Principles of Law?

[BBM]

2018-2019
PRINCE ANSU
Odisee
Week 1

What is The Law?

- Law is a system of rules that are created and enforced through social or governmental institutions to
regulate behavior. (It brings stability and predictability (the result).

Or

- Enforceable rules governing relationships among individuals and between individuals & their society.

- The Law sets out rights, duties and obligations of citizens.

Personal Level

- Citizens need to be able to determine “right from wrong”

Business Level

- Degree of “Legal Certainty” in business dealings.

Legal certainty is the principle that a legal system be predictable and transparent. It is considered a
protection that guarantees that the law will not be used in a random way.

The law brings stability and predictability into the society.

The difference between Legal and Illegal

Legal: allowable or enforceable by being in conformity with the law of the land and the public policy.

Illegal: Is when you are doing something unlawful or something which is forbidden by law.

What is legally right and wrong?

Answer is: It depends

- Everybody have some legal rights that could not be violated. (EX. You have legal right over your Property to
defend it in anyways/ defend what is yours.) You have the right to do a lot of things and choices. So, it depends
on what you do or happens, which makes it either legally right or wrong.

(Ex. It is within the legal rights of a police officer to take a car from you, if you are caught driving an
unregistered or stolen vehicle.)

- Right and wrong have nothing to do with legal and illegal. They are complicated and personal. Right and
wrong aren't inflexible rules; they are responses to the world as we move through it and to people as we interact
with them.
 Influences on The Law

 How will the local, legal environment affect my business decision making?
- Who will the law have effect on these options within a company:

Degree of predictability:

Predictability is the degree to which a correct prediction or

prediction of the state of a system can be made qualitatively or quantitatively. (Ex.) consistent repetition of a
state, course of action, behavior, or the like, making it possible to know in advance what to expect.

- Predictability means providing exactly what the customer expects. Unexpected surprises are only good as long as
you provide what the customer is looking for.

- Companies looking to improve predictability need to understand why customers call customer service or go
online for help, as these are instances where their mental models don’t match the product or service model—in
other words, they cannot predict how the thing works.

Business implication:

- Business implication is the effect a policy or action will have on the operations or financial well-being of a
company.

Conflict of Laws:

- Means:
o Determination of which law should apply to the facts of a particular case when the laws of more than one
state or nation may be applicable.
o

▪ Examples of conflict of laws?

o Limitations
o - A statute of limitation is a law which forbids prosecutors from charging someone with a crime that was
committed more than a specified number of years ago.

- One of the main reasons why states have criminal statutes of limitations is to prevent delays in the filing
of charges and to ensure that convictions are based on evidence (physical or eyewitness) that has not
deteriorated with time.

o Standards of negligence:
o Negligence is a failure to exercise appropriate and or ethical ruled care expected to be exercised amongst
specified circumstances.
o Negligence is not taking responsibility of things that turned up to causes pain to someone.
o To be negligent is to act, or fail to act, in a way that causes injury to another person.
International Law:

- Law governing relations between nations as well as business or other activities - public or private -
conducted beyond the boundaries of a single nation.

Examples of international treaties?

- Civil vs. Common Law: Continental European Approach”

- Civil law:
- Codified law based on Roman Code.
- legal rules set out in one comprehensive & systemized code.
-
- Common Law: “Anglo-Saxon Tradition”
o law is found on a “case-by-case basis”
o overall accumulation of judicial decisions - law is developed and pronounced by courts.

Civil vs. Common Law Countries

 Austria
Common Law
 China
Civil Law
 Egypt Australia
 Finland,
Argentina, Brazil,
SwedenChile, Venezuela  Bangladesh
 Germany  Canada
  Austria
Greece  Ghana
  China
Indonesia  India
  Egypt
Iran  Israel
  Finland,
Italy Sweden  Jamaica
  Germany
Japan  Kenya
  Greece
Mexico  Malaysia
  Indonesia
Poland  New Zealand
  Iran
South Korea  Nigeria
  Italy
Tunisia  Singapore
  Japan
South Africa  United Kingdom
 Mexico
 United States
 Poland
 Zambia
 South Korea
 Tunisia
 South Africa
 The types of laws around the world

Civil vs. Common Law Countries

Common law (also known as judicial precedent or judge-made law, or case law) is that body of law derived
from judicial decisions of courts and similar tribunals.
Common law: The judges of the court makes the decision based on the case to determine what should happen to
you in the.

Common law influences the decision-making process in novel cases where the outcome cannot be determined
based on existing statutes.

Civil Law: the system of law concerned with private relations between members of a community rather than
criminal, military, or religious affairs. The law is already there, so it (the law) determine what should happen to
you. It falls from the roman laws/quotes.
- "the owners can prosecute the individuals under civil law for trespassing".
Civil law is the part of a country's set of laws which is concerned with the private affairs of citizens, for
example marriage and property ownership, rather than with crime.
Yahoo study case
Week 2: Case Study on Conflict of Laws

Case Study on Conflict of Laws: Yahoo! vs La Ligue Contre Le Racisme et L’Antisemitisme .

First Amendment to US Constitution:

Explain how the freedom of speech is protected by the First Amendment!!

On July 4, 1776, American declared the colonies independent from England.

This what they stated:

❖ We hold these truths to be self-evident, that all men are created equal, that they are endowed by their
Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of
Happiness”

U.S. Constitution: Fundamental law of the U.S. which was ratified by the states in 1788:

❖ Creates three branches of government.

❖ Protects individual rights by limiting the government’s ability to restrict those rights.

Bill of Rights
- First 10 amendments to U.S. Constitution
- Guarantees fundamental rights and protects these rights from intrusive government action.

(P): What is Amendment?

❖ An amendment is a formal or official change made to a law, contract, constitution, or other legal
document... Amendments can add, remove, or update parts of these agreements. They are often used
when it is better to change the document than to write a new one.

- First Amendment: Includes freedom of speech, freedom to assemble, freedom of the press, and freedom of
religion.

Freedom of Speech

It is the right to engage in oral, written, and symbolic speech protected by the First Amendment.

Categories:

– Fully protected speech: Cannot be prohibited/ permitted or regulated by the government.

– Exceptions: Hate Speech.
Exception to First Amendment:

Hate Speech:

- Dangerous speech or words that are likely to provoke a hostile or violent response.

- Speech that incites the violent or revolutionary overthrow of the government

- Must be “likely to cause violence or harm before it can be deemed criminal”

Exceptions: Other Examples of Unprotected Speech

• Defamatory language
- Defamatory Communication is any communication that harms the reputation of another person or tends
to lower his respect or confidence in the community. Defamatory language often consists of harmful
lies.

• Child pornography
- Child pornography is a form of child sexual exploitation.

• Obscene speech
- Obscenity is a category of speech unprotected by the First Amendment. Indecent materials or depictions,
normally speech or artistic expressions, may be restricted in terms of time, place, and manner, but are
still protected by the First Amendment.

European Union Approach to Unprotected Speech

- Speech can be prohibited even if it is only “abusive, insulting or likely to disturb public order”

- However, European laws on the issue are not uniformly applied across the EU.

Conflict of Laws

Also known as “Private International Law:” concerns relations across different legal jurisdictions between
persons and sometimes companies or other legal entities.

Definition: a set of procedural rules that determine which legal system, and the law of which jurisdiction,
applies to a given dispute.
Conflict of Laws

Yahoo! Inc vs La Ligue Contre Le Racisme et L’Antisémitisme : US vs France. This is a:

- Case of First Impression: A new legal issue or interpretation that is brought before a court.

- Distinction between Law and Fact.

- Landmark Case”: Internet and First Amendment Freedom of Speech & Expression.
Week 3

Principles of Law
What is a Contract?
• Contract is a mature agreement or the meeting of the mind.
• Promise or Agreement.
• It creates legal obligation to do or not to do particular thing.
• Each party enjoys a “right” but also has a burden to perform a “duty”.

A contract is formed by a meeting of the minds of at least two parties, a mutual assent resulting from the
expression of an offer by the one and an acceptance of precisely that offer by the other...

Mutual assent: agreement between 2 people or/parties.

Mutual Assent: Agreement from both parties.
Requires an offer and an acceptance

Agreement that meets certain legal criteria and is enforceable in a court of law.

- Remedies mean (punishment)

Type of contract (……..)

Misrepresentation (5): statement of fact made during negotiations by one party to another, the statement then inducing
that other party into the contract.
- The untrue statement was one of fact
-The untrue statement that include the other party into contact. (Fraud)
- Fraud is voidable by the other party: But he has to proof these points:

Fraudulent Misrepresentation:

Requirement for a finding of fraud:

- False representation of material fact
- Made knowingly: must have known or made recklessly
- Intent to deceive: defendant intended that the Innocent Party should act in reliance on the representation.
- Reliance on the Misrepresentation by the Innocent Party and Suffered loss.

A mistake of fact can cancel a contact.

Bilateral (Mutual) Mistakes of Material Fact can be rescinded by either party.

Unilateral Mistakes cannot be cancelled unless: if the other party to the contract knows that a mistake of fact was
made. (The questing is: How will you know? Cause you have to proof it. (e.g, mistake was due to innocent mathematical
mistake) ex. 220 euro in place of 200 euro. The seller can also come back and ask for correction.

Mistake in value/Quality: Generally, the contract is enforceable by either party.

Adequation means: the act of making equal or commensurate.

Assent: means Agreement.
Forcing a party, to enters into a contract under fear or threat makes the contract voidable by Innocent Party.
-Threatened act must be wrongful or illegal.
-Improper Threat.
-Economic, physical, psychological...etc

Mutual Assent may be lacking.

Undue Influence
- Contract is voidable by innocent Party.
- Confidential or Fiduciary relationship (ex. Marriage) a relationship of trust.
- Relationship of Dependence: (ex. Your doctor)
- Influence or Persuasion
- Suspect relationship (Professor and Student)
- Weak party is talked into doing something not beneficial to him/her
- Presumption of Undue influence by more powerful party. (Pastor: (6.3.2.2) Great trust of confident.

Four Essential Elements

1. Mutual Agreement
2. Capacity of Parties: having a smart brain or way of thinking.
3. Legality of Contract: the legal of the contract.
4. Consideration: something for something (the barging)

Must a contract always be in writing to be legally enforced?

- To proof things in the future.

Express Contracts.

Proof of Existence
- A written or oral statements, An agreement that is expressed in written or oral words; terms are generally
“clear & definite“– Ex.: personal and business contracts.

- Actually, making contract with words.

Implied contract: Example if you order something for a chop you have to pay for it. And cannot walk
away from the shop without paying for it.
- Manifested by conduct rather than express language (“implied “in action & conduct).
Can I be held to something that I did not agree to?
- A contract in which agreement between parties has been inferred from their conduct.
If you enter into a restaurant and order something you must pay for it, you cannot walk away freely.

This is an Implied- In- Fact Contract.

- Conduct: by this action to pay.

Implied-in-Fact: taxi payment

If you take a taxi you know it is logical to pay for it. Weather you negotiate it with the drive or not you know it
is the fact to pay for it weather at high payment or low.

Implied-in-Law (“Quasi Contract“)

Is like the guy who got hit by the car. If he taking to the hospital for care, although he was unconscious but at
the end he has to pay for it weather he agreed to pay it or not.

The hospital always needs something in return.

The Offer
Manifestation of willingness to enter into a legally binding agreement

Offeror: Person who makes an offer

Offeree: Person to whom the offer is made

Offeror offers to the offeree

Requirements of an Offer
Are you making me an offer?
Courts look for 3 factors:

• Clear intent
• Sufficiently definite terms
• Clearly communicated

The Offer
Is an Advertisement an Offer?
A: It depends!

Special Offers Advertisements: (text, Pg 3.1.1 - 3.1.2)

• Generally, not an offer but “Invitation to Treat”
• Exception: Advertisement will be considered an offer if:
– i) it is definite and
– ii) it apparent that the advertiser has the intent to bind himself to the terms of the advertisement
• See, case of Carbolic Smoke Ball Company (text, p. 67)

Special Offers
Reward: Award given for performance of some service or attainment.
Ex. if you find my cat I will give you 50, 00 dollars. This is a contract.

To collect it, the offeree must:

• Have knowledge of it prior to completing the act
• Perform the requested act
Example: ----------------→ this is an offer
Termination of an Offer

Revocation: Withdrawal of an offer by the offeror that terminates the offer

Rejection: Express words or conduct by the offeree to reject an offer

– Terminates the offer

- Meet of the Mind: is Mutual Contract.

What is a Counteroffer? (read section 3.2.2)

Definition: Response by an offeree that contains terms and conditions different from or in addition to those of
the offer.

Legal Effect: Terminates the previous offer (rejects original offer + at the same time makes a new offer)

If you reject a counteroffer, you cannot can back and say you want the original offer. You cannot bring it back
to life. Maybe by that time the Offeree might have raise the price up.

At which point can I revoke my offer before it has been accepted?

(Visit study.com) for video

What Is the different between Bilateral contract and Unilateral contract?

- There are two types of contracts: a unilateral contract and a bilateral contract. The essential
difference between the two is in the parts. Unilateral contracts involve only promisor while bilateral
contracts involve both a promisor and a promisee.

Option contract
You can revoke your offer at any time before acceptant.

- Option contract is a separate contract.

- It is a chance for someone to buy something in a short amount of time.

- An options contract is an agreement between a buyer and seller that gives the purchaser of the option the right
to buy or sell a particular asset at a later date at an agreed upon price. Options contracts are often used in
securities, commodities, and real estate transactions.

(Read Hyde vs Wrench)

Acceptance
Voluntary agreement by Offeree to be bound by terms of the Offer.
Mirror Image Rule.
- Terms of Offer = Terms of Acceptance

Offeree accepts the offeror´s and creates a contract.

Parties to a Contract (section 4.5.2)

Consideration
If someone promise to give you a gift and did not gave it to you. You can not suit him or her cox is a gift.
Gift is one-way direction not 2 ways direction.

If you feel like you have paid too much for something the court will not do anything about it.
Value is variable: something may wroth € 20 today but maybe €5000,00 in the future.
Value changes all the time.

Promises that Lack Consideration No Mutuality of Obligation

Type of consideration

Illegal consideration: Promise to refrain from doing an illegal act.

Illusory promise: Promise where one or both parties can choose not to perform their obligation.

Preexisting duty: Something a person is already under an obligation to do.

: A promise lacks consideration if a person promises to perform a preexisting duty.

Past consideration 4.2.1: Promise based on the past performance of the promise. You cannot charge someone to
pay something you help her with in the past without letting her know that you will be charging her.
 Common Law vs Civil Law

Common Law:
Contract law developed primarily by courts - Extensive freedom of contract, only a few provisions are implied
by law into the contractual relationship.
- You have much more freedom of contract

Civil Law:
- Comprehensive statutory scheme, uniform system of commercial law.
- More limited Freedom of Contract: many provisions are implied by law into contractual relationships.
- You have less freedom of contract.

Week 3bis:
Case Study on Contracts Law
1. Mike contracts to purchase six cases of French champagne from Lone Star Liquors for $4,000. The contract states
that delivery is to be made at Mike’s residence “on or before June 1, to be used for daughter’s wedding reception
June 2.” Lone Star regularly carries champagne in stock. On June 1st, Lone Star’s delivery van was involved in an
accident, and the champagne is not delivered that day. On the morning of June 2, Mike discovers the non-delivery.
Unable to reach Lone Star because the telephone line is busy, Mike purchases the champagne from another dealer.
That afternoon, just before the wedding reception, Lone Star delivers the champagne to Mike’s residence. Mike
refuses the delivery. Lone Star sues for breach of contract.

Discussion: Based on the facts above,

Group A: What arguments support Mike’s position?
Group B: What arguments support Lone Star’s position?

2. ABC Clothiers has a contract with Taylor & Sons, a retailer, to deliver 1,000 summer suits to Taylor’s place
of business on or before May 1. On April 1st, Taylor receives a letter from ABC informing him that ABC will
not be able to make the delivery as scheduled. Taylor is very upset, as he had planned a big advertisement
campaign. He wants to file suit against ABC immediately, on April 1. However, Taylor’s son, Tom, tells his
father that filing a law suit is not proper until ABC actually fails to deliver the suits on May 1.

Discussion: Based on the facts above, who is correct?

Group A: Taylor. Provide supporting arguments.
Group B: Taylor’s son, Tom. Provide supporting arguments.
Week 3bis: Case Studies on Contracts:
Week 4: Capacity & Legality (section 4.4)

What is a Contract? Capacity & Legality

All contacts are agreements but not all agreements is a contracts.

Ex. If someone asks you to kill his husband, is an agreement but not a contract.

What is Capacity: Being able to do something.

- All contract are agreements but not all agreements are contracts.

A contract is an enforceable agreement.

You must be able to prove that a contract

exists!

- A Meeting of the Minds has occurred.

- All legally required elements are present.

- Always have a proof

Capacity

Contractual capacity: People who do not have contractual capacity: Explain downward!
The minimum mental capacity to understand a contract. These are Protected class. You don’t have to enter
into contract with such people:
- Minors
- Insane persons
- Intoxicated persons, not drank people.

Drank people ( It is your responsibility)

- If did something wrong and you think you were not at your right mind when that happened, then you have to
proof it by bringing fourth Witnesses.

Minor: a person who has not yet reached the age of the Majority: their minds are not developed enough.
- Contract entered with a minor is voidable

Age of Majority: generally, 18 years of age for both males and females (see local rules!)

Beware: a contract entered into by a Minor is generally voidable at the option of that minor.

Disaffirmance by Minors General Warning

- A person who deals with a minor does so at his/her peril. The adult party to the contract is bound by the
bargain; the minor is not.
Companies: have their limit by getting into a contract. You cannot sign a contact on behave of another person.

Infancy Doctrine
114-115 Task (Multiple Choice questions)
Question 9: Answer is B

- Allows minors to disaffirm most contracts they have entered into with adults.
Minors can choose whether to enforce a contract

- Disaffirmance - May be done orally, in writing, or by the minor’s conduct.

Disaffirm: Act of a minor to rescind a contract under the Infancy Doctrine
Rescind: means canceled

- Once you pass the age of 18, you cannot get away from any contract just because you entered it when
you were at the age of 17.

Allows minors to disaffirm most contracts they have entered into with adults.
Minors can choose whether to enforce a contract.

Disaffirmance - May be done orally, in writing, or by the minor’s conduct.

Disaffirm: Act of a minor to rescind a contract under the Infancy Doctrine.

Ratification: is a principal's approval of an act of its agent that lacked the authority to bind the principal legally.
EX. If you pass the age of 18 you are ratified = accepted. Which means you are faked.

Contracts for Necessaries:

Generally, contracts for food, clothing, shelter may be purchased by a Minor, who remains liable for the
reasonable value of goods or services.

Quasi Contract:
Minors do not have mental ability to make an express or implied-in-fact contracts. Any obligation owed will be
based on unjust enrichment principles.

Ratification
The act of a minor after the minor has reached the age of majority by which he or she accepts a contract entered
into when he or she was a minor

Expressed verbally, in writing, or implied from the minor’s conduct.

-If contract is legal, valid and binding it will be enforceable in court.

Capacity of Parties
Intoxication: “of sound mind “

An Intoxicated person may lack contractual capacity at the time the contract was made.

Capacity of Parties Intoxication

General Rules are Intoxication:
Contract may be voidable at the option of the intoxicated person.
Courts look at objective indications to determine if contract is voidable. Intoxication must:

1) Be such as to deprive the person of the ability to understand the nature of the agreement and
2) Be apparent to the other party.
Intoxicated person has the option to disaffirm the contract or
He/she may ratify the contract expressly or impliedly.

- If a contract is (rescind) it means to avoid or take something back. If you think the contract is a
fraud.
Ex. If you buy a pant and the person did not give you the right pant, but lie to you and said it is the right pant.
Then you can take it back. This is Voidable.

Mentally Incompetent Persons

- Protected by law from enforcement of contracts
- Law requires a person to have been legally insane at the time of entering into the contract
- Legal insanity: State of contractual incapacity as determined by law

A contract is Voidable: is a formal agreement between two parties that may be rendered unenforceable for a
number of legal reasons.

A contract is Void if:

If a person has been adjudged mentally incompetent by a
Court of Law and a guardian has been legally appointed.

A contract is Voidable if:

If the person does not know he/she is entering into the
contract or lacks the mental capacity to comprehend its
nature, purpose, and consequences.

Legality of Contract (Section 6.4)

- Lawful contract: A contract that has a lawful object.

- Illegal contract: A contract that has an illegal object.
- Result: void

Definition:
A contract to do something prohibited by law is illegal and therefore void (never existed).

1. Carrying out of a contract cannot force parties to act illegally.

2. Check local laws - Can this contract be locally enforced?
3. Enforceable Agreements must not call for the performance of any act that is criminal, illegal or otherwise
opposed to public policy.
Legality of Contract (Section 6.4)
Exceptions:

- Justifiable Ignorance of the Facts

- Members of Protected Classes
- Withdrawal from an Illegal Agreement
- Contract Illegal through Fraud, Duress, or Undue Influence
- Severable or Divisible Contracts
A case of force majeure is an exceptional event that cannot be addressed. In law, the conditions of force
majeure evolve according to jurisprudence and doctrine. Traditionally, the event must be "unpredictable,
irresistible and external" to constitute a case of force majeure.

Discharge of frustration

1. Impossibility
- Unavailability: Death or incompetence of performer (Michel Justin)
- Destruction of the specific subject matter
- For majeure: supervening force beyond the control of the parties to the contract (see section 7.1
3.2)

Force majeure are:

War, unrest, epidemic, Strikes, Fire/explosion

Act of God:
Mother Nature, Storm, volcano eruption, tsunami...

2. Bankruptcy- in the event of Bankruptcy, debtors are generally released from all contractual obligations to
their creditors.

3. Supervening illegality: is when a statute or regulation or court decision makes the object of an offer illegal.
It terminates the offer. Illegal to trade with an enemy.

Ex. You were trading with some people or at a particular place, but because of war you cannot trade there
anymore.
- Exception: Grandfather clause (See, Section 7.1.3.1)

Grandfather clause: is a provision in which an old rule continues to apply to some existing situations while a
new rule will apply to all future cases. Those exempt from the new rule are said to have grandfather rights or
acquired rights, or to have been grandfathered in.

Force majeure causes people not to do something they are supposed to do. Ex. War…

Breach of contract

Breach of contract is a legal cause of action and a type of civil wrong, in which a binding agreement or
bargained-for exchange is not honored by one or more of the parties to the contract by non-performance or
interference with the other party's performance.

Ex: Not going to work (Showing up drank)

Material Breach: Material breach is a contract law term which refers to a failure of performance under the
contract which is significant enough to give the aggrieved party the right to sue for breach of contract.

Non-Material Breach: is one which pertains to a minor or ancillary detail of the contract. ... A material breach
would be considered as a more serious form of breaking a contract.
Ex. I have to pant your house but broke my leg the day before and send someone else to step in and pant the
house. It not Breached he just want the work to be done.

Express Condition: An express condition is the manifested intention of the parties. Express conditions are
created through the agreement of the parties.

Week 4bis: Cultural differences:

Week 5

Misrepresentation, Mistake, Duress & Undue Influence

- All Contracts are Agreements but not all Agreements are Contracts.

Did the Minds Really Meet? On these (Misrepresentation and Fraudulent)

Mutual Assent may be lacking:

1. Misrepresentation (including Fraud)

2. Mistake

3. Duress

4. Undue Influence

Misrepresentation

Untrue statement of fact made by one of the parties to the contract which induced the other party to enter the
contract

Two Requirements:

i) The untrue statement was one of fact

ii) The untrue statement induced the other party to enter the contract.

Fraudulent Misrepresentation

Requirements for a finding of Fraud:

- False representation of Material Fact

- Made Knowingly: must have known or made recklessly

- Intent to Deceive: Defendant intended that the Innocent Party should act in reliance on the representation

- Reliance on the Misrepresentation by the Innocent Party and suffered loss

Mutual Assent may be lacking:

(1). Mistake

❖ Only a Mistake of Fact allows a contract to be cancelled.

❖ Q: What sort of “mistakes” do NOT void a contract?

(2) 3 types of Mistakes:

- Bilateral (Mutual) Mistakes of Material Fact can be rescinded by either party.

- Unilateral Mistakes cannot be cancelled unless: If other party to the contract knows or should have known that
a mistake of fact was made

(e.g. mistake was due to innocent mathematical mistake)

- Mistake in Value/Quality: Generally, the contract is enforceable by either party.

Mutual Assent may be lacking:

(3) Duress

- Forcing a party to enter into a contract under fear or threat makes the contract voidable by Innocent Party.

- Threatened act must be wrongful or illegal.

- Improper Threat

❖ Economic, physical, psychological, etc.

Mutual Assent may be lacking:

(4) Undue Influence

- Contract is Voidable by Innocent Party.

- Confidential or Fiduciary Relationship.

- Relationship of dependence.
- Influence or Persuasion.

- Weak party is talked into doing something not beneficial to him/herself.

- Presumption of Undue Influence by more “powerful” party.

- See, the case of Huguette Clark (http://justia.com/2013/09/27/last- rights-and-the-battle-over-huguette-clark’s-

will)

Case Study on Damages

Hadley v. Baxendale, 9 Exch. 341, 156 Eng. Rep. 145 (1854)

The Facts
The Hadleys (the plaintiffs) ran a flourmill in Gloucester. The crankshaft attached to the steam
engine in the mill broke, causing the mill to shut down. The shaft had to be sent to a foundry
in Greenwich so that the new shaft could be made to fit the other parts of the engine.

Baxendale, the defendant, was a common carrier that transported the shaft from Gloucester
to Greenwich. The freight charges were collected in advance. Baxendale promised to deliver
the shaft the next day. However, the crankshaft was not delivered for 5 days. As a
consequence the mill was closed during this time. Baxend
.ale did not know that the mill would be inoperable until the new shaft arrived.

The Hadleys sued to recover lost profits and wages during the time that the mill was closed.
Baxendale contended that the loss of profits and wages was “too remote” to be recoverable.
The court held for the plaintiffs. Baxendale appealed.

Team A: Claimants
What legal arguments would support the Hadleys’ position?

Team B: Defendants
What legal arguments would support Baxendale’s position?
Week 5bis: Discharge of Contracts/Remedies (Just read through it, to get understanding)

Discharge of Liability, Remedies for Breach of Contract

Discharge Defined Discharge is the general legal term describing comple3on or termina3on of the contract.

4 Ways for a Contract to be Discharged:

1. Performance

2. Agreement of Parties

3. Frustration

4. Breach

Performance
- It is a fulfillment or accomplishment of a contract.

- Execution of a contract by which contract parties are automatically discharged of their obligations under it.

- Most contracts generally require “Complete” performance.

Example: You hire a painter to paint your house. You offer him 5,000€ to perform the job. He accepts and
promises his best work to be completed by December 1. The house is painted by November 30. You pay the
worker, the contract ends. It is discharged.

Substantial Performance Doctrine

Substantial Performance may also be acceptable under certain circumstances.

Ex.) Finishing a job not on time. (A week late)

Sometimes the law allows for substernal performance to discharge a contract. This means most of the promises
have been met with only a slight modification from the original terms.

Example: The painter promised to complete painting your house by Dec 1, but it rained for an entire week,
making it impossible to complete the work until the following week. The court would look at this as Substantial
Performance because although the painter was unable to complete the job on time due to the weather conditions,
he was able to complete the task within a reasonable timeframe.
 Partial Performance

Like Substantial Performance, Partial Performance may also be acceptable under certain circumstances.

Parties make a 2nd contract, under which one party agrees to accept “partial performance” of an entire
contractual obligation. The party who has performed is entitled to payment for work done on the basis of
quantum meruit.

Example: Although the painter promised to complete painting your house by Dec 1, due to the heavy rains, he
has only finished half of the job. You are going on vacation for the month of December and need the works to
end. You agree to pay the painter 2000€ based on the works completed.

Quantum Meruit

“As much as he deserves”

“Definition: extent of liability on a contract based on concept that no one who benefits by the labor & materials
of another should be unjustly enriched.

The law implies a promise to pay a reasonable amount for labor & materials furnished, even absent a specific
contract therefore.

Ex. He did his job, but was not able to complete because something happened with him family and has to stop
the work. He can ask for the payment of the job he did under the Quantum Meruit .

Quantum Meruit (con’t)

4 Required Elements

1) valuable services were rendered or materials furnished

2) for a person sought to be charged

3) which services & materials were accepted by the person sought to be charged, “used & enjoyed “by him and

4) under such circumstances, in performing such services, plaintiff expected to be paid by the person sought to
be charged.

And more… (see PDF)

 Discharge by Agreement of Parties

When you change the agreement by ask to do something in it place. (clean your apartment)

Discharge by Frustration

If you are selling a house but go burnt out before the contact was made, you cannot sell it a
more. But if the contract was made before the it got burnt out then it is the buyer responsibility
to take care of the problem.

Impossibility:

Unavailability: Death or incompetence of performer

Destruction of the specific subject matter.

Force Majeure (supervening force beyond the control of the parties to the contract).

Bankruptcy - In the event of Bankruptcy, debtors are generally released from all contractual obligations to
their creditors. (It is the death of a company. It is another way to discharge)

Supervening Illegality (You don’t work at a particular place because of a change of zone)

Exception: “Grandfather Clause“ ( you fall under the old law)

- See, Examples (textbook, Section 7.1.3.1) it is important

Breach of Contract

One party to the contract fails in a material way to perform the terms as agreed.

Failure, without legal excuse, to perform any promise which forms part of the contract

*This is the most popular type of case in civil courts.

Ex. One side fail to do the part of the agreement. It is a breach.

If you get into a contact and do not preform you job

 Examples of breach of contract?
Material Breach: A breach that affects the entire agreement and involves changes in details of the contract that
change the main agreements in the contract.

Example: The painter never showed up to paint your house. Or worse yet, he showed up drunk and started the
work but never completed it. This represents a material breach because it had a serious impact on the promise.

Non-material Breach: Sometimes, the breach is not that complicated. In these instances, it only involves
smaller details of the contract that do not affect the overall contract between the parties. Generally, a court will
force performance on the breaching party.

Example: The painter fell on a banana peel and broke his leg the night before starting the job. He asks his
nephew, also a professional who works at the same firm, to step in and paint your house. The contract promises
remain intact. The only change is the painter.

Express vs Implied Conditions

Key terms:

- Express vs Implied Conditions

- Time of Performance

- Satisfactory Performance

Express Conditions are conditions that the contracting parties deliberately create in making the contract.

Agreed upon essen3al elements of the contract

Includes phrases such as: “on the condition that” “under the following conditions” “subject to”

Express Conditions (con’t) Time of performance is usually not an implied condition

If one of the parties strictly requires performance at a certain time, express words of condition should be used
“Time is of the essence”

Implied Conditions are conditions that are ‘implied’ (inferred) by the nature of the transaction even though they
are not expressly or consciously stated by the parties

Most contracts, whether oral or written, contain implied condi3ons (implied in fact or by the nature of the
agreement)

See, Sale of Goods Act (textbook, Section 8.2)

 Anticipatory Breach

If one party to a contract clearly states or implies the he/she cannot or will not perform as agreed, even though
the time of performance has not yet arrived”

- Get assurance
- Or try to negotiate
(textbook, Section 7.1.4.1)

Remedies for Breach of Contract

Damages - compensation due to the nonbreaching party to recover financial loss/injury caused by the breach

- Money Damages (Exams: Important section 722 and 7221)

(P) If you enter in a contract of 1000 euros and you could perform your job and breach your contact and if the
they find a someone to do the work in your place, and charge them 2000 euros for it. The company of the
individual or the other party can sue you for the 1000 euro change by the other party.

(P) Money Damages - damages for a monetary amount that is intended to compensate the non-breaching party
for losses that result from the breach. The aim is to "make the injured party whole again.

- Specific Performance: is when money cannot make the person hole again.
When there is a breach of contract, sometimes the courts require Specific Performance by the breaching party
when an award of money “does not adequately achieve justice.

Result: The breaching party will be legally forced to for fill his/her promises exactly as stated in the original
contract.

(Real piece of art like The Mona Lisa or something that cannot be replace by money. You can sue them)

Note: Generally, when money damages would be an adequate remedy, courts will not order Specific
Performance.

Money Damages: In Hadley v Baxendale when the machine was not delivered on time.

- Lose wages and profit

Direct damages: are those damages (a) that a reasonable, ordinary, and prudent person would expect the
non-breaching party to suffer from a breach, (b) where the reasonable, ordinary, and prudent person, though comparable
to the breaching party, is a stranger to this particular contract.

Indirect damages: damages which does not involved the contract. (ex. Loss wages and profit).

Late delivery: it will come on the exams

 Cases

Transfield shipping inc v mercator shipping inc (the achilleas) 2008: the court thinks it was too
remote, also they said it wasn’t practiced in the shipping mulier.

You cannot sue people just because you lost a contract. Especially when force majeure happens.

Koufos v czarnikow ltd the heron ii 1969

(Read: Section for the exams)

- 7.2.2.2: Quantification of damages
- 7.2.2.3: Mitigation of loss
- 72.2.5: Agreed damages
- Figure 7.1: explain how damages are calculated (summarized: very important, read it and apply it)
Exams.
 Corporations Business & Legal Factors
Sole proprietorship
A sole proprietorship, also known as the sole trader, individual entrepreneurship or proprietorship, is a type of enterprise
that is owned and run by one person and in which there is no legal distinction between the owner and the business entity.
The owner is in direct control of all elements and is legally accountable for the finances of such business and this may
include debts, loans, loss, etc. A sole trader does not necessarily work 'alone'—it is possible for the sole trader to employ
other people.

What partnership:

A business partnership is a specific kind of legal relationship formed by the agreement between two or more individuals to
carry on a business as co-owners.

- You are your own boss; this kind of business occurs mostly in the united states of America.
- Unlimited personal liability
- There is no legal distinction
- 100% control + flexibility
- The boss can be held responsible for repaying every debt alone.
-

General partnership: A General Partnership (GP) is an agreement between partners to establish and run a
business together. Most business partnerships are mostly general partnership. It is common.

Limited partnership: limited liabilities,

Advantages;

when 2 or more people are partners but in is limited partnership and one is general partnership. A limited
partner can only be held to the amount of money he or she invested into the company. This means that the
general partner has to pay all the rest of the dept. because he has unlimited liability. Limited partners simply
invest into the company but don’t have much control or say over the company.

Disadvantages or Limited partnership: they can loss all the money and profit they invested into the company
is anything happens. Because they just invested into the business.

What is a company:

- Shareholder – Bof Directors – Officers (employees)

Perpetual Existence (See Section 16.2.3) also (16.1)

If all the Shareholders, Directors, Officers and employees DIE simultaneously in a common accident, the Co.
will continue to exist. Ownership shares will pass on to heirs and new Directors/Officers will be named.

Shares are “freely transferable “

when every member of the company dies by plane crash or… the company still keep on running. All the shares
will go to the children of those who died.

Creation, Formalities & Costs

Separate Legal Entity created by operation of the law: “Statutory Authorization “

- Costly to incorporate and maintain existence Charter is issued by State law/local authorities,
minimum capital requirements, organizational fees, Annual Licenses, Annual Reports, etc.
 Business & Legal Factors

Important thing to consider in starting business

1. Control & Management

2. Personal Liability: All the cost of the company
3. Continuity & Transferability: how long you are planning to work.
4. Creation, formalities & Costs
5. Financing
6. Tax Structure
7. Termination
Limited Liability

- The Law treats Companies as “persons“ which can sue and be sued, make contracts, own
property, etc.

- Because it is a “person“ which is Separate & Distinct from its Owners, a Company is liable for
its debts/obligations

- Result: Limited Personal Liability - your personal liability for the Co.‘s actions is Limited

If the Co. defaults on a loan or is sued, as a Shareholder you won‘t lose any more than your
investment in Co.

Steps to go through to create a business in Belgium: This is not on your exams

1. Draft Financial Plan

2. Draft Articles of Association
3. Wire amount of minimum capital to a blocked account – bank certificate
4. Send to Notary: Bank Certificate, Financial Plan, identification of incorporators and Directors
5. Notary draws up the Notary Deed
6. Meeting with the Notary: enact Notary Deed
7. Notary registers Notary Deed, files a copy at the clerk‘s office of the Commercial Courts
8. Notary ensures: Publication in Annexes to Belgian State Gazette
9. Notary provides registration number in the Crossroad Bank of Enterprises

Creation, Formalities & Costs

Separate Legal Entity created by operation of the law: “Statutory Authorization“

- Costly to incorporate and maintain existence

Charter is issued by State law/local authorities, minimum capital requirements, organizational fees, Annual
Licenses, Annual Reports, etc.

Financing

If you don’t have any financial records you will have to pay guarantee before the bank will allow you.

Typically, easier to obtain necessary funding for operations and expansion

Reality for small Co‘s: If your Co. has few shareholders, is new or has no financial record, you will have to
Personally Guarantee any debt your Co. takes on.
Tax

- Law treats Co. as a “person“which can sue and be sued, make contracts, own property, and be TAXED

- USA: double taxation - Co. pays income tax on net profits (no deduction for dividends) + Shareholders pay
income tax on dividends received

Look at apple tax in Ireland

Termination

- Perpetual existence as provided by Statute or Articles of Incorporation.

- Continues despite sale, death, incapacity or withdrawal by officers, directors, and shareholders - Two Main
Types of Bankruptcy: i) Reorganization and ii) Liquidation.

Forms of Business Organizations:

3 Basic Legal Structures

The paperwork

1. Sole Proprietorship
2. Partnership
3. Corporation

This is private so you have to give less information about your company. You will want this information to be
lain and limited information because the government want to know a lot about your company.

Corporation stock certificates

Never invest in a share unless you know you can walk away from it if anything happens

The right of owning a share in a company: You have the right to Vote. Dividends

Can anyone get in and out of a owning a share?

Yes, the person can sell his or her share and if someone sell his or her share to him, he can also come back to
the company because he owns a share.
In sum a security is:

- Investment
- In a common enterprise
- derived primarily or substantially from other’s managerial or entrepreneurial efforts

Stocks Bonds
• 1) Ownership • 1) Debt
• 2) No Fixed Dividends • 2) Fixed Return: you have fixed shares
• 3) Stockholders elect BofD • 3) No voice or control in
• 4) No Maturity Date management
• 5) Most Co’s issue shares • 4) Maturity Date
• 6) “Residual position” in overall • 5) Not necessarily issued
financial structure • 6) Bondholders’ claims preceed
shareholders

Stocks Are Ownership Stakes; Bonds are Debt Stock and bonds represent two different ways for an
entity to raise money to fund or expand their operations. When a company issues stock, it is selling a
piece of itself in exchange for cash.
EXMAS STUDY CASE; this case is about shares

1: What is the primary reason for this lawsuit?

- Their parents wanted to buy share of their company for 20

2: what restriction did the corporate by-law place on the transfer of corporate shares? Upon transfer, how was
the price of share to be determined?

- They didn’t know It was there,

3: How did the majority shareholders effectively squeeze out or freeze out the minority shareholders?

- They move out of the business, the freeze out. And went to work for a competitor.

4: why was it necessary for the court to determine the fair value of the shares, given fact that the holders had in
the by-law on a method for accomplishing this?

5: why was it necessary to establish that the majority shareholders had acted oppressively toward the minority
shareholders or wasted corporate asset before the court could decide its particular remedy in this case?
Agents section 11.1

Board directors are agents

Agents works on behave of someone

If your are working for a company, and you are in charger of signing contracts to clients, you are an agent of the
company. If Odisee need a room to make a program, they may need to have representative to go any find one
for them.

Know the deference between Principal and Agents. Ppt

4 Examples of different kinds of agencies. Section 11.2 (exams)

11.1 TEST YOUR UNDERSTANDING

Week 7-8

Forms of Business Organizations

STEPHANIE & CINDY’S: DOG WALKING SERVICE

Starting a personal work alone

Forms of Business Organizations:

3 Basic Legal Structures

- Sole Proprietorship
- Partnership
- Corporation

Business & Legal Factors( they are all legal) exmans

1. Control & Management

2. Personal Liability
3. Continuity & Transferability
4. Creation, Formalities & Costs
5. Financing
6. Tax Structure
7. Termination

Financing

- Ability to raise CAPITAL

- Ease at which you can obtain funding/loans/ investment capital to help finance the Biz?

- Once rumors begin regarding any financial weakness of your Biz, the results can be devastating!

Remember: Liquidity is the lifeblood of a company.

 Sole Proprietarship
Legal Definition

the simplest form of business, in which a sole owner and his/her business are not legally distinct entities,
the owner being personally liable for business debts

1. Control & Management

- Created “at will“ by Owner: Full & complete control over all management decisions

- Owner and Biz are not legally distinct

- Easy and inexpensive to set up: One Biz, One Owner

- Just start operating your Biz (and maintain it)

- Highly Flexible

- Generally operated under Owner‘s name

. Personal Liability

- Unlimited Personal Liability

- Sole owner of profits but also solely liable for all debts
- Biz Liabilities = Personal Liabilities
- Personal assets vulnerable: Creditors can seize your personal assets for the debts of your Biz
- Why? No legal distinction between Biz Assets and Personal Assets

Continuity & Transferability

- How long will the Biz last? As long as you continue to run it
- Determined by Owner
- Dissolved at Owner‘s death
- Sell or inherit? No transfer of interest: Sole Proprietarship ends, New Sole Proprietarship must be put in
place

Creation, Formalities, & Costs

- Simplest form of Biz, easy & inexpensive to start and operate

- Biggest Advantage: Low costs & organizational fees
- No specific formalities & legal organization (except open separate bank account, obtain necessary
license, permit, zoning, insurance, etc.)
- “DBA“: Doing Business As
 5 and 6. Financing & Taxes

- Personal financing (life‘s savings, family loan, inheritance, etc.); getting a loan depends on your
personal financial strength or ability to obtain guarantees

- Generally, Personal Income Tax = Biz Income

- Your business income is your personal income

Termination

- The business stops when I stop working dogs. ( when you break you leg or have any kind of accident)
- Sale, voluntary cessation, death, or incapacity of Proprietor
- Insolvency: Personal Bankruptcy (all personal assets at risk)
- Chapter 13: Liquidation of assets
 STEPHANIE & CINDY’S: DOG WALKING SERVICE

If you see the job is going on well and a lot of people are bringing a lot of work. You invite a friend to
work with you.

You have to share the responsibility 50/50

You share everything together

You have to contribute together and share the profit together.

What is partnership?
Legal Definition (see Textbook: Section 15.1-15.2)

Partnership is the relation which subsists between persons carrying on a business in common with a
view of profit.

- It is a Contract between 2 or more Proprietorship.

What do you want to see in a partnership agreement?

- You need to identify who the partner is.

- You need to know what the partnership is. (ex. Walk dogs)

Bringing in a new partner needs to be unanimous. All the people in the partnership needs to agree.

You have to know the 7 forms of business for the exams

Control & Management

- Created by agreement of Partners: Express or Implied

- Implied: you didn’t sign a contract but work together, make profit.
- Presumption of shared control & management (unless otherwise expressly agreed in P.Agreement)
- One Partner, One Vote
- Pro Rata share in profits/losses: Base on your contribution: so if you contribute 60%= loss or profit.
- As Sole Proprietorship, Partnerships generally operate under the Partners‘names

Liability: Joint and Several Liability

Definition: Liability in which all parties are concurrently liable, but each is also individually liable for the debts
of the Partnership.

Ex. If one of the partner is in debt, it means you on the other hand as a partner is also automatically in dept.

Joint liability means; we are holding hands 50-50

Several liability means: individual

Joint and Several Liability (con’t)

Result?

- Creditors can sue one, some or ALL Partners (or any combination)

- Any partner can bind both the Partnership and the individual Partners to contracts and legal
obligations, without the approval of the other Partners

Joint and Several Liability (con’t) Section 15.10

Exception?

What is Limited Partnership:

- Limited Partnership creates Limited Liability for Limited Partners who agree to the following:

- No voice in management

- Liability is limited to amount invested in Partnership (ie, no further personal liability)

- General Partners continue to have Joint and Several Liability.

General partnership: is an arrangement by which two or more persons agree to share in all
assets, profits and liabilities of a business.

Continuity & Transferability

Q. How long does a Partnership last?

A. Determined by terms of the Partnerhsip Agreement: Generally, as long as Partners continue to agree
to run (see, Partnership Agreement)

Q. How is a Partnership dissolved?

A. Agreement of Partners, Court Order/Official Dissolution, Partner‘s withdrawl or death (entitled to

accounting in order to determine his share of profits/losses)

Q. Can a Partner sell his share of the Partnership?

A. Generally, no transfer of interest without the unanimous consent of all General Partners
 Creation, Formalities & Costs

- By Agreement of Partners (see, text Section 15.4 + “ Simple Partnership Agreement“ 15.4 )
- Low Costs: Generally, easy and inexpensive to set up.
- Few Legal Formalities & Requirements: Partnership.

Agreement + costs of organization (such as open separate bank account, organizational fee, obtain
necessary license, permit, zoning, insurance, annual reports, etc.)

Financing

- Personal financing: often life‘s savings, family loan, inheritance, etc.; getting a loan depends on
Partners‘ personal financial strengths or ability to obtain guarantees
- May require adding a new Partner in order to raise capital (note, upon unanimous consent of General
Partners)

. Taxes

-No separate tax for Partnership: the Partnership itself is not responsible for paying taxes on the income it
generates

-A Partnership Tax Return may be filed but “for information purposes“ only .

- Instead, each Partner individually pays taxes on his/her share of profits (Pro Rata share)
- Partnerhip Profits = personal income for each Partner

Termination: See text, Section 15.9

- Terms of Partnership Agreement (or subsequent agreement of Partners)

- Sale, death, incapacity, voluntary cessation or withdrawl by Partner(s)

- Insolvency: Bankruptcy may be brought directly against Partnership as well as any or all individual
Partners.
 Canine Globe trotters, Inc.
Public vs Private Companies (see, text, Section 16.4.1) exams

A company is an artificial being created by law, with an existence distinct from the shareholders who
own it

(see text, Chapter 16)

A company is an atifical person created by the law, with an existence distinct from the shareholders who
owns them

Private Companies: ex. family companies...

Public Companies:

Control & Management

The shareholders control the company but cannot fire the managers. it can only be done by the board od
Directors, The owners are the shareholders.

Limited Liabilities (section 1.6.2.2)

Don’t invest all your money in shares because you can loss it all, unless you are prepared to take the risk.

The purpose of a company is to create limited liabilities to protect the people who owns it.

- Minimum capital requirement in Belgium is 18.550 (ex. Bvba/splr)

- Maximum capital requirement in Belgium is 61.500 (NV/SA)

Continuity & Transferability

Perpetual existence (section 16.2.3)

If all the shareholder, directors, officers and employees die simultaneously in a common accident. The Co. will
continue to exist. (check PowerPoint).

Collateral: means Guarantee.

Proceeds: is collateral, if you don’t have it you can end up having nothing.

Uncure creators can end up having nothing or just 10 percent of the cut.
 MIDTERM EXAM*: Monday, November 5 (11-13:00); Room: Auditorium 1K216 (see, Toledo
Week 5 abs
for confirmation)
DischargeRemediesSTUDENT.pdf

Week 4 Reading:

Capacity: Section 4.4 - 4.4.2

Test Your Understanding: Section 4.3 # 4 & 5

Illegality: Section 6.4

Test Your Understanding: Section 6.5 # 1 & 3

Read book till chapter 7