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gbs
gbs ch. 8-
| Question | Answer |
|---|---|
| what four elements are needed for a valid contract? | mutual assent, real assent, consideration, legality |
| what are the most important sources of contract law? | state case law and state statutes |
| case law | aka common law; law made by judges |
| restatement of the law of contracts | an organized codification of the common law of contracts |
| Uniform Commercial Code (UCC) | modern American state statutory law governing commercial contracts; not federal law but uniform state law |
| Article 2 | the part of the UCC dealing with the sale of goods |
| what is the significance of the contracts of international sale of goods (CISG) | -uniform law -unlike in the UCC, consideration is not required to form a contract -sentate's first attempt to reform business law through its treaty power |
| CISG | -CISG preempts UCC -not mandatory; parties of international contracts may choose set of laws -does not apply to sale of ships or aircraft, electricity, personal use goods, goods resulting from services or labor |
| how are contracts classified | -explicitness- manifestation degree -mutuality- how many parties -enforceability- binding degree -degree of completion- contract performed or discharged |
| express contract | contract in which the terms are spelled out directly; written or oral; parties are conscience of agreement |
| applied contract | contract inferred from actions of the parties |
| quasi-contract | an obligation said to be “imposed by law” in order to avoid unjust enrichment of one person at the expense of another; not a contract |
| bilateral contract | contract in which each party makes a promise to the other |
| unilateral contract | contract that is accepted by the performance of the requested action, not by a promise; ex: reward offered for returning lost dog |
| void contract | an agreement that never was a contract |
| promissory estoppel | to be prohibited from denying a promise when another subsequently has relied on it |
| estopped | -to be prohibited from downplaying the validity of a previous promise |
| executory contract | a contract that has yet to be completed |
| partially executed contract | on party has performed, or partly performed, and the other has not |
| executed contract | a fully fulfilled contract |
| agreement | manifestation of mutual assent by two or more persons to one another |
| proposals that are not offers | most ads, price quotes, and invitations to bid; not of sufficient definiteness; the facts of the case will reveal if an offer was made or not |
| t/f every term in a contract must be communicated for a contract to be valid | false |
| agreement in principle | preliminary agreement that is definite enough to create contract liability even though they lack many common contractual terms |
| alternative offers | an offer that includes alternatives is definitive if each alternative is definite |
| ways in which an offer can expire | acceptance, revocation, rejection by the offeree, counteroffer, acceptance with counteroffer, lapse of time, death or insanity of a person or destruction of an essential term, and illegality |
| when can an offeror revoke an offer? | at any time before acceptance, even if the offer states that it will remain open for a specified period of time; effective once the offeree accepts the notice of revocation |
| option contract | the promisor explicitly agrees for consideration to limit his right to revoke |
| rejection | refusal to accept offer; effective when offeror receives notice of rejection; subsequent change of mind by the offeree cannot revive the offer |
| counteroffer | response that varies the terms of an offer, is a rejection |
| mirror image rule | common-law rule that the acceptance must be the same as the offer; an acceptance WITH a counteroffer is a rejection of the offer |
| how long is an offer valid if not expressly stated? | depends on the details of the situation; common law says a "reasonable" time; generally, the greater the risk for the seller, the shorter the time period |
| what happens to an offer if the offeror dies or goes insane? | the offer dies with the offeror |
| when is acceptance of an offer effective? | unlike an offer, revocation of offer, and rejection of offer (which all take effect once notice is received by offeror), an acceptance is effective when notice is sent even though it may not necessarily be received until later |
| mailbox rule | common law rule the acceptance is effective when dropped in the mail |
| uniform electronic transactions act (UETA) | US law making electronic contracting valid and legally enforceable |
| when can silence operate as acceptance of a contract? | -when the offer states the offeree may accept without responding to the offeror -implied acceptance -if it's reasonable to expect someone to say so when they want to REJECT an offer, and therefor don't respond |
| duress | the threat of improper action to induce a person to make a contract; 2 types- physical duress and duress by improper threat |
| duress by threat | essentially blackmail; 3 elements- threat must by improper, there must be no other reasonable alternative, the threat has to prompt assent |
| undue influence | improper use of power or trust in a way that deprives a person of free will and substitutes another's objectives |
| misrepresentation | false or misleading statement or impression that induces a person to contract; 2 types- fraudulent (in execution or inducement) and nonfraudulent (negligent or innocent) |
| fraud in the execution | causing a person to sign a legal document when that person believes they are signing something else |
| fraud in the inducement | deceit that causes someone to contract to his/her disadvantage |
| consideration | the surrender of any legal right (a detriment) in return for the promise of some benefit in return |
| legal detriment | the giving up by a person of that which he or she had a right to retain; act, forbearance, promise |
| legal benefit | the receipt by one person of something legal he or she had no preexisting right to; tangible benefit; benefit doesnt have to go to promisor; can be contingent on an event that may never happen |
| 2 elements of consideration | -whether the promisee has incurred a legal detriment (given up something) -whether the legal detriment was bargained for (intentional) |
| legal sufficiency | something of value enough to constitute consideration; exchange of legal detriment and legal benefit |
| covenant not to sue | an agreement not to pursue legal action |
| accord | an agreement to substitute a new contract for a disputed one; when executed the accord is satisfied |
| unliquidated debt | a money obligation the amount of which is unknown |
| liquidated debt | a money obligation the value of which is known |
| unforeseen difficulty | problems in executing a contract so great as to warrant the assumption that the contract is modified |
| novation | a new contract substituting an old one (like in the case of unforeseen difficulties) or a new party substituting an old party |
| creditors' composition | an agreement among creditors, each accepting less than a full payment from a debtor so that each gets something |
| exclusive dealing contracts | a contract- as between buyer and seller- where the parties agree only to deal with each other |
| outputs contract | an agreement to sell all of one's goods or services to one person |
| needs contract | an agreement to buy all of one's requirements (goods and services) from a single source |
| promissory estoppel | to be prohibited from denying a promise when another subsequently has relied on it |
| usury | charging illegal interest rates |
| statute of frauds | enacted in 1677; a rule requiring that certain contracts be evidenced by a writing, signed by the party to be bound, to be enforcable |
| contracts required to be in writing- statute of frauds | -promises to pay debt of another -agreements of executor or adminitrator (surety after death) -marriage promises -sale of land -contracts not to be performed in 1 yr |
| contracts required to be in writing- UCC sales of contracts | -sales of goods >$500 -sale of securities -other sales >$5,000 |
| surety or guarantor | one who promises to pay or perform a contract obligation when another defaults |
| merger clause | a contract term stating that the written agreement contains the parties' full understanding and intent |
| t/f contract law did not develop according to a conscious plan | true |
| t/f The legal definition of contract is formalistic | true |
| t/f a wager is a legal contract as both parties shake on the bet | false |
| t/f The Restatement (Second) of Contracts won prompt respect in the courts and has been cited in innumerable cases | true |
| t/f The Restatement of the Law of Contracts deals with the sale of goods | false |
| t/f The Uniform Commercial Code is not a federal statute but uniform state law | true |
| t/f The only contracts and agreements covered by Article 2 are those relating to present or future sale of goods | true |
| t/f Under the Convention on Contracts for the International Sale of Goods, consideration is not required to form a contract | true |
| t/f Under the Uniform Commercial Code, there is no Statute of Frauds, i.e., a requirement that certain contracts be evidenced by a writing | false |
| t/f A contract with a minor remains in force unless the minor decides that he or she does not wish to be bound by it | true |
| The most important source of contract law is... | state statutes |
| ... is the degree to which a contract agreement is manifest to those not party to it | explicitness |
| t/f If an acceptance that requests a change or an addition to the offer does not require the offeror's assent, then the acceptance is valid | true |
| t/f The estate of a deceased person cannot be held liable on a contract made by the person before death | false |
| t/f A promise cannot be made to one person who is not expected to do anything in return | false |
| Who does the mailbox rule place the burden on? | the offeror |
| t/f A fraudulent misrepresentation is a criminal wrong | false |
| t/f If the misrepresentation is fraudulent, the victim can avoid the contract, no matter the significance of the misrepresentation | true |
| t/f An infant will lose the power to avoid a contract if the rights of third parties intervene | true |
| t/f If the tort suit is an indirect method for enforcing a contract, infants are liable for their torts | false |
| t/f A promise made which saves the parties from incurring losses is a legal detriment | true |
| What kind of promises are enforceable without consideration according to the common law | international contracts |
| injunction | A judicial order directing someone to stop doing what he or she should not do |
| contraction adhesion | A contract presented to the offeree to take or leave without bargaining |
| exculpatory clause | contract provision that relieves one party of liability if damages are caused during the execution of the contract |
Created by:
geminijester617