Chapters 10-12

Question 1

forbearance

Answer 1

the promise to refrain from doing something that a party has a legal right to do

Question 2

promisor

Answer 2

in the making of a contract, the party who makes a promise

Question 3

promisee

Answer 3

in the making of a contract, the party to whom a promise is made

Question 4

pledge

Answer 4

a promise to donate money to a charitable organization (ex: church, temple, mosque, hospital, college, cultural institution)

Question 5

general release

Answer 5

an aggrieved party can fully or partially discharge a claim resulting from an alleged breach of contract

Question 6

barren promise

Answer 6

a promise to pay an existing debt or to obey the law, or a similar promise of something already owed

Question 7

preexisting duty

Answer 7

an obligation that a party is already bound to by law or by some other agreement. The party may not use this as consideration in a new contract.

Question 8

gratuitous promise

Answer 8

a promise that does not require some benefit in return

Question 9

illusory promise

Answer 9

one that consists of an indefinite, open-ended statement purporting to be an agreement

Question 10

moral consideration

Answer 10

something that a person is not legally bound to do but that he or she may feel bound to do because of love, friendship, honor, sympathy, conscience, or other reason

Question 11

past consideration

Answer 11

a promise to repay someone for a benefit after it has been received

Question 12

competent party

Answer 12

a person of legal age and at least normal mentality who is considered by law to be capable of understanding the meaning of a contract and is permitted to enter into a valid contract

Question 13

contractual capacity

Answer 13

the ability to make a valid contract

Question 14

minor

Answer 14

a person who has not yet reached the age of majority

Question 15

age of majority

Answer 15

the age at which a person is legally recognized as an adult and is bound by the terms of his or her contract

Question 16

coming of age rule

Answer 16

in COMMON LAW, the view that a person’s legal birthday is 12:01 a.m. of the day before his or her actual birthday

Question 17

birthday rule

Answer 17

the MODERN view that a person attains a given age on the anniversary date of his or her birth

Question 18

disaffirmance

Answer 18

in contract law, to indicate by a statement or act an intent not to live up to the terms of a contract

Question 19

necessaries

Answer 19

goods and services that are essential to a minor’s health and welfare

Question 20

ratified

Answer 20

an approval of a contract made by a minor after reaching majority

Question 21

emancipation

Answer 21

in contract law, the condition that exists when minors are no longer under control of their parents and are responsible for their contracts

Question 22

abandonment

Answer 22

in contract law, the condition that exists when a minor has left home and given up all rights to parental support

Question 23

incompetent

Answer 23

being able to make binding contracts due to having an unsound mind and being unable to safeguard one’s own interest and affairs

Question 24

blue laws

Answer 24

state statutes and local ordinances that regulate the creation and performance of certain types of contracts on Sundays and legal holidays

Question 25

Sunday agreements

Answer 25

a contract made on a Sunday; in a small number of jurisdictions, such contracts are invalid unless they are ratified on a weekday

Question 26

gambling agreement

Answer 26

an agreement in which performance by one party depends on the occurrence of an uncertain event

Question 27

interest

Answer 27

the charge for using borrowed money, generally expressed as an annual percentage of the amount of the loan (principal).

Question 28

usury

Answer 28

charging interest higher than the law permits

Question 29

unlicensed transaction

Answer 29

an agreement with a person who does not have a required license

Question 30

champerty

Answer 30

an agreement to encourage a lawsuit in which one or more of the parties have no legitimate interest

Question 31

exculpatory clause

Answer 31

releases one party from liability because of their negligence throughout the performance of a contract

Question 32

restraint of trade

Answer 32

a limitation on the full exercise of doing business with others

Question 33

monopoly power

Answer 33

a situation in which one or more people or firms control the market in a particular area or for a particular product

Question 34

Sherman Antitrust Act

Answer 34

a federal statute that forbids certain agreements that tend to unreasonably inhibit competition, fix prices, allocate territories, or limit production

Question 35

Robinson-Patman Act

Answer 35

a federal statute that makes it unlawful to discriminate, directly or indirectly, in matters involving product pricing, advertising, and promotion

Question 36

government granted franchise

Answer 36

a legal monopoly in which a state or federal government grants person or firm a license to conduct a specific business, usually an essential service

Question 37

franchisor

Answer 37

the parent firm in a franchise agreement

Question 38

franchisee

Answer 38

the independent company in a franchise agreement