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15 Cards in this Set
- Front
- Back
- 3rd side (hint)
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William, a 17 year old, bought $2,000 of clothes on credit and failed to make a single payment. Can he disaffirm the contract, return the clothing, and escape all liability?
___ Yes ___ No |
Yes.... Minor
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Since William is under 18, the entire contract can be disaffirmed and he can escape all liability if he returns the merchandise.
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Dryest Dry Cleaners, has the following disclaimer printed on the back of the receipt:
“We are not to be held liable for the damage, loss, or destruction of your garments due to our negligence.” Samuel’s dress shirt is lost during the dry cleaning process and he would like to make a claim. This is an example of a(n) ___________ clause and will not be upheld in court (it violates public policy). |
Exculpatory
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The clause is printed on the back of receipts, which he received after the transaction. Therefore Samuel could not agree to the agreement prior to the transaction.
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Nicholas needs $300. Oscar agrees to lend him the $300 if he pays him back $475 one month from today. Nicholas agrees, fails to pay, and Oscar sues him. Oscar will be unable to recover the full amount because the court will view the contract as _________.
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Usurious
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Usury, is an unlawful rate of interest, can void an otherwise legal agreement. Usury violates a statute (unenforceable contract).
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There are primary two reasons for ________.
Statutes – violates a law Public policy – Violates the prevailing public morality |
Illegal Contracts
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For a contract to be legal it must have:
1 – Capacity of parties 2 – Mutual assent 3 – Consideration 4 – Subject matter must be legal |
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Warren Gates, promised the Omaha Homeless shelter a gift of one million dollars on the first of next month. The Omaha homeless shelter took out a loan and purchased a building. On the first of next month, Warren Gates and the shelter them he changed his mind. The shelter has a valid contract due to ________.
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Promissory Estoppel
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Promissory estoppel, also known as detrimental reliance, is a substitute for valid consideration. A promise can be enforced without consideration if:
1 Promisor reasonably could expect his promise to induce action 2 Promise actually induces action 3 Contract must be enforced to avoid injustice |
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Jordan agrees to pay Shannon $25 per week to mow his yard for the next 16 weeks. Shannon agrees and mows the yard each Friday. Since both Shannon and Jordan agreed on the specific details, they have entered a(n) verbal ________.
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Express Contract
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Oral contracts are legally enforceable and binding contracts.
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Wayne offers to paint Kent’s house for $1,500 on January 1st. On January 2nd, Kent sends Wayne a letter accepting Wayne’s offer. The same day January 2nd, Wayne, who still has not received Kent’s acceptance letter, changes his mind about the price and mails Kent a letter revoking the offer. By January 5th both the revocation and the acceptance letters reach the respective party. Do they have a binding agreement?
___ No ___ Yes |
Yes... MailBox Rule
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The “mailbox rule" applies ONLY to acceptance letters. This also applies to emails, faxes, and other forms of communication. If an offer and acceptance has occurred, mutual assent has occurred.
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Bryan, 17 years old and 10 months, rents an apartment. Bryan rent the apartment for 8 months. He decides the rent is too high, decides he will void the contract on the basis of being a minor when he entered the contract. Will the court let him void the contract?
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No, Brian needed to disaffirm the agreement within 30 days of turning 18.
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If Bryan had wanted to disaffirm the contract, he should have done so “within a reasonable time” after reaching the age of majority (18).
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Bethany enters a binding contract with Floyd to have a full meal catered for her 1,500 guests. Floyd’s business, can only service 1,000 guests. Floyd contracts another catering business to handle the additional 500 guests. Did Floyd break his contract?
___ No ___ Yes |
No... Delegated Responsibility.
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Floyd delegated tasks and did not break the contract. Unless there is a contractual provision prohibiting delegation.
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Jim Tacklehard, verbally agrees to play “for life” with the Indianapolis Colts at a rate of $1,000,000 per year. A year later he no longer wants to play for a measly $1,000,000 per year. He feels that since the contract was “for life” and it has been over one year it is not a valid contract under the Statute of Frauds. The Indianapolis Colts argue that it is a valid contract and Joe is breaching the contract. Is the contract valid?
___ No ___ Yes |
After one year... No
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Since Joe could have died within the first year, the contract is considered “performable” within a year. Contracts “for life” do not necessarily extend beyond one year.
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Bryan hired WDW to dig a well and entered a contractual agreement specifying all of the details. However, when WDW began drilling the well, they found a layer of rock that was impossible to penetrate. WDW and Bryan agree to void the contractual agreement by ________.
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Mutual Rescission
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Mutual rescission – requires both parties to agree and both parties to have remaining performance obligation
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Calipari’s restaurant has a contract with Always Fresh Produce to have fresh produce delivered each Monday. One Monday, the produce delivered is in sad shape and not up to the Calipari standard. The driver tells the restaurant they still have to purchase the produce that does not meet their standards. Is this correct?
___ No ___ Yes |
No - Quality is Contractual
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Calipari’s Italian restaurant can send back the entire shipment. Upon delivery of non-conforming goods the buyer can:
1 – Reject the entire shipment 2 – Accept the entire shipment 3 – Accept the portion of the shipment that conforms and reject the remainder. |
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Al sells Susan his vehicle for $2750. He and Susan orally agree that Al will deliver the vehicle to Susan 6 months from today’s date. Al later gets a better offer from Jim and sells the vehicle to Jim. Al says he and Susan did not have a valid contract. Susan thinks the Statute of Frauds does not apply because the oral contract will be executed within the one-year limitation. Do they have a valid contract? ________.
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No - Oral Contracts for more than $500 are unenforceable.
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This is a tricky question involving overlapping categories. Although the Statute of Frauds does not require a written contract for contracts performable within a year’s time, it does clearly require contracts for the sale of goods above $500. Since the car is worth well over $500 and they did not have a written agreement.
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Ivanka agrees to sell Donald her penthouse for $550,000. One week later, prior to the sale, the apartment burns down. Donald tells Ivanka to rebuild the penthouse and be ready to close by the original closing date or he will sue her for breach of contract. Ivanka tells Donald she will look forward to winning in court. Ivanka is right – A judge would discharge the contract as ________.
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Impossible to Perform
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If performance of a contract is impossible, the judge will discharge the contract (operation of law).
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Tim agrees to sell James a Papa Picasso sculpture of a pear FOR $3,000,000. Both parties believed the Pear to be a genuine Picasso. When James has a panel of experts appraise the piece of art, he finds out that the pear was actually sculpted by one of Papa’s students. This is an example of ________ and the contract is voidable.
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Bilateral Mistake
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Both parties believed the sculpture to be original. This is a mutual mistake (bilateral) and the contract can be made void by rescission. As a general rule, a mutual mistake of a material fact is grounds to cancel (rescind) a contract.
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