BSAD 3200 Exam 2

Question 1

5 Elements that must be present for a contract to be validly

Answer 1

1) offer
2) acceptance
3) consideration
4) capacity
5) legality

Question 2

offer

Answer 2

a commitment or promise to do something (or refrain from doing something) at a later time

Question 3

offeror

Answer 3

the person making the offer

Question 4

offeree

Answer 4

the person whom the offer is made

Question 5

valid offer

Answer 5

• communicate the offer to the offeree
• make the offer with definite enough terms so a court could enforce it.
• make the offer in a manner that evidences the offeror’s intent to be bound by it if the offeree accepts it.

Question 5

bilatoral contract

Answer 5

Promise for a Promise

Question 6

Unilateral contract

Answer 6

I promise —–> in return acceptence / act

Question 7

Mirror image rule

Answer 7

the acceptance must match the offer exactly, or it’s considered a counter offer

Question 8

acceptance

Answer 8

when the offeree voluntarily agrees to the terms set forth by the offeror in the offer.

• an acceptance is accepted when it is mailed, not when it is received.
• A accepted offer becomes a contract

Question 9

consideration:

Answer 9

there must be something of value given

• past considerations / current obligations do not count as consideration

Question 10

capacity

Answer 10

• cannot make a contract if you are a minor, under the influence and mentally ill
• minors / mentally ill can DISSAFIRM

Question 11

unconscionable

Answer 11

the terms are so grossly unfair to one party that the contract should not be enforced

Question 12

Statute of frauds

Answer 12

• requires that for someone to be bound contractually regarding certain transactions, that person must have signed a written document

Question 13

Contracts that must be in writing

Answer 13

• any contract for the transfer of real-estate
• any contract that promises to pay someone else’s debt
• any contract that will take more than 1 year
• the sales of goods greater than $500

Question 14

Assignment

Answer 14

a transfer of an obligated right from one person to another

• assignor
• assignee

Question 15

Executed Contract & Executory Contract

Answer 15

• Executed Contract: a contract that is completed

- Executory Contract: when there is still some duty due on the contract.

Question 16

Accord

Answer 16

the agreement to settle a contract dispute

Question 17

Compensatory Damages

Answer 17

dollars to compensate for a loss

• Economic loss: repairs, hospital bills, lost wages.
• Non Economic loss: pain and suffering

Question 18

consequential damages

Answer 18

loss profit or opportunity

Question 19

punitive damages

Answer 19

punish the defendant, payout has to make a dent

Question 20

nominal damages

Answer 20

$1—- opens the vault to punitive damages

Question 21

liquidated damages

Answer 21

the damages are written within the contract

• cannot be punitive

Question 22

Restitution

Answer 22

“you damage his fence, make it whole”

Question 23

Injunction

Answer 23

when a party seeks a court order to stop another party from engaging in a certain action.

Question 24

Fraudulent Misrepresentation:

Answer 24

a person commits fraudulent misrepresentation when the person: 1) misrepresents a material fact 2) intends to deceive the other person 3) the other person justifiably relies on the misrepresentation

Question 25

UCC - Uniform Commercial Code

Answer 25

- contains 9 articles, each article addresses a different area of business transaction.

Question 26

UCC Article 2

Answer 26

- Sales of goods | - the laws that deal with the sales of goods differ from each party, dealer vs private seller

Question 27

Contracts

Answer 27

- offer - acceptance - consideration - writing in certain circumstances, leases > $1000, sales of goods > $500

Question 28

Output contract

Answer 28

"I will buy everything you put out" - everything the producer produces

Question 29

Requirements Contract

Answer 29

"I will buy everything I need from you" - exclusive with producer

Question 30

Shipment Contract

Answer 30

Seller delivers goods to buyers chosen shipping company - title passes

Question 31

destination contract

Answer 31

seller must deliver goods to buyers chosen destination - title passes

Question 32

F.O.B

Answer 32

free on board type of shipping contract

Question 33

Risk of Loss

Answer 33

the contract determines when the contract passes - intrustment of goods

Question 34

The perfect tender rule

Answer 34

you must deliver conforming goods to the buyer as specified b the contract

Question 35

Warrenty

Answer 35

tells the buyer certain things about the items being sold. - spoken in certain terms - written out in certain terms

Question 36

Puffing

Answer 36

not a warrenty

Question 37

Warranty of merchant ability

Answer 37

goods shall be fit for the general purpose of their sale

Question 38

warranty of fitness for particular purpose

Answer 38

the goods meet the functionality of the purpose, BUT NOT MY PURPOSE

Question 39

fitness for human consumption

Answer 39

- consumer expectation test | - foreign substance test

Question 40

warranty of title

Answer 40

the seller warrants that he or she has good title to the product being sold.

Question 41

Sole Proprietorship

Answer 41

- 1 single owner - no stock holders, no board of directors - all money you make is just personal income - all the ownership is yours and all liability is yours - everything you own is at risk

Question 42

E.I.N.

Answer 42

employer identification number

Question 43

Partnership

Answer 43

- 2 or more people - no formal documents - each partner has manager rights - combined liabilities - partnership agreement - personally liable for each partners action

Question 44

partnership agreement

Answer 44

contract defining the relationship of the partnership. - the more you put into the agreement the less issues.

Question 45

limited partnership

Answer 45

- 2 or more partners - at least 1 general partner - rest are limited partners

Question 46

general partner

Answer 46

manages day to day - unlimited liability

Question 47

limited partner

Answer 47

no management authority - limited liability

Question 48

LLC - Limited liability company

Answer 48

- articles of organization, filed at Secretary of states office. - owners = members, members enjoy limited liability - operating agreement - pass through entity, you won't be taxed twice, not taxed as a business.