MBA535 CH05-07

Minor Voidable

almost all of a minor's contracts are voidable at the minor's option; if a minor wishes to treat a contract made with an adult as valid, the adult is bound by it; an adult cannot avoid a contract on the ground that the minor might avoid it

Void

an agreement with no legal effect; not enforceable in a court of law does not come within the definition of a contract

Acceptance

assent to an offer resulting in a contract; acceptance must be a mirror image of the offer (is absolute); acceptance may be made by words (oral or written) or by some act that clearly shows an intention to accept

Necessaries

if a minor contracts, the contract is voidable, but the minor is liable for the reasonable value of whatever has been received (e.g., apartment rental)

Oral

just as good as a written contract

Contract

legally enforceable agreement between two or more competent people (marriage agreement not enforceable)

Ratification

minor may ratify a voidable contract only after attaining majority; one's willingness to be bound by promises made during minority

Classifications

(1) contracts, void agreements, and voidable contracts (2) express and implied contracts (3) formal and simple contracts (4) executory and executed contracts (5) unilateral and bilateral contracts

Valid Offer

(1) must be reasonably definite (2) must appear to be seriously intended (3) must be communicated to the offeree

Offer Duration

(1) offerer may revoke an offer at any time before acceptance; offer may be revoked even if the offeror has promised to keep it open (2) option cannot be revoked at will, binding promise to hold an offer open; firm offer: merchants signed, written offer to sell or purchase goods, saying it will be held open (3) revocation of an offer must be communicated to the offeree prior to the acceptance; intent not sufficient (4) terminated by the lapse of time specified in the offer, if no time is specified in the offer, it is terminated by a lapse of reasonable time after being communicated by the offeree (5) death or insanity of the offeror automatically terminates the offer (6) rejection of the offer by the offeree (7) after an offer has been made, the performance of the contract becomes illegal, the offer is terminated *Only one offer at time* Offer is dead; rejection; cannot be revived; revocation; time

Implied

(aka implied in fact contract) the duties and the obligations that the parties assume are not expressed but are implied by their acts or conduct

Quasi Contract

(aka implied in law contract) not a true contact, parties have not made an agreement

Counteroffer

a 2nd offer; offeree's response that rejects offer by varying its terms (an offer must be accepted without any deviation in its terms - or it becomes a counter offer)

Agreements

a contract must be an agreement, but an agreement need not be a contract

Minors' Torts

a minor is liable for torts as fully as an adult is (e.g., misrepresentation of age)

Unilateral

contract calling for an act in consideration for a promise; one-sided promise is made for *performance*; *cannot accept by words*

Executory

contract in which the terms have not been fully fully carried out by all parties; *not paid in full*

Executed

contract that has been fully performed by all parties to the contract; *paid in full*

Intoxicated People

contracts made by people who have become so intoxicated that they cannot understand the meaning of their acts are voidable

Breach

failure of one of the parities to perform the obligations assumed under the contract

General Invitations

most common types are: advertisements, window displays, catalogs, price lists, and circulars; preliminary discussion; are *never an offer*

Formal

must be in a special form or be created in a certain way; include contracts under seal (government/state contract), recognizances, and negotiable instruments

Contract Requirements

must fulfill the following definite requirements: (1) must be based on a mutual agreement by the parties to do or not to do a specific thing (2) must be made by parties who are competent to enter into a contract that will be enforceable against both parities (3) promise or obligation of each party must be supported by consideration (such as the payment of money, the delivery of goods, or the promise to do or refrain from doing some lawful future act) given by each party to the contract (4) must be for a lawful purpose; that is, the purpose of the contract must not be illegal (e.g., unauthorized buying and selling of narcotics) (5) in some cases, the contract must meet formal requirements, such as being in writing or under seal

Bilateral

mutual exchange of promises to perform future acts; *promise for a promise*

Acceptance Manner

offer that does not specify a particular manner of acceptance may be accepted in any manner reasonable under the circumstances; offeror may stipulate that the acceptance must be written and received by the offeror in order to be effective

Inquiries

offeree may make an inquiry about terms that differ from the offer's terms without rejecting the offer

Unjust Enrichment

one party benefiting unfairly at another's expense

Express

parties express their intentions by words, whether in writing or orally, at the time they make the agreement

Convicts

person found guilty by court of a major criminal case

Minor

person under the legal age (18) to contract; some states, married minors are fully competent to contract; some states minors in business for themselves are bound on all their business contracts

Offeror

person who makes an offer

Offer

proposal to make a contract

Mental Incompetence

reasonable appreciation of the transaction; impairment other than by reason of age (e.g., insanity, stroke, senility); duration must be determined (lucidity when contract established); must be declared by a court of law

Disaffirmance

repudiation of a voidable contract; the election to avoid it or set it aside; minor has a legal right to disaffirm a voidable contract at any time during minority or within a reasonable time after becoming of age

Capacity

the law presumes that all parties have capacity; anyone alleging incapacity must offer proof of incapacity to overcome the presumption

Offeree

to whom an offer is made

Voidable

would be an enforceable agreement but, because of circumstances or the capacity of a party, one or both of the parties may be set aside (or escape from it)