Business law ch 8-9

A promise to make a gift to charitable organization can be made enforceable by the charity sending a written request for the money to the potential donor within 30 days

False

Although a promise to perform an existing private duty cannot be consideration, a similar promise to perform an existing public duty can be consideration.

False

Past performance by one party to a contract is always legally sufficient consideration for a new promise by the second party

False

Generally, what the parties give and get as consideration need to be of equal economic value

False

An important exception to the general rule that mutual consideration is necessary for a valid contract or binding promise

Promissory estoppel

A promise unsupported by consideration is generally unenforceable

True

Ratification can never occur before the age of majority to contract

True

Which of the following is not evidence of informal emancipation?

A minor buys a car

Will disagrees with his bank over the money due to pay off a loan. After some negotiations, they agree that if Will pays 75% of the amount the bank believes its due, the debt will be canceled. This agreement is termed an

Accord

As the value different individuals put on an object or a performance may vary greatly, the courts typically do not question the _________ of consideration.

Adequacy

Which of the following is an act of ratification?

After entering the age of majority giving a new promise to perform as agreed, making payments after entering majority/ both b and c

What are the 3 possible forms of consideration?

An act, a forbearance, or a promise

When consideration is provided to keep an offer open, it creates

An option contract

When buyers agree to purchase all of a particular producer's production, it is called

An output contract

Generally, a person lacking contractual capacity can disaffirm a contract for non-necessaries

Anytime while still under the incapacity, within a reasonable after attaining majority/ both a and b

Generally, a promise to make a gift enforceable

False

A group of creditors that cooperatively agree to accept less than what they are entitled to from a particular debtor is legally known as

Composition of creditors

The ability to understand the ______________ of a contract is required for contractual capacity.

Consequences

Which of the following would most likely not be classified as a necessary?

Cosmetics

Although Julie is a minor and generally lacks capacity, she cannot disaffirm some contracts for non-necessaries. Which of the following cannot be disaffirmed?

Court approved contracts, certain life insurance contracts, depository contracts with banks/ all of the above cannot be disaffirmed

Contracts of a minor that cannot be disaffirmed include

Court-approved contracts, enlistment in the armed services, educational loans/ all of these

Heath can not afford to purchase a new refrigerator, but his brother, Jim, agrees to purchase the $800 refrigerator for Heath as long as Heath pays Jim $100 a month for the next 8 months. Under this arrangement since Heath owes him $800, Jim is the creditor and Heath is the

Debtor

When Marty agrees to take possession of her uncle's gift to her, Marty becomes a

Donee

Grant, a 16-year old high school student, quit school and took a full-time job. His actions are evidence of informal ___________.

Emancipation

The severance of the child-parent relationship is referred to as

Emancipation

As soon as a person reaches the age of majority the legal power to disaffirm a contract immediately ended.

False

Minors are not usually liable for their torts.

False

In many states, a minor who lies about her or his age may be held liable for the tort of

False representation

Derrick, a merchant, offers in writing to sell another merchant, Garry, 25 handmade, wrought iron patio furniture sets. Although no payment or other consideration was given, under the UCC Derrick must honor this ________ for a certain period of time not to exceed 3 months.

Firm offer

Agreeing not to exercise a legal right is what form of consideration?

Forbearance

When a court decrees a minor emancipated, it is referred to as

Formal emancipation

When a person reaches the age of majority, which of the following does not occur?

He or she must start paying taxes

If a contact contains a clause that allows you to to escape the legal obligation, the promise is said to be

Illusory

In a majority of states, minors cannot disaffirm a contract for _____ insurance.

Life

The specific time limit for bringing a lawsuit is set down in the statute of

Limitations

Sergio accidently wrecked and totaled Gustavo's car! Both parties agreed that Sergio owed Gustavo $6000 as a consequence. Because both parties agree on the fact that the debt exists and on the amount of that debt, this is an example of a(n)_____________________debt.

Liquidated

Minors can disaffirm their contracts during their minority and for a reasonable period of time after attaining their __________.

Majority

Parties who may, because of their status, have the right to disaffirm a contract include

Minors, the intoxicated, the mentally incapacitated/ all of these

Debbie produces dolls in her garage on a part-time basis. A local hobby store agrees to purchase ALL of the dolls she can make. This agreement is know as a (an)_______________ contract.

Output contract

Marissa agrees to purchase Danny's land. Both parties sign the contract, which states she will purchase the property for "one dollar ($1) and other good and valuable consideration." This type of consideration is referred to as

Nominal

Dahlia's Bakery produces a wide variety of cookies, cakes, and pastries. If Dahlia agrees to supply all the pastries a particular restaurant needs, what has she created?

None of the above

A promise to not do something that has already been performed is

Past consideration

Which of the following is consideration?

Past performance

Acting toward a contract as though one intends to be bound by it is called

Ratification

For the first couple of months after he turned 18, Ben continued to make monthly payments on his car. When that car was severely damaged in an accident, Ben tried to avoid the purchase contract and get his money back. However, the court would not allow him to do so as it held by making the payments Ben had _______ the contract.

Ratified

When a contract for necessaries is disaffirmed by a party lacking capacity, they still must pay a __________ amount for those necessaries.

Reasonable

Which of the following are rights given to those who lack capacity?

Right to disaffirm contracts for non-necessaries

After Gail was laid off her job, she was unbanked to pay her bills. Not wanting to file bankruptcy, she negotiates with her creditors for extended terms or reduced amounts of the money they are due. She believes her debt to one of the creditors, a local finance company, is $300, but the finance company believes the amount is $800. To avoid litigation, both parties enter into an agreement that calls for Gail to pay $500 to clear the debt. When Gail pays the $500, she will have completed what is legally termed the accord and...

Satisfaction

As the head of his academic department, Enrique has the capacity to contractually bind his school district pay for supplies he orders. This capacity is known as Enrique's __________.

Scope of authority

Employees acting outside of their ____________ do not have the power to bind the employer.

Scope of authority

The statement at the end of the contract reads, "Either party can cancel this agreement for any of the above stated reasons provided that 30 days written notice is given to the other party." This is the _________ of the contract.

Termination clause

In most states minors can get back everything they put into a contractual bargain even if

They are unable to return exactly what was received under the contract, the goods have been used or damaged, the goods have been lost, consumed, or destroyed/ all of these

Under the UCC once a merchant makes a firm offer to buy or sell goods, the merchant must keep the offer open for as long as is stipulated in the offer but no longer than

Three months

A debt discharged through the debtors bankruptcy proceeding can be reaffirmed by the debtor without any additional consideration for the subsequent promise to repay

True

A person can have a contractual capacity even if he or she cannot understand the wording of a contract

True

Consideration is what the promisor demands and generally must receive in order to make his or her promise legally binding against him or her.

True

Emancipated minors may lose the power to disaffirm a contract

True

Employees acting outside of the scope of their authority are generally personally liable whether their employer is or not

True

For the voluntarily intoxicated, disaffirmance is only allowed if they did not even know they were making the contract.

True

If a contracts termination clause gives a party the right to terminate for any reason whatsoever, that party's promise to perform would be illusory and non-binding as consideration.

True

In most jurisdictions, even if a minor cannot return everything that was received under a contract, the minor will receive back everything she or he put into the bargain.

True

Minority ends the day before the birthday of the age set as the age of majority

True

The party lacking capacity can generally disaffirm contracts for non-necessaries or, as an alternative, can enforce them against a party with capacity.

True

The payment of money for the release of unliquidated tort claim is adequate consideration to make the release enforceable

True

if the consideration received by one of the parties is so grossly inadequate that it shocks the conscience of the court, there is a great likelihood that the contract will be declared:

Unconscionable

All contracts by a party held to be permanently insane by a court are

Void

Contracts made by a person that a court has ruled to be in a permanent state of alcoholism are

Void

Holly is 18 years old and has been treated for schizophrenia, a severe mental illness. After being institutionalized repeatedly, she has been held to be permanently insane. Regardless, Holly has signed contracts for 2 necessary items: an apartment lease agreement and rental agreement for furniture for this apartment. Even though these contracts are for necessary items, these contracts will be held to be....

Void

Contracts made by a party who was temporarily insane are

Voidable

If a judge rules that a person was temporarily insane when a contract was made, that contract is considered to be ________ by the temporarily insane party.

Voidable

The person receiving a gift is legally known as

donee

Latrice is only 13 years old, but once she signs a court-approved contract she cannot ________ it.

disaffirm

A big difference in economic value of what one gives and receives may be evidence of

duress, mutual mistake, and fraud

Dwight signed a contract to begin his own home-based business to distribute health care products. The clause at the end of the distributor agreement gives him or the parent company the right to end the contract for any reason. This clause is an example of a(n):

illusory promise

Food, clothing, and shelter are all classified as ________ for those who lack capacity.

necessaries

Under the doctrine of __________ obligors can be denied the legal ability to show in the court that they did not receive consideration for their promises. Therefore, the court can enforce those promises against them.

promissory estoppel

A liquidated debt is one where the parties agree

that the debt exists and on the amount of the debt/ both a and b

The statute of limitations specifies

the time limit for bringing a lawsuit based on a claim