LAW200 Notes (Final Exam) PDF

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ZAYED UNIVERSITY ABU DHABILAW 200 FINALDefinition Ratify - affirm/accept Void - invalid/incorrect Adjudication- judgment- Capacity to Contract (Competent Parties) Powerpoint: - Capacity means that a person is competent/can perform the act in a contract. The following individuals cannot enter into a ...

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ZAYED UNIVERSITY ABU DHABI LAW 200 FINAL Definition Ratify - affirm/accept Void - invalid/incorrect Adjudication- judgment -

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Capacity to Contract (Competent Parties) Powerpoint: Capacity means that a person is competent/can perform the act in a contract. The following individuals cannot enter into a contract: Minors Insane people Those under the influence of drugs/alcohol Bankrupt persons Instead, they can “disaffirm” (not be bound by the contract anymore). This law protects such individuals who are not competent to defend themselves financially/legally. Mental capacity is the ability to understand the full meaning and effects of the contract. A contract with a minor is not enforceable unless the contract concerns providing the necessities of life. A minor still can enforce a contract (even if the other party is unaware that the individual is a minor), but they must ratify (confirm) it when they become of age. A contract with a minor is void ab initio (void from the beginning) and cannot be enforced in law. The result is that a party cannot compel the minor to perform his/her part of obligations as enumerated in the agreement… again, because they are a minor. Convicts can’t enter into contracts until they finish their sentence. An insolvent is a bankrupt person who can’t enter into a contract. James was furious with his parents because they do not allow him to stay up late. At age 17, he rented an apartment on the other side of town. When his landlord inquired about his age, James claimed that he was indeed an adult. James signed the lease and moved into his new apartment. After a few days, James missed his mom's cooking, so he asked if he could get out of the lease by admitting to his landlord that he had lied about his age and was a minor. What can the landlord do? 1.The lease may be considered enforceable because he falsified his age at the time of the contract. 2.The landlord can sue the parents, as they are legally responsible for their child's actions. 3.The only factor that needs to be considered is whether the signer of the contract had the mental capacity to understand it.

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4.The landlord has no actions that he can legally take until James is considered an adult in the eyes of the law.

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Capacity to Contract (Competent Parties) Practice Questions: Capacity means the ability to enter legal obligations and acquire legal rights. An individual who was intoxicated when they signed a contract can escape the contract. Persons intoxicated at the time of entering a contract are deemed to not have had capacity to enter into a contractual agreement and their agreement is deemed voidable. Minors don’t have the capacity to enter into contracts. Courts have long recognized that minors are in a vulnerable position in their dealings with adults. As a result, minors are considered to lack capacity to contract. A contract made by a person who has been adjudicated to be insane and institutionalized or put under a guardian's care is void rather than voidable. If a person has been adjudicated to be insane or institutionalized, then any contract made by the person becomes void at inception itself. Emancipation is not a formal agreement in writing to terminate a parent's right to control a child and receive services from him. Emancipation does not have any formal requirements and can be implied by parent's actions/events. Ratification/acceptance does not have to be expressly made only in written form, it can be expressed orally as well. Ratification/acceptance makes a contract valid from its inception. The act of affirming the contract and surrendering the right to avoid the contract is known as ratification. A person who at the time of the contract lacked capacity due to mental impairment can ratify the contract once he/she regains his/her normal mental faculties. Capacity is the ability to incur legal obligations and acquire legal rights. Which of the following contracts is void? A. A contract made by an unemancipated minor. B. A contract made by a person who has been adjudicated insane and institutionalized. C. A contract made by a person under the influence of mind-altering drugs. D. A contract made by a minor who receives no support from a parent or guardian. Why? the party is so impaired that he/she could not even manifest assent. The act of affirming a contract and surrendering the right to avoid the contract is ratification. A minor entered into a contract with GAM & Co. On attaining majority, he wishes to enforce the contract. The adult party must: A. perform the contract.

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B. rescind the contract. C. abandon the contract. D. ratify the contract. If a minor, on reaching majority, wishes to enforce a contract, the other party has to perform it. Which of the following characterizes emancipation? A. It allows parents to receive services from the child. B. It occurs only through parents' consent. C. Most states grant an emancipated minor the capacity to contract. D. There are no formal requirements for it. Emancipation is the termination of a parent's right to control a child and receive services and wages from him and there are no formal requirements for emancipation. Emancipation can occur through the implied actions of the parents. Mike, a minor, buys some real estate as investment. The contract obligates Mike to make monthly installment payments for 10 years. Mike reaches the age of majority one month after making the contract. After this, Mike makes 25 monthly payments under the contract, but then decides that he wants to rescind the deal. Which of the following is most true? A. Mike can disaffirm. B. Mike cannot disaffirm because contracts for the sale of land can only be disaffirmed before the age of majority. C. Mike cannot disaffirm because contracts for the sale of land must be disaffirmed within one year of the age of majority. D. Mike cannot disaffirm because he has already ratified the contract. If the adult has relied on the contract or has given something of value to the minor, the minor must disaffirm within a reasonable time after reaching majority. A former minor's continued performance of his part of the contract after reaching majority has been held to imply his intent to ratify the contract. The act of affirming a contract and surrendering the right to avoid it is called ratification. It can be done only when a person reaches majority. If a person fails to disaffirm a contract within a reasonable period of time after reaching majority, the contract is automatically ratified. Which of the following is most likely to constitute ratification of a contract made by a minor? A. Not performing one's duties under the contract after reaching the age of majority. B. Nonperformance of the other party to the contract after the age of majority. C. Failing to disaffirm a completely executory contract within one month after the age of majority. D. Making an oral statement that "I will ratify the contract." Marlene, a self-employed 16-year-old whose parents are dead, buys a dress on credit for $50. After receiving the dress and discovering that its reasonable value is only $25, Marlene tries to disaffirm the deal before paying the $50. In this case: A. Marlene can disaffirm, and she is bound to pay the full $50. B. Marlene can disaffirm,

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but she is only bound to pay $25. C. Marlene can disaffirm, and she can return the dress without paying for it. D. Marlene can disaffirm, and she can keep the dress without paying for it. Minors who disaffirm a contract are liable to pay the reasonable value of the good/services received. In general, contracts made by insane (mentally impaired) persons: A. can sometimes be ratified. B. are unconditionally void. C. are unconditionally voidable. D. are voidable only if they involve necessaries. A person formerly incapacitated by mental impairment can ratify a contract if he/she regains his/her capacity. Which of the following is true of contracts involving people suffering from mental illnesses? A. Contracts of people suffering from a mental defect at the time of contracting are usually considered to be enforceable. B. A person disaffirming on the ground of mental impairment need not return any consideration given by the other party. C. A person disaffirming on the ground of mental impairment is liable for the reasonable value of necessaries. D. A person incapacitated by mental impairments cannot ratify a contract if he/she regains his capacity. Like minors, a person who disaffirms a contract on the ground of mental incapacity is liable for the reasonable value of necessaries. Intoxication is a ground for lack of capacity only when it is so extreme that the person is unable to understand the nature of the business at hand. The rules governing the capacity of intoxicated persons are very similar to those applied to the capacity of people who are mentally impaired. The basic right to disaffirm contracts made during incapacity, the duties upon disaffirmance, and the possibility of ratification upon regaining capacity are the same for an intoxicated person as for a person under a mental impairment. Contracts made by severely intoxicated people cannot be ratified ONLY until the person has regained his mental faculties. Intention, Certainty and Completeness: An intention to create legal relations is required. The terms should be certain and not vague (does not need further development/clarification). If an important term is not settled, the agreement is not a contract. Intention is very important in domestic and social agreements (between friends/family). In Domestic and Social Agreements, parties do not intend to create legal relations. In the case of commercial agreements, it is presumed that there is an intention to create legal relations. A complete agreement/enforceable contract, parties must reach an agreement on all elements of their contract (nothing outstanding). Completeness is an aspect of certainty of terms.

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The contract conditions determine the parties' obligations. Condition Precedent: must happen before a contract is in effect (you will purchase if the house passes inspection). Condition Concurrent: must occur at the same time as some other act or event (I'll wash the dog if he'll clean my room). Condition Subsequent: requirement stated in a contract (Ayesha agrees to work for Emaar until she gets admission and returns to University.). Breach of Contract: a contract will place an obligation on each of the contracting parties, if one party fails to uphold his/ her obligations under the contract there's breach of contract (legal consequences, the court will issue a remedy/satisfies the legal harm/injury through compensation/the provisions of a contract (it depends what it exactly is). Intellectual Property: Intellectual property/capital can be tangible/intangible. Trade secret: knowledge on confidential inside processes. Restrictive covenant: An agreement not to work in similar employment. Restrictive covenants are enforceable, they must be reasonable. Agreement not to compete: Seller agrees not to begin/operate a similar business, reasonably for the firms’ goodwill. Trademark: Word/name/symbol used by a merchant to distinguish goods manufactured or sold by others. Ownership may be designated in advertising or on a label/package “® or ™”. Protection for creators is copyrights; thought the work must be original, creative, and expressed in a tangible form (digitally or not). Copyrights under one country are protected under the laws of most other countries. Patent: Protection to inventors that gives the patent holder the exclusive right to manufacture/sell the invention for 20 years. A patent cannot be renewed. The purpose is to encourage inventors to develop new products and new ideas.

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Business Organizations: Sole Proprietorship/Partnership Corporation

Three forms of business ownership: - Sole proprietorship (owned & operated by one person). - Easy and cheap to close/open unless you need permits, minimal gov intervention. - Owner makes all decisions & has full control (added flexibility, privacy, all profits). - Business pays no taxes or are deducted/are paid as personal income of the owner. - Owner has unlimited liability for debts/actions. - Difficult to raise capital (banks consider them high-risk). - Includes employees/inventory/capital/land...etc. - If unable to pay debts from their own pocket, bill collectors can take personal assets. - Delays hurt your business. - Limit in your own skills/abilities. - Uncertain life (ex: you get an injury, bankrupt, die (automatically dissolves the business..etc). -

Partnership (two or more people share the assets/liabilities/profits). Easy and cheap, though need an attorney to develop agreement. Have diverse resources (team with skills, experience, capital). Can decrease/eliminate competition. Reduced expenses. Losses are shared by all partners. Do not have to pay taxes, only their own share of the profit. Unlimited liability (can lose personal assets to pay debt). Liability is limited to the amount invested in the business. Some investors still may feel reluctant to lend large amounts. Difficult in dissolving if there’s no written agreement. By law, if there’s no agreement, all profits must be divided equally. Can lead to disagreements, though a partnership agreement helps.

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Corporation (chartered by a state and legally operates apart from its owners). Owned by stockholders who have purchased units or shares of the company. Protects entrepreneurs from being personally sued for actions/debts. Nonprofit corporation: Legal entities that make money for reasons other than the owner’s profit. Limited Liability Company (LLC): A form of business ownership that provides limited liability and tax advantages. Rise capital quickly by selling stock. Because it’s regulated by the gov, banks are more willing to lend large amounts. Limited liability, owners are only liable up to their amount of investments, personal assets are not considered.

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Unlimited life, death of someone does not affect it. Easy-to-transfer ownership,selling stock to someone else (stock certificate is issued in the name of a new stockholder, no permission required by others). The business can hire experts to professionally manage each aspect of the business, more efficiently run organization. Difficulty in forming & operating. Legal assistance is needed to start, lawyer fees are expensive. Subject to more government regulations than normal. Reporting & taxation requirements vary. Required to keep detailed reports for stockholders & to keep them informed of transactions, meetings, & voting rights. New charter/executive must be approved if corporate activities change. Dual taxation: taxes on profits of the company and shareholders are taxed on dividends they earn on their investments. Separate owners & managers. Stockholders are not involved in day-to-day operations. Stockholders form a board of directors to make decisions about the business & managers. Separation of ownership & management provides more opportunity for irregularities or misunderstandings.

- Stockholder Vs Stakeholder: Stockholder: - Proposed by Milton Friedman. - Theory states the purpose is to make money for the owner/stockholders. Stakeholder: - Proposed by Edward Freeman. - Theory views that both the stockholders and stakeholders have a right to demand certain actions from management because all have a vested stake. - Owners expect a return, financial stakes. - Employees have jobs, livelihood stakes. - Suppliers provide a lot of raw materials, supplier's stakes. - Customers exchange resources for benefits of the product/service. - Local community grants the right to build facilities in their area for community benefits from the tax and economic contributions of the corporation. - Managers look after the company’s health, balancing the conflicting claims of all stakeholders. - CSR = Corporate Social Responsibility. - Companies integrate social/environmental concerns in their operations/interactions with their stakeholders.

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Company achieves a balance of economic/environment/social imperatives, while addressing share/stakeholders. Example: Xerox launched a Green World Alliance program that recycles toner cartridges for free . Philanthropy is narrower than CSR. CSR requires engagement with internal/external stakeholders and benefits them alike....