Exam 2 - Business Law

Valid Offer Includes

- Agreement - Definite and certain terms - Communication to the offeree

Formal Contracts

- Letters of Credit - Contracts under Seal - Recognizances - Negotiable Instruments

elements of valid contract

- agreement - offer and acceptance -consideration -legal object -legal capacity -In writing

3 elements of acceptance

- manifestation or intent to be bound by the contract (performance ie lost dog/by return promise ie bilateral) - Acceptance of definite and certain terms - communication to the offeror

which of the following is not a recognized purpose of the Statute of Frauds

-ease contractual negotiations -prevents unreliable oral evidence from interfering with a contractual relationship -prevents parties from entering into contracts with which they do not agree

quasi-contract

-prevent one party from getting unjustly enriched at the expense of another - "implied in law"

contracts that require a writing under the statute of frauds

1. Contracts for the sale of real property. 2. Contracts that cannot be performed in one year. 3. Contracts for the sale of goods valued at $500 or more (under the UCC) 4. Contracts made in consideration of marriage 5. Contracts to answer another's debt

5 Ways offer can be terminated

1. revocation by the offeror 2. Rejection or counteroffer by the offeree 3. Death or incapacity by the offeree 4. destruction or subsequent illegality of the subject matter 5. lapse of time or failure of other conditions stated in the offer

under the UCC, contracts for the sale of goods totaling more than $____ must be in writing

500

which of the following does not constitute a valid offer?

Preliminary negotiation, and advertisements

which of the following agreements is likely to be held in violation of public policy

a contract in restraint of trade an unconscious contract

which of the following is not an exception to the parole evidence rule?

a contract involving real estate

which of the following contracts does not "fall within" the Statute of Frauds writing requirement

a contract with the sale of goods totaling $50

which of the following is a recognized exception to the preexisting duty rule?

additional work

an ____ contract is one that is offered on a "take it or leave it" basis

adhesion

which of the following statements is/are correct concerning contracts made by intoxicated persons

all of the above

an agree is based upon

an offer and an acceptance

advertisements

an offer to make an offer

_____ occurs when a contracting party refuses to complete contract before the actual time of performance

anticipatory

When one party knows in advance that it will breach and lets the other party know

anticipatory repudiation

generally parents _____ _____ liable for contracts entered into by their minor children

are not

which of the following represents discharge of the contract by operation of law

bankruptcy, tolling of the statute of limitations, impossibility of performance

a ? contract is defined as a promise made in exchange for a promise

bilateral

a person who has legal ?, has the mental ability to understand his or her rights and obligations under a contract

capacity

a person has legal ____ to contract if they have the mental ability to understand his or her rights and ____ under the contract

capacity / obligations

a secondary obligation is also called a ? promise

collateral; suretyship

____ _____ is a basis for discharge by operation of law when performance of a contract is still objectively possible but would be extraordinarily injurious or expensive to one party

commercial impracticability

sources of contract law include

common law and the Uniform Commercial Code

_____ damages are the most frequently awarded

compensatory

performance occurs when all aspects of the parties' duties under the contract are carried out perfectly

complete

____ _____ occurs when all aspects of the party's duties under the contract are carried out perfectly

complete performance

_____ conditions occur when each party's performance is conditioned on the performance of the others

concurrent

A ? is a particular event that must occur in order for a party's duty to arise

condition precedent

Is a future event taht terminates the obligation of the parties when it occurs

condition subsequent

Is required in every contract?

consideration

What a person receives in return for performing a contract obligation? Something of value given in exchange for something else of value

consideration

a ____ is a proposal by an offeree, proposing a substituted bargain, differing from that proposed by the original offeror

counter offer

a ____ ____ ____ ____ restricts what an employee may do after they leave a company

covenant not to compete

a condition ____ is a future event that terminates the obligation of the parties when it occurs

discharge

if a contract becomes illegal under a new statute, the contract is then _____

discharged

a "severable" contract is also known as a ? contract

divisible

minor's parents or guardians give up the legal right of child

emancipation

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

equal dignity

an ? clause releases one of the contracting parties from all liability, regardless of who is at fault or what injury is suffered

exculpatory

a contract is considered ______ if some of the duties under the contract have not yet been performed

executory

objective theory of contracts

existence and interpretation of contract based on outward manifestation and intent by parties

? contracts have all their terms clearly set forth in either written or spoken words

express

? is when the means by which acceptance can occur is expressly stated in the offer

express authorization

? occurs when, after reaching the age of majority, the person states orally or in writing that he or she intends to be bound by the contract entered into as a minor

express ratification

sometimes, when a contract is entered into, both parties recognize that the contract is to fulfill a particular purpose, and the happening of that purpose is said to be a basic assumption on which the contract is made. If, due to factors beyond the control of the parties, the event does not occur, and neither party had assumed the risk of the event's nonoccurrence, the contract may be discharged based on the ? doctrine

frustration of purpose

____ conditions are not explicitly stated but are inferred from the nature and language of the contract

implied

a(n) contract arises not from words, but from the conduct of the parties

implied

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

implied

? occurs when, after reaching the age of majority, the person states orally in writing that he or she intends to be bound by the contract entered into as a minor

implied ratification

an ____ is an order forcing a party to do something or _____ a party from doing something

in conjunction / prohibiting

? contracts are called ? because no formalities are required in making them

informal; simple

? contracts are written contracts intended to be the complete and final representation of the parties' agreement

integrated

for contractual capacity, ____ persons include those under the influence of both drugs and alcohol

intoxicated

monetary damages are ____ damages

legal

in pari delicto

legal principle that says that both parties are equally responsible for the illegal agreement

a person suffering from a mental illness may have full, ____ or _____ legal capacity to enter into a binding contract depending on the nature and extent of their mental deficiency

limited / no

in a ? debt, there is no dispute about the fact that money is owed, and the amount of money owed

liquidated

according to the ? rule, an acceptance is valid when the offeree places it in the mailbox, whereas a revocation is effective only when the offereee receives it

mailbox

? terms in an offer and its resulting contract allow a court to determine damages in the event that one of the parties breaches the contract. They include the subject matter, price, quantity, quality, and parties.

material

the ____ terms of a contract are those terms that help the court to determine damages in the event of a breach

material

a _____ breach _____ the non-breaching party from their obligations under the contract

material / charges

-subject matter -price -quantity -quality -parties

material matter includes

when parties agree that they simply wish to discharge each other from their mutual obligations and cancel the contract, it is called ____ ____

mutual decision

an agreement to cancel a contract

mutual rescission

____ damages may be awarded when there are no actual damages that result from the breach of contract

nominal

the original parties and a third party all agree that the third party will replace one of the original parties and that the original party will then be discharged

novation

when the parties to a contract agree to replace one of the parties with a third party, this is called a ______

novation

offeror intent is determined based upon a(n) ? standard

objective

the ? theory of contracts means that the existence and interpretation of a contract is based on the outward manifestations of intent by the parties

objective

formation of the contract begins when the party initiating the contract, called the ?, makes an offer to another party, called the ?

offeror; offeree

an ____ contract ensures that an offer will in fact be held open for a specified period of time - until time runs out

option

the statute of frauds seeks to prevent unreliable ____ evidence from interfering with a contractual relationship

oral /verbal

the ? rule states that oral evidence of an agreement made prior to or contemporaneously with the written agreement is inadmissible when the parties intend to have a written agreement be the complete and final version of the agreement

parole evidence

the ___ _____ rule is used to prevent attempts to use only oral evidence to prove agreements

parole evidence

regards to the enforceability of a present promise, which of the following is an accurate statement regarding past consideration

past consideration is no consideration at all

the ? rule states that if a writing, or a term in question, appears to be ? on its face, we must determine its meaning from just "the four corners" of the document, without resorting to outside evidence, and give the words their ordinary meaning

plain meaning; unambiguous

A condition ____ is a particular event that must occur in order for a party's duty to arise

precedent

according to ?, performance of a duty you are obligated to do under the law is not good consideration

preexisting duty rule

? obligations are debts incurred in an initial contract. Such obligations are not within the statute of frauds; therefore, they need not be in writing to be enforceable

primary

according to the uniform commercial code (UCC), parole evidence is admissible for the sake of clarification if it addresses? dealings between the parties or ? or trade in the business they are operating

prior; usages

______ _______ involves the legal enforcement of an otherwise unenforceable contract due to a party's detrimental reliance on the contract

promissory estoppel

occurs when one party makes a promise knowing the other party will rely on it, the other party does rely on it, and only way to avoid injustice is to enforce the promise

promissory estoppel

____ damages are designed to punish the defendant and deter him and others from engaging in similar behavior int the future

punitive

under the UCC's requirement for a written agreement, the contract for the sale of goods must at least state the ____ to be sold in order to be valid

quantity

the return of any property given up under a contract is called _____

restitution

under the statute of frauds, ____ _____ involve promises to pay the debt of another if the initial party fails to pay

secondary obligations

____ contracts contain multiple parts which can be performed separately

severable

which of the following is not a type of formal contract?

simple contracts

concurrent conditions exist when the parties are to perform their obligations for each other

simultaneously

executory

some terms still need to be performed

if a court orders ____ _____ the breaching party must fulfill their obligation under the contract

specific performance

performance occurs when nearly all of the terms of the agreement have been completed, there has been a good faith effort on the part of the obligor to complete all of the terms of the agreement, and there has been no ;willful departure' from the terms of the agreement

substantial

the parties agree that one party will perform his or her duty differently from the performance specified in the original agreement; after the new duty is performed, the party's duty under the original contract becomes discharged

substituted contract

executed

terms of the contract have been fully performed

according to the "mirror - image " rule, if the terms of the acceptance do not mirror the terms of the offer

the attempted acceptance is a counteroffer

if an offer merely authorizes a certain method of acceptance but does not condition acceptance on the use of this method, and the offeree uses an unauthorized means of acceptance

the contract is not formed until the acceptance is received by the offeror

all of the following are requirements necessary for an "accord and satisfaction" to be enforceable, except ?

the debt is liquidated

within the statute of frauds. "land" encompasses

the land and soil itself, as well as anything attached to the land

- promissory estoppel - contract under seal

two exceptions for rules of consideration

An ____ term in a contract is one that is so unfair it is void of conscience

unconscionable

the term ? refers to the fact that the agreement in question is so unfair that it is void of conscience

unconscionable

an agreement to commit a crime or a tort is ____

unenforceable

a ? contract represents a situation where the offeror seeks performance from the offeree to form the contract

unilateral

a ____ contract may be accepted by performance only

unilateral

if a debt is in dispute, or the party's dispute the fact that money is owed, the debt is _____

unliquidated

in a ? debt, the parties either disagree about whether money is owed or dispute the amount

unliquidated

When the debt is ?, parties enter into an ?

unliquidated, accord and satisfaction

_____ occurs when a party gives a loan at an interest rate exceeding the legal maximum

usury

when an agreement is deemed illegal courts will label the contract

void

Minors may enter into only -

voidable contracts

as a general rule, any contract entered into by a minor is ? by the minor until he or she ?

voidable; reaches the age of majority or a reasonable time thereafter

usury

when a party gives a loan at an interest rate that exceeds the maximum

if nothing is stated to the contrary in the terms of an auction, the auction is presumed to be ?, which means that the seller is merely expressing intent to receive offers

with reserve

in an auction ?, the seller is treated as making an offer to accept the highest bid and therefore must accept it

without reserve