Business Law Exam Study Guide - Contract Law & Remedies (Part 1 of 3)

Comprehensive practice flashcards covering contract formation, consideration, capacity, enforceability, formalities, and remedies from Part 1 of the Business Law study guide.

Richard offers to sell his car to John but later changes his mind. If Richard wants to revoke his offer, when must he do so?

Richard can revoke his offer at any time before John accepts it.

In order for the consideration requirement in contracts to be met, what must each party do?

Each party must give or promise something of legal value in exchange for the other's promise.

True or False: A party's signature is a strictly required element of a contract.

False. Many contracts are valid orally without signatures, unless required by the Statute of Frauds.

What is most likely to constitute undue influence in contract formation?

Unfair persuasion by a dominant or trusted person over a vulnerable party.

Terminating an old agreement, settling a dispute, and entering into a new agreement is called what?

A novation.

Is an oral contract for the sale of a parcel of land generally enforceable?

Generally unenforceable under the Statute of Frauds unless a specific exception applies.

Melanie owes $\$500$ to Jessica. Jessica gifts the right to receive the money to her daughter Kelly in writing. Is this assignment enforceable?

Yes. Gratuitous assignments of rights are enforceable despite the lack of consideration.

Do courts look at subjective intent or objective outward manifestations of intent when enforcing a contract?

Objective theory of intent (courts examine outward manifestations and reasonable interpretation).

James knows his house has a severe termite infestation and conceals it from Mikael during a sale. What remedy applies?

It is fraudulent concealment; Mikael may rescind the contract and seek damages.

What is the fundamental essence of a contract?

A legally enforceable promise or set of promises.

Joe buys a house from Jane and discovers it is reputed to be haunted. Can he rescind based solely on reputation?

Likely no rescission based solely on reputation unless state law specifically mandates disclosure.

Trista receives an email offer requiring acceptance prior to 2:30 PM. She emails acceptance at 2:15 PM. Is it binding?

Yes. A binding contract was formed upon proper electronic dispatch/sending before the deadline.

What is the legal term for the right of minors to avoid or cancel a contract?

Disaffirmance.

What are damages that are agreed upon in advance at the time the contract is formed called?

Liquidated damages.

What term describes a wrongful coercion that induces a person to enter or modify a contract?

Duress.

Under Texas law and general common law, what primary subject matter requires a written contract?

Sale of land/real estate (and other agreements under the Statute of Frauds).

When surrounding facts and conduct indicate that an agreement was reached, what contract exists?

An implied-in-fact contract.

When does a counteroffer become legally effective?

When it is received by the original offeror.

What does the Parol Evidence Rule prevent in integrated written contracts?

Prior or contemporaneous oral agreements cannot contradict a final written agreement.

What does the Statute of Frauds mandate for specific categories of agreements?

That certain contracts must be evidenced by a writing to be enforceable.

True or False: Anti-assignment clauses in contracts are strictly unenforceable.

False. Anti-assignment clauses are generally enforceable with narrow exceptions.

True or False: Generally, the age of majority for contracting purposes is 21 years old.

False. The age of majority for contracting in most states is 18 years old.

What is the legal term for the transfer of a contractual right to a third party?

An assignment.

True or False: A contract that has no legal effect from the start is voidable.

False. A contract with no legal effect is void (voidable contracts are valid until canceled).

When a court rules that a contract is illegal, what does that mean for enforcement?

It violates a statute or public policy and is generally unenforceable.

In determining whether an offeree accepted an offer, what standard do courts apply?

Courts look for objective manifestations of intent.

An offer is sent by U.S. Mail. The offeree responds via email. When is acceptance effective?

Acceptance by email is generally effective when sent if email is a reasonable medium.

True or False: To satisfy the Statute of Frauds writing requirement, both parties must sign.

False. Only the signature of the party to be charged (sued) is required.

Calvin agrees to sell Sara his car for $\$5,000$ in 10 days. What kind of contract is this?

A valid executory contract (promises made but performance is in the future).

In Beachcomber Coins v. Boskett, why could the buyer rescind the rare coin sale?

Rescission was granted due to a Mutual Mistake of Fact regarding the coin's authenticity.