Business Law (Ch. 5 —> Ch. 12) Flashcard

Contract
Any agreement enforceable by law
Equity Theory
Exchange of items of equal value
What do contracts do?
Create both moral and legal obligations.
Social Arrangements
Are not contracts and not enforceable by law. (Prom date).
Will Theory
Wether the parties agreed to the terms set forth by the contract without duress.
Formalist Theory
What parties were thinking when a contract was laid out.
Offer
Proposal from one part to another.
Acceptance
Willingness by the offeree to go along with the proposed contract.
Mutual Assent
Meeting of the minds.
Consideration
Any promise that requires bargaining.
Capacity
Both parties must be legally competent in order to contract.
Legality of Subject Matter
Purpose of a contract must be to accomplish a legal goal, contracts agreeing to illegal acts are not enforceable in court.
Valid
Legally binding.
Void
If a contract is missing legal elements, the there is no contract.
Voidable
When you can cancel a contract
Unenforceable
Contract exists, but cannot enforce because of legal defense or court order.
Express Contract
Formed by words (oral or written)
Implied Contract
A contract formed by conduct.
Bilateral Contract
A promise for a promise.
Unilateral Promise
A promise for an act.
Oral Contract
Contract formed by of mouth.
Written Contract
Contract formed in writing, proof of agreement.
Quasi Contract
Imposed to prevent unjust enrichment (take advantage of minors).
Formal Contract
Contract requiring a special form.
Informal Contract
No special form required to contract.
Executed Contract
A contract which has been fully performed.
Executory Contract
A contract that has not yet been completed.
Agreements to Contract
Agreement to agree are to vague and do not constitute a contract.
Termination/Revocation
To withdraw an offer.
Rejected
When an offeree refuses a proposal by word or deed.
Destruction of Material
When the physical material of a contract is destroyed and the contract is voided.
Death or Incompetence
Lacks capacity to contract; contract is void.
Silence
No response does not constitute acceptance.
Concealment
When a sellers actions prevent the buyer from learning all of the facts.
Misrepresentation of Law
Ignorance of the law does not excuse concealment.
Misrepresentation by Silence
Neither party has duty to announce facts.
Fraud
Deliberate deception intended to secure an unfair or unlawful gain
Rescind
To cancel a contact
Material fact
Any fact that is important to one of the parties.
Concealment
Choice to not reveal important information; just as bad as fraud.
Five elements of fraud
False representation
Party making it must know it is false
Made with intent to rely upon falsity
Innocent party must rely on the fact
Innocent suffer monetary loss.
Unilateral Mistake
Mistake by one party, cannot use to avoid contract.
Mistake of nature
Not aware what contract entails. Bound to it.
Mistake of Identity
Voids a contract.
Bilateral Mistake
Mutual mistake. Either party can avoid contract.
Mistake of subject matter
Mistaken as the identity of the subject matter.
Duress
Overcoming ones will; agreements made under this are voidable.
Economic duress
Threats to ones business or income that destroy a persons free will to avoid a contract.
Undue Influence
Can cause a contract to be voidable, unfair and improper persuasive pressure.
Rebuttable presumption.
Permission by law to assume both parties have the power to contract; challenges or in court.
Majority
Legal age of adulthood.
Minority (Minor)
Person below legal age of adulthood.
Age of Majority
Day before birthday, law doesn’t count fractions of days in ones life.
Emancipated
Minors no longer in control of their parentsz
Abandoned
Giving up adult protection of minors.
Misrepresentation of age
Minor lies about age, may or may not be sued depending on state. Can be sued for fraud.
Minors can
Void their contracts, but only the entire thing.
Ratify
Contracts are ratified upon age of majority when minors use goods and services at the age.
Necessaries
Minor is responsible for fair value of necessaries.
Guardian
A person appointed to look after a person lacking capacity.
Intoxicated Persons
Can disaffirm contracts made when they were drunk.
Aliens
People living in he country who owe allegiance to another one.
Consideration
Exchange of benefits and detriments.
Benefit
Something a party was not entitled to revive.
Detriment
Any loss suffered.
Bargained for Exchange
Law supports anything bargained for.
Unconscionable
When consideration of a contract is out of line.
Release
An agreement not to sue.
Pledge
A charity must carry out task collecting money for.
Accord and Satisfaction
Way a dispute is settled
Accord
Acceptance from creditor of what has been billed.
Satisfaction
Agreement reached in accord.
Promissory estoppel
Stop contracting.
Firm offer
Irrevocable offer.
Option
Promise to keep offer open for a period of time
Illusory promise
Appear to be a contract but actually isn’t.
Past consideration
Something already done, not recognized by courts
Preexisting duties.
Under legal obligation to do something
Goodwill
Good reputation of a business
Price fixing
Competitions agreement to sell products at a certain cost.
License
Required in certain fields
Usury
Demand of higher rate of insurance than allowed by law.
Restrictive covenants
Promises not to compete
Bid
Offer to buy or sell certain goods at certain prices
Lottery
A game of chance used to raise money for the government
Interest
The fee the borrower pays to the lender
Restraint of Trade
Element of competition used to control prices
Competitive bidding
Process used by the government to contract public works
Memorandum
A kind of written contract
Perjury
False statements made under oath.
Goods
Moveable items such as books, furniture and clothing
The parol of evidence law
Rule that states evidence of oral statement made before signing of a contract are not admissible in court
Ambiguous
When a contract can be understood in multiple ways.
The Statute of Frauds
Law establishing written contracts as enforceablez
Real Property
Land and anything affixed to the land.
Breach of contract
Failure to perform
Discharged
End of contract
Performance
Parities have curtailed the terms set out by the contract.
Complete Performance
Contract is discharged by this once carried out properly.
Reasonable time
A time that varies case to case.
Substantial Performance
Mostly completed contract, leaving out only a few minor details.
Tender
Offer to do what you have agreed to do. Must make tender in order to bring suit.
Legal Tender
Must offer US coins or currency
Mutual release
Both parties agree to end a contract
Impossibility of performance
Death or illness of destruction of property prevents performance of a contract.
Statute of limitations
Time frame in which a law suit must be filed
Operation of Law
Court orders end of contract or a provision becomes illegal.
Bankruptcy laws
Discharging a debtors obligations, debtor can’t be imprisoned for inability to pay.
Assignment
Transfer of a right under the law
What can be assigned
Rights may be assigned unless the alter he contract in an important way.
Delegation
transfer of duties
Novation
an agreement in which the original party of a contract is replaced by a new one
Privity of Contract
Who can so whom over a question of performance
third party benificiary
not a signor but directly benefits from a contract
Damages
payments recovered in court for a person who suffered injury
actual damages
Damages directly attributable to another party’s breach of contract.
incidental damages
any reasonable expense resulting from a breach of contract.

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