business law chapters 11-19

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Mutuality of obligation
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both parties must be bound to perform their obligations or the law will treat the agreement as if neither party is bound to perform.
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Privity
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the legal term for a close, mutual, or successive relationship to the same right of property or the power to enforce a promise or warranty. It is an important concept in contract law.
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Objective theory of contracts
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intent is determined by the Objective theory of contracts. the theory is that a party’s intention to enter into a legally binding agreement, or contract, is judged by outward, objective facts. the facts are as interpreted by a reasonable person
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three parts of the objective theory of contracts
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What the party said when entering into the contact, how the party acted or appeared (intent may be manifested by conduct as well as by oral or written words), The circumstances surrounding the transaction.
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What are the 4 elements of a valid contract?
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agreement, consideration, contractual capacity, and legality
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What are the two additional problems that may occur causing enforcement problems with a contract?
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voluntary consent and theirform
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bilateral
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when the offereee can accept by simply promising to perform. ” a promise for a promise”.
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unilateral
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the offer is phrased so that the offereee can accept the offer only by completing the contract performance. “Promise for an act”
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formal contract
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require a special form or method of creation (formation) to be enforceable such as negotiable instruments such as, checks, drafts, promissory notes, bills of exchange, and certificates of deposit.
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informal contracts
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(simple contracts) include all other contracts. no special form is required (except for certain types of contracts that must be in writing), as the contracts are usually based on their substance and not their form.
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express contracts
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the terms of the agreement are fully and explicitly stated in words, oral or written.
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implied contracts
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the terms of the agreement are fully and explicitly stated in words, oral or written.
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valid contract
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has the elements necessary to entitle at least one of the parties to enforce it in court.
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voidable contracts
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is a valid contract but one that can be avoided at the option of one or both parties. the party having the option can elect either to avoid any duty to perform or to ratify (make valid) the contract.
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unenforceable contracts
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one that cannot be enforced because of certain legal defenses against it.
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void contracts
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is not contract at all. meaning none of the parties have any legal obligations if a contract is void.
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What are the requirements of a valid offer?
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1. the offeror must have a serious intention to become bound by the offer. 2. the terms of the offer must be reasonably certain, or definite, so that the parties and the court can ascertain the terms of the contract. 3. the offer must be communicated to the offeree.
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What occurrences do not constitute and offer?
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statements of future intent, expressions of opinion.
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What is required to meet the standard for definite and certain?
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the identification of the parties, the identification of the object or subject matter of the contract (also the quantity when appropriate), the consideration to be paid and the time of payment, delivery, or performance.
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What two ways can an offer be terminated?
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Termination by action of the parties and termination by operation of law
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What are the ways an offer can be terminated by Action of the Parties?
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revocation, rejection or counteroffer.
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revocation
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The offerorsss act of withdrawing an offer. unless an offer is irrevocable, the offeror can usually revoke the offer.
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rejection of an offer
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if the offeree rejects the offer-by words or by conduct-the offer is terminated
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termination of an offer by a counteroffer
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a rejection of the original offer and the simultaneous making of a new offer
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What are the ways an offer terminated by Operation of Law?
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lapse of time, destruction of the subject matter, death or incompetence of the offeror or the offereee and if it is illegal
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What are the requirements for an acceptance to be valid?
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The acceptance must be unequivocal and must be communicated to the offeror
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What are the two elements of valid consideration?
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it must be something of legal sufficient value and there must be a bargain for exchange
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what consideration is considered something of value in the eyes of the law?
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a promise to do something that one has no prior legal duty to do, the performance of an action that one is otherwise not obligated to undertake and the refraining from an action that one has a legal right to undertake (called a forbearance).
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What are the 3 kinds of consideration to which the law gives value?
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an act, a promise or a forbearance
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What are the three kinds of agreements we covered that are unenforceable because they lack consideration?
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pre-existing legal obligations, past considerations and moral obligations
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What are the 3 exceptions to the requirements of consideration to support a valid agreement?
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doctrine of promissory estopel, a promise that is bared by the statute of limitations and charitable subscriptions.
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what is procedural Unconscionability?
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arises when a party’s lack of knowledge or understanding of the contract term like, inconspicuous print or unintelligent language, deprived him or her of any meaningful choice.
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what is substantive unconscionability?
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occurs when contracts, or portions of contacts, are oppressive or overly harsh.
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mistake of value
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does not effect the contract at all
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mistake of fact
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the contract may be voidable the contract is voidable unless it doesn’t involve some material fact
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material fact
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a fact that a reasonable person would consider important when determining his or her course of action
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what are exceptions to the patrol evidence rule?
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undue influence,
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what are three way contract duties can be discharged by operation of law
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statute of limitations, bankruptcy and impossibility

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