Acct350 Final Exam

Front 1

genuineness of assent

Back 1

the requirement that a party's assent to a contract be genuine

Front 2

rescission

Back 2

an action to undo a contract

Front 3

unilateral mistake

Back 3

a mistake in which only one party is mistaken about a material fact regarding the subject matter of a contract

Front 4

mutual mistake of a material fact

Back 4

a mistake made by both parties concerning a material fact that is important to the subject matter of a contract

Front 5

mutual mistake of value

Back 5

a mistake that occurs if both parties know the object of the contract but are mistaken as to its value

Front 6

fraudulent misrepresentation (fraud)

Back 6

an event that occurs when one person consciously decides to induce another person to rely and act on a misrepresentation

Front 7

scienter ("guilty mind")

Back 7

knowledge that a representation is false or that it was made without sufficient knowledge of the truth

Front 8

fraud in the inception (fraud in the factum)

Back 8

fraud that occurs if a person is deceived as to the nature of his or her act and does not know what he or she is signing

Front 9

fraud in the inducement

Back 9

fraud that occurs when the party knows what he or she is signing but has been fraudulently induced to enter into the contract

Front 10

fraud by concealment

Back 10

fraud that occurs when one party takes specific action to conceal a material fact from another party

Front 11

innocent misrepresentation

Back 11

fraud that occurs when a person makes a statement of fact that he or she honestly and reasonably believes to be true even though it is not

Front 12

duress

Back 12

a situation in which one party threatens to do a wrongful act unless the other party enters into a contract

Front 13

undue influence

Back 13

a situation in which one person takes advantage of another person's mental, emotional, or physical weakness and unduly persuades that person to enter into a contract; the persuasion by the wrongdoer must overcome the freewill of the innocent party

Front 14

Statute of Frauds

Back 14

a state statute that requires certain types of contracts to be in writing

Front 15

real property

Back 15

the land itself, as well as buildings, trees, soil, minerals, timber, plants, crops, fixtures, and other things permanently affixed to the land or buildings

Front 16

mortgage

Back 16

an interest in real property given to a lender as security for the repayment of a loan

Front 17

lease

Back 17

the transfer of the right to use real property for a specified period of time

Front 18

life estate

Back 18

an interest in real property for a person's lifetime; upon that person's death, the interest will be transferred to another party

Front 19

easement

Back 19

a right to use someone's land without owning or using it

Front 20

one-year rule

Back 20

a rule that states that an executory contract that cannot be performed by its own terms within one year of its formation must be in writing

Front 21

guaranty contract

Back 21

a promise in which one person agrees to answer for the debts or duties of another person. It is a contract between the guarantor and the original creditor.

Front 22

guarantor

Back 22

a person who agrees to pay a debt if the primary debtor does not

Front 23

main purpose exception (leading object exception)

Back 23

an exception to the Statute of Frauds that states that if the main purpose of a transaction and an oral collateral contract is to provide pecuniary benefit to the guarantor, the collateral contract does not have to be in writing to be enforceable

Front 24

equal dignity rule

Back 24

a rule that agents' contracts to sell property covered by the Statute of Frauds must be in writing to be enforceable

Front 25

Section 2-201(1) of the UCC

Back 25

a section of the Uniform Commercial Code (UCC) that states that sales contracts for the sale of goods costing $500 or more must be in writing

Front 26

Section 2A-201(1) of the UCC

Back 26

a section of the Uniform Commercial Code (UCC) that states that lease contracts involving payments of $1,000 or more must be in writing

Front 27

part performance

Back 27

an equitable doctrine that allows the court to order an oral contract for the sale of land or transfer of another interest in real property to be specifically performed if it has been partially performed and performance is necessary to avoid injustice

Front 28

integration of several writings

Back 28

the combination of several writings to form a single contract

Front 29

incorporation by reference

Back 29

integration made by express reference in one document that refers to and incorporates another document within it

Front 30

parol evidence

Back 30

any oral or written words outside the four corners of the written contract

Front 31

parol evidence rule

Back 31

a rule that says if a written contract is a complete and final statement of the parties' agreement, any prior or contemporaneous oral or written statements that alter, contradict, or are in addition to the terms of the written contract are inadmissible in court regarding a dispute over the contract.

Front 32

merger clause (integration clause)

Back 32

a clause in a contract that stipulates that it is a complete integration and the exclusive expression of the parties' agreement

Front 33

promissory estoppel (equitable estoppel)

Back 33

an equitable doctrine that permits enforcement of oral contracts that should have been in writing. It is applied to avoid injustice.

Front 34

breach of contract

Back 34

a situation that occurs if one or both of the parties do not perform their duties as specified in the contract

Front 35

complete performance (strict performance)

Back 35

a situation in which a party to a contract renders performance exactly as required by the contract; thereby discharging their obligations under the contract

Front 36

tender of performance (tender)

Back 36

an unconditional and absolute offer by a contracting party to perform his or her obligations under a contract

Front 37

substantial performance

Back 37

performance by a contracting party that deviates only slightly from complete performance

Front 38

minor breach

Back 38

a breach that occurs when a party renders substantial performance of his or her contractual duties

Front 39

material breach

Back 39

a breach that occurs when a party renders inferior performance of his or her contractual duties

Front 40

inferior performance

Back 40

a situation in which a party fails to perform express or implied contractual obligations and impairs or destroys the essence of a contract

Front 41

anticipatory breach (anticipatory repudiation)

Back 41

a breach that occurs when one contracting party informs the other that he or she will not perform his or her contractual duties when due

Front 42

monetary damages

Back 42

an award of money

Front 43

compensatory damages

Back 43

an award of money intended to compensate a nonbreaching party for the loss of the bargain

Front 44

consequential damages (special damages)

Back 44

foreseeable damages that arise from circumstances outside a contract. To be liable for these damages, the breaching party must know or have reason to know that the breach will cause special damages to the other party.

Front 45

nominal damages

Back 45

damages awarded when the non-breaching party sues the breaching party even though no financial loss resulted from the breach

Front 46

mitigation of damages

Back 46

a nonbreaching party's legal duty to avoid or reduce damages caused by a breach of contract

Front 47

liquidated damages

Back 47

damages that parties to a contract agree in advance should be paid if the contract is breached

Front 48

Uniform Commercial Code (UCC)

Back 48

a model act that includes comprehensive laws that cover most aspects of commercial transactions. Every state has enacted all or part of this act as a statute.

Front 49

Article 2 (Sales)

Back 49

an article of the UCC that governs sale of goods

Front 50

sale

Back 50

the passing of title of goods from a seller to a buyer for a price

Front 51

goods

Back 51

tangible things that are movable at the time of their identification to a contract

Front 52

mixed sale

Back 52

a sale that involves the provision of a service and a good in the same transaction

Front 53

merchant

Back 53

a person who (1) deals in goods of the kind involved in a transaction or (2) by his or her occupation holds himself or herself out as having knowledge or skill peculiar to the goods involved in the transaction

Front 54

gap-filling rule

Back 54

a rule that says an open term can be "read into" a contract

Front 55

firm offer rule

Back 55

a UCC rule that says that a merchant who (1) makes an offer to buy, sell, or lease goods and (2) assures the other party in a separate writing that the offer will be held open cannot revoke the offer for the time stated or, if no time is stated, for a reasonable time

Front 56

additional terms

Back 56

in certain circumstances, the UCC permits an acceptance of a sales contract to contain additional terms and still to act as an acceptance rather than a counteroffer

Front 57

accommodation

Back 57

a shipment that is offered to a buyer as a replacement for the original shipment when the original shipment cannot be filled

Front 58

battle of the forms

Back 58

a UCC rule that states that if both parties are merchants, then additional terms contained in the acceptance become part of the sales contract unless (1) the offer expressly limits the acceptance to the terms of the offer, (2) the additional terms materially alter the original contract, or (3) the offeror notifies the offeree that he or she objects to the additional terms within a reasonable time after receiving the offeree's modified acceptance.

Front 59

credit

Back 59

occurs when one party makes a loan to another party

Front 60

creditor

Back 60

the lender in a credit transaction

Front 61

debtor

Back 61

the borrower in a credit transaction

Front 62

unsecured credit

Back 62

credit that does not require any security (collateral) to protect the payment of the debt

Front 63

secured credit

Back 63

credit that requires security (collateral) that secures payment of the loan

Front 64

mortgagor

Back 64

the owner-debtor in a mortgage transaction

Front 65

mortgagee

Back 65

the creditor in a mortgage transaction

Front 66

note

Back 66

an instrument that evidences a borrower's debt to the lender

Front 67

deed of trust

Back 67

an instrument that gives a creditor a security interest in the debtor's real property that is pledged as collateral for a loan

Front 68

recording statute

Back 68

a statute that requires a mortgage or deed of trust to be recorded in the county recorder's office of the county in which the real property is located

Front 69

foreclosure sale

Back 69

a legal procedure by which a secured creditor causes the judicial sale of the secured real estate to pay a defaulted loan

Front 70

power of sale

Back 70

a power stated in a mortgage or deed that permits foreclosure without court proceedings and sale of the property through an auction

Front 71

deficiency judgment

Back 71

a judgment of a court that permits a secured lender to recover other property or income from a defaulting debtor if the collateral is insufficient to repay the unpaid loan

Front 72

antideficiency statute

Back 72

a statute that prohibits deficiency judgments regarding certain types of mortgages, such as those on residential property

Front 73

right of redemption

Back 73

a right that allows the mortgagor to redeem real property after default and before foreclosure. It requires the mortgagor to pay the full amount of the debt incurred by the mortgagee because of the mortgagor's default.

Front 74

land sales contract

Back 74

an arrangement in which the owner of real property sells property to a purchaser and extends credit to the purchaser

Front 75

mechanic's lien

Back 75

a contractor's, laborer's and material person's statutory lien that makes the real property to which services or materials have been provided security for the payment of services and materials

Front 76

lien release

Back 76

a written document signed by a contractor, subcontractor, laborer, or material person, waiving his or her statutory lien against real property

Front 77

surety arrangement

Back 77

an arrangement in which a third party promises to be primarily liable with the borrower for the payment of the borrower's debt

Front 78

writ of attachment

Back 78

a prejudgment court order that permits the seizure of a debtor's property while a lawsuit is pending

Front 79

writ of execution

Back 79

a postjudgment court order that permits the seizure of the debtor's property that is in the possession of the debtor

Front 80

writ of garnishment

Back 80

a postjudgment court order that permits the seizure of a debtor's property that is in the possession of third parties

Front 81

Title III of the Consumer Credit Protection Act

Back 81

a federal law that permits debtors who are subject to a writ of garnishment to retain a specified percentage or amount of their earnings

Front 82

personal property

Back 82

tangible property such as equipment, vehicles, furniture, and jewelry, as well as intangible property such as securities, patents, trademarks, and copyrights

Front 83

Revised Article 9 (Secured Transactions)

Back 83

an article of the Uniform Commercial Code that governs secured transactions in personal property

Front 84

secured transaction

Back 84

a transaction that is created when a creditor makes a loan to a debtor in exchange for the debtor's pledge of personal property as security

Front 85

security interest

Back 85

an interest in the collateral, such as personal property or fixtures, which secures payment or performance of an obligation

Front 86

collateral

Back 86

personal property that is subject to a security agreement

Front 87

two-party secured transaction

Back 87

occurs when a seller sells goods to a buyer on credit and retains a security interest in the goods

Front 88

three-party secured transaction

Back 88

occurs when a seller sells goods to a buyer who has obtained financing from a third party lender who takes a security interest in the goods sold

Front 89

security agreement

Back 89

a written document signed by a debtor that creates a security interest in personal property

Front 90

attachment

Back 90

a situation in which a creditor has an enforceable security interest against a debtor and can satisfy the debt out of the designated collateral

Front 91

floating lien

Back 91

a security interest in property that was not in the possession of the debtor when the security agreement was executed

Front 92

after-acquired property

Back 92

property that a debtor acquires after a security agreement is executed

Front 93

sale proceeds

Back 93

the resulting assets from the sale, exchange, or disposal of collateral subject to a security agreement

Front 94

future advance

Back 94

funds advanced to a debtor from a line of credit secured by collateral. These payments are future withdrawals from a line of credit.

Front 95

perfection of a security interest

Back 95

a process that establishes the right of a secured creditor against other creditors who claim an interest in the collateral

Front 96

financing statement

Back 96

a document filed by a secured creditor with the appropriate government office that constructively notifies the world of his or her security interest in personal property

Front 97

perfection by possession of collateral

Back 97

a rule that says if a secured creditor has physical possession of the collateral, no financing statement has to be filed; the creditor's possession is sufficient to put other potential creditors on notice of the creditor's secured interest in the property

Front 98

purchase money security interest

Back 98

an interest a creditor automatically obtains when he or she extends credit to a consumer to purchase consumer goods

Front 99

termination agreement

Back 99

a document filed by a secured party that ends a secured interest because the debt has been paid

Front 100

priority of claims

Back 100

the order in which conflicting claims of creditors in the same collateral are solved

Front 101

buyer in the ordinary course of business

Back 101

a person who in good faith and without knowledge of another's ownership or security interest in goods buys the goods in the ordinary course of business from a person in the business of selling goods of that kind

Front 102

default

Back 102

failure to make scheduled payments when due, bankruptcy of the debtor, breach of the warranty of ownership as to the collateral, and other events defined by the parties in a security agreement

Front 103

repossession

Back 103

a right granted to a secured creditor to take possession of the collateral upon default by the creditor

Front 104

retention of collateral

Back 104

a secured creditor's repossession of collateral upon a debtor's default and proposal to retain the collateral in satisfaction of the debtor's obligation

Front 105

disposition of collateral

Back 105

a secured creditor's repossession of collateral upon a debtor's default and selling, leasing, or otherwise removing it in a commercially reasonable manner

Front 106

judgment

Back 106

a right granted to a secured creditor to relinquish his or her security interest in the collateral and sue a defaulting debtor to recover the amount of the underlying debt

Front 107

artisan's lien

Back 107

a statutory lien given to workers on personal property to which they furnish services or materials in the ordinary course of business. The lienholder must maintain possession of the goods for this lien to exist.

Front 108

fresh start

Back 108

the goal of federal bankruptcy law to grant a debtor relief from some of his or her burdensome debts while protecting creditors by requiring the debtor to pay more of his or her debts than would otherwise have been required prior to the 2005 act

Front 109

Bankruptcy Abuse Prevention and Consumer Protection Act of 2005

Back 109

a federal act that substantially amended federal bankruptcy law. This act makes it more difficult for debtors to file for bankruptcy and have their unpaid debts discharged.

Front 110

Bankruptcy Reform Act of 1978

Back 110

a federal act that substantially changed federal bankruptcy law. This act made it easier for debtors to file for bankruptcy and have their unpaid debts discharged. This act was considered debtor friendly.

Front 111

Bankruptcy Code

Back 111

the name given to federal bankruptcy law, as amended

Front 112

U.S. Bankruptcy Courts

Back 112

special federal courts that hear and decide bankruptcy cases

Front 113

U.S. Trustee

Back 113

a federal government official who is responsible for handling and supervising many of the administrative tasks of a bankruptcy case

Front 114

petition

Back 114

a document filed with a bankruptcy court that starts a bankruptcy proceeding

Front 115

voluntary petition

Back 115

a petition filed by a debtor that states that the debtor has debts

Front 116

involuntary petition

Back 116

a petition filed by creditors of a debtor that alleges that the debtor is not paying his or her debts as they become due

Front 117

order for relief

Back 117

an order that occurs upon the filing of either a voluntary petition or an unchallenged involuntary petition, or an order that is granted after a trial of a challenged involuntary petition

Front 118

meeting of the creditors

Back 118

a meeting of the creditors in a bankruptcy case must occur within a reasonable time after an order for relief. The debtor must appear at this meeting.

Front 119

proof of claim

Back 119

a document required to be filed by a creditor that states the amount of his or her claim against the creditor

Front 120

proof of interest

Back 120

a document required to be filed by an equity security holder that states the amount of his or her interest against the debtor

Front 121

bankruptcy trustee

Back 121

a legal representative of the debtor's estate

Front 122

automatic stay

Back 122

the suspension of certain legal actions by creditors against a debtor or the debtor's property

Front 123

discharge

Back 123

a court order that relieves a debtor of the legal liability to pay his or her debts that were not paid in the bankruptcy proceeding

Front 124

reaffirmation agreement

Back 124

an agreement entered into by a debtor with a creditor prior to discharge, whereby the debtor agrees to pay the creditor a debt that would otherwise be discharged in bankruptcy

Front 125

bankruptcy estate

Back 125

the debtor's property and earnings that comprise the estate of a bankruptcy proceeding

Front 126

fraudulent transfer

Back 126

a transfer of a debtor's property or an obligation incurred by a debtor within two years of the filing of a petition where (1) the debtor had actual intent to hinder, delay, or defraud a creditor or (2) the debtor received less than a reasonable equivalent in value

Front 127

exempt property

Back 127

property that may be retained by the debtor pursuant to federal or state law that does not become part of the bankruptcy estate

Front 128

homestead exemption

Back 128

equity in a debtor's home that the debtor is permitted to retain

Front 129

Chapter 7- Liquidation (straight bankruptcy)

Back 129

a form of bankruptcy in which the debtor's nonexempt property is sold for cash, the cash is distributed to the creditors, and any unpaid debts are discharged

Front 130

abusive filing

Back 130

a Chapter 7 filing that is found to be an abuse of Chapter 7 liquidation bankruptcy. In such a case, the court can dismiss the case or convert the case to a Chapter 13 or Chapter 11 proceeding, with the debtor's consent.

Front 131

median income test

Back 131

a bankruptcy rule that states that if a debtor's median family income is at or below the state's median family income for a family the same size as the debtor's family, the debtor can receive Chapter 7 relief

Front 132

means test

Back 132

a bankruptcy rule that applies to a debtor who fails the median income test. A debtor in this category only qualifies for Chapter 7 bankruptcy if he has disposable income below an amount determined by bankruptcy law.

Front 133

Chapter 7 discharge

Back 133

the termination of the legal duty of an individual debtor to pay unsecured debts that remain unpaid upon the completion of a Chapter 7 proceeding