Contracts Flashcards

1
Q

What is a bilateral contract?

A

Two promises are made. (I promise to pay you $50,000 if you promise to do my audit.) A contract is formed when the promises are exchanged.

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2
Q

What is a unilateral contract?

A

One promise for an act. (I will pay anyone $100 who will find my dog.) A contract is formed when performance is completed.

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3
Q

What are the criteria for a contract?

A

Offer, acceptance and consideration.

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4
Q

What would terminate an offer?

A

Expiration, revocation, rejection or counteroffer, operation of law (death or insanity by either party, destruction of subject matter, illegal)

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5
Q

What is the mirror-image rule for acceptance?

A

Must accept all terms and conditions of the offer without any alteration. An acceptance must be unequivocal and unqualified with respect to the precise terms specified by the offer.

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6
Q

What is the early acceptance rule?

A

Acceptance is effective when transmitted or dispatched. (mailbox rule)

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7
Q

What is the conditions precedent?

A

Acceptances of the offer that cite events outside of the contract which must take place before the acceptance is effective.

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8
Q

What is consideration?

A

Consideration is the legal term for exchange of benefits and sacrifices. Consideration must be legally sufficient.

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9
Q

What are the elements of consideration?

A

Of value and bargained for.

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10
Q

T/F: Modification of contract requires additional consideration.

A

True

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11
Q

What is a liquidated damages clause and how is it used?

A

A liquidated damages clause is used to enforce a contract, but unless the amount to be awarded in the event of breach is a reasonable estimate of the damages caused by the breach, the charges will be considered a penalty and will be unenforceable.

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