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Business Law Test1
Study Guide
| Question | Answer |
|---|---|
| Why do contracts exist? | Make Business more predictable |
| Judicial restraint | a court taking a passive role and requiring the parties to fulfill whatever obligations they agreed to, whether the deal was wise or foolish. |
| Judicial Activism | makes law more flexible but less predictable. |
| Agreement | One party must make a valid offer, and the other party must accept it. |
| Consideration | There has to be bargaining that leads to an exchange between the parties. |
| Legality | The contract must be for a lawful purpose. |
| Capacity | The parties must be adults of sound mind. |
| Consent | Neither party may trick or force the other into the agreement. |
| Contract | A promise that the law will enforce. |
| Bilateral Contract | Both parties make a promise. |
| Unilateral Contract | One party makes a promise that the other party can accept only by doing something. |
| Implied Contract | The words and conduct of the parties indicate that they intended an agreement. |
| Executory | One or more parties has not fulfilled its obligations. |
| Executed | All parties fufill their obligations. |
| Valid Contract | One that satisfies all of the law's requirements. |
| Unenforceable agreement | Parties intend to from a valid bargain but a court declares that some frule of law prevents enforcing it. |
| Voidable Contract | Law permits one party to terminate the agreement. |
| Void Agreement | Neither party can enforce, usually because the purpose of the deal is illegal of because one of the parties had no lagal authority to make a contract. |
| What is an offer? | An act or statement that proposes definite terms and permits the other party to create a contract by accepting those terms. |
| What is an advertisement? | An advertisement is merely a request. |
| Output Contract | Obligates the seller to sell all of his output to the buyer, who agrees to accept it. |
| Requirements Contract | Obligates a buyer to obtain all of his needed goods from the seller. |
| Revocation | Effective when the offeree receives it. |
| Counteroffer | Is a rejection. |
| Mailbox Rule | An acceptance is generally effective upon dispatch, meaning the moment it is out of the offeree's control. |
| Consideration | There must be a bargaining that leads to an exchange between the parties. |
| Past Consideration | Is no consideration. |
| Liquidated Debt | One in which there is no dispute about the amount owed. |
| Good Faith | Honesty in fact and the observance of reasonable commercial standards of fair dealing. |
| Gambling Contract | Illegal unless it is specifically authorized by state statute. |
| Noncompete Clause | Enforceable only if it is essential to the employer, fair to the employee, and harmless to the general public. |
| Exculpatory Clause | One that attempts to release you from liablility in the event of injury to another party. |
| Bailment | giving possession and control of personal property to another person. |
| Unconscionable contract | One that a court refuses to enforce because of fundamental unfairness. |
| Adhesion contracts | Standard form contracts prepared by one party and given to the other on a "take it or leave it" basis. |
| Capacity | legal ability to enter into a contract. |
| Rescind | A contract that is formally cancelled. |
| Misrepresentation | Occurs when a party to a contract says something that is factually wrong. |
| Bilateral Mistake | Occurs when both parties negotiate based on the same factual error. |
| Unilateral Mistake | Sometimes only one party enters a contract under a mistaken assumption. |
| Collateral Promise | When one person agrees to pay the debt of another as a favor to that debtor. |
| Parol Evidence | Anything(apart from the written contract itself) that was said, done, or written before the parties signed the agreement or as they signed it. |
| Third Party Beneficiary | Someone who was not a party to the contract but stands to benefit from it. |
| Creditor Beneficiary | The promise is fulfilling some duty, the third party beneficiary is called a... |
| Donee beneficiary | The promisee is making a gift, the third party is a... |
| Obligor | One obligated to do something. |
| Obligee | One who has the obligation coming to him or her. |
| Repudiated | One party notifies the other party that they will not perform their side of the contract. |
| Novation | A three-way agreement in which the obligor transfers all rights and duties to a third party. |
| Discharge | A party has no more duties under a contract. |
| Condition | An event that must occur before a party becomes obligated under a contract. |
| Personal Satisfaction Contract | The promisee makes a personal, subjective evaluation of the promisor's performance. |
| Material Breach | A breach that substantially harms the innocent party and for which it would be hard to compensate without discharging the contract. |
| Anticipatory Breach | Making it unmistakenable clear that you will not honor a contract. |
| Statute of Limitations | Begins to run at the time of injury and will limit the time within which the injured party may file suit. |
| True Impossibility | Something has happened making it utterly impossible to do what the promisor said he would do. |
| Commercial Impracticability | Some event has occurred that neither party anticipated and fulfilling the contract would now be extraordinarily difficult and unfair to one party. |
| Frustation of Purpose | Some event has occurred that neither party anticipated and the contract now has no value for one party. |
| Breaching the Contract | When he or she fails to perform a duty without a valid excuse. |
| Remedy | The method a court uses to compensate an injured party. |
| Injunction | An order forcing someone to do something or refrain from doing something. |
| Liquidated damages clause | A provision in the contract that declares in advance what one party will receive if the other side breaches. |
| Interest | A legal right to something. |
| Expectation Interest | This refers to what the injured party reasonably thought they would get from the contract. |
| Compensatory Damages | Damages that flow directly from the contract. |
| Consequential Damages | Damages resulting from the unique circumstances of this injured party. |
| Incidental Damages | The relatively minor costs that the injured party suffers when responding to the breach. |
| Restitution Interest | Designed to return to the injured party a benefit that he has conferred on the other party, which it would be unjust to leave with that person. |
| Preliminary Injunction | An order issued early in a lawsuit prohibiting a party from doing something during the course of the lawsuit. |
| Reformation | A process in which a court will partially "re-write" a contract. |
| Punitive Damages | Damages designed not to compensate the injured party but to punish the breaching party. |
Created by:
ag22
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