Hackney Business Law Test #2 – Flashcards
Unlock all answers in this set
Unlock answersquestion
Elements of a Contract
answer
1. Agreement between 2. Competent Parties with 3. Genuine Assent supported by 4. Consideration for a 5. Legal Object/Purpose and in a 6. Legal Form if any is required
question
Privity
answer
Definition: succession or chain of relationship to the same thing or right, such as privity of contract, privity of estate, privity of possession i.e.: a relation between two parties that is recognized by law, such as that of blood, lease, or service.
question
Contract Under Seal
answer
A type of formal contract. Definition: contract executed by affixing a seal or making an impression on the paper or on some adhering substance such as wax attached to the document.
question
Contracts of Record/Recognizance (synonymous)
answer
A type of formal contract. Definition: Obligations that have been entered before a court of record.
question
Express Contract
answer
A type of simple contract. Definition: An agreement of the parties manifested by their words, whether spoken or written.
question
Implied Contract
answer
A type of simple contract. Definition: A contract expressed by conduct or implied or deduced from the facts.
question
Valid Contract
answer
Definition: An agreement that is binding and enforceable.
question
Voidable Contract
answer
Definition: An agreement that is otherwise binding and enforceable but may be rejected at the option of one of the parties as the result of specific circumstances.
question
Void Agreement
answer
Definition: An agreement that cannot be enforced.
question
Bilateral Contract
answer
Definition: An agreement under which one promise is given in exchange for another. Example: Owner promises to pay $5000 to painter, painter promises to paint the house.
question
Unilateral Contract
answer
Definition: A contract under which only one party makes a promise. Examples: Offered reward, contest.
question
Option Contract
answer
Definition: A contract to hold an offer to make a contract open for a fixed period of time.
question
Right of First Refusal
answer
Definition: The right of a party to meet the terms of a proposed contract before it is executed. Example: Real estate purchase agreement.
question
Quasi Contract
answer
Definition: A court-imposed obligation to prevent unjust enrichment in the absence of a contract. IT IS NOT A CONTRACT!
question
Is advertising an invitation to negotiate?
answer
Yes
question
Termination of Offers (not a list)
answer
Generally terminable at will. Other ways: 1. Revocation 2. Counter-offer 3. Rejection 4. Lapse of Time 5. Death of a party 6. Disability of a party 7. Subsequent illegality
question
Silence
answer
-Offeree's silence and failure to act cannot be regarded as acceptance -Offeror not permitted to frame offer to make silence and inaction of offeree operate as acceptance -Modifications to existing contract cannot be made without agreement of other party's actual acceptance or approval
question
Unordered Goods and Tickets
answer
"Unless notified to contrary, seller will send specified merchandise and the recipient is obligated to pay for it at stated prices" does not warrant acceptance.
question
Mailbox Rule
answer
Acceptance is effective upon dispatch even before it is received by the offeror.
question
Capacity
answer
Definition: The ability to understand that a contract is being made and to understand its general meaning. Factual and temporary incapacity can void a contract.
question
Status Capacity/Legal Capacity (synonymous)
answer
Law protects classes by keeping them out of unwise contracts Most important class today is minors.
question
Factual Capacity
answer
Definition: Temporary or permanent: mental condition caused by medications, alcohol, illness, age. A person does not understand that a contract is being made. Example: getting a tattoo when drunk.
question
Minors
answer
Under age 18. Lacks contractual capacity. Making contracts voidable. At election of the minor, minor may affirm or ratify contract on attaining majority at the election of the minor. Minors must pay reasonable value for necessaries.
question
Types of Mistake
answer
1. Mutual Mistake of Fact - Recession -->Yes 2. Unilateral Mistake of Fact - Recession -->No 3. Mutual Mistake of Law - Recession -->Maybe 4. Unilateral Mistake of Law - Recession -->No
question
Unilateral Mistake
answer
A mistake by only ONE of the parties.
question
Mutual Mistake
answer
Both parties enter into a contract under mutually mistaken understanding concerning a basic assumption of fact or law. Voidable by the adversely affected party if mistake has a material effect on the agreed exchange.
question
Undue Influence
answer
Definition: Influence that is asserted upon another person by one who dominates that person. Requires fiduciary.
question
Duress
answer
Definition: 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. Requires threats.
question
Consideration
answer
Definition: A promise or performance that the promisor demands as the price of the promise. Gifts are not supported by consideration.
question
Forbearance
answer
A form of consideration. Definition: Refraining from doing an act.
question
Illusory Promise
answer
Definition: A promise that in fact does not impose any obligation on the promisor.
question
Good-Faith Adjustment
answer
Exception to consideration. Definition: A second promise to the original agreement. Example: Bonus to finish a construction project on time.
question
Contract for Sale of Goods
answer
Exception to consideration. When the contract is for the sale of goods, any modification made in good faith by the parties to the contract is binding without regard to the existence of consideration for the modification.
question
Part-Payment Checks
answer
Exception to consideration. When there is a good-faith dispute about the amount of a debt and the debtor tenders a check that states on its face "paid in full" and references the transaction in dispute, but the amount of the check is less than the full amount the creditor asserts is owed, the cashing of the check by the creditor discharges the entire debt.
question
The Two Types of Minors
answer
Misrepresenting Minors: (Fake ID) guilty of fraud. A misrepresentation still means a minor can disaffirm a contract. Innocent Minor: doesn't have to make restitution
question
Composition of Creditors
answer
Exception to consideration. Definition: An agreement among creditors that each shall accept a part payment as full pay ment in consideration of the other creditors doing the same.
question
Promissory Estoppel
answer
Doctrine that a promise will be enforced although it is not supported by consideration when the promisor should have reasonably expected that the promise would induce action or forbearance of a definite and substantial character on the part of the promised and injustice can be avoided only by enforcement of the promise.
