Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
180 Cards in this Set
- Front
- Back
|
Q715.
Commission of Tort |
A715.
results in CPA liability - 3 torts are relevant - negligence - constructive fraud - fraud |
|
|
Q716.
Elements of constructive fraud |
A716.
- misrepresentation of a material fact - defendant acts with gross negligence - intent to induce plaintiff's reliance - actual reliance by plaintiff - Damages |
|
|
Q717. Ultramares rule
|
A717.
Limits CPA liability to - persons in privity of contract with the CPA - and intended 3rd parties |
|
|
Q718.
An accountant is prohibited from showing work papers to anyone without Clients permission except |
A718.
- lawful subpoena - Surviving member of the firm - Quality Control panel - AICPA/State trial board - Court proceedings |
|
|
Q719.
Accountant client privilege |
A719.
can only be claimed in States where it is recognized |
|
|
Q720.
Common Law negligence has 4 elements |
A720.
- duty of care - lack of due care - casualty - injury |
|
|
Q721.
CPA breaches professional duties, client and 3rd is entitled to |
A721.
compensatory money damages |
|
|
Q722.
who is the owner of the working papers , client or auditor ? |
A722. auditor
|
|
|
Q723. AGENCY
|
A723.
- one party (agent) acts on behalf of the other (principal) for contractual obligations - does not require a K - does not need consideration - need not be in writing EXCEPT - when Statute of Frauds applies: - real estate, over 1 year |
|
|
Q724. PRINCIPAL
|
A724.
- needs capacity - does not have fiduciary duty to agent - LIABLE whether or not undisclosed, partially or disclosed on K where agents have ACTUAL or APPARENT AUTHORITY, LIABLE where principal ratifies an agent's K |
|
|
Q725. AGENT
|
A725.
- has fiduciary duty to act on behalf of principal - must have sufficient mental & physical ability to carry out Principal's instructions - can be a minor - must have authority from the principal in order to act on the principal's behalf - LIABLE to principal if agent has K with principal based on APPARENT AUTHORITY |
|
|
Q726.
TYPES OF AGENCIES |
A726.
employee (agent) - employer (principal) independent contractor (agent) - company (principal) sales rep (agent) - company (principal) - employer is not liable for torts committed by independent contractor |
|
|
Q727.
TYPES OF AUTHORITIES (agent's) |
A727.
ACTUAL - principal gives agent actual authority to contract - can be EXPRESS OR IMPLIED APPARENT - principal creates the impression to 3rd parties that agent has authority - can only exist if there is a DISCLOSED OR PARTIALLY DISCLOSED PRINCIPAL UNAUTHORIZED ACTION - not liable unless RATIFY |
|
|
Q728. RATIFICATION
|
A728.
Principal gives agent authority - an approval after the fact of an unauthorized act done by an agent or someone else acting like an agent - principal must be FULLY DISCLOSED OR PARTIALLY DISCLOSED - must know of details of K made by agent on principal's behalf - must ratify before 3rd party - - discovers that the agent acted without authority and withdraws |
|
|
Q729.
POWER OF ATTORNEY |
A729.
- common form of agency - written authorization for the agent to act on behalf of the principal for a specific or indefinite period of time - written with specific provision keeping it enforceable - to act in certain matters or all matters - also in the event of incapacity or insanity of principal - terminated upon death of principal |
|
|
Q730.
TYPES OF TERMINATION OF AGENCY |
A730.
- mutual AGREEMENT - UNILATERAL - principal dismisses agent, or agent resigns - either party has power to terminate at any time - OPERATION OF LAW - terminates without notice - death, insanity, illegality, principal bankrupt - LOSS OR DESTRUCTION OF SUBJ MATTER which agency is based EXCEPT - agency coupled with an interest |
|
|
Q731.
AGENCY COUPLED WITH AN INTEREST |
A731.
- agent has some legal rights (property interest or security interest; sales commission is not an interest) to the subj matter of the agency - agency cannot be terminated unilaterally by principal |
|
|
Q732.
TERMINATION OF AGENCY - What is necessary to terminate APPARENT AUTHORITY? |
A732.
- must give NOTICE TO 3RD PARTIES ACTUAL NOTICE - each 3rd party is directly informed CONSTRUCTIVE NOTICE - publications that 3rd parties read (who haven't dealt w/agent) - public notice |
|
|
Q733.
AGENT LIABILITIES |
A733.
- always liable for any torts or criminal acts - if agent enters K with 3rd party on behalf of undisclosed principal, agent is liable - also liable for performance of K UNLESS - 3rd party discovers the id of principal & chooses to hold principal to the K (deep pockets) |
|
|
Q734.
PRINCIPAL LIABILITIES |
A734.
- liable for torts committed by an agent within scope of agency |
|
|
Q735. TORT
|
A735.
an act that that injures others but isn't done with evil intent (i.e. negligent driving) - a crime is a tort in which Scienter (evil intent) is present |
|
|
Q736.
FULLY DISCLOSED PRINCIPAL |
A736.
- 3rd party knows identity of principal - principal is liable to 3rd parties - agent is not liable to 3rd parties |
|
|
Q737.
PARTIALLY DISCLOSED PRINCIPAL |
A737.
- 3rd party knows agent is acting on behalf of another - principal and agent are jointly and severally liable |
|
|
Q738.
UNDISCLOSED PRINCIPAL |
A738.
- 3rd party believes agent is acting for themselves only - 3rd party can hold either agent or undisclosed principal liable - NOT LIABLE to 3rd party if agent acts outside the grant of ACTUAL AUTHORITY - agent required to perform K - agent CANNOT HAVE APPARENT AUTHORITY |
|
|
Q739.
Criteria for valid contract |
A739.
Offer Acceptance Genuine assent Consideration Legality Capacity |
|
|
Q740.
Contract is void if there is a defect in: |
A740.
Offer, acceptance, consideration, or legality |
|
|
Q741.
Contract is voidable if there is a defect in: |
A741.
Capacity or genuine assent |
|
|
Q742.
Criteria of an offer |
A742.
Intent Communication Definiteness |
|
|
Q743.
Offer is terminated if: |
A743.
Expiration of offer Item offered for sale is destroyed Offer withdrawn by offeror in writing at any time prior to acceptance Death or insanity of offeror or offeree Rejection by offeree Counteroffer |
|
|
Q744. Communication rules: Acceptance
Rejection Withdrawal by offeror |
A744.
Acceptance: must be sent but need not be received Rejection: must be received Withdrawal by offeror: must be received |
|
|
Q745.
Instances where agreement is defective even though there is offer and acceptance |
A745.
Misrepresentation by offeror Duress Undue influence Unilateral mistake Mutual mistake Lack of mutuality |
|
|
Q746.
Categories where capacity is lacking |
A746.
Minors Insane persons Drunk persons (voidable) |
|
|
Q747.
Distinction between necessaries and non- necessaries for contracts involving a minor |
A747.
If contract is for necessaries, minor must pay reasonable value for what he received |
|
|
Q748.
Requirement for insane person to disaffirm a contract |
A748.
Insane person must return item in condition it was in at time of purchase |
|
|
Q749.
Exculpatory clause: enforceable? |
A749.
Not enforceable if consumer is involved; enforceable if contract is between two businesses |
|
|
Q750.
Statute of frauds: contracts that must be in writing to be enforceable |
A750.
Promises to pay the debts of another Contracts for sale of real estate Contracts that cannot be performed within 1 year of agreement Contracts for sale of goods of $500 or more |
|
|
Q751.
Statute of frauds: who must sign? |
A751.
Party charged with performance |
|
|
Q752.
Parol evidence rule: exceptions (admissible evidence) |
A752.
Subsequent modifications of a written contract Evidence of fraud or misrepresentation Duress Undue influence Mistake Ambiguous terms |
|
|
Q753.
Assignment of contract rights is not permitted if assignment involves: |
A753.
Material increase of risk OR Unique personal service |
|
|
Q754.
Situation where specific performance may be required as a remedy |
A754.
Sale of a rare or unique item, or real estate |
|
|
Q755.
Agency: 3 forms of authority |
A755.
Actual or express authority Apparent or ostensible authority Ratification authority |
|
|
Q756.
Requirements for principal to ratify contract made by agent |
A756.
Principal must have capacity Principal must have knowledge of agent's acts Principal must have existed at time of contract Principal's identity must be disclosed Principal must ratify before other party withdraws |
|
|
Q757.
Employee negligence: is employer liable? |
A757.
Yes, if tort committed within scope of employment |
|
|
Q758.
Employee intentional tort: is employer liable? |
A758.
Yes, if tort committed within scope of employment AND incident was reasonably foreseeable |
|
|
Q759.
Duties of agent to principal |
A759.
Fiduciary duty Confidentiality Obey instructions Act with reasonable care Keep an accounting Keep property separate |
|
|
Q760.
Duties of principal to agent |
A760.
Act in good faith Refrain from thwarting agent's activities Compensation |
|
|
Q761.
Termination of agency by operation of law |
A761.
Death of principal or agent Insanity of principal or agent Bankruptcy of principal Illegality of agency purpose |
|
|
Q762.
Agreement to keep an offer open is valid if: |
A762.
Offeror receives consideration |
|
|
Q763.
Acceptance is valid when: |
A763.
Sent (mailbox rule) Mirror image rule is met |
|
|
Q764.
Situations where consideration is not required |
A764.
Charitable subscription Renewal of a debt barred by statute of limitations Composition agreement by creditors |
|
|
Q765.
Beneficiaries who may enforce contract even though not party to it |
A765.
Donee beneficiaries Creditor beneficiaries |
|
|
Q766.
Performer is entitled to what amount of payment if: Substantial performance Material breach |
A766.
Substantial performance: contract price less any damages Material breach: no payment |
|
|
Q767.
Agent is not liable for contract if (general rule): |
A767.
Agent has authority AND Principal was fully disclosed |
|
|
Q768.
Situations where agent can be liable along with or instead of principal |
A768.
Existence or identity of principal was not disclosed (principal and agent are liable) Principal did not exist when contract was made (agent alone is liable) |
|
|
Q769.
An agency coupled with an interest occurs only when |
A769.
the agent has been granted a lien (the legal right to keep or sell somebody else's property as security for a debt) or security interest in property. An agreement to pay a commission does not involve such a property interest. |
|
|
Q770.
A written agency agreement is required any time |
A770.
An agency contract must be in writing if the agent is empowered to buy, sell or lease real estate, or if the agency, by the terms of the agreement, is to last for more than one year from the date of the agency agreement. |
|
|
Q771.
1) An offeree who purports to “accept” an offer after the offer has been withdrawn is, in effect,_____ 2) An offeree who purports to “accept” an offer, but changes one of the terms or adds a new term has made _______ |
A771.
1) making a new offer or counteroffer. 2) a counteroffer. |
|
|
Q772.
Alexander Architects has substantially performed the contract and therefore, even though it is in breach of contract, it is entitled to recover under the contract. Since it has committed a minor breach, Alexander Architects is entitled to________ |
A772.
to the final payment, less damages. The fact that damages may be difficult to calculate does not affect the underlying rights of the parties. |
|
|
Q773.
When a party to a contract is in material breach____ |
A773.
s/he is barred from recovering for breach of contract |
|
|
Q774.
A 16 y.old can avoid contractual obligations entered into while he was a minor. But if the contract involved goods or services which would be considered “necessaries,” |
A774.
16 years old would be liable for the fair market value as long as he returns the item. Necessaries generally include food, shelter, clothing, tools of the trade and employment services. Even though the purchase of the refrigerator would be considered a necessary, s/he would be permitted to void the contract if he returned the refrigerator, or must pay the fair value which, in most instances, would be the purchase price. |
|
|
Q775.
Consideration is valid when |
A775.
actually paid. An agreement to refrain from doing something that a person otherwise has the right to do (e.g., smoking) is valid consideration for a contract (referred to as “legal detriment ”). |
|
|
Q776.
Courts generally do not weigh consideration. In other words,____ |
A776.
courts do not review the consideration which is bargained for and exchanged in a contract to ensure the two are equivalent. |
|
|
Q777.
Once a valid contract exists, unless it involves the sale of goods (UCC rules are different from common law contract rules) modifications of a contract are not binding unless both parties will receive new or additional consideration is _________ rule |
A777.
pre- existing contractual duty rule |
|
|
Q775.
Consideration is valid when |
A775.
actually paid. An agreement to refrain from doing something that a person otherwise has the right to do (e.g., smoking) is valid consideration for a contract (referred to as “legal detriment ”). |
|
|
Q776.
Courts generally do not weigh consideration. In other words,____ |
A776.
courts do not review the consideration which is bargained for and exchanged in a contract to ensure the two are equivalent. |
|
|
Q777.
Once a valid contract exists, unless it involves the sale of goods (UCC rules are different from common law contract rules) modifications of a contract are not binding unless both parties will receive new or additional consideration is _________ rule |
A777.
pre- existing contractual duty rule |
|
|
Q778.
Quantity can never be inferred. The price, subject matter, time for performance and, sometimes, even the parties can be _______ |
A778.
inferred in an otherwise valid offer, but quantity must be stated. In addition, a contract is enforceable only to the extent of the stated quantity. |
|
|
Q779.
What is the effect of a counter offer. |
A779.
Once a counter- offer is made the original offer is no longer in effect and cannot be accepted. |
|
|
Q780.
If a party to a contract dies, s/he is ________ from the contract. |
A780.
not released His/her estate will either be entitled to recovery (if the contract has been substantially performed) or will be liable for breach. This is different from the situation in which an offeror dies. If the offer has not been accepted, death terminates the offer. |
|
|
Q781.
Liquidated damages are permitted in breach of contract cases if they are |
A781.
reasonable in amount and if the calculation of actual damages would be difficult. |
|
|
Q782.
One of the elements of a valid contract is that the bargain must be legal. Contracts which involve the commission of a crime are _____ |
A782.
illegal and void. |
|
|
Q783.
Death does not excuse a party from _______ other than for personal services. |
A783.
a contractual obligation (Be sure to distinguish this from the rule that death of an offeror terminates the offer.) |
|
|
Q784.
A modification of an existing contract must be supported by _________ |
A784.
new consideration - additional services for the extra fees. (unless the contract is for the sale of goods, in which case good faith is the main requirement). New consideration must flow to both parties to support a modification of an existing contract. Note, however, that the rule under UCC article 2 (sale of goods) is different. |
|
|
Q778.
Quantity can never be inferred. The price, subject matter, time for performance and, sometimes, even the parties can be _______ |
A778.
inferred in an otherwise valid offer, but quantity must be stated. In addition, a contract is enforceable only to the extent of the stated quantity. |
|
|
Q779.
What is the effect of a counter offer. |
A779.
Once a counter- offer is made the original offer is no longer in effect and cannot be accepted. |
|
|
Q780.
If a party to a contract dies, s/he is ________ from the contract. |
A780.
not released His/her estate will either be entitled to recovery (if the contract has been substantially performed) or will be liable for breach. This is different from the situation in which an offeror dies. If the offer has not been accepted, death terminates the offer. |
|
|
Q781.
Liquidated damages are permitted in breach of contract cases if they are |
A781.
reasonable in amount and if the calculation of actual damages would be difficult. |
|
|
Q782.
One of the elements of a valid contract is that the bargain must be legal. Contracts which involve the commission of a crime are _____ |
A782.
illegal and void. |
|
|
Q783.
Death does not excuse a party from _______ other than for personal services. |
A783.
a contractual obligation (Be sure to distinguish this from the rule that death of an offeror terminates the offer.) |
|
|
Q784.
A modification of an existing contract must be supported by _________ |
A784.
new consideration - additional services for the extra fees. (unless the contract is for the sale of goods, in which case good faith is the main requirement). New consideration must flow to both parties to support a modification of an existing contract. Note, however, that the rule under UCC article 2 (sale of goods) is different. |
|
|
Q785.
An offer can terminate due to _________ |
A785.
lapse of time, a counteroffer by the offeree, rejection by the offeree, withdrawal of the offer before acceptance, or death of the offeror prior to acceptance. |
|
|
Q786.
An offer can be withdrawn ______ |
A786.
any time prior to acceptance (unless the offer is supported by consideration). |
|
|
Q787.
the three day right of rescission (three days within which to cancel, without obligation, any contract) involves _________ |
A787.
consumer transactions only |
|
|
Q788.
Advertisements are generally not considered offers because |
A788.
the advertiser does not have the requisite (obligatory) intent to make an offer. Specific, limited advertisements may be offers. For example, an advertisement that offers something to the “first to respond” may be deemed an offer. |
|
|
Q789.
An enforceable option has been created when ________ |
A789.
there is a promise in exchange for a promise which is valid consideration to support an option contract. |
|
|
Q790.
The issue of whether statements outside the final written contract should be admitted is governed by the Parol Evidence Rule. Under the Parol Evidence Rule, outside oral or written statements made prior to or contemporaneous with the written agreement can be |
A790.
admitted as evidence of fraud, duress and the like or to explain an ambiguous term. (The words “fully integrated” in the text of the question are a tip- off that the question deals with the Parol Evidence Rule. “Fully integrated” means that the contract is intended as a complete statement of everything the parties agreed upon.) The parol evidence rule keeps from evidence any prior or contemporaneous statements which add to, modify or vary a complete final written agreement. The discussion of a mediation clause at the time the contract was signed would be such a contract modification. Evidence of fraud, duress, undue influence, or of post- contract modifications are not excluded by the parol evidence rule, nor is evidence which is presented to explain an ambiguity. |
|
|
Q791.
The statute of Frauds requires that contracts which cannot, by their terms, be performed within one year, must be |
A791.
in writing and signed in order to be enforceable. The “ terms” of the contract in question were that the internship would begin on the following June 1st and last three months. Since this (oral) contract was made on August 16 of the year prior to when work would begin, and work could not be completed before the end of August (more than a year later) the contract must be in writing. |
|
|
Q792.
If a party to a contract omits material information of which s/he is aware at the time the contract was entered into, the other party can |
A792.
avoid the contract on the ground of misrepresentation. The parol evidence rule does not exclude evidence of misrepresentations or fraud. Cancellation of a contract due to misrepresentation is subject to time limits (statute of limitations) just as suits for breach of contract are. |
|
|
Q793.
For one who is not a party to a contract to enforce the contract, s/he must be |
A793.
a donee beneficiary, creditor beneficiary or an assignee. To qualify as a donee beneficiary, the main purpose of the contract must be to bestow a gift to the third party. To qualify as a creditor beneficiary the purpose of the contract must be to pay an obligation which was owed to the third party. |
|
|
Q794.
To void the contract as having been made under undue influence, |
A794.
Emma could show the existence of a trust relationship (her father) and an abuse of that trust (excessive fees). |
|
|
Q795.
An offer of a reward is a unilateral offer which means |
A795.
that it can only be accepted by performance. A contract is not formed until performance is completed. A unilateral offer can be withdrawn before acceptance in most instances. He would not be entitled to the reward if he was unaware of the reward. |
|
|
Q796.
If one of the parties to a contract acts under a mistaken belief, the mistaken party |
A796.
cannot avoid the contract unless the other party knew, or had reason to know of the mistake. |
|
|
Q797.
A contract which must be in writing to be enforceable and can be enforceable against one of the parties and not the other if |
A797.
only one party signs the contract. A contract which involves a transfer of real estate must be in writing to be enforceable, but if it is not in writing it is simply unenforceable (rather than void). If one of the parties to a contract is a minor, only the minor can void the contract. |
|
|
Q798.
Which of the following statements regarding validity, enforceability and avoidance of contracts is correct? A A statute of limitations can render a valid contract unenforceable. B A contract entered into by a minor is voidable by either party. C A unilateral mistake renders a contract void. D Minor breach of contract by one party excuses all duty of performance by the other party. |
A798.
A If suit is not filed within the time set by a statute of limitations, an otherwise valid contract is unenforceable, but not void or invalid. A contract entered into by a minor is voidable only by the minor. A unilateral mistake renders a contract voidable, but not automatically void. Material breach of contract by one party excuses all duty of performance by the other party, but minor breach does not. |
|
|
Q799.
Which of the following would affect the validity of a contract? A A contract for the sale of real estate is agreed to orally, but is signed by only one party. B The agreement violates law. C The statute of limitations has run for filing suit for enforcement or for damages. D One of the parties has committed a material breach of contract. |
A799.
The correct answer was B. Validity of a contract is affected when one of the elements of a contract (offer, acceptance, consideration, legality, capacity, mutuality) is lacking. Absence of an offer, acceptance or consideration, or the illegality of the contract’s purpose, will result in a void contract. If one of the parties lacks capacity, the contract is voidable by that party. If there has been a misrepresentation or a unilateral mistake (i.e., lack of mutuality) then the contract is voidable by the innocent party. In the rare case of mutual mistake (again, lack of mutuality) either party may void the contract. Answers A, C and D relate to the enforceability rather than the validity of the contract. |
|
|
Q800.
On February 1, Blaze- X submitted a proposal to Black for the complete installation of a fire suppression system in an office building which Black was renovating. The proposal provided that “to ensure performance at the specified price of $45,100, this proposal must be signed in duplicate and received by our Westport office within 10 days.” Black signed the proposal and gave it to his secretary to deliver to Blaze- X. Which of the following is correct?★ ★★A If the proposal is misdelivered to Sure- X Exterminators on February 9, delivery to Blaze- X the next day will result in no contract. ★B If Black faxes a memo to Blaze- X on February 7 agreeing to the proposal, this will bind Black.★C If the proposal is mailed to Blaze- X on the 10th and received on the 13th, Blaze- X will be bound by the price quoted.★D A telephone call by Black to Blaze- X accepting the offer at the price of $45,100 will bind Blaze- X. |
A800.
The correct answer was B. An offer may specify the terms under which it can be accepted. (This means that an offeror can modify the mailbox rule.) When an offeror specifies that an acceptance will only be valid if actually received, this governs the particular contract in question. Since Black did not comply with the requirements of the offer, Blaze- X is not bound. However, Black may be bound to the contract even though Blaze- X is not. This is a somewhat difficult concept, but one seen often on the CPA exam. Where all the elements of a valid contract exist, it may be enforceable against one party even though it is unenforceable against the other. |
|
|
Q801.
Jake has accepted the shipment even though he had not inspected it until Tuesday since he has had a reasonable opportunity to inspect. Once acceptance occurs the buyer |
A801.
must pay the contract price for any goods accepted. |
|
|
Q802.
Any statement by a party to a contract of an unwillingness or inability to perform the contract constitutes |
A802.
an anticipatory repudiation (breach) of the contract, entitling the nonbreaching party to file suit immediately, or to demand adequate assurance of performance. |
|
|
Q803.
Under Article 2 of the UCC, parties to a contract for the sale of goods (other than consumer contracts) can change the statute of limitations to |
A803.
not more than 4, nor less than 1, year. |
|
|
Q804.
A clause in a contract whereby one of the parties is exonerated (held harmless) for his/her own negligence is known as |
A804.
an exculpatory clause. Such clauses are generally unenforceable in consumer contracts, but are permitted in contracts between businesses. |
|
|
Q805.
A contract can only be modified if new consideration flows _____ |
A805.
to both parties. (Note that the rules are different for modifications of contracts involving the sale of goods.) |
|
|
Q806.
Contracts can be described by several attributes, such as: 1. method of formation a)________ b)_______ c)______ 2 whether there is one promise or two a)________ b)_______ 3. and the stage of performance a)________ b)_______ |
A806.
1. method of formation a) Express contract - oral or written b) Implied- in- fact contract - formed by conduct c) Implied- in- law contract OR Quasi- contract - remedy to prevent unjust enrichment 2. whether there is one promise or two a) Unilateral contract- not formed until performance is completed b) Bilateral contract - promise for a promise and contract is formed 3. and the stage of performance a) Executory contract - if duties remain to be performed b) Executed contract - all duties have been performed |
|
|
Q807.
Creation of a contract - elements in general: (3) |
A807.
1. Offer and acceptance 2. and exchange of Consideration 3. a lack of defenses NOTE : "a writing" is NOT a general element of a contract If 3 elements are present, there an enforceable contract and remedies are available if one party breaches. |
|
|
Q808.
To be an offer, the communication must create a reasonable expectation in the Offeree that the offeror intends to make a contract. 3 questions should be considered : |
A808.
1. Was there a manifestation of INTENT to contract? - Intent - would the reasonable person believe the offer was serious 2. Were the Terms Definite and Certain? Terms must include: a) parties b) price c) time d) quantity e) nature/type of work 3. Was there COMMUNICATION of the above to the offeree? |
|
|
Q809.
Termination of Offer To create a contract, an offer must be accepted before it is terminated. It can be terminated in 3 ways: |
A809.
1 Revocation 2 Rejection 3. by Operation Law |
|
|
Q810.
Revocation by Offeror - can be done any time before _______ |
A810.
Acceptance, except for Irrevocable offers |
|
|
Q811.
Irrevocable offers: (3) |
A811.
1 Option contract - the offeree gives CONSIDERATION $$$ to keep the offer open 2 Merchant's firm offers under UCC sales 3 Unilateral contracts |
|
|
Q812.
Under the Mailbox rule, a contract is formed on _________ even if the acceptance letter is never received by the offeror, but It must be properly addressed! |
A812.
DISPATCH The acceptance is valid when sent |
|
|
Q813.
Offeror may opt- out mailbox rule by stating that the acceptance must be __________ to be effective. |
A813. RECEIVED
|
|
|
Q814.
Defenses can make a contract unenforceable. Very few defenses make a contract ________, most contracts only ______ |
A814.
VOID - unenforceable by either party VOIDABLE - it may be avoided at the option of the party adversely affected. |
|
|
Q815.
Defenses to the contract are : lack of an agreement lack of consideration FRAUD - list 5 items |
A815.
MAIDS 1 Misrepresentation of Material fact 2 Actual and justifiable Reliance 3 Intent to Induce plaintiff's reliance 4 Damages 5 Scienter - disregard for truth |
|
|
Q816.
VOID or VOIDABLE? 1 fraud in the Execution - deceived into signing something you didn't know 2 fraud in the Inducement - you know you are making contract, but TERMS are materially misrepresented 3 Duress - a) physical force b) economic or social 4 Undue Influence - taking unfair advantage of the relationship 5 Mutual mistake - both parties are mistaken 6 Unilateral Mistake |
A816.
1 fraud in the Execution - VOID 2 fraud in the Inducement - VOIDABLE 3 Duress - a) physical force- VOID b) economic or social - VOIDABLE 4 Undue Influence - VOIDABLE 5 Mutual mistake - VOIDABLE 6 Unilateral Mistake - generally it is NOT a defense, only if the other party KNEW about the mistake - it is VOIDABLE |
|
|
Q817.
One of the DEFENSES is STATUTE OF FRAUDS - six contracts req, a writing: |
A817.
" MY LEGS" Marriage - is a consideration Year - cannot be performed within a year Land - and lease for more than year Executor contract to pay estate debts Goods for >$500 Suretyship - to pay the debt of another Note: contracts for services can be oral regardless of price as long as they can be done w/n 1 year. |
|
|
Q818.
________ rule that prohibits the admission of oral or written evidence to CONTRADICT the TERMS of a Written contract |
A818.
PAROL (oral) EVIDENCE RULE - NOTE: ONLY subsequent modification are admissible under this rule |
|
|
Q819.
Which is legally binding despite lack of consideration? |
A819.
A promise to donate money to a charity on which the charity relied in incurring large expenditures |
|
|
Q820.
One of the criteria for a valid assignment of a sales contract to a third party is that the assignment must |
A820.
Not materially increase the other party's risk or duty |
|
|
Q821.
To cancel a contract and to restore the parties to their original positions before the contract, the parties should execute a |
A821. RESCISSION
|
|
|
Q822.
the goal of contract remedies is to put the Nonbreaching party in as good position as _________ |
A822.
he would have been had there been no breach |
|
|
Q823.
list 6 types of damages |
A823.
1 Compensatory 1a Consequantial 2 Specific performance 3 Liquidated damages 4 Punitive d- ge 5 Rescission or Cancellation 6 Quasi- Contract damages |
|
|
Q824.
1 Compensatory Damages are ____ 1a Consequantial |
A824.
1D- ges for PERSONAL SERVICE contract to obtain substitute performance. 1a - D- ges that are reasonably foreseeable |
|
|
Q825.
2 Specific performance damages |
A825.
Used with land or Unique Items Cannot be used for personal service contract |
|
|
Q826.
3 Liquidated damages are enforceable if the $$$ is reasonable in relation to the actual harm done and _________ |
A826.
it is Not a PENALTY |
|
|
Q827.
4 Punitive d- ge for breach of contract are |
A827.
not available, for FRAUD ONLY |
|
|
Q828.
5 Rescission or Cancellation damages restore parties to ______ |
A828.
their former position. Contract cannot be cancel if it has been substantially performed |
|
|
Q829.
6 Quasi- Contract damages used to ______ |
A829.
prevent unjust enrichmet |
|
|
Q830.
In order to fairly compensate parties for harm done the law imposes the limitations of __________ and __________ on Monetary Damages |
A830.
FORSEEABILITY AND MITIGATION |
|
|
Q831.
the person OWING THE DUTY under a third party beneficiary contract is called the _________ The one bargaining for the performance is the __________ |
A831. PROMISOR PROMISEE
|
|
|
Q832.
An Intended beneficiary can SUE the ______. Creditor beneficiaries can also SUE the _________ Donee beneficiaries generally ________ |
A832.
1. promisor 2 promisee 3 cannot sue the promisee. |
|
|
Q833.
New party to an old contract is ________ |
A833.
NOVATION - defense |
|
|
Q834.
A condition is an event the occurrence or nonoccurrence of which will end a party's duty to perform. There are 3 types of conditions _____ |
A834.
PRECEDENT CONCURRENT SUBSEQUENT |
|
|
Q835.
Same parties, but new contract is |
A835.
ACCORD AND SATISFACTION AND SUBSTITUTED CONTRACT original contract is discharged immediately |
|
|
Q836.
Essential Elements of a K |
A836.
1. Offer 2. Acceptance 3. Consideration 4. Legal Capacity 5. Legality (legal purpose) 6. Reality of consent (technically not a true element, but important to consider b/c may be necessary for enforceability of K) 7. Statute of frauds (not a true element, but each factual situation should be examined to determine whether it applies) |
|
|
Q837. Express K
|
A837.
terms are actually stated orally or in writing |
|
|
Q838. Implied K
|
A838.
terms of K not specifically given but some or all of terms are inferred from conduct of parties and circumstances |
|
|
Q839. Executed K
|
A839.
one that has been fully performed |
|
|
Q840. Executory K
|
A840.
one that has NOT been fully performed by both parties |
|
|
Q841. Quasi K
|
A841.
not a real K but public policy creates legal obligation in certain circumstances |
|
|
Q842. Unilateral K
|
A842.
one party gives promise for completion of requested act |
|
|
Q843. Bilateral K
|
A843.
each party exchanges promises |
|
|
Q844. Voidable K
|
A844.
one that is enforceable unless party that has right pulls out of K |
|
|
Q845.
Requirements for a valid offer |
A845.
- Objective (not subjective) intent to make an offer - statement definite and certain as to what will be agreed upon in K (some courts allow some reasonable terms to be left open if customary to do so; under UCC, output or requirements Ks are considered reasonably definite b/c output is based upon actual output that does occur in good faith and requirements are actual good faith requirements) - communicated to offeree by offeror or his/her agent (exception: public offer - can learn of it in any way) |
|
|
Q846.
Types of statements that do NOT equal an offer |
A846.
- promises made in apparent jest - opinions - statements of intent - invitations to negotiate (i.e. - price tags, auctions, inquiries, general ads) |
|
|
Q847. Unilateral Offer
|
A847.
one that expects acceptance by action rather than promise |
|
|
Q848. Bilateral Offer
|
A848.
one that expects acceptance w/a promise |
|
|
Q849.
Who does the risk of mistakes in contracts fall on? |
A849.
The offeror (b/c s/he chose method of communication; therefore, offer is effective as transmitted) |
|
|
Q850.
How can offers be terminated? |
A850.
- rejection by offeree (must be communicated to offeror and effective when received by offeror) - revocation by offeror (may revoke offer at any time prior to acceptance by offeree - revocation effective when receive by offeree) - counteroffer (does not include mere inquiry or request for additional or different terms) - lapse of time (if no specified time by offeror - > reasonable time period) - death or insanity of offeror - illegality (offer terminates if it becomes illegal after making of offer but before acceptance) - bankruptcy or insolvency of either offeror or offeree - impossibility (offer terminates if after making offer and before it is accepted, performance becomes impossible) - destruction of subject matter |
|
|
Q851.
revocation of offer and sale of subject matter |
A851.
If offeree learns by reliable means that offeror has already sold subject of offer - > it is revoked. |
|
|
Q852.
revocation of public offers |
A852.
public offers must be revoked by the same amount of publicity used in making the offer |
|
|
Q853. Option
|
A853.
Defined: an offer that is supported by consideration and cannot be revoked before stated time - > rejection does not terminate the option. |
|
|
Q854.
Contracts and role of individuals |
A854.
Normally offers, acceptance, rejections, and counteroffers are effective if an individual is involved; thus, counteroffers are not effective against mere electronic agents. |
|
|
Q855.
Acceptance Requirements |
A855.
- offer must be accepted by person to whom it was directed - offeree must have knowledge of offer in order to accept - offeree must intend to accept - acceptance must generally be in the form specified by offer - acceptance must be unequivocal and unconditional (a condition that does not change or add to terms of K is not a counteroffer - i.e. - a condition that is already part of the K b/c of law) (*Note difference under UCC) - made within an appropriate time |
|
|
Q856.
Ways silence can constitute acceptance |
A856.
1.) offer indicated silence would constitute acceptance AND offeree intended his/her silence as acceptance (- > offeree has NO duty to reply) 2.) offeree has taken benefit of services or goods and exercised control over them when s/he had opportunity to reject them (however, statutes usually override cl rule by providing that unsolicited merchandise may be treated as a gift) - through prior dealings, by agreement between parties, or when dictated by custom, silence can be acceptance |
|
|
Q857.
When is an offer deemed accepted? |
A857.
- If acceptance is made by method specified in offer or by same method used by offeror to communicate the offer, acceptance is effective when sent. EXCEPTION: If offeree sends rejection and then acceptance, first received is effective even though offeree sent acceptance by same method used by offeror. - other methods of acceptance are considered effective when actually received by offeror (offeror can change the above rules by stating other rules in offer) (compare this to offers, revocations, and counteroffers which are valid when received) |
|
|
Q858.
Effect of late acceptance |
A858.
NOT valid BUT is instead deemed a counteroffer and is valid only IF original offeror then accepts. |
|
|
Q859.
Firm Offer Rule |
A859.
Applicable under UCC only. Applies to a written and signed offer for sale of goods by a merchant giving assurance that it will be held open for specified time. If such is made - > offer is irrevocable for that period. - No consideration is needed. - Period of irrevocability may not exceed three months. (- > even if offeror specifies 4 months in offer, period of irrevocability is limited to 3 months). - If no time period is specified - > reasonable time is inferred. - If assurance is given on form supplied by offeree - > it must be separately signed by offerror. |
|
|
Q860.
Acceptance of offer to buy goods under UCC |
A860.
An offer to buy goods may be accepted either by seller's promise to ship the goods OR by the actual shipment. (- > blurs common law distinction between unilateral and bilateral Ks) Beginning of performance by offeree (i.e. - part performance) will bind offeror if followed within a reasonable time by notice of acceptance. |
|
|
Q861.
Form of acceptance under UCC |
A861.
Rule: Unequivocal acceptance of offer for sale of goods is not necessary under UCC (Battle of Form) - > between merchants, if acceptance contains additional terms, there is valid acceptance and the additional terms become part of the K and K is formed. EXCEPTIONS: - original offer precludes such additions - new terms materially alter original offer - the original offeror gives notice of his/her objection within a reasonable time. - > if at least one party is a nonmerchant, the additional terms are considered proposals to offeror for additions to K, and unless offeror agrees to the additions, K is formed on offeror's terms. |
|
|
Q862.
Terms left open under the UCC |
A862.
If there was intent to K and a reasonable basis for establishing a remedy is available - > K will not fail for indefiniteness. |
|
|
Q863.
Open price term under UCC |
A863.
will be construed as reasonable price at time of delivery OR parties may agree to decide price at future date or can agree to allow third party to set price |
|
|
Q864.
Open place of delivery term under UCC |
A864.
will be construed as seller's place of delivery, if any, otherwise seller's residence or if identified goods are elsewhere and their location is known to both parties at time of K, then at that location |
|
|
Q865.
Open time of shipment or delivery under UCC |
A865.
will be construed as a reasonable time period |
|
|
Q866.
Open time of payment under UCC |
A866.
will be construed to be due at time and place of delivery of goods or at time and place of delivery of documents of title, if any. If on credit - > credit period begins running at time of shipment. |
|
|
Q867.
What constitutes reasonable price of reasonable time? Who construes? |
A867. The jury.
|
|
|
Q868.
UCC handling of writing that do not establish a K, but conduct by parties does. |
A868.
- terms will be those on which writings agree and those provided for in UCC where not agreed on (e.g. - reasonable price, place of delivery) (Often occurs when merchants send preprinted forms to each other w/conflicting terms and forms are not read for more than quantity and price.) |
|
|
Q869.
What constitutes the offer at an auction? |
A869. the bid.
|
|
|
Q870.
What is the rule on retraction of an offer at an auction? |
A870.
Offeror can retract until auctioneer announces the sale is complete. |
|
|
Q871.
Differentiate "with reserve" and "without reserve" in context of an auction. |
A871.
"With reserve" = auctioneer may withdraw goods before she/he announces completion of sale. "Without reserve" = goods may not be withdrawn unless no bid made within reasonable amount of time. |
|
|
Q872.
Consideration requirements |
A872.
- A party binds him/herself to do (or actually does) something s/he is not legally obligated to do, or when s/he surrenders legal right. - Must be bargained for |
|
|
Q873.
Types of consideration that is not legally sufficient (- > nonenforceable) |
A873.
- Preexisting legal duty which includes: 1.) agreement to accept from debtor a lesser sum than owed is unenforceable if the debt is a liquidated (undisputed) debt BUT if debtor incurs a detriment in addition to paying, creditor's promise to accept lesser sum will be binding; 2.) promise to pay someone for refraining from doing something s/he has no right to do is unenforceable; 3.) promise to pay someone to do something s/he is already obligated to do (i.e. - agreement to finish a job UNLESS unforeseen difficulties arose) - Past consideration - Moral obligation (except in minority of states) (- in majority of states, seals placed on Ks cannot substitute for consideration) |
|
|
Q874.
Modification of existing Ks and consideration |
A874.
Modification of K needs new consideration on both sides to be legally binding (BUT if the modification is not binding b/c of lack of consideration, original K still is) EXCEPTION: Under UCC, a K for sale of goods may be modified orally or in writing w/o consideration if in good faith. |
|
|
Q875.
Requirements Ks and consideration |
A875.
If one party agrees to supply what other party requires, agreement is supported by consideration. (b/c supplying party gives up right to sell to another; purchasing party gives up right to buy from another) - cannot be required to sell amounts unreasonably disproportionate to normal requirements |
|
|
Q876.
Output Ks and consideration |
A876.
If one party agrees to sell all his/her output to another, agreement is supported by consideration b/c s/he gives up right to sell that output to another. (BUT illusory Ks are not supported by consideration) |
|
|
Q877.
What can step in and bar a claim for lack of consideration (if there truly is no consideration)? What are the elements of such a claim? |
A877.
Promissory estoppel Elements: 1.) detrimental reliance on promise 2.) reliance is reasonable and foreseeable 3.) damage results (injustice) if promise is not enforced |
|
|
Q878.
Are promises to donate to charity enforceable and why? |
A878.
Yes - for public policy reasons |
|
|
Q879.
Legal capacity - what Ks are void and what are voidable for lack of legal capacity? |
A879.
- Minors = voidable (by minor) - Incompetent persons = void if K by person adjudicated insane; = voidable (by incompetent person) if K made before person adjudicated insane - Intoxicated person = voidable (by intoxicated person) IF extent of intoxication at time of K was so great that intoxicated party did not understand terms or nature of K |
|
|
Q880.
Illegal Ks and relief available from court |
A880.
When both parties are guilty, neither will be aided by court (BUT if one party repudiates prior to performance, s/he may recover his/her consideration). When one party is innocent (or a member of a class of people designed to be protected by statute), s/he will usually be given relief. |
|
|
Q881.
Types of illegal Ks |
A881.
- agreement to commit crime or tort - agreement not to press criminal charges for consideration - services rendered without a license when statute requires a license (regulatory licensing statute NOT revenue- seeking statute) - usury (contract for greater than legal interest rate) - contracts against public policy |
|
|
Q882.
Intentional wrongful interference w/a valid K relationship and legality of Ks |
A882.
Calling for the intentional wrongful interference w/a valid K renders a K unenforceable UNLESS that interference results from a sale of a business/ termination of an employee and a covenant not to compete |
|
|
Q883.
Requirements in order for a covenant not to compete to be valid |
A883.
1.) protects legit interests of buyer or employer w/o creating too large a burden on seller or employee (based on ability to find other work) 2.) is reasonable as to length of time under the circumstances to protect those interests 3.) is reasonable as to area to protect interests of same area 4.) same whether employer or employee initiated termination |
|
|
Q884.
Two types of Ks that are void as against public policy |
A884.
1.) Unduly restrictive covenants not to compete 2.) exculpatory clauses found in Ks in which one party tries to avoid liability for own negligence (UNLESS both parties have relatively equal bargaining power) |
