cheat sheet exam 3 LES 305 VOCAB

Development of Product Liability                                               Initially Courts Followed a Theory of Caveat Emptor (Let the Buyer Beware) - No Liability for the Seller Henningsen v. Bloomfield Motors - Caveat Emptor Removed Advertising as a Contract Basis for Product Liability UCC Article II (Sales) Governs Express Warranties (2-313) Description of goods and abilities Promise of performance Seller need not intend to create warranty or use the terms "promise," "warrant," or "guarantee" Example: Preshrunk fabric – will not shrink; 50/50 poly-cotton; nontoxic Federal Regulation of Warranties and Advertising Federal Trade Commission given broad authority Federal Trade Commission Act authorizes FTC as enforcement agency Passed in 1914 Requires regulation of "unfair and deceptive trade practices" Broadened by Wheeler-Lea Act of 1938 "Is public deceived?" standard Not limited to adverse impact on competition FTC Improvements Act of 1980 - put some restrictions on FTC regulation Federal regulations of Internet advertising Ad-blocking software is evolving Property rights and speed Types of FTC Regulation Content control and accuracy: "no aspirin," "aspirin free," all dairy products, and so on (like express warranties) Performance claims like express warranties too - promise of performance FTC has required corrective advertising when unsubstantiated claims have been made Celebrity endorsements celebrity must have used the product if celebrity has not used the product, source of claims must be given Bait and switch - prohibits advertising of cheaper product and then getting customers to buy the more expensive product Product comparisons FTC took a laissez-faire approach during the 1980s encouraged comparisons Congress amended trademark law in 1989 to allow competitors to bring suit for deceptive statements about products in competitor’s ads FTC remedies consent decree elimination of ads damages Ad regulation by FDA - as more prescription meds are advertised directly, FDA is regulating more State regulation of advertising professional ads (lawyers, accountants) similar to FTC, generally through state attorneys general Contract Product Liability Theories: Implied Warranties The Implied Warranty of Merchantability Given in every sale of goods by a merchant Goods are fit for ordinary purposes Average quality with adequate packaging The Implied Warranty of Fitness for a Particular Purpose Arises when seller promises buyer goods are appropriate for a particular purpose Requirements Seller has particular skill or judgment Buyer is relying on that skill or judgment Seller knows or has reason to know of reliance Seller makes recommendation to buyer Eliminating Warranty Liability by Disclaimers Use "with all faults", "as they stand", "as is" - disclaims both implied warranties Can also disclaim by using the names of both warranties Privity Standards for UCC Recovery (§2-318) Can recover from manufacturer Privity at buyer level - three code alternatives Alternative A - buyer, members of household, and guests Alternative B - any natural person expected to use goods Alternative C - extends to any person expected to use the goods Restaurant owner is liable for food defects Strict Tort Liability: Product Liability Under Section 402A Strict Tort Liability - § 402A Defendant had duty to manufacture a reasonably safe product/was in the business of selling or manufacturing product That duty was breached Breach of duty caused plaintiff's injury (product reached plaintiff in same condition) Foreseeable that defect will cause injury Plaintiff has property or physical damages Unreasonably Dangerous Defective Condition Design defect  Improper warnings or insufficient instructions/failure to warn Negligent packaging, manufacturing, or handling Example: Drug tampering/food tampering cases Reaching the Buyer in the Same Condition No substantial change in product design that caused malfunction or injury Product not tampered with during distribution The Requirement of a Seller Engaged in a Business Need not be a merchant Need not be "in the business" of selling that product Example: Peanuts sold at games by a baseball club Recovery allowed in some cases against defendants who did not manufacture the plaintiff’s particular product, but manufacture the product Negligence: A Second Tort for Product Liability Same elements as strict tort liability plus prior knowledge of defective condition; punitive damages if plaintiff can show manufacturer/seller knew of defect Privity Issues in Tort Theories of Product Liability Don't Need Privity Was Injury to That Party Foreseeable? Should Anticipate Household Use, Presence of Children, and So On Defenses to Product Liability Torts Misuse or Abnormal Use of a Product Examples: Exceeding weight limitations, using around flames Contributory Negligence Is a complete defense Overlaps with misuse Some states have comparative negligence; reduces the amount of recovery instead of being a complete defense Assumption of Risk Plaintiff aware of danger Does it anyway Is a defense to liability Product Liability Reform Verdicts and Costs Affect International Competitiveness Congress Has Made Efforts to Make Laws Uniform Restatement (3 rd ) is Proposed Businesses Need to Focus on Prevention Federal Standards for Product Liability Consumer Product Safety Commission Federal penalties of $2,000 per Violation Up to $500,000 maximum (willful violations carry $50,000 and/or 1 year imprisonment) Uniform Product Liability Act International Issues in Product Liability EU Trying to Gain Uniformity "State-of-the-Art" Defense (product as good as it can be upon release) International Standards Organization's 9000 Guidelines for Quality Assurance CISG Limits Product Liability Wages and Hours Protection Fair Labor Standards Act (FLSA) - Often Called "The Minimum Wage Law" Coverage Businesses engaged in interstate commerce Businesses engaged in production of goods to be shipped in interstate commerce Businesses engaged in interstate shipping Expanded to cover business enterprises with gross income of $362,500 or more Exemptions independent contractors agriculture, fishing, and domestic service white-collar management executive, administrative, and professional people FLSA minimum wage and overtime regulations Graduate increases in minimum wages Time-and-one-half pay for overtime (over 40 hours) White collar, professional, administrative employees are exempt New rules have created a great deal of ambiguity FLSA and Child Labor Provisions Age 18 years and over - any jobs 16-17 years old - any nonhazardous job (hazardous - mining, logging, roofing,excavation) 14-15 years old - any nonhazardous, non-manufacturing, and nonmining job duringnonschool hours; limits on hours Recordkeeping - employers must keep records of hours and wages; fines for not doingso Child actors are subject to strict Screen Actors Guild rules Enforcement of FLSA Can begin by complaint filed with U.S. Labor Department Employer can seek interpretation from Department of Labor Labor Department can initiate its own investigation FLSA and Record-Keeping Requirements Employers must keep records of hours and wages of their employees Required formats Penalties for FLSA Violations Fines - $10,000 first conviction $10,000 and/or six months for second violation Employees can't be fired for reporting violations Liability for FLSA Violation Corporation is liable Officers can be held individually liable The Equal Pay Act of 1963 Illegal to pay different wages to men and women doing the same jobs Equal Pay Act is not a comparable worth statute Comparable worth requires equal pay for jobs that require equal skill, effort, andresponsibility Test case came from Washington when a licensed practical nurse discovered she earned less than the groundskeeper at a state hospital and less than men doing similarjobs in the prisons; trial judge found discrimination and ordered back pay but decisin was later reversed Presently, federal standards do not require comparable worth Merit and seniority systems are exceptions Workplace Safety The Occupational Safety and Health Act Passed to ensure workplace safety precautions OSHA was agency created to enforce it OSHA Coverage and Duties Employers covered - all with one or more employees Basic responsibilities: Know and follow OSHA's rules Inspect for hazards and correct them / Post employee rights / Keep records of injuries / Post OSHA citations OSHA Responsibilities Promulgating rules and safety standards Can award variances for certain employers Inspections Have targeted industries (roofing, lumber) Also have random inspections Cannot retaliate against employee who notifies OSHA and requests an inspection OSHA search warrant requirement Either voluntary or require warrant Surprise element still preserved even with warrant Employees can accompany an OSHA inspector Employees can file complaints Right to notice if employer applies for variance OSHA penalties Fine and imprisonment escalate with seriousness of violation Citation is first step Many employers negotiate a consent decree after a citation If no consent decree, there is a hearing before an administrative law judge (ALJ) ALJ makes recommendations and OSHRC decides Can then appeal to a court State OSHA Programs States share responsibility for safety with feds Secretary of Labor must approve state's plan Employment Impairment and Testing Issues - If Safety Is an Issue, U.S. Supreme CourtHas Authorized Testing Employee Pensions, Retirement, and Social Security Social Security Act of 1935 Every employee, who is not an independent contractor, contributes to Federal InsuranceContributions Act (FICA) Benefits under Social Security depend on work and salary range Private Retirement Plans: Employment Retirement Income Security Act (ERISA) Coverage of ERISA: Applies to employers in interstate commerce Applies to medical, retirement, or deferred income plan Requirements of ERISA plans Must give employees an annual report Must disclose loans made from the fund ERISA does not require pension plans; it only regulates employers who offer them;levels of responsibility have caused some employers to drop the plans Employee rights under ERISA: get vesting rights in their pensions FASB 106, Retirees and Pensions - requires corporation to expense cost of benefits forretired employees Pension Protection Act of 2006 Imposes new funding requirements New disclosure requirements Unemployment Compensation Benefits provided States determine amount States' rules on minimum and maximum States' rule on length Qualifying for benefits Must have been involuntarily terminated Must be able and available for work Must be seeking employment Who pays for unemployment benefits? States administer the program Funds deposited with state Workers' Compensation Laws Compensation for Work-Related Injuries Principles of Workers' Compensation Employees injured in scope of employment are covered Fault is immaterial Independent contractors are not covered Benefits include expenses, lost wages, and injury compensation Employees do not have right of common law suit Third parties can be sued to indemnify employers Administrative agency handles program Every employer must carry insurance or be self-insured Employee Injuries Primarily accidental injuries covered Definition has been expanded Back problems from lifting Medical problems - heart attacks and nervous breakdowns Stress Co-worker injury Covered if arises in scope of employment Issue of rape is a problem; employer can be sued for the failure to screen employeesadequately Fault is Immaterial in Workers' Comp (Employee Can Even Disobey Instructions and BeCompensated) Employee vs. Independent Contractors: Independent Contractors are Not Covered Benefits Lost wages Medical expenses Disability benefits Partial disability - listed on schedule by rate Example: 50 percent of wages Total disability - generally 2/3 of salary Unscheduled injuries are determined by board Death benefits paid to family Forfeiture of the Right of Suit: Benefits in Lieu of Suing Employer Third-Party Suits: Can Sue Product Manufacturers, Other Third Parties, But Recovery Must First Go to Reimburse Employer Each State Has an Administrative Agency for Administration of Benefits and Insurance Insurance - Employers Must Have Some Form Self-insurance Private insurance State fund insurance Problems in Workers' Comp Systems Extent of injuries covered Fraud Nature of injuries changing from manufacturing injuries to stress, heart disease, and repetitive motion Long-term hazards Relationship between Americans with Disabilities Act and Workers’ Compensation Labor Unions History and Development of Labor Legislation Norris-LaGuardia Act of 1932 (Anti-Injunction Act) Stopped federal courts from issuing injunctions to stop union strikes Some exceptions:Violence/lack of control - harm to public Wagner Act - National Labor Relations Act (NLRA) of 1935 Gave employees the right to unionize Prohibited employers from firing or discriminating against union members Established NLRB created to conduct union election created to remedy unfair labor practices Taft-Hartley Act - Labor Management Relations Act of 1947 Lists unfair labor practices for unions Addresses secondary boycotts Provides president with authority to have prestrike cooling-off period when public health and safety are at issue; has been used in coal and transportation strikes Landrum-Griffin Act - The Labor Management Reporting and Disclosure Act of 1959 Regulates union officials Gives union members a bill of rights Establishes penalties for misconduct Union Organizing Efforts Right to unionize Selecting a union Once selected, union represents all employees Collective bargaining unit determined can be a plant can be workers doing same job in a company NLRB decides based on: type of union duties, wages, and skills of employees relationship to employer wishes of employees Petition, cards, and vote Petition for union representation filed must be supported by signed, dated authorization cards from 30 percent of unit cards must be signed willingly Election: NLRB monitors restrictions on what employer can do just prior to election and during campaign unions are subject to reasonable employer rules Certification Exclusive right to represent employees Cannot hold another election for twelve months If collective bargaining agreement in place, cannot hold election during that agreement's effective time Union members have the right to not participate along with nonunion members in a strike Nonunion members in the certified workplace Right to organize Cannot mandate membership Cannot force participation Union Contract Negotiations Try to get employer contract - collective bargaining agreement Good faith bargaining required - 8(d) of NLRA Subject matter of good-faith bargaining Mandatory or compulsory subject matters Wages,Hours,overtime,vacation,leaves,pay days,insurance, pensions,seniority two-tier wage structure has been an issue in sports and air pilots' negotiations Permissive subjects for collective bargaining/strike roles/not unfair to refuse to bargain it Cannot bargain away statutory rights Example: Cannot agree to have a closed shop Failure to bargain in good faith Constitutes an unfair labor practice Can be the basis of a charge and complaint E-commerce and the use of e-mail for organizing Protected Concerted Activities - Union Economic Pressure NLRA gives union right to engage in concerted activities Public advertisements - permitted Picketing - legal The strike - legal economic weapon The shareholders Unions have contacted shareholders for clout Allowed shareholders to bring public attention to the issues Unfair Employee Practices Slowdown Not a strike or stoppage Employees refuse to do certain work or use certain equipment Featherbedding Payment for work not actually done Unfair labor practice Secondary boycotts Illegal when coercion involved Third party involved

Employer Rights Freedom of speech: can explain their position to employees Right-to-work laws Prohibit closed shops Shops requiring union membership Right to an enforceable collective bargaining agreement Economic Weapons of Employers Plant and business closings Congress has passed a plant closing law Many state and local governments have them as well Laws require notice and time frame before plant is closed Designed to eliminate shock to local economy Federal law is the Worker Adjustment and Retraining Notification Act of 1988 applies to employers with 100 or more workers must give sixty days advance notice of closing that will affect fifty or more workers must give sixty days notice of layoff that will affect 1/3 or more of work force for 6 months or more some exceptions such as unforeseeable circumstances and seasonal businesses and construction penalties include back pay and benefits and fines of $500 per day for each day notice not given Cannot use temporary closing or send work away (runaway shops) Plant flight - legal if there are economic reasons for transferring work Lockout - legal for economic reasons; legal to prevent strike but not to prevent union certification Conferring benefits - a violation if done temporarily Bankruptcy - legal International Issues in Labor Immigration Laws Immigration and Naturalization Act Immigration Reform and Control Act of 1986 Illegal Immigration Reform and Immigrant Responsibility Act of 1996 Antiterrorism and Effective Death Penalty Act Increased types and numbers of crimes that were grounds for deportation Decreased defense to deportation Department of Homeland Security has reported an increase in deportation Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act) Homeland Security Act of 2002 Created Department of Homeland Security Immigration controlled here  Toughened security checks Require more employer vigilance on I-9s and hiring immigrants American Competitiveness in the Twenty-First Century Act of 2000 Restrictions on laying off U.S. workers 90-days after hiring immigrants American Competitive and Workforce Investment Act of 1998 American Competitiveness in the Twenty-First Century Act of 2000 Working Conditions and International Labor Laws Moving to arbitration - Labor Management Cooperation Act - mediation as an alternative Moving to international plants to avoid labor problems Teams approach by companies has effect of mixing labor and management; breaks down union segregation Foreign wage competition has moved jobs to Mexico   History of Employment Discrimination Law No Protection Under Common Law Civil Rights Act of 1866 (not really effective) Equal Pay Act of 1963 Title VII of the Civil Rights Act of 1964 - Prohibited Discrimination in Employment on the Basis of Race, Color, Religion, Sex, or National Origin Amended by the Equal Employment Opportunity Act of 1972 EEOC created Federal courts given jurisdiction for suits Amended by the Pregnancy Discrimination Act of 1975 - prohibited discrimination on the basis of pregnancy and childbirth Age Discrimination in Employment Act of 1967 - Expanded Title VII Protections to Include Age Rehabilitation Act of 1973 - Prohibits Federal Contractors from Discriminating Against the Handicapped Americans with Disabilities Act of 1990 - Provides Protection for Workers with Disabilities and Imposes Requirements for Access Family and Medical Leave Act of 1993 - Right to Take Twelve Weeks Unpaid Leave for Family Medical Emergency Executive Orders - Apply to Agencies and Federal Contractors Employment Discrimination: Title VII of the Civil Rights Act (Fair Employment Practices Act) Prohibits Discrimination on Basis of: Race,Color,Religion,National origin,Sex, Pregnancy Application of Title VII Groups covered Employers with fifteen or more employees (for at least twenty calendar weeks) Labor unions with fifteen members or more and/or a hiring hall Employment agencies that work for covered employers State and local agencies Noncovered employers Employment of aliens outside the United States,Religious corporations, and so on, when hiring for religious positions,Congress,Federal government (they have a separate scheme),Indian tribes Employment procedures covered Hiring,Compensation,Training,Promotion,Demotion,Transfer,Fringe benefits,Rules, Working conditions,Dismissals,For employment agencies - referrals Theories of Discrimination Under Title VII Disparate Treatment Treating employees or potential employees differently on the basis of race McDonnell Douglas Corp. v. Green established the required elements (U.S. Supreme Court) Plaintiff belongs to a racial minority Plaintiff applied for and was qualified for job Plaintiff was rejected (despite qualifications) Job remained open Employer's burden of proof to show nondiscriminatory reason for the nonhire Disparate Impact Not intentional discrimination Rule results in different effect on groups Example: Minimum height and weight requirement for prison guards had the effect of eliminating women Mostly statistical cases showing impact In Wards Cove Packing, Inc. v. Atonio , 490 U.S. 642 (1989), the Supreme Court put greater burdens of proof on Title VII plaintiffs In response to Wards Cove case, the U.S. Senate and House passed the Civil Rights Act of 1991 that has been called a "quota bill." Key provisions of the bill include a provision for jury trials in discrimination cases This provision carried strong employer objections because presently only the Age Discrimination Act carries jury trial requirements and employees have been quite successful with recoveries under the Act due to the jury sympathy factor of "someday I’ll be that age too." The act provides for compensatory damages whereas now the only remedies are back pay and reinstatement. In direct response to the Wards Cove decision, the legislation requires employers to carry the burden of business necessity in establishing a defense to a Title VII case. 1991 Amendments also require the plaintiff employee to show causation between the practice of the employer and the disparate impact Pattern or Practice of Discrimination - Generally involves a statistical comparison Example: 38 percent of work force in a community is black; 6 percent of an employer’s work force is black Specific Applications of Title VII Sex Discrimination "Protective" legislation is prohibited Examples: Lifting (30 lbs.) restrictions, safety restrictions, height/weight requirements Proof same as under Green Ads cannot specify male or female Glass-ceiling issues "Mixed motives" in making decisions If race, gender, and so forth were a factor, it is discrimination Glass Ceiling Act - allows funding for research into why there is a problem Sexual harassment Covered by EEOC guidelines,Employers must have policies on harassment demands for sexual favors - "quid pro quo" environment of sexual suggestion hostile conduct for refusal to provide sexual favors verbal or physical suggestions Cannot be fired for refusal to accept sexual advances Managers and companies have liability for failure to take action on complaints of sexual harassment Pensions and sex discrimination Pregnancy Pregnancy Discrimination Act of 1974 added to Title VII Coverage and protections can't require pregnant employee to quit cannot demote upon return to work cannot refuse to allow them to return to work same sick rules for pregnancy as other ailments same insurance coverage no promotion or hiring refusals because of pregnancy Religious Discrimination Permitted when religious organization is hiring people as pastors and so on Employers must make reasonable accommodations for employees Reasonable accommodation Need not burden other employees Need not restructure workplace or schedule Racial Discrimination Some cases of reverse discrimination have been prohibited Employers can, however, institute affirmative action plans Antidiscrimination Laws and Affirmative Action What Is Affirmative Action? Prohibits discrimination against any group Protects African Americans, Hispanics, Native Americans, Asians, women, persons with disabilities, and Vietnam veterans Who is Required to Have Affirmative Action Programs? Those who have been subject to court orders or consent decrees Those who are state and local agencies receiving federal funds Those who are colleges and universities receiving federal funds Government contractors Preparing an Affirmative Action Program Begin with equal employment opportunity statement Appoint an affirmative action officer Conduct an internal audit and maintain good records Establish overall goals and even goals for certain areas Affirmative Action Backlash: The Theory of Reverse Discrimination California’s proposition to eliminate programs in government agencies (including universities) Adarand case requires affirmative action programs to withstand strict scrutiny Taxman v. Board of Education – reverse discrimination case settled before it reached U.S. Supreme Court Defenses to a Title VII Charge Bona Fide Occupational Qualification (BFOQ) Qualification of sex, religion, or national origin necessary for job Examples: Pastor of Methodist churches must be Methodist, actors and actresses for parts Customer preference is not a BFOQ Seniority or Merit Systems Valid defense to Title VII sometimes Must be bona fide Must apply to all employees Origins of the system cannot be discriminatory Cannot be used to perpetuate discrimination Aptitude and Other Tests Tests must be validated Job-related Do not eliminate certain races Validate by following employees for correlation between test scores and job performance Misconduct Defense that there was a valid reason for termination or different treatment Employer could even use misconduct by employee discovered after termination Enforcement of Title VII EEOC Is Responsible Five-member commission Appointed by president/approved by Senate No more than three from same political party Steps in an EEOC Case Complaint Filed by employee or the EEOC Employee must file within 180 days from the violation Filed with EEOC or state agency Employer is notified of the charge EEOC has 180 days from filing of complaint to take action If case not settled within 180 days, employee gets right-to-sue letter Certifies administrative remedies are exhausted Employee can go to federal court In Ledbetter v. Goodyear , the court ruled that the 180-day limit started at time of discrimination It is not a running tab employee can postpone Cannot wait to leave before filing if it is over 180-days Remedies Available Under Title VII: Injunctions,Back pay,Punitive damages,Affirmative action,Attorneys' fees Other Antidiscrimination Laws Age Discrimination in Employment Act of 1967 Applies to employers with twenty or more employees Protects those between the ages of 40 and 75 Equal Pay Act of 1963 - Equal pay for equal work Communicable Diseases in the Workplace Rehabilitation Act of 1973 Protection for handicapped Enforced by Labor Department Employers covered Federal contracts over $2,500 States and municipalities Covers: Diabetes, epilepsy, heart diseases, cancer, retardation, blindness, deaf persons Former drug addicts and alcoholics Must make reasonable accommodations for handicapped Americans with Disabilities Act Applies to employers with fifteen or more employees Required to make reasonable accommodations for handicapped Cannot use tests to screen out handicapped applicants Local governments required to make transportation available to handicapped Family and Medical Leave Act New (1993) law Twelve weeks' unpaid leave each year for birth or adoption of child, illness of spouse, parent, or child Must return to same job or equivalent The Global Workforce Companies Must Follow Restrictions of Host Country UN Treaties Support Equal Pay and Nondiscriminatory Treatment EU Follows All the Treaties Conflicts Between U.S. Law and Most Country Law, Companies Follow Host Country Law The Global Workforce Companies Must Follow Restrictions of Host Country UN Treaties Support Equal Pay and Nondiscriminatory Treatment EU Follows All the Treaties Conflicts Between U.S. Law and Most Country Law, Companies Follow Host Country Law What Is a Contract? Set of promises for breach of which the law gives a remedy Defined in Restatement of Contracts - American Law Institute (ALI) Helps Businesses with Planning Sources of Contract Law Common Law English common law Summarized in Restatement (Second) of Contracts Developed by American Law Institute Followed in most states Applies to contracts with subject matters of land or services The Uniform Commercial Code (UCC) Common law is not uniform from state to state ALI and National Conference of Commissioners on Uniform State Laws drafted it First appeared in 1940s Adopted in part or whole in all states Article II governs contracts for the sale of goods More liberal than common law Reformed/revised again in 2003 UCC Versus Common Law - Case Determinations Often Required Article IIA Leases New addendum to UCC Covers leases of goods (long-term leases such as car leases) Adopted in most states Evolving E-Commerce Contract Laws Uniform Electronic Transactions Act (UETA) Law in 48 states (Dec. 2007) plus District of Columbia Governs contracts formed over the Internet Unilateral: One party promises something in exchange for performance Express Versus Implied Contracts (Quasi Contracts) Express contracts are written or oral agreements Implied contracts are nonspoken, nonwritten understandings Law implies a contract where one does not exist to prevent unjust enrichment Minors' contracts for necessaries are enforced in quasi contract since they are voidable Void and Voidable Contracts Void contract is one to do something illegal or against public policy - neither side can enforce Voidable contracts are contracts in which one party has the right to end the contract Example: Contracts of minors are voidable Unenforceable Contracts Procedural problem precludes enforcement Statute of frauds Executed Versus Executory Contracts Executed contract is one in which the promises under the contract have been performed Executory contract is one that has been entered into but not yet performed; can be partially executory/executed if one side has performed Formation of Contracts Offer Parties Person who makes offer = offeror Person who receives offer = offeree Must have language that indicates intent to contract vs. negotiation Not just inquiry More than negotiation Courts use an objective, not a subjective, standard examine language examine circumstances examine the actions of the parties Certain and definite terms Common law - parties, subject matter, price, payment terms, performance times UCC - subject matter, quantity, parties Under the UCC, court can consider industry custom and course of dealing in determining whether terms are sufficient Communication to offeree Offeree cannot accept offer that never arrives Ads are invitations for offers - not offers Termination of offers Can be revoked any time prior to acceptance exception is option offeror is paid to hold offer open it is a separate contract for time second exception is UCC merchant's firm offer - offer by merchant signed in writing states it will be kept open (irrevocable) for period stated (maximum of three months) Termination by rejection offeree indicates "no" rejection by changes in terms - counteroffer Termination by counteroffer - UCC section 2-207 changes to UCC (adoption in process) change the impact of 2-207 and battle of forms Old UCC: nonmerchants - addition of terms in acceptance does not equal a counteroffer; acceptance results, but additional terms aren't part of contract Example: A: I will sell you my white Ford Torino for $450. B: I accept. Throw in new seat covers. Contract for Torino without seat covers results. Old UCC: merchants - battle of the forms; invoices and purchase orders sent back and forth - no matching terms acceptance with additional terms = contract additional terms are part of contract unless: material - price, warranties (immaterials = shipment or payment terms) offer limited - "this offer is limited to these terms" objection to new terms UCC changes to 2-207 what contract terms were became very confusing new rule is applicable to merchants and non-merchants and is the "terms later" section – if the parties agree on subject matter, the terms can come later Termination of offer expiration time for offer expires every offer expires (lapses) after a reasonable time Acceptance: The Offeree’s Response Offeree's favorable response - must be communicated to offeror If means of acceptance stipulated: Use means stipulated, then mailbox rule applies Don't use means stipulated, then counteroffer and rejection Timing mailbox rule if same means or stipulated means used arrival if different (slower) method used if nonstipulated means used, it is a counteroffer and a rejection Acceptance with no stipulated means Can use any method of communication Same or reasonable method of communication gets you the mailbox rule E-Commerce and Contract Formation Same requirements Methodology varies Acceptance is by point and click Must show an understanding that there is a contract Consideration Distinguishes gifts from contracts What each party is willing to give up for the other The bargained-for exchange Unique consideration issues

Products Liability Vocabulary Terms Assumption of risk - Defense in negligence cases that prevents an injured party from recovering if it can be established that the injured party realized the risk and engaged in the conduct anyway. Bait and switch - Term given to advertising technique in which a low-price product is advertised and then the customer is told that the product is unavailable or is talked into a higher-priced product; prohibited by the FTC. Caveat emptor - Latin term for “Let the buyer beware”. Comparative negligence - In negligence, a defense that allocates responsibility for an accident between the plaintiff and defendant when both were negligent and allocates the recovery in proportion to liability. Consent decree - For administrative agencies, a type of plea bargain; a settlement document for an administrative agency’s charges. Contributory negligence - Negligence defense that bars an injured party from recovering any damages if the injured party acted in a negligent way and contributed to her own injuries. Corrective advertising - FTC remedy that requires a company to run ads explaining previous deceptive ads or run a new statement in future ads. Disclaimers - A provision in a contract that eliminates liability such as a warranty disclaimer or a disclaimer of tort liability. Express warranty - Expressed promise by seller as to the quality, abilities, or performance of a product. Federal Trade Commission (FTC) - Federal agency responsible for regulation of unfair and deceptive trade practices, including deceptive advertisements. Implied warranty of fitness for a particular purpose- Warranty given by seller to buyer that promises goods will meet the buyer’s specified needs. Implied warranty of merchantability - A warranty that the goods are of average quality; given in every sale of foods by a merchant. Misuse - In product liability, a defense based on the plaintiff’s failure to follow instructions or use of a product for improper purposes. Privity - Direct contractual relationship. Strict liability - Liability without fault Unconscionable - A defense to an otherwise valid contract that is grossly unfair to one side in the contract. Management Of Employee Welfare Vocabulary Terms Age Discrimination in Employment Act - Federal law that prohibits job discrimination on the basis of age. Americans with Disabilities Act - Federal law that prohibits discrimination in the workplace against persons with disabilities and requires employers to make reasonable accommodations for employees with disabilities who are otherwise qualified to perform a job. Bona Fide Occupational Qualification (BFOQ) - A justification for discrimination if it can be established that gender, religion, national origin, etc., is required for a job. Civil Rights Act of 1964 - Law that prevents discrimination in housing, education, ad employment. Disparate Impact - Theory for establishing discrimination; involves using statistical analysis to demonstrate that a particular practice or an employer’s hiring practices have a greater impact on protected classes. Disparate Treatment - In discrimination law, the application of different rules or standards to people of different races, genders, or national origins. Equal Employment Opportunity Act of 1972 - Federal law that established the EEOC which enforces Title VII. Equal Employment Opportunity Commission (EEOC) - Federal agency responsible for the enforcement of Title VII and other federal antidiscrimination laws. Equal Pay Act of 1963 - Law that prohibits wage discrimination on the basis of age, race, sex, ethnicity, and so on. Lilly Ledbetter Fair Pay Act - Federal law that extended the statute of limitations for employees to bring discrimination suits against employers for pay discrimination; time is now measured from each paycheck and not limited to 180 days from the act of discrimination. Pattern or Practice of Discrimination - In employment discrimination, a theory for establishing discrimination based on a pattern of dealing with minorities, women, and certain ethnic groups. Pregnancy Discrimination Act - Federal law prohibiting discrimination in hiring or promotion decisions on the basis of pregnancy or plans for pregnancy. Quotas - Affirmative action plans that dictate a specific number of minority or female applicants be accepted for jobs, graduate school, and so on. Outlawed by U.S. Supreme Court; can only have affirmative action goals, not specific quotas. Rehabilitation Act of 1973 - Federal law prohibiting discrimination by federal contractors on the basis of a handicapping condition. Right-To-Sue Letter - Letter issued by the EEOC to a complainant after all necessary administrative steps have been taken in the case; permits the complainant to pursue court action. Sexual Harassment - Unlawful suggestions, contact, or other advances in the workplace; prohibited under federal law. Title VII - Portion of the Civil Rights Act of 1964 that prohibits employment discrimination. Employment Discrimination Vocabulary Terms American Competitiveness in the Twenty-First Century Act - Federal law that increased the number of highly skilled immigrants that are allowed to work in the US. Antiterrorism and Effective Death Penalty Act - One of several post 9/11/2001 federal statutes passed to increase grounds for deportation and penalties for criminal conduct for terrorist activities. Employee Retirement Income Security Act of 1974 (ERISA) - Congressional act establishing requirements for disclosure and other procedures with relation to employees’ retirement plans. Equal Pay Act of 1963 - Act prohibiting wage discrimination on the basis of age, race, sex, ethnicity, etc. Fair Labor Standards Act (FLSA) - Federal law covering minimum wages, maximum hours, overtime, and compensatory time. Federal Insurance Contributions Act (FICA) - Federal law that requires the joint contribution by employers and employees of the funds used for the Social Security system. Immigration Act of 1990 - Federal law that requires an I-9 form for every employee. Immigration and Naturalization Act (INA) - Original federal act governing employer obligations on employing immigrants Independent Contractor - Person who works for another but is not controlled in her day- to-day conduct Minimum Wage - Under FLSA, all employees must be paid a minimum wage. Occupational Safety and Health Administration (OSHA) - A federal agency that develops and enforces safety standards in the workplace. Overtime Pay - Pay rate required for work beyond the maximum forty-hour work week for covered workers. Pension Protection Act of 2006 - Federal law that imposes additional funding and disclosure requirements on employers who have employee pension plans. Right-To-Work Laws - State laws that prohibit closed and union shops from requiring employees to join a union in order to work. Social Security Act of 1935 - Federal legislation that provides for the benefits of Social Security and the payment mechanisms through FICA deductions. U.S. Department of Homeland Security (DHS) - Federal agency that is an umbrella for several existing agencies that was designed to bring together all the functions related to emergencies, immigration, border security, and antiterrorism efforts. USA Patriot Act - Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act - Federal law that permits expanded warrant and investigation techniques for federal agencies as well as the sharing of information about suspected terrorists; also imposes control on large cash transactions for banks, real property, and vehicles. Unemployment Compensation - Funds paid to individuals who are involuntarily terminated from their jobs while they are seeking new employment. Workers’ Compensation - State system that provides payments for workers who are injured on the job Contracts Chapter 12 Vocabulary Terms Acceptance - Offeree's positive response to offeror's proposed contract. Article 2 of the Uniform Commercial Code (UCC) - Uniform laws adopted in forty-nine states governing sales contracts for goods. “Goods†are tangible and moveable. Bilateral Contract - Contract in which both parties make promises to perform; a promise is given in return for another’s promise. Bill of Lading - Receipt for goods issued by a carrier; used as a means of transferring title in exchange for payment or a draw on a line of credit. Charitable Subscriptions - A promise to make payment to a charitable organization; a pledge; it is enforceable even though the charity gives nothing in exchange. Common law - British law and customs that were adopted in the US by judicial precedent. In contracts, the common law rules apply to contracts for services and real estate. Consideration - Money or something of value; a legal detriment. Counteroffer - A new offer made in return by one who rejects an unsatisfactory offer. Digital Signature - Authorization for a contract provided via electronic means. Electronic Signatures in Global and National Commerce Act of 2000 (E-SIGN) - A federal law that recognizes digital signatures as authentic for purposes of contract formation; E-sign puts electronic signatures on equal footing with signatures on paper contracts. Executed Contracts - Contracts in which performance has been completed. Executory Contracts - Contracts that have been entered into but not yet performed. Express Contract - Contract agreed to orally or in writing. Force Majeure - Clause in a contract that excuses performance in the event of war, embargo, or other generally unforeseeable event. Implied Contract - A contract that arises from circumstances and is not expressed verbally or in writing by the parties. Mailbox Rule - Acceptance is effective upon mailing if properly done. Merchant's Firm Offer - Under §2-205 of the UCC, an offer required to be held open if made in writing by a merchant, even though no consideration is given. Merchants' Confirmation Memoranda - UCC rule stating that the confirmation of an oral agreement sent by one party to the other and signed only by the sender is effective unless the recipient rejects it. Offer - Indication of present intent to enter into a contract. Offeree - In contract negotiations, the person to whom the offer is made. Offeror - In contract negotiations, the person who makes the offer. Option Contract - An agreement to hold an offer open for a period of time in exchange for money or other consideration. Parol Evidence Rule - Oral evidence cannot be used to contradict or add to the terms of a written contract that appears to be the final expression of the agreement. Promissory Estoppel - A promise that causes another to act in reliance upon it; if the reliance is reasonable, the promise is enforceable. Quasi-Contract - A theory used to prevent unjust enrichment when no contract is formed; the court acts as if a contract had been formed and awards damages accordingly. One of the parties has received a benefit at the other's expense, knowing that payment would be expected. Revocation - The retraction by the offeror of an outstanding offer. Statute of Frauds - Statutes that require certain contracts to be in writing. Stipulated Means - In contracts, a method of acceptance specified or stipulated in the offer; if these means are followed by the offeree, the mailbox rule applies for the timing of the acceptance. UN Convention on Contracts for the International Sale of Goods (CISG) - U.N. rules that are similar to Article II of the UCC governing certain international transactions for the sale of goods. Unenforceable Contract - A contract that cannot be enforced due to a procedural error. Uniform Computer Information Transactions Act (UCITA) - Uniform law that governs sales of software, databases, and other products used on computers. Uniform Electronic Transactions Act (UETA) - Uniform law for states that provides the rule for forming electronic contracts. Unilateral Contract - Contract in which one party promises to perform in exchange for the performance of the other party. Void Contract - A contract that is not enforceable by either party. Voidable Contract - A contract in which one party can choose not to perform. CHAPTER 13:Vocabulary Terms Accord and Satisfaction - An agreement (accord) to pay a certain amount, the payment of which constitutes full payment (satisfaction) of that debt. Assignment - In contract law, the transfer of the benefits under a contract to a third party; the third party has a right to benefits but is subject to any contract defenses. Bill of Lading - Receipt for goods issued by a carrier; used as a means of transferring title in exchange for payment or a draw on a line of credit. Capacity - The ability to legally enter into a contract. Commercial Impracticability - Contract defense for nonperformance under the UCC that excuses a party when performance has become impossible or will involve much more than what was anticipated in the contract negotiations. Compensatory Damages - Damages to put nonbreaching party in the same position he would have been in had the breach not occurred. Conditions - Events that must occur before contract performance is due. Conditions Concurrent/Contemporaneous - In contracts, the conditions that must occur simultaneously for contract performance to be required; for example, in an escrow closing in real property, an agent collects title, insurance, funds, and other documents and sees that all the exchanges under the contract occur at the same time; the parties perform their part of the agreement at the same time. Conditions Precedent - In contracts, an event or action that must take place before a contract is required to be performed; for example, qualifying for financing is a condition precedent for a lender's performance on a mortgage loan. Confidential Relationship - A relationship with a high degree of trust and reliance. Consequential Damages - Damages resulting from a contract breach, such as penalties or lost profits. Contract Defense - Situation, term, or event that makes an otherwise valid contract invalid. Covenants not to Compete - Promises to protect employers and buyers from loss of goodwill through employee or seller competition. Delegation - Transfer of obligations under a contract; generally accompanied by assignment of benefits. Duress - A physical or mental force that was used to obtain the agreement to enter into the contract without voluntary consent. Exculpatory Clause - Clause that attempts to hold a party harmless in the event of damage or injury to another's property. Fraud - Intentional deception in contract negotiation that is relied on by the other party. Impossibility - Contract defense that excuses performance when there is no objective way to complete the contract. Incidental Damages - Damages suffered by the nonbreaching party to a contract as a result of the breach; for example, late performance fees on a buyer's contract because the seller failed to deliver on time. Letter of Credit - Generally used in international transactions; an assurance by a bank of the seller's right to draw on a line of credit established for the buyer. Liquidated Damages - Damages agreed to in advance and provided for in the contract; usually appropriate when it is difficult to know how much the damages will be. Material Fact/Material Misstatement - A statement of fact that would influence an individual’s decision to buy or sell. Minor/Infant - An individual under the age of majority; generally someone under the age of 18. Misrepresentation - In contract formation, misstatements of materials facts without the intent to deceive the other party. Novation - Process of reworking a contract to substitute parties or terms, so that the old contract is abandoned, and the new contract becomes the only valid contract. Puffing - An opinion about the quality of goods and products. Rescission - Process of revocation or cancellation of a contract. Scienter - Intent to defraud. Substantial Performance - Contract defense for performing a contract slightly differently from what was agreed upon; justification for substitute but equal performance; generally applicable in construction contracts. Unconscionable - Term used to describe contracts that are grossly unfair to one side in the contract; a defense to an otherwise valid contract. Undue Influence - Contract defense based on one party taking advantage of a relationship of trust and confidence. Void Contract - A contract that neither side can enforce. Voidable Contract - A contract that one side can choose not to perform