LES 305 Module 7

Commercial impracticability a. Exists only under the UCC b. Requires only proof that performance of a contract is much more expensive c. Is an excuse for not performing a contract that has common law subject matter d. Exists only in contracts that are in writing

A

How did Coke managers react when the Frozen Coke numbers inflation effort was discovered by Mr. Whitley? a. They fired Mr. Whitley. b. They recognized Mr. Whitley for doing the right thing. c. They had Mr. Whitley prosecuted criminally. d. They promoted Mr. Whitley.

A

Voidable Contract

A contract in which one party can choose not to perform.

Implied Contract

A contract that arises from circumstances and is not expressed verbally or in writing by the parties.

Unenforceable Contract

A contract that cannot be enforced due to a procedural error.

Void Contract

A contract that is not enforceable by either party.

Void Contract

A contract that neither side can enforce.

Voidable Contract

A contract that one side can choose not to perform.

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.

Counteroffer

A new offer made in return by one who rejects an unsatisfactory offer.

Duress

A physical or mental force that was used to obtain the agreement to enter into the contract without voluntary consent.

Promissory Estoppel

A promise that causes another to act in reliance upon it; if the reliance is reasonable, the promise is enforceable.

Charitable Subscriptions

A promise to make payment to a charitable organization; a pledge; it is enforceable even though the charity gives nothing in exchange.

Confidential Relationship

A relationship with a high degree of trust and reliance.

Material Fact/Material Misstatement

A statement of fact that would influence an individual’s decision to buy or sell.

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.

Mailbox Rule

Acceptance is effective upon mailing if properly done.

Accord and Satisfaction

An agreement (accord) to pay a certain amount, the payment of which constitutes full payment (satisfaction) of that debt.

Option Contract

An agreement to hold an offer open for a period of time in exchange for money or other consideration.

Minor/Infant

An individual under the age of majority; generally someone under the age of 18.

Puffing

An opinion about the quality of goods and products.

Digital Signature

Authorization for a contract provided via electronic means.

The UCC governs contracts primarily for a. real property, such as land and buildings. b. the sale of goods. c. services. d. None of the answer choices is correct.

B

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.

How did Coke get better numbers in the test market for Frozen Coke? a. Coke employees just added in sales after the numbers came in b. A marketing consultant spent $10,000 on Frozen Coke value meals by using his family and friends as customers c. A marketing consultant used Boys and Girls clubs to get customers into Burger King to buy Frozen Coke value meals. d. It had two sets of numbers, one for in-house and one for Burger King

C

How much of an effect did the Coke marketing adjustment plan have on sales in the Richmond test market? a. 2% b. 10% c. 6% d. 5%

C

What is the difference between misrepresentation and fraud? a. Fraud is a defense to a contract and misrepresentation is not b. Misrepresentation is based on puffing and fraud must be based on material statements of fact c. Fraud requires proof of intentional ommissions of fact or errors in fact d. Misrepresentation is also a crime

C

What terms are needed under the UCC to have enough certainty and definiteness for an offer? a. Parties, subject matter, price, payment terms b. Parties and subject matter c. Subject matter only d. Parties, price, and subject matter

C

Which of the following contract subject matters would not require some form of writing to satisfy the statute of frauds? a. A contract for the sale of a guitar for $1200 b. A corporate note guarantee by the CFO of the corporation c. A consulting contract for six months for a $50,000 fee d. The sale of 1/4 acre of land for $375.

C

Force Majeure

Clause in a contract that excuses performance in the event of war, embargo, or other generally unforeseeable event.

Exculpatory Clause

Clause that attempts to hold a party harmless in the event of damage or injury to another's property.

Express Contract

Contract agreed to orally or in writing.

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.

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.

Impossibility

Contract defense that excuses performance when there is no objective way to complete the contract.

Bilateral Contract

Contract in which both parties make promises to perform; a promise is given in return for another;™s promise.

Unilateral Contract

Contract in which one party promises to perform in exchange for the performance of the other party.

Executed Contracts

Contracts in which performance has been completed.

Executory Contracts

Contracts that have been entered into but not yet performed.

Which of the following contracts must be in writing to be enforceable? a. a contract to buy a $400 smartphone. b. all of the answer choices are correct. c. all employment contracts. d. a contract to buy a house.

D

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.

Consequential Damages

Damages resulting from a contract breach, such as penalties or lost profits.

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.

Compensatory Damages

Damages to put nonbreaching party in the same position he would have been in had the breach not occurred.

"I might be interested in buying your X-Box live if I could just play a game or two."This statement a. Is an offer b. Is an acceptance c. Is an expression of present intent to contract d. Both a and c e. None of the above

E

Conditions

Events that must occur before contract performance is due.

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.

Misrepresentation

In contract formation, misstatements of materials facts without the intent to deceive the other party.

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.

Offeree

In contract negotiations, the person to whom the offer is made.

Offeror

In contract negotiations, the person who makes the offer.

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.

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.

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.

Offer

Indication of present intent to enter into a contract.

Scienter

Intent to defraud.

Fraud

Intentional deception in contract negotiation that is relied on by the other party.

Consideration

Money or something of value; a legal detriment.

Acceptance

Offeree's positive response to offeror's proposed contract.

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.

Rescission

Process of revocation or cancellation of a contract.

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.

Covenants not to Compete

Promises to protect employers and buyers from loss of goodwill through employee or seller competition.

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.

Contract Defense

Situation, term, or event that makes an otherwise valid contract invalid.

Statute of Frauds

Statutes that require certain contracts to be in writing.

Unconscionable

Term used to describe contracts that are grossly unfair to one side in the contract; a defense to an otherwise valid contract.

Capacity

The ability to legally enter into a contract.

Revocation

The retraction by the offeror of an outstanding offer.

Delegation

Transfer of obligations under a contract; generally accompanied by assignment of benefits.

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.

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.

Uniform Electronic Transactions Act (UETA)

Uniform law for states that provides the rule for forming electronic contracts.

Uniform Computer Information Transactions Act (UCITA)

Uniform law that governs sales of software, databases, and other products used on computers.

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.