Business Law Test 1

Front 1

Chapter 5 introduction to contracts

Back 1

Chapter 5 a

Front 2

is a deliberate and complete agreement between two or more competent persons, not necessarily in writing, supported by mutual consideration, to do some act voluntarily. By definition , a - is enforceable in the court of law

Back 2

Contract

Front 3

A test based on how a “reasonable person” would view the matter

Back 3

Objective standard test

Front 4

Legal assumption that parties to a contract are able to look after their own interests

Back 4

Bargaining power

Front 5

Chapter 6 forming contractual relationships

Back 5

Chapter 6

Front 6

The starting point for all contracts. An - is a promise to enter into a contract, on specified terms, as a soon as the - is accepted

Back 6

Offer

Front 7

An expression of willingness to do business

Back 7

Invitation to treat

Front 8

A “take it or leave it” contract, where the customer agrees to a standard set of terms that favours the other side

Back 8

Standard form contract

Front 9

The withdrawal of an offer

Back 9

Revocation

Front 10

An agreement where, in exchange for payment, an offeror is obligated to keep an offer open for a specified time

Back 10

Option agreement

Front 11

The expiration of an offer after a specified or reasonable period

Back 11

Lapse

Front 12

An unqualified willingness to enter into a contract on the terms in the offer

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Acceptance

Front 13

The price paid for a promise

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Consideration

Front 14

A promise in which no consideration is given

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Gratuitous promise

Front 15

A legal obligation that a person already owes

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Pre-existing legal duty

Front 16

Once a - is affixed, it is evidence of serious intent and acknowledgement that the contract is enforceable. No further consideration is necessary

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Promise under seal

Front 17

A doctrine whereby someone who relies on a gratuitous promise may be able to enforce it

Back 17

Promissory estoppel

Front 18

Promise at issue must have been intended to be a contractual one

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Intention to contract

Front 19

Common law presumed that in the marketplace, the intention to contract is presumed

Back 19

Business agreements

Front 20

A contract that, in certain circumstances, an aggrieved party can choose to keep in force or bring to an end

Back 20

Voidable contract

Front 21

A contract involving a defect so substantial that it is of no force or effect

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Void contract

Front 22

The ability to make binding contracts

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Legal capacity

Front 23

It is the age at which a person becomes an adult for legal purposes

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Age of majority

Front 24

The threat of economic harm that coerces the will of the other party and results in a contract

Back 24

Economic duress

Front 25

Unfair manipulation that compromises someone’s free will or choice

Back 25

Undue influence

Front 26

An unfair contract formed when one party takes advantage of the weakness of another

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Unconscionable contract

Front 27

A false statement of fact that causes someone to enter a contract

Back 27

Misrepresentation

Front 28

The remedy that results in the parties being returned to their pre-contractual positions

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Rescission

Front 29

The speaker has a deliberate intent to mislead or makes the statement recklessly without knowing or believing that it is true

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Fraudulent misrepresentation

Front 30

The speaker makes the statement carelessly or negligently

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Negligent misrepresentation

Front 31

The speaker has not been fraudulent or negligent, but has misrepresented a fact. By process of elimination, the misrepresentation is merely -

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Innocent misrepresentation

Front 32

An error made by one or both parties that seriously undermines a contract

Back 32

Legal mistake

Front 33

Both parties to the agreements share the same fundamental mistake

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Common mistake

Front 34

A remedy available where parties have made a mistake in recording their agreement and based on establishing the specific terms actually agreed to

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Rectification

Front 35

A contract that cannot be enforced because it is contrary to legislation or public policy

Back 35

Illegal contract

Front 36

The community’s common sense and common conscience

Back 36

Public policy

Front 37

Requires that certain contracts be in writing to be enforceable

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Statute of frauds

Front 38

When both parties have fulfill their contractual obligations to each other, they have performed the contrsct

Back 38

Termination through performance

Front 39

Performance of contractual obligations through others

Back 39

Vicarious performance

Front 40

Parties are always free to voluntarily bring their contract to an end. Both parties could agree to simply walk away from their agreement, or one party could pay a sum to the other side by way of settlement in exchange for agreeing to end the contract

Back 40

Termination through agreement

Front 41

The substitution of parties in a contract or the replacement of one contract with another

Back 41

Novation

Front 42

Transfer of a right by an assignor to an assignee

Back 42

Assignment

Front 43

Termination of a contract upon the occurrence of an unforeseen catastrophic event which makes contractual performance impossible or prevents the contract from being performed in a manner at all similar to what the parties envisioned when they entered the contract

Back 43

Frustration

Front 44

Deal with risks of unforeseen events, and allow parties to delay or terminate the contract

Back 44

Force majeure clauses

Front 45

Proof that there is better than 50% chance that the circumstances of the contract are as the plaintiff contends

Back 45

Balance of probabilities

Front 46

The plaintiff has to establish that there is a contract between the parties

Back 46

Privity of contract

Front 47

The plaintiff must prove that the other party (the defendant) has failed to keep one or more promises or terms of the contract

Back 47

Breach of contract

Front 48

The plaintiff must demonstrate that it is entitled to the remedy claimed or is otherwise deserving of the courts assistance

Back 48

Entitlement to remedy

Front 49

An important term, which, if breached, gives the innocent party the right to terminate the contract and claim damages

Back 49

Condition

Front 50

A minor term, which, if breached, gives the innocent party the right to claim damages only

Back 50

Warranty

Front 51

A term that cannot easily be classified as either a condition or a warrant

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Innominate term

Front 52

A breach that occurs before the date of performance

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Anticipatory breach

Front 53

Monetary compensation for breach of contract or other actionable wrong

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Damages

Front 54

Damages that provide the plaintiff with the monetary equivalent of contractual performance

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Expectation damages

Front 55

An award to the plaintiff to punish the defendant for malicious, oppressive, and high handed conduct

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Punitive damages

Front 56

- damages are for financial loss

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Pecuniary damages

Front 57

- damages are for loss of enjoyment, mental distress

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Non-pecuniary damages

Front 58

Instead of providing monetary compensation the court orders the party who breached to do exactly what the contract obliged him to do

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Specific performance- equitable remedy

Front 59

Occurs when one party has undeservedly or unjustly secured a benefit at the other party’s expense

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Unjust enrichment

Front 60

An amount that is reasonable given the benefit the plaintiff has conferred

Back 60

Restitutionary quantum meruit

Front 61

Terms of the contract that state or make explicit one party’s promise to another

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Express terms

Front 62

Terms that are not expressly included in a contract but that are necessary to give effect to the parties’ intention

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Implied terms

Front 63

Terms that are not expressly included in a contract but that are necessary to give effect to the parties’ intention

Back 63

Implied terms

Front 64

Guiding principles for interpreting or “-“ the terms of a contract

Back 64

Rules of construction

Front 65

Permits judges to imply terms necessary to make the contract workable

Back 65

Business efficacy

Front 66

Terms that are not expressly included in a contract but that are necessary to give effect to the parties’ intention

Back 66

Implied terms

Front 67

Promises made outside of a written contract are not defensible in court

Back 67

Parole evidence rule

Front 68

Terms that are not expressly included in a contract but that are necessary to give effect to the parties’ intention

Back 68

Implied terms

Front 69

Guiding principles for interpreting or “-“ the terms of a contract

Back 69

Rules of construction

Front 70

Permits judges to imply terms necessary to make the contract workable

Back 70

Business efficacy

Front 71

Promises made outside of a written contract are not defensible in court

Back 71

Parole evidence rule

Front 72

Term of a contract that limits liability for breach to something less than what would otherwise be recoverable

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Limitation of liability cause

Front 73

Terms that are not expressly included in a contract but that are necessary to give effect to the parties’ intention

Back 73

Implied terms

Front 74

Guiding principles for interpreting or “-“ the terms of a contract

Back 74

Rules of construction

Front 75

Permits judges to imply terms necessary to make the contract workable

Back 75

Business efficacy

Front 76

Promises made outside of a written contract are not defensible in court

Back 76

Parole evidence rule

Front 77

Term of a contract that limits liability for breach to something less than what would otherwise be recoverable

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Limitation of liability cause

Front 78

Term of a contract that identifies events causing loss for which there is no liability

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Exemption clause

Front 79

Terms that are not expressly included in a contract but that are necessary to give effect to the parties’ intention

Back 79

Implied terms

Front 80

Guiding principles for interpreting or “-“ the terms of a contract

Back 80

Rules of construction

Front 81

Permits judges to imply terms necessary to make the contract workable

Back 81

Business efficacy

Front 82

Promises made outside of a written contract are not defensible in court

Back 82

Parole evidence rule

Front 83

Term of a contract that limits liability for breach to something less than what would otherwise be recoverable

Back 83

Limitation of liability cause

Front 84

Term of a contract that identifies events causing loss for which there is no liability

Back 84

Exemption clause

Front 85

Term of a contract that specifies how much one party must pay the other in the event of breach

Back 85

Liquidated damages clause