Chapter 6

Question 1

Acceptance

Answer 1

An agreement by one party to the terms of the offer made by another

Question 2

Bilateral contract

Answer 2

A contract in which there is an exchange of promises, both parties assume an obligation

Question 3

Capacity

Answer 3

An element of a valid contract, parties to a contract must be legally capable of understanding and entering into the agreement

Question 4

Contract

Answer 4

A voluntary exchange of promises creating obligations that, if defaulted on, can be enforced and remedied in the courts

Question 5

Consensus

Answer 5

An element of a valid contract, both parties must objectively know and agree to its terms through an offer and acceptance

Question 6

Consideration

Answer 6

An element of a valid contract, the price one is willing to pay for the promise set out in the offer

Question 7

Counteroffer

Answer 7

A new offer the proposal of which rejects and terminates the offer available until then

Question 8

E-commerce

Answer 8

Commercial activity using electronic communication

Question 9

Express contract

Answer 9

A contract in which the parties have expressly stated their agreement, either verbally or in writing

Question 10

Formal contract

Answer 10

An agreement under seal

Question 11

Freedom of contract

Answer 11

The parties to a contract are generally not restricted as to the terms of their contractual agreement

Question 12

Gratuitous promise

Answer 12

A one sided agreement that the courts will not enforce

Question 13

Illegal consideration

Answer 13

A promise to commit an unlawful act or to do something against public policy which is not valid consideration and will not be enforced by a court

Question 14

Illegal contract

Answer 14

A contract that is void because it involves the performance of an unlawful act

Question 15

Implied contract

Answer 15

An agreement inferred from the conduct of the parties

Question 16

Invitation to treat

Answer 16

An invitation to engage in the bargaining process

Question 17

Legality

Answer 17

An element of a valid contract; the object and consideration of the contract must be legal and not against public policy

Question 18

Mental incompetence

Answer 18

When a person cannot understand the nature or consequences of their acts

Question 19

Offer

Answer 19

A tentative promise to do something if another party consents to do what the first party requests

Question 20

Parol contract

Answer 20

A contract that may be verbal or written but is not under seal; called a simple contract

Question 21

Past consideration

Answer 21

Something completed before an agreement is made; it is not valid consideration

Question 22

Postbox rule

Answer 22

A principle that a mailed acceptance is effective when and where it is dropped into a mailbox

Question 23

Quantum meruit

Answer 23

A reasonable price paid for requested services

Question 24

Quasi-contract

Answer 24

A contractual relationship involving a request for goods and services where there is no agreement on price before the service is performed; courts impose an obligation to pay a reasonable price in these situations

Question 25

Revocation

Answer 25

Withdrawal of an offer before acceptance (must be communicated to the offeree)

Question 26

Simple contract

Answer 26

A written or verbal contract not under seal; also called parol contract

Question 27

Standard form contract

Answer 27

A contract with fixed terms prepared by a business

Question 28

Unenforceable contract

Answer 28

An otherwise binding contract that the courts will not enforce, such as a contract that does not satisfy the Statute of Frauds

Question 29

Unilateral contract

Answer 29

A contract formed when one party performs what has been requested by the other party; there is a promise followed by an act, but not an exchange of promises

Question 30

Valid contract

Answer 30

An agreement that is legally binding on both parties

Question 31

Void contract

Answer 31

An agreement that is not legally binding because an essential element is missing

Question 32

Voidable contract

Answer 32

An agreement that has legal effect but that one of the parties has the option to end