10.1

Chapter 10

Writings and Records, Defenses, Remedies, and Creditors’ Rights

© 2003 by West Legal Studies in Business/A Division of Thomson Learning

10.2

Writings

Oral contracts are legal and enforceable, but are sometimes hard to prove.

Purposes for writing contracts include Authentication

Prevention of forgery

Demonstration of each party’s serious intent

10.3

Signatures

Any tangible sign used to authenticate writing

Cursive Stamp Corporate seal Initials Typing or printing Fingerprinting Electronic signature pads Digital signatures

10.4

Statute of Fraud Categories

These documents must be in writing:

Sale of land Guarantees to pay the debts of

others

Contracts incapable of performance within one year of their making

Sales of goods of $500 or more

10.5

Uniform Electronic Transactions Act

Most significant law for electronic commerce

Validates electronic contracts, electronic signatures, and use of electronic agents

UETA does not apply to wills or their revisions, testamentary trusts, or common negotiable instruments

10.6

Provisions of the UETA

Electronic records

Electronic signatures

Electronic records and contracts

Information in writing

Presentation of records

Change or error

10.7

Provisions of the UETA

Notarization and acknowledgement Retention of electronic records Admissibility in evidence Automated transaction Time and place of sending and

receiving Transferable records

10.8

Parol Evidence

Prohibits either party from proving any different terms than those stated in the written document

Integration

Merger clause

Confirmatory records

10.9

Contract Defenses: Capacity

These defenses can be brought up to void contracts:

Minority

Intoxication

Under the influence of drugs

Insanity

10.10

Contract Defenses: Fraud and Misrepresentation

UCC imposes good faith requirements

UCITA further provides for “observance of reasonable commercial standards of fair dealing” in every contract

10.11

Contract Defenses: Mistakes

Discuss the implications of each of the following mistakes and give examples of each:

Bilateral or mutual mistakes

Unilateral mistakes

Electronic errors

10.12

Contract Defenses: Duress

DuressDuress includes direct threat of force Economic duress

Unconscionability

Undue influenceUndue influence includes no direct threat of force, but subtle coercion

10.13

Types of illegalities:

Licensing

Gambling

Public policy

Restraints of trade

Contract Defenses: Illegality

10.14

Agency

Two-party relationship between a principal principal and agentagent.

Agents must not Exhibit conflicts of interest Simultaneously represent both parties Favor their own personal interests Take a profit made for the principal

without the principal’s consent Divulge principal’s trade secrets Break the law in the performance of

duties

10.15

Agent’s Authority

Express authority

Implied authority

Apparent (ostensible) authority

After-the-fact authority by ratification

Conduit theory

Electronic agents

10.16

Discharge of Obligations

Discharge by performance

Impossibility of performance

Damages (compensatory, punitive, liquidated)

Specific performance

Arbitration clauses

10.17

UCC Remedies

Consequential damages

Cancellation of the contract

Lapse of statute of limitations

Commercial impracticality

10.18

Seller’s Obligations and Buyer’s Remedies

Conforming goods

Inspection

Nonconforming goods

Acceptance

Revocation of acceptance

Cure

10.19

Buyer’s Obligations and Seller’s Remedies

Payment made on or before the time set

Collect difference between contract price and lower market price

Collect difference between contract price and lower resale price to another buyer

10.20

Buyer’s Obligations and Seller’s Remedies

Recover lost profits for sale of fewer units

Sue for total sale price if goods can not be resold

10.21

Creditor’s Rights: Secured Financing

Promissory notes

Insolvency

Pledge

Lien

Foreclosure

Security interests

Attachment and perfection

10.22

Creditor’s Rights: Bankruptcy

StraightStraight bankruptcy (Chapter 7) Complete liquidation of assets to

satisfy debt Voluntary or involuntary petitions Secured and unsecured creditors

involved

Debt adjustmentDebt adjustment (Chapter 13) Debts adjusted, not discharged Trustee arranges payment of all debts

10.23

Questions & Discussion