Business Law Ch. 11

Front 1

Definition of a contract

Back 1

An enforceable promise; A promise or agreement that a court will enforce; Promises are enforcable legal duties.

Front 2

Common law

Back 2

Judge made law; Court cases, over a period of time, have developed a number of legal priniciples

Front 3

Uniform Commercial Code

Back 3

Article Z of the UCC applies to contracts for the sale of goods (tangibles).

It is a model law. Almost every state has adopted the UCC in some form

Front 4

The function of contracts

Back 4

To provide certainty; To assure parties to private agreements that the promise will be enforceable

Front 5

Offeror
Offeree

Back 5

Offeror - Makes the offer
Offeree - To whom the offer is made

Front 6

Bilateral contract

Back 6

A promise in exchange for a promise; Each person promises to perform whatever it is that he agreed to.

"If you agree to paint my house, I will pay you $2000"

Front 7

Unilateral contract

Back 7

A promise in exchange for an act. The offer is phrase in such a way that the offeree accepts the offer by completely the contract performance.

"If you paint my house, I will pay you."

Front 8

Express contract

Back 8

The terms of the contract are explicitly stated. Words whether oral or written are used.

Front 9

Implied-in-fact contract

Back 9

Contract is formed based on the parties conduct. Conduct implies an obligation to pay

Front 10

Implied-in-law (quasi) contract

Back 10

Not an actual contract; The court will impose a coract on the parties. The reason is that that courts are trying to be fair or prevent an unjust inrichment by one party at the expense of another (Landscpaing example)

Front 11

Executed contract

Back 11

A contract that has been complely performed by both parties

Front 12

Executory contract

Back 12

A contract that has not yet been fully performed

Front 13

Valid contract

Back 13

All of the contract elements are present

Front 14

Void contract

Back 14

No contract exists; There are no legal obligations on the part or either party.

Front 15

Voidable contract

Back 15

The contract is valid, but can be avoided by on of the parties

Front 16

Unenforceable contracts

Back 16

A valid contract rendered unenforceable by some statue or law

Front 17

Agreement

Back 17

An offer by one party to form a contract and the acceptance of the offer by the person to whom the offer is made

Front 18

Three elements of an offer

Back 18

1. There must be a serious, objectiveintention by the offeror
2. The terms of the offer must be reasonably certain or definite
3. The offer must be communicated to the offeree

Front 19

Revocation

Back 19

The offeror revokes the offer

Front 20

Rejection

Back 20

The offeree rejects the over.

Front 21

Counteroffer

Back 21

The offeree rejects the original offer and makes a new offer

Front 22

Three terminations of an offer by operation of law

Back 22

1. Time expires (or after the passage of the a reasonable amount of time)
2. Subject matter is destroyed
3. Offeror dies

Front 23

Acceptance

Back 23

By word or conduct, the offeree shows that he 'agrees' to the terms of the offer

Front 24

Mirror image rule

Back 24

A common law rules that requires that the terms of the offeree's acceptance adhere exactly to the terms of the offeror's offer

Front 25

Mailbox rule

Back 25

The acceptance of an offer becomes effective on disbatched (being placed in the mailbox).

Front 26

Consideration

Back 26

Something of "legally sufficient value" is given in exchange for a promise. There must be a bargained fro exchange.

Front 27

Gifts and consideration

Back 27

There is no consideration because the other party hasn't given up anything

Front 28

Flagpole and consideration

Back 28

If the agreement is halfway completed, one cannot revoke or reject the agreement

Front 29

preexisting duty and consideration

Back 29

A promise to do what one is already obligated to do doesn't constitute consideration

Front 30

Smoking and consideration

Back 30

The promise not to do what one has the legal right to do can constitute consideration

Front 31

Promissory estoppel

Back 31

Justifiable reliance on a promise. There must be a clear and definite promise; The promise must be justifiably relied on; The reliance must be of substantial and definite character; Justice will be better served by the enforcement of the promise.

Front 32

Capacity

Back 32

The mental ability to enter into a contract

Front 33

Capacity and minors

Back 33

Contracts by minors are voidable at the option of the minor until the minor eithe affirms the contract upon becoming an adult or a reasonable amount of time passes after the minor reaches adulthood.

Front 34

Capacity and drunks

Back 34

Contracted enetered into by an intoxicated person are voidable by such persons for a reasonable amount of time after sobrity is regained.

Front 35

Capactiy and incompetents

Back 35

If a court determines that an individual is mentally unfit to manage his own affairs, such person contracts are void from that moment in time on

If a person is unfit, but has not yet been declared so by a court, his contracts are voidable

Front 36

Legality

Back 36

For a contrac to be valid and enforceable, it must be formed for a legal purpose. A contract do do smething that is prohibited by law is illegal, void, and unenforceable

Front 37

Unilateral mistake

Mutual mistake

Back 37

A mistake made by one person is not a valid contract defense

When both parties are mistaken the contract is voidable by either party

Front 38

Fraud in the inducement (5)

Back 38

A person who is lied to or deceived can get out of a contract (voidable) if one of the following:
1. Misrepresentation
2. A material (important) fact is lied
3. There is intent to deceive
4. Reasonable reliance by the innocent party
5. Damage

Front 39

Innocent misrepresentation

Back 39

If a party can establish that the other party innocenty misrepresented a fact, the party can undo the contract

Front 40

Undue influence

Back 40

Occurs when one party overcomes the free will of another. Usually occurs when a person abuses a position of trust (parent/child)

Front 41

Duress

Back 41

Forcing another party to enter into a contract by the use of a threat

Front 42

Statute of Frauds

Back 42

Certain contracts must be in writting to be enforceable such as:
Marriage
Contracts that cannot be completed within one year
Purchase of Land
Goods over $500

Front 43

What law states that the sale of goods over $500 must be in writing?

Back 43

Article 2 of the UCC