied in law condition 14. Anticipatory repudiation 5. Condition precedent 15. Material Alteration 6. Condition subsequent 16. Mutual rescission 7. Discharge 17. Substituted contract 8. Performance 18. Accord and Satisfaction 9. Tender 19. Frustration of Purpose 10. Breach 20. Commercial impracticability

CHAPTER OBJECTIVES – After reading this chapter you should be able to:

1) Identify and distinguish among the various types of conditions.

2) Distinguish between full performance and tender of performance.

3) Explain the difference between material breach and substantial performance.

4) Distinguish among a mutual rescission, substituted contract, and accord and satisfaction.

5) Identify and explain the ways discharge may be brought about by operation of law.

Key Terms 1. Compensatory damages 9. Reliance damages 2. Incidental damages 10. Nominal damages 3. Consequential damages 11. Out-of-Pocket damages 4. Benefit of the bargain damages 12. Reformation 5. Punitive damages 13. Specific performance 6. Liquidated damages 14. Injunction 7. Foreseeable damages 15. Restitution 8. Mitigation of damages

CHAPTER OBJECTIVES – After reading this chapter you should be able to:

1) Explain how compensatory damages and reliance damages are computed.

2) Define (a)nominal damages, (b) incidental damages, (c) consequential damages, (d) foreseeability of damages, (e) punitive damages, (f) liquidated damages, (g) mitigation of damages.

3) Define the various types of equitable relief and explain when the courts will grant such relief.

4) Explain how restitutionary damages are computed and identify the situations in which restitution is available as a contractual remedy.


Key Terms – Chap. 47 1. Property 18. Binder 2. Tangible property 19. Insurable interest 3. Intangible property 20. Premiums 4. Real Property 21. Misrepresentation 5. Personal Property 22. Warranty 6. Fixture 23. Concealment 7. Sale 24. Waiver 8. Gift 25. Estoppel 9. Donor 26. Termination 10. Donee 11. Constructive Delivery 12. Accession 13. Confusion 14. Possession 15. Abandoned property 16. Insurance 17. Fire Insurance Key Terms – Chap. 48 1. Co-Tenants 4. Tenancy by the Entireties 2. Tenancy in Common 5. Condominium 3. Joint Tenancy 6. Cooperative Key Terms – Chap. 49 1. Marketable Title 7. Mortgagor 2. Deed 8. Mortgagee 3. Warranty deed 4. Delivery 5. Escrow 6. Mortgage

CHAPTER OBJECTIVES – After reading Chapter 47, you should be able to:

1) Define (a) tangible and intangible property, (b) real and personal property, and (c) a fixture.

2) Explain (a) the ways to transfer title to personal property; (b) the 3 elements of a valid gift; and (c) the treatment of abandoned property under the law.

3) With respect to property insurance, explain (a) types of fires, (b) insurable interest, (c) the defenses of misrepresentation, breach of warranty, waiver, concealment, and estoppel.

4) Describe the essential elements of a bailment and describe the rights and duties of the bailor and bailee.


Key Terms – Chap. 43 1. Engagement 6. Fraud 2. Third-party beneficiary 7. Working papers 3. Negligence 8. Accountant-client privilege 4. Privity 9. Due diligence 5. Foreseen users 10. Scienter Key Terms – Chap. 2 1. Ethics 3. Ethical Fundamentalism 2. Business Ethics 4. Utilitarianism

CHAPTER 43 OBJECTIVES – After reading Chapter 43, you should be able to:

1) Describe the contract liability of an accountant to her client.

2) Describe for what and to whom an accountant has tort liability.

3) Describe who owns the working papers an accountant generates and whether client information is privileged.

4) Discuss the potential civil and criminal liability of an accountant under the 1933 Securities Act and under the 1933 Securities Act.

CHAPTER 2 OBJECTIVES – After reading Chapter 47, you should be able to:

1) Describe the difference between law and ethics and THE SOCIAL CONTRACT.


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