Business Law Contracts

Question 1

What is a contract?

Answer 1

A contract is any agreement enforceable by law
-Not all agreements are contracts.

Question 2

The Formalist Theory

Answer 2

Courts study the parties actions/ words to see if there was a “meeting of the minds”
-Relies on the form of agreement and certain fixed elements

Question 3

6 Elements of a Contract

Answer 3

1. Offer
2. Acceptance
3. Genuine agreement
4. Capacity
5. Consideration
6. Legality

Question 4

6 Elements of a Contract: Offer

Answer 4

-A proposal by one party to another intended to create a legally binding agreement

Question 5

The person who makes an offer

Answer 5

Offeror

Question 6

The person who receives the offer

Answer 6

Offeree

Question 7

3 basic requirements to an offer

Answer 7

1. Made Seriously
2. Definite and Certain
3. Communicated to the offeree

Question 8

Invitations to Negotiate/Bargain

Answer 8

-Ads in newspapers, magazines, etc.
-Invitation to MAKE an offer

Question 9

6 Elements of a Contract: Acceptance

Answer 9

The second party’s unqualified willingness to go along with the first party’s proposal

Question 10

2 Requirements of Acceptance

Answer 10

1. Unconditional Acceptance
2. Methods of Acceptance

Question 11

Unconditional Acceptance

Answer 11

“Mirror Image Rule” states that the terms of the original offer must not be changed in any way

Question 12

Methods of Acceptance

Answer 12

-The time when an acceptance takes place is important- that’s when it comes into existence

Question 13

Mail Box Rule

Answer 13

-An acceptance that is sent over long distances is effective when it is sent

Question 14

6 Elements of a Contract: Genuine Agreement

Answer 14

A valid offer that is met by valid acceptance

Question 15

6 Elements of a Contract: Capacity

Answer 15

The legal ability to enter a contract
-Must be adults of sound mind

Question 16

6 Elements of a Contract: Consideration

Answer 16

-The exchange of things of value
-Both sides receive some benefit

Question 17

6 Elements of a Contract: Legality

Answer 17

-People can only enter contracts for legal purposes; not for legal acts

Question 18

Two types of contracts

Answer 18

Bilateral and unilateral

Question 19

Bilateral Contract

Answer 19

-BOTH parties make a promise

Question 20

Unilateral contract

Answer 20

-One person promises to do something; the other party can accept only by doing what is stated

Question 21

Valid contract

Answer 21

-Legally binding; satisfies all of the laws requirements

Question 22

Void contract

Answer 22

-No legal effect
-Purpose is illegal/no legal authority to form a contract

Question 23

Voidable contract

Answer 23

-The law permits one party to terminate the agreement because of some defect

Ex: A minor

Question 24

Unenforceable contract

Answer 24

-One the court will not uphold
-Some rule of law prevents enforcing it

Question 25

Express contract

Answer 25

-Stated in words: oral or written -All terms are explicitly stated

Question 26

Implied contract

Answer 26

-Formed in whole or in part from the actions/conduct of the parties

Question 27

5 Ways of Termination of an Offer

Answer 27

1. Revocation 2. Rejection 3. Counteroffer 4. Expiration of time 5. Death or insanity

Question 28

Termination of an Offer: Revocation

Answer 28

The taking back of an offer by the offeror

Question 29

Termination of an Offer: Rejection

Answer 29

Refusal of an offer by the offeree; brings the offer to an end

Question 30

Termination of an Offer: Counteroffer

Answer 30

Ends the first offer: offeree creates a new one where the offeror can accept/reject again

Question 31

Termination of an Offer: Expiration of Time

Answer 31

-The offeror sets a time limit for the acceptance of the offer: MUST BE HONORED!

Question 32

Termination of an Offer: Death or Insanity

Answer 32

-If the offeror dies/becomes insane before the offer is accepted, the offer comes to an end

Question 33

E contracts

Answer 33

-Must meet all elements of a paper contract -Equivalent to paper signed signatures -Replying "YES" is legally binding

Question 34

Uniform Electronic Transfer Act

Answer 34

-Takes place of mailbox rule -Acceptance becomes effective when sent

Question 35

E sign Act

Answer 35

-an electronic signature is valid as a signature on paper -E doc can be enforceable as a paper contract

Question 36

E sign Act EXCEPTIONS

Answer 36

-Court papers, divorce papers, evictions, wills, etc.