Business Law Test 2

Question 1

What are some basic elements of a valid contract?

Answer 1

1. an agreement
2. between competent people
3. based on the genuine assent of the parties
4. supported by consideration
5. made for a lawful objective
6. in the form required by law, if any.

Question 2

Parole Evidence

Answer 2

rule that prohibits the introduction into evidence of oral or written statements made prior to or contemporaneously with the execution of a complete written contract deed, or instrument, in the absence of clear proof of fraud, accident, or mistake causing the omission of statement in question.

Effort to introduce into court if a contract is valid or not based on oral testimony, but most are not allowed as evidence.

Oral testimony and written contract

Question 3

Suretyship

Answer 3

undertaking to pay the debt or be liable for the default of another. ex. cosigning

Question 4

Unilateral Contract

Answer 4

contract under which only one party makes a promise

Question 5

Privity of Contract

Answer 5

Party to the contract

relationship between a promisor and the promisee does not include subcontractors.

Question 6

Quantum Meruit

Answer 6

“As much as deserved”; an action brought for the value of the services rendered the defendant when there was no express contract as to the purchase price

Question 7

Quasi Contract

Answer 7

court-imposed obligation to prevent unjust enrichment in the absence of a contract
ex. painted house for free-court will settle the price.

Question 8

illusory promise

Answer 8

promise that in fact does not impose any obligation on the promisor

Question 9

Bilateral Contract

Answer 9

agreement under which on e promise is given in exchange for another

Question 10

Option Contract

Answer 10

contract to hold an offer to make a contract open for a fixed period of time.

Question 11

Reformation

Answer 11

remedy by which a written instrument is corrected when it fails to express the actual intent of both parties because of fraud, accident, or mistake.

the courts will rewrite part of a contract to make it valid instead of saying it invalid if they know the originally intent so the contract can be enforces. blue pencil rule

Question 12

Mailbox Rule

Answer 12

Timing for acceptance tied to proper acceptance

Question 13

Unilateral Mistake

Answer 13

a mistake by only one of the parties.

Question 14

Mutual mistake in judgement

Answer 14

is not voidable by the adversely affected party. ex) what was thought to be a weak horse by both parties turns out to be a winner. the seller can not rescind on the offer since it was a mutual mistake in judgement.

Question 15

discuss how a party can be Not Competent

Answer 15

if they are a minor, under 18 or if they are mentally impaired and can not give genuine consent

Question 16

Discuss lack of genuine assent

Answer 16

1. if there is a mistake
2. mutual mistake of material fact
3. unilateral mistake
4. puffering, when you haven’t actually made the contact and the person issuing the contract is lying during the negotiation.

Question 17

Discuss types of consideration

Answer 17

Anything of value: property, money. Something of value must pass between both parties.
Forbearance
conditional promise under consideration
Past consideration is not valid
NOT CONSIDERATION:
promise of a gift
love and affection

Question 18

Example of a bilateral and unilateral contract

Answer 18

Bilateral: A pays for B to paint his house
Unilateral: a reward for finding a dog

Question 19

Discuss making contracts on the internet

Answer 19

usually a unilateral offer. if enough terms are listed then it is a valid offer and it is up to the customer to accept.
• click wrap agreement
• e signature

Question 20

Discuss how pressure can make a contract voidable

Answer 20

• undue influence- to deprive someone of their freewill, like influencing an elderly and they are so enamored with their personality
• physical duress
• Economic duress-threatening a business to deprive or affect their business actions (suppliers etc.)

Question 21

Discuss “Promissory Estoppel” and give an example

Answer 21

• 4 elements:
o promisor-makes a promise that lacks consideration
o promisor intend or expects promisee to rely of the promise
o promisee does rely in a substantial degree
o it would be an injustice to not enforce the promise
• Lamborghini example in the book

Question 22

Discuss the elements of a valid non-compete agreement

Answer 22

• has to involve you not quitting and working for another employer of a direct competitor
• Reasonableness of terms: reasonable time- 1-2 years max.
and must have:
reasonable geographic area: just enough to give the current employer protection

Question 23

Discuss the statute of frauds

Answer 23

o Requires certain contracts to be in writing.
o land or buildings on land must be in writing
o If the contract will be more than one year to perform.
o Prenuptial agreement must be in writing to be valid and full disclosure of assets.
o surety-ship agreement must be in writing
o Details of a will.
o UCC sale must be in writing-sale over 500,000 in goods

Question 24

UCC

Answer 24

Uniform commercial code. Business transactions. Sale of goods. Effective in every state other than Louisiana

Question 25

Ante nuptial agreement

Answer 25

How property will be divided in case of a divorce- in writing and full enforceable as long as there is a full disclosure of assets

Question 26

Unconscionable clause

Answer 26

Courts will step in a cross out a clause that is not fair? Such as a contract that a person has a year to pay 1000 and if they do not pay then they have a penalty of 10,000

Question 27

Forbearance

Answer 27

an intentional delay in collecting a debt or demanding performance on a contract, usually for a specific period of time. Forbearance is often consideration for a promise by the debtor to pay an added amount.
Giving up the right to do something

Question 28

illusory Promise

Answer 28

Too vague to promise anything. I will sell you all of the oil that you order.

Question 29

Conditional promise

Answer 29

Becomes a valid contract on the happening of a future event. I will build you a house if you buy a certain plot of land

Question 30

Clear and convincing evidence

Answer 30

Needed to prove someone committed fraud

Question 31

Auction sales

Answer 31

If you make a bid but decide you don’t want it you can withdraw the offer before the bidding closes.
With reservation- does not always go to the highest bid, originally owner can set base bid price
Without reservation- to the highest bidder

Question 32

Invitation to negotiate

Answer 32

Ads are invitation to negotiate but we think that it is wrong.

Question 33

Quid pro quo

Answer 33

What consideration is- this for that. Exchange of things of value

Question 34

Caveat emptor

Answer 34

Let the buyer beware

Question 35

Blue pencil Rule

Answer 35

The blue pencil doctrine is a legal concept in common law countries, where a court finds that a portion of contract is void or unenforceable, but the other part of the contract is enforceable. In that case the court may order the parties to follow the enforceable part and can delete the voided portion.

Question 36

Early Contract

Answer 36

look it up

Question 37

Executory Contract

Answer 37

Something remains to be done before it is a final contract-such as payment.

Question 38

Click Wrap

Answer 38

A clickwrap agreement (also known as a clickthrough agreement or clickwrap license) is an online contract that confirms user consent to a company’s terms and conditions.

Question 39

Pre-printed Contract

Answer 39

pre-printed form-handwritten language is the most important because it is the most recent-only if it is written before acceptance.

Question 40

Restitution

Answer 40

returning to the proper owner property or the monetary value of loss. Sometimes restitution is made part of a judgment in negligence and/or contracts cases. 2) in criminal cases, one of the penalties imposed is requiring return of stolen goods to the victim or payment to the victim for harm caused.