Business Law Test Four

contract

a legally enforceable agreement

bilateral contract

a promise made in exchange for another promise

executory contract

an agreement in which one or more parties has not yet fulfilled its obligations

executed contract

an agreement in which all parties have fulfilled their obligations

valid contract

an agreement that satisfies all of the law’s requirements

unenforceable agreement

an agreement in which the parties intend to form a valid bargain, but a court declares that some rule of law prevents enforcing itv

voidable contract

an agreement that may be terminated by one of the parties

void agreement

a contract that neither party can enforce because the bargain is illegal or one of the parties had no legal authority to make ite

express contract

an agreement with all the important terms explicitly stated

promissory estoppel

a possible remedy for an injured plaintiff in a case with no valid contract, when the plaintiff can show a promise, resonable reliance, and injustice

quasi-contract

a possible remedy for an injured plaintiff in a case with no valid contract, when the plaintiff can show benefit to the defendant, reasonable expectation of payment and unjust enrichment

unilateral contract

when one party makes a promise that the other party can accept only by actually doing something e

express contract

an agreement with all the important terms explicitly stated

implied contract

the words and conduct of the parties indicate they intended an agreement

executory

a contract is ___ when it has been made, but one or more parties has not yet fulfilled its obligations

common law

source of contract law: real estate, money, services, anything that is not a good

Uniform Commercial Code (UCC)

source of contract law: governs sale of goods, anything moveable except for money or goods

False

all contracts need to be in writing (T/F)

executed

A contract is ___ when all parties have fulfilled their obligations

Predominant Purpose Test

Some contracts involve both goods and services. What test is used to determine which source governs

Uniform Commercial Code (UCC)

created in 1952 to facilitate the easy formation and enforcement of contracts in a changing and fast paced world, it was a response to the cumbersome common law that varied widely by state and inhibited business across all our states

goods

Trait of UCC: 1. Governs the sale of __

Pro

Trait of UCC: 2.____ Business

loosened, gap fillers

Trait of UCC: 3. Less restrictive than Common Law, ___is loosened, accounts for _____

contract checklist

offer, acceptance, consideration, legality, capacity, consent, writing

noncompetition agreement

a contract where on party agrees not to compete with another

quasi-contract

even when there is not contract, a court may use ___ to compensate a plaintiff who can show that
1. the plaintiff gave some benefit to the defendanct
2. the plaintiff reasonably expected to be paid for the benefit and the defendant knew this, and
3. the defendant would be unjustly enriched if he did not pay

quantum meruit

quasi-contract damages, means as must as he deserves

offer

an act or statement that proposes definite terms and permits the other party to create a contract by accepting those terms

offeror

the person who makes an offer

offeree

the person to whom an offer is made

letter of intent

a letter that summarizes negotiating progress

consumer protection statute

laws protecting consumers from fraud

gap-filler provisions

UC rules for supplying missing terms

output contract

obligates a buyet to obtain all of his needed goods from seller

counteroffer

a different proposal made in response to an original offermi

mirror image rule

requires that acceptance be on precisely the same terms as the offer

mailbox rule

acceptance is generally effective upon dispatch; terminations are effective when received

acceptance

you can revoke an offer before ___

1. Mutual Assent

2. Voluntary Consent

3. Does not require writing

elements of an agreement (3)

intent, definite, communicated

Requirements of an Offer:

1.serious ___

2. clear, certain, or ___ terms

3. offer must be __

False

Invitations to bargain, price quotes, letters of intent, advertisements, auctions are all examples of offers (T/F)

definiteness

to establish a ___ of terms

1. identify the parties

2. identify the object or subject of contract

3. identify the consideration to be paid

4. identify the time of payment, delivery, or performance

by revocation

termination of offer: most common, remove offer

option contracts

termination of offer: money, complicated

by rejection

termination of offer: counter offer/new offer

by expiration

termination of offer: timeline

by operation of law

termination of offer: something no longer exists or someone dies

True

Acceptance has to match the topic of conversation (T/F)

True

Ordinarily, silence cannot constitute acceptance

price, output, requirements

The UCC supplies terms for any terms missing

1. __ missing or vague

2. ___contract

3. ___contract

consideration

the inducement, price, or promise that causes a person to enter into a contract and forms the basis for the parties exchange

act

any action that a party was not legally required to take in the first place

forbearance

refraining from doing something that one has a legal right to do

bargained for

when something is sought by the promisor and given by the promisee in exchange for their promises

requirements contract

contract in which a buyer agrees to purchase all of her goods from one seller

output contract

contract in which the seller guarantees to sell all of its output to one buyer and the buyer agrees to accept the entire quantity

rescind

to cancel

liquidated debt

a debt in which there is no dispute about the amount owed

unliquidated debt

a debt that is disputed as the parties disagree over its existence or amount

accord and satisfaction

completed agreement to settle a debt for less than sum claimed

value and Bargained for Exchange

two factors that make up consideration

Act, Forbearance, Promise to Act of Forbear

What is value (3 things)

illusory promises, preexisting duties, and past consideration

Three exceptions to the basic rule of consideration

illusory proise

when a person expresses contract terms with such uncertainty that the terms are not definite, the promise is illusory

preexisting duty

when a person already has a legal duty to perform an action, there is no legally sufficient consideration

past consideration

when a person makes a promise in return for actions or events that have already taken place, there is no consideration

good faith requirement

states that a party must make its requirement demand in good faith, based on parties expectations at the start of the deal

Implied Contract

In an ____ the words and conduct of the parties indicate that they intended an agreement

Goods

Means anything moveable, except for money, securities, and certain legal rights

Promissory Estoppel

In ____ the defendant made a promise that the plaintiff relied on

Quasi-Contract Cases

In ___ the defendant received a benefit from the plaintiff and retaining that benefit would be unfair

1.        The defendant made a promise knowing the plaintiff would rely on it

2.        The plaintiff did rely on the promise

3.        The only way to avoid justice is to enforce the promise

What are the three requirements for promissory estoppel

True

Before you rely on a promise, negotiate a binding contract (T/F)

1.        The plaintiff gave some benefit to the defendant

2.        The plaintiff reasonably expected to be paid for the benefit and the defendant knew this

3.        The defendant would be unjustly enriched if he did not pay

What are the three requirements for Quasi-Contract

Meeting of the minds

Parties form contracts only if they have a ____

True

Courts focus on parties’ actual words and conduct, deciding how a reasonable person would interpret them in context (T/F)

1.        Offeror’s words and actions indicate an intention to make a bargain

2.        The terms of the offer are reasonably definite

What are the two things that make a statement an offer

Invitation to Bargain

Not generally considered an offer, “I may want to sell my condo for 350,000”

Price Quote

Not generally considered an offer, “list of prices for new year to regular customer”

Letter of Intent

Not generally considered an offer, distinguish a serious party from one with a casual interest, summarize the progress made thus far, and assist the parties in securing necessary financing

Advertisements

Not generally considered an offer, merely a request for offers

Consumer Protection Statute

Laws protecting consumers from fraud

Auctions

Not generally considered an offer, placing an item up for offers, does not guarantee a sale

True

Under the UCC, a contract for the sale of goods may be enforced when a key term is missing such as delivery date or price as long as both parties intended to create a contract (T/F)

Open Price

UCC gap provision, in general if the parties do not settle on a price, the Code establishes that the goods will be sold for a reasonable price, usually the market value or price established by a neutral expert or agency

Output and Requirements Provisions

UCC gap provision, agreements to sell or buy all products from one source, code requires that both parties act in good faith, neither party can demand a quantity of goods that is disproportionate to their past dealings or their reasonable estimates

Revocation, Rejection, Expiration, and Operation of Las

Four ways offers can be terminated

Revoked

Offer Termination: An offer is ___ when the offeror takes it back before the offeree accepts, in general the offeror may do this any time before the offer is accepted

True

Some offers cannot be revoked, at least for some time, Often people and business need time to evaluate offers, you can do this with an option contract or a firm offer (T/F)

Option Contract

With an ____, an interested purchaser buys the right to have the offer held open

True

The offeror may not revoke an offer during the option period (T/F)

Firm Offer

UCC contracts only, if a promise is made in writing by the merchant, and it agrees to hold open an offer for a stated period, then an offer may not be revoked

3

The open period of a firm offer may not exceed __ months

Rejection

Offer Termination: If an offeree ___ an offer, the offer is immediately terminated

True

If an offeree rejects an offer, the rejection immediately terminates the offer (T/F)

True

A counteroffer is rejection (T/F)

Expiration

Offer Termination: specific time frame for acceptance that was missed by the offeree

True

When an offer specifies a time limit for acceptance, that time period is binding (T/F)

Reasonable

If the offer specifies no time limit, the offeree has a ____  period in which to accept, varies depending on offer, previous dealings, and customary practices