2nd Quarter- BUSINESS LAW Exam 2

Question 1

Legal objectives of written contracts

Answer 1

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.

Question 2

expression of willingness of the offeror to enter a contractual agreement.

Answer 2

offer

Question 3

person or party who initiates or makes and offer

Answer 3

offeror

Question 4

person or party to whom an offer is made

Answer 4

offeree

Question 5

requirements of a valid offer

Answer 5

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.

Question 6

Offer vs. invitation to deal

Answer 6

o Is it truly an offer?

o Or an invitation to deal and make a subsequent offer?

Question 7

invitation to deal

Answer 7

• Advertisement
• Price list and quotations
• Bids
• Estimates
• Not valid offers
• May lead to an offer.

Question 8

termination of an offer

Answer 8

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.

By rejection.
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.)

Question 9

person afflicted with a serious mental disorder impairing ability to function.

Answer 9

insane

Question 10

intended acceptance which changes or qualifies the offer, and is a rejection of the original offer

Answer 10

counter offer

Question 11

o Legal situation interfering with an offer and agreement.

Answer 11

intervening illegality

example: making a contract to kill someone

Question 12

o Agreement to an offer resulting in a contract.
o Communicated by offeree to offeror.
o Oral or written.
o Including mail or telegram.

Answer 12

acceptance

Question 13

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.

Answer 13

reality of consent

Question 14

False statement of a matter of fact.

Answer 14

misrepresentation

Question 15

False statement made in the belief it is true.

Answer 15

innocent misrepresentation

Question 16

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.

Answer 16

fraud

Question 17

manner of committing fraud

Answer 17

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.)

Question 18

• Improper influence that is asserted by one dominant person over another, without threat or harm.
o Often with a fiduciary relationship.

Answer 18

undue influence

Question 19

Person in a relationship of trust or confidence

Answer 19

fiduciary

Examples
•	Family relationship.
•	Attorney and client.
•	Physician and patient.
•	Funeral director and family.

Question 20

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.

Answer 20

duress

Question 21

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.

Answer 21

unilateral mistake

Question 22

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

Answer 22

mutual mistake

Question 23

classes of illegal agreement

Answer 23

agreements to commit a crime or torts. Agreements prohibited by statute. Agreements contrary to public policy

Question 24

injurious to individuals and society at large

Answer 24

agreements to commit crimes of torts

Question 25

What type of agreements fall under the category of agreements prohibited by statute?

Answer 25

``` unsurious restraint of trade fix prices influence fiduciaries defraud creditors obstruct justice relieve liability for willful negligence ```

Question 26

exceeding maximum rate of interest which may be charged on loans or consumer credit accounts

Answer 26

usurious

Question 27

charging a higher rate of interest than the law allows

Answer 27

unsury

Question 28

highest legal rate of interest

Answer 28

maximum contract rate

Question 29

interest rate applied when no rate is specified

Answer 29

legal rate

Question 30

laws which seek to promote competition among business

Answer 30

antitrust law

Question 31

what are the advantages of antitrust laws or why were they set up?

Answer 31

to prevent creation of a monopoly prohibits contracts not to compete fix prices of goods and services unfair competitive practices

Question 32

Legislation intended to promote competition among business by prohibiting restraint of trade.

Answer 32

Sherman Antitrust Law

Question 33

Person or persons in a relationship of trust or confidence

Answer 33

Fiduciaries

Question 34

Agreement in which someone else “takes the blame.”

Answer 34

Agreements to relieve liability for willful negligence:

Question 35

Regarding payment of a debt. | Money owed.

Answer 35

Agreements to defraud creditors

Question 36

o Contracts limiting freedom of marriage. | o Contracts injurious to public service of the “public good.”

Answer 36

Agreements contrary to public policy:

Question 37

Statute of Frauds

Answer 37

* 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.

Question 38

Types of contracts in writing:

Answer 38

Contracts to transfer an interest in real property. Real estate - Land Real property - Objects attached to land.

Question 39

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.

Answer 39

Executory bilateral contracts

Question 40

Obligation to pay money or goods

Answer 40

debt

Question 41

Non-performance of a duty or obligation

Answer 41

default

Question 42

Rather than paying debts from decedent’s estate. | Agreement to pay debts of another.

Answer 42

Contracts made by executor or administrators to pay debts of an estate out of his/her personal funds.

Question 43

Promises made in consideration of marriage.

Answer 43

Prenuptial agreements.

Question 44

- movable, tangible, personal property.

Answer 44

goods

Question 45

Termination of a contract by performance, agreement, impossibility, acceptance of breach, or operation law.

Answer 45

Discharge of contracts

Question 46

When all terms of the contract have been fulfilled, the contract is discharged by performance

Answer 46

Performance

Question 47

* Satisfactory or complete performance. | * Contract that has been performed in a manner that would “satisfy” an ordinary, reasonable person.

Answer 47

Nature of performance:

Question 48

Fulfilling major terms of the contract. Contract can be discharged. Less any damages that might occur for minor breaches of contract

Answer 48

Substantial performance

Question 49

* Mutual agreement to cancel the contract. * Entering into a contract is a mutual agreement. * Parties can also mutually agree to cancel the contract.

Answer 49

Discharge by Agreement