Business Law
Combined Chapters
9, 11-15
Chapter 9
What is Bait and Switch?
 Using understocked, low-prices “come-
on” to lure prospective buyers out but
are directed to a more expensive item.
 Not illegal if they state how many of the
item they have or that the supply is
limited.
What is Price Fixing?
 Individuals and companies enter into
agreements to control or fix prices in
order to eliminate competition.
What is cease and desist?
 An order requiring the company to stop
the specified conduct. If they refuse,
heavy penalties may be awarded.
Chapter 11
What is consideration?
 The promise or action that one person
gives in exchange for the promise or
action of another person.
Why is consideration required?
 For a valid and enforceable contract.
 Must be mutual-both people must give
and get consideration.
 If one party doesn’t give consideration,
the other has no duty to perform as
promised.
What is sufficient
consideration?
 It is unimportant as long as the contracting
parties have voluntarily agreed.
 Depends on many variables such as:

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
Supply and Demand
Personal needs and desires
Individual’s ability to evaluate
 Courts will question if there is evidence of fraud
or duress—grossly inadequate as to shock the
court.
Is an Existing obligation
consideration?
 No
 A person sometimes promises to do
something that he or she has already
done in a prior contract.
 If they have already fulfilled the contract
then they cannot demand further
compensation.
Is past performance
consideration?
 An act that has already been performed
cannot serve as consideration for a
promise made now.
 You can’t go and mow someone’s lawn
and then go up to the door and ask to be
paid!
Exceptions to the requirement
of mutual consideration…
 Promises of Financial Support to
Charitable Organizations.
 Promissory Estoppel -- Page 218
 Commercial Paper
 State Statutory Exceptions
What is a Gift?
 A voluntary transfer of ownership of
property without receiving consideration
in return.
 If you give property as a gift-you cannot
get it back.
Chapter 12
What is duress?
 If one person compels another to enter
into it through coercion-threat of force or
an act of violence.
What is undue influence?
 When one person insidiously, or by
wrongful persuasion and control over the
free will of another, gets the other to
make a contract that is unfavorable.
What is ratification?
 The approval of a voidable contract in its
entirety.



An express new promise to perform as
agreed
Silence, or the failure to disaffirm, for an
unreasonably long time after attaining
majority.
Any act-continued use of the property that
clearly indicates the person’s intention to
be bound.
What is Usury?
 Lending money at a rate higher than the
state’s maximum rate.
 The penalty for usury is that the lender
cannot collect some or all of the interest.
Chapter 13
What is the Statute of Frauds?
 Designates statutes enacted by all states
that require certain contracts to be
evidence by a signed writing in order to
be enforceable in court.
 Contracts in writing is more likely to be
enforced in court than oral contracts.
Express and implied
contracts…
 Express: stated in words—written or
spoken.
 Implied: Not stated in words –express
intent by conduct that is appropriate
under the circumstances.

Example: Putting money into a vending
machine and expecting the product to
come out of it.
Chapter 14
Assignment/Delegation
 Assignment: Transfer of contractual
rights. As long as performance isn’t
changed or altered. (getting less than
what you paid for).
 Delegation: Routine contractual duties
may be transferred to another party.

A building contractor delegates to
someone else—electrical, or plumbing.
Discharged/Terminated
Contracts..
 A Termination of obligation s that occurs when
the parties perform as promised. It may also
take place when a party is released from
contractual responsibilities by action of the
other party of by law. Generally, contracts are
discharged by full performance; most parties
perform as promised. Partial performance does
not suffice.
 Contracts may also be discharged by:



Agreement
Impossibility of performance
Operation of law
What is a breach of contract?
 Failure to perform in accordance with the
contractual terms is a breach of contract;
this gives the other party the right to
cancel. Sometimes a party who defaults
(i.e., fails to perform) notifies the other
party to a contract before the time of
performance has arrived that he or she
will not perform.
What is Performance?
 Performance is the fulfillment of
contractual promises as agreed.
Frequently, assignments of future wages
are prohibited or limited by statute.
Chapter 15
What are Statute of Limitations?
 A creditor may lose a legal right of action against a debtor
by waiting too long before filing suit. Statutes in all states
deny creditors a right of action for damages for breach of
contract after the lapse of a specified time. These statues
of limitation prevent harassment of debtors by means of
lawsuits and other efforts to collect stale claims.
 Statues of limitations ordinarily do not discharge debts.
Instead, they merely bar the remedies of the injured
parties. The bar may be waived and the right of action
may be revived if the debtor makes a new promise. Since
the new promise is a waiver, it need not be supported by
consideration.