Bus-Law Test 2

Front 1

Elements of a contract

Back 1

-Agreement

-Consideration

-Capacity

-Legal Object

Front 2

Capacity

Back 2

The legal ability to enter into a binding contract

Front 3

Incapacity

Back 3

Mental or physical defect that prevents a natural person from being able to enter into a legally binding contract

Front 4

Degrees of capacity

Back 4

No capacity = void contract

Limited capacity = voidable contract

Front 5

Categories of incapacity

Back 5

-Minor

-Mental incapacity

-Intoxication

Front 6

Disaffirmance of a Minor's Contract

Back 6

Minors have the right to disaffirm (avoid) their contract for a limited time after reaching the age of majority.

Front 7

Ratification

Back 7

Once a person reaches the age of majority, he or she may ratify (legally affirm) contracts made as a minor

Front 8

Usury

Back 8

Lending of money at an exorbitant or unlawful rate of interest

Front 9

Adhesion

Back 9

An adhesion contract is a contract created by a party to an agreement that is presented to the other party on a take-it-or-leave-it basis

Front 10

Acceptance

Back 10

Acceptance is a key factor in the agreement element of a contract; it consists of the agreement of the offeree, to the terms of the offer in the contract made by the offeror.

Valid acceptance includes:

-A manifestation of intent to be bound

-Agreement to the terms of the offer

-Communication to the offeror

Front 11

Agreement

Back 11

An agreement is one of the four elements for a contract; it consists of an offer made by one party, the offeror, and the acceptance of the offer by another party, the offeree.

An agreement involves:

-An offer

-An acceptance

Front 12

Anticipatory breach

Back 12

Anticipatory breach occurs when one party communicates that he or she won't fulfill the contract obligations by the deadline

3 types of anticipatory breach:

-One party tells the other party they can't/won't fulfill the contract

-One party acts in a manner that is inconsistent with an intent to fulfill the contract

-One party sells, destroys, or disposes of the property that is the subject of the contract

Front 13

Consideration

Back 13

The bargained-for exchange in a contract

Front 14

Capacity (Legal capacity)

Back 14

The legal ability to enter into a binding agreement

Front 15

Legal object

Back 15

A contract cannot be either illegal or against public policy

Front 16

Uniform Commercial Code (UCC)

Back 16

It is a statutory source of contract law in the U.S. applicable to transactions involving the sale of goods

Front 17

Unilateral contract

Back 17

A promise exchanged for an act

Front 18

Bilateral contract

Back 18

A promise exchanged for a promise

Front 19

Consideration

Back 19

What a person will receive in return for performing a contract obligation

Front 20

Integrated contract

Back 20

An integrated contract awritten contract intended to be the complete and final representation of theparties’ agreement

Front 21

Parol evidence

Back 21

Evidence pertaining to the agreement that isn't included in a written contract

Front 22

Assignment

Back 22

The transfer of rights in a contract to a third party.

-in other words-

When a party to a contract transfers her rights to receive something under the contract to a third party.

Front 23

Delegation

Back 23

The transfer of duties in a contract to a third party.

-in other words-

When a party to a contract transfers her duty to perform to a third party who is not part of the original contract.

Front 24

Tender

Back 24

An offer by a party in a contract to perform, along with being ready, willing, and able to perform, a duty outlined in that contract.

Front 25

Substantial performance

Back 25

Contract performance that occurs when:

-nearly all the terms of the agreement have been met

-there has been an honest effort to complete the terms of the agreement

-there has been no willful departure from the terms of the agreement

Front 26

Novation

Back 26

The substitution of a third party for one of the original parties; the duties remain the same under the contract, but one original party is discharged and the third party takes that original party's place

Front 27

Monetary damages are also known as ______

Back 27

Legal damages

Front 28

Compensatory damages

Back 28

Money awarded to a plaintiff as reimbursement for his/her losses; based on the amount of actual damage or harm to property, lost wages or profits, pain and suffering, medical expenses, disability, etc.

Front 29

Anticipatory breach

Back 29

When a party in the contract communicates they will not perform their obligations before the time it is required.

Front 30

Assignee

Back 30

The party who receives the rights of another party to collect what was contractually agreed on in the original contract. The assignee essentially fills ni for the assignor as the legal recipient of the contractual duties.

Front 31

Assignment

Back 31

When a contracting party transfers his/her rights to a contract to a third party.

Front 32

Bilateral contract

Back 32

A promise exchanged for a promise

Front 33

Unilateral

Back 33

A promise exchanged for an act

Front 34

Commercial impracticability

Back 34

Arises when, because of an unforeseeable event, one party would incur unreasonable expense, injury, or loss if that party were forced to carry out the terms of the agreement.

Front 35

Compensatory damages

Back 35

Money awarded to a plaintiff as reimbursement for her or his losses. It is based on the amount of actual damage or harm to property, lost wages or profits, pain and suffering, medical expenses, disability, etc.

Front 36

Condition precedent

Back 36

An event that must occur in order for a party's duty to arise.

Front 37

Condition subsequent

Back 37

A future event that terminates the obligations of the parties when it occurs

Front 38

Conditional Contract

Back 38

A contract that becomes enforceable only on the happening or termination of a specified condition.

3 types: precedent, subsequent, & concurrent

Front 39

Contract

Back 39

A promise or set of promises for the breach of which the law gives a remedy or the performance of which the law in some way recognizes a duty

Front 40

Creditor beneficiary

Back 40

A third party who benefits from a contract in which the promisor agrees to pay the promisee's debt

Front 41

Delegation

Back 41

Occurs when a party to a contract transfers his/her duty to perform to a third party who is not part of the original contract.

Front 42

Disaffirm

Back 42

Because their contracts are voidable, minors have the right, for a reasonable amount of time after reaching the age of majority, to disaffirm (avoid) their contracts.

Front 43

Discharged

Back 43

When a party's obligations under a contract are terminated, they are said to be discharged.

Front 44

Donee beneficiary

Back 44

A third party who benefits from a contract in which a promisor agrees to give a gift to a third party. Example: life insurance policies.

Front 45

Duress

Back 45

Any unlawful act or threat exercised on a person whereby the person is forced to enter into an agreement or to perform some other act against his or her will

Front 46

Equitable remedy

Back 46

A court-ordered action (vs. money) given to the plaintiff as a remedy.

Front 47

Revocation

Back 47

One way in which an offer can be terminated, when the offeror revokes (takes back) the offer.

Front 48

Uniform Commercial Code

Back 48

A statutory source of contract law in the U.S., applicable to transactions involving the sale of goods.

Front 49

Statues of Frauds

Back 49

State-level legislation that addresses the enforceability of contracts that fail to meet the requirements set forth in the statue.

Wikipedia: The requirement that certain kinds of contracts be memorialized in writing, signed by the party to be charged, with sufficient content to evidence the contract.

Front 50

Substantial performance

Back 50

Contract performance that occurs when:

-nearly all the terms of the agreement have been met

-there has been an honest effort to complete all the terms

-there has been no willful departure from the terms of the agreement

Front 51

Material Breach

Back 51

A substantial breach of a significant term(s) of a contract that excuses the non-breaching party from further performance under the contract and gives the non-breaching party the right to recover damages.

Front 52

Duty to mitigate

Back 52

The obligation of the plaintiff to minimize damages resulting from the breach of contract by the other party.

Front 53

Rescission

Back 53

Termination of a contract

Front 54

Specific performance

Back 54

A court order requiring the breaching party to fulfill the terms of the contract. Courts only order this remedy when money will not solve the problem.

Front 55

Preliminary injunction

Back 55

Prohibits the other party from taking any action during the course of the lawsuit that would cause irreparable harm to any of the parties to the contract. It maintains the status quo until the case can be decided.

Front 56

Partial performance

Back 56

An exception to the statue of frauds. The performance of portions of an unwritten agreement by one or both parties can constitute proof that an oral contract exists between the parties.

Front 57

Promissory estoppel

Back 57

The legal enforcement of an otherwise unenforceable contract due to a party's detrimental reliance on the contract.

Front 58

Parol evidence rule

Back 58

A common law rule that states that oral evidence of an agreement made prior to or contemporaneously with a written agreement is inadmissible when the parties intend to have the written agreement be the complete and final version of their agreement.

Front 59

Merger Clause

Back 59

A clause in a written agreement that states that the written agreement accurately reflects the final, complete version of the agreement.

Front 60

Privity

Back 60

Contact, connection, or mutual interest between parties. The law of contracts ordinarily requires that there be privity for a party to enforce a contract.

Front 61

Vest

Back 61

To mature, as in the maturing of rights such that a party can legally act on the rights

Front 62

Rescind

Back 62

To cancel a contract

Front 63

Unilateral mistake

Back 63

An error by one party about a material fact. Generally, unilateral mistakes will not void a contract.

Front 64

Innocent misrepresentation

Back 64

A false statement about a material fact to an agreement that the person who made the statement believed to be true

Front 65

Scienter

Back 65

A person with scienter acts deliberately or knowingly

Front 66

Negligent misrepresentation

Back 66

A false statement of material fact by a party who thinks it is true but who would have known the truth about the fact had he or she used reasonable care to discover or reveal it

Front 67

Fraudulent misrepresentation

Back 67

A false representation of a material fact that is consciously false and is intended to mislead the other party

Front 68

Undue influence

Back 68

When a party takes advantage of his/her dominant position in a relationship to unduly persuade the other party

Front 69

Unconscionable

Back 69

A contract or bargain which is so unfair to a party that no reasonable or informed person would agree to it

Front 70

Incapacity

Back 70

Mental or physical defect that prevents a natural person from being able to enter into a legally binding contract

Front 71

Ratification

Back 71

When a person reaches age of majority (18), he/she may ratify (legally affirm) contracts made as a minor

Front 72

Legal object

Back 72

To be enforceable, a contract must have a legal exchange as its subject and must be able to be performed legally

Front 73

Usury

Back 73

Lending of money at an exorbitant or unlawful rate of interest

Front 74

Exculpatory clause

Back 74

A statement in a contract that frees one party from all liability arising out of performance of the contract; generally based on factors such as consumer ignorance or a great deal of unexplained fine print

Front 75

in pari delicto

Back 75

Parties are in pari delicto when they are in equal fault in an illegal agreement

Front 76

Severable contract (aka divisible contract)

Back 76

A contract that contains multiple parts that can be performed separately

Front 77

Consideration

Back 77

What a person will receive in return for performing a contract obligation

Front 78

Nominal

Back 78

Of trivial economic value, such as $10

Front 79

Force Majeure

Back 79

An event that no human foresight could anticipate or is too strong to be controlled; it is an act of God

Front 80

Liquidated debt

Back 80

A debt for which is no dispute between parties about the fact that money is owed and the amount of money owed

Front 81

Unliquidated debt

Back 81

A debt for which the parties either dispute the fact that any money is owed or agree that some money is owed but dispute the amount

Front 82

Accord

Back 82

A new agreement to pay less than the creditor claims. The satisfaction is the payment by the debtor of the reduced amount.

Front 83

Requirement contract

Back 83

An agreement whereby the buyer agrees to purchase all of his/her goods from one seller

Front 84

Output contract

Back 84

An agreement whereby the seller guarantees to sell everything he/she produces to one buyer

Front 85

Certain contract require a _____, and f there is none, the agreement will not be enforced

Back 85

Writing

Front 86

Quasi-contract

Back 86

Court-imposed contractual obligation to prevent unjust enrichment

Front 87

Recognizance

Back 87

An obligation in which a party acknowledges in court that he or she will perform some specified act and/or pay a price on failure to do so

Front 88

Option contract

Back 88

An agreement whereby the offeree gives the offeror a piece of consideration in exchange for the offeror's agreement to hold the offer open for the specified period of time.

Front 89

Mirror-image rule

Back 89

The principle hat holds that the terms of the acceptance must mirror the terms of the offer; if the terms of the acceptance do not mirror the terms of the offer, no contract is formed and the attempted acceptance is a counteroffer.

Front 90

Mailbox rule

Back 90

The principle that holds that an acceptance is valid when it is placed in the mailbox, whereas a revocation is effective only when received b y the offeree. IN some jurisdictions, the mailbox rule has been expanded to faxes.

Front 91

Illusory promise

Back 91

A situation in which a party appears to commit to something but really has not committed to anything. It is not a promise and thus not consideration.

Front 92

Severable contract

Back 92

A contract that contains multiple parts that can each be performed separately.

Front 93

Indivisible contract

Back 93

A contract that requires complete performance by both parties

Front 94

Scienter

Back 94

Deliberately or knowingly

Front 95

Consequential damages (aka special damages)

Back 95

In a contract, foreseeable damages that result from special facts and circumstances arising outside the contract itself. The damages must be within the contemplation of the parties at the time the breach occurs.

Front 96

Punitive damages

Back 96

Compensation awarded to a plaintiff that goes beyond reimbursement for actual losses and is imposed to punish the defendant and deter such conduct in the future.

Front 97

Nominal damages

Back 97

Monetary damages awarded to a plaintiff in a very small amount, typically $1 to $5, to signify that the plaintiff has been wronged by the defendant even though the plaintiff suffered no compensable harm.

Front 98

Liquidated damages

Back 98

Damages specified as a term of the contract, before a breach of contract occurs.

Front 99

Rescission

Back 99

The termination of a contract

Front 100

Restitution

Back 100

The return of any property given up under a contract

Front 101

Specific performance

Back 101

An order of the court requiring a breaching party to fulfill the terms of the contract.

Front 102

Injunction

Back 102

A court order either forcing a party to do something or prohibiting a party from doing something.

Front 103

Contract

Back 103

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

Front 104

Objective =

Back 104

1) Fact (vs. opinion)

2) Reasonable

Front 105

Subjective =

Back 105

Opinion (disliking french fries, etc)

Front 106

Forbearance

Back 106

A promise to refrain from exercising a legal right

Front 107

9 Rules of Consideration

Back 107

1) Consideration is what a person will receive in return for performing a contract obligation

2) For a promise to be enforced by the courts, there must be consideration

3) Promissory estoppel is the legal enforcement of an otherwise unenforceable contract

4) The court seldom considers adequacy of the consideration

5) An illusory promise is not consideration

6) Past consideration is no consideration

7) A promise to do something that you already obligated to do is not valid consideration

8) An accord and satisfaction is an arrangement between contracting parties whereby one of the parties substitutes a different performance for his/her original duty under the contract

9) The UCC permits consideration-less requirement contracts and output contracts for the sale of goods.

Front 108

True or False?
An illusory promise is consideration.

Back 108

False

Front 109

A contract has 4 elements: agreement, considertaion, _____, and _____.

Back 109

legal object and legal capacity

Front 110

A(n) _____ contract is a promise exchanged for an act.

Back 110

unilateral

Front 111

5 obstacles to asset

Back 111

1) Mistake

2) Misrepresentation

3) Undue influence

4) Duress

5) Unconscionability

Front 112

The _____ is the bargained for exchange. It is what each party gets in exchange for his or her promise under the contract.

Back 112

consideration

Front 113

True or False?

Contracts must be in writing.

Back 113

False (except in some cases)

Front 114

Statue of Frauds applies to:

Back 114

-Co-signing agreements

-Marriage

-Real Estate

-Rental agreements

-Oil/mineral royalties

-Agreements in which it is impossible to be performed within a year

-Sale of goods over $500

Front 115

_____ _____ is the legal enforcement of an otherwise unenforceable contract due to a party's detrimental reliance on the contract.

Back 115

Promissory estoppel

Front 116

Exceptions to the parol evidence rule:

Back 116

-Contracts that are subsequently modified

-Contracts conditioned on orally agreed-on terms

-Contracts that are not final as they are part written & part oral

-Contracts w/ ambiguous terms

-Incomplete contracts

-Contracts w/ obvious typographical errors

-Voidable or void

-Evidence of prior dealings or usage of trade

Front 117

A/an _____ is an agreement whereby the buyer agrees to purchase all of his goods from one seller. No quantity is stated in the contract.

Back 117

requirements contract

Front 118

Mutual rescission

Back 118

When both parties agree to cancel a contract

Front 119

Quasi-Contract

Back 119

A "sort of" contract. It doesn't meet the requirements of a contract and/or has problems/vagueness/etc.