FIN 2050 NYU Legal & Regulatory Environment Essay

I.SHORT-ANSWER QUESTIONS – Value: 5 Points Each
(100 Points, Total, for this Section)
Type your answer to each of the following questions. You need only write
the applicable term of art (most often, the proper legal term) that meets the
definition provided in the question (e.g., 4. Plaintiff). You need NOT write
the term in a full sentence or in the form of a question.
1.
The most accurate legal term for the form of product liability law that imposes
liability on a manufacturer of goods for an injury to a consumer from the
manufacturer’s goods without regard to the manufacturer’s fault (in other words,
even if the manufacturer were absolutely, 100% careful in manufacturing the
product) is
___________________________
_____________________________________.
2.
A contract, created digitally when a consumer presses on “I agree” or “Accept” at
the end of scrolled “Terms and Conditions”, is considered legally binding, even
though the consumer probably (definitely) did not read, understand, or
specifically agree to those “Terms and Conditions.”
A common legal term for this type of digital agreement is a(n)
____________________________ – ________________________ contract.
3.
Kim promised to sell Pete her older Windows 10 laptop computer for $400, once
she had purchased her new Windows 11 laptop. Kim’s performance of her
contractual obligation to Pete is dependent on a condition, most specifically a
_______________________________
_________________________________.
4.
The most accurate legal term for the remedy by which a Court orders parties to
“unwind” their contract, “cancelling” the contract and putting the parties where
they were before they made their agreement (i.e., status quo ante), including by
ordering each party to return the consideration he/she/it has received from the
other party, is
_____________________________________________________________.
5.
The standard of performance that requires virtually perfect compliance with the
terms of a contract is called
_________________________________________ Performance.
6.
The most accurate legal term for goods that fail to meet the standard(s) that the
seller has promised to deliver under a contract is
_______________________________________________________ goods.
7.
A buyer’s refusal to accept the goods delivered under a contract because those
goods do not meet the standards called for by the contract is called a(n)
_______________________________________________________.
[Short-Answer Questions continued on the next page]
I.
SHORT-ANSWER QUESTIONS – (Continued) –
8.
What is the most proper legal term for an offer that contains a promise to keep
the offer open, made by a merchant, in a signed writing – an offer that must be
kept open as promised and cannot be withdrawn, even if the person receiving the
offer has not given the person making the offer any consideration?
[Merchant’s] _______________________ _____________________________
9.
Under UCC Section 1-201(19) and as implied into all California contracts by state
law, the duty defined as “honesty in fact in the conduct or transaction concerned”
is
______________________ _________________________ (and fair dealing).
10.
Contract language which provides that failure to perform a contract obligation on
time is a serious breach of the contract and may result in termination of the
contract and/or liability for damages is
“_______________________ _________ _________ _____________
____________________________________.”
11.
Under a contract, when a party’s performance is deficient in a major way, a way
that interferes with the delivery of crucial items the party is expecting under the
contract (i.e., when a breach of contract is serious and the non-breaching party is
denied the benefit of his/her/its bargain), that type of breach is legally termed
a(n)
____________________________________________ Breach.
12.
The most proper legal term for damages for breach of contract agreed on by all
of the contracting parties at the time of entering into their contract, set forth in a
separate paragraph of their contract; stated in a large, bold-faced type font; and
separately initialed by all of the parties is
____________________________________
_____________________________
13.
The most proper legal term for release of all further liability under a contract
after a party’s performance of its obligations or after being excused from them is
_____________________________________________.
14.
A proper legal term for type of civil wrongs involving either intrusion on solitude,
public disclosure of private facts, false light, or misappropriation of name or
likeness (commercial exploitation) is
__________________________________ ________
_____________________________
[Short-Answer Questions continued on the next page]
2
I.
SHORT-ANSWER QUESTIONS – (Continued) –
15.
The most proper legal term for the civil wrong that involves complete
confinement of another person for an appreciable time without that person’s
consent is
_________________________
_______________________________________.
16.
The most proper legal term for the civil wrong that involves theft of
goods/property belonging to someone else is
_____________________________________________.
17.
The most proper legal term for the civil wrong that involves entering onto
someone else’s property/land without permission or remaining there after being
asked to leave is
_____________________________________________.
18.
The most proper legal term for the category of civil wrongs in business that
involves trade disparagement/trade libel and “palming off”/“passing off” (including
by using deceptively similar “trade dress”) is
________________________________
__________________________________________.
19.
What is the general legal term for crimes committed in and by businesses that,
for the most part are non-violent, financial crimes?
________________________ – ____________________________ crimes
20.
The most proper legal name for the very broadly worded and wide-ranging
federal law that sets additional criminal and civil penalties for those engaging in a
“pattern of racketeering activity” (i.e., a minimum of two business-related felonies,
whether violent or non-violent, committed in the past 10 years) is the
_________________________________
_______________________________
____________ ________________________________
__________________________________________
___________
(_________)
[HINT: You must answer this Question both with the six-word name AND with
the four-letter acronym/abbreviation for this federal law.]
3
[Final Exam continued on the next page]
II.
ESSAY QUESTIONS – (200 Points, Total, for this Section) –
A. Instructions –
Please type your answers to ALL of the following ESSAY
QUESTIONS, preferably in a MSWord document. If the ESSAY
QUESTION is worded in the disjunctive, you only need to answer the
overall question using EITHER the “If so, .…” OR the “Or, if not, ….”
alternative that fits your conclusion(s) to the overall question.
Because the ESSAY QUESTIONS look similar to the Essay Questions
on Midterm Examination in the course but are, in fact, more heavily
weighted toward analysis, you should be able to answer each ESSAY
QUESTION in less than TWO (2) typewritten pages. Often a page or
even a bit less than a page will suffice, depending on your margins,
line spacing, and type font. Use a reasonable type font size (i.e., 11or 12-point type), reasonable margins (i.e., no more than one inch all
around), and single-line spacing with double-spacing between
paragraphs or double-spacing all around.
Although this At-Home Final Exam is NOT collaborative, the exam is
an open-book, open-notes, and open-online-resources exam, and so,
your answers should be more complete than those on a closed-book
exam. Although you may receive partial credit for identifying or
explaining the legal doctrines or legal terms of art that apply, your
answers definitely will be graded on completeness and clarity of
thought, legal analysis, and written expression.
WARNING: If you quote or use any language from outside sources,
including but not limited to the Textbook, you MUST ATTRIBUTE that
material to a source or you will FAIL this Exam (receive zero (0)
credit). (You must use quotation marks around any language you
duplicate exactly. You may use basic attribution language, such as
“As stated in the Huber Text on page 234,” or “As stated on
findlaw.com,” or “As stated in the PowerPoint Slide on “Equity,”.)
[Essay Questions continued on the next page]
II.
ESSAY QUESTIONS – (Continued) –
B. Common Facts for All Essay Questions –
4
Legendary musical instruments manufacturer Atonal had made its reputation and
fortune with a variety of unique guitars, most notably the “Swinging A” back in the
1950s, the “Flying A” in the 1960s, and the “Sweet A” in the 1970s, all invented
and crafted by Atonal’s founder, Mel Oddik.
In the 21st Century, though, Atonal was a business dinosaur or, at best, a
struggling anachronism … something bound for extinction … whose instruments
would soon be silent museum pieces in tired window-box displays in the Rock
and Roll Hall of Fame or a Hard Rock Hotel/Cafe. Sadly, digital music had
overrun the acoustic and electric beauty of hand-crafted guitars … with DJs,
Hip-Hop, Rap, and EDM (electronic dance music) issuing pounding beat-driven,
bass-heavy “jams” to ecstatically entranced throngs of partiers/chemical
enthusiasts.
Seeing an opportunity to make her mark on the business world after Mel’s
passing, Mel’s daughter, Kay, an MBA, decided that Atonal needed to abandon
its legacy and join the crowd. Kay wanted to transform Atonal into a “digital
music empire,” borrowing a ton of money from greedy venture capitalists (“vulture
capitalists”?) to sink into revolutionary musical products.
Kay wanted Atonal to start with the “guitar of the future,” one that even an
untrained video-game-playing slob could play excellently (“Guitar Hero,”
anyone?) – the “Super A.”
The Super A was based on video game equipment that depended on “digital
optimizing note unit tonality” units (known as a “DONUT” in the electronics
industry) to generate sound, combined with powerful but tiny amplified onboard
speakers. Kay had to work fast, though, to produce and market the Super A
before venture capitalists called Atonal’s “bridge loan” due and seized all of
Atonal’s assets.
Atonal’s Van Nuys factory had huge stockpiles of guitar body and guitar
hardware, but to make 1,000 Super A prototype “collector’s editions” – for sale at
ridiculously inflated prices to musician-wanna-be billionaire tech and media gurus
– Atonal also would need 1,000 DONUTs and 2,000 miniature amplified
(powered) speakers (two for each Super A to sound in stereo).
Kay calculated Atonal’s production cost at $5,000 per Super A prototype,
meaning the initial run of 1,000 prototypes would cost Atonal $5 Million
($5,000,000) total.
Using online marketing, Atonal sold out those first 1,000 Super A prototypes
(before they were even manufactured) at a whopping sales price of $30,000 per
prototype. From these sales, Atonal would gross $30 Million ($30,000,000), with
a net profit of $25 Million ($25,000,000).
That screaming success could launch a mass-production version of the Super A,
which Kay hoped to sell for $3,000 apiece. But, let’s not get ahead of
ourselves….
II.
[Essay Questions continued on the next page]
ESSAY QUESTIONS – (Continued) –
5
B. Answer All of These Essay Questions – (continued) –
1.
(10 Points for this Question) –
To manufacture the 1,000 Super A prototypes, Atonal needed 1,000 DONUTs,
which already were in short supply world-wide.
Fortunately, Kay was able to locate the 1,000 DONUTs (not in the U.S.; not in
China; not in Korea (South or North), but in Uzbekistan) at the newly created
UZBK Electronics. UZBK agreed to sell Atonal 1,000 DONUTs for $1,000 each,
or a total purchase price of $1 Million ($1,000,000), well within Kay’s budget.
Unfortunately for Kay, about two weeks before UZBK was to deliver the DONUTs
to Atonal, UZBK received an order from Jeff Beezo’s A2Z-Super-Duper-Looper
Studios, buying out all of UZBK stock of DONUTs – over 10,000 units – at $2,000
per unit, for a total purchase price of over $20 Million ($20,000,000). At that
price, why wouldn’t UZBK sell all of its DONUTs to the “Big Beezo”?
Without these parts, as a direct result of UZBK’s breach of its contract with
Atonal, Atonal will be unable to bring the Super A prototypes to market, losing out
on $25 Million ($25,000,000) in profits.
Assuming Atonal is entitled to a buyer’s remedy under the
UCC (specifically, under UCC Section 2-712), (1) identify the most
specific legal term for the type of money damages that Atonal
would recover in a lawsuit against UZBK for the losses caused
directly UZBK’s breach of contract [HINT: You may answer this
first part of this Question fully with just two words, the second of
which is “damages.”]; AND (2) state the specific amount of
money (based on the anticipated figures) Atonal would claim for
these damages.
2.
(20 Points for this Question) –
Kay was furious that UZBK had breached its contract with Atonal, but she had no
time for anger. She had to concentrate on keeping Atonal from failing financially
and closing forever. Luckily, Kay was able to locate parts that UZBK had agreed
to supply from one other supplier … but at a much higher cost.
So, without a choice, Atonal purchased 1,000 substitute DONUTs from
Harmon–Electrical Engineering, Ltd. (“Harmon–E.E.”), a British electronics parts
firm, for a total of $15 Million ($15,000,000).
Atonal’s necessary purchase of these substitute goods from another seller
increased Atonal’s costs by $14 Million ($14,000,000) over the $1 Million
($1,000,000) that UZBK had agreed to charge, lowering Atonal’s anticipated $25
Million ($25,000,000) in profits from the sale of the Super A prototypes by the
amount of the increased parts/manufacturing cost.
II.
[Essay Question #2 continued on the next page]
ESSAY QUESTIONS – (Continued) –
B. Answer All of These Essay Questions – (continued) –
6
2.
(20 Points for this Question) – (continued) –
But, at least Kay had avoided a total loss – Atonal would still be able to
manufacture and sell the Super A prototypes – thus minimizing the damage/loss
from UZBK’s breach of contract.
Because Atonal has been forced to buy substitute DONUTs
from another supplier after UZBK’s breach of contract, (1) identify
the general legal term for the obligation to avoid, minimize, or
lessen damages that flow from another’s breach of contract [HINT:
You may answer this part of this Question with only one to three
words.]; (2) identify the specific legal term the UCC buyer’s
remedy of buying substitute goods, to try to avoid, minimize, or
lessen damages [HINT: You may answer this part of this Question
with only one word.]; AND (3) state a specific amount of money
that Atonal now may claim for these damages, in Atonal’s lawsuit
against UZBK.
3.
(25 Points for this Question) –
In addition to the substantial windfall in profits that UZBK received from its sale of
the DONUTs to Beezo’s company rather than to Atonal, UZBK had a “personal
reason” for breaching its contract with Atonal. As it turned out, UZBK’s CEA
(Chief Executive A … err, Administrator) Otto Tune — now a bitter, discordant old
man – had unsuccessfully tried to date Kay in graduate school and had been
secretly plotting to ruin any business venture Kay might try.
When Otto learned that Kay’s success with Atonal depended on DONUTs, he
became determined to “punish” Kay, by having UZBK intentionally breach its
contract and purposefully make these DONUTs unavailable to Kay so that the
Super A and Atonal would fail.
In addition to money damages making up for Atonal’s lost
profits, is there another, additional money damages remedy that
Atonal may recover from UZBK, based upon its clearly intentional,
malicious, despicable breach of contract alone?
If so, (1) identify the most specific legal term for the type
of money damages meant to punish or make an example of
someone for his/her/its intentional, malicious, despicable conduct
[HINT: You may answer this part of this Question with only two
words, the second of which is “damages.”]; (2) explain why these
damages are legally appropriate for breach of contract alone;
AND (3) cite specific narrative facts to show why Atonal is
entitled to these damages from UZBK for breach of contract
alone.
II.
[Essay Question #3 continued on the next page]
ESSAY QUESTIONS – (Continued) –
B. Answer All of These Essay Questions – (continued) –
7
3.
(25 Points for this Question) – (continued) –
Or, if not, (1) identify the most specific legal term for the
type of money damages meant to punish or make an example of
someone for his/her/its intentional, malicious, despicable conduct
[HINT: You may answer this part of this Question with only two
words, the second of which is “damages.”]; (2) explain why these
damages are not legally appropriate for breach of contract
alone; AND (3) cite specific narrative facts to show why Atonal is
not entitled to these damages from UZBK for breach of contract
alone.
4.
(25 Points for this Question) –
Otto had learned of Kay’s plan to use the DONUTs for the Super A prototypes
during the contract negotiations between Kay (for Atonal) and UZBK. So, at the
time UZBK was contracting with Kay, Otto had a secret intention to find another
buyer for the DONUTs UZBK had promised to deliver to Kay.
Thus, UZBK fully intended to continue to offer those parts for sale to others to get
a much better price (a “bigger, better deal”) for them. UZBK jumped at the
chance to sell the parts to Beezo’s company for many millions of dollars more.
Is there a type of legal claim other than breach of contract
that Atonal could use to sue UZBK to recover additional damages,
based on UZBK’s intentional, malicious, despicable conduct?
If so, (1) identify the category/level/classification of civil
wrongs that Atonal could use against UZBK (other than breach of
contract) to win these additional money damages [HINT: You may
answer this part of this Question fully with two words.]; (2) identify
one of the legal names for this separate claim that Atonal could
use against UZBK and set forth its legal elements/components;
AND (3) citing specific narrative facts, explain why Atonal
would be entitled to these additional money damages from
UZBK based on this separate claim.
Or, if not, (1) identify the category/level/classification of
civil wrongs that Atonal could use against UZBK (other than
breach of contract) to win these additional money damages [HINT:
You may answer this part of this Question fully with two words.];
(2) identify one of the legal names for this separate claim that
Atonal could use against UZBK and set forth its legal
elements/components; AND (3) specific narrative facts, explain
why Atonal would not be entitled to these additional money
damages from UZBK based on this separate claim.
[Essay Questions continued on the next page]
II.
ESSAY QUESTIONS – (Continued) –
B. Answer All of These Essay Questions – (continued) –
8
5.
(30 Points for this Question) –
Preoccupied with the electronic parts problems, Kay was completely surprised by
bad news from Tunes4Less, an audio wholesaler that had agreed to sell Atonal
2,000 unique tiny, light-weight, high-quality speakers – “G Blasters” – for $13.00
apiece, a total contract price of $13,000.
Based on the exact dimensions and wiring requirements of the Tunes4Less G
Blasters, Atonal’s engineers had designed and molded the plastic cases for the
Super A prototypes to “custom fit” those speakers … and only those speakers.
Just a few days before the Super A prototypes were to be assembled,
Tunes4Less CEO A. “Buzz” Noyes called from Tunes4Less headquarters to say
that he had sold all 2,000 of the tiny speakers to “Make America Loud Again”
(MALA), an organization that planned a Memorial Day protest march on
Washington, D.C., that needed the speakers to “enhance” the audio of the
marchers’ chants.
Buzz asked if slightly larger, but still light-weight and high-quality “H Blasters”
substitute? Clearly not!!! The workforce would have to break the plastic Super A
prototype cases to insert the “H Blasters” and change the instrument’s internal
wiring to make them work.
Once again, without a particular component (the G Blasters), Atonal would be
unable to produce the Super A prototypes, Atonal’s business would be destroyed
and the company would be forced to close, Atonal would face multi-million-dollar
lawsuits by lenders and customers around the world, Atonal’s workers would be
laid off, government regulators would investigate Atonal’s failure, and Kay’s
business reputation would be ruined forever.
Thus, without the Tunes4Less delivery, Kay’s/Atonal’s entire business life will
end.
Fortunately, Kay has learned that Tunes4Less has not yet delivered the G
Blasters to MALA, because the protest organizers do not yet have a
warehouse/manufacturing shop in the District of Columbia area. So, the G
Blasters sit in the Tunes4Less warehouse in nearby La Tuna Canyon, CA.
Assuming their contract is valid and enforceable for the G
Blasters, is there a remedy other than money for Atonal to compel
Tunes4Less to deliver those unique speakers to Atonal and to
forbid Tunes4Less from delivering them to MALA?
[Essay Question #5 continued on the next page]
II.
ESSAY QUESTIONS – (Continued) –
B. Answer All of These Essay Questions – (continued) –
9
5.
(30 Points for this Question) – (continued) –
If so, (1) specify the general type or category (i.e., area or
source of law) of remedy that would permit this type of recovery;
[HINT: You may answer this part of this Question fully with a legal
term that is one or two words.]; (2) identify the particular order a
court could issue to force Tunes4Less to deliver the G Blasters to
Atonal for their agreed-on/contract price [HINT: You may answer
this part of this Question fully with a legal term that is two words.];
(3) set forth the two standards the court would consider in
deciding whether to award Atonal this remedy [HINT: You may
answer this part of this Question with two sentences or phrases.];
AND
(4) citing specific narrative facts, explain why this
remedy is necessary and appropriate for Atonal, why it should
be ordered against Tunes4Less.
Or, if not, (1) specify the general type or category (i.e.,
area or source of law) of remedy that would permit this type of
recovery; [HINT: You may answer this part of this Question fully
with a legal term that is one or two words.]; (2) identify the
specific order a court could issue to force Tunes4Less to deliver
the soft plastic Rudolph dolls to Atonal for the agreed-on price
[HINT: You may answer this part of this Question fully with a legal
term that is two words.]; (3) set forth the two standards the court
would consider in deciding whether to award Atonal this remedy
[HINT: You may answer this part of this Question with two
sentences or phrases.]; AND (4) citing specific narrative facts,
explain why this extraordinary remedy is neither necessary nor
appropriate for Atonal, why it should not be ordered against
Tunes4Less.
6.
(35 Points for this Question) –
Atonal’s contract with Exertions Labor called for the staffing company to deliver,
on a “rush” basis, not only enough qualified “fill-in” workers to perform the
painstaking work of assembling the Super A prototypes, but also all of the tools
and adhesives (e.g., glue, solder) – all readily available elsewhere – necessary to
put the Super A prototype pieces together, including installing the G Blasters.
Kay had offered the contract to Exertions Labor at a per-piece price of $50 per
unit, meaning a $50,000 total cost for assembly of the 1,000 Super A prototypes.
But, in writing to “accept” Atonal’s offer, Exertions Labor’s President, Emma
Ploy-Yee, added a term providing for “surge pricing” of $25 per unit – meaning a
$75,000 total cost to Atonal – as pandemic-era labor was short supply.
[Essay Question #6 continued on the next page]
II.
ESSAY QUESTIONS – (Continued) –
B. Answer All of These Essay Questions – (continued) –
10
6.
(35 Points for this Question) – (continued) –
Busy with problems created by UZBK and Tunes4Less – not to mention having to
keep Atonal’s lenders, investors, and staff calm – Kay did not read
Emma’s/Exertions’ “acceptance” of Atonal’s offer. So … Kay was shocked when
Exertions refused to deliver even a little labor unless Atonal paid the full $75,000,
as “in the contract.”
When Kay refused and instead hired Handy Helpers on the terms that Atonal had
offered to Exertions, Emma insisted that Atonal’s contact with Exertions was
binding and that she would sue Atonal for breach of contract, claiming all
$75,000.
Do Atonal and Exertions have a legally binding contract that
Atonal breached by contracting with Handy?
If so, (1) identify the legal term for the type of contract that
combines both the sale of services and the sale of goods
[HINT: You may answer this part of this Question with just one
word, followed by “contract.”]; (2) specify what law (UCC and/or
common law) applies to which portions of this type of contract
or to the contract as a whole AND explain why; AND (3) citing
specific narrative facts, explain why – including any relevant
Rule of law – Atonal and Exertions had reached a legally binding
agreement, specifying the terms of that contract .
Or, if not, (1) identify the legal term for the type of contract
that combines both the sale of services and the sale of goods
[HINT: You may answer this part of this Question with just one
word, followed by “contract.”]; (2) specify what law (UCC and/or
common law) applies to which portions of this type of contract
or to the contract as a whole AND explain why; AND (3) citing
specific narrative facts, explain why – including any relevant
Rule of law – Atonal and Exertions failed to reach a legally
binding agreement.
7.
(25 Points for this Question) –
Unfortunately, the substitute DONUTs supplied by Harmon-E.E. overheated and
failed at an alarmingly high rate – some causing minor burns to Super A
prototype users — facts that Kay did not know until Atonal started receiving
complaints and returns from buyers who each had paid a small fortune for a
Super A prototype.
In the packaging for every DONUT, though, Harmon-E.E. had included a card
with the following language:
[Essay Question #7 continued on the next page]
II.
ESSAY QUESTIONS – (Continued) –
B. Answer All of These Essay Questions – (continued) –
11
7.
(25 Points for this Question) – (continued) –
“If product or any portion thereof is defective and fails to perform for 180
days from purchase, Manufacturer’s liability is limited to replacement of
the goods. Please mail the goods back to Manufacturer in the original
packaging, with a copy of the dated sales receipt/packing invoice/shipping
order, to Harmon-E.E., 111 Whine-Humm Lane, Con-On-Avon, Great
Britain, U.K. for a full replacement.”
Harmon-E.E. is relying on this language to limit its financial exposure if and when
its DONUTs fail, property is destroyed, and people are injured. Of course, the
DONUTs’ failure is disastrous to Atonal, and Kay is looking to sue Harmon-E.E.
Are the limitations in the DONUTs packaging valid and
enforceable, despite the fact that Kay (for Atonal) did not sign any
documents voluntarily agreeing to the limitations and really did not
understand their implications?
If so, (1) state a legal term for this type of language that
limits a consumer’s remedies for a defective product [HINT:
You may answer this part of this Question with any one of many
legal terms that is as short as one word or up to three words.];
(2) state a legal term for the type of contract or agreement
created by language on or inside of packaging [HINT: You may
answer this part of this Question with a legal term that is as short
as one hyphenated or two separate words, followed by
“contract.”]; AND (3) citing specific narrative facts, explain why
these limitations are binding on Atonal and limit its remedies
when purchasers of the Super A prototypes return them as
defective, demanding money back.
Or, if not, (1) state a legal term for this type of language
that limits a consumer’s remedies for a defective product
[HINT: You may answer this part of this Question with any one of
many legal terms that is as short as one word or up to three
words.];
(2) state a legal term for the type of contract or
agreement created by language on or inside of packaging
[HINT: You may answer this part of this Question with a legal term
that is as short as one hyphenated or two separate words,
followed by “contract.”]; AND (3) citing specific narrative facts,
explain why these limitations are not binding on Atonal and do
not limit its remedies when purchasers of the Super A prototypes
return them as defective, demanding money back.
[Essay Questions continued on the next page]
II.
ESSAY QUESTIONS – (Continued) –
B. Answer All of These Essay Questions – (continued) –
8.
(30 Points for this Question) – (continued) –
12
Excited and wanting to “shred massively” with his new Super A prototype at
extreme volumes, “Heavy Met” Al Thrasher plugged his Super A prototype
directly into a 220-volt line for “more power” – something the Super A prototype
manual had warned against specifically.
But, of course, Al didn’t bother to read – words or music.
The DONUT in Al’s Super A prototype, supplied by Harmon-E.E. overheated,
and, instead of just failing and disabling the unit, the DONUT caught fire due to
the dangerously unsafe extra power (Normal power outlets are 110-volt lines.)
that Al had the instrument plugged into.
In the resulting fire, Al sustained devastating burns over almost two-thirds of his
body. Of course again, Al hired a tough personal injury/product liability attorney
–Ima Biggs-Shark – who filed a lawsuit in Los Angeles County Superior Court
against both Atonal and Harmon-E.E. (through its U.S. joint venture, BoneThugs
& Harmon-E.E.) on Al’s behalf.
At trial, the jury found that Al’s total damages – including medical expenses;
costs of future surgeries; pain and suffering; loss of wages and future earnings;
costs of in-home nursing care for life; and loss of use of his fingers and, err, male
anatomy – totaled $100 Million ($100,000,000).
The jury also found Harmon-E.E. twenty per cent (20%) responsible and Atonal
five per cent (5%) responsible for Al’s injuries. The jury also found that Al was
seventy-five per cent (75%) responsible – that is, mostly responsible – for
causing his own injuries.
In California, a state that recognizes pure comparative
negligence, what, if any, total amount of money would a jury award
Al based on these facts?
(1) Calculate and show (Yes, show your math!) the amount
of money damages for which each party (Al, Harmon-E.E., and
Atonal) has liability, according to the jury; AND (2) citing specific
narrative facts, explain why each party bears that legal liability
(And no, not just because the jury said so.)
[Final Exam continued on the next page]
III.
FINAL QUESTIONS – These Question are OPTIONAL AND PURE EXTRA
CREDIT.
A.
EXTRA-CREDIT QUESTION – (30 Points for this Question) –
UZBK’s refusal to deliver the DONUTs to Atonal was based on the larger, vastly
more profitable deal with another buyer, Beezo’s company, A2Z.
13
Assuming the UCC applies to UZBK’s contract with Atonal, UZBK’s CEA Otto
Tune now claims that UZBK was not legally obligated to deliver the DONUTs to
Atonal. In fact, Otto claims that the UCC excused UZBK from performing its
agreement with Atonal because (a) UZBK’s entire DONUT supply already had
been delivered to Beezo’s company, making UZBK’s delivery to Atonal under
their contract “impossible”; and (b) because Beezo’s company was willing to pay
so very much more money for the DONUTs than Atonal’s contract called for,
UZBK would have to give up so much extra money that Atonal’s contract was
unfair and “commercially impracticable,” given the true worth of the parts.
Is Otto correct with either argument, excusing UZBK from
liability for failing to deliver the parts to Atonal under their contract?
If so, (1) state a definition for the term “impossibility”
under contract law; (2) provide a definition of (or explanation of,
by example) the term “commercial impracticability” under the
UCC; AND (3) citing specific narrative facts, explain why UZBK
has a legal excuse for non-performance of its contract with
Atonal and has no liability for its failure to deliver the DONUTs
to Atonal.
Or, if not, (1) state a definition for the term “impossibility”
under contract law; (2) provide a definition of (or explanation of,
by example) the term “commercial impracticability” under the
UCC; AND (3) citing specific narrative facts, explain why UZBK
has no legal excuse for non-performance of its contract with
Atonal and has liability for its failure to deliver the DONUTs to
Atonal.
B.
EXTRA EXTRA-CREDIT QUESTION – (20 Points for this Question) –
The defective DONUTs (in the Super A prototypes) caused dozens of injuries,
including Al’s serious burns.
As a result of complaints by hundreds of consumers, Harmon-E.E. and Atonal
each face criminal charges for allegedly knowingly “dumping” defective DONUTs
on the market, failing to recall them and/or warn consumers, and acting with
conscious disregard for the health, safety, and welfare of the public.
A business facing criminal charges for business misconduct (e.g., Volkswagen
for its diesel engine emissions cheating; Wells Fargo Bank for misuse of
customer information and fraudulent account-opening practices) is in a difficult
spot, legally speaking.
[Extra Extra-Credit Question continued on the next page]
III.
FINAL QUESTIONS – (Continued) –
B.
EXTRA EXTRA-CREDIT QUESTION – (continued) –
Knowing there usually is a mountain of unfavorable evidence against a business,
a company’s criminal defense attorneys often will recommend that the company
try to resolve criminal charges with prosecutors. By doing so, the attorneys hope
14
that business avoids the expense (mostly, attorneys’ fees) of a lengthy trial
(which the company likely would lose), obtains lesser punishment(s) from the
criminal court; and minimizes the damage to existing and future
business/reputation.
Is there a specific plea or course of action that criminal
defense attorneys suggest to businesses facing these bad
situations?
If so, (1) identify the general term for negotiations
between prosecutors and defense attorneys to resolve/settle
the criminal charges without going to trial [HINT: You may
answer this part of this Question fully with two words.]; (2) identify
three basic types of pleas in criminal court [HINT: You may
answer this part of this Question with just the three legal terms
totaling five words (in English or Latin) for these different pleas];
(3) specify which of the three pleas that the business’ defense
attorneys likely will recommend [HINT: You may answer this part
of this Question with a legal term that is one or two words (in
English or Latin).]; AND (4) state specific examples of how this
specific plea may help the business, both in the criminal case and
in facing later civil lawsuits.
Or, if not, (1) identify the general term for negotiations
between prosecutors and defense attorneys to resolve/settle
the criminal charges without going to trial [HINT: You may
answer this part of this Question fully with two words.]; (2) identify
three basic types of pleas in criminal court [HINT: You may
answer this part of this Question with just the three legal terms
totaling five words (in English or Latin) for these different pleas];
(3) specify which of the three pleas that the business’ defense
attorneys likely will recommend [HINT: You may answer this part
of this Question with a legal term that is one or two words (in
English or Latin).]; AND (4) explain why NONE of the specific
pleas will help the business, either in the criminal case or in facing
later civil lawsuits.
###
15
FINANCE 2050 – FINAL EXAM STUDY GUIDE – Spring, 2017 – COMPLETE
[You may ignore topics in red with double-strikethrough (e.g., Deleted.)]
CHAPTERS 8, 9 – Torts
CHAPTERS 8, 9 – Torts – (Continued)
CHART – 8 differences between criminal law
and civil law systems (also in Chapter 1)
Negligence – basic carelessness, based on
– Duty (of care) [Text = Duty of Due Care]
– Breach (of duty)
– Actual Causation (i.e., “but-for cause”)
– Proximate Cause (i.e., “legal cause”)
– Damages (harm)
ALL of these five elements must be present
for negligence to have occurred
No wrongful intent is required for
negligence.
e Tort = a Civil Wrong (but not a breach of
contract)
e Tort Levels/Classifications (“Fault Ladder”) –
e – Intentional Tort
e
– Definition: acts or omissions
undertaken with intent to cause
harm, injury, or loss
e – Recklessness
e
– Definition: conscious disregard for
the health, welfare, rights or safety
of others
e – Negligence
e
– Definition: basic carelessness,
breach of duty causing injury
– No Tort/Liability
e
e Intentional Torts –
e – Fraud (also called Deceit, Fraudulent
Misrepresentation, Intentional
Misrepresentation) –
e
– Elements:
e
– Affirmative Misrepresentation OR
Omission
e
– Of a Material Fact
e
– Made Intentionally (with scienter)
e
– Reasonably Relied on by Another
e
– To His/Her/Its Detriment, Harm, or
Damage
e
– The #1 Tort in business cases, based
on the threat of an uninsurable,
high award of punitive damages
e
– Disturbing to businesspeople to
be accused of “despicable conduct”
such as lying, cheating, concealing
e
– Fraud claims can damage business
reputation and disrupt working
relationships with suppliers or
with customers
e
e
e
e
e
Defenses to negligence –
– Assumption of Risk –
– Agreement to bear responsibility/liability
for someone else’s negligence
– For example, being hit by a foul ball
at an MLB Baseball game
– Cannot be used to transfer liability for
recklessness or intentional torts
– Disclaimer / Waiver / Release /
Limitation on Remedies / Limited
Warranty / Exculpatory Clause =
Different ways to avoid / lessen liability
for negligence, by having the person
harmed agree to accept responsibility,
usually in writing and in advance of the
act(s) or omission(s) causing the
injury
– Shrink-Wrap Contract –
Limitations on the manufacturer’s or
seller’s liability for negligence,
stated in or on product packaging,
are binding, based on the customer’s
purchase, opening of the package, and
use of the product
– Click-Wrap / Click-On Contract –
Limitations on the manufacturer’s or
seller’s liability for negligence,
stated in digital “terms and conditions,”
are binding, based on the customer’s
clicking on an “I Agree.” or “Accept”
button, whether the customer has
read the “terms and conditions” or not.
An “e” to the left of a topic means that it may be the subject of an essay question.
[2050:0517_2sF.STDY.GDE._Beatty7e-COMPLETE]
FINANCE 2050 – FINAL EXAM STUDY GUIDE – Spring, 2017 – COMPLETE – (continued)
[You may ignore topics in red with double-strikethrough (e.g., Deleted.)]
CHAPTERS 8, 9 – Torts – (Continued)
e
e
e
e
e
e
CHAPTER 7 – Crime
Damages –
Money Damages = Legal Remedy –
– Compensatory Damages = amount
of money necessary to reimburse
a victim for harms/losses/injuries
caused to him/her/it by a wrongdoer
– Punitive Damages = extra amount
of money (on top of compensatory
damages) necessary to
– punish a wrongdoer; and/or
– make an example of a wrongdoer
– For what level(s) of torts may
punitive damages be awarded?
(for Intentional torts or Recklessness,
but not for Negligence)
e CHART – 8 differences between criminal law
and civil law systems (also in Chapter 1)
e White-Collar Crimes –
– Definition: Usually non-violent, most
often financially motivated crimes
committed by businesses or by
businesspeople in or involving
business
– Examples: mail fraud, stock fraud,
wire fraud, money laundering,
embezzlement
e RICO (Racketeer Influenced and Corrupt
Organizations Act, Title IX of the
Organized Crime Control Act of 1970)
e
– Definition: A very broadly worded,
wide-ranging federal law that sets
additional criminal and civil
penalties for those involved in a
“pattern of racketeering activity”
(i.e., a minimum of two businessrelated felonies, which may be
violent or non-violent, committed
in the past 10 years)
e
– Criminal RICO – Additional fines
and/or prison time, on top of
fines and/or prison time for
committing the underlying crimes
e
– Civil RICO – Additional rights and
remedies for those victims of
the “racketeering activities,”
including the right to sue for and
recover treble (3x) damages
e
– Used not just against gangsters,
but also against business
professionals
An “e” to the left of a topic means that it may be the subject of an essay question.
[2050:0517_2sF.STDY.GDE._Beatty7e-COMPLETE]
2
FINANCE 2050 – FINAL EXAM STUDY GUIDE – Spring, 2017 – COMPLETE – (continued)
[You may ignore topics in red with double-strikethrough (e.g., Deleted.)]
CHAPTER 7 – Crime – (Continued)
CHAPTER 7 – Crime – (Continued)
e After being accused of a crime, a
defendant must plead / enter a plea
in court, to respond to the charges
– There are three different pleas:
e
– “Not guilty”
e
– “Guilty”
e
– “No contest” / “nolo contendere”
e
– With a “not guilty” plea, the defendant
e
– Denies guilt and demands a trial
on the criminal charges
filed against the defendant.
e
– With a “guilty” plea, the defendant
e
– Admits guilt and takes responsibility
for the crimes;
e
– Submits himself/herself/itself
to be punished by the judge,
without a trial;
e
– In court and under oath, makes
specific, detailed admissions
of his/her/its wrongdoing.
– These specific admissions help
prove to the judge that the
defendant deserves to be
punished and help the judge
decide on the proper punishment.
e
– With a “no contest” (in Latin, nolo
contendere) plea, the defendant
e
– Refuses to challenge or raise
any defense or explanation
in response to the prosecutor’s
charges and evidence against
him/her/it.
e
– Because a “no contest” plea is
functionally equivalent to a
“guilty” plea, the judge almost
certainly will convict the defendant
who pleads “no contest.”
e
– However, because a “no contest”
plea does not require admissions
of specific wrongdoing, business
defendants prefer it.
Pleas – (continued)
e – Effect of plea on later civil action?
e
– Thus, a “no contest” plea helps a
business avoid the expense and
time involved in a criminal trial
(as well as the possibility of more
severe criminal punishments –
see, plea bargaining, below),
and also avoid specific admissions
which could be conclusive
proof of the defendant’s
liability in later civil lawsuit(s)
filed by the alleged victim(s) of
the business’ wrongdoing, based on
the same acts or omissions.
e Plea Bargaining – Negotiations between
the criminal prosecutor and the defendant
(usually through his/her/its attorneys)
for a settlement of the criminal case.
e
– The prosecutor and defense attorney
try to reach agreement – usually
the defendant’s plea of “guilty”
or of “no contest” to criminal
charges reduced in number,
degree, and/or severity – to avoid
trial.
– As part of the plea bargain, the
prosecutor also may agree to
make recommendations to the
judge for lesser punishments for
the defendant.
Grand Jury
Indictment
An “e” to the left of a topic means that it may be the subject of an essay question.
[2050:0517_2sF.STDY.GDE._Beatty7e-COMPLETE]
3
FINANCE 2050 – FINAL EXAM STUDY GUIDE – Spring, 2017 – COMPLETE – (continued)
[You may ignore topics in red with double-strikethrough (e.g., Deleted.)]
CHAPTER 11 –
CHAPTER 11 – (Continued)
A contract = a legally binding agreement
e – Based on a “Meeting of the Minds” (p. 252)
– According to the “Objective Manifestations
of the Parties”;
e – Seeking to promote “reasonable business
expectations”
e
e
e
e
Elements of a Contract –
– Offer
– Acceptance
– Consideration
– Legality
– Capacity
– Consent /Assent– (“Knowing & Voluntary”)
– Writing? – (Under the Statute of Frauds,
all but 6 types of contracts may be oral,
but interpreting/enforcing oral
contracts is problematic.)
The three basic/essential “building blocks” are
OFFER + ACCEPTANCE + CONSIDERATION
/
= “legal value” or /
/
“bargained-for exchange” /
Terms Describing Contracts – (Continued)
– Enforceable = A court will uphold the
agreement as valid and award
remedies against a breaching party;
– Unenforceable = although it may have
begun as a valid and enforceable
contract, the contract now is not
legally binding, perhaps due to a
change in legal status (e.g., passage
of time under the statute of limitations)
– Express or Implied
– Express = stated in words (oral, written)
– Implied by Facts (e.g., restaurant order;
doctor’s visit)
– Implied by Law (e.g., quasi-contract;
“reasonable value”/quantum meruit)
Promissory Estoppel = Equitable enforcement of a promise (not rising to a contract) A Court uses its powers of equity to stop
someone from denying his/her/its promise,
to avoid a substantial unfairness
Terms Describing Contracts –
Rescission/to rescind = Equitable remedy
– Bilateral or Unilateral
to “unwind” a performed contract, putting
– Executory or Executed
the parties back in the positions they were
– Executory = not yet fully performed
in before the contract/status quo ante
– Executed = fully performed, leading to
a “discharge” of further responsibilitye Sources of Contract Law –
– Execute (in CA) may = sign and date
e – Common Law covers contracts for sale
– Notarize = have signature(s)
e
– of Real Estate
witnessed, acknowledged,
e
– of Services
Recorded (+ thumb print(s)
e
– of Intangibles (e.g., patents)
collected?) by a Notary Public
e – Uniform Commercial Code (UCC
licensed by the State of CA
Article 2) covers contracts for sale
– Valid or Voidable or Void
– of Goods
– Valid = all legal requirements met
e
– Goods = tangible, moveable items
– Voidable = subject to rescission on
BUT …
the decision of one of the parties e – Hybrid contracts/Mixed contracts
who has suffered a legal/equitable
include items covered by the common
disadvantage in the contracting
law and others covered by the UCC
Process
e
– ONLY ONE LAW applies to the
– Void = never valid or enforceable,
WHOLE Hybrid/Mixed contract,
based on a serious defect (e.g.,
based on “Which is “predominant”
an agreement to commit a crime)
(i.e., most important to the parties)?
An “e” to the left of a topic means that it may be the subject of an essay question
[2050:0517_2sF.STDY.GDE._Beatty7e-COMPLETE]
4
FINANCE 2050 – FINAL EXAM STUDY GUIDE – Spring, 2017 – COMPLETE – (continued)
[You may ignore topics in red with double-strikethrough (e.g., Deleted.)]
CHAPTER 12 –
CHAPTER 12 – (Continued)
e UCC allows more flexibility in forming,
interpreting contracts
e
– Less definiteness of terms required
e
– Terms other than those literally stated
in the contract may be implied into
the parties’ agreement – such as,
e
– Trade Usage (Custom and Practice
in the industry)
e
– Prior dealings of the parties
(Course of Conduct)
e
– “Reasonable”/“Seasonable” Time
for delivery of goods
– Advertisements
Offeror = one who makes, gives an offer
Offeree = one who receives, accepts(?) an
Offer
e Option (contract) – Common law requires
consideration (legal value) to force offer
to stay open
e (Merchant’s) Firm Offer – Under UCC,
No consideration is required to keep an
offer open, if there are three things:
e
– Promise to keep offer open;
e
– Made by a merchant; and
e
– In a signed writing
OFFER –
– Basic Elements:
– Present intent to contract
e
– Definiteness of terms
Termination of Offer –
– Communication to the other party
– By Revocation (to revoke) – offeror has
– Invitation to offer (invitation to bargain)
this basic right any time before the
– Price quote ≠ offer
offeree accepted or rejected the offer
e – Letter of intent (LOI) ≠ offer or contract
– By Rejection
– A document that summarizes the
e – By Counteroffer – Under common law,
parties’ negotiations and terms of
e
Counteroffer = implied rejection; see,
agreement, along with their intent
Mirror Image Rule, which does not
to continue negotiating seriously
apply to contracts covered by the UCC;
to try to reach a full agreement
e
NO right to revive/accept offer afterward
e
– A worthless document that is
e – By expiration (A “reasonable time is
neither a binding contract nor
implied if the offeror does not provide
an offer, because, as the LOI
a specific expiration date.)
clearly states:
– By Operation of Law — e.g.,
– The parties have not yet
subject matter of contract becomes
reached agreement on all
illegal;
material terms necessary
OR
to form a contract; and
either party becomes legally
– Neither party is ready to commit
incapacitated;
to definite terms which may be
OR
accepted, because they still
subject matter of offer is destroyed)
are negotiating.
– The parties’ “agreement to agree”
on definite terms in the future
represents an illusory promise
that means nothing and is not
not binding in any way.
– Also, the LOI may be used to
“shop” the deal to competitors.
An “e” to the left of a topic means that it may be the subject of an essay question.
[2050:0517_2sF.STDY.GDE._Beatty7e-COMPLETE]
5
FINANCE 2050 – FINAL EXAM STUDY GUIDE – Spring, 2017 – COMPLETE – (continued)
[You may ignore topics in red with double-strikethrough (e.g., Deleted.)]
e
e
e
e
CHAPTER 12 – (Continued)
CHAPTER 17 – Third Parties
ACCEPTANCE –
– Basic Elements:
– Present intent to contract
– Definiteness of terms
– Communication to the other party
– Mirror Image Rule APPLIES ONLY
under the Common Law
– Acceptance terms must match offer
terms exactly, or no agreement
(No additions, deletions, or
modifications in acceptance terms
allowed under the common law)
– UCC allows different terms in an
acceptance, unless the offeror
prohibits them as part of the offer;
offeror must review the
acceptance carefully and expressly
reject any changed term, or
otherwise, the offeror has
ACCEPTED the changed terms.
Assignment of Contract Rights/Benefits
– No particular “magic” contract language
is necessary to create this transfer
– Must give notice of assignment to
party that owes performance
– Cannot increase other party’s burden
– Certain types of rights not assignable
(e.g., the right to vote in a
governmental election)
– Contract language may prohibit any
transfer, particularly without the
other party’s consent in advance
Delegation of Contract Duties/Obligations
– No particular “magic” contract language
is necessary to create this transfer
– Certain duties (e.g., personal services,
unique talent) may not be delegated
– Delegation does not relieve the party
originally obligated from liability under
the contract, unless there is a
“novation” (i.e., a new contract)
with the party to whom the
performance is owed specifically
giving a release of liability
– Cannot increase other party’s burden
– Contract language may prohibit any
transfer, particularly without the
other party’s consent in advance
e Click-wrap contract (see also, Chapter 41)
e – A binding agreement is created by
clicking on “I Agree” or “Accept”
button in a digital document or on a
webpage, whether the person has
read or understood the “terms and
conditions” or not.
e Shrink-wrap contract
e – A binding agreement is created by
buying, opening package, and using
a product, based on the language in
or on the package (on product website)
(Rights of) Third-Party Beneficiaries – A
Third Party Beneficiary is NOT a party
to a contract, but receives a benefit
from the performance of the
contracting parties’ agreement;
– Intended Third Party Beneficiary –
Has A LEGAL RIGHT to sue breaching
party for loss of benefit from contract;
– OR – Incidental Third Party Beneficiary –
Has NO RIGHT to sue breaching
party for loss of benefit from contract
Mailbox rule
An “e” to the left of a topic means that it may be the subject of an essay question.
[2050:0517_2sF.STDY.GDE._Beatty7e-COMPLETE]
6
FINANCE 2050 – FINAL EXAM STUDY GUIDE – Spring, 2017 – COMPLETE – (continued)
[You may ignore topics in red with double-strikethrough (e.g., Deleted.)]
CHAPTER 18 – Performance & Discharge
CHAPTER 18 – Performance & Discharge
–
(continued)
e Performance – (continued)
– “Complete”/“Full” (Strict) performance
– Some contracts demand virtually
perfect performance – i.e., the party
performing must do all of what the
contract calls for, correctly and
exactly, NOT just the material terms,
or the other party’s “reasonable
business expectations” are unmet.
– The performing party will be in
material breach of contract, and
the contract may be terminated,
a major lawsuit for damages filed.
– Examples: (1) A contract to
manufacture aircraft parts, that
must be made to exacting
specifications, or, if not, they
will fail, causing death and
destruction of the aircraft;
(2) A contract to manufacture
prescription drugs, which must
be made to exact standards, or,
people may be poisoned and die.
Conditions – Events or occurrences that
have an effect on performance
– Condition Precedent – An event or
occurrence that must take place
before performance is due
– Example: Before I can deliver my
old Corvette to you, I must take
delivery of my new Corvette.
– Condition Subsequent – An event or
occurrence that occurs after
performance that changes the
performance
– Example: Worthington Ford’s free
“30-day Trial/Exchange” on used
cars, allows a dissatisfied buyer
in the first month to return the car
after performance/delivery by the
dealership, and, with limitations,
receive a different used car from
the dealership
– Concurrent Condition – An event or
occurrence that occurs at the same
time as performance
– Example: Concurrent closings in real
estate transactions: The sale of
condo will be finalized at the same
time as the purchase of my new
house, so that I can move from one
to the other.
e Breach (of contract)
e – Material breach
– Definition: A breach of contract
so substantial that it deprives
the other party of the benefit of
his/her/its bargain, defeating
“reasonable business expectations”
(colloquially, “a BIG breach”)
e
– Effect: Allows the non-breaching
party to terminate the contract
and sue for damages
e – Non-Material breach
e
– Definition: A breach of contract
so minor that the other party still
receives the benefit of his/her/its
bargain, meeting “reasonable
business expectations”
(colloquially, “a little-baby breach”)
e
– Effect: The non-breaching party
must complete the contract, but
may sue for damages.
e Performance
– Substantial performance
– Most contracts demand only substantial
performance – i.e., the party who
performs does most of what
the contract calls for (and absolutely
performs the material terms, so as
to fulfill the other party’s
“reasonable business expectations.”
– The performing party may still be in
breach of contract, but that breach
minor (non-material breach) and
may be compensated for easily.
– Example: I deliver my Corvette to
you, but with only a half tank of gas.
[2050:0517_2sF.STDY.GDE._Beatty7e-COMPLETE]
7
FINANCE 2050 – FINAL EXAM STUDY GUIDE – Spring, 2017 – COMPLETE – (continued)
[You may ignore topics in red with double-strikethrough (e.g., Deleted.)]
e
e
e
e
e
e
e
e
e
e
An “e” to the left of a topic means that it may be the subject of an essay question.
CHAPTER 18 – Performance & Discharge –
CHAPTER 18 – Performance & Discharge –
(continued)
(continued)
Good faith (“honesty in fact”) – Implied
Excuses for Nonperformance – (continued)
covenant of good faith and fair dealing
e – Commercial Impracticability (Also in
(a UCC concept) is implied into ALL
Chapter 23)
contracts under the laws of California
e
– Definition: Under the UCC, excuse
from performing a contract if
Time for Performance
that performance has been
– “Time is of the essence” is legal
made unreasonably expensive,
language meaning that failure to
based on an unpredictable,
perform on time = a material breach
uncontrollable event which the
– “Reasonable” or “Seasonable” Time
breaching party has not caused
may be implied under the UCC if the
and for which the breaching
contract fails to specify a time for
party has not accepted legal
performance
responsibility (e.g., through a
guaranty, business insurance,
Anticipatory Repudiation (Also covered
completion bond, or other
in Chapter 23)
agreement)
– Know the common law requirement(s)
– Example: A “killer frost” destroys
for a party to “sue early” (before the
90% of the Central Valley’s
other party’s performance is due)
strawberry crop, driving up
– Know the UCC procedure – “demand
wholesale prices to $50 a pound;
for assurance” — that can provide
FoodCo. is excused from its
absolute proof of anticipatory
contract to deliver 10,000 pounds
repudiation (in Chapter 23)
of strawberries to Coco’s
Restaurant for $1 a pound – and
Excuses for Nonperformance –
cannot be sued – because of
– Impossibility (Also in Chapter 23)
this commercial impracticability.
– Definition: Excuse from performing
a contract, based on a party’s total
Discharge (release from all further liability
inability to perform, because of an
under a contract after performance of
unpredictable, uncontrollable event
obligations or being excused from them)
which the breaching party has not
– Discharge by Mutual Agreement
caused and for which that party
– Discharge by Accord and Satisfaction
has not accepted legal responsibility
– Discharge by Waiver
(e.g., through a guaranty, business
– Discharge by Alteration
insurance, completion bond, or
– Discharge by Statute of Limitations
other agreement)
– Discharge by Decree of Bankruptcy
– Example: A massive earthquake
causes so much damage that
Rescission/to rescind = Equitable remedy
the Hollywood Bowl is unsafe,
to “unwind” a performed contract, putting
requiring months of expensive
the parties back in the positions they were
repairs; the City is excused from
in before the contract/status quo ante
its contract to rent out the Bowl
for a concert next week – and
cannot be sued – because of
this impossibility.
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8
FINANCE 2050 – FINAL EXAM STUDY GUIDE – Spring, 2017 – COMPLETE – (continued)
[You may ignore topics in red with double-strikethrough (e.g., Deleted.)]
An “e” to the left of a topic means that it may be the subject of an essay question.
CHAPTER 19 – Remedies
CHAPTER 19 – Remedies – (Continued)
e Breach of contract – failure to perform a
contract duty without a valid excuse
e – Material breach (see, Chapter 18)
e
– Effect of a material breach
e – Non-material breach (see, Chapter 18)
e
– Effect of a non-material breach
REMEDIES FOR BREACH OF CONTRACT –
e Legal remedies (money damages) –
e – Compensatory damages (Direct) –
e
– Definition: Amount of money
necessary to reimburse for the
harms, losses directly caused by a
breach of contract
e
– Most frequently, loss of profits
directly arising from the breach
of contract, but may also include
cost of obtaining replacement
performance (e.g., cost of cover,
which is buying substitute goods)
e – Consequential Damages (sometimes
called Indirect or Special Damages)
e
– Definition: Amount of money
necessary to reimburse for the
harms, losses indirectly caused by
a breach of contract
e
– Requirement: Damages must have
been “reasonably foreseeable to
the breaching party at the time
of contracting” (i.e., at the time
the parties entered into their contract)
e
– Examples: Reimbursement for
damage to business reputation,
loss of goodwill, loss of future
profits caused by breach of contract
– Most frequently, these damages
are excluded by contract language,
but, if not, the contract price will
e
e
e
REMEDIES FOR BREACH OF CONTRACT –
(continued) –
Legal remedies (money Damages) – (cont’d.)
– Punitive Damages – extra money to
– punish a wrongdoer
– make an example of a wrongdoer
Based on “despicable conduct”
– No right to recover punitive damages for
breach of contract alone – because
economic loss is not increased by intent
– Although punitive damages are NOT
recoverable in a lawsuit for breach of
contract alone – if the non-breaching
party’s complaint also sues for
an intentional tort, such as fraud,
punitive damages may be awarded.
(see, Chapters 8, 9)
e
e
– Incidental Damages
– Nominal Damages
e
Liquidated (Agreed-on) Damages –
– If the clause stating them is valid,
these damages are the ONLY ones
a non-breaching party may recover
– To be valid, a liquidated damages
clause must meet ALL of the
Following requirements:
1. Actual damages were impossible/
extremely difficult to calculate
at the time of contracting.
2. Legal formalities met? (e.g.,
separate paragraph in contract,
large type, separately initialed)
3. Liquidated damages amount must
not be unreasonably high or low
e
e
e
e
(i.e., not a penalty to either party).
jump to cover the risk/insurance cost
[2050:0517_2sF.STDY.GDE._Beatty7e-COMPLETE]
9
FINANCE 2050 – FINAL EXAM STUDY GUIDE – Spring, 2017 – COMPLETE – (continued)
[You may ignore topics in red with double-strikethrough (e.g., Deleted.)]
An “e” to the left of a topic means that it may be the subject of an essay question.
CHAPTER 19 – Remedies – (Continued)
CHAPTER 19 – Remedies – (Continued)
e
e
e
e
REMEDIES FOR BREACH OF CONTRACT Legal remedies (money damages) – (cont’d.)
Three Limitation(s) on Recovery of
Damages in Breach of Contract cases:
1. A party can recover damages only for
those losses that he, she, or it can
prove with reasonable certainty (i.e.,
No speculative award of damages).
2. A breaching party is responsible for
paying only those losses that were
reasonably foreseeable to him, her,
or it at the time of contracting (i.e.,
when the parties entered into their
contract).
3. Mitigation of damages – A person
injured by a breach of contract has
the duty to mitigate (i.e., avoid or
minimize his/her/its damages), if it is
feasible for that party.
e
e
e
e
e
e
e
e
e
e
e
Cover – Buyer’s remedy – Buyer lessens
losses by buying substitute goods, if
possible
e
Resale – Seller’s remedy – Seller finds
another buyer for goods, if possible;
must be done in a “commercially
reasonable” manner, maximizing
the amount recovered
e
e
REMEDIES FOR BREACH OF CONTRACT
– EQUITABLE REMEDIES/EQUITY ≠ money
– Definition: Use of the court’s power to
achieve a fair result – awarding
something other than money –
by compelling a party to do
something and/or by forbidding
a party from doing something
– Orders:
– Restitution
– Injunction
– Reformation
– Rescission – (see, Chapters 11, 18)
e
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e
10
REMEDIES FOR BREACH OF CONTRACT
– EQUITABLE REMEDIES/EQUITY ≠ money
– (continued) –
– Orders:
– Specific Performance (UCC and
Common Law) – Court compels a
party to perform its contract
– Standards:
– Fundamental fairness; AND
– Money is not an adequate remedy.
(e.g., Goods are unique or
otherwise irreplaceable, meaning
the non-breaching party unfairly
will suffer “irreparable harm”
unless the court awards
him/her/it this equitable relief.)
– Under the UCC, why is this remedy
a necessary and appropriate
remedy for a buyer?
Answer #1: Profitability of the
“Bigger, Better Deal” –
Usually, the seller’s bad behavior
is highly profitable, and so, a
smaller, newer customer may be
disadvantaged as the seller
favors larger, more lucrative
customers by directing unique
goods or goods in limited supply
to those “better” buyers.
That greed may be unethical or
immoral (unfair), but it is profitable,
even if it comes at the expense
of the smaller, newer customer
through a breach of contract.
If the seller’s “bad” behavior is
profitable enough, the seller will
be able to “pay off” the smaller,
newer customer with some of
this added profit, truly making
money an inadequate remedy.
Answer #2: Irreparable harm – the
harm caused by a loss of unique
goods can’t be fixed, isn’t fair at all.
– No Specific Performance for personal
FINANCE 2050 – FINAL EXAM STUDY GUIDE – Spring, 2017 – COMPLETE – (continued)
[You may ignore topics in red with double-strikethrough (e.g., Deleted.)]
services; a court can’t compel slavery.
An “e” to the left of a topic means that it may be the subject of an essay question.
CHAPTER 21 – Introduction to Sales
CHAPTER 21 – Introduction to Sales
– (Continued)
(See also, CHAPTER 11 – Introduction to
e Good Faith (Good Faith and Fair Dealing)
Contracts)
= honesty in fact in dealings with
e Coverage of UCC Article 2 – Contracts for
another party
the sale of goods
Unconscionability
e
Goods = tangible, moveable items
e
e Course of Dealing (Prior Dealings of
Coverage of the Common Law – Contracts
Parties)
for the sale of
e
e Usage of Trade (Custom & Practice)
– Real estate; or
e
– Intangibles (e.g., intellectual property;
e Waiver (of contractual rights)
goodwill; or stock rights); or
e
Delivery (of Goods)/Tender of goods
– Services
Buyer’s Right of Inspection of goods
e
e Conforming Goods = goods that meet
Goods and Services Combined – (In a
the standards of the contract
“Hybrid”/“Mixed” Contract, which law
e Nonconforming Goods = goods that do
applies – UCC or the Common Law –
NOT meet the standards of the contract
depends on “Which is predominant?”)
e Acceptance
e
e Rejection (Counteroffer not implied rejection?)
Merchant –
e
Revocation (of Acceptance)
– Definition: a professional buyer or seller
of goods
e
Buyer’s Rights on Improper Delivery
– UCC has different rules for Merchants
– Buyer may accept some of delivery and
e
reject remainder, but Partial Acceptance
UCC Contract Formation Rules –
e
must be in “Commercial Units”
– Less Definiteness in Terms Permitted
[2050:0517_2sF.STDY.GDE._Beatty7e-COMPLETE]
11
FINANCE 2050 – FINAL EXAM STUDY GUIDE – Spring, 2017 – COMPLETE – (continued)
[You may ignore topics in red with double-strikethrough (e.g., Deleted.)]
e
– No “Mirror Image Rule” (Acceptance
e – (Seller’s) Right to Cure
need not be on exact terms of the offer,
as required by the Common Law)
e
e Anticipatory Repudiation
Merchant’s Firm Offer (UCC) –
e
e Demand for Assurance (and effect of
– No need for consideration to keep
the three different possible responses)
the offer open, as required under an
(When can a buyer “sue early”?)
Option/Option Contract under the
Common Law
e
e Impossibility – (see, Chapter 18)
– Three Elements:
e
e Commercial Impracticability – (see,
1. A Promise to keep the offer open
e
e
Chapter 18)
2. Made by a Merchant
3. In a signed writing.
– Outputs Contract
– Needs (Requirements) Contract
Force Majeure Clause
e Promissory Estoppel (equitable doctrine) –
e – The defendant made a promise knowing
e
the plaintiff would likely rely on it; and
UCC – Court may imply a “reasonable” or
“seasonable” time for performance,
if the contract states none
– The plaintiff did rely on the promise; and
– The only way to avoid injustice is to
enforce the promise.
An “e” to the left of a topic means that it may be the subject of an essay question.
CHAPTER 10 – Cyberlaw and Privacy
CHAPTER 10 – Cyberlaw and Privacy –
(Continued)
Tracking Tools
Crime on the Internet – (continued)
e – Fraud
Regulation of Online Privacy
– Definition: Using the computer to
– Self-Regulation
perpetrate criminal and/or civil fraud
– The First Amendment
(see, Chapters 8, 9)
– The Fourth Amendment
– Auctions
– The Federal Trade Commission (FTC)
– Schilling
– Electronic Communications Privacy Act
– Identity Theft –
of 1986
e
– Phishing
– Children’s Online Privacy Protection Act
– Definition: An attempt to acquire
of 1998
sensitive (and perhaps personal)
– State regulation
information (e.g., usernames,
– European law
passwords, credit card details,
[2050:0517_2sF.STDY.GDE._Beatty7e-COMPLETE]
e
e
12
FINANCE 2050 – FINAL EXAM STUDY GUIDE – Spring, 2017 – COMPLETE – (continued)
[You may ignore topics in red with double-strikethrough (e.g., Deleted.)]
– Spyware
bank account or debit card
details, and sometimes, indirectly,
money), often for malicious
reasons, by masquerading as a
trustworthy entity, in an
electronic communication
(e.g., email, text, IM)
– Spear Phishing –
– Definition: A variation on phishing
in which hacker send emails to
groups of people with specific
common characteristics or
other identifiers; emails, texts,
or IM’s appear to come from a
trusted source, but are
designed to help hackers
obtain personal, sensitive, or
proprietary information
e Spam –
– Definition: Unsolicited (i.e., not asked for)
messages, especially advertising, sent
sent through electronic messaging
systems (e.g., email, texts)
e – The Controlling the Assault of
Non-Solicited Pornography and
Marketing Act (CAN-SPAM)
Internet Service Providers and Web Hosts:
Communications Decency Act of 1996
– ISP’s generally are NOT liable for
information provided by someone else
– Content providers (websites) may be
liable
Crime on the Internet –
– Hacking –
– Definition: Gaining access (wanted
or unwanted) to a computer and
viewing, copying, or creating
often with the intention of
destroying data or maliciously
harming the computer
e – The Computer Fraud and Abuse Act
of 1996 (CFAA)
e
An “e” to the left of a topic means that it may be the subject of an essay question.
CHAPTER 41 – Intellectual Property
GENERAL NOTES –
e Patent –
e – Generally covers inventions or formulae
e – Must register (through an extensive,
expensive process) with the USPTO
[United States Patent and Trademark
Office]
– Must be “unique,” not a logical
extension of an existing product
– Most patents last 20 years
e Copyright –
e – Generally covers “works of art”
e – May register with Copyright Office of
[2050:0517_2sF.STDY.GDE._Beatty7e-COMPLETE]
*
NOTE: An “e” in the check-box to the left
of a term signifies that the term may be
the subject of an Essay Question or of
a Final Question (i.e., of “The Coward’s
Way Out” or of “The Terminator”).
*
NOTE: If there is no “e” in the check-box
to the left of a term, then that term may
only be the subject of an objective
question (e.g., a Multiple Choice
Question or a Short Answer Question).
*
NOTE: An e in the check-box to
13
FINANCE 2050 – FINAL EXAM STUDY GUIDE – Spring, 2017 – COMPLETE – (continued)
[You may ignore topics in red with double-strikethrough (e.g., Deleted.)]
e
e
the Library of Congress
– Must not substantially duplicate existing
copyrighted work (“unique”?)
– Most copyrights last 70 years after the
death of the author or 120 years from
Creation
the left of a term signifies that the term
cannot be the subject of an Essay
Question or of a Final Question
(i.e., of “The Coward’s Way Out” or
of “The Terminator”), but if the
term is in black type, then
the term still could be the subject
of an objective question (e.g., of a
Multiple Choice Question or of a
Short Answer Question).
e Trademark – for goods –
Service Mark – for services –
e – Generally covers fanciful names, logos
(or designs), or slogans promoting
business
e – Must register with USPTO
e – Must not substantially duplicate
existing trademarks (“unique”?)
e – Most trademarks last 10 years, but may
be renewed every 10 years if in use
e Trade Secrets
e – Generally covers “proprietary
information” that must be kept secret
e – No federal registration, but some states
have laws mandating certain steps
e – May last forever, if kept secret
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14