Exam 2- Ch 11

Question 1

The VALUE given in return for a PROMISE or performance in a contractual agreement. must have “legally sufficient value” and a “bargained for exchange”

Answer 1

consideration

Question 2

1-a promise to do something that one has no prior legal duty to do
2-performance of an action that one is otherwise not obligated to undertake
3-refraining from an action that one has a legal right
Promise
Performance, or
Forbearance

Answer 2

Legally Sufficient Value

Question 3

the act of refraining from an action that one has a legal right to undertake

Answer 3

Forebearance

Question 4

remedy whereby a contract is canceled and the parties are returned to the positions they occupied before the contract was made. Unmaking of a contract that is executory

Answer 4

Rescission

Question 5

promise to do what one already has a legal duty to do does not constitute legally sufficient consideration. Intended to prevent extortion and the so called hold up game.

Answer 5

Preexisting Duty

Question 6

promises made in return for actions that have already taken place are unenforceable. No. consideration. Element of bargained for exchange is missing.

Answer 6

Past Consideration

Question 7

contract express uncertainty of performance. the promisor has not definitely promised to do anything. it is illusory- without consideration and unenforceable. It may or may not happen and depends on something else to happen.

Answer 7

Illusory Promise

Question 8

-must provide basis for the bargain
-something of legal value (promise, or performance) must be exchanged between parties
Promise must be legally detrimental to promisee or legally beneficial to promisor. Not illegal; exchange something of value

Answer 8

Bargained for exchange (negotiation)

Question 9

• courts will not consider adequacy of consideration

- Law Does NOT protect a person from entering into an unwise contract “Buyer Beware”

Answer 9

Adequacy of Consideration

Question 10

-lacks consideration

promise to do what one already has a legal duty to do does not constitute legally sufficient consideration

Answer 10

Pre existing Duty

Question 11

debtor offers to pay a lesser amount than the creditor purports to be owed
Accord=agreement
Satisfaction= performance

Answer 11

Accord and Satisfaction

Question 12

amount has been ascertained, fixed, agreed on, or exactly determined
-Not discharged

Answer 12

liquidated debt

Question 13

parties give up legal right to contest the amount in dispute. If settle on a lesser ant they still have right to go after you .
amount of debt is NOT settled

Answer 13

unliquidated debt

Question 14

bars any further recovery beyond the terms in the release. one party forfeits the right to pursue a legal claim against the other party.

Answer 14

Release

Question 15

agreement to substitute contractual obligation for some other type of legal action based on a valid claim

Answer 15

Covenant Not to Sue

Question 16

plaintiff must show he reasonably and substantially relied on promise of another can obtain recovery
-promise made, relied on, but was uneforceable

Answer 16

Promissory Estoppel

Question 17

• must be definite promise
• promisee must justifiably rely on the promise
• reliance is substantial
• justice will be served by enforcing promise

Answer 17

Promissory Estoppel Requirements

Question 18

Barred, impeded, or precluded

Answer 18

Estopped

Question 19

Courts apply estoppel to hardship or inequitable cases

Answer 19

Application of Promissory Estoppel

Question 20

legal ability to enter into a contractual relationship

Answer 20

Contractual Capacity

Question 21

-at 18 yrs a person is emancipated and has the legal capacity to enter into any contract

Answer 21

Contractual Capacity- Minors

Question 22

in regard to minors, the act of being freed from parental control

Answer 22

Emancipation

Question 23

contract can be disaffirmed (set aside) at any time during minority, or for reasonable period after minor is emancipated
- can be EXPRESSED or IMPLIED

Answer 23

Disaffirmance- Minor

Question 24

• majority rule; minor need only return the goods subject to the contract, provided the goods are in the minor’s possession or control

Answer 24

Minor’s Obligation on Disaffirmance

Majority Rule

Question 25

increasing number of states hold the minor must restore the adult to the position held before the contract was made

Answer 25

Minor’s Obligation on Disaffirmance

Minority Rule

Question 26

basic needs such as food, clothing, shelter and medical attention

Answer 26

Necessaries

Question 27

occurs when a minor, on or after reaching majority, indicates an intention to become bound by a contract made as a minor

Answer 27

Ratification

Question 28

parents generally not liable unless they co-sign with minor

Answer 28

Parents Liability

Question 29

lack of capacity AT THE TIME the contract is being made

contract is either voidable or valid depending on circumstances.

Answer 29

Intoxicated Persons

Question 30

Mentally Incompetent Persons

Answer 30

Contract is:

• VOID if person has been adjudged mentally incompetent and a guardian has been appointed.
• VOIDABLE- if person does not know he is entering into the contract or lacks mental capacity to comprehend the nature/consequences
• VALID- person is able to understand the nature and effective entering into a contract but lack capacity to engage in other activities

Question 31

contracts to do something prohibited by federal or state statutory law is illegal and therfore VOID

Answer 31

Contracts CONTRARY to statute

Question 32

charging illegal interest rate

Answer 32

Usery

Question 33

bars electronic payments, and allows civil forfeiture

Answer 33

Unlawful Internet Gambling Enforcement Act 2006

Question 34

VOID

-not enforceable bc of the negative impact they have on society

Answer 34

Contracts Contrary to Public Policy

Question 35

generally void.

Exception- covenant not to compete and sale of ongoing business

Answer 35

Contracts in Restraint of Trade

Question 36

release a party from liability in the event of monetary or physical injury- no matter who is at fault
-enforceable when they are not against public policy

Answer 36

Exculpatory Clauses

Question 37

contracts are oppressive or overly harsh; deny a remedy for non performance

Answer 37

Substantive Unconsciounablitily

Question 38

inconspicuous print or legalese

depends on a party lack of knowledge or expertise

Answer 38

Procedural Unconsciounability