Skip to main content
Open Textbooks for Hong Kong
Open Textbooks for Hong Kong
Member
Login
•
Sign up
Search form
Search
Main menu
About Open Textbooks
News
Media and Events
Discussion Forums
FAQ
Textbooks for Primary Schools (English Language)
Textbooks for Secondary Schools (English Language)
Textbooks for Certificates and Diplomas
Textbooks for Tertiary Institutions
You are here
Home
»
Law for Entrepreneurs
»
Remedies
»
Limitations on Contract Remedies
»
Election of Remedies
Untitled topic
Available under
Creative Commons-NonCommercial-ShareAlike 4.0 International License
.
up
1149 reads
19908
Front Matter
Preface
Body Matter
Introduction to Law and Legal Systems
Learning Objectives
LEARNING OBJECTIVES
What Is Law?
Functions of the Law
Law and Politics
KEY TAKEAWAY
EXERCISES
Schools of Legal Thought
LEARNING OBJECTIVES
Legal Positivism: Law as Sovereign Command
Natural Law
The Unanimous Declaration of the Thirteen United States of America
Other Schools of Legal Thought
KEY TAKEAWAY
EXERCISES
Basic Concepts and Categories of US Positive Law
LEARNING OBJECTIVES
Law: The Moral Minimums in a Democratic Society
The Common Law: Property, Torts, and Contracts
State Courts and the Domain of State Law
Civil versus Criminal Cases
Substance versus Procedure
KEY TAKEAWAY
EXERCISES
Sources of Law and Their Priority
LEARNING OBJECTIVES
Sources of Law
Constitutions
Statutes and Treaties in Congress
Delegating Legislative Powers: Rules by Administrative Agencies
State Statutes and Agencies: Other Codified Law
Judicial Decisions: The Common Law
Priority of Laws
The Constitution as Preemptive Force in US Law
Statutes and Cases
Treaties as Statutes: The “Last in Time” Rule
Causes of Action, Precedent, and
KEY TAKEAWAY
EXERCISES
Legal and Political Systems of the World
LEARNING OBJECTIVE
Comparing Common-Law Systems with Other Legal Systems
Civil-Law Systems
KEY TAKEAWAY
EXERCISES
A Sample Case
Note to Students
CASE QUESTIONS
Summary and Exercises
Summary
EXERCISES
SELF-TEST QUESTIONS
SELF-TEST ANSWERS
Corporate Social Responsibility and Business Ethics
Learning Objectives
LEARNING OBJECTIVES
What Is Ethics?
LEARNING OBJECTIVES
How Do Law and Ethics Differ?
Why Should an Individual or a Business Entity Be Ethical?
KEY TAKEAWAY
EXERCISES
Major Ethical Perspectives
LEARNING OBJECTIVES
Utilitarianism
Rules and Duty: Deontology
Social Justice Theory and Social Contract Theory
Aristotle and Virtue Theory
Josephson’s Core Values Analysis and Decision Process
KEY TAKEAWAY
EXERCISES
An Ethical Decision Model
LEARNING OBJECTIVE
Josephson’s Core Values Model
The Core Values
KEY TAKEAWAY
EXERCISES
Corporations and Corporate Governance
LEARNING OBJECTIVES
Legal Organization of the Corporation
Shareholders and Stakeholders
Maximizing Profits: Milton Friedman
“The Social Responsibility of Business Is to Increase Its Profits”
Stakeholder Theory
Corporate Culture and Codes of Ethics
Ethical Leadership Is Top-Down
Accountability Is Often Weak
Killing the Messenger
Ethics Codes
Ethics Hotlines and Federal Sentencing Guidelines
Managing by the Numbers
Managing by Numbers: The Sears Auto Center Story
Conscious Capitalism
Summary and Exercises
Summary
EXERCISES
SELF-TEST QUESTIONS
SELF-TEST ANSWERS
Courts and the Legal Process
Learning Objectives
LEARNING OBJECTIVES
Robinson v. Audi
The Relationship between State and Federal Court Systems in the United States
LEARNING OBJECTIVES
State Court Systems
Limited Jurisdiction Courts
General Jurisdiction Courts
Appellate Courts
The Federal Court System
District Courts
Courts of Appeal
United States Supreme Court
KEY TAKEAWAY
EXERCISES
The Problem of Jurisdiction
LEARNING OBJECTIVES
The Federal-State Balance: Federalism
Exclusive Jurisdiction in Federal Courts
Concurrent Jurisdiction
Summary of Rules on Subject Matter Jurisdiction
Robinson v. Audi
Legal Procedure, Including Due Process and Personal Jurisdiction
How a Case Proceeds
Complaint and Summons
Jurisdiction and Venue
Service of Process and Personal Jurisdiction
Summary of Rules on Personal Jurisdiction
Choice of Law and Choice of Forum Clauses
KEY TAKEAWAY
EXERCISES
Motions and Discovery
LEARNING OBJECTIVES
Initial Pleadings, and Motions to Dismiss
Discovery
KEY TAKEAWAY
EXERCISES
The Pretrial and Trial Phase
LEARNING OBJECTIVES
Pretrial Conference
Trial
Posttrial Motions
KEY TAKEAWAY
EXERCISES
Judgment, Appeal, and Execution
LEARNING OBJECTIVES
Judgment or Order
Appeal
Judgment and Order
KEY TAKEAWAY
EXERCISES
When Can Someone Bring a Lawsuit?
LEARNING OBJECTIVES
Case or Controversy: Standing to Sue
Class Actions
KEY TAKEAWAY
EXERCISES
Relations with Lawyers
LEARNING OBJECTIVES
Legal Fees
Costs
KEY TAKEAWAY
EXERCISES
Alternative Means of Resolving Disputes
LEARNING OBJECTIVES
Arbitration
Mediation
KEY TAKEAWAY
EXERCISES
Cases
Burger King v. Rudzewicz
Summary
CASE QUESTIONS
Ferlito v. Johnson & Johnson
CASE QUESTIONS
Constitutional Law and US Commerce
Learning Objectives
LEARNING OBJECTIVES
Basic Aspects of the US Constitution
LEARNING OBJECTIVES
The Constitution as Reflecting American Values
General Structure of the Constitution
Federalism
Separation of Powers and Judicial Review
KEY TAKEAWAY
EXERCISES
The Commerce Clause
LEARNING OBJECTIVES
Section 8
Early Commerce Clause Cases
From the New Deal to the New Frontier and the Great Society:1930s–1970
The Substantial Effects Doctrine: World War II to the 1990s
KEY TAKEAWAY
EXERCISES
Dormant Commerce Clause
LEARNING OBJECTIVES
Dealing with Unwelcome Waste
KEY TAKEAWAY
EXERCISES
Preemption: The Supremacy Clause
LEARNING OBJECTIVES
The Supremacy Clause
KEY TAKEAWAY
EXERCISES
Business and the Bill of Rights
LEARNING OBJECTIVES
First Amendment
Fourth Amendment
Fifth Amendment
Fourteenth Amendment: Due Process and Equal Protection Guarantees
KEY TAKEAWAY
EXERCISES
Cases
Griswold v. Connecticut
CASE QUESTIONS
Wickard v. Filburn
Kassel v. Consolidated Freightways Corp.
CASE QUESTIONS
Hunt v. Washington Apple Advertising Commission
CASE QUESTIONS
Citizens United v. Federal Election Commission
CASE QUESTIONS
Summary and Exercises
Summary
EXERCISES
SELF-TEST QUESTIONS
SELF-TEST ANSWERS
Administrative Law
Learning Objectives
LEARNING OBJECTIVES
Administrative Agencies: Their Structure and Powers
LEARNING OBJECTIVES
Why Have Administrative Agencies?
Why Regulate the Economy at All?
Ideal Conditions for a Free Market
History of Federal Agencies
Classification of Agencies
Powers of Agencies
The Constitution and Agencies
KEY TAKEAWAY
EXERCISES
Controlling Administrative Agencies
LEARNING OBJECTIVES
Legislative Control
Executive Control
Judicial Review of Agency Actions
KEY TAKEAWAY
EXERCISES
The Administrative Procedure Act
LEARNING OBJECTIVES
Trial-Type Hearings
Rulemaking
KEY TAKEAWAY
EXERCISES
Administrative Burdens on Business Operations
LEARNING OBJECTIVES
The Paperwork Burden
Inspections
Access to Business Information in Government Files
KEY TAKEAWAY
EXERCISES
The Scope of Judicial Review
LEARNING OBJECTIVES
Exhaustion of Administrative Remedies
Strategies for Obtaining Judicial Review
Suing the Government
KEY TAKEAWAY
EXERCISES
Cases
Marshall v. Barlow’s, Inc.
CASE QUESTIONS
American Textile Manufacturers Institute v. Donovan
CASE QUESTIONS
Summary and Exercises
Summary
EXERCISES
SELF-TEST QUESTIONS
SELF-TEST ANSWERS
Criminal Law
Learning Objectives
LEARNING OBJECTIVES
The Nature of Criminal Law
KEY TAKEAWAY
EXERCISES
Types of Crimes
LEARNING OBJECTIVES
Offenses against the Person
Homicide
Assault and Battery
Offenses against Property
Theft: Larceny, Robbery, Embezzlement, False Pretenses
Receiving Stolen Property
Forgery
Extortion
Offenses against Habitation and Other Offenses
Burglary
Arson
Bribery
Perjury
White-Collar Crime
Mail and Wire Fraud
Violations of the Food and Drug Act
Environmental Crimes
Violations of the Foreign Corrupt Practices Act
Violations of the Racketeering Influenced and Corrupt Organizations Act
Computer Crime
KEY TAKEAWAY
EXERCISES
The Nature of a Criminal Act
LEARNING OBJECTIVES
Attempt
Impossibility
Conspiracy
Agency and Corporations
KEY TAKEAWAY
EXERCISES
Responsibility
LEARNING OBJECTIVES
In General
Excuses That Limit or Overcome Responsibility
Mistake of Fact and Mistake of Law
Entrapment
Other Excuses
Lack of Capacity
KEY TAKEAWAY
EXERCISES
Procedure
LEARNING OBJECTIVES
KEY TAKEAWAY
EXERCISES
Constitutional Rights of the Accused
LEARNING OBJECTIVES
Search and Seizure
Double Jeopardy
Self-Incrimination
Speedy Trial
Cross-Examination
Assistance of Counsel
Cruel and Unusual Punishment
Presumption of Innocence
KEY TAKEAWAY
EXERCISES
Cases
False Pretenses
CASE QUESTIONS
White-Collar Crimes
CASE QUESTIONS
Summary and Exercises
Summary
EXERCISES
SELF-TEST QUESTIONS
SELF-TEST ANSWERS
Introduction to Tort Law
Learning Objectives
LEARNING OBJECTIVES
Purpose of Tort Laws
LEARNING OBJECTIVES
Definition of Tort
Kinds of Torts
Dimensions of Tort Liability
Dimensions of Tort: Fault
Dimensions of Tort: Nature of Injury
Dimensions of Tort: Excuses
Damages
KEY TAKEAWAY
EXERCISES
Intentional Torts
LEARNING OBJECTIVES
Assault and Battery
False Imprisonment
Intentional Infliction of Emotional Distress
Trespass and Nuisance
Intentional Interference with Contractual Relations
Malicious Prosecution
Defamation
Absolute Privilege
Qualified Privilege
Invasion of Privacy
Appropriation of Name or Likeness
Personal Space
Public Disclosure of Embarassing Facts
False Light
KEY TAKEAWAY
EXERCISES
Negligence
LEARNING OBJECTIVES
Elements of Negligence
Standard of Care
Duty of Care and Its Breach
Causation: Actual Cause and Proximate Cause
Damages
Problems of Proof
Excuses
Contributory and Comparative Negligence
Assumption of Risk
Act of God
Vicarious Liability
KEY TAKEAWAY
EXERCISES
Strict Liability
LEARNING OBJECTIVES
Historical Basis of Strict Liability: Animals and Ultrahazardous Activities
Strict Liability for Products
KEY TAKEAWAY
EXERCISES
Cases
Intentional Torts: False Imprisonment
CASE QUESTIONS
Negligence: Duty of Due Care
CASE QUESTIONS
Negligence: Proximate Cause
CASE QUESTIONS
Klein v. Pyrodyne Corporation
CASE QUESTIONS
Summary and Exercises
Summary
EXERCISES
SELF-TEST QUESTIONS
SELF-TEST ANSWERS
Introduction to Contract Law
Learning Objectives
LEARNING OBJECTIVES
General Perspectives on Contracts
LEARNING OBJECTIVES
The Role of Contracts in Modern Society
The Definition of Contract
Overview of the Contracts Chapter
KEY TAKEAWAY
EXERCISES
Sources of Contract Law
LEARNING OBJECTIVES
Case Law
Statutory Law: The Uniform Commercial Code
History of the UCC
Organization of the UCC
International Sales Law
The Convention on Contracts for the International Sale of Goods
KEY TAKEAWAY
EXERCISES
Basic Taxonomy of Contracts
LEARNING OBJECTIVES
Explicitness
Express Contract
Implied Contract (Implied in Fact)
Quasi-Contract
Mutuality
Bilateral Contract
Unilateral Contract
Enforceability
Void
Voidable
Unenforceable
Degree of Completion
Terminology: Suffixes Expressing Relationships
KEY TAKEAWAY
EXERCISES
Cases
Explicitness: Implied Contract
CASE QUESTIONS
Mutuality of Contract: Unilateral Contract
CASE QUESTIONS
Unilateral Contract and At-Will Employment
CASE QUESTIONS
Summary and Exercises
Summary
EXERCISES
SELF-TEST QUESTIONS
SELF-TEST ANSWERS
The Agreement
Learning Objectives
LEARNING OBJECTIVES
The Agreement in General
LEARNING OBJECTIVES
The Significance of Agreement
The Objective Test
KEY TAKEAWAY
EXERCISES
The Offer
LEARNING OBJECTIVES
The Definition of Offer
Proposals That Are Not Offers
Advertisements
Invitations to Bid
Communication
Definiteness
The UCC Approach
Duration of Offer
Revocation
Revocability
Irrevocable Offers
Revocability under the UCC
Irrevocability by Law
Rejection by the Offeree
Counteroffer
Acceptance with Counteroffer
The UCC and Counteroffers
Amendments
Lapse of Time
Death or Insanity of the Offeror
Destruction of Subject Matter Essential to the Offer
Postoffer Illegality
KEY TAKEAWAY
EXERCISES
The Acceptance
LEARNING OBJECTIVES
General Definition of Acceptance
Who May Accept?
When Is Acceptance Effective?
Instantaneous Communication
Stipulations as to Acceptance
The “Mailbox Rule”
Acceptance “Outruns” Rejection
Electronic Communications
Silence as Acceptance
General Rule: Silence Is Not Acceptance
Exceptions
KEY TAKEAWAY
EXERCISES
Cases
Objective Intention
CASE QUESTIONS
Advertisements as Offers
CASE QUESTIONS
Silence as Acceptance
CASE QUESTIONS
Summary and Exercises
Summary
EXERCISES
SELF-TEST QUESTIONS
SELF-TEST ANSWERS
SELF-TEST ANSWERS
Real Assent
Learning Objectives
LEARNING OBJECTIVES
Duress and Undue Influence
LEARNING OBJECTIVES
Duress
Physical Duress
Duress by Threat
Undue Influence
KEY TAKEAWAY
EXERCISES
Misrepresentation
Learning objectives
General Description
Fraudulent Misrepresentation
Misstatement of Fact
Concealment
Nondisclosure
Statement Made False by Subsequent Events
Statements of Opinion
Misstatement of Law
Assertions of Intention
Intentionally Made Misrepresentation
Reliance
Nonfraudulent Misrepresentation
Negligent Misrepresentation
Negligent
Misstatement of Fact
Materiality
Justifiable Reliance
Innocent Misrepresentation
Remedies
KEY TAKEAWAY
EXERCISES
Mistake
LEARNING OBJECTIVES
Mistake by One Party
Unilateral Mistake
Exceptions
Mutual Mistake
Material Effect on the Agreed-to Exchange of Performance
Party Seeking Relief Does Not Bear the Risk of the Mistake
KEY TAKEAWAY
EXERCISES
Capacity
LEARNING OBJECTIVES
Minors (or “Infants”)
The General Rule
Exceptions and Complications
Necessities
Nonvoidable Contracts
Misrepresentation of Age
Ratification
Duty to Return Consideration Received
Tort Connected with a Contract
Persons Who Are Mentally Ill or Intoxicated
Mentally Ill Persons
Intoxicated Persons
KEY TAKEAWAY
EXERCISES
Cases
Undue Influence
CASE QUESTIONS
Misrepresentation by Concealment
Facts
Discussion
CASE QUESTIONS
Misrepresentation by Assertions of Opinion
CASE QUESTIONS
Mutual Mistake
CASE QUESTIONS
Summary and Exercises
Summary
EXERCISES
SELF-TEST QUESTIONS
SELF-TEST ANSWERS
Consideration
Learning Objectives
LEARNING OBJECTIVES
General Perspectives on Consideration
LEARNING OBJECTIVES
The Purpose of Consideration
A Definition of Consideration
KEY TAKEAWAY
EXERCISES
Legal Sufficiency
LEARNING OBJECTIVES
The Concept of Legal Sufficiency
Actual versus Legal Detriment
Adequacy of Consideration
Applications of the Legal Sufficiency Doctrine
Threat of Litigation: Covenant Not to Sue
Accord and Satisfaction Generally
Settling an Unliquidated Debt
Settling a Disputed Debt
The “In-Full-Payment” Check Situation
Unforeseen Difficulties
Creditors’ Composition
Preexisting Duty
Illusory Promises
Exclusive Dealing Agreement
Outputs Contracts and Needs Contracts
KEY TAKEAWAY
EXERCISES
Promises Enforceable without Consideration
LEARNING OBJECTIVE
Promises Enforceable without Consideration at Common Law
Past Consideration
Promise Revived after Statute of Limitations Has Passed
Voidable Duties
Promissory Estoppel
Moral Obligation
Promises Enforceable without Consideration by Statute
Under the UCC
Bankruptcy
International Contracts
KEY TAKEAWAY
EXERCISES
Cases
Consideration for an Option
CASE QUESTIONS
Consideration: Preexisting Obligation
CASE QUESTIONS
Consideration: Required for Contract Modification
CASE QUESTIONS
Summary and Exercises
Summary
EXERCISES
SELF-TEST QUESTIONS
SELF-TEST ANSWERS
Legality
Learning Objectives
LEARNING OBJECTIVES
General Perspectives on Illegality
LEARNING OBJECTIVES
KEY TAKEAWAY
EXERCISES
Agreements in Violation of Statute
LEARNING OBJECTIVES
Overview
Types of Bargains Made Illegal by Statute
Gambling Contracts
Sunday Contracts
Usury
Licensing Statutes
KEY TAKEAWAY
EXERCISES
Bargains Made Illegal by Common Law
LEARNING OBJECTIVE
Overview
Types of Bargains Made Illegal by Common Law
Common-Law Restraint of Trade
Sale of a Business
Employment Noncompete Agreements
Unconscionable Contracts
Exculpatory Clauses
Obstructing the Administration of Justice or Violating a Public Duty
Family Relations
KEY TAKEAWAY
EXERCISES
Effect of Illegality and Exceptions
LEARNING OBJECTIVES
Effect of Illegality
Exceptions
Party Withdrawing before Performance
Party Protected by Statute
Party Not Equally at Fault
Excusable Ignorance
Partial Illegality
KEY TAKEAWAY
EXERCISES
Cases
Extension of Statutory Illegality Based on Public Policy
CASE QUESTIONS
Unlicensed Practitioner Cannot Collect Fee
CASE QUESTIONS
Unconscionability
CASE QUESTIONS
Summary and Exercises
Summary
EXERCISES
SELF-TEST QUESTIONS
SELF-TEST ANSWERS
Form and Meaning
Learning Objectives
LEARNING OBJECTIVES
The Statute of Frauds
LEARNING OBJECTIVES
Overview of the Statute of Frauds
Types of Contracts Required in Writing and the Exceptions
Promises to Pay the Debt of Another
Agreements of Executor or Administrator
The Marriage Provision
Contracts Affecting an Interest in Real Estate
The One-Year Rule
Under the UCC
Other Writing Requirements
Exceptions under the UCC
The Ten-Day-Reply Doctrine
“Specially Manufactured Goods”
The “Admission” Exception
The “Payment or Delivery and Acceptance” Exception
Sufficiency of the Required Writing
At Common Law
Under the UCC
Electronic Communications
Effect of Noncompliance and Exceptions; Oral Rescission
Full Performance
Detrimental Reliance
Oral Rescission
Contract Modification
KEY TAKEAWAY
EXERCISES
The Parol Evidence Rule
LEARNING OBJECTIVES
The Purpose of the Rule
Parol Evidence at Common-Law
The Rule
The Exemptions and Exceptions
Not an Integrated Contract
Void or Voidable Contracts
Contracts Subject to a Condition Precedent
Untrue Recital or Errors
Ambiguity
Postcontract Modification
The UCC Approach
KEY TAKEAWAY
EXERCISES
Interpretation of Agreements: Practicalities versus Legalities
LEARNING OBJECTIVES
The General Problem and the Purpose of Contractual Interpretation
The General Problem
The Basic Rule of Interpretation
Tools of Interpretation
KEY TAKEAWAY
EXERCISES
Cases
The Statute of Frauds’ Main Purpose Doctrine
CASE QUESTIONS
The Statute of Frauds’ One-Year Rule
CASE QUESTIONS
The Parol Evidence Rule: Postcontract Modification
CASE QUESTIONS
Summary and Exercises
Summary
EXERCISES
SELF-TEST QUESTIONS
SELF-TEST ANSWERS
Third-Party Rights
Learning Objectives
LEARNING OBJECTIVES
Assignment of Contract Rights
LEARNING OBJECTIVES
The Concept of a Contract Assignment
Method of Assignment
Manifesting Assent
Acceptance and Revocation
Notice
Effect of Assignment
General Rule
Exceptions
When Assignments Are Not Allowed
Material Change in Duties of the Obligor
Assignment of Personal Rights
Assignment Forbidden by Statute or Public Policy
Contracts That Prohibit Assignment
Future Contracts
Partial Assignments
Successive Assignments
Assignor’s Warranties
KEY TAKEAWAY
EXERCISES
Delegation of Duties
LEARNING OBJECTIVES
Basic Rules Regarding Delegation
General Rule
Effect on Obligor
Nondelegable Duties
Personal Services
Public Policy
Delegations Barred by Contract
KEY TAKEAWAY
EXERCISES
Third-Party Beneficiaries
LEARNING OBJECTIVES
The General Rule
Two Types of Third-Party Beneficiaries
Creditor Beneficiary
Donee Beneficiary
Modification of the Beneficiary’s Rights
Government Contracts
KEY TAKEAWAY
EXERCISES
Cases
Nonassignable Rights
CASE QUESTIONS
Assignment Includes Delegation
CASE QUESTIONS
Third party Beneficiaries and Foreseeable Damages
CASE QUESTIONS
Summary and Exercises
Summary
EXERCISES
SELF-TEST QUESTIONS
SELF-TEST ANSWERS
Discharge of Obligations
Learning Objectives
LEARNING OBJECTIVES
Discharge of Contract Duties
LEARNING OBJECTIVES
Discharge by Performance (or Nonperformance) of the Duty
Full Performance
Nonperformance, Material Breach
Substantial Performance
Substantial Performance.
Anticipatory Breach and Demand for Reasonable Assurances
KEY TAKEAWAY
EXERCISES
Discharge by Conditions
LEARNING OBJECTIVES
Conditions Classified Based on How They Are Created
Conditions Classified Based on Their Effect on Duty to Perform
Condition of Timeliness
Condition That a Party Must Be Satisfied
KEY TAKEAWAY
EXERCISES
Discharge by Agreement of the Parties
LEARNING OBJECTIVE
Mutual Rescission
Waiver
Substituted Agreement
Accord and Satisfaction
KEY TAKEAWAY
EXERCISES
Discharge When Performance Becomes Impossible or Very Difficult
LEARNING OBJECTIVE
Overview
Impossibility
Death or Incapacity of a Personal Services Contractor
Destruction or Deterioration of a Thing Necessary for Performance
Performance Prohibited by Government Regulation or Order
Impracticability
Common-Law Impracticability
Commercial Impracticability
Frustration of Purpose
KEY TAKEAWAY
EXERCISES
Other Methods of Discharge
LEARNING OBJECTIVES
Cancellation, Destruction, or Surrender
Power of Avoidance
Statute of Limitations
Bankruptcy
KEY TAKEAWAY
Cases
Substantial Performance; Conditions Precedent
CASE QUESTIONS
Waiver of Contract Rights; Nonwaiver Provisions
CASE QUESTIONS
Impossibility as a Defense
CASE QUESTIONS
Summary and Exercises
Summary
EXERCISES
SELF-TEST QUESTIONS
SELF-TEST ANSWERS
Remedies
Learning Objectives
LEARNING OBJECTIVES
Theory of Contract Remedies
LEARNING OBJECTIVES
Purpose of Remedies
Parties Have the Power—but Not the Right—to Breach
KEY TAKEAWAY
EXERCISES
Promisee’s Interests Protected by Contract
LEARNING OBJECTIVE
KEY TAKEAWAY
EXERCISE
Legal Remedies: Damages
LEARNING OBJECTIVES
Overview
Types of Damages
Compensatory Damages
Incidental Damages
Consequential Damages
Nominal Damages
Liquidated Damages
Punitive Damages
KEY TAKEAWAY
EXERCISES
Equitable Remedies
LEARNING OBJECTIVES
Overview
Types of Remedies in Equity
Specific Performance
Injunction
Restitution
Total Nonperformance by Breaching Party
Part Performance and Then Breach
Restitution in Other Cases
KEY TAKEAWAY
EXERCISES
Limitations on Contract Remedies
LEARNING OBJECTIVES
Overview
Foreseeability
Mitigation of Damages
Certaintymages
Loss of Power of Avoidance
Delay
Affirmation
Rights of Third Parties
Agreement of the Parties Limiting Remedies
Election of Remedies
At Common Law
Under the UCC
Tort versus Contract
Legal versus Extralegal Remedies
KEY TAKEAWAY
EXERCISES
Cases
Consequential Damages
CASE QUESTIONS
Liquidated Damages
CASE QUESTIONS
Injunctions and Negative Covenants
CASE QUESTIONS
Limitation on Damages: Mitigation of Damages
CASE QUESTIONS
Summary and Exercises
Summary
EXERCISES
SELF-TEST QUESTIONS
SELF-TEST ANSWERS
Products Liability
Learning Objectives
LEARNING OBJECTIVES
Introduction: Why Products-Liability Law Is Important
LEARNING OBJECTIVES
History of Products-Liability Law
Current State of the Law
KEY TAKEAWAY
EXERCISES
Warranties
LEARNING OBJECTIVES
Types of Warranties
Express Warranties
Implied Warranties
Implied Warranty of Merchantability
Fitness for a Particular Purpose
Other Warranties
Problems with Warranty Theory
In General
Exclusion or Modification of Warranties
Exclusion of Express Warranties
Exclusion of Implied Warranties in General
Implied Warranty of Merchantability
Implied Warranty of Fitness
Conflict between Express and Implied Warranties
The Magnuson-Moss Act and Phantom Warranties
Privity
Horizontal Privity
Vertical Privity
Contributory Negligence, Comparative Negligence, and Assumption of Risk
KEY TAKEAWAY
EXERCISES
Negligence
LEARNING OBJECTIVES
Typical Negligence Claims: Design Defects and Inadequate Warnings
Design Defects
Warning Defects
Problems with Negligence Theory
Common-Law Defenses against Negligence
Preemption
KEY TAKEAWAY
EXERCISES
Strict Liability in Tort
LEARNING OBJECTIVES
Strict Liability Defined
Section 402A Elements
Product in a Defective Condition
Unreasonably Dangerous
Engaged in the Business of Selling
Reaches the User without Change in Condition
Liability Despite Exercise of All Due Care
Liability without Contractual Relation
Problems with Strict Liability
Disclaimers
Plaintiff’s Conduct
Assumption of Risk
Misuse or Abuse of the Product
Limited Remedy
The Third Restatement
KEY TAKEAWAY
EXERCISES
Tort Reform
LEARNING OBJECTIVES
The Cry for Reform
State Reforms
Statutes of Repose
State-of-the-Art Defense
Failure to Warn
Comparative Fault for Consumer Misuse
Criminal Penalties
Federal Reform
KEY TAKEAWAY
EXERCISES
Cases
Implied Warranty of Merchantability and the Requirement of a “Sale”
CASE QUESTIONS
Strict Liability and Bystanders
402 A. Special Liability of Seller of Product for Physical Harm to User or Consumer
CASE QUESTIONS
Failure to Warn
CASE QUESTIONS
Summary and Exercises
Summary
EXERCISES
SELF-TEST QUESTIONS
SELF-TEST ANSWERS
Intellectual Property
Learning Objectives
LEARNING OBJECTIVES
Patents
LEARNING OBJECTIVES
Source of Authority and Duration
Patentability
What May Be Patented
What May Not Be Patented
Tests for Patentability
Procedures for Obtaining a Patent
Patent Ownership
Infringement and Invalidity Suits
Patent Misuse
KEY TAKEAWAY
EXERCISES
Trade Secrets
LEARNING OBJECTIVES
Definition of Trade Secrets
Elements of Trade Secrets
Originality
Secrecy
Economic Espionage Act
Right of Employees to Use Trade Secrets
KEY TAKEAWAY
EXERCISES
Copyright
LEARNING OBJECTIVES
Definition and Duration
Protected Expression
Rights Protected by the Copyright Act
Preventing Copying
Fair Use
Infringement
Copyrightability Standards
Who May Obtain a Copyright?
Obtaining a Copyright
Computer Downloads and the Digital Millennium Copyright Act
KEY TAKEAWAY
EXERCISES
Trademarks
LEARNING OBJECTIVES
Definitions of Trademarks
Extent of Trademark Protection
Kinds of Marks
Limitations on Marks
Dilution, Tarnishment, and Blurring
Acquiring Trademark Rights
Loss of Rights
KEY TAKEAWAY
EXERCISES
Cases
Fair Use in Copyright
CASE QUESTIONS
Trademark Infringement and Dilution
CASE QUESTIONS
Summary and Exercises
Summary
EXERCISES
SELF-TEST QUESTIONS
SELF-TEST ANSWERS
Insurance
Learning Objectives
LEARNING OBJECTIVES
Definitions and Types of Insurance
LEARNING OBJECTIVES
Public and Private Insurance
Types of Insurance for the Individual
Life Insurance
Health Insurance
Disability Insurance
Homeowner’s Insurance
Automobile Insurance
Other Liability Insurance
Types of Business Insurance
Workers’ Compensation
Automobile Insurance
Property Insurance
Malpractice Insurance
Business Interruption Insurance
Liability Insurance
KEY TAKEAWAY
EXERCISES
Property Insurance, Liability Insurance, and Life Insurance
LEARNING OBJECTIVES
Property Insurance
Coverage
Insurable Interest in Property
Subrogation
Assignment
Intentional Losses
Coinsurance Clause
Liability Insurance
No-Fault Trends
Life Insurance
Insurable Interest
Subrogation
Change of Beneficiary and Assignment
Intentional Losses
Suicide
Murder
KEY TAKEAWAY
EXERCISES
Insurer’s Defenses
LEARNING OBJECTIVES
Types of Defenses
Representation
Concealment
Warranties
Incontestable Clause
Requirement of Insurer’s Good Faith
KEY TAKEAWAY
EXERCISES
Case
Misrepresentation to Insurer
CASE QUESTIONS
Summary and Exercises
Summary
EXERCISES
SELF-TEST QUESTIONS
SELF-TEST ANSWERS
Relationships between Principal and Agent
Learning Objectives
LEARNING OBJECTIVES
Introduction to Agency and the Types of Agents
LEARNING OBJECTIVES
Introduction to Agency Law
Why Is Agency Law Important, and What Is an Agent?
Recurring Issues in Agency Law
John Alden
Recurring Issues in Agency
Types of Agents
General Agent
Special Agent
Agency Coupled with an Interest
Subagent
Servant
Independent Contractor
Creation of the Agency Relationship
Agency Created by Agreement
Consideration
Formalities
Capacity
Agency Created by Operation of Law
Implied Agency
Apparent Agency
KEY TAKEAWAY
EXERCISES
Duties between Agent and Principal
LEARNING OBJECTIVES
Agent’s Duty to Principal
Fiduciary Duty
Duty to Avoid Self-Dealing
Duty to Preserve Confidential Information
Other Duties
Duty of Skill and Care
Duty of Good Conduct
Duty to Keep and Render Accounts
Duty to Act Only as Authorized
Duty Not to Attempt the Impossible or Impracticable
Duty to Obey
Duty to Give Information
“Shop Rights” Doctrine
Principal’s Duty to Agent
Contract Duties
General Contract Duties
Employment at Will
Duty to Indemnify
Tort and Workers’ Compensation Duties
Background to Workers’ Compensation
The System in General
Kansas Workers’ Compensation Benefits for Specific Injuries
Coverage
Paying for Workers’ Compensation
Recurring Legal Issues
KEY TAKEAWAY
EXERCISES
Cases
Creation of Agency: Liability of Parent for Contracts Made by “Agent” Child
CASE QUESTIONS
Employee versus Independent Contractor
CASE QUESTIONS
Breach of Fiduciary Duty
CASE QUESTIONS
Workers’ Compensation: What “Injuries” Are Compensable?
CASE QUESTIONS
Summary and Exercises
Summary
EXERCISES
SELF-TEST QUESTIONS
SELF-TEST ANSWERS
Liability of Principal and Agent; Termination of Agency
Learning Objectives
LEARNING OBJECTIVES
Principal’s Contract Liability
LEARNING OBJECTIVES
Principal’s Contract Liability Requires That Agent Had Authority
Types of Authority
Express Authority
Implied Authority
Apparent Authority
Ratification
KEY TAKEAWAY
EXERCISES
Principal’s Tort and Criminal Liability
LEARNING OBJECTIVES
Principal’s Tort Liability
The Distinction between Direct and Vicarious Liability
Direct Liability
Vicarious Liability
Agents for Whom Principals Are Vicariously Liable
Liability for Agent’s Intentional Torts
Deviations from Employment
The “Scope of Employment” Problem
The Zone of Risk Test
Special Cases of Vicarious Liability
Use of Automobiles
Torts of Family Members
Other Torts Governed by Statute or Regulation
Principal’s Criminal Liability
KEY TAKEAWAY
EXERCISES
Agent’s Personal Liability for Torts and Contracts; Termination of Agency
LEARNING OBJECTIVES
Agent’s Personal Liability for Torts and Contracts
Tort Liability
Contract Liability
Agent for Undisclosed or Partially Disclosed Principal
Lack of Authority in Agent
Agent Acting on Own Account
Termination of Agency
By Act of the Parties
Express Termination
Implied Termination
By Operation of Law
KEY TAKEAWAY
EXERCISES
Cases
Implied Authority
CASE QUESTIONS
Employer’s Liability for Employee’s Intentional Torts: Scope of Employment
CASE QUESTIONS
Employer’s Liability for Employee’s Intentional Torts: Scope of Employment
Facts and Proceedings in the Trial Court
Discussion
CASE QUESTIONS
Summary and Exercises
Summary
EXERCISES
SELF-TEST QUESTIONS
SELF-TEST ANSWERS
Partnerships: General Characteristics and Formation
Learning Objectives
LEARNING OBJECTIVES
Introduction to Partnerships and Entity Theory
LEARNING OBJECTIVES
Importance of Partnership Law
History of Partnership Law
Through the Twentieth Century
The Current State of Partnership Law
Entity Theory
Meaning of “Legal Entity”
Entity Characteristics of a Partnership
For Accounting Purposes
For Purposes of Taxation
For Purposes of Litigation
For Purposes of Owning Real Estate
For Purposes of Bankruptcy
KEY TAKEAWAY
EXERCISES
Partnership Formation
LEARNING OBJECTIVES
Creation of an Express Partnership
Creation in General
Specific Issues of Concern
Who Can Be a Partner?
Written versus Oral Agreements
Validity of the Partnership Name
Creation of Implied Partnership
Tests of Partnership Existence
Association of Persons
Co-owners of a Business
Sharing of Profits
Business for Profit
Sharing the Profit
Other Factors
Creation of Partnership by Estoppel
KEY TAKEAWAY
EXERCISES
Cases
Tests of Partnership Existence
CASE QUESTIONS
Creation of a Partnership: Registering the Name
Background Facts
Suit against Whitehead
Discussion
CASE QUESTIONS
Partnership by Estoppel
Facts
The Faxed Credit References
The Fax Cover Sheet
The Epsco Personnel Credit Application
The Checks to Epsco
The Business Card
The Dealership Application
CASE QUESTIONS
Summary and Exercises
Summary
EXERCISES
SELF-TEST QUESTIONS
SELF-TEST ANSWERS
Partnership Operation and Termination
Learning Objectives
LEARNING OBJECTIVES
Operation: Relations among Partners
LEARNING OBJECTIVES
Duties Partners Owe Each Other
Duty to Serve
Duty of Loyalty
Application of the Fiduciary Standard to Partnership Law
Limits on the Reach of the Fiduciary Duty
Activities Affected by the Duty of Loyalty
Duty of Care
Duty of Obedience
Duty to Inform Copartners
Duty to Account
The Rights That Partners Have in a Partnership
Rights to Distributions
Right to Profits (and Losses)
Right to Indemnification
Right to Return of Capital Contribution
Right to Compensation
Right to Management
Right to Choose Partners
Right to Property of the Partnership
Rights in Specific Partnership Property: UPA Approach
Rights in Specific Property: RUPA Approach
Right to Assign Partnership Interest
Voluntary Assignment
Involuntary Assignment
Right to Enforce Partnership Rights
Right to Information and Inspection of Books
KEY TAKEAWAY
EXERCISES
Operation: The Partnership and Third Parties
LEARNING OBJECTIVES
Contract Liability
Liability of the Partnership
The General Rule
Partnership “Statements”
Personal Liability of Partners, in General
Liability of Existing Partners
Liability of Incoming Partners
Tort and Criminal Liability
Partnership Liability for Torts
Partners’ Personal Liability for Torts
Liability for Crimes
Liability for Taxes
KEY TAKEAWAY
EXERCISES
Dissolution and Winding Up
LEARNING OBJECTIVES
Dissolution of Partnerships under UPA
Meaning of Dissolution under UPA
Causes of Dissolution
In Accordance with the Agreement
In Violation of the Agreement
By Operation of Law
By Court Order
Effect of Dissolution on Authority
After Dissolution
Forming a New Partnership
Winding Up and Termination
Dissociation and Dissolution of Partnerships under RUPA
Dissociation
Causes of Dissociation
Effect of Dissociation
Dissolution
Causes of Dissolution
Effect of Dissolution
Continuing after Dissociation
Winding Up the Partnership under UPA and RUPA
Who Can Participate in Winding Up
Settlement of Accounts among Partners
KEY TAKEAWAY
EXERCISES
Cases
Breach of Partnership Fiduciary Duty
CASE QUESTIONS
Partnership Authority, Express or Apparent
CASE QUESTIONS
Partnership Bound by Contracts Made by a Partner on Its Behalf; Partners’ Duties to Each Other; Winding Up
Analysis
Winding Up the Partnership
Lopez’s Liability for the IKON Debt
Attorneys’ Fees
Conclusion
CASE QUESTIONS
Dissolution under RUPA
CASE QUESTIONS
Summary and Exercises
Summary
EXERCISES
SELF-TEST QUESTIONS
SELF-TEST ANSWERS
Hybrid Business Forms
Learning Objectives
LEARNING OBJECTIVES
Limited Partnerships
LEARNING OBJECTIVES
Governing Law and Definition
Governing Law
Definition
Creation and Capitalization
Creation
Capitalization
Control and Compensation
Control
General Partners
Limited Partners
Assignment of Partnership Rights
Inspection of Books
Addition of New Partners
Compensation
General Partners
Limited Partners
Liabilities
General Partners
Limited Partners
Taxation
Termination
Dissolution
Winding Up
KEY TAKEAWAY
EXERCISES
Limited Liability Companies
LEARNING OBJECTIVES
History and Law Governing Limited Liability Companies
History of the Limited Liability Company
Governing Law
Creation and Capitalization
Creation of the LLC
Capitalization
Control and Compensation
Control
Compensation
Liability
Liability to Outsiders
Internal Liabilities
Taxation
Termination
Continuity of Life
Dissolution and Winding Up
Free Transferability of Interest
KEY TAKEAWAY
EXERCISES
Other Forms
LEARNING OBJECTIVE
Sub-S Corporation
History
Creation and Capitalization
Liability
Taxation
Transferability of Ownership
Limited Liability Partnerships
Background
Creation
Liability
Limited Liability Limited Partnerships
Ethical Concerns
KEY TAKEAWAY
EXERCISES
Cases
Limited Partnerships: Limited Partners’ Liability for Managing Limited Partnership
CASE QUESTIONS
Liability Issues in LLCs
CASE QUESTIONS
Defective Registration as a Limited Liability Partnership
CASE QUESTIONS
Summary and Exercises
Summary
EXERCISES
SELF-TEST QUESTIONS
SELF-TEST ANSWERS
Corporation: General Characteristics and Formation
Learning Objectives
LEARNING OBJECTIVES
Historical Background
LEARNING OBJECTIVES
A Fixture of Every Major Legal System
US Corporation Formation
Corporate Law Today
KEY TAKEAWAY
EXERCISES
Partnerships versus Corporations
LEARNING OBJECTIVES
Ease of Formation
Ownership and Control
Transferability of Interests
Financing
Taxation
KEY TAKEAWAY
EXERCISES
The Corporate Veil: The Corporation as a Legal Entity
LEARNING OBJECTIVES
The Basic Rights of the Corporate “Person”
Absence of Rights
Piercing the Corporate Veil
Fraud
Failure to Act as a Corporation
Other Types of Personal Liability
KEY TAKEAWAY
EXERCISES
Classifications of Corporations
LEARNING OBJECTIVES
Nonprofit Corporations
Public Corporations
Professional Corporations
Business Corporations
The Two Types
KEY TAKEAWAY
EXERCISES
Corporate Organization
LEARNING OBJECTIVES
The Corporate Charter
Function of the Charter
Charter as a Contract
Selection of a State
Where to Charter
Why Choose Delaware?
The Promoter
Functions
Contract Liability
Preincorporation Stock Subscriptions
Execution and Filing of the Articles of Incorporation
Organizational Meeting of Directors
KEY TAKEAWAY
EXERCISES
Effect of Organization
LEARNING OBJECTIVES
De Jure and De Facto Corporations
Corporation by Estoppel
KEY TAKEAWAY
EXERCISES
Cases
Limiting a Corporation’s First Amendment Rights
CASE QUESTIONS
Piercing the Corporate Veil
CASE QUESTIONS
Corporate Promoter
CASE QUESTIONS
De Jure and De Facto Corporations
CASE QUESTIONS
Summary and Exercises
Summary
EXERCISES
SELF-TEST QUESTIONS
SELF-TEST ANSWERS
Legal Aspects of Corporate Finance
Learning Objectives
LEARNING FAKE OBJECTIVES
General Sources of Corporate Funds
LEARNING OBJECTIVES