Flashcards in 2nd Quarter- BUSINESS LAW Exam 2 Deck (49)
Legal objectives of written contracts
legal purpose and execution,
as long as elements of a contract are legal (Mutual Agreements,competent parties and Consideration) terms of contract should be executed. Illegality renders a contract void.
expression of willingness of the offeror to enter a contractual agreement.
person or party who initiates or makes and offer
person or party to whom an offer is made
requirements of a valid offer
Must be Definite
o Basis for agreement
o Seriously intended
o Not a joke / Nor offered in jest, fear, or anger.
o Communicated from offeror to offeree.
o Both parties must be cognizant of the agreement.
Offer vs. invitation to deal
o Is it truly an offer?
o Or an invitation to deal and make a subsequent offer?
invitation to deal
• Price list and quotations
• Not valid offers
• May lead to an offer.
termination of an offer
o By revocation - annulment or cancellation of an instrument, act, promise by one doing or making it.
o Communicated by offeror to offeree prior to acceptance.
By terms of the offer:
o If terms are not met, there is no contract.
o By lapse of “reasonable” period of time.
o Depends on type of offer.
o By death or insanity of offeror.
o Refusal to accept.
o By counter offer - intended acceptance which changes or qualifies the offer, and is a rejection of the original offer.
o By intervening illegality.
(Legal situation interfering with an offer and agreement. Example:Making a contract to kill someone.)
person afflicted with a serious mental disorder impairing ability to function.
intended acceptance which changes or qualifies the offer, and is a rejection of the original offer
o Legal situation interfering with an offer and agreement.
example: making a contract to kill someone
o Agreement to an offer resulting in a contract.
o Communicated by offeree to offeror.
o Oral or written.
o Including mail or telegram.
o Justifiable reliance by offeree.
o Offeree believes what offeror says is true.
o No reason to believe otherwise.
o Without this, contract is voidable.
reality of consent
False statement of a matter of fact.
False statement made in the belief it is true.
Intentional or reckless false statement of a material fact, upon which the injured party relied, which induced the injured party to enter into a contract, at his/her detriment.
manner of committing fraud
o By expressed misrepresentation.
o Oral or written.
o By concealment. (attempting to hide information)
o By silence when one has a duty to speak.
(Not sharing information when asked or requested.)
• Improper influence that is asserted by one dominant person over another, without threat or harm.
o Often with a fiduciary relationship.
Person in a relationship of trust or confidence
• Family relationship.
• Attorney and client.
• Physician and patient.
• Funeral director and family.
Means of removing one’s free will. Obtaining consent by threat to do harm to the person, his/her family, or property.
o Element of coercion or force.Can be physical, emotional and financial.
Mistake by one party to a contract
o Mistake as to quality, value or price.
o Mistake as to terms of contract.
o Generally will not render agreement defective.
Mistake by both parties to a contract.
o Mistake as to nature of transaction.
o Mistake as to identity or existence of subject matter.
o Generally render agreement defective
classes of illegal agreement
agreements to commit a crime or torts. Agreements prohibited by statute. Agreements contrary to public policy
injurious to individuals and society at large
agreements to commit crimes of torts
What type of agreements fall under the category of agreements prohibited by statute?
restraint of trade
relieve liability for willful negligence
exceeding maximum rate of interest which may be charged on loans or consumer credit accounts
charging a higher rate of interest than the law allows
highest legal rate of interest
maximum contract rate
interest rate applied when no rate is specified
laws which seek to promote competition among business
what are the advantages of antitrust laws or why were they set up?
to prevent creation of a monopoly
prohibits contracts not to compete
fix prices of goods and services
unfair competitive practices
Legislation intended to promote competition among business by prohibiting restraint of trade.
Sherman Antitrust Law
Person or persons in a relationship of trust or confidence
Agreement in which someone else “takes the blame.”
Agreements to relieve liability for willful negligence:
Regarding payment of a debt.
Agreements to defraud creditors
o Contracts limiting freedom of marriage.
o Contracts injurious to public service of the “public good.”
Agreements contrary to public policy:
Statute of Frauds
• Originally enacted by the English Parliament (1677).
• Present in some form in all states.
• Lists certain types of contracts which can only be enforced if it is in written form.
Types of contracts in writing:
Contracts to transfer an interest in real property.
Real estate - Land
Real property - Objects attached to land.
cannot be completed within one year from date of making.
Ensures parties do not forget contract terms
Example: purchase of real estate with long term loan contract/mortgage.
Executory bilateral contracts
Obligation to pay money or goods
Non-performance of a duty or obligation
Rather than paying debts from decedent’s estate.
Agreement to pay debts of another.
Contracts made by executor or administrators to pay debts of an estate out of his/her personal funds.
Promises made in consideration of marriage.
- movable, tangible, personal property.
Termination of a contract by performance, agreement, impossibility, acceptance of breach, or operation law.
Discharge of contracts
When all terms of the contract have been fulfilled, the contract is discharged by performance
• Satisfactory or complete performance.
• Contract that has been performed in a manner that would “satisfy” an ordinary, reasonable person.
Nature of performance:
Fulfilling major terms of the contract. Contract can be discharged. Less any damages that might occur for minor breaches of contract