Business Law Chapter 5: Elements of a Contract

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Capacity
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the legal ability to enter into a contract
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Rebuttable Presumption
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the assumption that another person has the capacity to contract
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Doctors
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are the ones to determine if someone is mentally imparied
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Age of Majority
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18 in most states
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Emancipated Minor
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one who is no longer under the legal control of his or her parents
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Disaffirm
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to show the intent not to live up to the contract
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Ratification
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the act of agreeing to go along with a contract that could have been avoided
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Parents Patriae Doctrine
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the state can act as a child’s parent when natural or adoptive parents cannot or will not perform their parental duties
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Paci Delicto & Divisible Contracts
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if certain promises and actions in a contract can be performed by themselves the contract is divisible
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Civil & Criminal Statutes
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agreements that require one party to commit a tort or a crime are illegal
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Usury Statutes
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an activity that has hidden dimension of illegality; charging more than the maximum legal intertest rate
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Gambling Statutes
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fall within the hidden dimension of illegality; playing cards, betting on sports events, or entering an office pool of money
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Sunday Statutes
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agreements made on sundays are void
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Licensing Statute
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all states have statutes that require a license to do certain jobs; the license is a legal document that grants permission from the government to do a certain job
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Public Policy
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a legal principle that holds that nobody should be allowed to do something that harms the public
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Agreements that Unreasonably Restrain Trade
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take away somebody’s ability to do business with others
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Agreements Not to Compete
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the seller promises not to open a business that competes with the buyer within the same area for a period of time
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Agreements to Fix Prices
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when competitors agree to set prices within certain ranges
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Agreements to Defeat Competitive Bidding
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laws often require governments to construct public works or buy goods and services through competitive bidding
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Competitive Bidding
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competitors submit bids for a project and the lowest qualified bid wins
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Bid
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an offer to buy and sell goods or services
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Agreements to Obstruct Justice
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a contract that gets in the way of the dispensing of justice is illegal
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Agreements Inducing Breach of Duty or Fraud
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any contract that tries to influence people who habe a position of trust or responsibility fir the well-being of others, for the private gain is unenforcable
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Agreements to Give up the Right to Litigate or Arbitrate
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contracts may include clauses that limit the ability of the parties to bring a lawsuit or to arbitrate a claim
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Agreements Interfering with Marriage
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contracts that discourage, damage, or destroy good family relationships are illegal
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Statute of Frauds
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a State Law that requires that contracts be in writing
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Written Contracts
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letter, sales slip, invoice, several words placed on a check
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Contracts must..
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identify the place, date, parties, subject matter, price and terms, & intent of the parties
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Contracts to Pay someboby Else’s Debt
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must be in writing; the debtor still owes the money; the person promising to cover the debt does so only if the debtor fails to pay
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Contracts to Pay Debts of a Person Who has Died
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must be in writing; when a person dies, somebody has to pay that person’s debts and divide up the rest of his or her property among any remaining relatives
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Contract Requiring More than a Year to Perform
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any contract that cannot be performed within one year, must be in writing; the year begins when the contract is made not when the performance is started
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Contracts in Consideration of Marriage
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when two people agree to marry, they must enter into a contract; must be in writing
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Contracts for the Sales of Goods
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a contract for the sale of goods over $500 or more must be in writing
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Contracts to Sell Real Property
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contracts for the sale of property must be in writing
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Real property
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land and anything permanently attached to the land
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Equitable Estoppel
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An exception to the rule that contracts for the sale of land must be in writing. It applies when a person relies on an owner’s oral promise to sell real estate and then makes improvements on the property or changes his or her position in an important way.
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Parol Evidence
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a written contract should contain everything that was agreed upon between the parties so that neither party can go to court and claim a contract is incorrect or fails to show the parties’ real intensions
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The Best Evidence Rule
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requires that the original written agreement (rather than a copy) be used as evidence in court
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Consideration
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the exchange of benefits and detriments by the parties to a contract
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Benefits
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something a party recieves in the agreement
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Detriment
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something the party gives up in the agreement
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Unconscionable Contract
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when the contract is so unfair that it shocks the court’s conscience
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Adhesion Contract
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a take-it-or-leave-it offer made by a party who holds most of the power in a bargaining situation
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Types of Consideration
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money, property and services, a promise not to sue, & charitable pledges
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Accord and Satisfaction
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legal way to settle contractual disputes by which one party agrees to accept less than the amount due as full payment
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Accord
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the acceptance by the creditor to recieve less
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Satisfaction
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the agreed-to settlement
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Promises Under Spell
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a seal is a mark or an impression placed on a written contract indicating that it is a formal agreement
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Promises After Discharge in Bankruptcy
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sometimes people who have had their debts discharged in bankruptcy court promise to pay debts anyway
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Promises Enforced by promissory Estoppel
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if someone making a promise should have reasonably expected the other person to rely on the promise, and the other person did rely on the promise and suffered a loss, the innocent party can use promissory estoppel to make the other party compensate him or her for the loss
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Primissory Estoppel
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the principle taht a promise made without consideration may nonetheless be enforced to prevent injustice
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Option
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sometimes one person will pay another person money to keep an offer open for a set period of time
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Illusory Promises
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when a contract seems to require something when it really does not

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