business Law Flashcards
A contract that is a promise in exchange for a promise
Bilateral contract
When a contract is crested by accepting performance of an act it’s a
Unilateral contract
The four requirements of a valid contract
Offer and acceptance
Consideration
Legal capacity
Legal purpose
Real property interests and leases are governed under
Common law
The act of acceptance is making a promise in exchange for
The offer
A contract unless irrevocable is terminated upon the
Death of the offer or
If the means of delivery and time is specified and it is not meant then a
Counter offer has been issued
Advertisement is not
An offer but invitation to trade
Common law contracts like window repair must have a
Price listed
Uniform commercial Code (UCC) a sale of goods is a valid contract without
Stating a price
Consideration is required for a real estate contract
Only UCC contracts of sales of goods can be modified without new consideration
Modification is invalid if it’s a contract for services and new consideration
Is not given
Evidence about things taking place after a contract is signed is
Admissible
Past actions cannot count as considerations for
Current promises
Consideration must be
Legally sufficient
A promise to do something new or something not already obligated to do is
Consideration
Contracts not performed within 1 year are not enforceable unless they
Are in writing
The parole rule allows
Evidence fir subsequent agreements
Complete and unambiguous written contracts and prohibits any evidence that would modify or alter the contract
Common law of frauds does not apply to contracts performed in one year because
They are not required to be in writing
Under guaranty contracts for the statutes of frauds to be enforceable the guarantor must be signed
In writing
Under the statue of frauds the contract terms must be stated in more than one
Document
The oral contract is enforceable under the statue of frauds if the amount is under
$500
When info is left out a person may win if get sue for
Breach of contract
A minor had a reasonable period of time to dis affirm a contract
After he reaches majority
If there is a immaterial unilateral mistake the contract is till
Valid by both parties
If the mistake is known by the buyer the contract would be void able to the buyer and
Enforceable against the seller
Duress are threats that overcome one’s free will by
Inducing that person to assent to the contract
Void able contracts occur when a contract is created prior to a court determining a person as
Incompetent
All future contracts are void on a person is declared
Incompetent
To have the right to rescind the other side must known of the error or the error must be
Large that the other side should reasonably have known of the error.
Void able contracts are when you are free to accept or
Rescind
Physical threats makes a contract
Void
Under a personal services contract a person may be discharged of a party’s duties if there is
Illegality of services provided
An action that would generally discharge the performance is
Material breach of contract
If a person refuses to close a sell of property ones agreed to pay the amount at closing the buyer is entities to
Compensatory damages and specific performance
The statute of limitations is set to 4 years a party is limited to wait before bringing a lawsuit. For a breach of contract the statute of limitations is at the time of
Breach
When the statute if limitations expired on a contract it
Bars access to judicial remedies
Accord is the agreement to accept a different
Performance
The following conditions may be in contracts
Precedent
Subsequent
Conditions
A rescission is the undoing of a
Contract. Both parties are returned to their original positions
One criteria for a valid assignment of a sales contract to a third party is
Not materially increase the other party’s risk or duty
A third party beneficiary who is an incidental beneficiary cannot sue because they are not the
Primary beneficiary
A creditor beneficiary may sue if he is unable to
Satisfy the debt
When a creditor beneficiary needs to sue the parties who would be liable are
The parties involved.
A contract is assigned unless the contract or law prohibits assignment or the assignment would alter or materially
Increase the risks or duties of the obligor.
Malpractice contracts may create new or
Increase risks since it’s based on a faiths reputation type of practice past performance
Executory contract is when the contract is not
Fully performed
When the mailbox rule is in place it is effective when
Sent
The statute of frauds requires all contracts of $500 or more be
In writing
A service is not covered under the statue of frauds and modification can be accepted if there is
Consideration
Only contracts for the sale of goods have a minimum of $500 or more to fall under the statute of frauds and be
In writing
Statue of frauds covers contractors that cannot be performed within
One year of the date they are made
Sale of Realty falls under the statute of frauds however if only one person signs the contract
It is enforceable against that person.
An agreement supported by consideration between two or more persons with competent capacity for legal purpose is a
Contract
UCC article 2 is
Sales
Common law is the view of
Majority of the states
The UCC is a form of codified commercial law that was developed by
Business people lawyers and legal experts
The UCC is codified in statutory form and common law is the law developed
In judicial decisions on contracts
An act of a legislature that declares proscribes or commands something a specific law expressed in writing is a
Statute
Common law requires more detail than UCC
formation terms and damages
If the purpose of the contract is primarily for the sale of goods it’s given under UCC. If the primary purpose is for the installation of goods it’s governed by
Common law
Common law applies to service and
Real estate contracts
Real estate contracts include
Leases mortgages liens and contracts for the sale and purchase of real estate
A contract formed by oral and/or written words are
Express contract
A contract formed at least in part based on the conduct of the parties or based on the factual circumstances
Implied or implied in fact contract
A contract imposed by the courts or by law when some performance has gone forward.
Quasi contract or implied in law contract
A contract when both sides make a promise. A promise is made by one party to the contract in exchange for a promise from the other party
Bilateral contract
A contract in which one side makes a promise in exchange for an action or performance from the other side.
Unilateral contract
A contract that had been fully performed by both parties to the contract
Executed contract
A contract that has not yet been fully performed is
Executory
The contract has been formed legally and meets the necessary requirements for formation
Valid contract
A contract that lacks legal purpose or is in violation of the law
Void
A valid contract that can be set aside because one party has protection under the law and the right by choice to be relived of the liability
Void able contract (due to fraud or lack of capacity)
An otherwise valid contest that cannot be enforced because of statutory or other legal defense
Un enforceable
Party who makes an offer is an
Offer or
Party who accepts an offer is the
Offeree
Requirements to firm a contract is
Offer acceptance consideration no defenses
Advertisements are not offers but
Invitations to make an offer
Definite terms requirements are
Identification of parties, subject matter, price stated, and time of performance
UCC Article 2 only requires identification of the
Subject matter and quantity
Revocations are effective when received and must be received
Prior to acceptance by the offeree
Options are when the offeree gives consideration in exchange for the offerors promise to keep the offer open for a specific period of time. Options criteria are
Offerors can’t withdraw offer during the option period
Offeree has the right to accept the offer during the period
Offeree rejection does not end the option period
Firm offers (merchants offer)are the UCC article 2. The requirements are
In writing
Made by a merchant
States it will keep it open for a period of timebut not max 3 months (more than 3 requires consideration)
Offeree holds an Irrevocable offer when elements are present
If a non merchant common law applies
Counteroffer general offer is a form of
Rejection
Common law requires a mirror image rule
Conditional acceptance is a
Counter offer
Termination by law includes
Death or insanity except options
Destruction of the subject matter unless it’s fungible goods or commodities
Illegality of the subject matter
Bilateral offer acceptance must be the following
Absolute unequivocal unconditional and communicated to the offerors
For non merchants if there is a definite statement of acceptance followed by some additional terms a contract is formed
Without the additional terms
For merchants the additional terms are included except as follows
Material (waiver of warranties)
Limited to these terms
Offerors Objects within a reasonable time
Only in acceptance is an acceptance made at the time it is
Sent
Silence does not constitute
Acceptance
Doing what you are free not to do and not doing what you are free to do is
Legal detriment
Consideration must be the following
Something of legal value
Legally sufficient amount (adequate consideration)
Bargained for exchange
Pre-existing duty consideration is one that exists under a
Valid contract or by law
Exceptions to the per existing duty rule are
Rescission and new contract
UCC modification for contracts for the sale of goods
Unforeseen hardship
Accord is the agreement to
Waive legal rights
Satisfaction is the actual payment
Of the amounts agreed to in the accord
Liquidated debts are
The amount due and owed is cleared to both parties
Unliquidated debts are the parties acknowledge that
The money is due and owed but they disagree on the amount
A promise to pay for past performance is not
Consideration
A legal principle that bars a party from denying or alleging a certain fact owing to the party’s previous conduct allegation or denial
Estoppel
A promise that induces another party to rely on the promise and results in the party materially changing their position stops the other party from refusing to honor that promise based on a claim of no valid consideration
Promissory estoppel
The statue of limitations under UCC is
4 years from the time contract is formed or from the time of the breach
Types of contracts that should be in writing under the statue of frauds are
Guaranty of debt contracts
Contracts involving an interest in real property
Contracts impossible to perform in one year
Contracts for the sale of goods priced at $500 or more
Promises of executors for personal liability for debts of the estate
A person who guarantees to pay for someone else’s debt if he or she should default on a loan obligation
Guarantor
Exception to the written requirement is partial performance where
Payment of some or all the purchase price has been made.
The buyer is the possession of the land by living there or proceeding to develop it
The buyer made valuable improvements
Merchants confirmation if two merchants have an oral agreement that must b in writing the the writing is met by
A confirmation memorandum
Exemptions to the UCC statute of frauds is
Merchants confirmation memo
Special ordered goods
Admission under oath
Performance by buyer
Parol evidence protects from the following
Prior negotiations, prior agreements, contemporaneous oral agreements
Types of defenses for formation are
Mistake Fraud or misrepresentation Duress Undue influence Illegality
Minors can do the following
Dis affirm at any time before reaching majority and for a reasonable time thereafter.
When dis affirming show intent and return any consideration derived from the contract the minor still possess or controls
The minor is entitled back his/her consideration and cannot be held further.
Exception of a minors right to dis affirm are
Item is a necessity (food clothing shelter)
In value of what the minor is accustomed to (standard of living)
Not under the care of a parent or guardian
Ratification is when a contract is affirmed after
Reaching the age of majority (fully liable)
Contracts of a mentally incompetent person are void able during the period of
Incompetency and for a reasonable period of time after gaining competency. Must return consideration to avoid liability
If court deem person incompetent all contracts are
Void by legal guardian
Unilateral mistake is binding on the mistaken party unless
The other party knows or should know of the mistake
The mistake is material and obvious. If immaterial it’s still binding
There is an error due to mathematical calculation (inadvertently) not gross negligence
Bilateral mutual mistake is not enforceable against the parties if it relates to
Identity, existence, or quantity go the subject matter. Defense of mistake
Innocent misrepresentation the damages is limited to
Recission
If deception of a material fact causes one party to b deceived and it’s intentional the other party is entitled to
Damages or can rescind the contract. Fraud on formation can result in punitive damages
Undue influence contracts can be
Void able
Physical force or threats
Threats to disclose private info
Economic pressure
Are examples of
Duress
Contracts in violation do statutes are
Void
Types of illegal contracts are
Usury- charging a higher interest rate than permitted by law.
Gambling contracts
Licensing statutes ( if purpose if for unlicensed person to regulate public welfare)
Unconscionable contracts
Exculpatory clauses
Contracts in restraint of trade
Are all contracts
Contrary to public policy
Types of conditions for performance are
Precedent
Subsequent
Concurrent
Something that must be present or occur before a party has a duty to perform is a
Precedent
A condition subsequent is something that must be present or occur after a duty to perform has arisen
Subsequent
The duty to perform at the same time is
Concurrent
Discharge by failure of conditions
If the condition precedent does not occur.
Discharge by agreement or part of action is
Release, waiver, and mutual recission
Action of breach of a construction contract would begin at the date
The contract is breached
Fraud in the inducement makes a contract
Void able
A valid assignment of a sales contract to a third party is the assignment must
Not materially increase the other party’s risk or duty
