Business Law: Test 2

Front 1

contract

Back 1

a binding agreement based on the genuine assent of the parties made for a lawful object between competent parties

Front 2

obligor

Back 2

promisor, person who made an obligation or promise

Front 3

obligee

Back 3

promisee who can claim the benefit of the obligation

Front 4

privity

Back 4

succession or chain of relationship to the same thing or right

Front 5

privity of contract

Back 5

relationship btwn a promisor and the promisee

Front 6

formal contracts

Back 6

contracts made under seal, signature, or LS. contracts of record. negotiable instruments.

Front 7

implied contract

Back 7

contract expressed by conduct or implied or deduced from the facts. happens when 1) a person renders services under circumstances indicating that payment for them is expected 2) the other person (knowing the consequences) accepts the benefits of the services

Front 8

voidable contract

Back 8

valid to start out, but ends up being cancelled because something wasnt right

Front 9

void agreement

Back 9

agreement that cannot be forced; it was never a contract to begin with

Front 10

executory contract

Back 10

agreement by which something remains to be done by one or both parties

Front 11

bilateral contact

Back 11

agreement under which promise is given in exchange for another

Front 12

unilateral contract

Back 12

contract under which only one party makes a promise

Front 13

option contract

Back 13

contract to hold an offer to make a contract open for a fixed period of time

Front 14

right of first refusal

Back 14

right of a party to meet the terms of a proposed contract before it is executed (ex: real estate purchase agreement)

Front 15

quasi contract

Back 15

court imposed obligation to prevent unjust enrichment in the absence of contract

Front 16

quantum merit

Back 16

"as much as deserved"; an action brought for the value of services rendered the defendant when theere was no express contract as to the purchase price

Front 17

express contracts

Back 17

almost all of contracts; either written or oral. the parties have stated to eachother their obligations

Front 18

implied contract

Back 18

one of the parties has not expressed what he needs to do; we infer by parties conduct

Front 19

valid contract

Back 19

it meets all elements to have a good contract

Front 20

offer

Back 20

expression of an offeror's willingness to enter in to a contractual agreement

Front 21

divisible contract

Back 21

agreement consisting of two or more parts, each calling for corresponding performances of each part by their parties

Front 22

requirements contract

Back 22

contract to buy all requirements of the buyer from the seller

Front 23

output contract

Back 23

contract of a producer to sell its entire production or output to a given buyer

Front 24

firm offer

Back 24

offer stated to be held open for a specified time, which must be so held in some even in the absence of an option contract, or under the UCC, with respect to merchants

Front 25

counteroffer

Back 25

proposal by an offeree to the offeror that changes the terms of and thus rejects, the original offer

Front 26

acceptance

Back 26

the assent of the offeree to the terms of the offer

Front 27

contractual capacity

Back 27

ability to understand that a contract is being made and to understand its general meaning

Front 28

status quo ante

Back 28

original positions of the parties

Front 29

necessaries

Back 29

things indispensable or absolutely necessary for the sustenance of human life

Front 30

reformation

Back 30

remedy by which a written instrument is corrected when its fails to express the actual intent of both parties because of fraud, accident or mistake

Front 31

fraud

Back 31

making a false statement of a past or existing fact, with knowledge of its falsity or with reckless indifference as to its truth, with the intent to cause another to rely thereon, and such person does rely thereon and is harmed thereby. VOID

Front 32

undue influence

Back 32

influence that is asserted upon another person by one who dominates that person. VOIDABLE

Front 33

physical duress

Back 33

threat of physical harm to a person/property

Front 34

economic duress

Back 34

threat of financial loss

Front 35

duress

Back 35

conduct that deprives the victim of free will and that generally gives the victim the right to set aside any transaction entered into under such circumstances. VOID - cannot be voidable because there was never a meeting of the minds

Front 36

consideration

Back 36

promise of performance that the promisor demands asa the price of the promise. what each party to a contract gives up to the other in making an agreement

Front 37

forbearance

Back 37

refraining from doing an act

Front 38

illusory promise

Back 38

promise that in fact does not impose any obligation on the promisor

Front 39

cancellation promise

Back 39

crossing out of a part of an instrument or a destruction of all legal effect of the instrument

Front 40

composition of creditors

Back 40

agreement among creditors that each shall accept a part of payment in consideration of the other creditors doing the same

Front 41

past consideration

Back 41

something that has been performed in the past and which cannot be consideration for a promise made in person

Front 42

normal consideration

Back 42

"shocks the conscience of the court" - void. the price is so grossly inadequate

Front 43

minors duty

Back 43

minor is entitled to get every consideration and minor only gives consideration back the he/she still has

Front 44

mental incompetence

Back 44

the person is mentally unable to enter into the contract

Front 45

mental impairment

Back 45

made a contact on a "bad" day; therefore, voidable

Front 46

intoxication

Back 46

does not understand the nature of the contract

Front 47

fraud in the inducement

Back 47

misrepresented facts to induce one in to a contract. most common way to get out of a contract

Front 48

scienter

Back 48

knowledge of the falsity (ex: changing miles on the car) - have to show that the person knew it was false

Front 49

innocent misrepresentation

Back 49

unaware of made falsation. material = allowed to cancel, immaterial = court will not cancel.

Front 50

moral obligation

Back 50

if you have a _____ obligation to pay for something, it is not consideration

Front 51

illusory

Back 51

contrats w/ no promise being made, so no consideration. the party can chose to do or not to do something

Front 52

pre-existing duty

Back 52

if you already have a duty, no new consideration for a 2nd agreement so have to abide for first one

Front 53

illegality

Back 53

"in pari delicto" = equally guilty. used in reference to a transaction as to which relief will not be granted to either party b/c both are equally guilty of wrongdoing.

Front 54

usury law

Back 54

charge a interest rate higher than the legal limit

Front 55

blue laws

Back 55

any type of contract that is entered in to on the sabbath (ex: can't buy a car on sunday in indiana)

Front 56

immorality

Back 56

not exactly illegal, but against public morality (ex: the exchange of money for sex)

Front 57

covenants not to compete

Back 57

if the agreement not to compete is not properly executed in accordance with state law, it will not be properly enforced. Allowable within reason. Against public policy, not illegal.

Front 58

statute of frauds

Back 58

in order to prevent fraud through the use of perjured testimony, requires that certain kinds of transactions be evidenced in writing in order to binding or enforceable

Front 59

suretyship

Back 59

undertaking to pay the debt or be liable for default of another. must be in writing. offered buy the guarantor on behalf of the debitor.

Front 60

executor

Back 60

person named in a will to administer the estate of decedent

Front 61

administrator

Back 61

person appointed to wind up and settle the estate of a dead person w/o a will

Front 62

decedent

Back 62

person whose estate is being administered

Front 63

parol evidence rule

Back 63

based on the theory that either there never was an oral agreement or if there was the parties abandoned it when they reached the stage in negotiations of executing their written contract

Front 64

ambiguous

Back 64

it may have two or more meanings, and so parol evidence is admitted to clarify the meaning

Front 65

incorporation by evidence

Back 65

contract consisting of both original document and the detailed statement that is incorporated in it

Front 66

good faith

Back 66

absence of knowledge of any defects or problems

Front 67

usage of trade

Back 67

language and customs of an industry

Front 68

intended beneficiary

Back 68

third person of a contract whom the contract is intended to benefit

Front 69

3rd party beneficiary

Back 69

3rd person whom the parties in a contract intend to benfit by the making of the contract to confer upon such person the right to sue for breach of contract. most common: life insurance

Front 70

right

Back 70

legal capacity to require another person to perform or refrain from performing a certain act

Front 71

duty

Back 71

obligation of the law imposed on a person to perform or refrain from performing a certain act

Front 72

assignment

Back 72

transfer of a right (ex: contract, mortgage)

Front 73

claim

Back 73

right to payment

Front 74

cause of action

Back 74

right to damages - when a legally protected right of the plaintiff is violated by an unlawful act of the defendant

Front 75

novation

Back 75

substitution for an old contract w/ a new one that either replaces an original party with a new one

Front 76

implied warranty

Back 76

warranty that was not made but is implied by law

Front 77

delegation of duties

Back 77

transfer of duties by a contracting party to another person who is to perform them

Front 78

delegation

Back 78

transfer to another of the right and power to do an act

Front 79

notice to obligor

Back 79

notify him to perform for the assignee; if not, the assignee can sue

Front 80

condition precedent

Back 80

any event, except the lapse of time, which must occur before performance is due.

"time of the essence"

Front 81

condition subsequent

Back 81

an event which operates by agreement of the parties to discharge a duty of performance after it has become absolute (most common - employment (drug tests))

Front 82

concurrent conditions

Back 82

two preceding conditions come together

Front 83

condition

Back 83

prerequisite in a contract, will, or other instrument

Front 84

substantial performance

Back 84

a party who in good faith has provided ____ _______ of the contract may sue to recover the payment specified in the contract.

Front 85

rescission

Back 85

action of one party to a contract to set the contract aside when the other party is guilty of a breach of contract

Front 86

accord and satisfaction

Back 86

agreement to substitute for an existing debt some alternative form of discharging that debt, coupled with the actual discharge of the debt by the substituted performance

Front 87

mutual consent

Back 87

mutually agreeing to resend the contract (but doing so enters in to another contract...)

the consideration is that the parties no longer have to perform. can ONLY do if neither party has performed

Front 88

specific vs. generality

Back 88

the more specific you are, the more likely it is to be discharged because of impossibility

Front 89

impracticability

Back 89

when performance becomes extremely costly or time consuming that it becomes impracticable, parties may be discharged

Front 90

frustration of purpose

Back 90

events which destroy the purpose for which contract was formed

if the purpose doesnt happen for some un-seeable event, it can be discharged

Front 91

request assistance

Back 91

ask the obligor if he's going to perform on time

Front 92

direct damages

Back 92

1) compensating the damages for the breach 2) my loss of profits was a direct result of you breaching the contract 3) quantum merit

Front 93

consequential

Back 93

caused by breach, but indirectly. Has to be forseeable.

Front 94

nominal

Back 94

(1-10$), essentially so plaintiff gets satisfaction that he's right

Front 95

punitive

Back 95

in most cases, do not grant punitive rights; awarded if obligor keeps breaching contracts

Front 96

liquidated

Back 96

damages the parties agree on at the time the contract is made

Front 97

duty of the mitigation

Back 97

every plaintiff has a duty to mitigate the damages