Ch 8 Offer, Acceptance and Mutual Assent, MBA 603

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Acceptance
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offeree agrees to be bound by the terms set up by the offeror
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Active Fraud
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when one party actually makes a false statement intended to deceive the other party in a contract
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Auction
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a sale that is open to the public, during which potential buyers compete for the right to purchase certain items by placing higher and higher bids until the highest bid is reached and the auctioneer accepts on behalf of the seller
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Auction with Reserve
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the seller is the offeror and the bidder is the offeree
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Auction without Reserve
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the bidders are the offerors and the seller is the offeree
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Bait-and-switch Confidence Game
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a deliberately deceptive practice that entices buyers into a place of business when the seller actually has no intention of selling the item at the price stated in the advertisement.
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Bilateral Mistake
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“mutual mistake” both parties are mistaken, and may permit a rescission by either the offeror or the offeree
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Business Compulsion
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“economic duress” threats of a business nature that force another party without real consent to enter a commercial agreement
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Click-on Acceptance or Agreement
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one that is created by having a party click on a box on the computer screen that states he or she agrees to be bound by the terms of the contract
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Concealment
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“nondisclosure or passive fraud” occurs when one party does not say something about certain facts that he or she is under obligation to reveal
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Contract
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an agreement between two or more competent parties based on mutual promises and an exchange of things of value, to do or refrain from doing some particular thing that is neither illegal nor impossible
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Cost-Plus Contract
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does not include a final price; rather, the contract price is determined by the cost of labor and materials, plus an agreed-to-percentage or dollar markup
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Counteroffer
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response to an offer in which the terms of the original offer are changed
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Current Market Price Contract
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prices are determined by reference to the market price of the goods as of a specified date
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Cyber-Contract
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” electronic contracts or e- contracts” contracts that are made using computers either via e-mail or the internet or contracts that involve computer-related products such as databases and software
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Duress
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action by one party that forces another party to do what need not otherwise be done. forces a person into a contract through the use of physical, emotional, or economic threats
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Economic Duress
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“business compulsion” threats of a business nature that force another party without real consent to enter a commercial agreement
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Electronic Contracts or E-Contracts
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” cyber- contracts” contracts that are made using computers either via e-mail or the internet or contracts that involve computer-related products such as databases and software
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Emotional Duress
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arises from acts or threats that would create emotional distress in the one on whom they are inflicted
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Fiduciary Relationship
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relationship based on trust
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Firm Offer
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created when a merchant agrees in writing to hold an offer open
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Fraud
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disrupts mutual assent
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Fraud in the Inception
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when one party tricks another party into a contract by lying to the innocent party about the actual nature of the contract
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Fraud in the Inducement
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when one party tricks another into a contract by lying about the terms of the agreement to get the innocent party to enter the contract under false pretenses
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Invitation to Trade
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announcement published to reach many persons for the purpose of creating interest and attracting responses
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Lease Option
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contract that permits a party to lease real property while at the same time holding an option to purchase that property
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List Price
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for real property, is the price that a seller asks initially when the property is placed on the market
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Material Fact
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an important fact, a fact of substance
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Mirror Image Rule
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the terms as stated in the acceptance must exactly “mirror” the terms in the offer
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Mistepresentation
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false statement made with no intent to deceive
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Mutual Assent
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both parties know what the terms are, and both have willingly agreed to be bound by those terms
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Mutual Mistake
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“bilateral mistake” both parties are mistaken, and may permit a rescission by either the offeror or the offeree
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Nondisclosure
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“concealment or passive fraud” occurs when one party does not say something about certain facts that he or she is under obligation to reveal
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Offer
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a proposal freely made by one party to another indicating a willingness to enter a contract
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Offeree
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the person to whom the offer is made
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Offeror
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the person who makes an offer
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Option Contract
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agreement that binds an offeror to a promise to hold open an offer for a predetermined or reasonable length of time
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Output Contract
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an agreement in which one party consents to sell to a second party all of the goods that party makes in a given period of time.
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Passive Fraud
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“concealment or nondisclosure” occurs when one party does not say something about certain facts that he or she is under obligation to reveal
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Physical Duress
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either violence or the threat of violence against an individual or against that person’s family, household, or property
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Public Offer
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made through the publc media but is intended for only one person whose identity or address is unknown to the offeror
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Rejection
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comes about when an offeree expresses or implies a refusal to accept an offer
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Requirements Contract
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an agreement in which one party agrees to but all the goods it needs from the second party
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Recission
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both parties are returned to their original positions, before they entered into the contract
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Revocation
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the calling back of the offer by the offeror. An offer may be revoked any time before it has been accepted
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Sales Puffery
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consist of persuasive words and exaggerated claims made by salespeople to induce a customer to buy their product
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Undue Influence
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occurs when the dominant party in a special relationship uses excessive pressures to convince the weaker party to enter a contract that greatly benefits the dominant party
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Unilateral Mistake
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A mistake made by only one of the contracting parties is a and not offering sufficient grounds for rescission or renegotiation

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