Business Law Test 3 Mississippi State

Promise

A person's assurance that he or she will or will not do something.

Promissor

A person who makes a promise.

Promisee

A person to whom a promise is made.

Contract

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

Objective theory of contracts

A theory under which the intent to form a contract will be judged by outward, objective facts (what the party said when entering into the contract, how the party acted or appeared, and the circumstances surrounding the transaction) as interpreted by a reasonable person, rather than by the party's own secret, subjective intentions

Offeror

A person who makes an offer.

Offeree

A person to whom an offer is made.

Bilateral Contract

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

Unitlateral Contract

A contract that results when an offer can only be accepted by the offeree's performance

Formal Contract

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

Informal Contract

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 and explicitly 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). Also known as implied-in-fact contract.

Executed Contract

A contract that has been completely performed by both parties.

Executory Contract

A contract that has not as yet been fully performed.

Valid Contract

A contract that results when elements necessary for contract formation (agreement, consideration, legal purpose, and contractual capacity) are present.

Voidable Contract

A contract that may be legally avoided (canceled, or annulled) 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

Quasi Contract

A fictional contract imposed on parties by a court in the interests of fairness and justice; usually, quasi contracts are imposed to avoid the unjust enrichment of one party at the expense of another.

Quantam Meruit

An equitable doctrine based on the concept that one who benefits from another's labor and materials should not be unjustly enriched thereby but should be required to pay a reasonable amount for the benefits received, even absent a contract.

Extrensive Evidence

Evidence that relates to a contract but is not contained within the document itself, such as the testimony of parties and witnesses, or additional agreements or communications. A court may consider extrinsic evidence only when a contract term is ambiguous and the evidence does not contradict the express terms of the contract.

CHAPTER 12

CHAPTER 12

Acceptance

In contract law, the offeree's notification to the offeror that the offeree agrees to be bound by the terms of the offeror's proposal.

Agreement

A meeting of two or more minds in regard to the terms of a contract; usually broken down into two events—an offer by one party to form a contract, and an acceptance of the offer by the person to whom the offer is made.

Browse-Wrap Terms

Terms and conditions of use that are presented to an Internet user at the time certain products, such as software, are being downloaded but that need not be agreed to (by clicking "I agree," for example) before being able to install or use the product.

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 button that says, for example, "I agree"; sometimes referred to as a click-on license or a click-wrap agreement.

Counteroffer

An offeree's response to an offer in which the offeree rejects the original offer and at the same time makes a new offer.

E-Contract

A contract that is entered into in cyberspace and is evidenced only by electronic impulses (such as those that make up a computer's memory), rather than, for example, a typewritten form.

E-Signature

As defined by the Uniform Electronic Transactions Act, "an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record."

Forum-Selection Clause

A provision in a contract designating the court, jurisdiction, or tribunal that will decide any disputes arising under the contract.

Mailbox Rule

A rule providing that an acceptance of an offer becomes effective on dispatch. Acceptance takes effect, thus completing formation of the contract, at the time the offeree sends or delivers the communication via the mode expressly or impliedly authorized by the offeror.

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.

Offer

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

Option Contract

A contract under which the offeror cannot revoke his or her offer for a stipulated time period and the offeree can accept or reject the offer during this period without fear that the offer will be made to another person. The offeree must give consideration for the option (the irrevocable offer) to be enforceable.

Partnering Agreement

An agreement between a seller and a buyer who frequently do business with each other on the terms and conditions that will apply to all subsequently formed electronic contracts.

Record

According to the Uniform Electronic Transactions Act, information that is either inscribed on a tangible medium or stored in an electronic or other medium and that is retrievable. The Uniform Computer Information Transactions Act uses the term record instead of writing.

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.

Shrink-Wrap Agreement

An agreement whose terms are expressed in a document located inside a box in which goods (usually software) are packaged; sometimes called a shrink-wrap license.

CHAPTER 13

CHAPTER 13

Accord and Satisfaction

An agreement for payment (or other performance) between two 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 and satisfaction" is complete and the obligation is discharged.

Consideration

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

Covenant not to sue

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

Estopped

Barred, impeded, or precluded.

Forbearance

The act of refraining from exercising a legal right. An agreement between the lender and the borrower in which the lender agrees to temporarily cease requiring mortgage payments, to delay foreclosure, or to accept smaller payments than previously scheduled.

Liquidated Debt

A debt that is due and certain in amount.

Past Consideration

Something given or some act done in the past, which cannot ordinarily be consideration for a later bargain.

Promissory Estoppel

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

Release

A contract in which one party forfeits the right to pursue a legal claim against the other party.

Rescission

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

Unliquidated Debt

A debt that is uncertain in amount.

CHAPTER 14

CHAPTER 14

Age of Majority

The age at which an individual is considered legally capable of conducting himself or herself responsibly.

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.

Covenant not to compete

A contractual promise to refrain from competing with another party for a certain period of time and within a certain geographic area.

Disaffirmance

The legal avoidance, or setting aside, of a contractual obligation.

Emancipation

In regard to minors, the act of being freed from parental control; occurs when a child's parent or legal guardian relinquishes the legal right to exercise control over the child.

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.

Necessaries

Necessities required for life, such as food, shelter, clothing, and medical attention; may include whatever is believed to be necessary to maintain a person's standard of living or financial and social status.

Ratification

The act of accepting and giving legal force to an obligation that previously was not enforceable.

Reformation

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

Unconscionable

A contract or clause that is void on the basis of public policy because one party, as a result of his or her disproportionate bargaining power, is forced to accept terms that are unfairly burdensome and that unfairly benefit the dominating party.

Usury

Charging an illegal rate of interest.

CHAPTER 15

CHAPTER 15

Adhesion Contract

A "standard-form" contract, such as that between a large retailer and a consumer, in which the stronger party dictates the terms.

Innocent Misrepresentation

A false statement of fact or an act made in good faith that deceives and causes harm or injury to another.

Latent Defects

A defect that is not obvious or cannot readily be ascertained.

Negligent Misrepresentation

Any manifestation through words or conduct that amounts to an untrue statement of fact made in circumstances in which a reasonable and prudent person would not have done (or failed to do) that which led to the misrepresentation.

Scientor

Knowledge by the misrepresenting party that material facts have been falsely represented or omitted with an intent to deceive.

Voluntary Consent

Voluntary agreement to a proposition or an act of another. A concurrence of wills.

CHAPTER 18

CHAPTER 18

Anticipatory Repudiation

An assertion or action by a party indicating that he or she will not perform an obligation that the party is contractually obligated to perform at a future time.

Breach of Contract

The failure, without legal excuse, of a promisor to perform the obligations of a contract.

Commercial Impractiability

A doctrine under which a seller may be excused from performing a contract when (1) a contingency occurs, (2) the contingency's occurrence makes performance impracticable, and (3) the nonoccurrence of the contingency was a basic assumption on which the contract was made

Concurrent Conditions

Conditions in a contract that must occur or be performed at the same time; they are mutually dependent.

Condition

A possible future event, the occurrence or nonoccurrence of which will trigger the performance of a legal obligation or terminate an existing obligation under a contract.

Condition Precedent

A condition in a contract that must be met before a party's promise becomes absolute.

Condition Subsequent

A condition in a contract that operates to terminate a party's absolute promise to perform.

Discharge

The termination of an obligation. (1) In contract law, discharge occurs when the parties have fully performed their contractual obligations or when events, conduct of the parties, or operation of the law releases the parties from performance. (2) In bankruptcy proceedings, the extinction of the debtor's dischargeable debts.

Discharge in Bankruptcy

The release of a debtor from all debts that are provable, except those specifically excepted from discharge by statute.

Frustration of Purpose

A court-created doctrine under which a party to a contract will be relieved of his or her duty to perform when the objective purpose for performance no longer exists (due to reasons beyond that party's control).

Impossibility of Performance

A doctrine under which a party to a contract is relieved of his or her duty to perform when performance becomes impossible or totally impracticable (through no fault of either party).

Mutual Recission

An agreement between the parties to cancel their contract, releasing the parties from further obligations under the contract.

Novation

The substitution, by agreement, of a new contract for an old one, with the rights under the old one being terminated

Performance

In contract law, the fulfillment of one's duties arising under a contract with another; the normal way of discharging one's contractual obligations.