Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Commonwealth 2nd Quarter > Business Law Exam 2 > Flashcards

Business Law Exam 2 Flashcards

1
Q

Elements of a Contract

A

Mutual agreement
Competent parties
Consideration

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Mutual Agreement

A

Offer
Acceptance
Reality of consent

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Offer

A

Expression of willingness of the offeror to enter a contractual agreement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Offeror

A

Person/party who initiates, or makes, an offer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Offeree

A

Person/party whom an offer is made

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Requirements of a Valid Offer

A 
o	Definite
o	Basis for agreement
o	Seriously intended
o	Not a joke
o	Nor offered in jest, fear, or anger
o	Communicated from offeror to offeree
o	Both parties must be cognizant of the agreement
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Invitation to Deal

A 
o	Advertisements
o	Price lists and quotations
o	Bids
o	Estimates
o	Not valid offers, may lead to an offer
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Termination of an Offer

A

o By REVOCATION
o Annulment or cancellation of an instrument, act, or promise by one doing or making it
o Communicated by offeror to offeree prior to acceptance
o By terms of the offer
o If terms are not met, there is no contract
o By lapse of “reasonable” period of time
o Depends on type of offer
o By death or insanity of offeror

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Insane

A

Person afflicted with a serious mental disorder impairing ability to function

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

By Rejection

A

Refusal to accept

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

By Counteroffer

A

Intended acceptance which changes or qualifies the offer, and is a rejection of the original offer.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

By Intervening Illegality

A

Legal situation interfering with an offer and agreement

• Example: Making a contract to kill someone

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Acceptance

A

o Agreement to an offer resulting in a contract
o Communicated by offeree to offeror
o Oral or written
o Including mail or telegram

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Reality of Consent

A 
o	Justifiable reliance by offeree
o	Offeree believes what offeror says is true
o	No reason to believe otherwise
o	Without this, contract is VOIDABLE
o	Influencing factors:
•	Misrepresentation
•	Fraud
•	Undue influence
•	Duress
•	Mistake
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Misrepresentation

A

o False statement of a matter of fact
o *INNOCENT MISREPRESENTATION
o False statement made in the belief it is true

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Fraud

A

Intentional or reckless false statement of a material fact, upon which the injured party relied, which induced the injured party to enter into a contract, at his/her detriment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Manner of Committing Fraud

A

o By express misrepresentation
o Oral or written
o By concealment
o Attempting to hide information
o By silence when one has a duty to speak
o Not sharing information when asked or requested

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Undue Influence

A

o Improper influence that is asserted by one dominant person over another, without threat of harm
o Often with a fiduciary relationship

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Fiduciary

A 
o	Person in a relationship of trust or confidence
o	Family relationships
o	Attorney and client
o	Physician and patient
o	Funeral director and family
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Duress

A

o Means of removing one’s free will
o Obtaining consent by threat to do harm to the person, his/her family or property
o Element of coercion or force
o Physical, emotional, and financial

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Unilateral Mistake

A
  • Mistake by one party to a contract
  • Mistake as to quality, value, or price
  • Mistake as to terms of contract
  • Generally will not render agreement defective
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Mutual Mistake

A
  • Mistake by both parties to a contract
  • Mistake as to nature of transaction
  • Mistake as to identity or existence of subject matter
  • Generally render agreement defective
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Competent Parties

A

o CONTACTUAL CAPACITY
o Necessity that parties desiring to enter into contracts meet all requirements
o Requirements
• Parties must have the ability to understand a contract is being made
• Parties must understand the contracts general nature
• Must have legal competence to contract

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Protected Classes of Persons

A 
o	Afforded special protection in contracts
•	Minors
•	Insane persons
•	Intoxicated persons
•	Convicts
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Minors

A

o Persons under full legal age
o Under age eighteen (18)
o In most states

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Contracts by a Minor

A

o VOIDABLE at option of the minor
o DISAFFIRMANCE
• Repudiation of, or election to avoid a voidable contract
o Minor can also agree to terms of a contract after becoming a legal adult
o RATIFICATION
• Confirming of an act which was executed without authority or an act which was voidable
o Liable for reasonable value of contracts involving necessaries
o NECESSARIES
• Items, required or proper and useful, for sustaining a human being at an appropriate living standard (food, clothing, and shelter)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

Insane Persons

A

o “Mentally incompetent”
o “Mentally impaired”
o Includes complications from stroke, senile dementia, and mental retardation.
o Contracts by those legally declared insane are VOID
o Contracts by those not legally declared are VOIDABLE
o Determination of intensity and duration of state of incompetence
o Disaffirmance
o Ratification
o Liability for necessities
o Applicable to insane persons

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Intoxicated Persons

A

o INTOXICATION
• Persons who are under the influence of alcohol to the extent that their judgment may be impaired
o Contracts made by intoxicated persons are VOIDABLE
o Disaffirmance, ratification, and liability for necessities may apply

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Convicts

A

o Persons found guilty by court of a major criminal offense (felony or treason)
o Contracts by a Convict
• Depends on state or jurisdiction
• Some impose limitations similar to minors and insane persons
• Lifted once individual is no longer imprisoned or supervised by parole authorities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Consideration

A

o That which the offeror/ promisor demands and receives as the price for an offer/ promise
o Includes money, personal property, and service
o Generally, promises unsupported by consideration are not enforceable
o Concept of legal detriment as a basis for consideration
o Contract cannot call for performance of an illegal act as consideration
o Fairness and adequacy of consideration
o Goods and services typically have recognized market value
o But not every promise has a fixed monetary value
o The law does not prohibit “bargains”

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Invalid Consideration

A

o Promising to do what one is legally obligated to do
• Cannot promise to drive legal speed limit
• Already obligated to follow speed laws
o Promising or refraining from doing that which one has no right to do
o FORBEARANCE

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

Forbearance

A
  • Refraining from doing something

* Example: Promising not to rob a bank

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

Promises Enforceable without Consideration

A

o Charitable pledges and subscriptions
o Church or other charity organization
o Legally required to honor your pledge or subscription
o Depend on this for budget and expenses
o Your subscription or pledge…
o “is an offer of an unilateral contract that is accepted by creating liabilities and making expenditures” (P. 78 textbook)
o PROMISSORY ESTOPPEL

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

Promissory Estoppel

A

Enforceable promise whereby one party justifiably acts in reliance upon the promise of another

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

Elements of Promissory Estoppel

A

o Offer is made
o Offeror reasonably expects the promise to induce action by offeree
o Offeree acts
o Offeror fails to honor the offer
o What can the offeree do?
o According to promissory estoppel
o Justice requires enforcement of the promise when the offeree would be substantially harmed if it were not enforced

36
Q

Legal Objectives

A

o Legal purpose and execution
o As long as elements of a contract are legal (mutual agreement, competent parties, and consideration), terms of a contract should be executed
o Illegality renders a contract VOID

37
Q

Classes of illegal Agreements

A

o Agreements to commit crimes or torts
o Agreements prohibited by statute
o Agreements contrary to public policy

38
Q

Agreements to Commit Crimes or Torts

A

o Injurious to individuals and society at large

39
Q

Agreements Prohibited by Statute

A 
o	Usurious
o	Restraint of trade
o	Fix prices
o	Influence fiduciaries
o	Defraud creditors
o	Obstruct justice
o	Relieve liability for willful negligence
40
Q

Usurious

A

Exceeding maximum rate of interest which may be charged on loans or consumer credit accounts

41
Q

Usury

A

Charging a higher rate of interest than the law allows

42
Q

Maximum Contract Rate

A

Highest legal rate of interest

43
Q

Legal Rate

A

Interest rate applied when no rate is specified

44
Q

Antitrust Laws

A 
Laws which seek to promote competition among businesses
o	Prevents creation of a MONOPOLY
o	Prohibits contracts not to compete
o	Restrain (limit or prohibit) trade
o	Fix prices of goods and services
o	Unfair competitive practices
45
Q

Sherman Antitrust Act

A

Legislation intended to promote competition among businesses by prohibiting restraint of trade

46
Q

Agreements to Influence Fiduciaries

A

o FIDUCIARIES

• Person or persons in a relationship of trust or confidence

47
Q

Agreements to Defraud Creditors

A

o Regarding payment of a debt

o Money owed

48
Q

Agreements to Obstruct Justice

A

o Process of law and justice
o Determined by established laws
o Court judgments

49
Q

Agreements to Relieve Liability for Willful Negligence

A

o Agreements in which someone else “takes the blame”

50
Q

Agreements Contrary to Public Policy

A

o Contracts limiting freedom of marriage

o Contracts injurious to public service or the “public good”

51
Q

Statute of Frauds

A

o Originally enacted by the English Parliament
o Present in some form in all States
o Lists certain types of contracts which can only be enforced if in written form

52
Q

Debt

A

Obligation to pay money or goods

53
Q

Default

A

Nonperformance of a duty or obligation

54
Q

Types of Contracts in Writing

A

o Contracts to transfer an interest in real property
• REAL PROPERTY (real estate)
• Land
• Objects attached to land
o Executory bilateral contracts which cannot be completed within one year from date of making
o Ensures parties do not forget contract terms
• Examples: Purchase of real estate with long term loan contract/ mortgage
o Agreement to become responsible for the debt (or default) of another
o Contracts made by executors or administrators to pay debts of an estate out of his/her personal funds
o Rather than paying debts from decedent’s estate
o Agreement to pay debts of another
o Promises made in consideration of marriage
• Prenuptial agreements
o Contracts involving sale of goods or merchandise with price of $500.00 or more
• GOODS
• Moveable tangible personal property

55
Q

Discharge

A

Termination of a contract by performance, agreement, impossibility, acceptance of breach, or operation of law

56
Q

Performance

A

When all terms of the contract have been fulfilled, the contract is discharged by performance

57
Q

Satisfactory or Complete Performance

A

Contract that has been performed in a manner that would “satisfy” an ordinary, reasonable person

58
Q

Substantial Performance

A
  • Fulfilling major terms of the contract
  • Contract can be discharged
  • Less any damages that might occur for minor breaches of contract
  • Examples:
  • You have a contract to build a house for $100,000; some minor breach of contract amounting to $1,000; You don’t like the kitchen flooring; Builder can still collect $99,000 for substantial performance of building your house
59
Q

Discharge by Agreement

A

o Mutual agreement to cancel the contract
o Entering into a contract is a mutual agreement
o Parties can also mutually agree to cancel the contract
o NOVATION
o ACCORD AND SATISFACTION

60
Q

Novation

A

Change of one party to a contract at the mutual agreement of the original parties
• Example
• You buy a house; you decide to sell the house; another person agrees to assume your bank mortgage

61
Q

Accord and Satisfaction

A
  • Agreement made and executed in satisfaction of the rights one has from a previous contract
  • You satisfy your contract with the bank when another party assumes payment of your mortgage
62
Q

Discharge by Impossibility

A

o Impossibility of performance
o Destruction of the subject matter
o Occurs when subject matter of a contract is destroyed without fault of either party
o Examples:
• You want to sell your car; you find a buyer who agrees to buy the car; before the sale is completed; tornado destroys the car; subject matter is destroyed; contract is discharged
o Intervening illegality
o New laws which make the contract illegal

63
Q

Discharge by Acceptance of Breach

A

o Material breach of contract
o BREACH OF CONTRACT
o ANTICIPATROY BREACH

64
Q

Breach of Contract

A

Situation in which one of the parties to a contract fails or otherwise refuses to perform the obligation established in that contract

65
Q

Anticipatroy Breach

A
  • One party announces his/her intention not to perform prior to time to perform
  • If innocent party accepts breach of contract, contract is discharged
66
Q

Remedies for Breach of Contract

A 
o	DAMAGES
•	Sum of money awarded to injured party
•	Nominal 
•	Compensatory
•	Punitive
•	Liquidated
67
Q

Nominal Damages

A

o Token award to symbolize vindication wrong done to the plaintiff
o Generally award of $1.00

68
Q

Compensatory Damages

A

o Award paid to injured party to cover exact amount of their loss, but no more

69
Q

Punitive Damages

A

o Award paid to the plaintiff in order to punish the defendant, not to compensate the plaintiff
o EXEMPLARY
o Occurs most with torts
o Rather than breach of contract

70
Q

Liquidated Damages

A

o Provision in a contract fixing the amount of damages to be paid in the event one party breaches the contract

71
Q

Rescission

A

Canceling, annulling, or avoiding

72
Q

Specific Performance

A
  • Carrying out terms of the contract
  • Contracts involving sale of real estate
  • Sale of rare articles of personal property
73
Q

Injunction

A

Judicial order or decree forbidding performance of a certain act

74
Q

Discharge by Operation of Law

A

o Intervening illegality
o New laws which make the contract illegal
o In Addition…
• Debts discharged in bankruptcy cannot be collected
• Individual or business debts
• Upon filing with and discharge by bankruptcy court
• Creditor’s rights of action to enforce contracts of the debtor are barred

75
Q

Statute of Limitations

A
  • Time within which right to sue must be exercised or lost
  • Time limits vary from state to state
  • Types of suits
  • Types of debts

o If creditor does not sue for payment of a debt within a certain time period
o Will not be allowed under statute of limitations

76
Q

Assignment

A

Method whereby one party conveys rights to another person, who is not a party to the original contract

77
Q

Assignor

A

Party making assignment

78
Q

Assignee

A

Party to whom assignment is made

79
Q

Rights of Assignment

A

Transferring one’s rights under a contract to another party

80
Q

Third-Party Beneficiary Contract

A

Person not a party to a contract, but whom the parties intend to benefit

81
Q

Creditor Beneficiary

A

Person to whom the promisee owes an obligation, which is discharged if the promisor performs

82
Q

Donee Beneficiary

A

Third party beneficiary to whom no legal duty is owed and for whom performance is a gift

83
Q

Sale

A

o Transfer of title of goods from seller to buyer for consideration called the price
• Is a contract in which ownership of goods transfers immediately from the seller to the buyer for a price

84
Q

Goods

A 
o	Moveable tangible personal property
•	Examples:
•	Food
•	Vehicles
•	Clothing
•	Furniture
85
Q

Existing Goods

A

Goods which are in existence and owned by the seller when the contract is made

86
Q

Future Goods

A
  • Goods which are not in existence when the contract is made

* “Goods to be provided at a later date”

Commonwealth 2nd Quarter (22 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions