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Business Law > Exam 3 > Flashcards

Exam 3 Flashcards

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1
Q

Sources of Contract Law

A

Common law and Uniform Commercial Code (for sale and lease contracts)

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2
Q

Function of contract law

A

Provide stability and predictability for commerce

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3
Q

Contract

A

An agreement that can be enforced in court.

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4
Q

Objective theory of contracts

A

Use circumstances to determine parties’ intent

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5
Q

Four elements of a contract

A
  1. Agreement (offer and acceptance)
  2. Consideration (bargained for exchange)
  3. Contractual capacity
  4. Legality
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6
Q

Consideration

A

Any promises made by the parties to the contract must be supported by legally sufficient and bargained for consideration (something of value received or promised).

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7
Q

Defenses to enforceability of contract

A
  1. Lack of voluntary consent (fraud, undue influence, etc.)

2. Wrong form (not in legal format)

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8
Q

Bilateral contract

A

Offeree accepts offer by promising to perform (no performance needs to take place for contract to be formed)

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9
Q

Unilateral contract

A

Offeree accepts only by performance (once performance has been substantially undertaken, offer is irrevocable)

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10
Q

Formal contracts

A

Contracts in writing, special form required for enforceability

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11
Q

Express contract

A

Explicitly stated in words (oral or written)

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12
Q

Implied contract

A

Conduct of the parties, rather than words, creates and defines the terms of the contract

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13
Q

Reqs. for Implied Contracts

A
  1. Plaintiff furnished good or service
  2. Plaintiff expected payment, and defendant knew payment was expected
  3. Defendant had a chance to reject and didn’t
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14
Q

Executed contract

A

A contract that has been fully performed on both sides

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15
Q

Executory contract

A

Contract that has not been fully performed on both sides

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16
Q

Voidable contract

A

One or both parties can avoid or ratify contract

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17
Q

Unenforceable contract

A

Otherwise valid contract rendered unenforceable by legal defense or statute

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18
Q

Quasi contract

A

Not an actual contract. Equitable remedy created by courts where no agreement exists

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19
Q

Plain meaning rule

A

Courts will not permit external testimony/evidence if meaning of contract terms is clear and unambiguous.

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20
Q

Ambiguous contract

A
  1. The intent of parties cannot be determined from the contract’s language
  2. The contract lacks a provision on a disputed term
  3. A term is susceptible to more than one interpretation
  4. There is uncertainty about a provision
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21
Q

Agreement

A

Parties must agree on the terms of the contract and manifest to each other their mutual assent.

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22
Q

Requirements of offer

A
  1. Offeror’s serious intention
  2. Definiteness of terms
  3. Communication to offeree
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23
Q

Offeror’s serious intention

A

Judged by what reasonable person in offeree’s position would conclude about offer

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24
Q

Definiteness of terms

A

Required to determine breach of contract and give an appropriate remedy

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25
Q

Minimum reqs. of definiteness of terms

A
  1. Identification of parties
  2. Object or subject matter of contract
  3. Consideration to be paid
  4. Time of payment, delivery, or performance
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26
Q

Termination of offer

A

Offer can be terminated at any time before acceptance by either (1) action of the parties, or (2) operation of the law

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27
Q

Revocation

A

Offer withdrawn by offeror before acceptance by offeree. Effective when the offeree receives notice.

28
Q

Irrevocable offers

A

Offeree changed position due to justifiable reliance on offer

29
Q

Option contract

A

Promise to hold open offer for a specified period of time

30
Q

Rejection

A

Termination of contract by offeree. Subsequent acceptance attempts are new offers

31
Q

Counteroffer

A

Simultaneous rejection of original offer and making new offer

32
Q

Lapse of time

A

Termination by operation of law, offer terminates after period of time specified in offer or after a reasonable period of time.

33
Q

Destruction of subject matter

A

If destruction occurs before acceptance, offer is canceled`

34
Q

Acceptance

A

Voluntary act by offeree that shows agreement to terms of offer

35
Q

Mirror image rule

A

Acceptance must be unequivocal

36
Q

Mailbox rule

A

Acceptance is effective when dispatched, not received

37
Q

Two requirements of consideration

A
  1. Legally sufficient value

2. Bargained for exchange

38
Q

Legally sufficient value

A

Can consist of the following:

  1. Promise to do something you don’t have prior legal duty to do
  2. Performance of an action you are not otherwise obligated to undertake
  3. Forbearance from action you have legal right to undertake
39
Q

Adequacy of consideration

A

Court doesn’t usually consider adequacy, unless voluntary consent may be lacking

40
Q

Preexisting duty

A

Agreement that lacks consideration, promise to do what one already has legal duty to do

41
Q

Past consideration

A

Lacks consideration, promise made in return for actions that have already taken place

42
Q

Illusory promise

A

Lacks consideration, promisor has not definitely promised anything. No promise at all.

43
Q

Accord and satisfaction

A

Debtor offers to pay, and creditor accepts, a lesser amount than is owed. Not allowed for liquidated (set) amount.

44
Q

Release

A

One party forfeits right to pursue legal claim against other party.

45
Q

Promissory Estoppel

A

Party can enforce promise on which they have reasonably and substantially relied, even if it lacks consideration

46
Q

Contractual capacity

A

Legal ability to enter into a contractual relationship

47
Q

Disaffirmance

A

Allows minors to not be bound by a contract if minor disaffirms entire contract.

48
Q

Majority rule

A

Upon disaffirmance, minor must return goods if they are in his possession

49
Q

Minority rule

A

Minor must restore adult to position held before contract was made (e.g. pay for damages)

50
Q

Ratification

A

Minor, on or after becoming an adult, indicates intention to be bound by contract made as a minor.

51
Q

Intoxication

A

Contract is voidable if person is too intoxicated to comprehend consequences of contract

52
Q

Mental incompetence

A

Contract is void if adjudged mentally incompetent by court and guardian has been appointed

53
Q

Legality

A

Contract must be formed for a legal purpose

54
Q

Contracts in restraint

A

Contrary to public policy, void unless they are covenant not to compete and sale of ongoing business.

55
Q

Procedurally unconscionable contracts or clauses

A

Void due to inconspicuous print or legalese that the party did not understand/know terms

56
Q

Substantively unconscionable contracts or clauses

A

Oppressive or overly harsh, deprive party of benefit or deny remedy for nonperformance

57
Q

Exculpatory clauses

A

Release party from liability for monetary/physical injury, regardless of who is at fault

58
Q

Discriminatory clauses

A

Promise to discriminate on basis of race, origin, etc.

59
Q

Unilateral mistake of fact

A

One party is mistaken, generally enforceable unless the other party knows mistake of fact was made of due to math error.

60
Q

Bilateral (mutual) mistake of fact

A

Both parties mistaken. Generally unenforceable, either party can rescind.

61
Q

Mistake of value

A

One or both parties mistake value of good, generally enforceable.

62
Q

Fraudulent misrepresentation

A

Contract is voidable by innocent party

63
Q

Reasonable reliance

A

Deceived party must have justifiably relied on misrepresentation and not known the truth

64
Q

Undue influence

A

Free will is overcome, voidable for lack of voluntary consent

65
Q

Duress

A

Forced under fear or threat, voidable for lack of voluntary consent

Business Law (3 decks)

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