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Business Law
QUESTION
- What does “capacity” mean in a legal sense? How does capacity affect contracts involving minors? Discuss in detail. 2) Define the different types of mistakes that can affect the validity and enforceability of contracts and the difference between them. What is the result of a contract that is based on a mistake? Finally, describe the circumstances that will cause a court to refuse to rescind a contract based on the defense of a "mistake"? 3) Define exculpatory clauses and identify when they will not be enforceable. Additionally, describe the elements that must be met in order for an exculpatory clause to be deemed to be valid. . 4) Identify and describe the difference between fraudulent misrepresentation and nonfraudulent misrepresentation, between fraud in the execution and fraud in the inducement, and between negligent and innocent misrepresentation. Additionally, identify and describe the four different types of misrepresentation and list the elements that must be shown to prove them. 5) Todd owns a small independent service station chain. Mike and Todd reach an agreement for Mike to deliver gasoline to Todd’s stations at $1.85 per gallon over a period of one year. Halfway through the term of the contract, the price of gasoline had increased by more than a dollar per gallon. Although Mike still had gasoline available for sale, he told Todd the price per gallon would have to increase by $1.00 per gallon, or he would be unable to deliver. Todd initially agreed to pay the higher amount, but when billed, refused to pay more than the initially agreed upon price. Mike sues to enforce the agreement for the higher amount. Who will prevail and why? Identify and include each side’s best arguments. 6) Explain what the parol evidence rule is and describe its purpose. How does the rule work to clarify the intent of the contracting parties? To what kinds of contract issues does the rule NOT apply? Finally, what assistance does the Uniform
| Subject | Business | Pages | 3 | Style | APA |
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Answer
Question #1
In legal sense, capacity is defined as the fitness to execute something. Primarily, capacity is a legal right, or competency allowing someone to perform certain acts. One must be of sound mind while performing certain actions. People who are considered minors cannot get into a contract. Thus, a minor who gets into a contract can choose to honor or void the deal and it would not attract legal consequences.
Question #2
The types of mistakes that affect the validity and enforceability of a contract include common mistakes, mutual mistakes, and unilateral mistakes. Common mistake is where both parties makes same mistake, while mutual mistake is where each party makes a different mistake. Unilateral mistake happens when only one party makes the mistake, and the other party is aware of the mistake. The court considers contracts made on mistakes as non-existent. Nonetheless, the court can decide that the contract was not lawfully formed. The courts may refuse to rescind a contract due to defense of mistake when the mistaken parties are in consent.
Question #3
Exculpatory Clause is a lease provision that does not make the property owner liable for damages done on the property, including those done by the proprietor. The clause is not valid if the actions are unreasonable or intentional harm is caused in the process. The clause is valid if the party asking for its enforcement is not part of business that is considered crucial to public interest.
Question #4
Fraudulent misrepresentation is intentional misrepresentation while none-fraudulent misrepresentation is non-intentional. Fraud in the execution is deceiving another person on the character of the document they are signing while fraud in inducement is the factors that made an individual to act. Negligence representation is a careless execution of representation that results to breach of duty owed to party A to party B. on the other hand. Fraudulent misrepresentation is knowingly making a false representation. The four types of misrepresentation include negligent misrepresentation, innocent misrepresentation, and fraudulent misrepresentation.
Question #5
Mike will prevail since he has a right to be paid by Todd the extra amount. He informed Todd of the changes in the market prices, and Todd agreed to pay the extra amount, different from the one agreed upon in the initial contract. Thus, he was obliged to pay Mike the whole amount. Todd will lose the case because he is bridging a contract they had with mike when the prices increased. Mike gave him an opportunity to say no, or accept supply of gas but with increased prices. He accepted and made a commitment to pay.
Question #6
Parole evidence states that extrinsic evidence is not used to vary the provisions of a written contract. Its role is to bar individuals from bringing evidence of earlier oral agreement before or while the contract was being finalized. It does not apply if the parties never intended a written contract or if they intended to make it oral.
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