Legal Environment of Business - Contracts

Card Set Information

Author:
JoetheDowd
ID:
213459
Filename:
Legal Environment of Business - Contracts
Updated:
2013-04-15 16:22:05
Tags:
contracts legal environment business whitney traylor metro metropolitan state university denver auraria colorado
Folders:

Description:
These cards are for the contract test.
Show Answers:

Home > Flashcards > Print Preview

The flashcards below were created by user JoetheDowd on FreezingBlue Flashcards. What would you like to do?


  1. Contracts exist to make _____ matters more predictable
    business
  2. Why do contracts exist?
    Contracts exist to make business matters more predictable.
  3. Even if the contract results in serious harm to one party, a court will generally enforce it. This is called...?
    Judicial restraing
  4. _______ means that a court will ignore certain provisions of a contract, or an entire agreement, if the judge believes that enforcing the deal would be unjust.
    Judicial activism
  5. What is judicial activism?
    judicial activism means that a court will ignore certain provisions of a contract, or an entire agreement, if the judge believes that enforcing the deal would be unjust.
  6. A contract has _______ elements
    four
  7. What are the four elements of a contract?
    • Agreement
    • Consideration
    • Legality
    • Capacity
  8. What is an agreement?
    • One party must make a valid offer, and the other party must accept it.
    • Also is 1 of the 4 elements to a contract.
  9. What is consideration?
    • There has to be bargaining that leads to an exchange between the parties
    • Also is 1 of the 4 elements to a contract.
  10. What is legality?
    • The contract must be for a lawful purpose.
    • Also is 1 of the 4 elements to a contract.
  11. What is capacity?
    • The parties must be adults of sound mind
    • Also is 1 of the 4 elements to a contract.
  12. Consent
    Neither party may trick or force the other into the agreement
  13. Written Contract
    Some contracts must be in writing to be enforceable.
  14. Third-party interests
    Some contract affect people other than the parties themselves.
  15. Performance and discharge
    If a party fully accomplishes what the contract requires, his duties are discharged.
  16. Remedies
    A court will award money or other relief to a party injured by a breach of contract.
  17. What is a contract
    A promise that the law will enforce.
  18. What are the three most basic questions to ask that relate to a promise (contract)?
    • Is it certain that the defendant promised to do something?
    • If she did promise, is it fair to make her honor her word?
    • If she did not promise, are there unusual reasons to hold her liable anyway?
  19. What are some types of contracts?
    • Bilateral and Unilateral
    • Express and Implied
    • Executory and Executed Contracts
    • Valid, Unenforceable, voidable, and void agreements

    • Special types are:
    • Promissory estoppel and Quasi-contracts
  20. What is it called when both parties make a promise?
    bilateral contract
  21. Bilateral contract
    A contract where both parties make a promise. The vast majority of contracts are bilateral contracts.
  22. When one party makes a promise that the other party can accept only by doing something is called...
    Unilateral Contract
  23. Unilateral Contract
    A contract where one party makes a promise that the other party can accept only by doing something.
  24. Express contract
    An agreement with all important terms explicitly stated. The great majority of binding agreements are express contracts. Some express contracts are oral and some are written.
  25. An agreement with all important terms explicitly states is called....
    Express contract
  26. Implied contract
    A contract where the words and conduct of the parties indicate that they intended an agreement.
  27. A contract where the words and conduct of the parties indicate that they intended an agreement.
    Implied contract
  28. Executory Contract
    A binding agreement in which one or more of the parties has not fulfilled its obligations.
  29. A binding agreement in which one or more of the parties has not fulfilled its obligations.
    Executory contract
  30. Try to define an executory bilateral express contract.
    • Executory - one or more parties have not fulfilled obligations
    • Bilateral - Both parties make a promise
    • Express - Terms are explicitly stated.
  31. Executed contract
    An agreement in which all parties have fulfilled their obligations.
  32. An agreement in which all parties have fulfilled their obligations is called an _______ contract
    Executed
  33. Valid Contract
    A contract that satisfies all the law's requirements.
  34. A contract that satisfies all the law's requirements is called a Valid contract or Unenforceable agreement?
    Valid Contract
  35. Unenforceable agreement
    A contract where the parties intend to form a valid bargain but a court declares that some rule of law prevents enforcing it.
  36. Voidable contract
    An agreement that, because of some defect, may be terminated by one party, such as a minor, but not by both parties.
  37. Void agreement
    An agreement that neither party may legally enforce, usually because the purpose of the bargain was illegal or because one of the parties lacked capacity to make it.
  38. A voidable contract occurs when the law permits one party to terminate the agreement.
  39. In _______  ________ cases, the defendant made a promise that the plaintiff relied on.
    Promissory estoppel
  40. In  ___________ cases, the defendant did not make any promise, but did receive a benefit from the plaintiff.
    quasi-contract
  41. Promissory estoppel
    A doctrine in which a court may enforce a promise made by the defendant even when there is no contract, if the defendant knew that the plaintiff was likely to rely on the promise, the plaintiff did in fact rely, and enforcement of it is the only way to avoid injustice.
  42. Even when there is no contract, a plaintiff may use promissory estoppel to enforce the defendants's promise if he can show that:
    • The defendant made a promise knowing that the plaintiff would likely rely rely on it
    • The plaintiff did rely on the promise
    • The only way to avoid injustice is to enforce the promise.
  43. Quasi-contract
    A legal fiction in which, to avoid injustice, the court awards damages as if a contract had existed, although one did not.
  44. Even when there is no contract, a court may use quasi-contract to compensate a plaintiff who can show that:
    • The plaintiff gave some benefit to the defendant
    • The plaintiff reasonably expected to be paid for the benefit and the defendant knew this
    • The defendant would be unjustly enriched if he did not pay
  45. Quantum meruit
    "As much as he deserves." The damages awarded in a quasi-contract case.
  46. Meeting of the minds
    Two parties can form a contract only if they have had a meeting of the minds. This requires that they (1) understood each other and (2) intend to reach an agreement.
  47. Offer
    In contract law, an act or statement that proposes definite terms and permits the other party to create a contract by accepting those terms.
  48. Offeror
    The party in contract negotiations who makes the first offer.
  49. Offeree
    The party in contract negotiations who receives the first offer.
  50. What two questions determine whether a statement is an offer?
    • Did the offeror intend to make a bargain?
    • Are the terms of the offer definite?
  51. An invitation to bargain is not an offer
  52. In what ways can an offer be terminated?
    • Revocation
    • Rejection
    • Counteroffer
    • Expiration
    • Destruction of the subject matter
  53. Revocation
    The offeror may revoke the offer any time before it has been accepted.
  54. Rejection
    If an offeree rejects an offer, the rejection immediately terminates the offer.
  55. Expiration
    When an offer specifies a time limit for acceptance, that period is binding. If the offer specifies no time limit, the offeree has a reasonable period in which to accept.
  56. Acceptance
    • The offeree can create a contract by accepting an offer. The Offeree must say or do something to accept.
    • When the offer is for a bilateral contract, the offeree generally must accept by making a promise. 
    • When the offer is for a unilateral contract, the offeree must accept by performing.
  57. Mirror image rule
    A contract doctrine that requires acceptance to be on exactly the same terms as the offer.
  58. Consideration
    Bargaining that leads to an exchange between the parties. Consideration is a required element of any contract.
  59. ____ indicates that each side is obligating itself in some way to induce the other side to agree.
    Bargaining
  60. The thing bargained for can be another _____ or _____
    promise or action
  61. An illusory promise is not consideration
  62. A non-compete clause in an employment contract is generally reasonable and enforceable only to the extent necessary to protect what?
    • Trade Secrets
    • Confidential information
    • Customer lists developed over an extended period.
  63. Exculpatory clause
    • A contract provision that attempts to release one party from liability in the event the other party is injured. 
    • Exculpatory clauses are common.
  64. Unconscionable contract
    A contract that is shockingly one-sided and fundamentally unfair.
  65. The two factors that most often lead a court to find unconscionability are:
    • Oppression, meaning that one party used its superior power to force a contract on the weaker party. 
    • Surprise, meaning that the weaker party did not fully understand the consequences of its agreement.
  66. Oppression (unconscionable contract)
    One party uses superior power to force a contract on another party.
  67. Surprise (unconscionable contract)
    A party does not fully understand the consequences of its agreement to a contract.
  68. Capacity
    The legal ability to enter into a contract.
  69. What two groups usually lack legal capacity?
    • Minors
    • Those with a mental impairment
  70. Minor
    A minor is someone under the age of 18.
  71. Disaffirm
    To give notice of refusal to be bound by an agreement.
  72. Restitution
    Restoring an injured party to its original position.
  73. A person suffers from a mental impairment if...
    by reason of mental illness or defect he is unable to understand the nature and consequences of the transaction.
  74. Rescind
    To cancel a contract
  75. Misrepresentation
    A statement that is factually wrong.
  76. What is the difference between innocent misrepresentation and fraudulent misrepresentation?
    Regarding innocent misrepresentation, the person who misrepresented in the first place believed the misrepresentation to be true.

    If they knew it to be false, it is a fraudulent misrepresentation.
  77. To rescind a contract based on misrepresentation or fraud, a party must show three things...
    (These are the three elements in which one can rescind a contract)
    • There was a false statement of fact
    • The statement was fraudulent or material
    • The injured person justifiably relied on the statement.
  78. False Statement of Fact
    (An element in rescinding a contract)
    • This does not mean the statement was a lie.
    • An opinion is not a statement of fact.
    • Puffery is not a statement of fact.
  79. What is puffery?
    When a reasonable person would realize that it is a sales pitch, representing the exaggerated opinion of the seller. Puffery is never a basis for rescission.
  80. Fraud
    Intending to induce the other party to contract, knowing the words are false or uncertain that they are true.
  81. Fraud or Materiality
    (An element in rescinding a contract)
    • The injured party must demonstrate that the statement was fraudulent or material:
    • The statement was fraudulent if the maker intended to induce the other party to contract either knowing that her words were false or uncertain that they were true. 
    • The statement was material if the maker expected the other party to rely on her words in reaching an agreement.
  82. Material
    The maker expected the other party to rely on her words.
  83. Justifiable Reliance
    (An element in rescinding a contract)
    The injured party must also show that she actually did rely on the false statement and that her reliance was reasonable.
  84. Bilateral mistake
    Occurs when both parties negotiate based on the same factual error.
  85. Unilateral mistake
    occurs when only one party negotiates based on a factual error.
  86. Statute of frauds
    Requires certain contracts to be in writing.
  87. The statute of frauds which requires certain contracts to be in writing include:
    • For any interest in land.
    • That cannot be performed within one year. 
    • To pay the debt of another.
    • Made by an executor of an estate.
    • Made in consideration of marriage.
    • For the sale of goods worth $500 or more.
  88. True or false
    In most cases, agreements for an interest in land must be in writing
    True
  89. Explain Promise to pay the debt of another
    When one person agrees to pay the debt of another as favor to that debtor, it is called a collateral promise, and it must be in writing to be enforceable. A student applies for a $10,000 loan to help pay for college, and her father agrees to repay the bank if the student defaults. The bank will insist that the father's promise be in writing because his oral promise alone is unenforceable.
  90. In written contracts, what must the writing contain?
    • Must be signed by the defendant
    • Must state with reasonable certainty the name of each party, the subject matter of the agreement, and all essential terms and promises.
  91. Third party beneficiary
    Someone who is not party to a contract but stands to benefit from it.
  92. Promisor
    The person who make the promise that the third party beneficiary benefits from.
  93. Promises
    The person to whom a promise is made.
  94. A beneficiary of a promise is an intended beneficiary and may enforce a contract if the parties intended her to benefit and if either (a) enforcing the promise will satisfy a duty of the promisee to the beneficiary, or (b) the promisee intended to make a gift to the beneficiary.
  95. Assignment of rights
    A contracting party transfers his rights under a contract to someone else.
  96. Delegation of duties
    A contracting party transfers her duties pursuant to a contract to someone else.
  97. Assignor
    The person making an assignment.
  98. Assignee
    The person receiving an assignment
  99. Obligor
    The person obligated to do something under a contract.
  100. Obligee
    The person who has an obligation coming to them
  101. What rights are assignable?
    • Any contractual right may be assigned unless assignment:
    • (A) would substantially change the obligor's rights or duties under the contract, or 
    • (B) is forbidden by law or public policy
    • (C) is validly precluded by the contract itself.
  102. Delegator
    A person who gives his obligation under a contract to someone else.
  103. Delegatee
    A person who receives an obligation under a contract from someone else
  104. What duties are delegable?
    • Any obligor may delegate his duties unless;
    • (1) delegation would violate public policy
    • (2) the contract prohibits delegation
    • (3)the obligee has a substantial interest in personal performance by the obligor
  105. Rescind
    To terminate a contract by mutual agreement
  106. Statute of limitations
    Limits the time within which an injured party may file suit
  107. Interest
    A legal right in something
  108. Compensatory damages
    compensatory damages are those that flow directly from the contract.
  109. Consequential damages
    Damages that result from the unique circumstances of the plaintiff. Also known as special damages
  110. Rescission
    the undoing of a contract, which puts both parties in the positions they were in when they made the agreement.
  111. Special performance
    special performance compels parties to perform the contract they agreed to when the contract concerns the sale of land or some other unique asset.
  112. Injunction
    A court order to do something or to refrain from doing something.
  113. Mitigate
    To keep damages as low as possible.
  114. Right to assign
    a party generally may assign contract rights unless doing so would substantially change the obligors rights or duties; is forbidden by law; or is validly precluded by the contract.
  115. Discharge
    Unless the obligee agrees otherwise, delegation does not discharge the delegator's duty
  116. Substantial performance
    Strict performance, which requires one party to fulfill its duties perfectly, is unusual. In construction and service contracts, substantial performance is generally sufficient to entitle the promisor to the contract price.
  117. Good faith
    good faith performance is required in all contracts.

What would you like to do?

Home > Flashcards > Print Preview