M1 - Agency

- Only Principal must be competent

- No Consideration required
- Power of Attorney - Limited to Specific Transaction

Duties of Agent to principal (LORAS)-Loyalty, Obedience, Resonable Care, Account,

Duties of Principal to Agent (CIR) - Compensation,Indeminification/Reimbursement,

Principal Remedies
1 Tort Damages
2 Contract damages
3 Recovery of Secret profits
4 Withhold Conpensation

Agency coupled with Interest

- Only Agent can Terminate, Agency power is given as Security

Agents Power to contractually Bind Principal

Actual Authority
Right and power to bind principal
Exress Authority Implied Authority
Agent Resonably Believe
Agent Resonably Believe after after Communication from
Communication from Principal Principal

Termination of Actual Authority

Acts of parties, Principal(revocation) agent (renunciation)
Accomplishment of Objection/Expiration of Period
Automatic Termination
- Death of Either party
- Incapacity and discharge of bankruptcy of principal
- failure to acquire licence
- Distuction of subject matter
- subsequent illegility

Ratification - Principal choose to bound by the unauthorised acts of agent

only if :
 - 3rd party belies on agency relation(disclosed principal only)
- All material facts disclose dto principal
- retify entire transaction
- does not require conssideration, no need to notify 3rd party

Agent's liability to 3rd party

1 Disclosed principal 1
Agent not liable - if authorized
Agent liable - if not authorized

2 Partially Disclosed/undisclosed principal

3rd party can elect either to hodl Agent/principal liable (not both)

3 Undisclosed Principal
No Apparent Authority
No Effect on Actual Authority
Tort Liability
General rule : Principal is not liable, only agent is Liable
Care, Account, Subagent

mbursement,Remedies

ually Bind Principal

Apparent Authority
Only power to bind no right

3rd Party Resonably Believe

Ditinguise from Actual Authority

- From position
- Not affected by secret instructions
- Genral Agent wider power than Specific

Termination of Apparent Authority

Old customer - Actual Notice
Constructive Notice must be given to terminate Apparent Authority
(Advertisemnet in newspaper)
3rd party Liability

Only principal can hold 3rd party liable

Exceptions
- Princial's identity was fradulently concealed
- increase burden on the 3rd party if performed for Principal
Module 2 - Contracts : Part1
Contracts
Method of Formation
- Express Contract By Language
- Implied-in-fact Contract By conduct
-Impled in law/Quasi contract to prevent Unjust enrichment
-Unilateral Contract One promise/one performance
-Bilateral Contract two promises

Sourcse of Contract Law

Common Law Other than Sales of Goods
UCC sales Article Sales of Goods

Elements of legal contract

A Agreement made up of offer and acceptances
C Consideration exchanged
O Lack of Defences

Agreement made up of offer and acceptances

Offer :
Intent to make a contract (serious offer)
Advertisement (invitation seeking offer, not an offer)
Terms must be definite
- Identity of offerree and Subject matter
-Price
-Time
-Quantity
-Nature of Work

Termination of Offer

Revoke by Offeror Reject by Offeree Operation

Revocation of offer must reached to Counteroffer is rejection Either party dies
offeree before accetance is sent by offeree Become incompetent p

Effective when received Effective when received

Option Contract

- Remain open in return of consideration

- Not terminated by death of party
- is assignable
Other reason of termination :
-Subject matter destroyed or illegal
Acceptance
- Offeree can accept, non assignable only Option contracts are assignable
- Mirror Image Rule applies : terms must be same as in offer(no mofication)
- Mailbox rule Applies : accepted once sent, date of receipt is not relevant unless
specifically mentioned in offer the last date and time of receipt

Consideration No Gratuitous Promises are enforeceable

Need not have monetary value
Need not flow to Party, may flow to 3rd party
Court will not inquire into adeqyacy
Preexisting duty and contractual obligation is not a consideration
Exception: If each party gives something diofferent from what was orginally requierd then co
Gift : unenforceable
Past / Moral consideration : unenforceable
Eception : Detrimental reliance
 Module 3 - Contracts : Part2
Defences can make the contract unenforceable

- Lack of Agreement
- lack of Consideration
- Fraud (MAIDS) :
M Misrepresentation,
A Actually and resonably rely by Victim
I Intect to induce reliance
D Damages
S Scienter(Intent to Deceive)
Void Fraud in the Excution Not a contract at all
Voidable Fraud in the Inducement Terms are materially misrepr
Voidable Innocent misrepresentation All except Scienter
- Duress
Void Physical
Voidable Social/Econimical
Voidable Undue Influence
Voidable Mutual Mistake Material fact(not value)
Voidable Unilateral Mistake (only if other party know/should have kn
Void Illegal
Licencing
Void Protection to Public
Voidable Revenue raising
Voidable Minors (age<18) defence fro Minor only
If ratified by minor on reaching at age of majority
- Failing to disaffirm
- expressly ratified
-retain/accept the benefits
Voidable Intoxication can be a defence
- if intoxication prevents promisor from knowing nature and s
Operation of Law - other party knew the impairement
Either party dies Void Adjudicated Mental Incompetency
Become incompetent prior to acceptance

Statute of Limitations : Judicial remedies can be done within 4

(the contract is not void but can not avail Judicial remedies)

Statute of Frauds : Six Contracts require in writing

(Only signed by the person being sued)
M Contract of Marriage
Y performed within a year
 L Interest in Land
E Executors (pay estate debts out of personal funds)
G Goods more than $500 or more(not services)
S Contract of Surety

Impossibility (objectively impossible is available as Defence)

Accord and Satisfaction and Subsituted Contract is Defence

Subsitute on contract with another. Accord and Satisfaction of subsituted

Novation is a Defence
ginally requierd then consideration When a new contract subsitutes a new party from an old party in an exis
(only releasing a party and no replacement is not novation)

Parol Evidence rule (Not applicable to subsequent modifications)

- Fully Integrated Written Contract
- Prohibits a party in lawsuit from inducing evidence at trial of
Oral/written statements made prior to the written contract
Oral statements made contemporaneously with the written co
vary the terms of written contract

Damages

Is Breach Material/Substancial

(non breaching party cannot recover for damages tehat could be reasonabley avoid
Conpensatory Damages (cost of Subsititute performance - contrc

Consequencial Damanges Extra Cost

(if Foreseeable)

Specific Performance Used for Land or unique Items Only

(if available either Specific performance or Compensatory damages, not

Liquidated Damages Reasonable in relation to actual harm

Not a Penalty

Punitive damages Only in case of FRAUD

Rescission or Cancellation Available for Mutual/ Unilateral Mistakes, Fraud, M

Cannot recind or cancel if contract is substancially
y rely by Victim

Not a contract at all

Terms are materially misrepresentated
All except Scienter

ct(not value)
r party know/should have known of the mistake)

at age of majority

or from knowing nature and significance of promise

emedies can be done within 4-6 years from the date of breach

udicial remedies)
 of personal funds)
not services)

ilable as Defence)

ntract is Defence
and Satisfaction of subsituted contract discharge the original contract

ty from an old party in an existing contract, All party must Agree

is not novation)

sequent modifications)

m inducing evidence at trial of

rior to the written contract
oraneously with the written contract

Yes, Non breaching party dischaged

Minor breach, not discharged but entitles

to damages

at could be reasonabley avoided)

bsititute performance - contrcat price)

and or unique Items Only

Compensatory damages, not both)

e in relation to actual harm

e of FRAUD

Unilateral Mistakes, Fraud, Most Material Contract Breaches

cel if contract is substancially performed
Module 4 - Contracts : Part3

UCC sales Article applies to the sale of Goods, following are excluded : (PRIX)
- Contracts for Personal services and Real estate
- Contracts for Intangible persoanl property
- Contract for Fixtures- Things attached to the land

Difference Between General law contract and UCC sales Article

General law Contract UCC Sales Article

Offer is Irrevocable only if Consideration is made to offeror Consideration is not required if

(Option contract) - Seller is merchant
- Offer is writing and signed by him
- time stated in offer

Terms of offer ion acceptance No mofification should be made Modification in acceptances can be
Mirror Image Rule applies - Contracts must be between merch
- offeror didn’t object to the modifi
- changes are not material

Acceptance mode Only as specified or reasonable Either as Specified or

Offer to buy goods can be accepted
- a promise to ship
- promt shipment

In promt shipment if the seller notifi

buyer that non conforming goods a
as accomodation then, it is a counte
not acceptance

Modification is Enforceale If each party provide some consideration If modification is in good faith then,
then modification is enforceable no consideration is required

Statute of Limitation 4-6 years 4 years

Statute of Fraud MYLEGS must be in writing contract for sale of goods value $50
marriage, year, land, executor, goods, Surety must be in writing except SWAP
S - Specifically manufactured good
W - written mechant confirmatory
A - Admitted in court
P - performance

Content of Written agreement All essential terms Only Quantity is essential

Performance discharged if the contract if impossible even if impracticle

Mode of transport must be same as difined Seller can use different mose of tran
(no defence if unavailable or unreas

Delivery and Risk of Loss (below rules apply only if contract is silent)

- Title and risk of loss can not be pass until the goods are first identified

Transfer of risk of loss to the buyer in Non carrier cases

Merchant seller Nonmerchant Seller
- on Actual delivery - Upon Tender of Delivery of goods

Transfer of risk of loss to the buyer in Carrier cases

With shipment Contracts With destination Contracts
- on delivery to carrier - on the destination and seller tenders delivery

- Seller send the Non conforming goods, unless the buyer accepts the goods no risk is transferred
regardless of terms but the title trabsferred on delivery

Warranties
Remedies

Both Buyer or seller

1. Anticipatory Repudiation (when either party indicates in advance of performance that he will not perform)
- sue immediately, cancel, demand assurance, wait and then sue

2. Right to Demand Assurance

3. No Punitive damages
4. Duty to Mitigate

Sellers Remedies if Buyer Breaches

1. Right to cancel and sue if Buyer Breaches
2. Withhold Delivery and stop in Transit if not paid
3. Right to resell anf sue for damages
4. Right to full contract price if not resold or destroyed
5. Liquidated Damges - must be reasonable (can withhold down payment lesser of $500 or 20% of price)

Buyers Remedies if Seller Breaches

1. Right to reject/cancel/rescind non confirming goods
2. can inspect goods before payment, no inspect fro COD goods
3. Righ to sue for damges
- Can accept non conforming goods and sue fro damages
- if rejected(non conforming goods) and contracted undelivered goods
4. Right to specific performance or Replevin
Specific performance Unique goods / buys cannot reasonably cover
Replevin If goods are identified and buyer cannot reasonably cover then
can recover goods wrongfully with the seller

5. Buyers right on seller's insolvency

paid in part or in full if goods are identified

Entrusting Owner of good

Entrust

merchant who deals in same kind goods (not bank)

Sells the goods in ordinary course of business(not bulk sale)

Even if merchant don’t have tittle

Purchaser get the good tittle of goods

 Module 5- Suretyship

Only written Agreement

Surety - Liable even if creditor don’t ask from debtor
Guarantor - liable only if creditor cant recover from debtor
after exhausting all legal remedies, including demand, suit,
judgement and exhaustion of all supplementary proceedings
rticle
UCC Sales Article Against Creditor
When a dibtorImmediately demand payment from the surety
tion is not required if - Immediately demand payment from the debtor
- Immediately go after collateral, if tehre is any
riting and signed by him -
The surety does not have the right to require the creditor to take any of the ab
actions. A guarantor of collectibity would have the right to require a creditor to
on in acceptances can be made if against the debtor or against available collateral
must be between merchants
dn’t object to the modifications or Against Principal Debtor
are not material 1 Exoneration (Suit to compel payment from principal)
2 Subrogation (Enforcement of Creditors Right Against the principa
3 Reimbursement (Suit against Principal agter Payment)
y goods can be accepted either :
Against Cosureties
Cosureties are jointly and severally liable
1 Exoneration (one surety may compel the cosurities, by a suit in e
hipment if the seller notifies to 2 Contribution from cosurities after payment made more than the
non conforming goods are shipped 3 if coSurety obligation is discharged in backruptcy, her share wont
dation then, it is a counteroffer
Defences of Surety
1 Defruaded Principal- Fraud by creditor against debtor is defence
tion is in good faith then, 2 Duress on principal if Surety don’t know about it.
ration is required 3 Illegal obligation
4 Discharge of Principal's obligation, debtor tender performance an
Unless creditor reserved his right against Surety
5 Surety incapacity or Bankruptcy
r sale of goods value $500 or more 6 Gratuitous Surety will be bound if promise is made before consid
writing except SWAP 7 Variation of Surity Risk/Extension of Time
ally manufactured goods Gratuitous Surety Always discharged
n mechant confirmatory memo Compensated Surity Discharged only if risk increase
ed in court 8 Loss of Security held by creditor discharged the surety in the amo
if substancial and burdensome acts were not required to protect
9 Release of Cosurety without other cosurety consent discharge t
tity is essential
Creditors Right outside of Suretyship
1 Creditor's Composition Agreement b/t debtor and 2 or m
 debtor is discharged from the un
use different mose of transport 2 Assignment property transferred to trustee,
e if unavailable or unreasonable) debtor is not discharged from th

Judicial Liens and Garnishment (only if Creditor without Security Interest/mo

1 Prejudgement Attachment Before final Judgement, The cred

debtor's property, if creditors ha
Hearing must be held before att

2 Judicial Lien to sieze property of debtor, sell i

States provide "homestead"exem
household (not applicable to PM

3 Garnishment 3rd party holding debtors prope

The writ orders the person holdi
Social secuty payment not subje
wages not more than 1/4 of emp

Prejudgement remedies are prejudgment attachment and Garn

Mechanic's Liens
who works on property and either improve it or repairs it has a lien on the pro
property is in the lienor's possession

Materialman's Liens
Unpaid Materialman's must file a notice with the local recorder of deeds to pre

Fraudulent Conveyances occurred, a court will consider whether:

1 transfer to the insider
2 retained possession or control afetr transfer
3 not disclosed
4 substancially all the assets
5 value is not reasonable
6 debtor is insolvent/insolvent after transfer

Dair Debt Collection Practices Act(FDCPA)

Prohibited Acts
- contact debtor inconvenient or unusual times (before 8 or after 9
- contact directly even after attorney is hired
- using harassing and abusive language
- making false or misleading claims
- contacting at place of employment

Remedies
 - can terminate the collection agnecy contracts by notifying collecti
the agency must stop communication to debtor
Damages Civil damages by the conduct of collection agency, statutory $1,0

e will not perform)

20% of price)
 g demand, suit,
ntary proceedings

r to take any of the above mentioned

o require a creditor to first proceed

ht Against the principal)

r Payment)

osurities, by a suit in equity to pay their pro rata shares

made more than the share
uptcy, her share wont be considered in ratio.

inst debtor is defence but fraud by debtor is not a defence unless creditor Knows

ender performance and creditor refuses, Surety is discharged

is made before consideration flow from creditor to debtor

the surety in the amount of security relased value

ot required to protect the security
y consent discharge to the extent of released cosurity share

t b/t debtor and 2 or more creditor to pay less than due

 ischarged from the unpaid debt after the amount paid
ansferred to trustee, who dispose off and pay the creditors
ot discharged from the unpaid debt after the amount paid

Security Interest/mortagages)

al Judgement, The creditor can ask to provisionally attacehd a piece of

operty, if creditors have reason to believe that the debtor wont pay
ust be held before attachement of property by court

operty of debtor, sell it and turn over the proceeds to creditor

vide "homestead"exemption that excludes items of personal
(not applicable to PMSIs and Federal taxes dues to IRS)

holding debtors property (salary, bank account, debst own by debtors)

ders the person holding the property to it over to the creditor
ty payment not subject to Garnishment
more than 1/4 of employee's weekly salary

attachment and Garnishment

t has a lien on the property for the price of repair as long as

corder of deeds to preserve his or her Lien

mes (before 8 or after 9)

cts by notifying collection agency in writing that he won't pay

agency, statutory $1,000 damage award

Module 6- Secured Transaction

Article 9, Secured Transactions

Applicable on Not applicable on
SI in personal property/ SI in Land(mortgages)
fixtures wage claims
Outright sales of AR Statutory liens (mechanics Liens)

Purchase Money Security Interest (PMSI) exists if

1 Creditors sells the collateral on credit, retaining a Security Interest
2 Creditors advance funds used by debtor to purcahse collateral
In short, debtor used the creditors money/ debts to purchase the collateral

Security Agreement
- Must be in writing
- signed by debtor
- can be oral if secured party takes possession of collateral(pledge)
- Debtor must have right
- debtor is given value from the creditor
- Security Interest in after acquired property in clause is mentioned in agreement

Duties of Secured party after attachment

- File or send the termination statemnet when debt is paid
- confirm the unpaid amount left on secured lone
- use reasonable care to preserve the collateral

Perfection of the Security Interest (FaTCAT)

To gain maximum piority in Security Interest creditor must perfect the SI after/with attachement
F Filing
 T Taking possession of the collateral
C Control
A Automatic Perfection
T Temporary Perfection

Filing All kinds of collateral except Deposit and cash Account

Notice filing by filing Finnacial Statement
must give
Name Address of Debtor and creditor
Indication and details of collateral convered
Can file the perfection before but Security Interest is not perfected till the time collateral is attached

Taking possession of the collateral

pledge by pawn shop is best example

Control Investment property is perfected by taking control from debtor

owner instructed the brokers or mutual fund company that
the secured party now has whatever right owner had

Automatic Perfection
PMSI in Consumer Goods has automatic perfection
Perfected PMSI in Inventory and Equipment collateral has priority over other filed SI in same collateral
if PMSi is perfected within 20Days of delivery of collateral to debtor

Temporary Perfection
20days period of perfection for proceed of perfected Security Interest in collateral if sold
Movement of debtor from one state to another then creditor must have 4months perfection in second st

Rights of creditors on default

Taking possession
secured party may take possession by self help withour judicial process if she can do without a breach of the peace
always take possession by replevy action , a judicial action seeking the transfer of personal property

Sale or lease the collateral may be either public or private sale

- Must be commercially reasonal in all respects
- debtors and other parties must be given notice
- wipes other lower priority interest
- debtor can redeem by paying off the indebtedness

If sale of collateral is not enough for debt then secured party may bring court action for deficiencey

Retention of Collateral in Satisfaction of Debt

Not involving Consumer Involving consumer
Seek to recover deficiency no deficiency may be recovered
 if 60% is paid by debtor, then must sell the property within 90days

Notice must be given of his intent tio keep the collateral to debtor and other secured parties

Debtor may redeem the collateral by paying all the secured obligatios + all resonable expense incurred related to re
al is attached

r filed SI in same collateral

teral if sold
nths perfection in second state

hout a breach of the peace

al property

r deficiencey
operty within 90days

ense incurred related to repossession