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Law 2 > Chapter 11: Consideration, Capacity, and Legality > Flashcards

Chapter 11: Consideration, Capacity, and Legality Flashcards

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1
Q

Liberty of contract is not

A

Absolute

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2
Q

What are the two parts of consideration?

A

Something of legally sufficient value must be given in exchange for the promise
Must be a bargained for exchange (Negotiation)

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3
Q

Promise to do something that one has no prior legal duty to do

A

Legally sufficient value

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4
Q

Performance of an action that one is otherwise not obligated to undertake

A

Legally sufficient value

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5
Q

Refraining from an action that one has a legal right to undertake

A

Legally Sufficient Value

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6
Q

This must be given or promised by the promisor in return for the promisee’s promise, performance, or promise of performance

A

Bargained for Exchanged

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7
Q

A bargain for exchange must be something of

A

Legal value

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8
Q

This distinguishes contracts from gifts

A

Bargain for exchange

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9
Q

A bargain for exchange must be legally __________ to the promisee

A

Detrimental

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10
Q

A bargain for exchange must be legally detrimental to the promisee or legally _________ to the promisor

A

Beneficial

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11
Q

How much consideration was given

A

Adequacy of Consideration

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12
Q

Concerns the fairness of the bargain

A

Adequacy of Consideration

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13
Q

Generally, a court will not question this

A

Adequacy of consideration

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14
Q

The law does not protect a person from entering into an

A

Unwise Contract

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15
Q

A promise to do what one already has a legal duty to do

A

Preexisting Duty

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16
Q

Does not constitute legally sufficient consideration

A

Preexisting Duty

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17
Q

If a party is already bound by contract to perform a certain duty, that duty cannot serve as

A

Consideration for a second contract

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18
Q

A court may allow an exception to the rule if

A

during the performance of a contract, extraordinary difficulties arise that were totally unforeseen at the time the contract was formed

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19
Q

The law recognizes that two parties can mutually agree to do this

A

rescind their contract

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20
Q

A remedy whereby a contract is canceled and the parties are returned to the positions they occupied before the contract was made

A

Recission

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21
Q

An act that takes place before the contract is made and that ordinarily, by itself, cannot be consideration for a later promise to pay for the act

A

Past Consideration

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22
Q

No promise at all

A

Illusory Promises

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23
Q

Without consideration and unenforceable

A

Illusory Promises

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24
Q

The terms of the contract express such uncertainty of performance that the promisor has not definitely promised to do anything

A

Illusory Promises

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25
Q

Claims are commonly settled through

A

Accord and satisfaction

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26
Q

The agreement under which one of the parties promises to give or perform

A

Accord

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27
Q

A debtor offers to pay a lessor amount than the creditor is owed

A

Accord and Satisfaction

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28
Q

Performance, which takes place after the accord is liquidated

A

Satisfaction

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29
Q

A debt whose amount has been ascertained, fixed, agreed on, settled, or exactly determing

A

Liquidated Debt

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30
Q

With this, a balance is still owed

A

Liquidated Debt

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31
Q

There can be no satisfaction, unless there is first an

A

Accord

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32
Q

If this happens, accord and satisfaction cannot take place

A

Liquidated Debt

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33
Q

The amount of the debt is not settled, fixed, agreed on, ascertained, or determined, and the reasonable persons may differ over the amount owed

A

Unliquidated Debt

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34
Q

If the debt is unliquidated, the balance is

A

Discharged

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35
Q

If this happens, accord and satisfaction is possible

A

Unliquidated Debt

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36
Q

A contract in which one party forfeits the right to pursue a legal claim against the other party

A

Release

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37
Q

Bars any further recovery beyond the terms of

A

Release

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38
Q

Releases will generally be binding if they are

A

Given in good faith
Stated in a signed writing and
Accompanied by consideration

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39
Q

Detrimental Reliance

A

Promissory Reliance

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40
Q

A court may enforce an otherwise unenforceable promise to avoid

A

an injustice that would otherwise result

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41
Q

To establish promissory estoppel, there must be a clear and definite

A

promise

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42
Q

List the requirements to establish promissory estoppel

A

Must be a clear and definite promise
Promisor should have expected that the promise would rely on the promise
Promisee reasonably relied on the promise by acting or refraining from some act
Promisee’s reliance was definite and resulted in substantial detriment
Enforcement of the promise is necessary to avoid injustice

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43
Q

Promissory Estoppel originally applied to situations involving

A

Gifts and donations to charity

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44
Q

Now, promissory estoppel includes other situations including business transactions in order to

A

Avoid inequity or hardship

45
Q

The capacity required by law for a party who enters into a contract to be bound by that contract

A

Contractual Capacity

46
Q

Under the age of 18

A

Minor

47
Q

Minority status may be terminated by a minor’s

A

Emancipation

48
Q

When a child’s parent or legal guardian relinquishes the legal right to exercise control over a child

A

Emancipation

49
Q

A minor can enter into any contract an adult can, provided the contract is not one

A

prohibited by law for minors

50
Q

A contract entered into by a minor is

A

Voidable

51
Q

A contract entered into by a minor is voidable at the option of

A

the minor

52
Q

The legal avoidance or setting aside of a contractual obligtion

A

Disaffirmance

53
Q

The minor must disaffirm

A

the entire contract

54
Q

A minor can recover property that she or he transferred to the adult as

A

consideration for the contract

55
Q

Contract can normally be disaffirmed at any time during minority or

A

for a reasonable time after the minor comes of age

56
Q

An adult who enters into a contract with a minor cannot avoid his or her

A

Contractual duties

57
Q

Disaffirmance is prohibited if the minor has

A

Misrepresented their age

58
Q

When the individual, reaching the age of majority, states orally or in writing, that she or he intends to be bound by the contract

A

Express Ratification

59
Q

When the individual, reaching the age of majority, behaves in a manner inconsistent with disaffirmance

A

Implied Ratification

60
Q

Generally, parents are not liable for the contracts made by minor children acting on their own, except

A

Contracts for necessaries

61
Q

A condition in which a person’s normal capacity to act or think is inhibited by alcohol or some other drug

A

intoxication

62
Q

If the person was sufficiently intoxicated to lack mental capacity, the transaction may be

A

Voidable at the option of the intoxicated person

63
Q

If the intoxicated person understood the legal consequences of the agreement, the contract is

A

enforceable

64
Q

A contract with a mentally incompetent person can be

A

Void, voidable, or valid

65
Q

How is a contract with a mentally incompetent person void?

A

If a court has previously determined a person mentally incompetent

66
Q

How is a contract with a mentally incompetent person voidable?

A

If a court has not previously judged a person mentally incompetent, and the person did not know he or she was entering into the contract or lacked the mental capacity to comprehend its nature, purpose, and consequences

67
Q

How is a contract with a mentally incompetent person valid?

A

If the person had capacity at the time the contract was formed, or had lucid intervals

68
Q

For a contract to be valid and enforceable, it must be formed for

A

A legal purpose

69
Q

Statutes often set forth rules specifying which ___________ may be included in contracts and which are prohibited

A

Terms and clauses

70
Q

If the object or performance of a contract is rendered illegal by statute after the contract has been formed, the contract is considered

A

Discharged by Law

71
Q

Most states limit the interest that the may collect on the contract to the

A

Lawful Maximum Interest Rate

72
Q

Creation of risk for the purpose of assuming it

A

Gambling

73
Q

Any scheme that involves the distribution of property by chance among persons who have paid valuable consideration for the opportunity to receive the property

A

Gambling

74
Q

All states require members of certain professions to haves licenses. This can be done under the state’s

A

Police Powers

75
Q

Whether a contract with an unlicensed person is legal and enforceable depends on

A

Purpose of the licensing statute

76
Q

Some contracts are not enforceable because of the negative impact they would have on society. These re

A

Contracts contrary to public policy

77
Q

Examples of contracts contrary to public policy include

A

Contract to commit an immoral act; contract that prohibits marriage

78
Q

Contracts in restraint to trade are generally

A

Void

79
Q

Why are contracts in restraint to trade generally void/unenforceable?

A

They are contrary to public policy

80
Q

When is a contract in restraint to trade valid?

A

When the restraint is reasonable and is an ancillary part of the contract

81
Q

A contractual promise of one party to refrain from conducting business similar to that of another party for a certain period of time within a specified geographical area

A

Covenant Not to Compete

82
Q

A contract between an employer and an employee in which the terms and conditions of employment are stated

A

Employment Contract

83
Q

An employment contract can include this

A

Covenant Not to compete clause upon termination

84
Q

You can only have a covenant not to compete clause if it protects a

A

Legitimate Business Interest

85
Q

A covenant not to compete clause must not be

A

Any greater than necessary

86
Q

A court ordered correction of a written contract so that it reflects the true intentions of the parties

A

Reformation

87
Q

A contract or clause that is void on the basis of public policy because one party was forced to accepts terms that are unfairly burdensome and that unfairly benefit the stronger party

A

Unconscionable

88
Q

Involves inconspicuous print, unintelligible language, or the lack of an opportunity to read the contract or ask questions about its meaning

A

Procedural Unconscionability

89
Q

When a party lacks knowledge or understanding

A

Procedural Unconscionability

90
Q

A standard-form contract in which the stronger party dictates the terms

A

Adhesion Contract

91
Q

No opportunity to negotiate the terms of the contract

A

Adhesion Contract

92
Q

Occur when contracts or portions of contracts are oppressive or overly harsh

A

Substansitive Unconscionability

93
Q

A contract clause that gives the business entity unrestricted access to the courts but require the other party to arbitrate any dispute with the firm

A

Substansitive Unconscionability

94
Q

A clause that releases a contractual party from liability in the event of monetary or physical injury, no matter who is at fault

A

Exculpatory Clauses

95
Q

Frequently held to be contrary to public policy

A

Exculpatory Clauses

96
Q

Exculpatory Clauses are almost always unenforceable in these

A

Residential Property Leases

97
Q

Exculpatory clauses are enforced when they do not contravene public policy, are not ambiguous, and do not claim to

A

Protect parties from liability for intentional misconduct

98
Q

An illegal contract is

A

VOID

99
Q

An illegal contract is deemed to never have existed, and the courts will aid whom?

A

Neither party

100
Q

In Pari Delicto

A

Both parties are at fault

101
Q

A plaintiff who suffers a loss because of an illegal bargain will presumably be deterred from entering into similar illegal bargains in the future

A

Hoped for deterrent effect

102
Q

Courts will not enforce the contract but will allow the parties to return to their original positions

A

Justifiable Ignorance of the facts

103
Q

Courts may permit an innocent party who has fully performed under a contract to enforce the contract against the guilty party under this

A

Justifiable Ignorance of the facts

104
Q

A member of protected classes can enforce an illegal contract even if

A

the other party cannot

105
Q

State laws that regulate the offering and sale of securities for the protections of the public

A

Blue Sky Laws

106
Q

If the illegal part of bargain has not yet been performed, the party rendering performance can withdraw from the contract and

A

Recover the performance or its value

107
Q

Consists of distinct parts that can be performed separately with separate consideration provided for each part

A

Severable, or divisible, Contract

108
Q

Parties intended that complete performance by each party would be essential

A

Indivisible Contract

Law 2 (22 decks)

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