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Business Law > Chapter 10 > Flashcards

Chapter 10 Flashcards

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1
Q

Private law

A

The terms of the contract that the parties enter into

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2
Q

Contract

A

An agreement that is enforceable by a court of law or equity

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3
Q

Offeror

A

The party who makes an offer to enter into a contract

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4
Q

Offeree

A

The party to whom an offer to enter into a contract is made

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5
Q

Bilateral contract

A

A contract entered into by the way of exchange of promises of the parties, a “promise for a promise”

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6
Q

Unilateral contract

A

A contract in which the offender’s offer can be accepted only by the performance of an act by the offeree, a “promise for an act”

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7
Q

Objective theory of contracts

A

Holds that the intent to enter into an express or implied-in-fact contracts is judged by the reasonable person standard

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8
Q

Actual contract

A

An agreement that is expressed in written or oral words

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9
Q

Requirements for an Implied-in-Fact Contract:

A
  1. The plaintiff provided property or services to the defendant
  2. The plaintiff expected to be paid by the defendant for the property or services and did not provide the property or services gratuitously
  3. The defendant was given an opportunity to reject the property or services provided by the plaintiff but failed to do so
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10
Q

Quasi contract

A

Provides that the court may award monetary damages to a plaintiff for providing work or services to a defendant even though no actual contract existed between the parties. Also called, implied-in-law contract

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11
Q

A quasi-contract is imposed where:

A

(1) One person confers a benefit on another, who retains the benefits, and (2) it would be unjust not to require that person to pay for the benefit received

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12
Q

Executed contract

A

A contract that has been fully performed on both sides; a completed contract

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13
Q

Executory contract

A

A contract that has not been fully performed by either or both sides

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14
Q

Valid contract

A

A contracts that meets all the essential elements to establish a contract; A contract that is enforceable by at least one of the parties

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15
Q

A valid contract must:

A

(1) Consist of an agreement between parties, (2) be supported by legally sufficient considerations, (3) be between parties with contractual capacity, and (4) accomplish a lawful object

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16
Q

Void contract

A

One that has no legal effect

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17
Q

Voidable contract

A

A contract in which one or both parties have the option to void their contractual obligations

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18
Q

Unenforceable contract

A

One where there is some legal defense to the enforcement of the contract

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19
Q

Requirements of a Contract

A
  1. Agreement
  2. Consideration
  3. Contractual Capacity
  4. Lawful Object
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20
Q

Agreement

A

The manifestation by two or more persons of the substance of a contract

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21
Q

Three elements required to make an offer effective:

A
  1. The offeror must objectively intend to be bound by the offer
  2. The terms of the offer must be definite or reasonably certain
  3. The offer must be communicated to the offeree
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22
Q

An offer must contain the following terms:

A
  1. Identification of the parties
  2. Identification of the subject matter and quantity
  3. Consideration to be paid
  4. Time of performance
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23
Q

Revocation

A

Withdrawal of an offer by the offeror that terminates an offer

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24
Q

The revocation may be:

A

(1) Communicated to the offeree either by the offeror or a third party and (2) made by the offeror’s express statement or by an act of the offeror that is inconsistent with the offer

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25
Q

Rejection

A

Express words or conduct by the offeree that rejects an offer. Rejection terminates the offer

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26
Q

Counteroffer

A

A response by an offeree that contains terms and conditions different from or in addition those of the offer. A counteroffer terminates an offer

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27
Q

Lapse of time

A

A stated time period after which an offer expires. If no time is stated, an offer terminates after a reasonable time

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28
Q

Supervening illegality

A

The enactment of a statute or regulation or court decision that makes the object of an offer illegal. This terminates the offer

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29
Q

Acceptance

A

A manifestation of assent by the offeree to the terms of the offer in a manner invited or required by the offer, as measured by the objective theory of contracts

30
Q

Mirror image rule

A

A rule that states that in order for there to be an acceptance, the offeree must accept the terms as stated in the offer

31
Q

Mailbox rule

A

A rule that states that an acceptance is effective when it is dispatched, even if it is lost in transmission. Also called, acceptance-upon-dispatch rule

32
Q

Consideration

A

Something of legal value given in exchange for a promise

33
Q

Consideration consists of two elements:

A
  1. Something of legal value must be given

2. There must be a bargained-for exchange

34
Q

A contract is considered supported by legal value if:

A
  1. The promise suffers a legal detriment

2. The promisor receives a legal benefit

35
Q

Bargained-for exchange

A

An exchange that parties engage in that leads to an enforceable contract

36
Q

Gift promise

A

A promise that is unenforceable because it lacks consideration. Also called, gratuitous promises.

37
Q

Illegal consideration (Contracts Lacking Consideration)

A

A promise to refrain from doing an illegal act. Such a promise will not support a contract

38
Q

Illusory promises (C.L.C.)

A

A contract into which parties enter but one or both of the parties can choose not to perform their contractual obligations. Such a contract lacks consideration. Or illusory contracts

39
Q

Moral Obligation (C.L.C.)

A

Not treated as legal consideration. Examples are contracts based on love and affection and deathbed promises.

40
Q

Past Consideration (C.L.C.)

A

A prior act or performance. Past consideration will not support a new contract. New consideration must be given

41
Q

Preexisting Duty (C.L.C.)

A

Something a person is already under an obligation to do.

42
Q

Infancy doctrine

A

A doctrine that allows minors to disaffirm (cancel) most contracts they have entered into with adults

43
Q

Disaffirmance

A

The act of a minor to rescind a contract under the infancy doctrine. Disaffirmance may be don orally, in writing, or by the minor’s conduct

44
Q

Competent party’s duty of restitution

A

A duty in which if a minor has transferred money, property, or other valuables to the competent party before disaffirming the contract, that party must place the minor back into status quo

45
Q

Minor’s duty of restoration

A

A minor’s obligation to return goods or property at the time of disaffirmance. As a general rule, a minor is obligated only to return the goods or property he or she has received from the adult in the condition they are in at the time of disaffirmance

46
Q

Most states provide that the minor must put the adult in status quo upon disaffirmance of the contract if:

A
  1. The minor’s intentional or grossly negligent conduct caused the loss of value to the adult’s property
  2. The minor misrepresented his or her age when entering into the contract
47
Q

Ratification

A

The act of a minor after the minor has reached the age of majority by which he or she accepts a contract entered into when he or she was a minor

48
Q

Necessaries of life

A

The reasonable value of food, clothing, shelter, medical care, and other items considered necessary to the maintenance of life for which a minor must pay after he or she contracts for them

49
Q

Two standards concerning contracts of mentally incompetent persons:

A
  1. Adjudged Insane

2. Insane, but Not Adjudged Insane

50
Q

Adjudged Insane

A

A person who has been determined to be insane by a proper court or administrative agency. A contract entered into by such a person is void

51
Q

Insane, but Not Adjudged Insane

A

A person who is insane but has not been adjudged insane by a court or an administrative agency. A contract entered into by such person is generally voidable. Some states hold that such a contract is void

52
Q

Intoxicated persons

A

A person who is under contractual incapacity because of ingestion of alcohol or drugs to the point of incompetence

53
Q

Illegal contract

A

A contract to perform an illegal act. Cannot be enforced by either party to the contract

54
Q

Gambling statutes

A

Statutes that make certain forms of gambling illegal

55
Q

Usury law

A

A law that sets an upper limit on the interest rate that can be charged on certain types of loans

56
Q

Sabbath law

A

A law that prohibits or limits the carrying on of certain secular activities on Sunday. Also called Sunday laws or blue laws

57
Q

Licensing statutes

A

A statute that requires a person or business to obtain a license from the government prior to engaging in a specified occupation or activity

58
Q

License

A

Granted to a person who demonstrates that he or she has the proper schooling, experience, and moral character required by the relevant statute

59
Q

Contract contrary to public policy

A

A contract that has a negative impact on society or interferes with the public’s safety and welfare

60
Q

Contracts in restrain of trade

A

A contract that unreasonably restrains trade

61
Q

Noncompete clause

A

An agreement whereby a person agrees not to engage in a specified business or occupation within a designated geographical area for specified period of time following the sale

62
Q

A covenant not to compete that is ancillary to an employment contract is lawful if it is reasonable in three aspects:

A
  1. The line of business protected
  2. The geographical area protected
  3. The duration of the restriction
63
Q

Exculpatory clause

A

A contractual provision that relieves one (or both) parties to the contract from tort liability for ordinary negligence

64
Q

Immoral contracts

A

A contract whose objective is the commission of an act that is considered immoral by society

65
Q

Third parties do not acquire any rights under other people’s contracts, under two exceptions:

A
  1. Assignees to whom rights subsequently are transferred
  2. Intended Third-party Beneficiaries to whom the contracting parties intended to give rights under the contract at the time of contracting
66
Q

Assignment

A

The transfer of contractual rights by an obligee to another party

67
Q

Assignor

A

An obligee who transfers a right

68
Q

Assignee

A

A party to whom a right has been transferred

69
Q

Intended Third-party Beneficiary

A

A third party is not in privity of contract but who has rights under the contract and can enforce the contract against the obligor

70
Q

Incidental beneficiary

A

A party who is unintentionally benefited by other people’s contract

Business Law (9 decks)

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