REG: Business Law - Contracts1b

Question 1

What does the Statute of Frauds require?

Answer 1

That certain contracts must be in writing.

Question 2

List the 6 types of contracts that must be in writing according to the Statute of Frauds

Answer 2

1) Sale of goods $500 or more
2) Real Estate
3) Contracts over 1 year
4) Answering debt of another
5) Executor’s promise to be liable to the debt of an estate
6) Marriage

Question 3

Parties to contracts must be competent. List 3 incompetencies.

Answer 3

1) Minor
2) Drunk
3) Insane

Question 4

A minor can disaffirm a contract when?

Answer 4

Anytime while a minor and within a reasonable time after reaching adulthood.

Question 5

Elements necessary to prove fraud in a contractual basis?

Answer 5

1) Misrepresentation of material fact
2) Intent to deceive (scienter)
3) Reasonable reliance by injured party
4) Results in injury or damages

Question 6

Define fraud in the inducement.

What kind of contract does it create?

Answer 6

Misrepresentation occurs during contract negotiations.

Creates a voidable contract (at option of defrauded party)

Question 7

Define fraud in the execution.

What kind of contract does it create?

Answer 7

Misrepresentation occurs during in the actual form of the agreement (ex written contract)
Creates a void contract.

Question 8

List 2 ways (other than fraud) to void a contract.

Answer 8

1) Undue influence

2) Duress

Question 9

What is the Parole Evidence Rule?

Answer 9

Oral or written evidence developed prior to or during writing of contract that contradicts what the contract says, is inadmissible in court.
Usually they are things that failed to show up in the contract because their importance is limited.

Question 10

List some contracts that cannot be assigned or delegated:

Answer 10

1) Insurance contracts
2) Personal service contract requiring special skill (ex specific singer)
3) If the reassigned contract materially increases risk or duty of other party
4) If it’s actually prohibited by the contract

Question 11

What is a third party beneficiary?

Answer 11

Someone not part of the contract, but benefit from it.

Question 12

List 3 third party beneficiary and specify whether or not they had privity.

Answer 12

1) Creditor - privity
2) Donee (beneficiary of a life insurance policy) - privity
3) Incidental - no privity

Question 13

List 4 contract remedies

Answer 13

1) Compensatory (actual) Damages - equals amount caused by breach - most common
2) Specific Performance - equals the performance promised (when money damages are not enough) - rare
3) Liquidated Damages - damages whose amount the parties designate during the formation of a contract for the injured party to collect as compensation upon a specific breach (e.g., late performance).
4) Punitive Damages - Purpose is to punish, can ask for fraud.