Contract Law Quiz

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Questions and Answers

Ultimately, the case was settled out of court, allowing Taco Bell to continue operating without further ______.

litigation

A ______ mistake occurs when only one side understands what is going on and another side makes a mistake.

unilateral

Fraud in the ______ occurs when one party does not know the reality of the contract.

inception

Fraud in the ______ means the party was misled about background or information pertaining to the contract.

inducement Signup and view all the answers

The Winklevoss twins alleged that Zuckerberg had agreed to help them create a social networking site called '______' while secretly developing Facebook.

ConnectU Signup and view all the answers

No party can threaten another with a ______ act to force them to enter a contract.

wrongful Signup and view all the answers

Certain contracts must be in ______ to be valid according to the statute of frauds.

writing Signup and view all the answers

In 2008, the Winklevoss twins received $20 million and Facebook ______ as part of a settlement.

stock Signup and view all the answers

The Winklevoss twins accused Zuckerberg of lying about the value of Facebook ______ during settlement negotiations.

stock Signup and view all the answers

The ______ clause is also known as the entire agreement clause.

merger Signup and view all the answers

Laws for ______ have a different set of standards compared to goods.

service Signup and view all the answers

The franchisees presented a marketing proposal to Taco Bell featuring a ______ mascot.

Chihuahua Signup and view all the answers

The franchisees claimed that Taco Bell infringed on their branding efforts by airing a commercial featuring a ______ mascot.

Chihuahua Signup and view all the answers

The franchisees accused Taco Bell of breaching the ______, while Taco Bell argued that there never was one.

contract Signup and view all the answers

The catchphrase '______ Quiero Taco Bell' became synonymous with the Chihuahua mascot.

Yo Signup and view all the answers

The legal proceedings for both cases included various motions and ______ as the parties made their cases.

hearings Signup and view all the answers

Every single material term and information on the contract overrides any previous information or after discussion or ______.

contention Signup and view all the answers

The Uniform Commercial Code provides the same set of laws in every ______.

state Signup and view all the answers

Goods or loans over ______ must be in writing according to the statute of frauds.

1k Signup and view all the answers

An expressed warranty is a ______ made about a product that allows for a lawsuit for breach.

statement Signup and view all the answers

If a product does not meet the statement of merchantability, you can return it for its full ______.

value Signup and view all the answers

In the case of Portuguese-Santana v Rekomdiv Industries, the significance was that there was no meeting of the ______.

minds Signup and view all the answers

The farmers in Pilgrim's Pride sued because they were told it would be a long-term ______.

investment Signup and view all the answers

Equitable relief involves the court telling someone to act in a certain ______.

way Signup and view all the answers

The City of Seattle was found to be ______ for failing to secure the pole hole.

negligent Signup and view all the answers

A municipality can be held liable for negligence if it fails to address known ______, resulting in injury.

hazards Signup and view all the answers

Grady sustained injuries after allegedly colliding with another ______ while snow tubing.

tuber Signup and view all the answers

The court found that primary assumption of the risk applies, ______ liability for injuries arising from inherent dangers.

barring Signup and view all the answers

Grady claimed negligence against Green Acres for failing to provide lanes, attendants, or a designated ______.

walkway Signup and view all the answers

The court affirmed summary judgment for Green Acres, holding that Grady voluntarily ______ the risks of snow tubing.

assumed Signup and view all the answers

The extent to which we hold a property owner responsible for injuries is referred to as ______ liability.

premises Signup and view all the answers

The court upheld the jury’s decision, affirming the $______ million damages award to Jones for the City’s negligence.

12.75 Signup and view all the answers

An ______ is someone allowed on the property but is there for their own benefits.

Licensee Signup and view all the answers

The owner has a duty to invitees to use the ______ prudent person standard.

reasonably Signup and view all the answers

Trespassers are to be protected from ______ harm.

willful Signup and view all the answers

Manufacturers have a duty to design products that are not ______ dangerous.

inherently Signup and view all the answers

In products liability, failure to warn consumers involves using the reasonably prudent person ______.

standard Signup and view all the answers

Strict liability can apply even in ultra ______ activities.

hazardous Signup and view all the answers

In the principal-agent relationship, the principal can be held liable for the agent's ______.

actions Signup and view all the answers

Independent contractors cannot be sued through their ______.

principal Signup and view all the answers

Study Notes

Winklevoss Twins v. Facebook

The Winklevoss twins alleged that Mark Zuckerberg, the founder of Facebook, agreed to help them create a social networking site called ConnectU but secretly developed Facebook instead.
The twins received a $20 million settlement with Facebook stock in 2008.
The twins appealed the settlement, arguing it was unfair, but the courts upheld the original agreement.

Wrench LLC v Taco Bell

A group of Taco Bell franchisees sued Taco Bell over contract breaches and mismanagement.
The franchisees presented a marketing proposal to Taco Bell featuring a Chihuahua mascot, but Taco Bell did not accept their contract proposal.
Taco Bell aired a commercial with a Chihuahua mascot, leading the franchisees to claim that their branding efforts were infringed upon.
The franchisees claimed that Taco Bell breached the contract by using a similar mascot in their advertising, while Taco Bell maintained that no contract existed.
The case was settled out of court, with terms not disclosed to the public.

Contract Law

A valid contract requires a meeting of the minds, meaning both parties must have a genuine and mutual understanding of the contract's terms and intentions.

Unilateral Mistake

Only one party misunderstands the contract's terms.
The contract can be voided only if the party who knows the other made a mistake fails to correct them, or if the mistake results in unfairness or negligence.

Mutual Mistake

Both parties misunderstand the contract's terms, resulting in no meeting of the minds.

Fraud

Fraud in the inception: One party is unaware of the contract’s true nature, and the contract itself is deceptive.
Fraud in the inducement: One party knows about the contract but is misled about the background or relevant information.
- Requirements for Fraud in the Inducement:
  - A false representation must be made (material to the contract).
  - The representation must be made intentionally.
  - The innocent party must have relied on the false representation.
  - The innocent party must have suffered an injury.

Concealment

Silence - The contract might require parties to make specific disclosures.
Innocent representations - No intentional deception occurs, but an injury results regardless.

Duress

One party uses wrongful threats or coercion to force another party into a contract.
The innocent party can void the contract.

Undue Influence

One party takes advantage of a relationship or trust to persuade another party to enter into a contract they wouldn't normally sign.
The innocent party can void the contract.

Statute of Frauds

Certain contracts require written documentation for validity:
- Contracts for marriage
- Contracts for the purchase of land
- Contracts that take longer than a year to perform
- Loan agreements

Service Contracts vs. Goods Contracts

Different legal standards apply to service contracts compared to those related to goods.
Georgia has a specific set of laws governing service contracts.
Uniform Commercial Code (UCC) applies to goods, offering a standardized set of laws for interstate commerce and transactions.

Merger Clause

Also known as an entire agreement clause; it specifies that all material terms and information in the contract supersede any prior discussions, contentions, or understandings.

Uniform Commercial Code (UCC)

  -  Applies to goods and loans.
  -  Contracts for goods over $500 must be in writing.
  -  Contracts for loans over $1,000 must be in writing. 
  -  Exception for statute of frauds: Partial performance – If both sides start to engage in the contract, lawyers can determine if it is valid.

Sellers' Promises (Implied Warranties)

Expressed warranty: A statement made about the product that can be used as grounds for a breach of contract lawsuit.
Merchantability: A guarantee that the product is suitable for its intended purpose. If it's not, the buyer can:
- Return it for a full refund.
Fitness for a particular purpose: A statement that the product is suitable for a specific purpose. If it's not, the buyer can:
- Return it for a full refund.

Case Law Examples

Portuguese-Santana v Rekomdiv Industries
- Portuguese-Santana (PS) wanted to open a franchise and hired Richard Domingo, a business broker.
- Domingo promised PS a franchise if he hired Domingo's firm Venerable LLP and a senator, for a combined fee of $625,000.
- PS discovered that a franchise in Puerto Rico already existed, and sued Domingo for fraud.
- Rekomdiv Industries was found liable and settled with PS.
- Significance: Demonstrates a lack of "meeting of the minds" (mutual understanding).
Pilgrim's Pride Case
- Chicken farmers were promised long-term contracts, but only a short-term agreement was put in writing.
- Pilgrim's Pride canceled the contracts, leading the farmers to sue.
- Pilgrim's Pride argued they had a merger clause, making the oral promises invalid.
- The court ruled in favor of Pilgrim's Pride.
- Significance: This case highlights the importance of having written contracts and incorporating merger clauses to avoid disputes over oral promises.

Contract Breaches

Remedies for Contract Breaches
- Monetary Damages
- Equitable Relief - Court-ordered actions for specific performances.

Magnitude of Breach

Contractual Component: If both parties fulfill their obligations, no remedies are necessary.
Issues: The court evaluates whether a breach occurred and what extent of liability exists.
Example: City of Seattle case - Found liable for negligence in failing to secure a pole hole, resulting in an injury.
Example: Grady v. Green Acres - Snow tubing incident - Court found that the plaintiff assumed the inherent risks of the activity.

Negligence

Premises Liability:
- The legal responsibility of a property owner for injuries occurring on their property.
- The duty of care depends on the status of the person on the property:
  - Invitee: Someone on the property for the owner's benefit. The owner has a duty to exercise reasonable care.
  - Licensee: Someone allowed on the property for their benefit. The owner's duty is to refrain from reckless or willful harm.
  - Trespasser: Someone on the property without permission. The owner's duty is to refrain from willful harm, except under the "attractive nuisance doctrine" where children or others are lured to potentially dangerous areas.
Products Liability:
- The legal responsibility of manufacturers for injuries caused by their products.
- Duty to Design: Manufacturers must ensure their product designs are not inherently dangerous.
 - Equation: Design Precaution > (or <) Risk x Loss
 - If Risk x Loss > Design Precautions, there might be a legal obligation/liability.
- Failure to Warn: Manufacturers must provide adequate warnings about potential hazards, using a reasonably prudent person standard from the consumer's point of view.
- Build: Manufacturers must ensure their product builds comply with industry standards and safety requirements.
Strict Liability:
- Applies to manufacturers regardless of fault.
- Applies to ultra-hazardous activities (Nuclear or chemical operations, inherently dangerous animals) where someone can sue for negligence even if all safety measures were followed.

Principal and Agent

Principal: The party employing someone to act on their behalf.
Agent: Someone acting on behalf of another party (the principal).
Employee-Agent/Employer-Principal: An employee is considered an agent, and the employer is the principal.
Independent Contractor: Someone performing work for a principal, but they are generally not considered agents.
- To determine if someone is an independent contractor:
  - Factors to consider:
    - The degree of control exercised by the principal over the contractor's work.
    - The skill required for the work.
    - The duration of the relationship.
Liability: Principals can be held liable for the actions of their agents (employees). However, independent contractors are generally not subject to principal liability.

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Description

Test your knowledge on contract law concepts with this quiz. Explore fundamental principles such as fraud, mistake, and the essentials of valid contracts. Prepare to dive into some famous cases like the Winklevoss twins and Facebook.