Business Law Test 2 Flashcards
What are some basic elements of a valid contract?
- an agreement
- between competent people
- based on the genuine assent of the parties
- supported by consideration
- made for a lawful objective
- in the form required by law, if any.
Parole Evidence
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
Suretyship
undertaking to pay the debt or be liable for the default of another. ex. cosigning
Unilateral Contract
contract under which only one party makes a promise
Privity of Contract
Party to the contract
relationship between a promisor and the promisee does not include subcontractors.
Quantum Meruit
“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
Quasi Contract
court-imposed obligation to prevent unjust enrichment in the absence of a contract
ex. painted house for free-court will settle the price.
illusory promise
promise that in fact does not impose any obligation on the promisor
Bilateral Contract
agreement under which on e promise is given in exchange for another
Option Contract
contract to hold an offer to make a contract open for a fixed period of time.
Reformation
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
Mailbox Rule
Timing for acceptance tied to proper acceptance
Unilateral Mistake
a mistake by only one of the parties.
Mutual mistake in judgement
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.
discuss how a party can be Not Competent
if they are a minor, under 18 or if they are mentally impaired and can not give genuine consent
Discuss lack of genuine assent
- if there is a mistake
- mutual mistake of material fact
- unilateral mistake
- puffering, when you haven’t actually made the contact and the person issuing the contract is lying during the negotiation.
Discuss types of consideration
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
Example of a bilateral and unilateral contract
Bilateral: A pays for B to paint his house
Unilateral: a reward for finding a dog
Discuss making contracts on the internet
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
Discuss how pressure can make a contract voidable
- 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.)
Discuss “Promissory Estoppel” and give an example
• 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
Discuss the elements of a valid non-compete agreement
• 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
Discuss the statute of frauds
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
UCC
Uniform commercial code. Business transactions. Sale of goods. Effective in every state other than Louisiana
