Business Law Test 4

Front 1

Statute of Frauds

Back 1

certain agreements are required by law to be in writing or evidenced by a record. If there is no written evidence of the contract, it may not be enforceable

Front 2

Parol evidence rule

Back 2

if a court finds that the parties intended their written contract to be a complete and final statement of their agreement, then it will not allow either party to present parol evidence (testimony or other evidence of communications between the parties that are not contained in the contract itself)

Front 3

Contracts required to be in writing

Back 3

1. Contracts involving interests in land
2. Contracts that cannot be performed within one year from the day after the date of formation.
3. Collateral, or secondary, contracts
4. Promises made in consideration of marriage.
5. Under the Uniform Commercial Code contracts for the sale of goods priced at $500 or more

Front 4

Contracts Involving Interests in Land

Back 4

A contract calling for the sale of land is not enforceable unless it is in writing or evidenced by a written memorandum. Land is real property and includes all physical objects that are permanently attached to the soil, such as buildings, fences, trees, and the soil itself

Front 5

Contracts Involving Interests in Land exceptions

Back 5

Partial Performance
Admission
Promissory Estoppel

Front 6

The One-Year Rule

Back 6

Contracts that cannot, by their own terms, be performed within one year from the day after the contract is formed must be in writing to be enforceable

Front 7

The One-Year Rule exceptions

Back 7

Admission
Promissory Estoppel

Front 8

Collateral Promise

Back 8

one made by a third party to assume the debts or obligations of a primary party to a contract if that party does not perform

Front 9

Collateral Promise exceptions

Back 9

Main Purpose rule
Admission
Promissory Estoppel

Front 10

Promises Made in Consideration of Marriage

Back 10

A unilateral promise to make a monetary payment or to give property in consideration of a promise to marry

ex. prenuptial agreements

Front 11

Contracts for the Sale of Goods

Back 11

The Uniform Commercial Code (UCC) includes Statute of Frauds provisions that require written evidence or an electronic record of a contract for the sale of goods priced at $500 or more

Front 12

Contracts for the Sale of Goods exceptions

Back 12

Customized goods
Admission (quantity)
Partial Performance

Front 13

Partial Performance

Back 13

when the purchaser has paid part of the price, taken possession of the property, and made permanent improvements to it, the parties clearly cannot be returned to the positions they occupied before the contract was formed

Front 14

Admissions

Back 14

In some states, if a party against whom enforcement of an oral contract is sought "admits" in pleadings, testimony, or otherwise in court that a contract for sale was made, the contract will be enforceable.9 A contract subject to the UCC will be enforceable, but only to the extent of the quantity admitted.

Front 15

Promissory Estoppel

Back 15

if a promisor makes a promise on which the promisee justifiably relies to his or her detriment, a court may estop (prevent) the promisor from denying that a contract exists

Front 16

Main Purpose Rule

Back 16

If the main purpose of the contract between A & B is to benefit C, it doesn't have to be in writing

Front 17

Special exceptions under the UCC

Back 17

apply to sales contracts. Oral contracts for customized goods may be enforced in certain circumstances. Another exception has to do with oral contracts between merchants that have been confirmed in a written memorandum

Front 18

Exceptions to the Parol Evidence Rule

Back 18

1. Contracts subsequently modified
2. Voidable or void contracts
3. Contracts containing ambiguous terms
4. Incomplete contracts
5. Prior dealing, course of performance, or usage of trade
6. Contracts subject to an orally agreed-on condition precedent
7. Contracts with an obvious or gross clerical (or typographic) error that clearly would not represent the agreement of the parties

Front 19

Condition precedent

Back 19

the parties agree that a condition must be fulfilled before a party is required to perform the contract

Front 20

Integrated contract

Back 20

whether the written contract is intended to be a complete and final statement of the terms of the agreement

Front 21

Assignment

Back 21

The transfer of contractual rights to a third party

Front 22

Rights that cannot be assigned

Back 22

1. When a Statute Prohibits Assignment
2. When a Contract Is Personal in Nature
3. When an Assignment Will Significantly Change the Risk or Duties of the Obligor
4. When the Contract Prohibits Assignment

Front 23

Delegations

Back 23

does not relieve the party making the delegation (the delegator ) of the obligation to perform in the event that the party to whom the duty has been delegated (the delegatee ) fails to perform. No special form is required to create a valid delegation of duties. As long as the delegator expresses an intention to make the delegation, it is effective; the delegator need not even use the word delegate

Front 24

Duties that cannot be delegated

Back 24

1. When the Duties Are Personal in Nature
2. When Performance by a Third Party Will Vary Materially from That Expected by the Obligee
3. When the Contract Prohibits Delegation

Front 25

Third Party Beneficiary

Back 25

When the original parties to the contract agree that the contract performance should be rendered to or directly benefit a third person

Front 26

Intended Beneficiary

Back 26

Has legal rights and can sue the promisor directly for breach of the contract

1. Performance is rendered directly to the third party.
2. The third party has the right to control the details of performance.
3. The third party is expressly designated as a beneficiary in the contract.

Front 27

Creditor Beneficiary

Back 27

benefits from a contract in which one party (the promisor) promises another party (the promisee) to pay a debt that the promisee owes to a third party (the creditor beneficiary).

Front 28

Donee beneficiary

Back 28

When a contract is made for the express purpose of giving a gift to a third party, the third party (the donee beneficiary) can sue the promisor directly to enforce the promise
ex. life insurance policy

Front 29

When do the rights of third parties vest?

Back 29

1. The third party materially changes his or her position in justifiable reliance on the promise.
2. The third party brings a lawsuit on the promise.
3. The third party demonstrates her or his consent to the promise at the request of the promisor or promisee

Front 30

Incidental beneficiary

Back 30

The benefit they receive from a contract between two parties is unintentional

Front 31

Condition

Back 31

a possible future event, the occurrence or nonoccurrence of which will trigger the performance of a legal obligation or terminate an existing obligation under a contract.1 If this condition is not satisfied, the obligations of the parties are discharged

Front 32

Conditions Precedent

Back 32

A condition that must be fulfilled before a party's performance can be required

Front 33

Conditions Subsequent

Back 33

The condition follows the time that the absolute duty to perform arose. If the condition occurs, the party's duty to perform is discharged

Front 34

Concurrent Conditions

Back 34

When each party's performance is conditioned on the other party's performance or tender of performance (offer to perform). Occur only when the contract calls for the parties to perform their respective duties simultaneously.

Front 35

Express conditions

Back 35

provided for by the parties' agreement.

Front 36

Implied conditions

Back 36

understood to be part of the agreement, but they are not found in the express language ofthe agreement

Front 37

Tender

Back 37

an unconditional offer to perform by a person who is ready, willing, and able to do so

Front 38

Anticipatory repudiation

Back 38

Saying in advance the intention to not perform on the contract

Front 39

Rescission

Back 39

the process by which a contract is canceled or terminated and the parties are returned to the positions they occupied prior to forming it

Front 40

Novation (&4)

Back 40

when both of the parties to a contract agree to substitute a third party for one of the original parties. The requirements of a novation are as follows:

1. A previous valid obligation.
2. An agreement by all parties to a new contract.
3. The extinguishing of the old obligation (discharge of the prior party).
4. A new contract that is valid.

Front 41

Settlement Agreement

Back 41

arises out of a genuine dispute over the obligations under an existing contract will be recognized at law. Such an agreement will be substituted as a new contract, and it will either expressly or impliedly revoke and discharge the obligations under any prior contract

Front 42

Accord and Satisfaction

Back 42

the parties must agree to accept performance that is different from the performance originally promised

Front 43

Discharge by operation of law (4)

Back 43

1. Alteration of the Contract
2. Statutes of Limitations
3. Bankruptcy
4. Impossibility or Impracticability of Performance

Front 44

Alteration of the Contract

Back 44

the law operates to allow an innocent party to be discharged when the other party has materially altered a written contract without consent

Front 45

Statute of Limitations

Back 45

restrict the period during which a party can sue on a particular cause of action. After the applicable limitations period has passed, a suit can no longer be brought to court

Front 46

Bankruptcy

Back 46

bar enforcement of most of the debtor's contracts by the creditors

Front 47

Impossibility or Impracticability of Performance

Back 47

After a contract has been made, supervening events (such as a fire) may make performance impossible in an objective sense. Performance may also become so difficult or costly due to some unforeseen event that a court will consider it commercially unfeasible, or impracticable

Front 48

Temporary Impossibility

Back 48

An occurrence or event that makes performance temporarily impossible operates to suspend performance until the impossibility ceases. Then, ordinarily, the parties must perform the contract as originally planned. If, however, the lapse of time and the change in circumstances surrounding the contract make it substantially more burdensome for the parties to perform the promised acts, the contract is discharged.

Front 49

Types of Damages (4)

Back 49

1. Compensatory(to cover direct losses and costs).
2. Consequential(to cover indirect and foreseeable losses).
3. Punitive(to punish and deter wrongdoing).
4. Nominal(to recognize wrongdoing when no monetary loss is shown).

Front 50

Compensatory damages

Back 50

These damages compensate the injured party only for damages actually sustained and proved to have arisen directly from the loss of the bargain caused by the breach of contract. They simply replace what was lost because of the wrong or damage and, for this reason, are often said to "make the person whole."

Front 51

Incidental damages

Back 51

Expenses that are caused directly by a breach of contract—such as those incurred to obtain performance from another source

Front 52

Sale of Goods

Back 52

usual measure of compensatory damages is an amount equal to the difference between the contract price and the market price

Front 53

Sale of Land

Back 53

Ordinarily, because each parcel of land is unique, the remedy for a seller's breach of a contract for a sale of real estate is specific performance—that is, the buyer is awarded the parcel of property for which she or he bargained. When this remedy is unavailable (because the seller has sold the property to someone else, for example) or when the buyer is the party in breach, the measure of damages is typically the difference between the contract price and the market price of the land.

Front 54

Consequential damages

Back 54

They are caused by special circumstances beyond the contract itself. They flow from the consequences, or results, of a breach.

Front 55

Punitive damages

Back 55

designed to punish a wrong-doer and setan example to deter similar conduct in the future, they have no legitimate place in contract law

Front 56

Nominal damages

Back 56

When no actual damage or financial loss results from a breach of contract and only a technical injury is involved. often small, such as one dollar, but they do establish that the defendant acted wrongfully

Front 57

Mitigation of damages

Back 57

Non-breaching parties have a duty to mitigate the breach of contract (in a reasonable amount of time)

Front 58

Liquidated damages

Back 58

provision in a contract specifies that a certain dollar amount is to be paid in the event of a future default or breach of contract

Front 59

Rescission and Restitution

Back 59

Rescind the contract and pay restitution. (returning goods, property, or funds previously conveyed.9 If the property or goods can be returned, they must be. If the goods or property have been consumed, restitution must be made in an equivalent dollar amount.)

Front 60

Reformation

Back 60

an equitable remedy used when the parties have imperfectly expressed their agreement in writing. Reformation allows a court to rewrite the contract to reflect the parties' true intentions.

Front 61

Requirements of Quasi Contract

Back 61

1. The party has conferred a benefit on the otherparty.
2. The party conferred the benefit with the reasonable expectation of being paid.
3. The party did not act as a volunteer in conferring the benefit.
4. The party receiving the benefit would be unjustly enriched if allowed to retain the benefit without paying for it.