question

Promisor

answer

Person making the promise

question

Promisee

answer

Person to whom the promise is made

question

Objective Theory of Contracts

answer

intent to form a contract will be judged by outward, objective facts as interpreted by a reasonable person, rather than by the party's own secret, subjective intentions

question

Requirements of a valid contract

answer

Agreement, Consideration, Contractual Capacity, Legality

question

Offeror

answer

party making the offer

question

Offeree

answer

party to whom the offer is made

question

Bilateral Contracts

answer

promise is given in exchange for a return promise

question

Unilateral Contracts

answer

promise for an act (moment the contract is performed)

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Formal Contracts

answer

contracts that require a special form or method of creation to be enforceable

question

Informal Contracts

answer

a contract that doesn't require a specified form or formality in order to be valid

question

Express Contract

answer

terms of the agreement are fully and explicitly stated in words, oral or written

question

Implied Contract

answer

contract formed in whole or in part from the conduct of the parties (as opposed to an express contract)

question

Executed Contract

answer

contract that has been fully performed on both sides

question

Executory contract

answer

contract that has not been fully performed by the parties

question

Valid Contract

answer

has the elements necessary to entitle at least one of the parties to enforce it in court

question

Voidable Contract

answer

valid contract but one that can be avoided at the option of one or both of the parties

question

Unenforceable Contract

answer

contract that cannot be enforced because of certain legal defenses against it

question

Void Contract

answer

no contract at all

question

Quantum meruit

answer

"as much as he or she deserves" the extent of compensation owed under a contract implied in law

question

Quasi contracts

answer

Fictional contract imposed on parties by a court in the interests of fairness and justice; to avoid the unjust enrichment of one party at the expense of another

question

Extrinsic Evidence

answer

any evidence not contained in the document itself

question

Contract

answer

a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty

question

Agreement

answer

a meeting of 2 or more minds in regard to the terms of a contract

question

Offer

answer

promise or commitment to do or refrain from doing some specified action in the future

question

Revocation

answer

offeror's act of withdrawing an offer

question

Option Contract

answer

offeror promises to hold an offer open for a specified period of time in return for a payment given by the offeree

question

Counteroffer

answer

rejection of the original offer and the simultaneous making of a new offer

question

Mirror image rule

answer

offeree's acceptance to match the offeror's offer exactly--to mirror the offer

question

Mailbox rule

answer

rule providing that an acceptance of an offer becomes effective on dispatch. Acceptance takes effect, thus completing formation of the contract, at the time the offeree sends or delivers the communication via the mode expressly or impliedly authorized by the offeror

question

Forum Selection Clause

answer

provision in a contract designating the court, jurisdiction, or tribunal that will decide any disputes arising under the contract

question

Click-on Agreement

answer

agreement that arises when a buyer, engaging in a transaction on a computer, indicates his or her assent to be bound by the terms of an offer by clicking on a button that says, for example, "i agree"

question

Shrink Wrap Agreement

answer

terms are expressed inside the box in which the goods are packaged

question

Browse-wrap terms

answer

terms and conditions of use that are presented to an internet user at the time certain products, such as software, are being downloaded but that need not be agreed to before being able to install or use the product.

question

E-signature

answer

electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record

question

Partnering agreement

answer

seller and a buyer who frequently do business with each other agree in advance on the terms and conditions that will apply to all transactions subsequently conducted electronically

question

Record

answer

information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable (visual) form

question

Forbearance

answer

the refraining from an action that one has a legal right to undertake

question

Rescission

answer

the unmaking of a contract so as to return the parties to the positions they occupied before the contract was made

question

Past Consideration

answer

something given or some act done in the past, which cannot ordinarily be consideration for a later bargain

question

Accord and Satisfaction

answer

debtor offers to pay, and a creditor accepts, a lesser amount than the creditor originally claimed was owed

question

Liquidated debt

answer

the amount has been ascertained, fixed, agreed on, settled, or exactly determined

question

Unliquidated debt

answer

amount of the debt is not settled, fixed , agreed on, ascertained, or determined, and reasonable persons may differ over the amount owed

question

Covenant not to sue

answer

the parties simply substitute a contractual obligation for some other type of legal action based on a valid claim

question

Promissory estoppel

answer

a person who has reasonably and substantially relied on the promise of another may be able to obtain some measure of recovery

question

Estopped

answer

barred, impeded, or precluded

question

Age of Majority

answer

The age at which an individual is considered legally capable of conducting himself or herself responsibly (when a person is no longer a minor)

question

Emancipation

answer

The act of being freed from parental control

question

Disaffirmance

answer

the legal avoidance, or setting aside, of a contractual obligation

question

Necassaries

answer

basic needs such as food, clothing, shelter, and medical services

question

Ratification

answer

act of accepting and giving legal force to an obligation that previously was not enforceable

question

Usury

answer

lender who makes a loan at an interest rate above the lawful maximum

question

Covenant not to compete

answer

contractual promise to refrain from competing with another party for a certain period of time and within a certain geographic area

question

Unconscionable

answer

contract or clause that is void on the basis of public policy because one part, as a result of his or her disproportionate bargaining power, is forced to accept terms that are unfairly burdensome and that unfairly benefit the dominating party

question

Reformation

answer

court ordered correction of a written contract so that it reflects the true intentions of the parties

question

Exculpatory Clauses

answer

release a party from liability in the event of monetary or physical injury no matter who is at fault.

question

Contractual Capacity

answer

legal ability to enter into a contractual relationship

question

Voluntary Consent

answer

The consent of both parties must be voluntary. If a contract was formed as a result of fraud, undue influence, mistake, or duress, the contract may not be enforceable

question

Scienter

answer

knowledge by the misrepresenting party that material facts have been falsely represented or omitted with an intent to deceive

question

Latent Defects

answer

defects that could not readily be ascertained (found out for certain)

question

Negligent Misrepresentation

answer

any manifestation through words or conduct that amounts to an untrue statement of fact made in circumstances in which a reasonable and prudent person would not have done (or failed to do) that which led to the misrepresentation

question

Adhesion contracts

answer

exclusively written by one party and presented to the other party on a take-it-or-leave-it basis (standard form contract such as that between a large retailer and a consumer, in which the stronger party dictates the terms)

question

Innocent Misrepresentation

answer

person makes a statement that she or he believes to be true but that actually misrepresents material facts

question

Condition

answer

qualification in a contract based on a possible future event

question

Condition precedent

answer

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

question

Discharge

answer

terminate one's contractual duties

question

Performance

answer

fulfillment of one's duties arising under a contract with another; the normal way of discharging one's contractual obligations

question

Condition subsequent

answer

when a condition operates to terminate a party's absolute promise to perfrom

question

Concurrent conditions

answer

when each party's performance is conditioned on the other party's performance or tender of performance (offer to perform)

question

Tender

answer

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

question

Breach of Contract

answer

the nonperformance of a contractual duty

question

Anticipatory repudiation

answer

before either party to a contract has a duty to perform, one of the parties may refuse to carry out his or her contractual obligations

question

Mutual Rescission

answer

the parties must make another agreement that also satisfies the legal requirements for a contract. Must be an offer, an acceptance, and consideration

question

Novation

answer

both parties to a contract agree to substitute a third party for one of the original parties

question

Discharge in bankruptcy

answer

the release of a debtor from all debts that are provable, except those specifically excepted from discharge by statute

question

Impossibility of performance

answer

after a contract has been made, supervening events may make performance impossible in an objective sense. Can discharge a contract

question

Commercial impracticability

answer

a doctrine under which a seller may be excused from performing a contract when 1) a contingency occurs 2) the contingency's occurrence makes performance impracticable and 3) the nonoccurrence of the contingency was a basic assumption on which the contract was made

question

Frustration of purpose

answer

court created doctrine under which a party to contract will be relieved of his or her duty to perform when the objective purpose for performance no longer exists beyond that party's control

question

Incidental damages

answer

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

question

Nominal damages

answer

no actual damage or financial loss results from a breach of contract and only a technical injury is involved. Often $1, establish that the defendant acted wrongfully

question

Mitigation of Damages

answer

rule requiring a plaintiff to have done whatever was reasonable to minimize the damages caused by the defendant

question

Liquidated damages

answer

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

question

Penalty

answer

specifies a certain amount to be paid in the event of a default or breach of contract, it is designed to penalize the breaching party, not to make the innocent party whole.

question

Restitution

answer

an equitable remedy under which a person is restored to his or her original position prior to loss or injury, or placed in the position he or she would have been in had the breach not occurred

question

Specific performance

answer

performance of the act promised in the contract

question

Waiver

answer

an intentional, knowing relinquishment (give up) of a legal right

question

Consequential damages

answer

foreseeable damages that result from a party's breach of contract (special damages)

Business Law Chapters 11-19 Test Answers – Flashcards

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