Contract Law Terms

Question 1

□ capacity

Answer 1

Legal ability to understand the nature and effects of a contract’s components and enter into one.

Question 2

□ caveat emptor

Answer 2

A latin phrase meaning “let the buyer beware”

Question 3

□ clerical mistake

Answer 3

An error caused by a clerk or other employee; typically involved numbers; an example of a unilateral mistake

Question 4

□ consent

Answer 4

Agreement given freely and voluntarily in good faith

Question 5

□ consideration

Answer 5

• The exchange of something of value from one party to another
• Can be classified as a past, present or future consideration.

Question 6

□ contract

Answer 6

• An agreement or promise that the law will enforce.
• Types of contracts include, express, implied, simple contracts. Also contracts under seal.

Question 7

□ duress

Answer 7

• Similar to undue influence, but more extreme.
• Illegal coercion; the threat to use of violence to force a person to do something against their own free will to participate in a contract.

Question 8

□ elements of a valid contract

Answer 8

Lawful purpose, consideration, capacity, consent, offer and acceptance.

Question 9

□ express contract

Answer 9

• Can be verbal, or written.
• Clearly defines all terms and conditions

Question 10

□ fraudulent misrepresentation

Answer 10

• f a seller makes a statement about a material fact knowing it to be false.
• Far more serious than innocent misrepresentation because the seller is lying to cheat, or defraud, the buyer.

Question 11

□ future consideration

Answer 11

• One of the two forms of legal consideration
• Occurs when one of both of the parties promises to do something in the future.
• Ex. Buying on credit
  Not always in the world of business, but rather in sports. Might have to replace a player

Question 12

□ implied contract

Answer 12

• Only suggested by a person’s actions - nothing is precisely stated or written
  Ex. Ordering a meal in a restaurant

Question 13

□ innocent misrepresentation

Answer 13

• When a person makes a false statement about a material fact that he or she believes to be true.
  Where something was misrepresented, not forced, but rather an accident

Question 14

□ invitation to treat

Answer 14

• Invitations by sellers for cusomers to make an offer to buy the products advertised
• Retailers don’t expect everyone who sees an advertisement to buy the items being promoted
  *EX. Advertisements, displays and catalogues *

Question 15

□ lapse and revocation

Answer 15

• Lapse: When an offer closes due to the acceptance date expiring
• Revocation: When an offer is withdrawn before being accepted

Question 16

□ lawful purpose

Answer 16

Finally, the contract has a lawful purpose (object - there is nothing illegal about buying a snowboard)

Question 17

□ meeting of the minds

Answer 17

A situation in which both parties clearly understood the rights and responsibilities in the contract that developed.

Question 18

offer and acceptance

Answer 18

a proposal that expresses the willingness of one party to enter into a contract, followed by an assent by the other party in words or deed; called a “meeting of the minds”

Question 19

□ offeree

Answer 19

Determines whether or not to accept the offer presented by the offeror

Question 20

□ offeror

Answer 20

Must make a clear, precise offer

Question 21

□ performing

Answer 21

Forming and performing (completing) a contract)

Question 22

□ restraint of trade

Answer 22

• Business contracts may be challenged on grounds of public policy if they are in restraint of trade.
• Restraint of trade is enforced to promote competition. However, if the period is too long or unreasonable, the contract may be void.

Question 23

□ simple contract

Answer 23

They can be verbal, written or implied.
Ex. Most day to day transactions

Question 24

□ unilateral mistake

Answer 24

• A contract can be void and unenforceable if one party has made a mistake and the other party knew of the mistake but made no attempt to correct it.
  *EX. when you try to buy a knife to cut a rock, but the seller knows it wont cut a rock and doesn’t tell you. *