Principles - Chapter 7 Contracts

Question 1

Contract

Answer 1

agreement, written or oral, to do or obstain from doing certain things

Question 2

Express Contract

Answer 2

declared intention, written or oral

Question 3

Implied Contract

Answer 3

declaration by acts or conduct rather than words

Question 4

Unilateral Contract

Answer 4

One sided - exchanges a promise for an act

need only be signed by party initiating the contract

Question 5

Bilateral Contract

Answer 5

promises exchanged by both parties

signed by both

Question 6

Legal effect of contract

Answer 6

void
voidable
valid
enforceable

Question 7

Void Contract

Answer 7

Courts consider it to have no effect - no contract at all

ex: contract that is against the law

Question 8

Voidable Contract

Answer 8

Still binding, but may be rejected by one or both parties

ex: contract induced by fraud

Question 9

Valid Contract

Answer 9

binding and enforceable contract

Question 10

Unenforceable Contract

Answer 10

is valid but is ont that cannot be proved or sued upon by the parties
ex: time expired contract

Question 11

Elements of a Contract (CMLS)

Answer 11

1. Capability (no minors, mental incompentence, convicts
2. Mutual consent (offer & absolute acceptance)
3. Lawful object (can’t be against the law)
4. sufficient consideration - price paid

Question 12

Discharge of contract

Answer 12

full performance
partial performance
impossibility of performance
agreement between the parties
release
operation of law
acceptance of a breach

Question 13

Assignments

Answer 13

a party may withdraw without breaching a contract by assignment or novation

Question 14

Novation

Answer 14

substitution b agreement of a new obligation for an existing one. requires consideration

Question 15

Recission

Answer 15

cancellation of contract by mutual consent of parties or by legal action

Question 16

Breach of Contract

Answer 16

when one party fails to perform

remedies included mutual acceptance, release, action to rescind, monetary, equitable action or action for restitution

Question 17

Statue of Frauds

Answer 17

certain contracts need to be in writing to be valid and enforceable
purpose: prevent perjury, forgery, dishonesty

Question 18

Statue of Limitations

Answer 18

maximum limits within which to bring legal action for a breach of contract
Civil- 90 days
Libel/Slander-1 year
Contract/Title:-2 years
Fraud/mistake-3 years
Contract in writing-4 years
Recovery of real property-5 years
Court judgement-10 years

Question 19

Laches

Answer 19

delay or negligence in asserting one’s legal rights (may lose the right even if w/i statue of limitations)

Question 20

Option

Answer 20

a contract to keep an offer open or a right given for consideration to purchase or lease property upon specified terms, time w/o obligating the party who receives the right to exercise the contract

Question 21

Lease Purchase Option

Answer 21

lessor grants lessee right to lease and then purchase at a future date. If agreed, all or part of payments may be applied to purchase price.