Quiz 1 Business Law

Illusory promise 12-1d

- Not valid consideration - Promise had not committed - Appears to make a promise, but is not definite

Legally sufficient value 12-1a

1. A promise to do something that one has no prior legal duty to do (to pay on receipt of certain goods, for example). 2. The performance of an action that one is otherwise not obligated to undertake (such as providing accounting services). 3. The refraining from an action that one has a legal right to undertake (called a forbearance).

Termination of an offer 11-1b

1. Revocation Before acceptance; 2. Death or incapacity 3. Expiration of the time limit 4. Rejection of the offer* 5. Destruction of the subject matter 6. Illegality (ex. Buying fireworks if not legal) 7. Counteroffer rejection of original offer +new offer

Requirements of an offer

1. There must be a serious, objective intention by the offeror. 2. The terms of the offer must be reasonably certain, or definite, so that the parties and the court can ascertain the terms of the contract. 3. The offer must be communicated to the offeree.

Stare Decisis 1-3b

A common law doctrine under which judges are obligated to follow the precedents established in prior decisions.

Mailbox rule 11-1c

A common law rule that acceptance takes effect, and thus completes formation of the contract, at the time the offeree sends or delivers the acceptance via the communication mode expressly or impliedly authorized by the offeror.

Mirror image rule 11-1c

A common law rule that requires that the terms of the offeree's acceptance adhere exactly to the terms of the offeror's offer for a valid contract to be formed.

Accord and Satisfaction 12-1e

A common means of settling a disputed claim, whereby a debtor offers to pay a lesser amount than the creditor purports to be owed.

Void contracts 10-3c

A contract having no legal force or binding effect.

Unconscionability 17-2f

A contract or clause that is void on the basis of public policy because one party was forced to accept terms that are unfairly burdensome and that unfairly benefit the other party.

Unconscionability 12-4b

A contract or clause that is void on the basis of public policy because one party was forced to accept terms that are unfairly burdensome and that unfairly benefit the other party. Miller, Roger LeRoy. Business Law Today, Comprehensive (Page 313). Cengage Learning. Kindle Edition.

Reformation 15-2c

A court-ordered correction of a written contract so that it reflects the true intentions of the parties.

Promissory estoppel 12-2

A doctrine that can be used to enforce a promise when the promisee has justifiably relied on the promise and when justice will be better served by enforcing the promise.

Promissory estoppel 13-2f

A doctrine that can be used to enforce a promise when the promisee has justifiably relied on the promise and when justice will be better served by enforcing the promise.

Negligent misrepresentation

A misrepresentation that occurs when a person makes a false statement of fact because he or she did not exercise reasonable care or use the skill and competence required by her or his business or profession.

Bilateral/Mutual Mistake

A mistake that occurs when both parties to a contract are mistaken about the same material fact.

Unilateral mistake

A mistake that occurs when one party to a contract is mistaken as to a material fact.

Compensatory damages 15-1a (see examples for sale of goods and sale of land)

A monetary award equivalent to the actual value of injuries or damage sustained by the aggrieved party.

Damages 15-1

A monetary award sought as a remedy for a breach of contract or a tortious action.

Offer 11-1a

A promise or commitment to perform or refrain from performing some specified act in the future.

Offer 17-2a

A promise or commitment to perform or refrain from performing some specified act in the future.

Rescission 15-2a

A remedy whereby a contract is canceled and the parties are returned to the positions they occupied before the contract was made.

Parol Evidence Rule 17-2e

A rule of contracts under which a court will not receive into evidence prior or contemporaneous external agreements that contradict the terms of the parties' written contract.

Parol evidence rule 13-4

A rule of contracts under which a court will not receive into evidence prior or contemporaneous external agreements that contradict the terms of the parties' written contract.

Express warranties 18-4b

A seller's or lessor's promise as to the quality, condition, description, or performance of the goods being sold or leased.

Contract defintion 10-1c

A set of promises constituting an agreement between parties, giving each a legal duty to the other and the right to seek a remedy for the breach of the promises or duties.

Nominal damages15-1a

A small monetary award (often one dollar) granted to a plaintiff when no actual damage was suffered.

Statute of Frauds 13-2

A state statute that requires certain types of contracts to be in writing to be enforceable.

Implied warranties 18-4c

A warranty that arises by law because of the circumstances of a sale and not from the seller's express promise.

Implied warranty of merchantability 18-4c

A warranty that goods being sold or leased are reasonably fit for the general purpose for which they are sold or leased, are properly packaged and labeled, and are of proper quality.

Implied warranty of fitness for a particular purpose 18-4c

A warranty that goods sold or leased are fit for the particular purpose for which the buyer or lessee will use the goods.

Fully integrated contract 17-2e

A written contract that constitutes the final expression of the parties' agreement. Evidence extraneous to the contract that contradicts or alters the meaning of the contract in any way is inadmissible.

Integrated contracts 13-4b

A written contract that constitutes the final expression of the parties' agreement. Evidence extraneous to the contract that contradicts or alters the meaning of the contract in any way is inadmissible.

Additional terms 17-2b

Additional terms in an acceptance under the UCC do not defeat contract formation ♣ Additional terms do not become part of the deal

Adequacy of consideration 12-1c

Adequacy of consideration involves "how much" consideration is given. Essentially, adequacy of consideration concerns the fairness of the bargain.

Mutual assent/Agreement 11-1

Agreement- a mutual understanding or meeting of the minds between two or more individuals regarding the terms of a contract.

Past consideration 12-1d

An act that takes place before a contract is made and that ordinarily, by itself, cannot later be consideration with respect to that contract.

Click on agreements 11-2b

An agreement that arises when an online buyer clicks on "I agree" or otherwise indicates her or his assent to be bound by the terms of an offer.

Shrink wrap agreements 11-2b

An agreement whose terms are expressed in a document located inside a box in which goods (usually software) are packaged.

Liquidated damages 15-1c

An amount, stipulated in a contract, that the parties to the contract believe to be a reasonable estimation of the damages that will occur in the event of a breach.

Anticipatory repudiation 18-2

An assertion or action by a party indicating that he or she will not perform a contractual obligation.

Specific performance 15-2b

An equitable remedy in which a court orders the parties to perform as promised in the contract. This remedy normally is granted only when the legal remedy (monetary damages) is inadequate.

Restitution 15-2a

An equitable remedy under which a person is restored to his or her original position prior to loss or injury, or placed in the position he or she would have been in had the breach not occurred

Counteroffer

An offeree's response to an offer in which the offeree rejects the original offer and at the same time makes a new offer.

Sources of Law

Constitutional, Statutory, Administrative, Common

Part performance 13-2f

Exception to rule that requires a writing o One party relies on verbal contract or defective contract and partially performs (monthly payments and improvements) based on reasonable reliance on verbal contract

Consequential damages 15-1a

Foreseeable damages that result from a party's breach of contract but are caused by special circumstances beyond the contract itself.

Discharge by accord and satisfaction 14-4c

In an accord and satisfaction, the parties agree to accept performance different from the performance originally promised. An accord is a contract to perform some act to satisfy an existing contractual duty that has not yet been discharged.6 A satisfaction is the performance of the accord agreement. An accord and its satisfaction discharge the original contractual obligation.

Voluntary consent 13-1

Knowledge of, and genuine assent to, the terms of a contract.

Intent to deceive/scienter

Knowledge on the part of a misrepresenting party that material facts have been falsely represented or omitted with an intent to deceive.

Misrepresentation by conduct

Misrepresentation also occurs when a party takes specific action to conceal a fact that is material to the contract.6 Therefore, if a seller, by her or his actions, prevents a buyer from learning of some fact that is material to the contract, the seller's behavior constitutes misrepresentation by conduct. It would also be misrepresentation by conduct for a seller to untruthfully deny knowledge of facts that are material to the contract when a buyer requests such information.

Punitive damages 15-1a

Monetary damages that may be awarded to a plaintiff to punish the defendant and deter similar conduct in the future.

Misrepresentation by silence

Ordinarily, neither party to a contract has a duty to come forward and disclose facts, and a contract normally will not be set aside because certain pertinent information has not been volunteered. Jude is selling a car that has been in an accident and has been repaired. He does not need to volunteer this information to a potential buyer. If, however, the buyer asks him if the car has had extensive bodywork and he lies, Jude has committed fraudulent misrepresentation.

Undue influence 13-1c

Persuasion that is less than actual force but more than advice and that induces a person to act according to the will or purposes of the dominating party.

Discharge by mutual rescission 14-4c

Rescission occurs when the parties cancel the contract and are returned to the positions they occupied prior to the contract's formation. For mutual rescission to take place, the parties must make another agreement that also satisfies the legal requirements for a contract—there must be an offer, an acceptance, and consideration. Ordinarily, if the parties agree to rescind the original contract, their promises not to perform those acts promised in the original contract will be legal consideration for the second contract.

Equitable remedies 15-2

Sometimes, damages are an inadequate remedy for a breach of contract. In these situations, the nonbreaching party may ask the court for an equitable remedy. Equitable remedies include rescission and restitution, specific performance, and reformation

Acceptance 11-1c

The act of voluntarily agreeing, through words or conduct, to the terms of an offer, thereby creating a contract.

Acceptance 17-2b

The act of voluntarily agreeing, through words or conduct, to the terms of an offer, thereby creating a contract. In negotiable instruments law, a drawee's signed agreement to pay a draft when it is presented.

Administrative Law

The body of law created by administrative agencies (in the form of rules, regulations, orders, and decisions) in order to carry out their duties and responsibilities.

Constitutional law 1-2a

The body of law derived from the U.S. Constitution and the constitutions of the various states.

Common Law

The body of law developed from custom or judicial decisions in English and U.S. courts, not attributable to a legislature.

Statutory law 1-2b

The body of law enacted by legislative bodies (as opposed to constitutional law, administrative law, or case law).

Justifiable reliance

The deceived party must have a justifiable reason for relying on the misrepresentation. Also, the misrepresentation must be an important factor (but not necessarily the sole factor) in inducing the deceived party to enter into the contract.

Material Breach 14-4b (p.344)

The failure, without legal excuse, of a promisor to perform the obligations of a contract. A breach is material when performance is not at least substantial.

Conditioned performance 14-4a

The fulfillment of one's duties under a contract—the normal way of discharging one's contractual obligations.

Unforeseen difficulties

The preexisting duty rule is intended to prevent extortion and the so-called holdup game. Nonetheless, if, during performance of a contract, extraordinary difficulties arise that were totally unforeseen at the time the contract was formed, a court may allow an exception to the rule.

Mitigation of damages 15-1b

The requirement that a plaintiff do whatever is reasonable to minimize the damages caused by the defendant's breach of contract.

Case law 1-3

The rules of law announced in court decisions. Case law interprets statutes, regulations, constitutional provisions, and other case law.

Bargained for exchange 12-1b

The second element of consideration is that it must provide the basis for the bargain struck between the contracting parties. The item of value must be given or promised by the promisor (offeror) in return for the promisee's promise or performance distinguishes contracts from gifts.

Consideration 12-1

The value given in return for a promise or performance in a contractual agreement.

Objective theory of contracts 10-1d

The view that contracting parties shall only be bound by terms that can be objectively inferred from promises made.

Revocation

The withdrawal of a contract offer by the offeror. Unless an offer is irrevocable, it can be revoked at any time prior to acceptance without liability.

Lease 17-1b

Under Article 2A of the UCC, a transfer of the right to possess and use goods for a period of time in exchange for payment.

Preexisting duty 12-1d

Under most circumstances, a promise to do what one already has a legal duty to do does not constitute legally sufficient consideration. A sheriff, for example, cannot collect a reward for information leading to the capture of a criminal if the sheriff already has a legal duty to capture the criminal.

Duress 13-1d

Unlawful pressure brought to bear on a person, overcoming that person's free will and causing actions that he or she would not have otherwise done.

Contract enforceability 10-3c

Valid Contract- A contract that results when the elements necessary for contract formation (agreement, consideration, capacity, and legality) are present. Voidable Contract- A contract that may be legally avoided at the option of one or both of the parties. Unenforceable Contract- A valid contract rendered unenforceable by some statute or law Void Contract-A contract having no legal force or binding effect.

Partial (part) performance 13-2f

When a contract has been partially performed and the parties cannot be returned to their positions prior to the contract's formation, a court may grant specific performance. Specific performance is an equitable remedy that requires that a contract be performed according

Goods 17-1

all things that are moveable and tangible at the time of contract formation ¬ Real estate ¬ Services ¬ Intangibles o Not considered goods and therefore not covered under the UCC

Mistake of fact

can excuse criminal responsibility if it negates the mental state necessary to commit a crime.\ Only a mistake of fact may allow a contract to be avoided.

Material fact

fact—that is, a fact important to the subject matter of the contract.

Legality 12-4

is the fourth requirement for a valid contract to exist. For a contract to be valid and enforceable, it must be formed for a legal purpose. A contract to do something that is prohibited by federal or state statutory law is illegal and, as such, is void from the outset and thus unenforceable. Additionally, a contract to commit a tortious act (such as engage in fraudulent misrepresentation) or to commit an action that is contrary to public policy is illegal and unenforceable.

Statute of Limitations 14-4d

limits the time within which a party can enforce an agreement -(2-4 years) measured from time of breach

Contract for the sale of goods for $500 or more

must be in writing

Contracts involving an interest in land

must be in writing

Merchant 17-1

one who deals in goods of the kind (retailer, wholesaler, manufacturer) ¬ OR one who holds self out to have special knowledge and skill re: the goods at issue

Gift (compare)

promise is not enforceable, because the son need not do anything to receive

Voidable contracts 10-3c

♣ The contract is voidable at the election of the party lacking the capacity to be bound

Legal capacity 12-3

♣ Voidable at the election of the party lacking capacity ¬ Minor Mentally incapacitated