Business Law Chapter 12-15

_____ is found when one party is forced into the agreement by the wrongful act of another.

Duress

A(n) _____ contract is a written contract intended to be the complete and final representation of the parties' agreement.

Integrated

A transfer of the right to possession and use of goods for a term in return for consideration is known as _____.

Lease

____________ is when one person has taken advantage of his or her dominant position in a relationship to unduly persuade the other person to the extent that the dominant person's persuasive efforts have interfered with the other person's ability to make his or her own decision.

Undue influence

Which of the following would not render a contract voidable?

Unilateral mistake. -In general, a unilateral mistake does not void a contract.

A(n) _____ is a false statement about a fact material to an agreement that the person who made the statement believed to be true.

innocent misrepresentation

In a _____ contract, the seller allows the buyer to take possession of the goods before deciding whether to complete the contract by making the purchase.

sale-on-approval

A _____ contract occurs when the purchased goods are transferred to the buyer from the seller at either the time of the sale.

simple delivery

A requirement that the seller has and holds conforming goods at the disposal of the buyer and gives the buyer reasonable notification to enable him or her to take the goods is known as:

tender of delivery.

_____ is the transfer of goods to a merchant who ordinarily deals in that type of goods.

Entrustment

A common-carrier delivery contract is a type of contract in which purchased goods are delivered to the buyer via an independent contractor.

True

A(n) _____ is used when one of the parties wants to substitute a different performance for its original duty under the contract.

accord and satisfaction

Which of the following is an example of a void title?

A buyer acquires a stolen car without his knowledge -A void title is not true title. Someone who purchases stolen goods, knowingly or unknowingly, has void title.

After Company X enters into a contract with Company Y, it advises Company Y of its intent to not honor its contractual obligations. What can company X be sued for?

Anticipatory repudiation -Anticipatory repudiation occurs when a contracting party decides not to complete the contract before the actual time of performance. Once the contract has been anticipatorily repudiated, the nonbreaching party is discharged from his obligations under the contract. It is free to go ahead and sue for breach, as well as find another, similar contract elsewhere.

What are liquidated damages?

Damages specified as a term of the contract, before a breach of contract occurs.

Which rule requires that contracts that would normally fall under the statute of frauds and need writing if negotiated by the principal must be in writing even if negotiated by an agent?

Equal dignity rule

A _____ is made in writing and giving assurances that it will be irrevocable for not longer than three months despite a lack of consideration for the irrevocability.

Firm Offer

A person who transfers the right to possession and use of goods under a lease is known as the _______.

Lessor

Which clause states that the written agreement accurately reflects the final, complete version of the agreement?

Merger clause

A(n) _____ is an untruthful assertion by one of the parties about a material fact.

Misrepresentation

The agreement to replace one of the parties with a third party is known as:

Novation

What condition will the court consider to invalidate a contract on grounds of unilateral mistake?

One party made a mistake about a material fact and the other party either knew or had reason to know about the mistake. -Any of the following conditions permits a court to invalidate a contract on grounds of unilateral mistake: 1. One party made a mistake about a material fact and the other party either knew or had reason to know about the mistake. 2. The mistake was caused by a clerical error that did not result from gross negligence. 3. The mistake was so serious that the contract is unconscionable, that is, so unreasonable that it is outrageous.

Which of the following is an exception to the statute of frauds in which an unwritten agreement is executed in some degree by one or both parties?

Partial performance -Partial performance is an exception to the statute of frauds in which the performance of portions of an unwritten agreement by one or both parties can constitute proof that an oral contract exists between the parties.

_____ is the legal enforcement of an otherwise unenforceable contract due to a party's detrimental reliance on the contract.

Promissory estoppel

_____ damages are imposed to punish the defendant and deter such conduct in the future.

Punitive

Which of the following is true of a mutual mistake?

Such contracts can be rescinded by either of the parties.

Anticipatory repudiation discharges the nonbreaching party from his obligations under the contract.

True

Mark hands over the power of attorney of his apartment to his mother. Consequently, the tenants living in his apartment now pay rent to his mother. In this case, Mark's mother is a(n) _____.

assignee -Assignee refers to the party who receives the rights of another party (an assignor) to collect what was contractually agreed on in the original contract.

Money awarded to a plaintiff as reimbursement for her or his losses is known as _____ damages.

compensatory

A _____ is an event in a contract that must occur in order for a party's duty to arise.

condition precedent

In most situations, parties _______their obligations by doing what they respectively agreed to do.

discharge -this is called discharge by performance

Under which of the following situations will a contract be discharged by law?

Commercial impracticability -Alteration of the contract, bankruptcy, tolling of the statute of limitations, impossibility, commercial impracticability, and frustration of purpose are all situations in which a contract may be discharged by operation of law.

_____ refers to the contractual terms under which each party's performance is conditioned on the performance of the other.

Concurrent conditions

Federal statutes govern the formation of sales and lease contracts.

False -Federal statutes do not govern the formation of sales and lease contracts. Instead, each state passes its own laws to outline rules in this area.

If the seller is not a merchant, the risk of loss remains with the seller under the rule of tender of delivery.

False -If the seller is not a merchant, the risk of loss remains with the buyer under the rule of tender of delivery.

Scienter is present when the party accused of making a fraudulent assertion believed that the assertion was true.

False -Scienter is present when the party accused of making the fraudulent assertion believed that the assertion was false or made the claim without any regard for whether it was true or false.

Secondary obligations are debts entered into in an initial contract.

False -Primary obligations are debts entered into in an initial contract. A secondary obligation arises when a party outside a primary agreement promises to fulfill one of the original party's obligations if the original party fails to fulfill his or her obligation.

When a contact is void, it may be rescinded, or canceled.

False -When a contact is voidable, it may be rescinded, or canceled.

Which of the following is true about a unilateral mistake?

The contract can be invalidated if caused by a clerical error not resulting from gross negligence. -Any of the following conditions permits a court to invalidate a contract on grounds of unilateral mistake: 1. One party made a mistake about a material fact and the other party either knew or had reason to know about the mistake. 2. The mistake was caused by a clerical error that did not result from gross negligence. 3. The mistake was so serious that the contract is unconscionable, that is, so unreasonable that it is outrageous.

Which one of the following is one of the conditions required for mutual mistake to interfere with legal consent?

The parties have a basic assumption about the subject matter of the contract. -For a mutual mistake to interfere with legal consent, it must involve all the following: 1. A basic assumption about the subject matter of the contract. 2. A material effect on the agreement. 3. An adverse effect on a party that did not agree to bear the risk of mistake at the time of the agreement.

Which of the following is true of incidental beneficiaries?

They lack the capacity to enforce a contract as they maintain no rights to enforce other people's contracts. -An incidental beneficiary is one who unintentionally gains a benefit from a contract between other parties. Incidental beneficiaries maintain no rights to enforce other people's contracts.

A unilateral mistake does not void a contract.

True

Consequential damages are foreseeable damages that result from special facts and circumstances arising outside the contract itself.

True

A third party who is not part of the original contract but to whom duties to perform are transferred by one of the contracting parties is known as a(n):

delegatee. -A third party who is not part of the original contract but to whom duties to perform are transferred by one of the contracting parties is known as a delegatee.

A(n) _____ results when the party making the statement would have known the truth about the fact had it used reasonable care to discover it.

negligent misrepresentation

All of the following are contracts that fall within the statute of frauds and thus are required to be evidenced in writing, except:

Contracts between parties whereby one party substitutes a different performance for his or her original duty under the contract. -Specific types of contracts that fall within the statute of frauds and thus are required to be evidenced in writing are (1) contracts whose terms prevent possible performance within one year, (2) promises made in consideration of marriage, (3) contracts for one party to pay the debt of another if the initial party fails to pay, and (4) contracts related to an interest in land.

_________ required that the breaching party fulfill the terms of the agreement.

Specific performance -Specific performance is an order requiring that the breaching party fulfill the terms of the agreement. Courts are very reluctant to grant specific performance and will do so only when monetary damages simply are not adequate, typically because the subject matter of the contract is unique.

Courts can rescind a contract even though the person making the false assertion is entirely innocent of any intentional deception.

True

Implied conditions are those that are not explicitly stated but are inferred from the nature and language of the contract.

True

The mirror-image rule that applies under common law does not apply under the UCC.

True

The parol evidence rule states that oral evidence of an agreement is inadmissible when it is made prior to or contemporaneously with a written agreement.

True

The rights to a contract cannot be assigned when the contract is personal in nature.

True

The statute of frauds does not relate to fraudulent contracts.

True

To recover damages in a breach-of-contract case, the plaintiff must demonstrate that he used reasonable efforts to minimize the damage resulting from the breach.

True