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Business Law > Test 2: Contracts > Flashcards

Test 2: Contracts Flashcards

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1
Q

Purpose of Common Law Contract

A

Provides mechanism to deal with others.

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2
Q

Freedom of Contract`

A

Concept that there are responsibilities to those who create binding relationships.

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3
Q

Contract

A

A promise or a set of promises for the breach of which the law gives a remedy or the performance of which the law recognizes as duty.

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4
Q

Common Law of Contracts

A

A judge-made law,

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5
Q

Express Contract

A

Direct oral or written statements by the parties of the promise made. All important terms are expressly stated between the parties.

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6
Q

Implied Contracts

A

Contracts which actions and circumstances defines the terms of the contract.

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7
Q

Elements of a Valid Contract

A

1) Agreement
2) Consideration
3) Capacity
4) Legality
5) Consent
6) Writting

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8
Q

Agreement (Element of a Valid Contract)

A

1) Offer

2) Acceptance

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9
Q

Offer (Agreement)

A

1) Must show manifestation of intent
2) Provides definite terms
3) It is communicated

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10
Q

Acceptance (Agreement)

A

Expression of agreement.

1) Unconditional (mirror image)
2) Unequivocal (clear)
3) Legal
4) Communicated

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11
Q

Termination of an Offer

A

1) Revocation
2) Rejection
3) Counteroffer
4) Operation Law (illegality, destruction of subject, insanity)

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12
Q

Consideration (Element of Valid Contract)

A

Something of value or something bargained in exchange of a promise. Differs contract from a gift.

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13
Q

Traditional Rule

A

Creation of detriment to the promisse and legal benefit to the promissor. Hammer vs. Sidway.

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14
Q

Adequacy of Consideration

A

Court does not care if one poorly bargained.

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15
Q

Promissory Estoppel

A

Doctrine that prevents promissor from denying promise.

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16
Q

Equitable Doctrine

A

Doctrine that states that promisor should reasonably expect to induce an action on the part of the promisee. Ex: initiating construction based on promised donation.

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17
Q

Capacity (Element of Valid Contract)

A

Ability to create a contract. If there is no capacity, the contract is void. If there is partial capacity, the contract is voidable.

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18
Q

Void Contract (Capacity)

A

Contract that does not exist at law.

1) An element of the contract is missing
2) One party is incapacitated (insane)
3) Subject matter is illegal

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19
Q

Voidable Contract (Capacity)

A

Contract that one party has the right to void legal obligation.

1) Minor
2) Intoxicated persons
3) Existance of fraud

20
Q

Insane Person (Void Contract)

A

Person that was legally/ judge adjudicated insane who is under guardianship.

21
Q

Minor (Voidable Contract)

A

Person who is under the legal majority of 18 years old (for most states and most contracts)

22
Q

General Rule of Voidable Contract by a Minor

A

Minor may disaffirm the contract until becoming an adult as an option. If disaffirmed after receiving benefit, minor is reliable for back payment.

23
Q

Exception of Voidability to Minors

A

1) Enlistment Contract
2) Marriage Contract
3) Student Loan
4) Insurance Contract
5) Medical Care Contract

24
Q

Gratification (of a Minor)

A

Decision of a minor to not disaffirm the contract before turning 18 years old therefore gratifying the contract.

25
Q

Legality (Element of a Valid Contract)

A

Subject matter of the contract must be legal.

26
Q

Unenforceable Contracts

A

1) Unconscionable Contract
2) Exculpatory Contract
3) Contract in Restrain of Trade

27
Q

Unconscionable Contract

A

Contract of unequal bargaining power. Ex. selling an item that cost $500 for $5,000 to an elderly person.

28
Q

Exculpatory Contract

A

Contract that releases the liability beyond what is reasonable. Ex: signing a waiver to ride a mechanic bull that has not been properly maintained.

29
Q

Contract in Restrain of Trade

A

Contracts that unreasobly restrain ability to compete. Ex: employment contract that restrict employee from working to a competitor for more than 12 months, without territory and scope.

30
Q

Consent (Element of Valid Contract)

A

Choice of entering in a contract.

31
Q

Writting

A

Required for specific contracts:

1) Sale of Land
2) Service that will not be performed within one year
3) Promise to pay debt of another
4) Sales over $500
5) Leases over $1,000

32
Q

Sufficiency of Writting

A

1) Name of parties
2) Consideration
3) Subject matter

33
Q

Oral Evidence (use)

A

Can be used in the absence of written evidence.

34
Q

Discharge of Contract

A

1) Assigment/ Delegation
2) Third Party Beneficiary
3) Discharge by Breach
4) Dischange by Impossibility

35
Q

Assigment (Discharge of Contract)

A

Transferring rights to another.Ex: Sigway case.

36
Q

Delegation (Discharge of Contract)

A

Transferring the obligation to another.Ex: sublease.

37
Q

Third Party Beneficiary (Discharge of Contract)

A

Party not in the original contract.

38
Q

Discharge by Breach (Discharge of Contract)

A

Non breaching party is discharged.

39
Q

Material Breach (Discharge by Breach)

A

Performance is substantially less than provided in the contract.

40
Q

Anticipatory Breach (Discharge by Breach)

A

Party indicated the inability to perform.

41
Q

Discharge by Impossibility (Discharge of Contract)

A

Unforseeable, unanticipated event that makes performance impossible by creating unreasonable difficulty, expense, or loss.

42
Q

Remedies for Breach of Contract

A

1) Liquidated Damages
2) Specific Performance
3) Mitigation of Damages

43
Q

Liquidated Damages (Remedy for Breach of Contract)

A

Stated remedy when monetary damages are difficult to compute because of cost opportunity.

44
Q

Specific Performance (Remedy for Breach of Contract)

A

Court order to perform a specific act.

45
Q

Mitigation Damages (Remedy for Breach of Contract(

A

Injured party is required to make effort to lessen loss. Ex: moving a tv from under a leaking ceiling.

46
Q

Privity Contract

A

Doctrine that states that only the parties involved in a contract can sue each other in regard a product. A buyer coiuld not sue a manufacturer if have not bought directly from manufacturer. No longer valid.

Business Law (3 decks)

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