Business Law Chapter 10 Key Terms Quiz

Objective Standard

A standard that is based on factual measurements, in the absence of a biased judgement or analysis

Offer

A manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it 

Offeror

Person making the offer

Offeree

Recipient of the offer

Auction Sale 

A public event where goods or services are sold to the highest bidder through a bidding process 

Without Reserve 

Auctioneer may not withdraw the goods from the auction 

Open Terms 

A payment agreement where a customer pays a bill at a later date 

Good Faith 

Honesty in fact and the observance of reasonable commercial standards of fair dealing 

Commercial Reasonableness

Judgement of reasonable persons familiar with the business transaction

Output Contract 

A contract in which one party agrees to sell his entire output and the other agrees to buy it; it is not illusory, though it may be indefinite

Requirements Contract 

A contract in which one party agrees to purchase his total requirements from the other party; hence, such a contract is binding, not illusory 

Revocation 

The recall of some power, authority, or thing granted, or a destroying or making void of some deed that had existence until the act of revocation made it void 

Option Contract 

Contract providing that an offer will stay open for a specified period of time 

Firm Offer 

Irrevocable offer to sell or buy goods by a merchant in a signed writing which gives assurance that it will not be rescinded for up to three months 

Rejection 

The refusal to accept an offer; manifestation of an unwillingness to accept the goods (sales) 

Counteroffer 

A statement by the offeree which has the legal effect of rejecting the offer and of proposing a new offer to the offeror. However, the provisions of the UCC modify this principle by providing that the “additional terms are to be constructed as proposals for addition to the contract.”

Conditional Acceptance 

An acceptance of an offer contingent upon the acceptance of an additional or different term

Acceptance 

Compliance by offeree with terms and conditions of offer 

Authorized Means 

Any reasonable means of communication 

Mirror Image Rule 

An acceptance cannot deviate from the terms of the offer 

Battle of the Forms 

When two businesses are negotiating the terms of a contract and each party wants to contract on the basis of its own terms