Business Law Test 2 Ch 13 Set 1

Front 1

a situation, term, or event, that makes an otherwise valid contract invalid.

Back 1

contract defense

Front 2

Both Parties to a Valid Contract Must Have---------, Which Includes Age (18) and Mental --------------

Back 2

capacity, capacity

Front 3

requires that both parties be at least the age of majority, in most states the age is 18

Back 3

age capacity

Front 4

allows the minor (sometimes called an infant) to choose not to honor the contract, in which case the other party to the contract will have no remedy.

Back 4

a voidable contract of a minor

Front 5

Contracts are voidable—minor can get out at his/her option
Liable in quasi-contract for necessaries
Some exceptions—student loans; military service

Back 5

Capacity – Age

Front 6

Person Understands Contracts are Enforceable and Significance of Legal Documents
Understands Contracts Involve Costs and Litigation

Back 6

mental capacity

Front 7

contracts of those lacking mental capacity are

Back 7

voidable

Front 8

when one party to a contract is not given full or accurate information by the other party about the contract subject matter

Back 8

misrepresentation

Front 9

in the case of misrepresentation in the formation of a contract, the law allows a ---------- which means the contract is set aside.

Back 9

recission

Front 10

Misstatement of a material fact
Reliance by the buyer on that material misstatement or omission
Damages to the buyer

Back 10

elements require for misrepresentation

Front 11

to be a basis for rescission, the misrepresentation must have been one regarding a ----- ----- which is a type of information that would affect someone's decision to enter into the contract.

Back 11

material fact

Front 12

misrepresentation cannot be based on ---------- which is opinion about the subject matter of a contract.

Back 12

puffing

Front 13

Knowing and intentional use of false information
Knowing and intentional failure to disclose
Many states have statutes exempting the disclosure of a murder or AIDS victims as previous owners or residents
However, if there is an inquiry by the potential buyer, the information cannot be withheld

Back 13

elements of frauds

Front 14

the knowing and intentional disclosure of false information or the knowing failure to disclose relevant information.

Back 14

fraud

Front 15

fraud has the same elements of proof as misrepresentation, with the added element of ---------- or knowledge that the information given is false

Back 15

scienter

Front 16

occurs when a party is physically forced into a contract or deprived of a meaningful choice when deciding whether to enter into a contract. ex-requiring company employees to sell stock to keep their jobs

Back 16

duress

Front 17

the party who experienced the duress has the right to rescind the agreement, but ----------- is a choice;

Back 17

rescission

Front 18

the law does not make the contract illegal or unenforceable because ------------ was present. The choice of enforcement or rescission is left to who?

Back 18

duress, the party that experienced the duress

Front 19

occurs when one party uses a close personal relationship with another party to gain contractual benefits. ex-conditioning an elderly parent's care upon signing over of his land to a child.

Back 19

undue influence

Front 20

for undue influence to exist a ---------- -------- of trust and reliance must exist between the parties. elderly parents relying on a child for their care.

Back 20

confidential relationship