Business Law I: Contracts I Flashcards
Contract Definition
An agreement supported by consideration between two or more persons with competent capacity for a legal purpose
Sources of Contract Law
- UCC
2. Common Law
Statute Definition
An act of legislature that declares, proscribes, or commands something; a specific law, expressed in writing
UCC vs Common Law
- UCC applies to sale of goods (tangible personal property)
2. Common Law applies to service and real estate contracts
Express Contract
A contract formed wholly by oral and/or written words
Implied/implied-in-fact contract
A contract formed, at least in part, based on the conduct of the parties or based on the factual circumstances
Quasi-/implied-in-law contract
A contract imposed by the courts or by law when some performance has gone forward, even though there is no express/implied contract
Bilateral contract
A type of contract in which both sides make a promise. A promise is made by one party in exchange for a promise from the other party. *Most contracts are bilateral contracts
Unilateral Contract
A type of contract in which one side makes a promise in exchange for an action or performance from the other side
Executed Contract
A contract that has been fully performed by both parties to that contract
Executory Contract
A contract that has not yet been fully performed by the involved parties
Partially executed contract
A contract that has been performed in part… One side has performed the contractual obligation
Valid contract
A contract that has been legally formed and meets the necessary requirements for formation
Void contract
A contract that lacks a legal purpose or is in violation of the law… cannot be enforced by the courts b/c enforcement would violate public policy and encourage illegal conduct
Voidable contract
An otherwise valid contract that can be set aside b/c one party has protection under the law (fraud in formation or minors)
Unenforceable contract
An otherwise valid contract that cannot be enforced b/c of a statutory or other legal defense (courts will not enforce, but parties still can)
Parties to a contract (2)
- Offeror: party who makes the offer
2. Offeree: party w/ right to accept the offer
Requirements for formation of a contract (4)
- Offer
- Acceptance
- Consideration
- No defenses
Requirements of a valid offer (3)
- Present Intent
- Definite Terms
- Communication of the offer
Termination of offer: Revocation
An offer can be revoked at any time prior to acceptance
Irrevocable Offer: Options (3)
- Offeror cannot withdraw the offer during the option period
- Offeree has right (not requirement) to accept during option period
- Offeree’s rejection during option period does not end the option
Irrevocable Offer: Merchant’s Firm offer (8)
UCC Article 2
- in writing
- made by a merchant
- states that it will be kept open (max 3 months)
- does not require consideration
- once 1-4 are present, offeree holds irrevocable offer for time stated
- if parties want more than 3 months, consideration required
- if offeror is nonmerchant, common law applies, consideration required
- valid firm offer is just like common-law option (cannot be revoked and ends only upon expiration)
Contract Rejection
offer is terminated at any time prior to acceptance (verbal/writing) - rejection is effective when RECEIVED
Counteroffer
when made any time prior to acceptance is a form of rejection
