Business Law, (Chapter 10) Capacity – Flashcards
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1) offer 2) effective acceptance 3) mutual assent
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4) legality 5) capacity
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Illegal agreement
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One that violates criminal law or tort law, a statute, and/or public policy as established by the court.
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Capacity
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Legal ability to enter a valid contract.
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Disaffirm
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Law allows minors privilege to disaffirm (negate) a contract to protect themselves from others .
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Rescind
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Minors are able to change their mind.
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Majority
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Minors who reach the age of 21 are said to have reached majority.
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Emancipated minor
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No longer under control of their parents, are responsible for their own contracts.
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Misrepresentation of age
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Despite this misrepresentation of age, most states will allow the minor to reaffirm of get out of the contract.
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Ratification or affirmance
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With in a reasonable amount of time thereafter, the willingness to abide by contractual obligations.
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Mentally impaired
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Suffers from a psychological disorder may be voidable if the person's impairment is severe enough to rob that person's ability to understand the nature and purpose and effect of contract.
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Mentally impaired (Disaffirm)
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Disaffirm any contract made while made under the influence of that mental impairment.
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under the influence (drugs or alcohol)
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Contract be voidable. A person who enters a contract while under the influence of alcohol or drugs may not be considered incompetent at the time the contract was made.
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Unlawful to commit a tort.
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The law will not uphold any contract that obligated one of the parties to commit a tort.
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Usury
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Illegal practice of charging more than the amount of interest allowed by law.
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Specialty statutes. Who can use high interest rates.
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Small time loan shops such as pawn shops, and load places that lend to high risk applicants.
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Licensing to operate legally
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To provide a source of revenue, part of which is used to supervise the business or profession being licensed.
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Sunday Agreements (Blue Laws)
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Banning ordinances that regulate the making and performing of contracts on Sunday. (made on blue paper)
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Laws who do restrict (Sunday business)
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1st) agreements made on Sunday may be invalid. (exceptions agreements necessary to health, welfare, and safety of residence and community. 2nd) agreements made on Sunday for work to be done or goods to be delivered on a business day are valid and enforceable.
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Sale of business
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Time and geography restrictions (Restrictive Covenants)
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Restrictive employment covenant or Noncompete Agreement.
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Limits workers employment options after leaving his/her present job. To protect present employer. Must be reasonable in type of work, length of time and geography.
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"In par delito" (equally at fault) No action will be made to help either party
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Both parties that enter into an illegal agreement are equally wrong in the knowledge of the operation and effect of their contract.
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Conspiracy
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Person's who agree to commit acts for a promised consideration are involved in what criminal law defines as a conspiracy.
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Partially legal
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If legal part of contract can be removed from illegal part without changing essential nature of contract then the agreement is said to be divisible. Court will in force legal part.
