Chapter 1 Business Activities and the Legal Environment

Law – enforceable rule governing relationships among individuals and between individuals and their
society
Substantive Law – consists of all laws that define, describe, regulate, and create legal rights, and
obligations
Procedural Law – establishes the rules of the court and the methods used to ensure the rights of
individuals in the court system
Business Activities and the Legal Environment
• Laws and regulations affect virtuall all business activities
• Hiring and firing
• Workplace safety
• Manufacturing and marketing of products
• Business financing
• Many different laws may affect a single business transaction
• Contracts
• Intellectual property
• Torts
• Product liability
• Sales
• Internet law, social media, and privacy
• Environmental law and sustainability
Primary Sources of Law
• Those that establish the law
• Constitutional law
• Supremacy Clause – Article VI, the constitution is the supreme law of the land
• The Tenth Amendment – reserves to the states all powers not granted to the
federal government
• Statutory law – laws enacted by legislative bodies
• Uniform laws
• States have the option of adopting uniform law (model statutes) to ease
trade and commerce from state to state
• Uniform commercial code (UCC) adopted by all 50 states
• Regulations – rules, orders, and decisions of administrative agencies
 • Administrative agency – government agency established to perform a specific
function
• US food and drug administration
• Case law – judge made law, the rules of the law announced in court decisions
Secondary Sources of Law
• Books and articles that summarize and clarify the primary sources of law
• Legal encyclopedias
• Treatises
• Law review articles
• Compilations of law
• Restatements of the law
Common Law Tradition
• Court of Law – granted limited kinds of (monetary) remedies at law such as land, items of value,
and money
• Courts of Equity – awarded non-monetary relief (remedies in equity)
• Injunction – order to a party to stop a specific activity or undue a wrong
• Rescission – cancelling a contract or obligation
• Specific Performance – ordering a party to perform an agreement as promised
• Ex: Ted forms a contract to purchase a parcel of land that he thinks will be the perfect for
his future home. Bill, the seller, fails to fulfill (breaches) the agreement. Ted could sue for
the return of any money paid toward the land, but this is not what he wants. Ted wants
to have a court order for Bill to perform the contract. Ted will seek the equitable remedy
of specific performance because monetary damages are inadequate.
• Stare Decisis – common law doctrine under which judges must follow the precedents established
in prior decisions in their jurisdiction
• A court should not overturn its own precedents
• Decisions made by a higher court are binding on lower courts
• Ex: What should happen to Student A if Student A is caught cheating on a test, when
student B, who was caught cheating several days earlier, is expelled? By precedent,
student A should also be expelled
• What happens if you change the facts slightly?
• What if student B previously had been warned against cheating but student A
never had any warnings? Does that change the answer?
How to find primary sources of law: Case Law
• Federal Courts and State Courts
• Trial Courts and Appellate Courts
• Trial Courts – those in which evidence is presented and testimony is given
• Appellate Courts – decisions may be appealed to an even higher court, such as a state
supreme court or the US Supreme Court
How to Read and Understand Case Law: Selected Case Titles and Terminology
• Plaintiff/Petitioner - party who initiates a lawsuit
• Defendant/Respondent - the party against whom the lawsuit is brought
 • Appellant/Petitioner - the party who takes an appeal from one court to another
• Appellee/Respondent - the party against whom an appeal is taken
Classifications of Law
• Civil Law – rights and duties that exist between persons and between persons and their
government
• Criminal Law – concerned with wrongs committed againts the public as a whole
• Criminal acts are defined and prohibited by local, state, or federal government statutes
• State of California v. Smith
Case Briefing
In law, there is the concept of stare decisis. The definition is “A common law doctrine under which judges
are obligated to follow the precedents established in prior decisions.” Business Law – Text and Cases by
Clarkson, Miller and Cross, 14th ed. Published by Cengage Learning. This really means that a judge has to
follow what was ruled on by other judges who are at the same level. For instance, an appellate judge
must follow what that appellate court did in the past or what the Supreme Court stated. However, a
Supreme court can change the law as to what an appellate court ruled.
The best way to read a case is to have a format as to how your are going to construct your “brief.” Also
be aware that most judges follow (very loosely in some cases) this format:
• Facts
• Issue
• Rule
• Analysis/Application (Apply facts to the rule)
• Conclusion.
This is known as FIRAC.
In the video that you will watch below, it will state things a little differently. They will start with Facts but
then have another category called Procedural History. You may combine this with the facts or create your
own sub-category. They will also identify Issue but then have you put the “Holding” (which is the
conclusion) down after the Issue. You may do this or put it at the Conclusion of the case brief.

They will discuss the Rule and Analysis. During the Analysis discussion, it may be more detail then you
anticipated. Just remember that the Analysis portion of a brief is simply applying the Facts to the Rule.
Finally, the Conclusion can include the holding as well as who won the case.
Please watch this short video on how to brief cases from the Center for Innovation in Legal Education –
University of Utah, S.J. Quinney School of Law. This video is really made for law school students;
however, it is well done and in very plain English.

Reading Cases
• Two parties suing each other
• Where the official citation of the case
was reported
• 233 – volume number
• F.3d – series of reported opinions
• 441 – first page number of the case
• (7th Cir. 2000) - abbreviation of the court whose opinion it is & date of the opinion
 •

Name of judge who made the opinion

• Format; order elements differently/omit
• Facts – statement of facts; things occurred prior to the lawsuit; gave rise to the suit
• Procedural posture – history of the case; mistake to think that opinions are only written
when a case has been decided (can be made at any time); most but not all reading
during first year will be appellate case
• Bench Trial – judge rather than a jury; judge writes opinion justifying his/her
decision
• Jury Trial – juries do not need to write an opinion to justify their verdicts
• Issue – category of the legal problem involved; can be 1 or more; can be sorted by
subject matter; issue is always stated as a question—can be broadly/narrowly;
• Holding – answers the question from the issue
• Ex. Issue – is there a contract where a seller delivered goods, but there was no
written contract? Holding – either there is a contract or there is no contract
• Rule – judges typically decide cases based on pre-existing rules; can be asked to decide a
novel issue of law; judge never free to make up the law. Rely on statement of law
(Precedent – when a judge relies on earlier cases to decide a dispute).
• Analysis – rules are not self-effectuating
• when applying a preexisting rule, the judge must decide what result that rule
calls for
• has to enunciate the reasons why the judge decided that the rule requires this
particular result
• Where the judge defends her holding in the case
• You will be expected to be able to paraphrase the judge’s reasoning; articulate
why the judge held that way
• Outcome – tells us who won
• Judgement for the seller vs buyer
How to Brief a Case
Facts of Jill vs Jack
On April 1, 2018, Jill went up the hill to fetch a pail of water.
• Jack followed her and touched her without Jill’s consent.
• Jill sued for battery.
• The trial court held that Jack was not liable for any damages.
 • Jill entered into evidence that she went to the hospital and suffered a black eye.
The Appellate court overruled the trial court.
• The court held that a battery is an intentional and offensive touching of another without the consent
of the person who is alleging a battery.

• The court ruled in favor of Jill for damages of $100,000.

IRAC aka FIRAC
Procedural Facts
• Procedural History
• Trial Court
Legally Relevant Facts
• Tough at beginning
Issue
• What is the issue of the case? What is the legal question that the appellate court is
deciding?
• Not who is right or wrong
Rule – what is the rule that the court is relying on?

Analysis or Application
• Apply the rule to the relevant facts
• “Here, Jill went up the hill to fetch a pail of water.”
• “Jack followed her and intentionally touched her without her consent.”
• This would be considered an offensive touching without consent.
• On April 1, 2018, Jill went up the hill to fetch a pail of water. Jack followed her and
touched her without Jill’s consent.
• Jill sued for battery.
• The trial court held that Jack was not liable for any damages. Jill entered into
evidence that she went to the hospital and suffered a black eye.
• The Appellate court overruled the trial court.
• The court held that a battery is an intentional and offensive touching of
another without the consent of the person who is alleging a battery.
• The court ruled in favor of Jill for damages of $100,000.
RAC aka FIRAC
Sample of Brief
Procedural History:
• Jill brought an action against Jack in the Los Angeles Superior Court for a battery.
• The trial court found in favor of Jack.
• Jill appealed to the appellate court.
Facts:
• On April 1, 2018, Jill went up the hill to fetch a pail of water.
• Jack followed her and touched her without Jill’s consent.
• Jill suffered damages of a black eye and $100,000.
Issue:
• Did Jack commit a battery on Jill?
Rule:
• A battery is an intentional and offensive touching of another without the consent of
the person who is alleging a battery.
Analysis or Application:
• Here, a battery was committed.
• Jill went up the hill to fetch some water and Jack touched her without Jill’s consent.
• This resulted with Jill suffering a black eye.
• This would be considered an offensive touching without consent.
Conclusion:
• The appellate court overturned the trial court and ruled in favor of Jill for $100,000.
Chapter 1 Group Discussion – law and legal reasoning
• Suppose that the California legislature passes a law that severely restricts carbon
dioxide emissions from automobiles in that state.
• A group of automobile manufacturers files suit against the state of California to
prevent the enforcement of the law.
• The automakers claim that a federal law already sets fuel economy standards
nationwide and that fuel economy standards are essentially the same as carbon
dioxide emission standards.
• According to the automobile manufacturers, it is unfair to allow California to impose
more stringent regulations than those set by the federal law.
Legal remedies – allow the non-breaching party to recover monetary damages.
Equitable remedies – non-monetary solutions to resolve the disputed issue.
Who are the parties (the plaintiffs and defendant) in this lawsuit?
 • Plaintiff: Group of Automobile Manufacturers
• Defendant: State of California
Are the plaintiffs seeking a legal remedy or an equitable remedy?
• Since the automobile manufacturers are not trying to recover any monetary
damages, they are seeking equitable remedies to resolve the disputed issue.
What is the primary source of the law that is at issue here?
• Passing a law that severely restricts carbon dioxide emissions from automobiles in
California
Where would you look to find the relevant California and federal law?
• Most updated state constitution and the US Constitution
• Statutory Law
• Regulations
• Case Law
• Common Law Doctrines
• The plaintiff is the group of Automobile Manufacturers while the defendant is the
State of California. Since the automobile manufacturers are not trying to recover any
monetary damages, they are seeking equitable remedies to resolve the disputed
issue. The primary source of the law that is at issue is about passing a law that
severely restricts carbon dioxide emissions from automobiles in California. There are
several resources where we could find relevant California and Federal law. Namely,
recent California state constitution, US constitution, statutory law, regulations, case
laws, and common law doctrines.
Chapter 2 Courts and Alternative Dispute Resolution
Courts
- US has 52 court systems
- federal courts are not superior to state courts
- us supreme court is the final, controlling voice over all 52 systems

Basic Judicial Requirements:

Jurisdiction - authority of court to hear and decide a specific action
- Personal - state trial court has jurisdiction over residents and businesses in its county or
disctrict
ex. slip and fall at ralph's on lake, you can sue in LA sup ct. because it has jurisdiction
over businesses in LA County
- Subject Matter - authority of a court to hear and decide a specific type of dispute
- can be limited by any of the following
- subject of lawsuit
- sum in controversy
- whether the case involves a felony or a misdemeanor
- whether the proceeding is a trial or an appeal
Federal courts - 3 tiered system of US district courts, US courts of appeal, and US supreme
court

US District Courts - trial courts of general jurisdiction; each state the DC and certain other
US territories and possessions have atleast one district

US Courts of Appeals - courts that hear appeals from the federal district courts located
within their judicial circuits
- 12 geographic regions
- 13th federal circuit - national appellate jurisdiction over patent law, trademark,
government contracts, and those in which US government is a defendant
Trial versus Appellate Courts
Trial Courts - lawsuits begin, trial takes place, and evidence is presented. "Trial Courts" in
State Court (Los Angeles Superior Court). "District Courts" in Federal Court
Appellate Court - review a prior decision

US Supreme Court - the highest court in the land

- appeals court for all federal appellate courts as well as state supreme and appellate courts
in federal questions
- to bring a case before a supreme court a party requests to issue a writ of certiorari
- an order by the supreme court to a lower court requiring the latter to end the record of
the case for review

Federal Jurisdiction - federal courts have subject-matter jurisdiction in two situations:

1. When federal question is involved - cases that contain disputes which pertain to the
US constitution, acts of congress, or treaties
2. Diversity of Citizenship - cases in which parties in the lawsuit are from different US
states and/or the US and a foreign country AND the dollar amount in dispute exceeds
$75,000

Jurisdiction
Exclusive Jurisdiction - only one court (State or federal) has the power (jurisdiction) to hear
the case
Concurrent jurisdiction - more than one court can hear the case i.e. diversity jurisdiction

Alternative Dispute Resolution

Litigation - process of resolving a dispute through court and is expensive and time
consuming
ADR methods - inexpensive, relatively quick, and give parties more control over process
Negotiation - informal settlement talks, sometimes without attorneys, where differences are
discussed with the goal of "meeting the minds" in resolving the case
Mediation - utilizes the services of a netural third party, called a mediator
- the mediator acts as a communicating agent between parties and suggests ways in which
the parties can resolve their dispute
- mediatior proposes a solution but does not make a decision
Arbitration - utilizes an arbitrator (neutral third party or a panel of experts) who hears a
dispute and imposes a resolution on the parties
- commercial matters can be submitted to arbitration
- parties include an arbitration clause in a contract
- ex. when you buy a car that vehicle contract typically has an arbitration clause
Overview of Courts
Our court system is made up of the Federal Court system and the state court system.
Although each state may call their courts different names, most state courts including
California have the same names for each court. The trial court is what you see on T.V. where
there are witnesses and attorneys asking questions.

Remember, T.V. is exaggerated as to what really happens in court. If we were to televise a

real trial, most people would fall asleep. This does happen once in a while for a juror who is
falling asleep due to boredom. However, this system allows both sides to fairly present their
case to the judge or the jury.

Below is a diagram from the book on page 35 which shows the court system. Remember
that the trial courts for the Federal system which is on your left are call U.S .District Courts.
In California, the trial court is called the Superior Court.

Ex 2-2 Court System

In California, we have two trial courts - General Jurisdiction and Limited Jurisdiction. Both
are still called Superior Court but there are different requirements. In General Jurisdiction,
the amount being disputed is over $25,000. In Limited Jurisdiction, the amount being
disputed is $25,000 or less.

A division of the Limited Jurisdiction Superior Court is called Small Claims court. The book
states that "attorneys are not required" in this court in most states. In California, attorneys
are not allowed to represent a client in small claims court. The amount that can be
requested ranges from $2,500 to $10,000. There are several guidelines regarding the
amount you can request for each case. For more information please see the Los Angeles
Superior Court website. (Links to an external site.)

In the Federal court system there are two separate ways to qualify for subject matter
jurisdiction (to be able to have a case heard in Federal District Court).

1) The first is to have a Federal question. This is where a federal law such as a statute
passed by Congress, federal case law or a U.S. Constitution such as the 1st amendment is at
issue.

2) The second way is to diversity of citizenship AND for the amount demanded by the
Plaintiff to be $75,000 or more. Diversity of citizenship means that the Plaintiff and the
Defendant are residents of different states.

https://youtu.be/U4GU1ha2Pq8

Minimum Contacts and Personal Jurisdiction

Minimum contacts - when may a court assert personal jurisdiction over an out of state
defendant in a civil lawsuit
- minimum contacts = constitutional
- if a defendant is sued within their own state, then personal jurisdiction should not be a
problem
- NY court personal jurisdiction over residents of NY

Long Arm Jurisdiction https://youtu.be/wQ0FnWxuRsI

- ex. Sue david in New York, but David no contacts in NY (no business, dont go to NY, etc) it is
unconstitutional to assert long arm jurisdiction
- due process of law protects residents of other states
- when an out of state defendant has contact on state, type and amount of contact may
enforce long arm jurisdiction is consitutional
- may assert specific or general jurisdiction

In Rem Jurisdiction
https://nv.instructuremedia.com/fetch/QkFoYkIxc0hhUVNHZ0owRk1Hd3JCeHgvQW1BPS0tY
zBlMjVmYjhjMjNjMTBhNWVlZDNjNjA0ZDQ0ZmNlNzBkOTVhYTY1ZQ.mp4
- another type of court jurisdiction over a defendant's property
- determined by geographic location of the property in dispute.
- a court generally has in rem jurisdiction over any property situated within its geographical
borders
- jurisdiction over property at issue
- ex. boat in california. 2 owners at dispute from different states. Can go to court in california
because the boat is in california

Personal Jurisdiciton - Jurisdiction in Cyberspace

https://nv.instructuremedia.com/fetch/QkFoYkIxc0hhUVQ5cEowRk1Hd3JCeVIvQW1BPS0tYz
hjNDYwZmIwODA4YTE1ZjE2NzgxNGNjNTJlODFhNjM2YmY1NzM1Nw.mp4
- purchasing items in internet (amazon, etc)
- sliding scale standard - 3 types of internet business contacts that outline the rules for
jurisdiction
passive website - no jurisdiction
some interaction - maybe jurisdiciton
substantial business interaction - yes jurisdiciton
Federal Subject Matter Jurisdiction https://youtu.be/vxoKL4W31Ik
1. When a federal question is involved
- Cases that contain disputes which pertain to the U.S. Constitution, acts of Congress, or
treaties
2. Diversity of Citizenship
- Cases in which the parties in the lawsuit are from different U.S. states and/or the United
States and a foreign country AND the dollar amount in dispute exceeds $75,000
- bankruptcy, patenting, or maritime law
State courts have the broadest jurisdiction; have power to hear a much bigger variety of
cases; 30x cases vs federal courts;
Chapter 3 Court Procedures

Stages of Litigation
1. Pretrial
2. Trial
3. Posttrial
Stages in a Typical Lawsuit
1. accident, breach of contract, or other event
2. party hires a lawyer, who files a complaint and notifies the defendant
3. defendant's attorney files an answer or a motion to dismiss
4. pretrial discovery and more motions, pretrial conference
5. trial and perhaps posttrial motions and/or an appeal

Pretrial procedures
Pleadings - inform each party of the other's claims, reveal the facts and specify the issues
(disputed questions)
- plaintiffs complaint and defendant's answer taken together
- plaintiff's complaint: initiates lawsuit; specifies jurisdiction, legal theory and remedy
- ex. plaintiff and defendant get into car accident; plaintiff sues defendant files a complaint
specifying personal injuries suffered by negligence
- defendant's answer - response to the complaint either admitting or denying the allegations
set forth in plaintiff's complaint

Procedural Rules
-specify what must be done at every stage of the litigation process
ex. service of process; timing of exchange of evidence (discovery requests and responses)

Service of Process
- formal notification of court proceedings or document
- court cannot exercise jurisdiction over a defendant until it has proof that the defendant
was properly served

Defendant's answer
affirmative defense - defendant admits truth of the complaint but raises additional facts to
show that he should not be held liable for the damages
- ex. in car accident example, defendant answers by raising affirmative defense of
contributory negligence - plaintiff was driving negligently at the time of accident

Counterclaim - defendant denies allegations in complaint and sets forth his own claim that
he is owed damages
- ex. defendant alleges the accident occured due to plaintiff's negligence and is owed
damages for his car

Dismissals and Judgments before trial

Motion - procedural request submitted to the court by an attorney on behalf of her or his
client

Pretrial Motions
Motion to DIsmiss - motion that asks court to dismiss case for a specified reason, such as
lack of personal jurisdiction or failure to state a claim (can be filed in place of defendant's
answer)
- ex. if allegations in plaintiff's complaint do not constitute negligence on the part of the
defendant; on grounds that service was improper; or venue was improper

Motion for Summary Judgment - motion asking the court to enter a judgment in his or her
favor without a trial (made before or during a trial)
- court will grant motion if no facts are in dispute and the only question is how the law
applies to the facts

Discovery - process of obtaining information from the opposing party or from witnesses
prior to trial
- includes witnesses, documents, records, and other types of evidence
- can involve depositions, interrogatories, requests for admission

Interrogatories - written questions related to the subject matter of the lawsuit that must be
answered under oath

Depositions - sworn testimony, recorded by a court reporter and often by videotape, of the
parties and other key witnesses

Request for admissions - questions to the responding party phrased in an admit or deny
fomat

Trial
Jury selection (voir dire) - attorneys question prospective jurors to determine bias or
connection with a party in the case
Opening statements - given by both attorneys to set forth the facts that they expect to
prove during the trial

Presentation of evidence
- plaintiff presents case
- examination of witnesses
- direct examination
- cross-examination
- the defendant's attorney presents the evidence and witnesses for the defendant's case

Rules of evidence - created by the court to ensure that any evidence presented during a trial
is fair and reliable = relevant
- hearsay is an out of court statemnet being submitted for the truth; what someone else
heard someone say

Closing Arguments - after both sides present their cases (rest), the attorneys summarize the
facts and evidence and telling their client's story in the most compelling way possible

Jury Instructions - after closing arguments are completed, the judge provides instrucitons
(charges) to the jury on the law that applies to the case as well as the standard of proof
- civil cases - preponderance of the evidence
- criminal cases - beyond a reasonable doubt

Verdict - juries findings after deliberation

- after the jury reaches a verdict, either party can make a posttrial motion that asks the trial
court to alter or disregard the jury's verdict/to order a new trial
- motion for new trial - motion asserting that the trial was so fundamentally flawed that a
new one is required
- motion for judgment NOV (non obstante veredicto) - motion asking the court to enter
judgment as a matter of law in the defendant's favor, despite the jury's verdict

Appeal
- a party may appeal the jury's verdict or any legal issue, motion, or court ruling during trial
- once appellate court has reviewed the case, it issues a written opinion that
- affirms the trial court's judgment
- reverses part or all of the judgment and remands (sends back) the case for an additional
trial
- reverses part or all of the judgment and renders a new ruling without another trial
- modifies the lower court's decision

Enforcing the Judgment

- no guarantees that a judgment will be enforceable
- writ of execution - if defendant does not have the funds to pay the judgment plaintiff can
request an order directing the sheriff to seize defendant's non exempt property and sell it to
pay for judgment

Discovery - process of obtaining information https://youtu.be/I6pUa5dOq1A

Courtroom Supercut https://youtu.be/A1Sbj_rITyY

Chapter 4 Business and the Constitution

A federal form of government

- a constitution sets forth
1. enumerated powers (specific)
2. implied power to undertake actions necessary to carry out its expressly designated
powers

- each US state government has

1. sovereignty - power to govern itself-- authority to regulate within their borders
2. police powers - enforcement of criminal laws, broad rights to regulate private activities to
protect or promote the public order

Privileges and Immunities Clause

- 'citizens of each State shall be entitled to all Privileges and Immunities of Citizens in the
several States.'
- state may not treat citizens of other states differently from citizens of its own state without
a substantial reason that is substantially related to the purpose of the rule
- ex. Forest Gump is a Alabama resident seeking to fish off the coast of South Carolina.
(Bubba-Gump Shrimp didn’t do as well as he had planned, and he is now working on his
own.) For various reasons, Gump refuses to move away from his native Alabama. However,
the best shrimping around, he’s been told, is in South Carolina. He packs up his boat and
goes to South Carolina, stopping to get a proper license to avoid doing any wrong. His friend
in the army had told him he got a license in South Carolina for $150, and Gump factors this
price into his budget. Upon arrival, however, he is told that $150 is the resident fee for a
license, and that the law is that nonresidents must pay $2500. Poor Gump is so
disappointed that he leaves his boat at the dock and runs all the way home. Because the law
discriminates against Gump in his ability to earn a livelihood by shrimping, it is invalid under
the privileges and immunities clause
Supremacy Clause and Federal Preemption
Supremacy Clause - Artivle VI of the Constitution provides that the constitution, laws, and
treaties of the US are the 'Supreme Law of the Land'
Preemption - certain federal laws preempt (or take precedence over) conflicting state or
local laws
- if direct conflict -> the state law is invalid

Separation of Powers
- national government is composed of three separate branches
1. Legislative branch - creates laws; US Capitol - congress - house of representatives and
senate
2. Executive branch - enforces laws; the white house - president - vice president
3. Judicial branch - interprets laws; supreme court
The Basic Structure
Constitution has 3 parts
1. Preamble - explains the reason for the constitution
2. Articles 1-7 - provides the outline for the three branches of government and state and
federal powers
3. Amendments - includes the bill of Rights and 17 other 'changes'
Bill of Rights - first ten amendments to the US constitution
1. Freedom of Speech - right to free speech is the basis for our democratic government;
includes symbolic speech gestures, movements, certain forms of expression, and articles of
clothing
- ex. burning an American flag in a peaceful protest is a constitutionally protected form of
expression. Wearing a t-shirt with a presidential candidate is also a constitutionally
protected form of expression
- Morse v. Frederick (2007) held that schools may restrict students' speech at school events
2. Freedom of Religion
1st Clause - Establishment Clause - prohibits government from establishing a state-
sponsored religion, or passing laws that favor one over another
2nd Clause - Free Exercise Clause - guarantees a person's right to freely exercise her religion
3. Searches and Seizures
- the Fourth Amendment protects the right of people to be secure in their persons, houses,
papers, and effects
- Law enforcements must have a search warrant-- an order from a judge or other public
official authorizing the search or seizure, before searching or seizing private property
- Officers must have probable cause trustworthy evidence that justifies search in order to
get a search warrant
4. Self- Incrimination
- the Fifth Amendment guarantees that no person can be compelled to testify against
himself in a criminal proceeding
Due Process
- under the due process clauses of the Fifth and Fourteenth Amendments clauses, no person
shall be deprived 'of life, liberty, or property, without due process of law'
- Procedural due process - any government decision to take life, liberty, or property must be
equitably (proper notice and an opportunity to be heard)
Commerce Clause
- part of US constitution
- major source of congress's powers to pass laws
- assigns powers to constitution-- power delegated to state/federal or shared
- federal power must come from constitution
- to pass a law, the congress must draw power/authority from the constitution
Article I Section 8 Clause 3 - authorize congress to pass laws; regulate commerce with
foreign nations and among several states
The Commerce Clause
Interstate Commerce Laws - congress empowered regulate interstate commercial activity
International Commerce Clause - regulate commercial acitivities b/w US and other countries
ex. truck safety. if congress can show that the law should be constitutional under the
constitution then it can be passed
Commerce Clause https://youtu.be/cPGiE1ptAXo https://youtu.be/UvemEXqINIc
Heart of Atlanta Motel v. US https://youtu.be/EsktEwEOII8
- Civil rights act 1964
- prohibits discrimitation in any place of public accomodations (including motels and
restaurants that substantially affect interstate commerce)
- motel advertised in national media
- situated conveniently in interstate highways
- 75% of business came from out of state guest
- policy refuse to rent rooms for african americans
- civil rights act is unconsitutional and violates due process rights by depriving right to
select customers
Issue - can congress prohibit racial discrimination in places of public accomodation by using
its commerce clause authority?
Justice Clark: "the Civil Rights Act, as applied to places of public accommodation that serve
interstate travelers, is a valid exercise of Congress's Commerce Clause authority"
Congress has the power to remove local obstructions to interstate commerce
- record established racial discrimination has a disruptive effect on interstate travel by
substantially discouraging travel by African Americans
- without a place to stay, they are not able to move freely from state to state - creating a
drag on interstate commerce
- Civil Rights Act, as applied to places of public accommodation that serve interstate
travelers, is a valid exercise of Congress's Commerce Clause authority
- court affirmed district courts order in joining motel in basis of race
- act does not violate motel's due process rights
- regulating the use of a private property isnt a constitutional taking under the Fifth
Amendment
- Fourteenth amendment was adopted to prohibit discrimination, not support it
- an impact on interstate commerce shouldnt be a prerequisite for receiving protection
against discrimination - douglas
- majority opinion should rest on both 14th amendment and commerce clause - justice
goldberg
- Heart of Atlanta Motel v. US allowed congress to use it s commerce clause powers to
combat racial discrimination
First 10 Amendments https://youtu.be/czapBO-ZypA
- get trialed in court - double jeopardy
- Miranda rights
- silence is gold and duct tape is silver
Priveleges and Immunities Clause https://youtu.be/y5iIEQlwnuo
- state cannot knowningly discriminate against citizens of other states in favor of their own
citizens
- violate commerce clause and privileges and immunities clause
- need substantial reason to do so
ex. charge in state tuition lower than out of state

Due Process https://youtu.be/J436pFZA3is

- only command in constitution stated twice
- government must respect a person's legal rights before taking them
- life, liberty, or property
- right to a notice of charges against you, opportunity to be heard, and to defend yourself
- when a system of law ignores any one of these steps before convicting someone-- violation
of due process and rule of law
- originally in Magna Carta
ex. cant be forced to testify against yourself; cannot be tried for same offense twice
- lacking in specifics
- must include notice, hearing, and ruling
- supposed to apply to all citizens

Chapter 1 and 2 Quiz

Jurisdiction over a person is called in personum jurisdiction

Jurisdiction over a property is called in rem jurisdiction
Plaintiff is the one who is bringing a lawsuit
Attorneys are not required in a small claims court
To have subject matter jurisdiction for US District Court there must be a federal question or
diversity of residency and a dispute of at least 75k
witkin summary of california law is not a primary source of law
an example of non-exclusive jurisdiction is plaintiff is from california and defendant is from
arizona and case is for negligence for the amount of 100k
a california court have in personum jurisdiction when a california resident buys a purse on
amazon and it is delivered to their home in california
the highest court in the US is the US Supreme Court
California is in the 9th US Circuit Court of Appeals

the definition of a closing argument is an argument made at a trial after the plaintiff and
defendant have rested their cases. this is done before they jury deliberates
an answer in a lawsuit is a defendant's response to the plaintiff's complaint
Summons is document informing a defendant that a legal action has been commenced
against him or her and that defendant must appear in court on a certain date to answer the
plaintiff's complaint
commerce clause is the provisioin in the us constitution that give congress the power to
regulate interstate commerce
the privileges and immunities clause of the constitution ensures that an out of state citizen
enjoys the same privileges as a citizen of the state in which he happens to find himself
what is the definition of a search warrant - an order granted by a judge that authorizes law
enforcement personal to search a particular premises

Chapter 6 Tort Law

Tort - a civil wrong proximately causing another person harm or injury

Purpose - provide a remedy (damages) for injury to a protected interest
Compensatory - reimburse paintiff for actual losses
Punitive - punish the wrongdoer and deter similar conduct in the future
International Tort - the tortfeasor must "intend" to commit the act
- does not need to be evil or harmful motive; practical joke can be an intentional tort

Transferred Intent - intent of tortfeasor is transferred when he intends to harm person A but
unintentionally harms person B as well
Assault - threat of immediate harmful or offensive contact; no physical contact necessary
Battery - completion of assault; harmful or offensive physical contact; contact does not have
to be harmful
False imprisonment - intentional confinement of another person or restraint of acitvity
Infliction of Emotional Distress - extreme and outrageous conduct resulting in severe
emotional distress to another
Trespass to Land - occurs when a person, without permission physically enters onto the
surface of another's land
Trespass to Personal Property - intentional interference with another's use or enjoyment of
personal property without consent or privilege
- failure to return property -> conversion
Negligence - failure to live up to a required duty of care that a reasonable person would
exercise in similar circumstances
- plaintiff must prove the following:
- duty - defendant owed plaintiff a duty of care
- breach - defendant breached that duty
- causation - defendant's breach caused injury
- damages - plaintiff suffered legal injury
Negligence - causation
1. is there a causation in fact?
2. was the act proximate (legal) cause of the injury. Ex. Palsgraf v. Long Island RR

Defenses to Negligence - assumption of risk

- a plaintiff that
1. knows the risk
2. voluntarily engages in the act anyway

Contributory Negligence - if plaintiff caused his injury in any way, he was barred from
recovery
Comparative Negligence - computes the liability of plaintiff and defendant and apportions
damages

Palsgraf v. Long Island Railroad https://youtu.be/G-9cIaMhtUE

- railroad is not liable for Palsgraf's injuries because the injuries were not a reasonably
forseeable consequence of any possible negligence by the railroad
- duty to one, is a duty to all. if injury can be traced to the wrongful act with no intervening
events then it is sufficient to establish liability
- approximate cause as a limit on the scope of tort liability
- proximate cause means you can only hold a defendant liable for harm that is a reasonably
foreseeable result of the wrongful act

Chapter 7 Strict Liability and Product Liability

Strict Liability - liability regardless of fault
- a person who engages in certain activities can be held responsible for any harm that
results to others, even if the person used the utmost care

Abnormally Dangerous Activities or Ultrahazardous Activities - involve high degree of risk

and potential harm that cannot be completely guarded against with reasonable care.
Ex. blasting/storing explosives, keeping wild animals

Product Liability - manufacturers and sellers of products may incur when product defects
cause injury or property damage to consumers

Product Liability - negligence

- if a manufacturer fails to exercise due care to make a product safe, a person who is injured
by the product may sue the manufacturer for the negligence
- due care must be exercised in:
design, materials, production process, assembling, adequate warnings, inspection, and
testing
-no privity of contact needed
Privity of contact - relationship that exists between the parties of the contract; only parties
to a contract can enforce that contract
-liability extends to any person's injuries caused by the product

Product Liability - Misrepresentation

- occurs when fraud is committed against consumer or user of product
- must have been made knowingly or with reckless regard for safety
- plaintiff does not have to show the product was defective
- ex. intentional mislabeling of packaged cosmetics; intentional concealment of a product's
defects

Strict product liability - holds people liable for results of their acts, regardless of their
intentions or exercise of reasonable care
Requirements:
1. product must be in defective condition when sold by defendant
2. defendant is in the business of selling the product
3. product must be unreasonably dangerous because of its defective condition
4. plaintiff must be physically harmed
5. defective condition must be proximate cause of injury
6. goods are in substantially same condition

Unreasonably dangerous products:

1. Manufacturing defects - departure from a product unit's design specifications that results
in products that are physically flawed, damaged, or incorrectly assembled
- failure to exercise quality control
- ex. glass bottle too thin and exploded in consumer's face

2. Design defects - product is unreasonably dangerous as designed even if its manufactured

correctly
- plaintiff must show defendant's failure to use a reasonable alternative design rendered the
product not reasonably safe

3. Warning defects - product is defective based on inadequate warnings or instructions

- content of warning: reasonableness test
- ex. children respond to bright simple warnings and adults may require more detailed
information

Market-Share Liability - liability when multiple defendants contributed to manufacture of

same defective product
- each defendant is proportionately liable based on its market share

Defenses to Product Liability

1. plaintiff has not met the requirements for the action
2. preemption
3. assumption of risk
4. product misuse
5. comparative negligence
6. commonly known dangers
7. knowledgeable user
8. statutes of limitation - vary by state law but are typically two to four years
9. statutes of repose - place outer time limits on product liability actions so that sellers and
manufacturers are not left vulnerable to lawsuits indefinitely
- ex. 12 years from date of sale or manufacture

Chapter 10 Criminal Law and Cyber Crime

Civil Law - pertains to the duties that exist between persons or between persons and their
governments
Criminal Law - has to do with crime
Crime - a wrong against society, defined in a statute, and punishable by fines, imprisonment,
or-in rare cases-- death
- crimes are prosecuted by a public official and not by the victims (DA/AG)

Key differences between civil and criminal law

1. burden of proof - government must prove its a case beyond reasonable doubt and the
jury's verdict normally must be unanimous in a criminal case
2. criminal sanctions - punishments are typically harsher in criminal cases and include fines
as well as incarceration

Civil liability for criminal acts - some torts provide a basis for criminal prosecution and civil
action in tort

A person suddenly attacks Jonas as he is walking down the street

1. civil
- physical attack is a tort
- assailant commits an assault (intentional, unexcused act that creates in Jonas the
reasonable fear of immediate harmful contact) and a battery (intentional harmful or
offensive contact)
- jonas files a civil suit against the assailant
- court orders the assailant to pay jonas for his injuries
2. crime
- physical attack as a crime
- assailant violates a statute that defines and prohibits the crime of assault (attempt to
commit a violent injury on another) and battery (commission of an intentional act resulting
in injury to another)
- state prosecutes the assailant
- a court orders the assailant to be fined or imprisoned

To be convicted of a crime, a person must

1. perform some prohibited act (actus reus) and
2. have a specified state of mind or intent (mens rea)
- strict liability crimes being the exception here - no intent needed

Violent Crimes - acts against persons that cause them to suffer harm or death
- murder, assault, battery, rape
- robbery - forcefully and unlawfully taking personal property of any value from another

Property Crime - goal is economic gain or property damage

Burglary - unlawful entry into a building of another (at night) with the intent to commit a
felony
Arson - willfully and maliciously burning a building owned by another- or one's own
personal property to collect insurance benefits
Larceny - wrongfully taking and carrying away another person's personal property with the
intent to permanently deprive the owner of the property
Obtaining Goods by False Pretenses - theft that involves trickery or fraud in order to receive
property, services, or cash

Defenses to Criminal Liability

Necessity - criminal act was necessary to prevent greater harm
Insanity - a person with mental illness may be incapable of the state of mind required to
commit a crime. courts use tests to determine the defendant's state of mind
Duress - wrongful threat induces another to commit a crime that she/he would not have
otherwise done
Justifiable Use of Force - self defense is the legally recognized privilege to protect one's self
or property against injury by another

Criminal Procedures
- US constitution provides specific safeguards for those accused of crimes at federal and
state levels
- criminal procedures are designed to protect against arbitrary use of power by the
government

4th Amendment Protections

- before searching or seizing private property, law enforcement officers must obtain a search
warrant with probable cause - a search will reveal a specific illegality
- scope of warrant - warrants must have a specific description of what is to be searched or
seized

Exclusionary Rule - evidence obtained in violation of the accused's 4th, 5th, or 6th
amendment rights- as well as any evidence derived from illegally obtained evidence is not
admissible at trial
- all evidence derived from the illegally obtained evidence is known as the 'fruit of the
poisonous tree'
ex. if a confession is obtained after an illegal arrest, the arrest is the 'poisonous tree' and the
confession, if tainted by the arrest, is the 'fruit'

The Miranda Rule - based on 1966 Miranda v. Arizona case.

- individual who is arrested must be informed of their 5th amendment right to remain silent
and their 6th amendment right to counsel
- failure to inform -> any statements the suspect makes normally are not admissible in court
ex. 'public safety' exception

Miranda v Arizona https://youtu.be/vX_93Euq3iM

- set of arrest procedures
- reversed stewart loss
- in a custodial interrogation, are procedural safeguards required to protect the 5th
amendment right against self incrimination
- court held without set hallmark warnings, statements made during custodial interrogation
is not admissible in court
- prosecutors cant use statements from custodial interrogations without procedural
safeguards
Custodial interrogation - law-enforcement officers question a person who has been arrested
and taken into custody
- inherently coersive; cutoff from outside world; closed hostile environment intimidation
- risk of psychological intimidation - mental illness, 6th grade dropout

Procedural Safeguards needed

- arrestee must be informed of the right to remain silent and the right to an attorney
- any waiver of these rights must be voluntary
- if a person refuses to answer questions, the questioning must stop
- the arrestee can stop the interrogation at any time
-statements of all four defendants are inadmissible. convictions are reversed.

- totality-of-the-circumstances test should be used to evaluate whether each statement was

voluntary
- majority's procedures discourage any kind of confession even if the 5th amendment
- better solution can be reached by legislative reform (empirical data)
- no 5th amendment jurispudence supported the majority's procedures
- custodial interrogations are not inherently coercive. the majority's procedures will weaken
law enforcement
- 2 yrs later Nixon reversed Miranda; pass omnibus crime control and safe streets act
- Dickerson v US; miranda warnings are constitutionally required

Fruit of the poisonous tree https://youtu.be/fWgh9ks2UM4

Criminal Procedure - constitutional protections for everyone
- whenever you interact with a police you have rights
- when police act illegally in order to obtain/get evidence from you
- fruit - evidence they obtain
- police brutality/excessive force - get you to testify against of yourself
- legal action - tree testify against self - fruit
- warrantless search, sees cocaine, cant use the cocaine in court

Chapter 11 Nature and Terminology

Contract Law
Promise - declaration by a person (promisor) to do or not to do a certain act
- person whom promise is made (promisee) has a right to expect or demand that something
either will/will not happen in the future

•What extent does our society allow people to make promises or commitments that are
legally binding?
•What excuses will we accept for breaking certain types of promises?
•What promises are considered to be contrary to public policy and therefore legally invalid?

Sources of Contract Law

Common law governs all contracts except sales and leases
- common law governs contracts relating to services, real estate, employment, and
insurance
- sale and lease contracts are governed by the uniform commercial code (UCC)

Definition of a Contract
- A contract ("K") is an agreement formed by two or more parties who agree to perform or
to refrain from performing some act now or in the future
Remedies - damages for failing to perform the contractual promise to a party may be
required to perform the promised act (specific performance)

Objective Theory of Contracts - circumstances determine the intent of the parties to enter
the contract is judged by outward, objective facts including
- what the party said when entering the contract
- how the party acted/appeared
- circumstances surrounding the transaction

Elements of a Valid Contract

1. Offer
2. Acceptance
3. Consideration (Legally sufficient and bargained-for detriment)

Defenses to Enforceability
Voluntary Consent - all parties must voluntarily consent to the contract
Ex. fraud, undue influence, mistake, or duress
Form - contract must be in whatever form the law requires.
Ex. Some contracts must be in writing

Contracts - Parties
Atleast have 2 parties
Offeror - party making the offer
Offeree - party whom the offer is made

Types of Contracts
Bilateral - promise for a promise; offeree can accept by promising to perform.
Ex. I offer to buy your iphone for $200 when I get paid tomorrow, and you accept the offer
and promise to give me the iphone when I pay you tomorrow

Unilateral - offeree can accept the offer only by completing the contract performance (“a
promise for an act”)
Ex. If you drive my car from California to Florida, I’ll give you $1,000
Contests, lotteries and prizes

Contract Performance
1. Executed - contract that has been fully performed by both (or all parties)
2. Executory - contract that has not been fully performed by one or more parties

Contract Enforceability
Valid - contract that has offer, acceptance, and consideration and entitles at least one of the
parties to enforce it in court
- valid contracts may be enforceable, voidable, or unenforceable
Voidable - valid contract that can be legally avoided, canceled, or annulled by one of the
parties. can also be ratified (made valid)
Unenforceable - an otherwise valid contract that is rendered unenforceable by some statute
or defense.
Ex. duress - threats, violence, constraints, or other action brought to bear on someone to do
something against their will or better judgment.
Quasi Contracts - contracts implied in law; fictional contracts that the courts impose on the
party "as if" the parties had entered into an actual contract
- Quasi contracts are imposed in the interest of fairness and justice

Interpretation of Contracts
"Plain Meaning" Rule - a court will enforce a contract according to its obvious terms when it
is clear and unequivocal
Extrinsic Evidence - considered if the contract has ambiguous terms
- any evidence not contained in the document itself
Ex. testimony of parties or additional communications
When a contract is clear and unambiguous, a court cannot consider extrinsic evidence

What is a contract? https://youtu.be/HrZDpDvxqJo

- liability if breaks a promise
-promise that a court will enforce
- promise that if broken can result in liability
- agreement that can be enforced in court

Chapter 12 Agreements in Traditional and E-Contracts

Agreement = Offer and Acceptance
- parties must show mutual assent to terms of contract
- if other elements are present - valid contract is formed

Agreement Requirements of the offer

1. intention to be bound by the offer
- what a reasonable person in the offeree's position would conclude about the offer
-offers made in obvious anger, jest, or undue excitement does not meet the serious-and-
objective intent test
-where intent may be lacking:
•Expressions of opinionStatements of future intent.
•Preliminary negotiations, or invitations to negotiate
•Advertisements
•Live and online auctions
2. terms must be reasonably certain, or definite
Definiteness of terms - offer must express the following:
a. parties
b. subject matter
c. consideration
d. time of payment, delivery, or performance
3. communicated by the offeree
Communication - offer must be communicated to the offeree
- one cannot agree to a bargain without knowing that it exists

Termination of offer - offer can be terminated either by action of the parties or by operation
of the law
Revocation - offer withdrawn by the offeror anytime before offeree accepts the offer
Termination by action of the parties - irrevocable offers cannot be revoked
Option contract - type of irrevocable offer that is held open for specified period of time in
return of consideration - takes away offeror's power to revoke for the time specified in the
option

Termination by Action of the Parties

Rejection - offeree's rejection of the offer (in words/conduct)
- any subsequent attempt to accept is construed as a new offer giving the original offeror
the power of acceptance
Counteroffer - rejection of original offer and simultaneous making of a new offer
"Mirror Image" Rule - acceptance must match the offer exactly and any change in terms
automatically terminates the offer and substitutes the counteroffer

Termination by Operation of the Law

Lapse of Time - period of time specified in the offer has passed
- if no time period for acceptance is specified, the offer terminates at the end of a
reasonable period of time
Destruction of Subject Matter
Death or Incompetence of the Offeror/Offeree - automatically terminates the offer unless it
is an irrevocable offer
Supervening Illegality - legislation or court decision automatically terminates offer or K
Acceptance - indicates his/her assent (agreement) to the terms of the offer
Unequivocal Acceptance - cannot impose new conditions on-- or change the terms of-
original offer ("mirror image rule")
- i accept the offer but only if i can pay on 90 days credit
Silence as Acceptance - generally, silence/inaction cannot constitute acceptance

Lucy v. Zehmer https://youtu.be/n8ufj8ISJFA

- Lucy walks in with a bottle of whiskey, lucy wanted the farm, Lucy asks if zimmer still have
the ferguson farm, 50,000 contract.
- mutual is assent to form a valid contract but the law imputes to a person on an intention
corresponding to the reasonable meaning of his words and acts. If his words and acts,
judged by a reasonable standard, manifest an intention to agree, his unexpressed state of
mind is immaterial
- joke/secret intent were irelevant
- in determining whether a contracting party inteded to contract, only that outward,
objective manifestation of intent matters

Mailbox Rule https://youtu.be/BLNRiWWHINY

Agreement Mode and Timeliness. Acceptance is timely if made before the offer is
terminated.

Mailbox Rule: Acceptance is effective when offeree sends or delivers the communication via
the mode expressly or impliedly authorized by the offeror

Example: Ann makes an offer to Bob on January 1; Ann decides to revoke the offer on
January 2 and puts a letter in the mail to Bob revoking the offer; but Bob puts a letter
accepting the offer in the mail on January 3, and does not receive Ann’s revocation letter
until January 4. Is there a contract?
Yes, because Bob sent his acceptance before receiving Ann’s revocation, the mailbox rule
dictates that Bob’s acceptance is effective. Ann will therefore be bound to the contract, and
can no longer revoke the offer.
The Mailbox Rule states that acceptance of an offer is valid as of the time of mailing the
acceptance and not at the time the other side receives the mailing. The video below is a
good explanation of this rule.

However, the video does not take into account emails that are subject to the UETA (Uniform
Electronic Transactions Act). The purpose of the Uniform Electronic Transactions Act (UETA)
is to remove barriers to forming electronic contracts. UETA does not create new rules, but
rather enforces “real world” rules on electronic contracts. UETA only applies if all parties to
a transaction have explicitly or impliedly agreed to conduct the transaction using electronic
means.

It appears under this act, that an email acceptance takes effect when it is properly directed
to the intended recipient in a form readable by the recipient's computer system. Once the
email (or other electronic record) leaves the control of the sender or comes under the
control of the recipient, the UETA deems it to have been sent. It is irrelevant if the recipient
actually saw the email or does not even know it was sent. This rule follows the same
concept as the original mailbox rule explained at the top of this section.

Chapter 13 Consideration
Consideration - the value given in return for a promise or in return for a performance
- inducement, price, or motive that causes a party to enter into an agreement = bargained-
for legal detriment
- must have legal value and may consist of the following
- a promise to do somethine one has no prior legal duty to do
- performance of an action that one is otherwise not obligated to undertake
-forbearance - refraining from an action that one has a legal right to undertake

Bargained-for-Exchange - consideration must provide the basis for the bargain struck
between the contracting parties
-distinguishes contracts from gifts
-"uncle promises to give the nephew $5,000 because he is smarter than his cousins”

Adequacy of Consideration
- large 'shockingly inadequate' disparity in the amount of conisderation, may be lack of
voluntary consent in the K
- unconscionable - a contract where terms are so unscrupulous or grossly unfair as to be
'void of conscience'.

Preexisting duty - promise to do what one already has a legal duty to do does not constitute
consideration
- meant to prevent extortion

Agreements that lack consideration

Example: Ajax Contractors begin construction on a seven-story office building and after
three months demands an extra $75,000 on its contract. If the extra $75,000 is not paid, the
contractor will stop working. The owner of the land, finding no one else to complete the job,
agrees to pay the extra $75,000.
•The agreement is unenforceable because it is not supported by consideration. Ajax
Contractors had a pre-existing contractual duty to complete the building.

Preexisting Duty Exception - unforseen difficulties

Past consideration is no consideration because the bargained-for exchange element is
missing.
-one can bargain for something to take place in the present or future but not in the past.

Illusory Promises - promisor has not definitely promised to do anything (no promise at all)
Ex. “I will recommend to the board of directors to give all employees a raise if our profits
continue to be high for the next two months. This will take effect if the board approves this
in the future.”

Promissory Estoppel - detrimental reliance

1. clear and definite promise
2. promisor knows promisee would justifiably rely on the promise
3. promisee reasonably relied on the promise by acting or refraining from some act
4. promisee's reliance resulted in a substantial detriment
5. justice will be served by enforcing promise
- promisor will be estopped (prevented) from asserting the lack of consideration as defense

Example: Jim tells Church he will donate $10,000 to help them build their kid zone building.
Church hires contractor to draw up plans for building and hires some workers to clear out
the space for the new building. Two weeks later, Jim tells Church he changed his mind and
that he found another Church to donate his money to.
•Do we have consideration for the K? yes
•Do we have promissory estoppel?
Hamer v. Sidway https://youtu.be/Tg0ijmAGAdQ
- no drinking, smoking, etc
- after 21 bday get 5k
- nephew agreed for bank interest
- uncle died without giving the money
- hamer (plaintiff) won trial, lost appelate,
-consideration is not limited to benefit one party
- also found when a party agrees to incur detriment

Forbearance (agreeing to not do something) can constitute adequate consideration

sufficient to form a valid and enforceable contract

Preexisting Duty https://youtu.be/AS5_hPcY2RM

- preexisting duty is a promise to do what one already has a legal duty to do.
- not consideration and would be create a binding contract
- legally insufficient consideration
consideration - give and get

Consideration - Settlement of laims

ttps://canvas.pasadena.edu/courses/1111009/pages/consideration-settlement-of-claims-2?
module_item_id=12665148#

Accord and Satisfaction: "payment of money, or other thing of value usually less than the
amount owed, in exchange for extinguishment of the debt. It amounts to 'something other
than strict performance or payment. It is doing that by the convenator which the convantee
accepts in lieu of a performance of the terms of the covenant."
- there is a contract between parties but there is a disputed amount in the contract
(unliquidated debt), can create 2nd contact (an accord) an actual performance is
satisfaction. If 2nd contract is not satisfied, other party can bring an action based on the
1st/2nd contract

Ex. Dr. lou owns an apartment blg in la. Lets tenants take care of issues. tenant called mr
smith and charged mr lou 2k. he calls mr smith and said this was price gouging. parties
agree on a second contract of 800, dr lou wrote a check and mr smith cashed it. contract is
over/discharged.
contract 1 2k
contract 2 800
discharges 1st contract since there is satisfaction
if contract 2 does not go through then dr lou can sue for 1st/2nd contract

Liquidated Debt: Amount has been ascertained, fixed, agreed on, settled, or exactly
determined.
Unliquidated Debt: Parties give up right to contest amount in dispute, and thus
consideration is given.
An accord and satisfaction cannot take place if the debt is liquidated.
There must exist an agreement, actual or implied, that the acceptance of the smaller sum is
meant to discharge the obligation to pay the larger sum. The original agreement is only
discharged upon the full execution of the new agreement.

Release: Bars any further recovery beyond the terms stated in the release.
Covenant Not to Sue: Substitute contractual obligation for some other type of legal action
based on a valid claim.

Promissory Estoppel https://youtu.be/srNCkjq90sE

promise without consideration or which a party is liable
if no consideration, there is no contract
ex. one party makes a promise, expecting other party to do the promise = injury
go ahead and buy whatever you want, uncle will give 1k next week. changed mind
no consideration for uncles promise, no contract.
promise, reasonable expectation of reliance, justifiable reliance/unfair injury = promissory
estoppel (court could assign some liability on the uncle for breaking his promise)
1. There must be a clear and definite promise;
2. The promisor should have expected that the promisee would rely on the promise;
3. The promisee reasonably relied on the promise by acting or refraining from some act;
4. The promisee's reliance was definite and resulted in substantial detriment;
5. Enforcement of the promise necessary to avoid injustice.

To sum this up, if someone reasonably relies on another's promise and suffered some
detrimentally relied on that promise, the court can give a remedy (enforce the promise like
it was a contract) against the person that made the promise. Take a look a the video below
for a good example.

Lawyer Up on Contracts:Elura & Michelle https://youtu.be/OQuYr2WbQOY

Capacity
Parties to a contract must have contractual capacity – the legal ability to enter into a
contractual relationship

Contractual Capacity
•Minors: those who are under 18oA minor can enter into any contract that an adult can
•A contract entered into by a minor is voidable at the option of that minor
•Exception - A minor cannot avoid a contract for necessaries: items and services that are
necessary to the minor’s health and safety, food, lodging, shelter and clothing
•Disaffirmance: The legal avoidance, or setting aside, of a contractual obligation.oA minor
must express his/her intent not to be bound to the contract.
•Disaffirmance for Minor - Contract can be disaffirmed at any time during minority oMinor
need only return the goods subject to the contract provided they are still in the minor’s
possession
oEven if the minor returns damaged goods, the minor often is entitled to disaffirm the
contract and obtain full refund on the purchase price

•Ratification: act of accepting and giving legal force to an obligation that previously was not
enforceable. oA minor who has reached the age of majority can ratify a contract

Intoxication: A condition in which a person’s normal capacity to act or think is inhibited by

alcohol or some other drug.oA contract entered into by an intoxicated person can be either
voidable or valid.
•voidablelack mental capacity.
•validunderstood the legal consequences of the agreement
•Disaffirmance for Intoxication - Intoxicated person must disaffirm while still intoxicated or
within a reasonable time after becoming sober.
•Ratification for Intoxication - An intoxicated person may ratify a contract once sober.

Mental Incompetence/Vulnerable Persons

•Contracts made by mentally incompetent persons can be void, voidable, or valid.
When the Contract Will Be Void - Court has previously determined a person to be mentally
incompetent, contract is void.
When the Contract Will Be Voidable - A party who is not determined to be mentally
incompetent by a court of law may avoid a contract if at the time of contracting, that person
was incompetent
When the Contract Will Be Valid - A contract entered into by a person who is mentally ill—
but not previously declared incompetent—may be valid if the person had capacity at the
time the contract was formed, such as during a lucid interval

Legality - contract is valid and enforceable only if it is formed for a legal purpose.
- A contract to do something that is prohibited by federal or state statutory law is illegal,
void from the outset, and unenforceable.
Contracts to Commit Crimes: A contract to commit a crime isunenforceable and void.
Examples: Usury; Gambling
Example: Martha contracts with Cam to break into Mrs. Fields and steal the cookie recipe
for her. Cam breaks into Mrs. Fields and gets the recipe and delivers to Martha. Martha
refuses to honor the contract and pay Cam for his hard work. Does Cam have a case for
breach of contract?

Effect of Illegality - An illegal contract is void and both parties are usually considered to be
equally at fault

Public Policy - If a bargain is so oppressive it is unconscionable: so unscrupulous or grossly

unfair to be void of conscienceocourts will relieve innocent parties of part or all of their
duties

Covenants Not to Compete in Employment Contracts: Agreements not to compete (or

noncompete agreements) may be included in employment contracts.
- Employees cannot work for competitors or start competing businesses for a specified
period of time after termination of employment.
- Noncompete agreements are legal in most states if the specified period of time (of
restraint) is not excessive and the geographic restriction is reasonable

Discussion Ch 6 Comments
The injuries to the plaintiff do not matter when it comes to liability, that is a question of
damages (how much money). The change in stadiums’ implementation of safety precautions
(netting) has developed over the years due to accidents like these. As some of you stated,
this installation may impact the viewing for some fans, but the general consensus is that
they are necessary to protect fans. Also, the assumption of the risk doctrine focuses on
knowingly and voluntarily entering into a situation that one knows is inherently dangerous,
yet doing it anyway. There can be some debate, then, on the inherent risks during warm-ups
versus those during the actual baseball game.
This assumption of the risk standard requires taking the particular plaintiff into
consideration. As we saw in Taylor, the court was convinced that she was aware of the
dangers as she was an avid baseball fan. This means that the court in both cases, looks to
whether this particular plaintiff knew of the risk and voluntarily undertook it anyway and
that would mean taking into consideration the age of the plaintiff. As we can see, these are
two different outcomes to a similar situation, yet courts are evolving and this happens even
in our system of stare decisis and precedent.

Discussion Ch 7 Comments
In this fact pattern, Superior is liable for Uri's injuries because Superior did not perform an
inspection when they should have. Even though Superior did not manufacture the rims,
they had a duty to inspect the rims and this liability would encompass their manufacture of
the vehicle.

Uri may use the legal theory of Strict Product Liability - Manufacturing defects as this was
one particular product that was unreasonably dangerous due to the failure of quality
control. Uri may also use product liability – negligence because Superior did not exercise
due care in inspecting the products.

Uri likely would not be able to use market-share liability as he knows it was Superior who
was negligent in the manufacture of the rims and the inspection. Market share would be if
Uri did not know who manufactured the rim and it could have been any number of
companies (i.e. manufacturers of a prescription drug).

Typically, in these situations where there are multiple defendants who can be at fault, the
plaintiff will sue all of them in one lawsuit and each defendant will then begin to point
fingers at the other defendants. However, with respect to this situation, all defendants in
the supply chain have a duty to the customer and all can be held liable (to varying degrees
of damages).

Chapter 15 Mistakes, Fraud, and Voluntary Consent

Voluntary Consent - lack of voluntary consent can be used as a defense to the K's
enforceability
May be lacking due to:
- mistake
- fraudulent misrepresentation
- undue influence
- duress

Mistake
Unilateral Mistakes of Fact - mistake made by only one of the parties that does not generally
give the mistaken party any right to relief from the contract.
Ex. I intend to sell my car for $12,000 but when I send an email to Michael to offer to sell my
car I mistakenly type in $10,000. Michael immediately accepts my offer. I am bound to sell
the car for $10,000 because this is a unilateral mistake

Bilateral (Mutual) Mistakes of Fact - mistake by borth contracting parties about one or more
material facts generally entitles either party to rescind
Ex. Buyer buys a parcel of land to build a home. The buyer and the seller believe that there
are no restrictions to build on the property but it turns out the land has a restriction that
precludes building a structure on it. Both parties made a mutual mistake

Mistake of Value (or quality) - mistake about the future market value or quality of the object
of the K. Ks cannot be rescinded due to mistakes of value.
Ex. Jim buys a baseball from John for $3. Neither party believes it is valuable. Later, a
baseball aficionado reveals that the ball was Barry Bonds’ 756th homerun (passing Hank
Aaron as the all time homerun leader) and is worth thousands of dollars. Can the contract
be rescinded? No

Fraudulent Misrepresentation - innocent party is induced to enter K

1. misrepresentation of material fact
- statement of opinion and predictions (representations of future facts - "this car will last for
years and years" generally are not subject to claims of fraud
Ex. Art dealer states “this sculpture was created by Michelangelo” is a misrepresentation of
a fact if another artist sculpted the piece

- Misrepresentation by silence - ordinarily neither party has duty to disclose facts

Ex. Jim is selling a car that has been in an accident and has been repaired. He does not need
to volunteer this information to a potential buyer. If the purchaser asks Jim if the car has had
extensive bodywork and he lies, then he has committed a fraudulent misrepresentation.

2. intent to deceive
- knowledge on the part of the misrepresenting party that facts have been falsely
represented "guilty knowledge"
- Innocent misrepresentation - person makes statement she/he believes to be true but
actually misrepresents facts.
Ex. Ann mistakenly tells Bill that a tract of land consists of 250 acres when it is actually 215
acres. Relying on that statement Bill contracts to buy the land.
Result: Person is not guilty of fraud
Remedy: Aggrieved party can rescind K, but usually cannot seek damages.

3. justifiable reliance
- innocent party must justifiably rely on the misrepresentation
- reliance is not justified if extravagant statement
- this pickup truck will get 100 miles to the gallon

4. damages -> party must have been harmed as a result of the misrepresentation

Undue influence - arises from relationships in whoch one person can greatly influence
another person and overcome that party's free will in entering into contracts
- excessive persuasion that causes another person to act or refrain from acting by
overcoming that person's free will and results in inequity
-minors and elderly people with their guardians
- K lacks voluntary consent and is voidable
- when a K enriches the dominant person in a fiduciary relationship, the court will presume
undue influence.
Ex. Alice is the guardian for Jan. If Alice enters into a contract on Jan’s behalf from which
Alice benefits, she must rebut the presumption of undue influence. Alice must show:
(1) there was consideration and
(2) independent advice was given to Jan before the transaction
Duress - use of fear or threat to force a party to enter a contract, makes the contract
voidable
- threatened act must be illegal (something the party has no right to do) and render person
incapable of exercising free will
Ex. After a car accident between Bob and Joan, Bob claims to have whiplash and says “If you
don’t pay me $5,000 right now, I will sue you for $25,000”. Joan gives Bob the check to avoid
the lawsuit. If Joan wants to stop payment on the check and claim duress does she have a
case? yeah extortion

Adhesion Contracts - written exclusively by one party and presented to other party on a take
it or leave it basis
- to avoid enforcement of the contract, plaintiff normally must show that the contract or
particular clause is unconscionable

Unconscionable - contains terms that are unfairly burdensome and that unfairly benefit the
dominating party
- created under Section 2-302 of UCC
- originally for all other contractual situations, the concept of an Adhesion Contract was
applied as a common law concept
- application has broadened and courts can invalidate a contract/clause as being
unconsciable at their discretion

Unilateral Mistake https://youtu.be/9Mp0_iaWxAs

- mistake only one sided
- gambling on horses, mistake on buying the non winning horse
- fake coin, buyer lost, equally innocent so no contract

Fraudulent Misrepresentation https://youtu.be/1L3gJj5d2W4

- diamond ring as crystal
- can be written, spoken, gestured, or made through silent
- reckless/exaggerating to do something
- prove material representation, false premise, reckless disregard, and intent to induce

Steps to address fraudulent misrepresentation

1. rescind contract - voidable
both parties must return anything they received
- must ask to rescind right away. they may not continue to benefit from the contract
2. sue for damages
- cannot sue for more than what you lost
- you can sue for punitive damages, but these are subject to state and federal llimits
- in some states you can rescind the contract and sue for damages
- UpCounsel's marketplace

Undue Influence https://youtu.be/PgQiN_uHgD0 https://youtu.be/uXj8m1_X2vs

- seniors and financial abuse
- old case from english law - young girl to older man, scamming to change will and write
everything to her after death, she lost
- california - excessive persuation causes another person to act or refrain from acting by
overcoming that person's free will and results in something that isnt in the influenced
person's best interests
- money/property, pressure, improper use of relationship, and harm to the elderly
- elderly/frail/dependent on others for care/under a lot of stress are especially vulnerable
- influencer family/professional/caregiver/ position of trust/authority (financial
advisor/lawyer/homecare/elderly relative)
1. vulnerable - after spouse died/lonely/dementia
2. influencer assumes power/authority/control over the person - trusted/does not question
them
3. isolation of senior/secret/in hurry says that against them - stop other family members
from visiting and creates discord
4. sudden change in a longstanding estate plan including will/trust, natural heirs are cutout
and instead goes to someone outside the family
5. not fair/reasonable - seizes control over elders assets and chooses what to do, nursing
home against their will

-financial abuse harm to elder

Duress - https://youtu.be/8cBJD4qoWmw
Duress - when one party does not enter into a contract on their own free will. Can be by
threat or economic duress
Economic duress is when the offending party creates the need for a contract with an
exorbitant price.
Ex. if you dont agree, i will kill you physically compelled by duress
if party's manifestation of assent is induced by an improper threat by the other party that
leaves the victim no reasonable alternative, the contract is voidable by the victim
Improper threat - harm/loss/injury, words/action, positive/refraining from action
- employer threatens to make it difficult for employee to find another job if they do not sign
- bad faith threat
No Reasonable Alternative
- victim's emotional state - if person with have ordinary courage to stand up to the
perpetrator of the threat
- subjective attribute
- weak/cowardly nature need protection
Reasonable Alternative - if victim faces financial ruin
ex. sell $1 a piece, buying 1 million widgets by january 1st
changed mind need to pay $2
sue bill for breach of contract
- if really need, then there is no reasonable alternative
Economic Duress vs Hard Bargaining
ex. sell restaurant to get timmy better,
jane offers half a million to buy restaurant (below market price)
accept offer due to need
if jane refuses to pay under the original price, then he can sue
Unconsciability https://youtu.be/lGTuTtJmGg4
- block enforcement of a contract whose terms are very unfair to one party
Ex. bad credit has to buy HD TV. contract require 50 to pay with interest until it has been
paid in full. That tv costs her 10k, but it will take her 10 years to pay the purchase
Chapter 16 - writing requirement in our digital world
Statute of Frauds - require certain types of contract be evidenced by a signed writing in
order to be enforceable
Marriage, 1 Year, Land, Executor, Goods $500+, and Surety
-to be enforceable the following types of contracts must be in writing and signed
1. Promises in consideration of marriage
2. contracts that cannot be performed within one year
3. contracts involving interest in land
4. collateral, or secondary, contracts (promises to answer debt for another)
5. under the UCC, contracts of the sale of goods priced at $500+
Contracts involving interest in land
Ex. Skylar contracts orally to sell his real property to Beth. If he later decides not to sell, Beth
cannot enforce the contract
- includes physical objects permanently attached to it, such as buildings, fences, trees, and
soil

One-Year Rule
Ex. PCC asks me to teach Business Law courses for Summer, Fall and next Spring. If the
contract is entered into in May this year it must be writing to be enforceable.•Time period
begins the day after the contract is made

Collateral/Secondary Contracts - one that is ancillary (subsidiary) to a principal transaction

or primary contractual relationship
•one that is made by a third party to assume the debts or obligations of a primary party to a
contract if that party does not perform.
•A promise to pay another’s debt only if that party fails to pay is a secondary obligation.
•Needs to be in writing under the SOF
•Exception: if the guarantor’s main purpose in incurring the secondary obligation is to
secure a personal benefit, it does not need to be in writing
•Example: Jim agrees to pay his niece Allison’s orthodontist bill, only if her mother does
not. Does this need to be in writing?

Contracts for the Sale of Goods: The UCC requires written evidence or an electronic record
of a contract for the sale of goods priced at $500 or more.

Partial Performance: Under the UCC an oral contract for the sale of goods is enforceable to
the extent that the seller accepts payment or a buyer accepts delivery of the goods
Example: Jamie calls and orders 20 chairs from an online store. After ten chairs have been
delivered, Jamie denies the existence of the contract. The seller can enforce the contract
and obtain payment for the 10 chairs already accepted

Exceptions to the Writing Requirement

Promissory Estoppel: If a person justifiably relies on another’s promise to his or her
detriment, a court may estop (prevent) the promisor from denying that a contract exists.
What Constitutes a Writing? A writing can consist of any order confirmation, invoice, sales
slip, check, fax, or e-mail—or a combination of these items.

What Must Be Contained in the Writing?

•A memorandum or note evidencing an oral contract only needs the essential terms of the
contract, not every term.
•Essential terms: quantity, signed by party to be charged, names of parties, subject matter,
consideration.
•Sales of land must state the price and description
•Note: Only the party against whom enforcement is sought must have signed the writing

Parol Evidence Rule: If written K represents the complete and final statement of the parties’
agreement, neither party is allowed to present parol evidence (testimony or other evidence
of communications between the parties that is not contained in the contract itself).
Example: a landlord tells a renter that cats are allowed but the lease contract states that no
pets are permitted

•A party normally cannot present contradictory evidence:

•Negotiations prior to contract formation.
•Agreements prior to contract formation.
•Oral agreements contemporaneous with (at the same time as) contract formation.

https://youtu.be/tNwAFgdpLJM
Parole Evidence Rule https://youtu.be/EQz3VHoxg98

Chapter 17 Third Party Rights

Privity of Contract: The principle that a contract is a private agreement between the parties
who have entered into it. Third parties normally do not have rights under that contract
- In a contract, one party has a right to require the other to perform some task, and the
other has a duty to perform it.

Assignment. Transfer of contractual rights

Example: lenders (banks), frequently assign their rights to receive payments under their loan
contracts to other firms – student loans assign rights, and then the student must make
payments to the new institution
- Delegation. Transfer of contractual duties

•Assignor: Party assigning rights to third party.

•Assignee: Party receiving rights.
•Obligee: Person to whom a duty or obligation is owed.
•Obligor: Person who is obligated to perform the duty.

Assignments and Delegations

•When rights under a contract are assigned, the rights of the assignor are extinguished.
•The third party (assignee) has right to demand performance from original party to
contract.
•Example: Brower is obligated by K to pay Horton $1,000. Brower is the obligor because she
owes the obligation to Horton. Horton is the obligee.
•If Horton assigns his rights to Kuhn (Horton the assignor and Kuhn the assignee). Kuhn is
now the obligee because Brower owes Kuhn the $1,000.
•Now Kuhn is entitled to enforce the payment if Brower does not pay the $1,000. Horton is
no longer entitled to enforce payment because he assigned his rights.
Third Party Beneficiaries - Courts today usually distinguish only between intended
beneficiaries (who can sue to enforce contracts made for their benefit) and incidental
beneficiaries (who cannot sue).

Assignment of Rights https://youtu.be/GavnyQGA7oc

Chapter 18: Performance and Discharge
Performance and Discharge of a Contract
Performance is the most common way to discharge contractual duties
Performance may also be conditioned on the occurrence or nonoccurance of a certain
event
Condition: A qualification in a contract based on a possible future event. Occurrence (or
nonoccurrence) will
(1) trigger performance; or
(2) terminate an existing obligation

Conditions Precedent - condition that must be fulfilled before a party’s performance can be
required.
Example: A contract to lease university housing may be conditioned on the person’s being a
student at the university

Conditions Subsequent - when a condition operates to terminate a party’s promise to

perform, after the time performance was due.
Example: law grad employment conditioned on passing the bar

Conditions Concurrent - when each party’s performance is conditioned on the other party’s
performance or tender.
Example: Promise to pay for goods when they are delivered

Tender of performance - offer to perform.

Two types of performance:
(1) Complete performance - Parties perform exactly as agreed, or “perfect.”
- All conditions are satisfied.
Example: construction contracts must meet certain specs, once they are met  complete
performance
(2) Substantial performance - A party can enforce the K
1) performed in good faith
(2) must not vary greatly from promised in the K
(3) substantially the same benefits as those promised

Substantial Performance
Measure of Damages: The cost to bring the object of the contract into compliance with its
terms—if cost is reasonable
If unreasonable, measure of damages is the difference in value between the performance
rendered and complete performance

Breach of Contract - nonperformance of a contractual duty

Anticipatory Repudiation: Refusal of one party to carry out contractual obligations before
either party has a duty to perform.
Discharge by Novation - Substitution of a new third party for one of the original parties.
Previous valid obligation.
Agreement by all parties.
Extinguishment of all old obligations.
New valid K
A novation revokes and discharges a prior K

Impossibility of Performance: Supervening, unforeseeable events may make performance

objectively impossible.
One party to a personal K dies or becomes incapacitated prior to performance.
The specific subject matter of the K is destroyed
When a change in law renders performance illegal.

Commercial Impracticability - parties may be excused from performance if it becomes more

difficult or expensive than the parties originally expected at K formation.
Example: Party would have had to pay 10 times more than the original price to excavate
gravel  K discharged

Frustration of Purpose - supervening circumstances make it impossible to attain the purpose

both parties had in mind when they made the K
Example: John signs up for piano playing lessons from Tara. John suffers a horrible accident
that causes him to lose dexterity in his hands. This is a frustration of purpose that was
unforeseeable and substantially frustrates the purpose of learning to play the piano. As
such, John will be excused from performance of the contract.

Substantial Performance https://youtu.be/EfIn38wqX

Chapter 19 Breach of Contract and Remedies

Remedy: the relief provided for an innocent party when the other party has breached the K.
Remedy at Law: Damages
Equitable Remedies: Rescission; Restitution; Specific Performance; Reformation
Damages compensate the nonbreaching party for loss of the bargain
(1) Compensatory
(2) Consequential
(3) Punitive
(4) Nominal

Compensatory Damages - compensate for loss of the bargain and replace what was lost

Compensatory Damages Measure - difference between value of promised performance and

value of actual performance.
Example: Randall contracts to perform certain services exclusively for Hernandez for the
month of March for $4,000. Hernandez cancels the contract, in breach. Randall is able to
find another job during March but he can only earn $3,000. He can sue Hernandez for
breach of contract and recover _______ in compensatory damages?

Incidental Damages - expenses caused directly by breach of contract.

Example: Randall can also recover the amount that he spent to find another job.
Consequential Damages - foreseeable damages that result from a party’s breach of contract.
Example: when a seller fails to deliver goods, knowing that the buyer is going to resell those
goods immediately, courts will award consequential damages for the loss of profits from the
planned resale

Punitive Damages - punish or deter future conduct.

Generally not available for breach of K.
Only if both a breach of K and a tort (i.e. fraud)
Nominal Damages: No financial loss.

Liquidated Damages vs. Penalties:

Liquidated Damages - specific amount agreed to be paid as damages in the event of
future breach.
Penalties: Designed to penalize, generally unenforceable

Rescission - the cancellation of a K to return the parties to their pre-K position.

Restitution: plaintiff’s recapture of a benefit conferred on the defendant that has unjustly
enriched her
returning goods/property/funds

Example: Katie contracts with Mikhail to design a house for her. Katie pays Mikhail $9k and
agrees to make two more payments as the design progresses. The next day, Mikhail tells
Katie that he has accepted a position with an architectural firm in another state and he can
no longer design the house. Katie can obtain restitution of the $9k.

Specific Performance - calls for the performance of the act promised in the K.

Reformation - allows a K to be rewritten to reflect the parties’ true intentions.

Example: mutual mistake made in the contract such as a clerical error or incorrect subject
matter of the K

Waiver: Knowing relinquishment of a legal right to require satisfactory and full performance.
party waiving the breach cannot take any later action on it

Chapter 20 The Formation of Sales and Lease Contracts

- UCC governs contracts for the sale or lease of goods

Uniform Commercial Code (UCC) - most comprehensive codification of laws involved in a

total commercial transaction
- Article 2 - Sale of Goods
- Article 2A covers lease contracts

Article 2 (Sales) and Article 2A (Leases)

- common law of contracts applies to sales contracts (offer, acceptance, consideration, etc)
- Art 2 deals with sale of goods and does not deal with real property (real estate), services,
or intangible property

Sale - passing of title from seller to a buyer for a price

Goods - property that is tangible and movable
- tangible can be touched or seen. Ex. car
- movable carried from place to place

Formation of Sale and Lease contracts

UCC open terms - UCC provides open-term provisions to be used to fill the gaps
- parties are free to agree to terms different from those in UCC
- sales or lease K with open terms will not fail for indefiniteness if
1. parties intended to make a K
2. there is a reasonably certain basis for the court to grant an appropriate remedy

Open Price Term - reasonable price at the time for delivery

Open Payment Term - due at the time and place at which the buyer is to receive goods
Open Quantity Terms - if no quantity specified, no K is formed because there is no basis for
determining a remedy

2 Exceptions
1. Requirements Contract - buyer agrees to purchase-- and seller agrees to sell-- all or up to
a stated amount of what the buyer requires
2. Output Contract - seller agrees to sell-- and the buyer agrees to buy--- all or up to a stated
amount of what the seller produces
Ex. Newport Cannery agrees to purchase from Tu and Tu agrees to sell to the Cannery, all of
the green beans that the Cannery requires during summer.
- what if buyer promises to purchase only if he wishes to do so?
- what if buyer receives the right to buy goods from someone other than the seller?

Merchant's Firm Offer - merchant-offeror gives assurances in a signed writing that the offer
will remain open
- irrevoceable for reasonable period of time without consideration
Ex. Osaka, used car salesman, emails a letter to Gomez on July 1 stating 'I have a used 2016
Toyota RAV4 on the lot that I will sell you $22K any time between now and July
31.Thanks,Osaka'

Acceptance - may be made in any reasonable manner and by any reasonable means
Additional terms - k is formed if there is definite acceptance regardless of additional or
different terms
-A promise to ship or prompt shipment of conforming or nonconforming goods is an
acceptance and a breach

Statute of Frauds (UCC Article 2) - the K will not be enforceable beyond the quantity of
goods shown in the writing

Special Rules for Merchants - the SoF is satisfied if after oral agreement, one of the
merchants sends a signed, written memorandum containing essential terms to the other
merchant within a reasonable time
Ex. Alfonso is a merchant-buyer in Cleveland. He contracts over the phone to purchase
$6,000 worth of spare aircraft parts from Goldstein, a merchant-seller in New York. Two
days later, Goldstein emails a signed confirmation detailing the terms of the oral contract,
and Alfonso subsequently receives it. Twenty days later, Alfonso notifies Goldstein in writing
that he objects to the contents of the confirmation
Alfonso cannot raise the SoF as a defense against enforcement of the contract
UCC https://youtu.be/ewP_QiinJ_g
- not a law, but more of a proposal which anyone can follow or not
- each state enacted their own UCC
- UCC are for goods while the Common law is for everything else (real estate, employment
contracts, insurance, etc)

Chapter 23 Warranties
Warranty - assurance or guarantee by the seller or lessor of certain facts concerning the
goods being sold or leased
- A warranty imposes a duty on the seller  a breach of warranty is breach of the seller’s
promise
UCC Article 2 designates several types of warranties including
1. warranties of title - 3 express (automatically arise in sales Ks) title warranties at sale:
- Good Title - seller warrants that she/he has good and valid title to the goods sold and that
she/he may rightfully transfer title to the buyer [UCC 2-213(1)(a)]
Ex. buyer can sue for breach if she/he later learns that the seller did not have valid title to
the goods
- No Liens - protects buyers/lessees who are unaware of any liens (claims, charges, or
liabilities against the goods at the time the contract is made) [UCC 2–312(1)(b), 2A–211(1)]
warranty protects buyers who unknowingly purchase goods that are subject to a creditor’s
security interest
- No Infringements - merchant-seller warrants that the buyer takes the goods free of
infringements from any copyright, trademark, or patent claims of a third person [UCC 2–
312(3), 2A–211(2)]
Notice - if buyer is subsequently sued by a third party holding copyright, trademark, or
patent rights in the goods this warranty is breached - buyer must notify seller
- failure to provide notice normally bars subsequent remedy against the lessor for liability
established by the litigation

2. express warranties - seller's oral or written promise, ancillary to an underlying sales or

lease agreement, regarding the goods' quality, description, or performance
- Statements That Create Express Warranties UCC 2–313 and 2A–210 –That the goods
conform to any affirmation of fact or promise that the seller/lessor makes to the
buyer/lessee about the goods.
■Ex: “these drill bits will easily penetrate stainless steel –without dulling”–That the goods
conform to any description of them.
■Ex: “Crate contains one Kawasaki Brute Force 750”–That the goods conform to any sample
or model of the goods shown to the buyer or lessee.
■Ex: Dealer demonstrations
Note: seller does not have to use words like “guarantee” or “warranty.”
- Statements of Opinions and Value - only statement of facts create express warranties.
Exception for statement of opinion by experts
- the context in which a statement is made may be relevant in determining the
reasonableness of a buyer's or lessee's reliance

3. implied warranties - one that the law derives by inference from the nature of the
transaction or the relative situations or circumstances of the parties
- merchants impliedly warrant that the goods they sell are
1. merchantability - every sale/lease of goods made by a merchant automatically gives rise
to an implied warranty of merchantability (UCC 2–314, 2A–212)
Merchantable goods - reasonable fit for the ordinary purposes for which such goods are
used
- goods are of average, fair, or medium grade quality
- adequately packaged and labeled
- conform to promises on label
Merchantable Food - food that is fit to eat
- serving of foods or drinks in a public establishment also has an implied warranty of
merchantability
- courts generally determine whether food is fit to eat based on consumer expectations
Example: Woman ordered fish chowder in a restaurant in Boston. The fish chowder is milky
and not clear. She ate the chowder and had a fish bone lodge in her throat which had to be
removed. The issue was whether the food was merchantable. The court held that if you
were in New England and order a “good New England fish chowder” it could have some fish
bones in it. Since this was commonly known, the restaurant did not breach the implied
warranty of merchantability. Webster v. Blue Ship Tea Room, Inc. on page 431
■Would the court have decided differently if it was a piece of glass?

2. Implied Warranty of Fitness for a Particular Purpose - seller knows both of the following
1. particular purpose for which a buyer or lessee will use the goods
2. that the buyer or lessee is relying on the skill and judgement of the seller or lessor to
select suitable goods (CC 2–315, 2A–213)

Example: Carlos tells Tyrone, a salesperson at GamerPC, that he is looking for a new PC,
such as the Cyberpower Black Pearl or Velocity Rapter Signature Edition, to use for gaming.
Carlos’ statement implies that he needs a PC with a video card that is capable of running
fast-paced video games with detailed graphics. Tyrone recommends and sells to Carlos a
computer that does not have a video card and is too slow to run such video games. Tyrone
has breached the implied warranty of fitness for a particular purpose.

3. Warranties Implied from Prior Dealings or Trade Custom - when both parties to the
contract have knowledge of a well-recognized trade custom, courts will infer that both
parties intended for that custom to apply to their contract

Warranty Disclaimers and Limitations on Liability

- Express warranties -> a seller/lessor can disclaim all oral express warranties by a written
disclaimer included in a contract
- must be language that is clear and conspicuous and must be called to a buyer’s or lessee’s
attention [UCC 2–316(1), 2A–214(1)].
- Implied warranties -> unless circumstances indicate otherwise, warranties of fitness and
merchantability can be disclaimed with the words 'as is' or 'with all faults'

Implied Warranties Disclaimer of the Implied Warranty of Merchantability:

-Seller must use the word “merchantability.”
–Disclaimer of the Implied Warranty of Fitness: Must be in writing and conspicuous. Note:
Warranties are disclaimed as to defects that could reasonably be found on examinationby
buyer
Courts will ultimately test warranty disclaimers with reference to the UCC’s
unconscionability standards (UCC 2–302, 2A–108).
–Factors include “take-it-or-leave-it” provision or unequal bargaining power.

Statutes of Limitation
■Action for breach of warranty must commence within four years after the action accrues
(breach).
–Action for breach accrues when the seller or lessor tenders delivery, even if the buyer or
lessee is unaware of the breach at that time [UCC 2–725(2), 2A–506(2)].