Business Law: Exam 2

Valid

A _____ contract contains all the essential elements of a contract.

Void

A _____ contract has no legal effect and neither party can enforce the contract.

Bilateral

A _____ contract is one in which both parties have promised to perform.

Unilateral

A _____ contract is where an offer calls for an act, performance of the act is acceptance of the offer.

Remedy at equity

A _____ is a court order that requires some action by the breaching party.

Contract

A _____ is a legally enforceable agreement between two or more parties.

Remedy at law

A _____ is an award of monetary damages to compensate the injured party.

Unenforceable

A contract is _____ when it is legal in all respects except that there is a legal reason why the contract will not be enforced.

Voidable

A contract is _____ when one of the legal parties can avoid its obligation.

Statute of limitations

A law that places limits on the time available to bring a lawsuit is known as _____.

Void

Agreements that require one party to commit a tort or crime are illegal and _____.

Exculpatory

An _____ clause is a term or provision placed in a contract to limit the liability of one party for any damage or injury.

Executory

An _____ contract is one in which neither party has performed or one party has performed and the other has not yet performed.

Executed

An _____ contract is one where both sides have completed their performances

Prove minimum skill

Contract entered into by persons who require a license but do not have one will not be enforced if the purpose of the license was to _____.

Raise revenue

Contracts entered into by persons who require a license but do not have one will still be enforced if the purpose of the license was to _____.

Assent is lacking or the contract is unconscionable

Courts will generally only look to see if consideration is adequate in what two situations.

Law or equity

If a party does not performed as agreed upon in the contract they will be entitled to a remedy at ____ or a remedy at _____.

Promissory Estoppel

If your health insurance denies a claim, what term would you apply to appeal your claim?

Liquidated

In _____ debt, the debtor must pay the full amount owed.

Unilateral

In a _____ contract the offeree's performance of a promise is acceptance.

Bilateral

In a _____ contract the offeree's promise to perform is acceptance.

Undue influence

Is where one person uses a position of dominance or trust to cause the victim to enter into a contract that is not normal.

Fraud, duress, undue influence, unilateral or mutual mistake

List the five possible defenses to breach of contract.

Revocation, rejection, counteroffer, lapse of time, subsequent impossibility, death or mental incompetence, subsequent illegality

List the seven means by which an offer may be terminated.

necessary for their existence

Minors cannot disaffirm contracts that are made for items that are ______.

Incompetent

Minors, those under the influence of drugs and alcohol and the mentally disabled are considered to be _____ and contracts that they enter into may be voidable.

Definite, seriously intended and communicated

Offers must be _____, ______, and _____ to the offeree.

Unliquidated debt

Partial payment of _____ may cancel the debt if the creditor accepts and cashes a check marked "paid in full".

Sherman Anti-trust

Restraint of trade contracts violate the _____ act.

Usury

The act of charging an interest rate that is in excess of state laws.

Disaffirmation

The process of a minor declaring a contract void is known as _____.

Definite

The terms of an offer must be _____.

Liquidated Debt

This concept states that the amount of money owed has been established and cannot be disputed.

Unliquidated Debt

This concept states that the value of consideration can honestly be disputed.

Mailbox Rule

This rule states that an acceptance is effective when it is sent.

False (the contract is valid until the minor sets aside the agreement)

True or False: Minors are not considered competent parties and cannot enter into legal contracts.

True

True or False: a later promise to pay for the act is unenforceable.

False

True or False: absolute certainty is necessary for the terms of an offer to be accepted.

True

True or False: acceptance must be communicated to the offeror to be effective.

True

True or False: advertisements are not offers but invitations for customers to make an offer.

True

True or False: advertisements that contain specific wording may constitute an offer.

True

True or False: borrowers and lenders cannot enter into a contract that has an interest rate higher than that agreed upon by the state in which the contract is formed.

True

True or False: common law governs all contracts except those modified by statutes.

True

True or False: contracts with electronic signatures are just as legal and enforceable as traditional paper contracts.

True

True or False: contracts with unilateral mistakes will usually be enforced by the courts.

True

True or False: courts may insert details that were intended on the part of the parties involved in a contract.

False (clauses that are too broad or are offered on a take it or leave it basis are often unenforced by the courts)

True or False: exculpatory clauses are usually enforceable in most situations.

True

True or False: for a contract to be void it must lack one or more of the essential elements.

False (there will be no contract)

True or False: if a mistake is made by both parties as to the subject matter of the contract, the contract must be mitigated by the court.

False (silence is generally not considered acceptance)

True or False: if you state in your offer that failure to respond is a method of acceptance the contract is valid in a court of law.

True

True or False: in liquidated debt, the debtor may give partial payment with another form of consideration.

False (alteration of an offer voids the terms and makes it a counteroffer)

True or False: offerees may alter the terms of an offer at any time.

False(generally offers can only be accepted by the person to whom it was made)

True or False: offers can be accepted on behalf of someone else.

True

True or False: offers can be made expressly or may be implied by the conduct of the offeror.

False

True or False: offers that appear to be made in jest or anger may still be upheld in a court of law.

True

True or False: prior to the age of 18, minors cannot disaffirm contracts in which real estate is sold to an adult.

False

True or False: restraint of trade contracts are usually enforceable.

True

True or False: some states allow creditors to accept and cash a check marked "paid in full" if they write "under protest" on the check prior to cashing it.

True

True or False: when a court has decided that a person lacks the mental capacity to conduct business affairs, any contract that they enter into is void.

True

True or False: when breach occurs the contract is terminated.

True

True or false: some promises given without adequate consideration may still be enforced by the court.

Agreement, consideration, competent parties and legal purpose

What are the four essential elements of a contract?

Mutual mistake

When a mistake is made by both parties to the contract.

Unilateral mistake

When a mistake is made by one party to the contract.

Promissory Estoppel

When courts enforce promises because it would be grossly unfair to one party not to enforce it, even if no consideration was given.

Duress

When one person compels another to enter a contract through physical force or threats.

Nominal Damages

_____ acknowledge that a breach of contract occurred and are awarded when the non-breaching party did not suffer any damages.

Preexisting contractual

_____ agreement states that additional payment cannot be sought unless additional consideration is provided.

Noncompete

_____ agreements are a legal form of restraint of trade.

Liquidated Damages

_____ are a good faith effort to estimate the actual damage that will probably result from a breach.

Compensatory Damages

_____ are an award of money to the injured party to compensate for actual loss suffered.

Express

_____ contracts are where the agreement's terms have been specifically stated either orally or in writing.

Unconscionable

_____ contracts have provisions that are overreaching, oppressive or shock the conscience of the court.

Implied

_____ contracts that are the result of a situation where the actions of the parties indicated that they did indeed want to form a contract.

Quasi

_____ contracts that can be implied by the court to prevent the unjust enrichment of one party.

Nominal

_____ damages may be awarded in the amount of $1.

Specific Performance

_____ is a remedy where the courts require a party to perform exactly as promised in the contract.

Rescission

_____ is a remedy where the parties call off the contract and each party is obligated to return consideration received.

Legal Purpose

_____ is the element of a contract that states the contract must not be against the law.

Competent Parties

_____ is the element of a contract which states that each party to the contract must be of legal age, not under the influence of drugs and mentally competent.

Acceptance

_____ is the offeree's approval of the binding legal relationship proposed by the offeror.

Mitigation of damages

_____ is when all courts agree that where the injured party might have avoided a particular item of damage by reasonable effort, without undue risk, expense or humiliation, he or she may not recover for that item if he or she fails to make an effort.

Consideration

_____ is when each party agrees to exchange something of value.

Agreement

_____ is when one party makes an offer; the person to whom the offer is made can accept or reject the offer.

Fraud

_____ is where a party is induced to enter a contract through lies and deception.

Breach

_____ occurs when one party fails to completely or substantially perform.

Past consideration

_____ occurs when performance of the act is completed before the contract is formed.

Adequacy of consideration

_____ states that the exchange made by parties does not have to be equal.

Fraud

_____ usually must have a deliberate false statement or concealment which caused the victim to act and instigated damages to the victim.

Authorized means

______ is a manner of acceptance that is transmitted in the same fashion or more quickly than the original method in which the offer was made.

Injunction

_____is a remedy where the courts order a person to cease an activity.

Uniform Commercial Code

this Is the set of statutes that governs many contracts in the US today.