Fundamentals of Business Law Summarized Cases, 8th Ed., a.docx

Fundamentals of Business Law
Summarized Cases, 8th Ed., and Excerpted Cases, 2nd Ed.
ROGER LeROY MILLER
Institute for University Studies
Arlington, Texas
GAYLORD A. JENTZ
Herbert D. Kelleher Emeritus Professor in Business Law
University of Texas at Austin
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Copyright © 2010 South-Western Legal Studies in Business, a
part of South-Western Cengage Learning.
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Learning ObjectivesWhat is the difference between an
assignment and a delegation?What rights can be assigned
despite a contract clause expressly prohibiting assignment?What
factors indicate that a third party is an intended
beneficiary?How are most contracts discharged?What is a
contractual condition, and how might a condition affect
contractual obligations?
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AssignmentsTransfer of contractual rights to a 3rd party
(assignee).The assignee has the right to demand performance
from the other original party (Obligor) to the contract.Cannot
Assign rights for personal services or when obligor’s
performance changes.
CASE 11.1 Graham School and Dance Foundation, Inc. v.
Martha Graham Center of Contemporary Dance, Inc. (2nd
Circuit, 2004).
6.bin
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DelegationsTransfer of duties to a 3rd party (Delegatee) by
Delegator.Delegatee owes duty to original party in
contract.Delegator is still liable for performance of duty.
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“Assignment of All Rights”
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Third Party Beneficiaries3P Intended Beneficiaries (Creditor
and Donee) Original parties to K intend at the time of
contracting that the contract performance directly benefit a 3rd
party. After rights vest, 3P can sue for breach.3P Incidental
Beneficiaries. Benefit is unintentional. 3P has no rights.CASE
11.2 Revels v. Miss America Organization (North Carolina,
2007).
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Third Party Beneficiaries

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Contract DischargeConditions to Performance:Condition is a
possible future event that may or may not happen.Triggers or
terminates performance.Condition Precedent: prior to
performance.Condition Subsequent: follows initial
performance.Concurrent: occur simultaneously.
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Contract Discharge
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Discharge by PerformanceComplete vs Substantial
Performance.Complete Performance: perfect performance under
the contract.Substantial Performance: technically a minor
breach but as long as in good faith, the non-breaching party
remains liable to pay.Satisfaction Contract: performance is
conditioned on reasonable satisfaction.
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Discharge by PerformanceMaterial Breach of Contract. When
performance is not substantial.Innocent party is excused from
performance and has the right to sue for damages.A minor
breach may be cured.Anticipatory Repudiation.One party gives
notice of refusal to perform.Innocent party treats AR as material
breach.
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Discharge by AgreementDischarge By Mutual Rescission:
parties must make another agreement.Discharge by Novation:
new contract with substitution of a third party for one of the
original parties.Accord and Satisfaction: settlement to discharge
original contract.
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Discharge by Operation of LawContract Alteration.Statutes of
Limitations.Bankruptcy.Impossibility of Performance
(Objective).Party’s incapacitation.Subject matter is
destroyed.Performance becomes illegal.Commercially
impracticable.
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Discharge by Operation of LawTemporary Impossibility.
Suspends performance until the impossibility
ceases.Commercial Impracticability.Performance may be

excused when it becomes extremely more difficult or expensive
than originally contemplated.CASE 11.3 Facto v. Pantagis
(New Jersey, 2007).
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Unit 6 Discussion Topic: Legality of Assignments
Throughout this course, many discussion opportunities come up
where you need to respond to other people's opinions and
comments. Then, respond to your Discussion topic after you
have completed your Reading.
Bo Jenkins, (Camille’s second ex-husband) and Camille have a
sporting accessories store together. Camille bought Bo’s share
of the store but continues to rent to him so that business can be
conducted as usual. One of the biggest customer draws to the
store is Bo, as he was a world famous international triathlon
runner whose name has been endorsed by a multitude of
sporting goods manufacturers. Bo has decided he and Rana, a
former friend of Camille’s will be entering into European
ventures together. As such, Bo has orally assigned his lease to
Rana’s daughter Fauna. Bo has given Camille oral notice of the
assignment. Fauna was a model and knows fashion and has sold
items that would look great with some of the accessories in the
store. Camille objects to the assignment claiming that the store
is a specialty store and personal in nature and therefore cannot
be assigned.
Please respond using the information from your Reading and be
sure to do the following:
1. Discuss whether or not the assignment is valid.
2. Analyze whether or not the rights can be assigned or if they
are prohibited under the basic rules of assignments.
Unit 6 Assignment: Cardigan History
LS311-3: Analyze the elements of a valid contract
GEL 6.06: Apply research to create original insights and/or
solve real-world problems.
The Cardigan family has made a name for themselves in the
sweater industry whereby they have designed sweaters for a
variety of uses and for a wide target audience ranging from

toddlers to business professionals. Cassandra, whom everyone
calls Cassie, is the CEO of CARDWARE Inc., Camoni is the
spokesperson for the sweater line, and Candie models the lines
in the professional sphere. They often use their mother,
Camille, as a business consultant for input about various new
ideas and marketing because she was the manager and agent of
her son’s glove company. Cora and Caley, Camille’s two
youngest daughters from her second failed marriage to Bo
Jenkins, are co-office managers of their headquarters located in
Silkadonia.
Camille has developed a good network among those in the
fashion industry, especially the seamstresses who have been
hired by well-known celebrities. One day, Camille spoke with
Sonya, the owner and Lead Seamstress for Shazam Clothing
Industries. Shazam is a leading manufacturer of unique limited
edition clothes in Silkadonia. Camille presented Sonya with her
order to sew a limited number (500) of hot pink and black
machine knitted sweaters with a matching knit hat. Each sweater
was to have a number and Candie Cardigan’s signature on a
label sewn onto the bottom right side of the sweater. The hats
would have the same label with matching number to its sweater,
but sewn on the right side of the turned up hat cuff. Sonya
agreed to make each sweater and hat pair for $100. Camille’s
plan was to sell each set for $300 thereby making a $200 profit
per set. While discussing the type of yarn to be used, Sonya’s
cell phone rang. Sonya pushed a piece of paper and a color
palette towards Camille and whispered “write the type of yarn
you want used and exact dye lots” and I will begin work on this
right away. Camille did as requested, but forgot to give Sonya
the traditional 25% down payment. The down payment has
always been used to purchase the materials.
Sonya completed production of all 500 sweaters in record time
and has presented Camille with an invoice for payment for the
same. At the bottom of the invoice, the words, “Payment Due
Upon Receipt” were written. Camille changed her mind about
wanting the sweaters and hats, as she decided that the items

would not be as profitable as originally anticipated. Sonya now
comes to the law firm you work for, P. Strami, and Hammond,
Attorneys at Law, and wants to know if she has any recourse.
Attorney Strami hands you the following instructions and asks
that you draft a memorandum to him incorporating your
research.
Dear Paralegal:
Please prepare a 2–3-page double-spaced memorandum in size
12 Times New Roman font discussing the following in the order
presented:
· Please determine whether or not a contract has been formed
using the basic contract principles of offer, acceptance, and
consideration. State whether or not any of the crucial parts of
the initial offer may be missing.
· Further, please research whether or not Camille and Sonya’s
prior course of dealings has an impact on the parties’
communications and whether or not Sonya would be successful
against CARDWARE Inc. should a breach of contract lawsuit be
brought against her.
· Be sure to include intext citations as you integrate your
research to support your position on whether or not a contract
has been formed.
· Do not forget to provide your legal research within your
memorandum. You may use case law to make comparisons, your
textbook, and reliable Internet research to provide in-text
citations for your work. Do not use Wikipedia.
Prepare your memorandum paying particular attention to the
following:
· For confidentiality reasons, please prepare an APA formatted
cover sheet with your memorandum. Do not forget to indicate
which unit the Assignment is for.
· Be sure to avoid the use of first person. Instead, convey your
research utilizing third person.
· Be sure to discuss any ethical perspectives/concerns with
regard to the parties' communications
· Keep all font color consistent throughout. If you copy and

paste a link and it is in blue, hover your mouse over the link,
right click, and select “REMOVE HYPERLINK” to keep the
font color black like the rest of your submission.
· Use size 12 Times New Roman font.
· Utilize in-text citations. If a reference is listed in your
reference page, it must be included within the body of your
submission as well.
· Prepare an APA formatted reference page.
· Proofread your submission for any grammatical or sentence
structure errors. Also, please refer to the rubric for this
Assignment to make sure you have included that which you will
be graded over before placing the same into the Unit 6
Assignment Dropbox.
· Submit your Assignment in a timely manner.
· Do not hesitate to ask for assistance should you need it.
Fundamentals of Business Law
Summarized Cases, 8th Ed., and Excerpted Cases, 2nd Ed.
ROGER LeROY MILLER
Institute for University Studies
Arlington, Texas
GAYLORD A. JENTZ
Herbert D. Kelleher Emeritus Professor in Business Law
University of Texas at Austin
*

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Learning ObjectivesIn what types of situations might
genuineness of assent to a contract’s terms be lacking? What is
the difference between a mistake of value or quality and
mistake of fact?What elements must exist for fraud to
occur?What contracts must be in writing to be
enforceable?What is parole evidence? When is it admissible to
clarify the terms of a written contract?
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Mistakes
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MistakesMistake of Value (or Quality).Contract is

enforceable.Mistake of Fact.Unilateral Mistake of Material
Fact—mistaken party does not have the right to cancel contract
unless:(1) the non-mistaken party knew or should have known
about the mistake, or (2) there is a clerical error.
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MistakesBilateral (Mutual) Mistakes—if both are mistaken
either one can cancel the contract.CASE 10.1 Inkel v. Pride
Chevrolet-Pontiac, Inc. (Vermont, 2008).
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Fraudulent MisrepresentationInnocent party can cancel the
contract.Plaintiff must show:Misrepresentation of a material
fact (not opinion) by conduct, silence or words.Intent to
deceive.Innocent party must have justifiably relied on the
misrepresentation.Plaintiff must have suffered a legal injury.

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Undue Influence and DuressUndue Influence.Arises from a
special relationship of trust.A stronger party overcomes a
weaker party’s free will by exerting psychological
influence.Duress.Threat of physical force or extortion.Can serve
as basis for rescission of contract.Economic need, by itself, is
not duress.
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Statute of Frauds: The Requirement of a WritingStatute of
Frauds requires certain contracts to be in writing and signed to
be enforceable.A contract involving an interest in land.A
contract that by its terms cannot be performed within 1 year of
execution.Collateral contracts to answer for the debt of
another.Prenuptial agreement. Contracts for sale of goods over

$500.
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One Year Rule
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Exceptions to Statute of FraudsPartial performance. Purchaser
has paid part of purchase price, taken possession and made
valuable improvements to property.CASE 10.2 School-Link
Technologies, Inc. v. Applied Resources, Inc. (Kansas, 2007).
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Exceptions to Statute of FraudsAdmissions.Party admits in
court records contract exists.Promissory Estoppel/Detrimental
Reliance.Promisee justifiably relies.
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Sufficiency of the Writing“Writing” includes memorandum,
invoice, fax, check, email.Essential terms sufficient.Signed by
party against whom enforcement is sought (Defendant).Initials
of Defendant adequate.
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Contracts Subject to
the Statute of Frauds
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Parol Evidence Rule
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Parol Evidence RuleProhibits the introduction at trial of
evidence of the parties prior communications that contradicts
the written contract.CASE 10.3 Yocca v. Pittsburgh Steelers
Sports, Inc. (Penn., 2004).

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Parol Evidence: ExceptionsExceptions (allow parol
evidence):Evidence of subsequent contract modificationsOral
evidence to show contract was void or voidable. Show meaning
of ambiguous Terms.To “fill in the gaps.” Prior Dealings,
course of performance, usage in trade.Obvious or gross clerical
errors.
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Integrated ContractsIs the written contract intended to be a
complete and final statement of the terms of the agreement?If
“yes”, then the contract is “integrated.”Can be fully or partially
integrated.Courts exclude any parol evidence that contradicts
the writing.

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