Business Law Chapters 11-19 Flashcard

Promisor
Person making the promise
Promisee
Person to whom the promise is made
Objective Theory of Contracts
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
Requirements of a valid contract
Agreement, Consideration, Contractual Capacity, Legality
Offeror
party making the offer
Offeree
party to whom the offer is made
Bilateral Contracts
promise is given in exchange for a return promise
Unilateral Contracts
promise for an act (moment the contract is performed)
Formal Contracts
contracts that require a special form or method of creation to be enforceable
Informal Contracts
a contract that doesn’t require a specified form or formality in order to be valid
Express Contract
terms of the agreement are fully and explicitly stated in words, oral or written
Implied Contract
contract formed in whole or in part from the conduct of the parties (as opposed to an express contract)
Executed Contract
contract that has been fully performed on both sides
Executory contract
contract that has not been fully performed by the parties
Valid Contract
has the elements necessary to entitle at least one of the parties to enforce it in court
Voidable Contract
valid contract but one that can be avoided at the option of one or both of the parties
Unenforceable Contract
contract that cannot be enforced because of certain legal defenses against it
Void Contract
no contract at all
Quantum meruit
“as much as he or she deserves” the extent of compensation owed under a contract implied in law
Quasi contracts
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
Extrinsic Evidence
any evidence not contained in the document itself
Contract
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
Agreement
a meeting of 2 or more minds in regard to the terms of a contract
Offer
promise or commitment to do or refrain from doing some specified action in the future
Revocation
offeror’s act of withdrawing an offer
Option Contract
offeror promises to hold an offer open for a specified period of time in return for a payment given by the offeree
Counteroffer
rejection of the original offer and the simultaneous making of a new offer
Mirror image rule
offeree’s acceptance to match the offeror’s offer exactly–to mirror the offer
Mailbox rule
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
Forum Selection Clause
provision in a contract designating the court, jurisdiction, or tribunal that will decide any disputes arising under the contract
Click-on Agreement
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”
Shrink Wrap Agreement
terms are expressed inside the box in which the goods are packaged
Browse-wrap terms
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.
E-signature
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
Partnering agreement
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
Record
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
Forbearance
the refraining from an action that one has a legal right to undertake
Rescission
the unmaking of a contract so as to return the parties to the positions they occupied before the contract was made
Past Consideration
something given or some act done in the past, which cannot ordinarily be consideration for a later bargain
Accord and Satisfaction
debtor offers to pay, and a creditor accepts, a lesser amount than the creditor originally claimed was owed
Liquidated debt
the amount has been ascertained, fixed, agreed on, settled, or exactly determined
Unliquidated debt
amount of the debt is not settled, fixed , agreed on, ascertained, or determined, and reasonable persons may differ over the amount owed
Covenant not to sue
the parties simply substitute a contractual obligation for some other type of legal action based on a valid claim
Promissory estoppel
a person who has reasonably and substantially relied on the promise of another may be able to obtain some measure of recovery
Estopped
barred, impeded, or precluded
Age of Majority
The age at which an individual is considered legally capable of conducting himself or herself responsibly (when a person is no longer a minor)
Emancipation
The act of being freed from parental control
Disaffirmance
the legal avoidance, or setting aside, of a contractual obligation
Necassaries
basic needs such as food, clothing, shelter, and medical services
Ratification
act of accepting and giving legal force to an obligation that previously was not enforceable
Usury
lender who makes a loan at an interest rate above the lawful maximum
Covenant not to compete
contractual promise to refrain from competing with another party for a certain period of time and within a certain geographic area
Unconscionable
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
Reformation
court ordered correction of a written contract so that it reflects the true intentions of the parties
Exculpatory Clauses
release a party from liability in the event of monetary or physical injury no matter who is at fault.
Contractual Capacity
legal ability to enter into a contractual relationship
Voluntary Consent
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
Scienter
knowledge by the misrepresenting party that material facts have been falsely represented or omitted with an intent to deceive
Latent Defects
defects that could not readily be ascertained (found out for certain)
Negligent Misrepresentation
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
Adhesion contracts
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)
Innocent Misrepresentation
person makes a statement that she or he believes to be true but that actually misrepresents material facts
Condition
qualification in a contract based on a possible future event
Condition precedent
condition that must be fulfilled before a party’s performance can be required
Discharge
terminate one’s contractual duties
Performance
fulfillment of one’s duties arising under a contract with another; the normal way of discharging one’s contractual obligations
Condition subsequent
when a condition operates to terminate a party’s absolute promise to perfrom
Concurrent conditions
when each party’s performance is conditioned on the other party’s performance or tender of performance (offer to perform)
Tender
unconditional offer to perform by a person who is ready, willing, and able to do so
Breach of Contract
the nonperformance of a contractual duty
Anticipatory repudiation
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
Mutual Rescission
the parties must make another agreement that also satisfies the legal requirements for a contract. Must be an offer, an acceptance, and consideration
Novation
both parties to a contract agree to substitute a third party for one of the original parties
Discharge in bankruptcy
the release of a debtor from all debts that are provable, except those specifically excepted from discharge by statute
Impossibility of performance
after a contract has been made, supervening events may make performance impossible in an objective sense. Can discharge a contract
Commercial impracticability
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
Frustration of purpose
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
Incidental damages
expenses that are caused directly by a breach of contract– such as those incurred to obtain performance from another source
Nominal damages
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
Mitigation of Damages
rule requiring a plaintiff to have done whatever was reasonable to minimize the damages caused by the defendant
Liquidated damages
certain dollar amount is to be paid in the event of a future default or breach of contract
Penalty
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.
Restitution
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
Specific performance
performance of the act promised in the contract
Waiver
an intentional, knowing relinquishment (give up) of a legal right
Consequential damages
foreseeable damages that result from a party’s breach of contract (special damages)
Consequential damages

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