Business Law: Contract Elements – Flashcards
Unlock all answers in this set
Unlock answersquestion
Offer Requirements
answer
Present intent to contract, specificity/definiteness, and communication from the offeror to the offeree
question
Offeror
answer
The person making the offer to someone
question
Offeree
answer
The person receiving the offer
question
Present Intent
answer
Intent to enter the contract upon acceptance
question
Definiteness
answer
Completeness and specifics included in the offer
question
Special Offer Types
answer
Advertisements, rewards, auctions, and bids
question
Advertisements
answer
Classified as an invitation to offer
question
Rewards
answer
Classified as an offer for a unilateral contract
question
Auctions
answer
Generally classified as making an invitation to offer, so acceptance only occurs when the auctioneer strikes the goods off to the highest bidder.
question
Bids
answer
Bids are typically classified as offers to the owner, but can be reversed if the owner includes terms that state otherwise (like saying "will sell to lowest bidder")
question
Termination of Offers
answer
Can be done by stated terms within the offer, a lapse of time (reasonable amount), and revocation (any time before acceptance, even with a promise to hold offer open).
question
Option
answer
A separate contract created to promise to hold an offer open for a certain amount of time. Must include consideration ($$$)
question
Unilateral Contract Termination
answer
Can only be terminated before the offeree begins performance on the contract
question
Promissory Estoppel
answer
When the offeree relies on the offer being kept open, is enforceable in court if offeror tries to terminate offer
question
Firm Offer
answer
Applies to sale of goods only, and is similar to an option. Required to be made by an offeror that is a merchant, be contained in signed writing, and gives assurance that the offer will be kept open
question
Rejection
answer
Opposite of acceptance, can also be done by creating a counteroffer.
question
Acceptance
answer
A manifestation of assent to the terms of the offer made by the offeree in the manner invited or required by the offer
question
Evidence of Acceptance
answer
1. The offeree intended to enter the contract 2. The offeree accepted on the terms proposed by the offeror 3. The offeree communicated his acceptance to the offeror
question
Mirror Image Rule
answer
The acceptance must exactly match the offer stated or it is not an acceptance, it is a counteroffer that rejects the offer. Exception is made for UCC contracts, which don't have to be identical.
question
Communication of Acceptance
answer
Must be in the way the offeror said to communicate the acceptance if stated. If not stated, must be reasonable form of communication.
question
Mailbox Rule
answer
Acceptance of offer is effective upon dispatch
question
Acceptance in Unilateral Contracts
answer
Must perform the requested act to show acceptance
question
Silence as Acceptance
answer
Silence cannot be treated as acceptance unless specified BY THE OFFEREE, not the offeror.
question
Elements of Consideration
answer
Legal value, bargained-for and given in exchange for an act or promise
question
Legal Value
answer
Has this if it is something they had no prior legal duty to do, or refrains from something that they have a legal right to do
question
Bargained-For Exchange
answer
It must be the price that the promisor asked for in exchange for making his promise
question
Illusory Promise
answer
A promise that is not specific enough to meet consideration (such as "if I feel like it" or "as much as you have")
question
Preexisting Duty
answer
Cannot be seen as consideration if they already are required to do it/refrain from it, either by law or by preexisting contractual duties
question
Liquidated Debts
answer
Debts that are both due and certain, therefore cannot dispute the charge. A creditor's promise to discharge a liquidated debt for part payment is therefore unenforceable
question
Unliquidated Debts
answer
A good faith dispute can be made on the amount of debt due to uncertainty. If the liquidator cashes in the check for less than the amount they expected, they are accepting the discharge as full payment
question
Accord and Satisfaction
answer
The settlement of an unliquidated debt
question
Composition Agreements
answer
Agreements by two or more creditors to accept a stated percentage of the amount they are owed as full payment because the debtor will like file bankruptcy otherwise
question
Forbearance to Sue
answer
An agreement by a promisee to refrain/forbear from pursuing a legal claim against a promisor
question
Past Consideration
answer
An act or other benefit given in the past that was not given in exchange for the promise in question, and is therefore not valid consideration
question
Promissory Estoppel in Consideration
answer
Some contracts are enforceable without consideration, such as donations, debt-paying barred by statute of limitations, and debt-paying barred by bankruptcy discharge
question
Ratification
answer
A person who has the right to rescind the contract chooses not to do so
question
Misrepresentation
answer
Innocent mistake in the giving of information in making a contract
question
Fraud
answer
Intentional mistake in the giving of information in making the contract, can also be charged for punitive damages due to tort of deceit
question
Scienter
answer
A knowledge of falsity that represents the difference between innocent misrepresentation and fraud
question
Rescission Requirements for Misrepresentation
answer
1. Untrue assertion of fact 2. The fact asserted was material 3. The complaining party entered the contract because of his reliance on the asseration 4. The reliance of the complaining party was reasonable
question
Untrue Assertion of Fact
answer
Includes concealment and nondisclosure, and must be a past or existing fact (not an opinion on the future)
question
Actual Reliance
answer
The person pursues some course of action because of their faith in an assertion made to him
question
Justifiable Reliance
answer
The reliance must be justified, so the assertion cannot be obviously false or not be taken seriously
question
Mistake
answer
A belief about a fact that is not in accord with the truth
question
Requirements for Mutual Mistake
answer
1. The mistake relates to a basic assumption on which the contract was made 2. The mistake has material effect on the agreed-upon exchange 3. The party adversely affected by the mistake does not bear the risk of the mistake
question
Requirements for Unilateral Mistake
answer
Same as mutual mistake, plus: 1. The nonmistaken party caused or had reason to know of the mistake 2. It would be unconscionable to enforce the contract
question
Duress
answer
Wrongful coercion that induces a person to enter or modify a contract
question
Requirements for Duress
answer
1. The contract was induced by an improper threat 2. The victim had no reasonable alternation but to enter the contract
question
Economic Duress
answer
Threats made by large companies with more resources on companies with reliance on the larger company
question
Undue Influence
answer
Unfair persuasion, typically while the person is in a position of weakness (death in the family, etc.)
question
Capacity
answer
The ability to incur legal obligations and acquire legal rights
question
Disaffirmance
answer
The exercising of the right to avoid a contract when you do not have full capacity
question
Emancipation
answer
The termination of a parent's right to control a child and receive services and wages from them
question
Exculpatory Clauses
answer
A provision in a contractthat purports to relieve one of the parties from tort liability, and are often suspect by courts
question
Enforceability of Noncompetition Clauses
answer
1. Clauses must serve a legitimate business purpose 2. The restriction on competition must be reasonable in time, geographic area, and scope 3. The noncompetition clause should not impose an undue hardship
question
Contracts of Adhesion
answer
Contracts in which stronger party is able to determine the terms of the contract, leaving the weaker party no practical choice but to adhere to them
question
Unconscionablility
answer
A contract that is oppressively unfair
question
Specific Performance
answer
The court forces the breaching party to perform their contract
question
Statute of Frauds
answer
Forces certain agreements to be in writing to be enforceable
question
State of Limitations
answer
Amount of time to file suit from the time of incident
question
Usury
answer
Higher interest than allowed by law
question
Nolle Prosequi
answer
Dismissal
question
Bankruptcy
answer
Chapter 7: Liquidation proceeding (insolvent, sells assets to distribute money to creditors) Chapter 11: Busines reorganization (pay-off plan over period of time) Chapter 13: Wage-earners plan (proposal for plan for non-business entities)
question
Automatic Stay
answer
A hold on the payment of debts to creditors during bankruptcy proceedings
question
Reformation
answer
A remedy to correct a written instrument that fails to express the terms agreed upon by the parties
question
Parole Evidence Rule
answer
Allows introduction of extrinsic evidence when there is ambiguity
question
Necessaries
answer
Things you require (food, shelter, clothing). Enforceable contracts for minors
question
Forum Selection Clause
answer
A clause identifying how all disputes will be resolved
question
Integration Clause
answer
An agreement that the contract is complete and final
question
Choice-of-Law Clause
answer
A contract provision where parties stipulate that any dispute between them arising from the contract shall be determined in accordance with the law of a particular jurisdiction
