Validity Contract Requirements

A mutual agreement is sometimes called what?

"meeting of the minds" or "offer and acceptance"

For mutual agreement to be achieved, three general conditions must be met.

1. One party (the offeror) must make an offer to the other party (the offeree). 2. The offeree must accept the offer. 3. The offeree must communicate the acceptance to the offeror.

A mistake is an error in the FACTS of a transaction that occurs:

1. mutually by both parties 2. unintentionally 3. without negligence

The second requirement of a valid contract is?

A mutual agreement

The "A" in CALL stands for _____.

Agreement

There are four elements that are required for a contract to be valid. What are they?

C - consideration A - agreement L - legal objective L - legally competent parties

The word to use to remember the requirements for a valid contract is?

CALL

A promise to deliver a service is called _____.

Consideration

In a home sale, the seller promises to give his home to the buyer and the buyer promises to give him money. This is known as _____.

Consideration

The "C" in CALL stands for _____.

Consideration

Forcing someone to do something against his/her will in the execution of a contract is called _____.

Duress

Love, affection, and good will are examples of _____ consideration. good

Good

Something of worth promised in a contract that doesn't have a monetary value is called _____ consideration.

Good

What is the third requirement for a valid contract

It must have a legal purpose

The party to whom an offer is made is called the _____.

Offeree

In a home sale, the seller promises to give his home to the buyer and the buyer promises to give him money. This is known as _____.

The purchase price

Taking advantage of someone in the execution of a contract is called _____.

Undue influence

A contract whose objective is illegal is?

VOID, and cannot be enforced in court

A contract entered into by a corporation is _____.

Valid

Anything that has monetary value when promised in a contract is called _____ consideration.

Valuable

A contract which does not have a legal objective is _____.

Void

Contracts made by persons already declared incompetent are _____.

Void

In the case of a mistake in material fact resulting in no mutual agreement, the contract is _____.

Void

A contract made by a person who was intoxicated is typically _____. void

Voidable

If a contract is signed under duress or undue influence, the resulting contract is _____.

Voidable

If a person signs a contract and is later judged to have been incompetent at the time of the signing, the contract is _____.

Voidable

Most contracts with minors are _____.

Voidable

When fraud occurs, the injured party has the OPTION to RESCIND (cancel) the contract or to leave it in effect. Yes or No?

Yes

Consideration

a promise that someone makes to give up something of value.

Fraud

an act intended to deceive someone in order to get him/her to give up something of value.

Someone who is appointed to act on behalf of someone else in a specific act is called a(n) _____.

attorney-in-fact

The last requirement in the process of offer and acceptance is _____.

communication of acceptance

If the offeree chooses not to accept the original offer of the offeror, he/she may make a "____________," which is a new offer substituted for the original offer.

counteroffer

When an offeree rejects an offer and becomes an offeror, the immediate result is a(n) _____.

counteroffer

In reaching an agreement through the process of offer and acceptance, the seller can be _____.

either the offeror or offeree

Duress

forcing someone to do something against his/her will.

The second condition for accomplishing a mutual agreement is that NONE of the following may occur:

fraud innocent misrepresentation mistake

Fraud can result from intentionally?

giving false information withholding relevant information

The giving of incorrect information without the intent to deceive is called _____.

innocent misrepresentation

The third condition that must be met to achieve mutual agreement?

is that the offer and acceptance must be genuine and freely given. There can be no duress or undue influence used to obtain agreement.

The "L's" in CALL stand for legally competent parties and _____.

legal objective

The "L's" in CALL stand for legal objective and _____.

legally competent parties

A requirement for a valid contract known as mutual agreement is also called a _____.

meeting of the minds

An error in the facts of a transaction that occurs mutually by both parties is called

mistake

Offer and acceptance are required in order to have _____.

mutual agreement

If a contract is obtained under duress or undue influenced conditions, the injured party has the option to?

rescind (cancel) the contract or leave it in effect. Thus, it is voidable.

In the case of innocent misrepresentation, the buyer has the option to _____.

rescind the contract

When fraud occurs, the injured party has the option to _____

rescind the contract

attorney-in-fact

someone who has been granted power of attorney, limited to the specific transaction named in the document.

Undue influence

taking unfair advantage of someone.

When a counteroffer is made, the original offer is _____.

terminated

A counteroffer automatically ____________ the original offer and constitutes a totally new offer, even if the counteroffer only changes one minor item.

terminates

Innocent misrepresentation

the giving of incorrect information by one party WITHOUT the intent to deceive.

The party who makes an offer is called the _____.

the offeror

The fourth, and last, requirement for a valid contract is?

the parties to the contract must be legally competent. There are three primary categories of people who are NOT legally competent: minors intoxicated persons insane persons

A contract entered into by an attorney-in-fact is valid when

the power of attorney has been properly granted.

Once an offer is made, it can be withdrawn _____.

until acceptance is communicated

There are two types of consideration:

valuable consideration - anything that has a monetary value such as money, services, merchandise, etc. good consideration - something of worth that does not have a monetary value such as love, affection, or good will

A seller is aware that the roof of her house leaks but conceals this fact from the buyer. Fraud?

yes

A seller tells a buyer that the property he is selling is zoned commercial when he knows that it is zoned residential. Fraud?

yes

Once an offer is made, can it be withdrawn by the offeror any time before the acceptance of the offer is communicated to the offeror.

yes