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
