Business Law - Exam 3 - Virginia Tech - Showalter

contract

The promise that the law will enforce

elements of a contract

Agreement, consideration, legality, capacity

bilateral

A contract where both parties make a promise to do something for eachother

unilateral

A contract where one party makes a promise to the other that the party can only accept by doing something specific

express

A contract where the two parties explicitly state all of the important terms of the agreement

implied

A contract where the words and conduct of the parties indicate that the parties intended to make an agreement

executory

A contract where one or more parties has not fulfilled the obligations under the contract

executed

A contract where all parties have fulfilled the obligations under the contract

void

A contract neither party can enforce

voidable

A contract that, by law, one party can terminate

unenforceable

A contract that parties intended to form validly, cannot because a rule of law prevents enforcement

valid

A contract that satisfies the law's requirements

services or real estate

What common law contracts deal with

moveable goods

What Uniform Commercial Code (UCC) contracts deal with

merchant

Someone who deals in goods of the kind or otherwise by their occupation. They hold themselves out as having the knowledge or skill peculiar to the practices involved

promissory estoppel

When a defendant makes a promise knowing that the plaintiff would likely rely on it, the plaintiff did rely on it, and the only way to avoid injustice is to enforce the promise. This is not a contract

quantum merit

When the plaintiff gave some benefit to the defendant, the plaintiff reasonably expected to get paid and the defendant knew that, and without payment the defendant would be unjustly enriched. Not a contract

offer

An intentional act or statement where the offeror proposes definite and certain terms. It is communicated to the offeree. Permits the offeree to create a contract by accepting.

quantity

The one material term that the UCC generally has no basis for determining a remedy for

requirements

A contract that obligates a buyer to obtain all of his needed goods from the seller

output

A contract that obligates a seller to sell all of his production to one buyer, who agrees to buy it

revocation

When the offeror takes back the offer

termination by expiration

The type of termination of an offer that occurs when the time limit for acceptance runs out

termination by rejection

The type of termination of an offer that occurs when the offeree rejects the offer

termination by operation of law

The type of termination of an offer that occurs with the death or mental incapacity of the offeror, or the subject matter matter of the offer is destroyed

mirror image rule

Common Law rule that requires the acceptance to be on precisely the same terms as the offer

mailbox rule

An offer is accepted as soon as the acceptance is put into the mail

consideration

What a person will receive in return for performing a contract obligation

pre-existing duty rule

A promise to do something the promisor is already obligated to do is not consideration

illusory promise

If one party's promise is conditional, it forms a(n)_____

modification

Exception to the pre-existing duty rule: When both parties agree to change the contract, the best option is to rescind the contract and write a new one

additional work

Exception to the pre-existing-duty rule: When a promisor agrees to do something above and beyond what the promisor is obligated to do

output and requirements contracts

These type of contracts are not allowed in common law. However, they are allowed under the UCC

liquidated debt

No dispute about the amount owed

unliquidated debt

When there is a dispute over whether there is a debt at all or how much is owed

covenant not to compete

An agreement where an employee agrees not to work for a competitor once they leave their current company

gambling contract

This type of contract is usually illegal unless the state specifically authorizes it

enforceable

When a licensing requirement is designed to raise revenue, a contract made with an unlicensed person is generally ______

unenforceable

When a licensing requirement is designed to protect the public, a contract made with an unlicensed person is _____

usury laws

This prohibits excess interest on loans

public interest

One way an exculpatory clause can be unenforceable is if it deals with _____

Consumer Review Fairness Act

Protects people's ability to share in any forum their honest opinions about a businesses' products, services, or conduct

bailment

Giving possession and control of personal property to another person

unconscionable contract

A contract a court will refuse to enforce due to fundamental fairness

adhesion contract

Standard form contracts that prepared by one party and given to another on a "take it or leave it" basis

disaffirm

Minors can do this to a contract; meaning that the minor can notify the other party that they refuse to be bound by the agreement

restitution

Restoring a party to their original position

creation of a voidable contract

The effect of an intoxicated person making a contract

capacity

The legal ability to enter into a contract. Minors and those with mental impairments usually lack this

fradulent misrepresentation

When the owner knows a statement is false or the speaker makes a reckless misrepresentation

innocent misrepresentation

Owner makes a false statement they believe to be true and has good reason for the belief

rescind

To cancel a contract

bilateral mistake

When both parties negotiate based on the same factual error

unilateral mistake

When only one party enters into a contract under a wrong assumption

duress

When one party makes a threat that causes the other party to enter into a contract and the threatened party had no other alternative

interest in land

This type of contract must be made in writing

parol evidence

Anything said or done or written before the parties signed the agreement, or as they signed it

condition

Must occur before a party is obligated under a contract

condition subsequent

Occurs after a duty arises

strict performance

Performance that is exactly what is promised

discharge

Occurs when a party has no more duties under a contract

concurrent conditions

Certain things must occur at the same time

substantial performance

This type of performance gets the party who performed the contract price minus the value of any defects

condition precedent

Occurs before a duty arises

personal satisfaction contract

When the promisee makes a subjective evaluation of the promisor's performance

time is of the essence clause

Generally makes the contract dates strictly enforceable

anticipatory breach

When one party makes it unmistakably clear they will not honor the contract

Commercial Impracticability

An event occurred that neither party anticipated that makes the contract extra-ordinarily difficult and unfair to one party

frustration of purpose

When an event occurs that neither party anticipates that makes a contract have no value for one party

true impossibility

Something happens that makes it utterly impossible to fulfill a promise

remedy

A method the court uses to compensate an injured party

restitution interest

Designed to return to an injured party a benefit he has conferred to another party, which it would be unjust to leave with that person

compensatory

Damages that generally flow directly from the contract

reliance interest

Designed to put the injured party in a position they would have been in had they not entered into a contract

consequential

Damages that are foreseeable and caused by the unique circumstances of the injured party

expectation interest

Designed to put the injured party in a position they would have been in had both parties performed their obligations

equitable interest

Money is not enough to help the injured party, a court may order a transfer of property or order an injunction

incidental

Damages that are incurred when the injured party responds to the breach

The contract deals with a sale of land or the asset is unique

When a court will order specific performance

injunction

A court order that requires someone to do something or not do something

nominal

Damages that are a token some such as $1

liquidated damages clause

Provision stating in advance how much a party must pay if it breaches

good faith

An honest effort to meet both the spirit and letter of the contract