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Legal Business 1 > Ch 8 > Flashcards

Ch 8 Flashcards

(73 cards)

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0
Q

Contract law enables private agreements to be…

A

Legally enforceable

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1
Q

Contract

A

Legally enforceable promise or exchange of promises

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2
Q

Confidentiality agreements

A

Employees sign contract and promise not to disclose

Company’s marketing plans, customer lists, discoveries, etc.

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3
Q

Uniform Commercial Code (UCC)

A

Important state based legislation impacting contract law

Covers the sale of goods

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4
Q

UCC relates to contracts involving goods, and what governs most other contracts?

A

Common law

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5
Q

Bilateral contracts

A

Involve promise for promise (mutual) exchange

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6
Q

Unilateral contracts

A

Agreement with only 1 promise and only 1 party is committed
To perform

Exist when promise is made to motivate an action

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7
Q

Express contract

A

Arise from interactions where parties discuss promised
Terms of their agreement

Ex. Negotiated purchase of land for construction of
manufacturing plant

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8
Q

Implied-in-fact contracts

A

Arise from conduct of parties rather than from words

Ex. Asking an accountant for professional advice implies
Promise to pay going rate for advice, even though you
Don’t make express promise to pay

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9
Q

Implied in law contract AKA quasi contract

A

1 party unjustly enriched at expense of another, law may
Imply duty on 1st party to pay 2nd even though there is
No contract

Ex. Debtor over pays creditor $5000, they can sue creditor
On quasi contract to get back the money

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10
Q

Enforceable contract

A

When courts uphold validity of promises of contract

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11
Q

Unenforceable contract

A

Nonperforming party has justifiable reason for noncompliance

With promise

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12
Q

Valid contract

A

Agreement is enforceable because all essential requirements

Are present

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13
Q

Void contract

A

Appears to be in agreement but lacks essential requirement
For validity and enforceability

Ex. Collecting money on illegal gambling

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14
Q

Voidable contract

A

Agreement when at least one party has right to withdraw

From promise made without legal liability

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15
Q

Executed contract

A

Parties have performed their promises

Ex. Paying for groceries with money

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16
Q

Executory contract

A

Parties have not yet performed their agreement

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17
Q

What are the 5 essential elements for forming a valid contract?

A 
1 offer
2 acceptance
3 consideration
4 capacity
5 lawful purpose
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18
Q

Offer to contract

A

Contains specific promise and specific demand

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19
Q

Definite terms: contracts

A

Under common law of contracts, contractual terms must

Be definite and specific

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20
Q

3 examples of indefiniteness

A

Advertisements, catalogs, web pages with price quotes

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21
Q

Under the UCC, contracts for the sale of goods can…

What does this not apply to?

A

Leave open nonquantity terms to be decided at future time
(can leave open price for future date)

This doesn’t apply to real estate or services

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22
Q

4 instances when an offer is terminated?

A

1 too much time ellapses
2 oferee’s rejection
3 offerees counter offer
4 revocation (offeror takes back offer)

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23
Q

Acceptance

A

Offeree’s makes the required promise

Necessary to create valid enforceable contract

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24
Mirror image rule, required by standard contract law
For acceptance to create binding contract, acceptance | Must mirror offer (match exactly)
25
Merchants
People who deal in business of goods
26
Mailbox rule AKA deposited acceptance rule
Acceptance of contract becomes binding when deposited | with postal service
27
Consideration
All promises aren't enforceable though legal action, there Must be incentive for person's promise or it's nonbinding Consideration is mechanism for evaluating existence of Incentive
28
Consideration: bilateral contract
Promises each party makes to each other are the | consideration
29
Consideration: unilateral contract
Performance when there is no obligation to do so
30
Important aspect of consideration
It must be bargained for
31
Promises to make gifts...
Are not binding because no bargained for consideration | Supports the promise
32
Accord of satisfaction
Compromising payment between parties, where one after | Receiving the payment will not sue the other
33
Preexisting obligation
If you have contract person to repair your house for $20000 And halfway through he insists on another $5000 to complete The job and you agree. But only pay him $20k when he finishes He will lose I court if he sues you Unless he does more than you previously agreed to do
34
Preexisting obligation: sale of goods contract
Does not apply to Sale of goods contract Binding modifications can be made
35
Firm offer
Exists when merchant offers goods promises in writing That offer will not be revoked for period not exceeding 3 Months
36
Option
Promise to keep offer open for certain time period | By the oferee's consideration
37
Doctrine of promissory estoppel
Promisee justifiably relies on promisor's promise to his Economic injury Ex. Employer promises not to fire employee without justifiable cause
38
Capacity, define. 3 classes of persons who lack capacity to be bound by contractual promises
Refers to person's ability to be bound by contract 1 minors 2 intoxicated persons 3 mentally incompetent persons
39
What 5 contractual promises can minors be legally bound by?
Necessaries of life: food, clothing, shelter, medical care, | Education (in some states)
40
Lawful purpose
Courts don't deal with illegal contracts (killing, tort with standards of behavior violated)
41
Contracts that restrain trade
Often illegal if they monopolize companies and fix prices | Btw competitors
42
Covenants not to compete
Important in protecting employers from having employees They train leave them and compete against them Also protect buyer from business from seller setting up Competing business
43
6 common voidable contracts
``` 1 fraud 2 misrepresentation 3 duress 4 undue influence 5 mutual mistake 6 unilateral mistake ```
44
Fraud
Involves intentional misstatement of important fact that | Induces one to rely justifiably on his injury
45
Misrepresentation
Misstatement without intent to mislead
46
Duress
Force or threat
47
Undue influence
One is taken advantage of unfairly through contract by | Party who misuses position of relationship or legal confidence
48
Mutual mistake
Voluntarily agree to contract without understanding important Facts in it from both parties involved
49
Rescission
Test of materiality whether parties would have contracted if | They'd been aware of the mistake
50
Unilateral mistake
Only one of the parties to contract is wrong about material | Fact
51
Oral contracts
Generally valid unless they involve larger sums of money
52
Statute of frauds
Law requiring certain contracts be in writing Designed to prevent potential deception or fraud from oral Contracts
53
Contracts for sale of Interest in land, covers contracts for 4 things
1 Covers contract to sell land 2 mortgages 3 mining rights 4 easements
54
Easements, define, give example
Rights to use another's land Ex. Cross it with electric power wires
55
Collateral promise
Secondary Or conditional promise
56
Collateral promise
Business shareholder promises to repay loan of corporation If and only when the corporation is having trouble making Payments Written contract
57
If it is possible or unlikely to perform a contract within 1 year The statute of frauds allows...
An oral contract involving that performance to be enforceable
58
Sale of goods $500 or more
Must be in writing or have written evidence of transaction
59
3 Exceptions to written contracts in the statute of frauds?
1 part performance 2 rules involving goods 3 judicial admissions
60
Part performance AKA promissory estoppel
Creates exception to requirement that sales of interests in land must be in writing When buyer makes valuable improvements to land and paid Part of purchase price, oral contract to sell is enforceable
61
4 for sale of good contracts that can be oral
1 $500 goods manufactured specifically for buyer 2 where payment made and accepted 3 party admits in court contract was made 4 sued merchant receives written contract and doesn't Reject w/in 10 days
62
Judicial admissions
Sued party admits Oral contract exists in court
63
Third party beneficiaries
Original parties to contract may intend for agreement to | Benefit a 3rd party
64
When can a 3rd party sue
Sue if parties in contract intended to benefit that person
65
Donee beneficiary
When performance under contract is meant as gift to third | Party, that person is donee beneficiary
66
Incidental beneficiary
Someone who unintentionally benefits from contract Has no rights under that contract
67
Creditor beneficiary
Someone who's owed money from a person contracted to | pay them
68
Law of assignment
Transfer (generally a sale) of rights under a contract
69
Assignor Assignee
1 of the original contracting parties assigns rights and/or | duties to third party (assignee)
70
Obliger Obligee
Obliger = contracts to buy Obligee = in contract sells to buyer
71
Contracts that can't be assigned
Assignment that increases burden of performance to Obligor | Can't be assigned
72
Novation, ex.
3 or more party contract where original contracting parties Agree to relieve Obligor from liability by substituting an Assignee in place of this party Ex. You and your friend have contract to pay rent with landlord, your friend moves out and stops paying rent, novation is agreeing with landlor that the liability of the rent goes to the friend

Legal Business 1 (25 decks)

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