Chapter 9-12 Test Review--Legal Environment of Business (Schupp)

Define unilateral contract.

A contract in which only one party makes a promise. -Ex: someone loses their watch, so they promise $50 to whoever can find it and bring it to him. 1. One party makes a promise. 2. Offer is made only to those whom the offer-or chooses. 3. Acceptance only by the individual who completes the promise. 4. Only a person who knows of the offer may accept.

Define implied (in fact) contract.

A contract in which the agreement of the parties is inferred from their conduct. -Ex: someone is in an accident and breaks their leg, so they are brought to the ER and they are unconscious. The doctor fixes the broken leg while the person is unconscious, therefore, it is implied that the person will pay for this procedure.

Define executed contract.

A contract that has been fully performed by all of the parties (completed).

Define executory contract.

A contract that has yet to be fully performed (incomplete).

What are the requirements of a quasi contract?

A court will impose a quasi contract or restitution when: 1. the plaintiff confers a benefit upon the defendant (benefit). 2. the defendant knows or appreciates the benefit (knowledge). 3. the defendants retention of the benefit is inequitable (retention).

Define moral obligations.

A promise made to satisfy a preexisting moral obligation is generally unenforceable for lack of consideration. -Do moral obligations carry weight? Sadly, no.

Define mistake.

An understanding that is not in accord with existing fact. -Mutual mistake: both parties have a common but erroneous belief forming the basis of the contract; renders the contract voidable by either party (the injured party). -Unilateral mistake: courts are unlikely to grant relief unless the error is known or should be known by the nonmistaken party; contract enforceable in most cases unless unconscionable (pretty much just tough luck).

Define the Uniform Commercial Code.

(AKA UCC) Article 2 of the UCC governs the sales of goods (2A is about leasing). -Sale: the transfer of title from seller to buyer. -Goods: tangible personal property (personal property is all property other than an interest in land). -Hardest state to accept this: Louisiana. -Where find the UCC? Appendix B in the textbook.

Define fraud (in the inducement).

If occurs, voidable by the injured party. 1. False representation: a lie; positive statement or conduct that misleads. 2. Fact: not subjective or a prediction; an event that occurred or a thing that actually exists. 3. Materiality: misrepresentation would be likely to induce a reasonable person to manifest her assent. -Q: would you have agreed to the contract if you knew the truth? (1) A: if yes, then NOT material. (2) A: if no, then it IS material. -VERY IMPORTANT. 4. Made with the knowledge of falsity and *with the intent to deceive*: called scienter and includes (1) actual knowledge, (2) lack of belief in statement's truthfulness, or (3) reckless indifference to statement's truthfulness. --------------- 5. Reliance: the person relied on this false statement; a defrauded party is reasonably influenced by the misrepresentation. 6. Damages.

Define void contract.

No contract at all; without legal effect (does not meet all 4 criteria).

Define valid contract.

One that meets all of the requirements of a binding contract (meets all 4 criteria).

Define undue influence.

Taking unfair advantage of a person by reason of a dominant position based on a confidential relationship. -Taking advantage of position of trust. -Dominant/Subservient relationship (doctor/patient). -If occurs, voidable by injured party. -Has to be factual. -Presumption of dominant taking advantage of subordinate.

What is the remedy for a quasi contract?

The plaintiff recovers the reasonable value of the benefit she conferred upon the defendant.

Define duress.

Wrongful or unlawful act or threat that overcomes the free will of a party. -Loss of free will to make a decision. -Subjective test: how you feel about a situation. -If duress occurs, voidable by injured party.

Define breach.

Failure to perform a contractual obligation properly.

What are the requirements of accepting an offer?

1. Communication. 2. Silence as acceptance: only if its the continuance of an offer based on pattern (until one says stop). 3. Conditions in an offer: can put a condition in the offer that acceptance is not valid until received. 4. Authorized means: the Restatement and the Code provide that unless the offer provides otherwise, acceptance is authorized to be in any reasonable manner. -Must respond in a way that is as fast, or faster, than the way the offer was sent (unless specified). 5. Acceptance following a rejection: the first communication received by the offer is effective.

What are the essentials of an offer?

1. Communication: offeree must have knowledge of the offer, and the offer must be made by the offeror to the offeree. -Offeror and offeree (ONLY to who it is directed) have to both be aware of the offer. 2. Intent (objective): determined by an objective standard of what a reasonable offeree would have believed. -A reasonable, external, third person has to believe the offer is valid. 3. Definiteness: the offer's terms must be clear enough to provide a court with a basis for giving an appropriate remedy. A. Open terms: quantity and price can be unknown as long as they are definite enough. B. Output and requirement contracts. -Output: Ex = will buy 100% of the output of peanut butter jars for a price break (90 cents instead of $1); can't produce more than usual on purpose, can only be a small percentage over or under the average. -Requirement: Ex = all the tomatoes I NEED (not want, wish, or desire) for my restraint, I will buy from you ONLY.

What are some contracts without consideration?

1. Debt barred by statue of limitations. 2. Debt discharged in bankruptcy. 3. Moral obligations.

What are some irrevocable offers?

1. Firm offer. 2. Option contract. 3. Irrevocable offer of unilateral contracts.

What are some ways to terminate an offer?

1. Lapse of time: offer remains open for the time period specified or, if no time is stated, for a reasonable period of time. -Expiration of the offer. 2. Revocation: generally, an offer may be terminated at any time before it is accepted. -Change their mind. 3. Rejection: refusal to accept an offer terminates the power of acceptance. 4. Counteroffer: a counterproposal to an offer that generally terminates the original offer. -(1) rejection of the offer and (2) then makes a new offer. 5. Death or incompetency: of either the offeror or the offeree terminates the offer. -Offeror or offeree dies. 6. Destruction of subject matter: of an offer terminates the offer. 7. Subsequent illegality: of the purpose or subject matter of the offer terminates the offer. -When the offer is made, it is legal, but then it becomes illegal before the acceptance of the offer. ***ALL OF THIS IS DONE BEFORE THE ACCEPTANCE OF THE OFFER***

What are the 2 types of debt?

1. Liquidated: sum certain or undisputed; the amount of the debt is known and agreed upon. -Legally sufficient for consideration. -If not paying the full amount, must give some consideration or could be sued. -Ex: (1) you borrow $100 from your friend, (2) but are broke so you can only pay $40 back, (3) therefore you must give some consideration (could be paying the $40 sooner than the due date or giving them their favorite candy as well, etc). (5) This must be done, and the creditor must agree to it, or you could be sued for the $60 you didn't pay back. 2. Unliquidated: disputed; the fact that the debt exists is acknowledged, but the amount of the debt is not yet agreed upon. -Not legally sufficient for consideration. -Ex: (1) It costs $75 for a plumber to come out to your house, the piece o fix the issue costs only 25 cents and takes 3 minutes to install, (3) the plumber wants an additional $350 for the labor, (4) you guys agree that $15 is more reasonable and pay that instead. --(1) is liquidated, (2)-(4) is unliquidated.

What are the requirements of a contract?

1. Mutual assent: the parties to a contract must manifest by words or conduct that they have agreed to enter into a contract (offer and acceptance). 2. Consideration: each party to a contract must intentionally exchange a legal benefit or incur a legal detriment as an inducement to the other party to make a return exchange (what you give up to get what you want). 3. Legality of Object: the purpose of a contract must not be criminal, tortious, or otherwise against public policy. 4. Capacity: the parties to a contract must have contractual capacity. ------------ 5. written.

Acceptance of offer becomes legally effective when:

1. Offer: received. 2. Acceptance: sent. 3. Revocation: received. 4. Rejection: received. 5. Counteroffer: received. 6. Rejection and then acceptance: received (the 1st one to be).

Define bilateral contract.

A contract in which both parties exchange promises (2 parties involved).

Define voidable contract.

A contract capable of being made void.

Define unenforceable contract.

A contract for the breach of which the law provides no remedy (has all 4 criteria, but also needs the 5th one).

Define firm offer.

A merchant's irrevocable offer to sell or buy goods in a signed writing ensures that the offer will not be terminated for up to three months. -Unique because only open to merchants. 1. Put the offer in writing. 2. The merchant signs the offer. 3. It is timed, 0-90days or just reasonable. -Ex: Dillard's holding clothes for you that you don't know if you want to buy or not yet.

Define fraud (in the execution).

A misrepresentation that deceives the other party as to the nature of a document, evidencing that the contract renders the agreement void.

Define bargained for exchange.

A mutually agreed-upon exchange. 1. Past consideration: an act done before the contract is made is not consideration. -Ex: if voluntarily help an old lady for years, and then she dies, you have no right to fight to be in her will. -Not good consideration. 2. Third parties: consideration to support a promise may be given to a person other than the promisor. -Ex: paying a company to deliver flowers to your loved ones. -Good consideration.

Define promise to pay debt by the statue of limitations.

A new promise by the debtor to pay the debt renews the running of the statue for a second for a second statutory period. -Limits the amount of time you have to sue someone (because memory fades over time, people die, etc.). -UNLESS the debtor acknowledges or reaffirms the debt, then the statue of limitations will restart.

Define irrevocable offer of unilateral contracts.

A unilateral offer may not be revoked for a reasonable time after performance is begun. -Acceptance of offer = the completion of the act. -Making a promise for an act. -Ex: whoever finds my watch gets $50. -Need 100% completion in order to get the reward. -BUT you cannot revoke the offer if the person has substantially completed the offer (ex: if 90% done).

Define express contract.

An agreement that is stated in words, either orally or in writing.

Define advertisement.

An invitation to a potential customer to come to the store to then make an offer. -The advertisement is not the offer because (1) it does not contain a promise and (2) it leaves unexpressed many terms that would be necessary to the making of a contract.

Define quasi contract.

An obligation not based on a contract that is imposed to avoid injustice.

Define contract.

Binding agreement that the courts will enforce.

Define legal sufficiency.

Consists of either a benefit to the promisor or a detriment to the promise. -Legal value. -Adequacy: not required where the parties have freely agreed to the exchange (not fair or equal value). -Unilateral contract: a promise exchanged for an act or a forbearance to act (promise of 1 party and the completion of the act by the other party: ex: whoever finds my watch gets $50). -Bilateral contract: a promise exchanged for a promise (Ex: I'll give you $10,000 if you graduate from UNF). -Output contract: agreement to sell all of one's production to a single buyer. -Requirements contract: agreement to buy all of one's needs from a single producer. -Conditional promises: a contract in which the obligations are contingent upon the occurrence of a stated event. -Preexisting public obligations: public duties such as those imposed by tort or criminal law are neither a legal detriment nor a legal benefit. (Ex: lifeguards have an obligation to save drowning people).

Define auction.

Consumer/audience is the one making the offer (AKA the offeror). -The auctioneer is the offeree (the one accepting the offer); ONLY have a contract if accepted. -Auctioneer = invites offerors to buy. -Must communicate if there is a reserve (minimum price) or not; owners want a reserve, customers want "without reserve."

Define option contract.

Contract that binds offeror to keep an offer open for a specified time. -Ex: money for time; pays $100 for 10 days to get the money to buy a house, or to see if you can even afford the house, or to find the money.

The peerless case.

Ended with no contract. -There were two ships named peerless, a guy wanted to make a deal with peerless #2 (the speculator), but accidently made a deal with peerless #1 (the owner).

Define misrepresentation.

Fraud without the intent to deceive; an honest mistake. -If occurs, voidable by the injured party.

Define common law.

Most contracts are governed primarily by State common law, including contracts involving employment, services, insurance, real property (land and anything attached to it), patents, and copyrights.

Define promise to pay debt discharged in debt.

May be enforceable without consideration.

Define acceptance of an offer.

Positive and unequivocal expression of a willingness to enter into a contract on the terms of the offer. -Acceptance is valid as soon as it's sent, even if it takes 3 days to get to the person. NOT when received, but when sent. -BUT can put a condition in the offer that acceptance is not valid until received.

Define offer.

The indication of willingness to enter into a contract.

Define consideration.

The inducement to enter into a contract (to make an enforceable promise). -What you give up to receive what you want. -Elements: legal sufficiency and bargained-for exchange.

Define modification of preexisting contract.

Under the common law, a modification of a preexisting contract must be supported by mutual consideration; under the Code, a contract can be modified without new consideration. -When you have a contract and change/modify the contract, it requires consideration. -Modification has to be supported by consideration. -Ex: in order to get a job on time, the guy says you owe an extra $100, but because he didn't do anything he wasn't obligated to do, you are NOT obligated to pay that $100. But if it is $100 extra in order to get the job done a day early, then there is consideration and you have to pay the $100. **There are certain contracts that don't need consideration, ONLY under the USCC** -Ex: UNF buys 1000 computers for $520,000, but a mistake occurs and they were actually supposed to be sold for $550,000. UNF is NOT required to raise the price, but if they AGREE to, then they are obligated to pay.