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Legal Environment of Business > Exam 4 Prep > Flashcards

Exam 4 Prep Flashcards

1
Q

Thor, laughing, told Loki that he’d sell him his hammer in consideration of $1. Thor was just joking as the
hammer was worth billions. Loki, also laughing, said “I accept.” This is

A

not a valid contract as there is no meeting of the minds or mutual assent.

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2
Q

Joker held a knife to Batman’s throat and told him “I’ll kill you on the spot unless you sign this contract!”
The contract called for Batman to turn over his Batmobile to Joker in consideration of $5. The Batmobile is
worth $10 million. Under these circumstances this is not a valid contract because

A

it is void due to duress.

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3
Q

Deadpool saved Black Panther from a trap that had been set to kill him by Erik Killmonger. In gratitude,
Black Panther told Deadpool: “Next time you come to Wakanda, look me up and I’ll give you a billion
dollars.” Deadpool happily said “I accept your contract, I could use the money.” If Deadpool stops Black
Panther the next time he passes through Wakanda, what duty does Black Panther owe him?

A

He owes no duty to pay him anything due to the rule of past consideration.

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4
Q

Avery advertised in the George-Anne classifieds: “Lost ferret, has collar, last seen near Seasons Apartments.
$250 reward.” This is a _____________ contract and it is _____________ once performance has begun.

A

unilateral, irrevocable

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5
Q

Teoni was offered a contract to work for Process Products. When she objected to a clause in the contract
which said that all parties waived the right to sue and agreed to submit their claims to binding arbitration,
the person interviewing her told her that Progressive would not alter the contract in any way. This contract
is a ___________ and if there is an ambiguity in the contract, it will be interpreted in favor of ___________.

A

contract of adhesion, Teoni

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6
Q

Gonzalez entered into a contract to lease an apartment for $500 a month. Under these circumstances, the
contract must be in writing because it

A

involves an interest in land.

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7
Q

McEnroe was hired by Tennis Star Camps, Incorporated (TSCI), to conduct a two-day tennis camp in
consideration of $50,000. He decided to take some time off after a busy schedule, so he determined that he
no longer wanted to do the camp. He arranged to have his friend Federer fill in for him to teach the camp.
Federer was a very famous tennis star and every bit as prominent as McEnroe. He was also one of the
premier experts at teaching tennis camps in the world. Under these circumstances

A

the duty cannot be delegated without permission of TSCI because this is a personal services contract.

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8
Q

Isabella purchased a car for her son Darnell’s 18 th birthday. She wanted it delivered to their house on his
birthday with a large bow on top. Under these circumstances, Darnell is an _____________ beneficiary and
he has ____________ to enforce the terms of the contract.

A

intended, the right

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9
Q

Jimmy Bob had entered into a contract with Johnna to repair her car in consideration of $1,500. Jimmy
Bob then got an offer to join the NASCAR pit crew of Chase Elliott. Jimmy Bob called his best friend and
fellow mechanic Carl and asked him if he could fix Johnna’s car instead. Carl agreed and Johnna agreed.
Carl would completely step into Jimmy Bob’s shoes, so to speak, and assume full rights and duties under
the contract. This is known as

A

novation agreement

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10
Q

Romero raced motorcycles for a living. He was sponsored by Yamaha on a one-year contract. While
practicing for the big race at Daytona, he wrecked his motorcycle and broke his leg and was unable to race
under his contract. Yamaha sued him for breach of contract. Under these circumstances this is

A

subjective responsibility and romeo is not liable to yamaha

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11
Q

Elements of Contracts

A

offer
acceptance
consideration
capacity
legality and public policy

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12
Q

Offer and Acceptance

A

for a contract to be valid, There must be a genuine offer and acceptance judged by a reasonable person’s standard

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13
Q

Offer and acceptance example

A

A person offers to sell a client a car for 5 grand; they accept and buy for that price.

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14
Q

Mirror image rule for offer and acceptance.

A

no material variation between the two. They must be identical or have no major difference that matters.

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15
Q

If a person buys the car for 4,999.99 instead of 5,000, what happens.

A

There is no mirror image. That is a counter offer. The seller has the choice whether to accept it or not.

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16
Q

If the buyer agrees to buy the car for 5k as long as it gets delivered, this is

A

Not the perfect mirror image as this would be another term thats added. May be a difference that matters.

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17
Q

Both parties must genuinely ______ to offer and acceptance

A

agree

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18
Q

Joking (even internally), jesting, anger and rash statements would not be considered as an

A

offer

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19
Q

If you breach a contract, you can get sued. This is called

A

Remedy; however, this is not always the case

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20
Q

You can revoke an offer ___ before you accept.

A

anytime

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21
Q

You cannot back out an offer if you

A

have purchased an option contract of value

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22
Q

To formally accept an offer, you must

A

sign it

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23
Q

Detrimental Reliance

A

The court pretends as if there was an actual contract, and say they rely on it reasonably, they can sue

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24
Q

The offeree can reject the offer, and

A

the offer no longer exists. But the offerer doesn’t have to renew it after rejected.

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25
Consideration
Any contract must have a something for something exchange; Something for nothing doesn't count since its a gift
26
Quid Pro Flow
latin term for Something for something; view it broadly
27
Examples of something for something
Doing a service for money, selling a car for money, etc.
28
In a something for something consideration, it does not have to be equal to count, for example
Ill give you my car if you smile at me
29
Past consideration does not count in a case because ____ therefore, you do not have to honor your offer.
it is an action someone did in the past before an offer was made. The person was merely offering a gift
30
If you offer to save someone for money, it is a valid contract because
It is not a past consideration.
31
If a fire fighter offers to put out a fire in consideration of the victim passing over there car, this is not consideration because
They had an preexisting obligation to put out the fire.
32
Capacity
all parties in contract must have capacity to enter it
33
Capacity example
People who are infant in the law(under 18), they dont fully have the capacity to enter in the contract
34
Voidable Contract
Ineligible people (infants) can have the power to make a non enforceable contract any time they want. As long its before 18
35
You as an infant want a brand for your breakfast cereal etc, this is a
Its a voidable contract unless you get your parents to sign or cosign. Cant be sued if contract is breached
36
If a person is too intoxicated to understand the contract,
the contract is voidable
37
If someone offers to buy a car for $50 by physical force, its a contract obtained under
Duress
38
Since you are certified insane, You scribble your name as your signature on a document. Since this is inconsideration of paperwork, this contract is
void
39
A contract to do something illegal is the the _________ as a contract to with someone insane. it is void
same
40
Public Policy
Courts have the power to void contract if it violates public policy
41
If a mother offers to giver her daughter a millions dollars to divorce her husband, but doesn't divorce him and keep the money, the mother
would not win the case because the contract is against public policy and is void
42
Bilateral Contracts
Two parties exchanging promises; each have certain rights and duties under contract
43
Bilateral Contracts example:
I offer to sell you a car for 5k: Right: receive 5k duty: turn over the car
44
Unilateral Contract
One sided contract; one side making the offer. Offer is accepted by action instead of promise
45
Unilateral Contract example
Newspaper of Lost dog, reward 5K; You accept that contract by showing up with the dog
46
A teacher promises to give each of the class 10 dollars for running around the building. This is a _____ contract because the action is done
unilateral
47
A unilateral contract would turn into a bilateral contract if
there is negotiation. ex: counter offering
48
The offeror _______ retract the offer once the performance has begun
may not
49
Quantum Meruit
When there is an unjust, unfair enrichment. Cant be invoked by courts or requested by parties ; getting something for nothing
50
The court can allow one party to sue the other side for damages because of _________ even if there is no contract
quantum meruit
51
A couple associates paint your house even though you didnt request it. Under the doctrine of Quantum Meruit, the court could say
You have been unjustly enriched since you allowed them to continue doing it. There was no contract
52
Even though you get your cost back when the other side gets unjustly enriched, you do not get
you costs + profits
53
Issues related to quantum meruit
issues of expressed vs implied Contracts.
54
Implied contract
people act in a certain way that indicates they have interest in a contract
55
expressed contract
the parties have expressed states that its a contract. Orally or written
56
You ask a guy who works at an auto paintshop the cost it takes to paint your truck, you drop your car off the next day, and then the guy states 5k. You claim you never formally agreed or signed with that price prior. However, you felt bad and pay the worker only 25 dollars. What happens?
The worker gets the cost and profits (5k) since this was an implied contract. You did actions that indicated that it was implied.
57
If there is a bilateral mistake of fact, what happens?
either party can cancel the contract if they wish
58
A person sells a ring to you, for 10 dollars. The clerk thought it was Quartz, until he was told that the ring us actually with 5k as its a diamond in reality. He changed his mind and raised the price from 10 dollars to 5k dollars. Can You sue him?
Yes. because This was a unilateral mistake of fact. The contract cannot be canceled or altered.
59
AN exception to unilateral mistake of fact
If the other side knew you were mistaken, and if you can prove that, that person can cancel the contract
60
Mistake of value
You cant invalid the contract regardless; you are stuck
61
Unilateral mistake of value example
An old lady thinks that a car she owns is not worth very much, and sells it to a man. She cannot void or back out the contract.
62
Contract of Adhesion
unequal bargaining power between parties ; offered as a take it or leave it basis.
63
In a take it or leave it situation, If there is any term that is ambiguous and there is an argument,
the term would be contributed by court to your favor rather than the other party; you had no opportunity to negotiate the terms
64
Statute of fraud
usually a contract that is oral is valid
65
A statute of fraud can be proven with evidence in the court as long
as it is persusadable enough. written or oral
66
These things must be written in a statute fraud case, not claimed orally
interest in land, lease agreement, sale of property
67
Surety agreement
agreement to pay off the debt of another ; cosigner that has to be in writing
68
Signature requirement applies to sale of goods that are _____ or more
$500
69
A yearly contract that exceeds its time cannot violate the statutes of frauds only if
by their terms must the contract be longer than a year.
70
intended beneficiary
someone who is intended to be benefited into the contract
71
Intended beneficiary examples
A dad gifts his daughter a car for her 18th birthday. On the contract, she has the right to exchange the car for the first 15 days to better fit her tastes
72
incidental beneficiary
Someone who wasnt intended to benefit from the contract
73
Incidental beneficiary example
The girl's boyfriend is riding and driving around her car since she lets him do it. even though the father bought the car for the daughter only
74
Assignments of Rights/ Delegation Of duties
Passing along the duties and rights of a contract to someone else
75
Example of personal services contract
You hire me to cut your hair Kobe bryant is hired to conduct a 3 day basketbal camp for 10k for the disadvantaged youth
76
Contracts can be written to _____ the delegation of duty
prohibit
77
Complete/ perfect performance
Perfectly Done everything that needed to be done and nothing else to do after
78
Pure breach performance
Liable in court since you failed to do the required tasks.
79
Substantial performance elements
Good faith no material variance Delivers substantially the same benefits
80
Good faith
Performance that is subject to an honest mistake
81
Breach performance example
you hire someone to paint your truck but uses a paint of their own instead of the paint you wanted. You would not have to pay the worker
82
In substantial performance, what liberties do you have?
You, the party that has substantially performed have contract rights to sue the contracted amount
83
Reasonable to complete
The damages is the cost of completion
84
Unreasonable to complete
The K value if it were to be completed gets deducted from K value as if it was substantially completed. This would total into the damages
85
Bankruptcy example
You get issued a credit card from a bank and they file for bankruptcy. The contract is terminated once the court approves the bankruptcy claim
86
Settlement agreement example
Youre suing someone and you agree to settle a lawsuit, the contract is done.
87
Novation
substitution of parties under a contract ; You give the lease you pay to friend to pay on your behalf since he has better credit than you.
88
Difference with sublease
If someone does not assume full duties of payment, You are still on the hook and bear the risk of penalties if you don't pay. ; Not a novation
89
Accord and satisfaction
agreement to substitute performances
90
I agree to buy your car for 4k, I fall into hard financial times and can no longer afford it . Instead, I offer to give you my motorbike for your car instead. This is because of
accord and satisfaction
91
If someone refuses satisfies the accord,
You have the right to revert back to the original contract. If not, they can sue under a legal remedy
92
If it is impossible to objectively satisfy the performance,
they can get out of the contract
93
Subjective Impossibility example
A pilot crashes a plane, and survives the crash, and backs out the contract with the operation. The company can sue him since other pilots can fly it?
94
Objective Impossibility example
Marshall was imposed and the USA bans planes with the exception of military planes. No one would be able to fly for that company since they are not military
95
Exceptions to subjective impossibility
Death; impossible to be held accountable Disability; can get you out even though its subjective UCC commercial impracticality
96
The equitable contract remedies
Specific Performance Rescission Reformation
97
Specific Performance
Order someone to do something ex: the court orders the other side to turn over the car
98
Recission
If a contract is unfair, you can be let out of it by court
99
Mutual recission
Both parties going there separate ways
100
Reformation
A court remedy where they reform/ change the contract ; only done when there is an obvious error that allows one side to take advantage of it.
101
The legal contract remedies
Compensatory Consequential- duty to mitigate Punitive
102
Compensatory
Puts you back in the position you would've been but for the breach of the other party
103
Compensatory examples
You pay me 5k for a motorbike, but for your breach, I wouldve recieved the 5k in damages, etc
104
Sales of Goods Examples
Buyer’s damages = difference between FMV and K price Seller’s damages = profits
105
Consequential damages are ones that could have been
forseen
106
duty to mitigate
You have a duty to make your damages as little as they can be
107
Punitive damages
damages granted when someone does something truly outrages; crook, criminal
108
Examples of tangible goods covered under the UCC Article 2
Cars, planes, puppies, real estate(although this in particular isnt movable)
109
The 2nd article of the UCC covers not only merchant transactions but generally
all sales of goods
110
Merchant firm offer
Normal rules of offer and acceptance are loosened under UCC; no consideration given to bind the merchant to hold the offer for periods of time
111
Gifts dont count until
they are delivered
112
Option contract unsupported by consideration
if it was common law to common law or private party to private party situation; making the firm offer invalid.
113
The UCC alters certain rules which includes ______ and ______
offer and acceptance
114
Battle of the forms
counter offers are also relaxed under the UCC.
115
If 2 parties have different proposals in regards to payment, etc what happens under the UCC?
The court handles the disputes, and the contract is still valid
116
Risk of loss under UCC
the risk loss transfers between fire and seller; whoever is liable would vary
117
Free on Board/ Freight on board destination
the seller is insuring the product from the starting point to destination; they assume the risk
118
FOB shipping point
seller will only bear the risk when it is still on the seller location; then the risk is beared by the buyer at the point the seller passes it on to the shipping company
119
Implied warranties only count for
Mechants who are involved in the sale of a certain type of thing
120
Express warranties
covers most products such as cars, laptops; you can purchase the warranty for a replacement or maintenance guarantee, etc
121
implied warranty example
you buy an air conditioner and it generally functions as intended.; if not, money back guarantee?

Legal Environment of Business (2 decks)

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