legal environment of business chapter 12

promise

a persons assurance that he or she will or will not do something

contract

an agreement that can be enforced in court, formed by 2 or more parties, each of whom agrees to perform or to refrain from performing some act now or in the future

offeror

a person who makes an offer

objective theory of contracts

a theory under which the intent to form a contract will be judged by outward, objective facts as interpreted by a reasonable person, rather than by the partys own secret, subjective intentions. objective facts might include what a party said when entering into a contract, how a party acted or appeared, & the circumstances surrounding the transaction

bilateral contract

a type of contract that arises when a promise is given in exchange for a promise

offeree

a person who whom an offer is made

unilateral contract

a contract that results when an offer can be accepted only by the offeree’s performance

formal contracts

a contract that by law requires a specific form, such as being executed under seal, to be valid

informal contracts

a contract that does not require a specified form or formality in order to be valid

express contract

a contract in which the terms of the agreement are fully & explicity stated in words, oral or written

implied contract

a contract formed in whole or in part from the conduct of the parties (as opposed to an express contract)

executed contract

a contract that has been completely performed by both parties

valid contract

a contract that results when the elements necessary for contract formation (agreement, consideration, contractual capacity, & legality) are present

executory contract

a contract that has not yet been fully performed

voidable contract

a contract that may be legally avoided (canceled) at the option of one of the parties

unenforceable contract

a valid contract rendered unenforceable by some statute or law

void contract

a contract having no legal force or binding effect

agreement

a meeting of 2 or more minds in regard in the terms of a contract, usually broken down into 2 events - an offer by one party to form a contract & an acceptance of the offer by the person to whom that offer is made

offer

a promise or commitment to perform or refrain from performing some specified act in the future

revocation

in contract law, the withdrawal of an offer by an offeror. unless an offer is irrevocable, it can be revoked at any time prior to acceptance without liability

counteroffer

an offeree response to an offer in which the offeree rejects the origional offer & at the same time makes a new offer

option contract

a contract under which the offeror cant revoke his or her offer for a stipulated time period & the offeree can accept or reject the offer at any time during this period. the offeree must give consideration for the option to be enforceable

mirror image rule

a common law rule that requires, for a valid contractual agreement, that the terms of the offeree’s acceptance adhere exactly to the terms of the offeror’s offer

acceptance

in contract law, the offeree’s indication to the offeror that the offeree agrees to be bound by the terms of the offeror’s proposal

e-contracts

a contract that is entered into a cyberspace & is evidenced only by electronic impulses (such as those that make up a computers memory) rather than, for example, a typewritten form

mailbox rule

a rule providing that an acceptance for an offer becomes effective on dispatch

click on agreement

an agreement that arises when a buyer, engaging in a transaction on a computer, indicates his or her assent to be bound by the terms of an offer by clicking on a buttom that says, for example, “I agree” sometimes referred to as a click on license or a click wrap agreement

shrink-wrap agreement

an agreement whose terms are expressed in a document located inside a box in which goods (usually software) are packages, sometimes called a shrinkwrap license

browse-wrap terms

terms & conditions of use that are presented to an Internet user at the time of a product, such as software, is downloaded but that need not be agreed to before the product is installed or used

e-signature

as defined by the uniform electronic transactions act, “an electronic sound, symbol, or process attached to or logically associated with the record & executed or adopted by a person with the intent to sign the record

record

according to the uniform transactions act, information that is either inscribed on a tangible medium or stored in an electronic or other medium & that is retrievable

consideration

generally, the value is given in return for a promise or a performance. the consideration, which must be present to make the contract legally binding, must something of legally sufficient value & must be bargained for

forbearance

(1) the act of refraining from exercising a legal right. (2) an agreement between a lender & a borrower in which the lender agrees to temporarily cease requiring mortgage payments, to delay foreclosure, or to accept smaller payments than previously scheduled

rescission

a remedy whereby a contract is canceled & the parties are returned to the positions they occupied before the contract was made, may be affected through the mutual consent of the parties, by their conduct, or by court decree

past consideration

something given or some act done in the past, which can’t ordinarily be consideration for a later bargain

accord & satisfaction

an agreement for payment (or other performance) between 2 parties, one of whom has a right of action against the other. after the payment has been accepted or other performance has been made, the “accord & satisfaction” is complete & the obligation is discharged

liquidated debt

a debt that is due & certain in amount

unliguidated debt

a debt that is uncertain in amount

release

a contract in which one party foreits the right to purse a legal claim against the other party

covenant not to sue

an agreement to substitute a contractual obligation for some other type of legal action based on a valid claim

promissory estoppel

a doctrine that applies when a promisor makes a clear & definite promise on which the promise justifiably relies. such a promise is binding if justice will be better served by the enforcement of the promise

estopped

barred, impeded, or precluded

disaffirmance

the legal avoidance, or setting aside, of a contractual obligation

contractual capacity

the legal ability to enter into contracts, the threshold mental capacity required by law for a party who enters into a contract to be bound by that contract

usury

charging an illegal rate of interest

covenant not to compete

a contractual promise to refrain from competing with another party for a certain period of time & within a certain geographic area. although covenants not to compete restrain trade, they are commonly found in partnership agreements, business sale agreements, & employment contracts. if they are ancillary to such agreements, covenants not to compete will normally be enforced by the courts unless the time period or geographic area is deemed unreasonable

reformation

a court-ordered correction of a written contract so that it reflects the true intentions of the parties

unconscionable

described a contract or clause that is void on the basis of public policy because one party is forced to accept terms that are unfairly burdensome & that unfairly benefit the dominating party

exculpatory clauses

a clause that releases a contractual party from liability in the event of monetary of physical injury, no matter who is at fault

statute of frauds

a state statute under which certain types of contracts must be in writing to be enforceable

assignment

the act of transferring to another all or part of ones rights arising under a contract

3rd part beneficiary

one of whose benefit a promise is made in a contract but who is not a party to the contract

delegation

the transfer of a contractual duty to a 3rd party. the party delegating the duty (the delegator) to the 3rd party (the delegatee) is still obligated to perform on the contract should the delegatee fail to perform

intended beneficiary

a 3rd party for whose benefit a contract is formed, an intended beneficiary can sue the promisor if such a contract is breached

exculpatory clause

a clause that releases a contractual party from liability in the event of monetary or physical injury, no matter who is at fault