What is the Statute of Frauds?
The Statute of Frauds makes certain types of contracts unenforceable unless that are in writing.
Even if you had an enforceable oral contract it becomes unenforceable
What types of contracts does the statute of frauds cover?
i. A promise by an executor or
administrator to pay estate debts
out of his own money,
o ii. A promise to answer for the
debt, default, or miscarriage of
another (guarantee),
o iii. An agreement made in
consideration of marriage,
o iv. A contract dealing with
interests in land,
o v. An agreement not performed within
one year of its making, and
o vi. Ratification of debts incurred
while a minor.Part Performance and requirements for oral contract recognition
If the plaintiff can show that performance of the contract has begun and he has relied on its existence, the court would accept that performance as evidence of the contract without writing.
However the following conditions have to the met.
- It must be a contract on land
- The acts of performance must suggest quite clearly the existence of a contract dealing with the land in question (no ambiguity)
- Activities of either the plaintiff or the defendant may be considered acts of performance but the plaintiff must have
relied on the existence of the contract and suffered a loss if the contract is not enforced.
What is parol Evidence?
During the negotiation process, emails, phone messages, draft documents, faxes, and letters may be created and exchanged. These documents and recordings are collectively known as parol evidence.
What is the parol evidence rule?
The parol evidence rule puts a limit on what uses can be made of parol evidence which can be used to interpret ambigious words.
A court will admit parol evidence about
a missing term when
o the written agreement does not
contain the whole agreement;
o the missing term is part of a
subsequent oral agreement;
o the missing term is part of a
collateral agreement for which there
is separate consideration; or
o the missing term is a condition
precedent to the written agreement.What are the three types of Remedies for a breach in contract?
o a. damages
o b. equitable remedies—specific
performance, injunction, and
rescission
o c. quantum meruitWhat are the prerequisites to be awarded damages?
- Loss must flow from the breach
2. the plaintiff must have done their best to mitigate these damages
Liquidated Vs. Penalty clauses
liquidated damages are damages specified in the contract that if a breach were to occur, the injured party would get x amount which could be less or more than the actual damage but it gives parties a piece of mind to know their liability
penalty clauses on the other hand are a term that specifies an huge amount of money that is more so intended to force or scare parties into performance and courts will not often require that exact amount for damage payment
What are the types of damages
- exception damages (may include opportunity costs)
- Consequential Damages
- general damages
- Reliance Damages
- Punitive Damages
prerequisite for equitable remedies
First, the court must be satisfied
that damages will not adequately
compensate the loss;
and the plaintiff…
- Must come with ‘clean hands’
- the plaintiff must not delay in taking action
- a court will refuse to intervene on equitable principles when to do so would negatively affect an innocent purchaser.
- the plaintiff must have paid reasonable consideration for the defendants promise.
- Finally, a plaintiff must ordinarily be a party against whom the remedy would be awarded were he the defendant instead.
Types of equitable Remedies
- Specific performance
- Injunction (requiring a negative covenant not always needed in writing)
- Recession
- Quintum Meruit
Difference between Business and affairs
- the affairs are the internal relationships and arrangements among those responsible for running a corporation
- the business involves the external relations between a corporation and those who deal with it as a business enterprise
What are the three basic groups that are common within all corporations
- Shareholders
- Directors
- officers
What is the role of Directors?
Directors manage or supervise the management of the business and affairs
of the corporation. There most
important powers are…
- To issue shares
- To declare dividends
- To call meetings of shareholders
- To delegate responsibility and appoint officers.
Appointment and removal of a director
A simply majority (ordinary resolution) is enough for the appointment or removal of a director unless otherwise stated (cumulative voting)
- they must be 18 years of age, of sound mind and have never declared bankruptcy.
What is an officer?
they are responsible for the day to day hands on tasks of running the corporation and are appointed by the directors who define and designate their responsibilities
What are the duties of Directors and Officers?
o 1. Every director and officer of a
corporation in exercising their
powers and discharging their duties
shall
▪ a. act honestly and in good faith with a view to the best interests of the corporation; and
▪ b. exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.
o 2. Every director and officer of a
corporation shall comply with this
Act, the regulations, articles,
bylaws and any unanimous shareholder
agreement.
What duties are owed?
A fiduciary duty and a Duty of care, Diligence and Skill.
To Whom is this duty owed to
The corporation, the shareholders and other stakeholders.
What are the defences to a breach of duty?
- due diligence defence : By establishing that the required degree of care was taken, directors and officers can defend themselves against claims of breach of the articles, bylaws,
- Good faith reliance: Good faith reliance on audited financial statements or expert reports is a defence to breach of fiduciary duty or duty of skill and care
- Corporate indemnity: An agreement with the corporation to reimburse a director or officer for any costs associated with liability for breach of duty is enforceable provided that the director acted honestly, reasonably, and in good faith
- Directors’ and officers’ liability insurance: A corporation may purchase directors’ liability insurance on behalf of its board
- The key common law defence available to directors and officers is known as the business judgment rule . Under this rule, courts will grant business experts the benefit of the doubt and not easily criticize a business decision. Judges recognize
that they are not business
experts and that even sound
decisions may ultimately be
unsuccessful. Therefore,
courts focus on the process
used to arrive at the
decision; as long as
directors and officers
exercise an appropriate
degree of prudence and
diligence while making the
decision,What is some conduct that involves conflicts of interest?
- Contract with a corporation
- Interception of Corporate opportunity
- Competing with the Corporation
- related party transactions
- Insider Trading
Role of Shareholders
Shareholders play little or no part in
management. They have some rights, the
most important being the right to vote
at shareholder meetings, but generally,
once the shareholders have elected a
board of directors, they have no
further power to participate in
management.
What are the artibutes of being ‘locked in’ and ‘frozen out’
-The minority shareholder is “locked in”
in the sense that he probably cannot
sell his shares except at a fraction of
what he believes they should be worth.There is two reasons for this
(1) in private corporations, the transfer of shares is restricted and usually requires the consent of the board.
(2) even if the minority shareholder is free to sell the shares he will have great difficulty in finding a buyer who would consider acquiring a minority position in a private company.
The minority shareholder may be “frozen
out” in the following manner.
o First, the majority directors may
fire him from his job with the
corporation or, at the very least,
refuse to renew his employment
contract when it expires.
o Second, they may remove him from the
board of directors or elect someone
else in his place at the next
election.
o Third, they may increase salaries to
themselves, so that the corporation itself earns no apparent profit.What rights do shareholders have?
- To vote at any meeting of shareholders
- To receive any dividend end that is declared
- to receive the remaining property of the corporation (after the payment of its debts) on dissolution
