What is a contract? Chapter 4 Business Law – Flashcards
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capacity
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legal ability to enter a contract
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consideration
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that things of value are being exchanged
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legality
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no laws are being violated
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genuine agreement
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both offer and acceptance are valid
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acceptance
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second party's willingness to go along with the proposal
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offer
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proposal by one party to another to create a legal agreement
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6 elements to a contract
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offer, acceptance, genuine agreement, consideration, legality, capacity
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Characteristics of a contract
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valid, express, bilateral, oraal, written
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Valid
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legally binding
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void
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has no legal effect
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voidable
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can be canceled
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Implied contract
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Derived from parties' actions
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express contract
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may be written or oral
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bilateral
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contains 2 promises
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unilateral
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promise by one party to do something only if other party's performs an act
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Oral contract
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when 2 or more people make an agreement by talking
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Contract
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any agreement enforceable by law
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Offeror
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the person MAKING the offer
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Offeree
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the person RECEIVING the offer
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Invitation to negotiate
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Deal, trade or make an offer. This is not considered an offer or contract
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Unconditional acceptance
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Offeree does not change terms of original offer
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Revocation
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Taking back of offer by offeror
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Rejection
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Refusal of an offer by offeree
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Mirror image rule
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Terms stated in acceptance must match those of the offer
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Offer
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3 requirements: serious intent, definiteness and certainty, communication to offeree
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Counteroffer
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Response to an offer where the original terms are changed
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Acceptance
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Must be unconditional and follow the rules regarding the method of acceptance. Acceptance must not change the terms of the original offer according to the mirror image rule
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Termination
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5 ways to terminate an offer: revocation, rejection, counteroffer, expiration of time, death, insanity
