CH 11 Business Law by Beatty Samuelson Abril 8th Edition

Question 1

CH11 What is a contract?

Answer 1

A legally enforceable agreement.

P 281

Question 2

CH 11 What are the 7 key characteristics that must be in place for a contract to be enforceable?

Answer 2

Offer -

Acceptance -

Consideration - There has to be bargaining that leads to an exchange between the parties.

Legality - The contract must be for a lawful purpose.

Capacity - The parties must be adults of sound mind.

Consent - Certain kinds of trickery and force can prevent the formation of a contract.

Writing - While verbal agreements are often contracts, some types of contracts must be in writing to be enforceable.

P 281

Question 3

CH 11 Third Party Interests: Jerome and Tara have a contract; can Kevin sue to enforce the agreement?

Answer 3

It depends. (will add later)

Question 4

CH 11 Performance Discharge. If a party accomplishes what the contract requires, his duties are discharged. But what if his obligations are performed poorly or not at all?

Answer 4

(will add later)

Question 5

CH11 Remedies: A court will award money or other relief to a party injured by a breach of contract.

Answer 5

(will add later)

Question 6

CH11 Chris reserved a table online at a fancy restaurant to propose to his girlfriend. He clicked on a box agreeing that no one at the table would use their cell phones while in the restaurant. After proposing, Chris forgot and they took selfies with their cell phones and were kicked out of the restaurant. Is this legally binding?

Answer 6

Valid offer and acceptance - Chris clicked on the box and made the reservation, making that table and timeslot unavailable.
Consideration - Chris promised to stay away from his phone and the restaurant gave up their table and time slot.
Capacity and legality - Both are adults of sound mind.
Consent - There was no fraud or trickery on the part of the restaurant.
Writing - The terms were in writing.

P 280, 282

Question 7

CH11 What are the three basic questions relating to promises?

Answer 7

Is it certain that the defendant promised to do something?

If she did promise, is it fair to make her honor her word?

If she did not promise, are there unusual reasons to hold her liable anyway?

p 283

Question 8

CH11 In the 12th and 13th centuries, what made the promises binding?

Answer 8

They had to be made in writing.

A seal had to be affixed to the document.

Question 9

When did the courts start to allow some suits based on a broken promise?

Answer 9

In the 15th centruy.

p 283

Question 10

CH11 What were the major limitations to suits in the 15th century?

Answer 10

If a job was not started in time and the ordering party paid money to the performing party. A verbal promise was not adequate; the ordering party had to have paid a 10% down payment.

Question 11

CH11 When did English courts begin to enforce mutual promises?

Answer 11

In 1602. Suits could be enforced on just a verbal promise.

Question 12

CH 11 in 1792 - Davis agreed to apprentice as surgeon/apothecary to Mason and in return he would not set up a practice within 10 miles of that town for 14 years. If he does set up within 10 miles, he will pay Mason $200 pounds. Davis began working for Mason in 1789. In 1791 Davis was let go due to misconduct, which Davis denied. Davis set up a practice within 10 miles of Mason. Mason sued to $200 pounds.

How was it ruled?

What is this kind of contract called?

Answer 12

The plaintiff did not want Davis to benefit from the apprenticeship and then steal customers away from Mason. Davis said he found the limits of the agreement unreasonable. The judge found that the public is unlikely to be injured by an agreement of this kind, the judge did not find the terms of the agreement unreasonable, every other person is at liberty to practice as a surgeon in this town. The judge ruled for the Plaintiff.

A noncompetition agreement. They are no longer automatically enforced. (P284)

P 283

Question 13

CH11 What is a laissez-faire approach, where parties have the freedom to contract?

Answer 13

This is a business-oriented approach and the parties are free to engage in a contract.

P 284.

Question 14

CH11 Why is a noncompete contract not guaranteed to be enforceable today?

Answer 14

There may be unequal power between the parties.

The public may have an interest in the employee being able to compete.

P 284

Question 15

CH11 Name 4 types of contracts.

Answer 15

Bilateral and Unilateral contracts

Executory and Executed Contracts

Valid, Unenforceable Voidable and Void agreements.

Express and Implied contracts.

P 285, 286.

Question 16

CH11 What is a bilateral contract?

Answer 16

A contract where both parties make a promise.

P 284

Question 17

CH11 What are the vast majority of contracts?

Answer 17

Bilateral contracts.

P 284

Question 18

CH 11 What is a unilateral contract?

Answer 18

One party makes a promise that the other party can accept only by actually doing something.

If a reward is offered when someone returns a lost dog to the family, the $100 is not to be paid until the dog is returned.

P 284

Question 19

CH11 What are Executory and Executed Contracts?

When is the contract executed?

Answer 19

A contract is executory when the contract has been agreed upon, but one or more parties have not yet fulfilled their obligation.

The contract has been executed when all parties have fulfilled their obligations.

P 285

Question 20

CH11 What do we call a contract that satisfies all of the law’s requirements. All 7 requirements are met and it is enforceable.

Answer 20

A valid contract.

P285

Question 21

CH11 What is it called when the parties intend to form a valid Bargain, but a court declares that some rule of law prevents enforcing it?

Answer 21

An unenforceable agreement.

P 285

Question 22

CH11 In what timeframe must a contract be satisfied to not require that it be in writing?

Answer 22

One year. Beyond one year the contract must be in writing.

P 285

Question 23

CH11 What is it called when the law permits one party to terminate the agreement?

Give examples of that kind of contract.

Answer 23

A voidable contract.

When the agreement is signed under duress.

When a party commits fraud.

If the producer that she was promised was misrepresented and is not involved with the film, the contract is fraudulent and voidable at Gloria’s option. She can choose to accept another director she can stay with the contract. She also has the option to cancel and sue.

P 285

Question 24

CH11 What is the type of agreement called where neither party can enforce it?

Name two situations that would cause this.

Answer 24

A void agreement.

The deal may be illegal.

One of the parties has no legal authority to make a contract.

P 285

Question 25

What type of contract is where the two parties explicitly state all the important terms of their agreement.

Answer 25

A contract where the two parties state all the important terms of their agreement is called an express contract. The majority of contracts are express contracts. P 286

Question 26

CH11 What is it called when the words and conduct of the parties indicate that they intended an agreement. What setting do these more occur in?

Answer 26

An implied contract. An implied contract has a common understanding amongst those involved in the contract. Employment. P 286

Question 27

CH11 Common law principles are developed by ___________.

Answer 27

The courts. P 287

Question 28

CH 11 In 1952, what was created to make some types of law the same in every state? What does it govern?

Answer 28

The Uniform Commercial Code, or ICC. Commerce: sale and leasing of goods, negotiable instruments, bank deposits, letters of credit, investment securities, secured transactions, etc. P 287

Question 29

CH11 What is the part of the Uniform Commercial Code that we will study? What does it govern?

Answer 29

Article 2. It governs the sale of goods. In the sale the primary purpose must be the sale of goods. A Porsche is moveable and is governed by the UCC. Repairing equipment is a service and is governed by the common law of contracts. P 288

Question 30

CH11 Most agreements that courts enforce are:

Answer 30

express contracts. P 289

Question 31

CH11 How to tell a promissory estoppel from a quasi-contract.

Answer 31

A Promissory estoppel case: the defendant made a promise that the plaintiff relied on. Quasi-contract: The defendant received a benefit from the plaintiff and retaining that benefit would be unfair. P 289

Question 32

Notes: CH11 Promissory Estopel - The defendant made a promise knowing that the plaintiff would likely rely on it. The plaintiff did rely on the promise, and The only way to avoid injustice is to enforce the promise.

Question 33

Notes: To prevail on Promissory Estoppel a plaintiff must establish: A promise was made. It was the reasonable expectation of the promisor to induce action or forbearance on the part of the promise, the promise reasonable relied on the promise and took action to his detriment and such promise is binding because injustice can be avoided only by enforcement of the promise.

Question 34

CH11 Do Promissory Estoppel cases usually win or fail for the plaintiff?

Answer 34

They generally fail. P 291

Question 35

CH11 If you have neither an express nor implied contract how do you make a legal claim when you acted on the assumption that you would have a contract but the contract process fails?

Answer 35

By relying on the legal theory of a quasi-contract. You have to be able to show that: The plaintiff gave some benefit to the defendant. The plaintiff reasonably expected to be paid for the benefit and the defendant know this, and The defendant would unjustly benefit if he did not pay. P 292, 293

Question 36

CH11 What that the damages awarded in a quasi-contract called? What does the term mean?

Answer 36

quantum meruit. It means that the plaintiff gets as much as he deserves, or what he morally ought to have. P 292

Question 37

CH11 What are the 4 theories of recovery? There are the names of the theories, two conditions and an outcome for each.

Answer 37

Express Contract Defendant made a promise There is a contract The parties intend to contract They intend to agree on explicit terms Implied Contract No explicit promise There is a contract The parties do not formally agree Words and conduct indicate intent to contract Promissory Estoppel There is a promise There is no contract A promise is made that creates foreseeable reliance, plaintiff relies on it Quasi-Contract There is no promise There is no contract There is no intent to contract but plaintiff created benefit for the defendant and plaintiff expects compensation

Question 37

CH11 What are the 4 theories of recovery?

Answer 37

Express Contract, Defendant made a promise, There is a contract, The parties intend to contract