Exam 3 Busi Law 2700

Question 1

Contract Definition

Answer 1

agreement between 2 or more parties who agree to perform (or refrain from performing) some act now or in the future which can be enforced in court

Question 2

Elements of Contract

Answer 2

Agreement
* Offer & acceptance

Consideration (Value)
* Legally sufficient and band bargained-for

Contractual Capacity
* Must possess characteristics that qualify as a competent
person

Legality
* Purpose must be to accomplish some goal that is legal and
not against public policy

Question 3

Offerror vs Offerree

Answer 3

Offerror - Party making offer
Offerree - Part to whom offer is made

Question 4

Bilateral Contract

Answer 4

offeree can accept simply by
promising to perform (“promise for a promise”

Question 5

Unilateral Contract

Answer 5

offeree can accept the offer only by
completing the contract performance (“promise for an act”)

Question 6

Revocation

Answer 6

offers are normally revocable (able to be taken back/canceled) until accepted; but…
* Issues can arise in unilateral contracts when revocation occurs after
substantial undertaking – then you can’t revoke the offer

Question 7

Express Contracts

Answer 7

terms of agreement are fully and explicitly stated in words, oral or written

Question 8

Implied Contracts

Answer 8

implied from conduct of the parties
* Requires:
* Plaintiff furnished some service or property
* Plaintiff expected to be paid for that service or property and Defendant knew or should have known that payment was expected
* Defendant had a chance to reject the services or property but did no

Question 9

Formal Contracts

Answer 9

Require a special form or method
of creation to be enforceable

Question 10

Informal Contracts

Answer 10

(“simple contracts”) – all other
contracts – no special form is required (exception – certain types that have to be in writing)

Question 11

Contact Performance (Executed vs Executory)

Answer 11

Executed - A contract that has been fully performed on both sides
Executory - A contract that has not been fully performed on either side

Question 12

Contract Enforceability

Answer 12

Valid: agreement, consideration, contractual capacity, and legality

• Void: no contract.
• Voidable: valid, but can be avoided at option of one or both of the parties
• Unenforceable: cannot be enforced because of certain legal defenses against it

Question 13

Quasi Contracts implied in Law

Answer 13

No actual contract exists
Equitable remedy created by courts and imposed on parties in the interest of fairness and justice to avoid unjust enrichment
* Individuals should not be allowed to profit or enrich themselves inequitably at the expense of others
* Cannot be used when there is an actual contract that covers the matter in controversy

Question 14

Plain Meaning Rule

Answer 14

the words and their plain, ordinary meaning determine intent of the parties and court is bound to give effect to contract according to this intent

Question 15

Ambiguity

Answer 15

exists when:
* the intent of the parties cannot be determined from contract’s language
* The contract lacks a provision on a disputed term
* When a term is susceptible to more than one interpretation
* When there is uncertainty about a provision
Business Law/ACCT 2700 Harbert College of Business 15

Question 16

Written, typewritten give ___ weight compared to preprinted

Answer 16

Greater

Question 17

Requirements of an agreement offer

Answer 17

Offeror must have serious intention to become bound by offer
*Terms must be reasonably certain or definite
*Offer must be communicated to offerree

Question 18

Where Intent may be lacking

Answer 18

Expressions of Opinion: not offers
* “I think that house is worth $500K”
* Statements made in jest, frustration, or anger
* “Auburn football sucks this season, I am going to sell my tickets
for $1.00 a piece”

Statements of Future Intent: not offers.
* “I plan to sell my Apple stock”

Preliminary Negotiations, or Invitations to Negotiate: not offers
* “Would you sell your farm?”

Question 19

Revocation

Answer 19

Offer can be withdrawn anytime before Offeree accepts the
offer (unless irrevocable – ex: option contract, seen a lot in real
estate, option to purchase rental property at end of lease
period or certain amount of time)
* Express repudiation: “I withdraw my previous offer of October
17, 2023”
* Performance of acts that are inconsistent with existence of
offer and made known to the offeree
* Selling the offered property to another person in the offeree’s
presence

Question 20

Termination of Action by Parties:

Answer 20

Rejection (by offerree)
Counteroffer
Mirror Image Rule: At common law, any change in terms automatically terminates the offer and substitutes the counteroffer.

Question 21

Termination by Action of Law

Answer 21

• Lapse of Time
• Destruction of Subject Matter
• Death/Incompetence of Offerree/Offerer
• Supervening Illegality of the Proposed Contract

Question 22

Acceptance Definition

Answer 22

Voluntary act (expressed or implied), by the Offerree that shows assent (agreement), to the terms of an offer

Question 23

Unequivocal Acceptance

Answer 23

The “Mirror Image” Rule
* Cannot impose new conditions or change the terms of the original offer (remember, that would be a counteroffer)

Question 24

Silence as Acceptance

Answer 24

General Rule: offerree should not be legally obligated to affirmatively reject an offer when no consideration has
passed to impose such a duty

Question 25

Mode and Timeliness Acceptance

Answer 25

General Rule: acceptance is timely if made before offer is terminated.
* Mailbox Rule: acceptance is effective when offeree places the acceptance in the mailbox/sends the communication via the mode expressly or impliedly authorized by offeror
* This is the majority rule that is followed
* Does not apply to instantaneous forms of communication (face to face,
phone, email, fax)
* Exception – email – under Uniform Electronic Transactions Act, email is considered
sent when he leaves control of sender or received by recipient. This takes the place of the Mailbox Rule when the parties have agreed to conduct transactions electronically and allows email acceptance to become effective when sent

Question 26

Substitute Method Of Acceptance

Answer 26

If the offer calls for a specific way of acceptance that should be the only way you accept. Use an alternative way at your own risk.

Question 27

E-Contracts must meet ______ as paper contracts

Answer 27

The same requirements

Question 28

E-Contracts

Answer 28

Click-On Agreements: “I Accept” or “I Agree”
* Generally, law doesn’t require parties read all of the terms for it to be
effective
* Shrink-Wrap Agreements
* Terms expressed inside the box in which goods are packaged (you agree
by keeping whatever is in box)
* Ex: buying the box of Microsoft office from Best Buy
* Agreement between manufacturer and ultimate buyer/user
* BUT…example of smartwatch purchased at AT&T store – battery life not as
advertised. Phone defends saying there is a tiny booklet that includes a
standard limited warranty and on page 97 it says any dispute resolved
through binding arbitration – NOT sufficient – tucked away in a brochure,
does not give reasonable notice of clause

Question 29

Browse Wrap Terms

Answer 29

Like click on agreements, but do not
require buyer or user to assent to the terms before downloading or using