Business Law Exam 2

Question 1

A type of contract that arises when a promise is given in exchange for a promise

Answer 1

Bilateral Contract

Question 2

An agreement that can be enforced in court; formed by two or more parties, each of whom agrees to preform or to refrain from performing some act now or in the future

Answer 2

Contract

Question 3

A contract that has been completely performed by both parties

Answer 3

Executed Contract

Question 4

A contract that has not yet been fully performed

Answer 4

Executory Contract

Question 5

A contract in which the terms of the agreement are fully and explicitly stated in words, oral or written

Answer 5

Express Contract

Question 6

Evidence that relates to a contract but is not contained within the document itself, including the testimony of the parties, the testimony of the witnesses, and additional agreements and communications. A court may only consider this when a contract term is ambiguous and the evidence does not contradict the express terms of the contract.

Answer 6

Extrinsic Evidence

Question 7

A contract that by law requires a specific form, such as being executed under seal, to be valid

Answer 7

Formal Contracts

Question 8

A contract formed in whole or in part from the conduct of the parties (as opposed to an express contract)

Answer 8

Implied Contract

Question 9

A contract that does not require a specified form or formality in order to be valid

Answer 9

Informal Contracts

Question 10

A theory under which the intent to form a contract will be judged by outward, objective facts as interpreted by a reasonable person, rather than by the party’s own secret, submissive intentions. Objective facts might include what a party said when entering into the contract, how a party acted or appeared, and the circumstances surrounding the transaction.

Answer 10

Objective Theory of Contracts

Question 11

A person to whom an offer is made

Answer 11

Offeree

Question 12

A person who makes an offer

Answer 12

Offeror

Question 13

A person’s assurance that he or she will or will not do something

Answer 13

Promise

Question 14

A person to whom a promise is made

Answer 14

Promisee

Question 15

A person who makes a promise

Answer 15

Promisor

Question 16

A fictional contract imposed on parties by a court in the interests of fairness and justice; usually, quasi contracts are imposed to avoid the unjust enrichment of one party at the expense of another

Answer 16

Quasi Contracts

Question 17

A valid contract rendered unenforceable by some statute or law

Answer 17

Unenforceable Contract

Question 18

A contract that results when an offer can be accepted only by the offeree’s performance

Answer 18

Unilateral Contract

Question 19

A contract that results when the elements necessary for contract formation (Agreement, Consideration, contractual capacity, and legality) are present.

Answer 19

Valid Contract

Question 20

A contract having no legal force or binding effect

Answer 20

Void Contract

Question 21

A contract that may be legally avoided (Canceled) at the option of one of the parties

Answer 21

Voidable Contract

Question 22

(1) In contract law, the offeree’s notification to the offeror that the offeree agrees to be bound by the terms of the offeror’s proposal. (2) In negotiable instruments law, the drawee’s signed agreement to pay a draft when presented.

Answer 22

Acceptance

Question 23

A meeting of two or more minds in regard to the terms of a contract; usually broken down into two events - an offer by one party to form a contract, and an acceptance of the offer by the person to whom the offer is made.

Answer 23

Agreement

Question 24

Terms and conditions of use that are presented to an Internet user at the time a product, such as software, is downloaded but that need not be agreed to before the product is installed or used.

Answer 24

Browse-warp Terms

Question 25

An agreement that arises when a buyer, engaging in a transaction on a computer, indicates his or her assent to be bound by the terms of an offer by clicking on a button that says, for example, "I agree", sometimes referred to as a click-on license or a click-warp agreement

Answer 25

Click-on Agreement

Question 26

An offeree's response to an offering which the offeree rejects the original offer and at the same time makes new offer

Answer 26

Counteroffer

Question 27

A contract that is entered into in cyberspace and is evidenced only by electronic impulses (such as those that make up a computer's memory), rather than, for example, a typewritten form.

Answer 27

E-contracts

Question 28

As defined by the Uniform Electronic Transactions Act, "an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record."

Answer 28

E-signature

Question 29

A provision in a contract designating the court, jurisdiction, or tribunal that will decide any disputes arising under the contract

Answer 29

Forum-selection Clause

Question 30

A rule providing that an acceptance of an offer becomes effective on dispatch

Answer 30

Mailbox Rule

Question 31

A common law rule that requires, for a valid contractual agreement, that the terms of the offeree's acceptance adhere exactly to the terms of the offeror's offer

Answer 31

Mirror Image Rule

Question 32

A promise or commitment to perform or refrain from performing some specified act in the future

Answer 32

Offer

Question 33

A contract under which the offeror cannot revoke his or her offer for a stipulated time period and the offeree can accept or reject the offer at any time during this period. The offeree must give consideration for the option to be enforceable

Answer 33

Option Contract

Question 34

An agreement between a seller and a buyer who frequently do business with each other on the terms and conditions that will apply to all subsequently formed electronic contracts

Answer 34

Partnering Agreement

Question 35

According to the Uniform Electronic Transactions Act, information that is either inscribed on a tangible medium or stored in an electronic or other medium, and that is retrievable

Answer 35

Record

Question 36

In contract law, the withdrawal of an offer by an offeror. Unless an offer is irrevocable, it can be revoked at any time prior to acceptance without liability.

Answer 36

Revocation

Question 37

An agreement whose terms are expressed in a document located inside a box in which goods (usually software) are packaged; sometimes called a shrink-wrap license

Answer 37

Shrink-wrap license

Question 38

An agreement for payment (or other performance) between two parties, one of whom has a right of action against the other. After the payment has been accepted or other performance has been made, the "accord and satisfaction" is complete, and the obligation is discharged

Answer 38

Accord and satisfaction

Question 39

Generally, the value given in return for a promise or a performance. Must be present to make the contract legally binding, must be something of legally sufficient value and must be bargained for

Answer 39

Consideration

Question 40

An agreement to substitute a contractual obligation for some other type of legal action based on a valid claim.

Answer 40

Covenant Not To Sue

Question 41

Barred, impeded, or precluded

Answer 41

Estopped

Question 42

A debt that is due and certain in amount

Answer 42

Liquidated Debt

Question 43

Something given or some act done in the past, which cannot ordinarily be consideration for a later bargain

Answer 43

Past Consideration

Question 44

A doctrine that applies when a promisor makes a clear and definite promise on which the promise justifiably relies. Such a promise is binding if justice will be better served by the enforcement of the promise

Answer 44

Promissory Estoppel

Question 45

A contract in which one party forfeits the right to pursue a legal claim against the other party

Answer 45

Release

Question 46

A remedy whereby a contract is canceled and the parties are returned to the positions they occupied before the contract was made; may be effected through the mutual consent of the parties, by their conduct, or by court decree

Answer 46

Rescission

Question 47

A debt that is uncertain in amount

Answer 47

Unliquidated debt

Question 48

The age at which an individual is considered legally capable of conducting himself or herself responsibly and is entitled to vote. In contract law, the age which one is no longer an infant and can no longer disaffirm a contract

Answer 48

Age of Majority

Question 49

The legal ability to enter into contracts; the threshold mental capacity required by law for a party who enters into a contract to be bound by that contract

Answer 49

Contractual Capacity

Question 50

A contractual promise to refrain from competing with another party for a certain period of time and within a certain geographic area. Although covenants not to compete restrain trade, they are commonly found in partnership agreements, business sale agreements, and employment contracts. If they are ancillary to such agreements, covenants not to compete will normally be enforced by the courts unless the time period or geographic area is deemed unreasonable.

Answer 50

Covenant Not To Compete

Question 51

The legal avoidance, or setting aside, of a contractual obligation

Answer 51

Disaffirmance

Question 52

In regard to minors, the act of being freed from parental control; occurs when a child's parent or legal guardian relinquishes the legal right to exercise control over the child. Normally, a minor who leaves home to support himself or herself is considered emaciated

Answer 52

Emancipations

Question 53

A clause that releases a contractual party from liability in the event of monetary or physical injury, no matter who is at fault.

Answer 53

Exculpatory Clauses

Question 54

Necessities required for life, such as food, shelter, clothing, and medical attention; may include whatever is believed to be necessary to maintain a person's standard of living or financial and social status

Answer 54

Necessaries

Question 55

The act of accepting and giving legal force to an obligation that previously was not enforceable

Answer 55

Ratification

Question 56

A court-ordered correction of a written contract so that it reflects the true intentions of the parties

Answer 56

Reformation

Question 57

A contract or clause that is void on the basis of public policy because one party is forced to accept terms that are unfairly burdensome and that unfairly benefit the dominating party

Answer 57

Unconscionable

Question 58

A contract or clause that is void on the basis of the public policy because one party is forced to accept terms that are unfairly burdensome and that unfairly benefit the dominating party

Answer 58

Unconscionable

Question 59

Charging an illegal rate of interest

Answer 59

Usury

Question 60

A "standard-form" contract, such as that between a large retailer and a consumer, in which the stronger party dictates the terms

Answer 60

Adhesion Contracts

Question 61

A mistake that occurs when both parties to a contract are mistaken about the same material fact

Answer 61

Bilateral Mistake

Question 62

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Answer 62

Duress

Question 63

A false statement of fact or an act made in good faith that deceives and causes harm or injury to another

Answer 63

Innocent Misrepresentation

Question 64

A defect that is not obvious or cannot readily be ascertained

Answer 64

Latent Defects

Question 65

Any manifestation through words or conduct that amounts to an untrue statement of fact made in circumstances in which a reasonable and prudent person would not have done that which led to the misrepresentation. A representation made with an honest belief in its truth may still be negligent due to (1) a lack of reasonable care in ascertaining the facts, (2) the manner of expression, or (3) the absence of the skill or competence required by a particular business or profession

Answer 65

Negligent Misrepresentation

Question 66

Knowledge by the misrepresentation party that material facts have been falsely represented or omitted with an intent to deceive

Answer 66

Scienter

Question 67

Persuasion that is less than actual force but more than advice and that induces a person to act according to the will or purposes of the domination party

Answer 67

Undue Infuence

Question 68

A mistake that occurs when one party to a contract is mistaken as to a material fact

Answer 68

Unilateral Mistake

Question 69

Knowing and voluntary agreement to the terms of a contract. If it is lacking, the contract will be voidable

Answer 69

Voluntary Consent

Question 70

A second promise that is ancillary (subsidiary) to a principal transaction or a primary contractual relationship, such as a promise made by one person to pay the debts of another of the latter fails to preform. Normally must be in writing to be enforceable.

Answer 70

Collateral Promise

Question 71

A written contract that constitutes the final expression of the parties' agreement. If a contract is integrated, evidence extraneous to the contract that contradicts or alters the meaning of the contract in any way is inadmissible

Answer 71

Integrated Contract

Question 72

A substantive rule of contracts under which a court will not receive into evidence the parties' prior negotiations, prior agreements if that evidence contradicts or varies the terms of the parties' written contract

Answer 72

Parol Evidence Rule

Question 73

An agreement made before marriage that defines each partner's ownership rights in the other partner's property. Prenuptial agreements must be in writing to be enforceable

Answer 73

Prenuptial Agreements

Question 74

A state statute under which certain types of contracts must be in writing to be enforceable

Answer 74

Statute of Frauds

Question 75

An assertion or action by party indicating that he or she will not perform an obligation that he or she is contractually obligated to perform at a future time

Answer 75

Anticipatory Repudation

Question 76

The failure, without legal excuse, of a promisor to perform the obligations of a contract

Answer 76

Breach of Contract

Question 77

A doctrine under which a seller may be excused from performing a contract when (1) a contingency occurs, (2) the contingency's occurrence makes performance impracticable, and (3) the nonoccurrence of the contingency was a basic assumption on which the contract was made

Answer 77

Commercial Impracticability

Question 78

Conditions in a contract that must occur or be performed at the same time; they are mutually dependent. No obligations arise until these conditions are simultaneously preformed

Answer 78

Concurrent Conditions

Question 79

A possible future event, the occurrence or nonoccurrence of which will trigger the performance of a legal obligation or terminate an existing obligation under a contract

Answer 79

Condition

Question 80

A condition in a contract that must be met before a party's promise becomes absolute

Answer 80

Condition Precedent

Question 81

A condition in a contract that operates to terminate a party's absolute promise to perform

Answer 81

Condition Subsequent

Question 82

(1) The termination of an obligation. such an occurs when the parties to a contract have fully performed their contractual obligations. (2) The termination of a bankruptcy debtor's obligation to pay debts.

Answer 82

Discharge

Question 83

The release of a debtor from all debts that are provable, except those specifically excepted from discharge by statue.

Answer 83

Discharge in Bankruptcy

Question 84

A court-created doctrine under which a party to a contract will be relieved of his or her duty to perform when the objective purpose for performance no longer exists (due to reasons beyond that party's control).

Answer 84

Frustration of Purpose

Question 85

A doctrine under which a party to a contract is relieved of his or her duty to preform when performance becomes impossible or totally impracticable (through no fault of either party)

Answer 85

Impossibility of Performance

Question 86

An agreement between the parties to cancel their contract, releasing the parties from further obligations under the contract. The object of the agreement is to restore the parties to the positions they would have occupied had no contract ever been formed.

Answer 86

Mutual Recission

Question 87

The substation, by agreement, of a new contract form an old one, with the rights under the old one being terminated. Typically, there is a substitution of a new party who is responsible for the contract and the removal of an original party's rights and duties under the contract.

Answer 87

Novation

Question 88

In contract law, the fulfillment of one's duties arising under a contract; the normal way of discharging one's contractual obligations

Answer 88

Performance

Question 89

An unconditional offer to perform an obligation by a person who is ready, willing, and able to do so

Answer 89

Tender