Business Law Quiz #1: Key Terms & Definitions for Students

Contract

A promise that the law will enforce

By enforcing exchanged promises, what does contract law protect

The people who rely on the promises

Buyers remorse

when a person has second thoughts about an agreement because they no longer feel it is mutually beneficial

How does contract law limit future risk

mutual assent, consideration, definiteness

Buyers - ensures steady supply

Sellers - keeps demands constant

Stair desis

Subsequent courts are supposed to be bound to respect earlier decisions treating them as law

In order for a contract to be enforceable, the contract must include

mutual assent, definiteness, and consideration

Four listed common defenses to a contract

Incapacity, misrepresentation and mistake, duress and undue influence, unconscionability

breach

when a party to a contract does not perform and has no excuse,

Impractability

when a disaster occurs that is beyond the control of the breaching party and prevents performance

Frustration

when disasters make other parties control useless

Expectation interest

when the court places the victim of a breach in the position they would have been if the contract had been completed

Specific Performance

an injunction compelling a breaching to perform the promise

reliance interest

seek to place the victim in the position she would have occupied if promises were never made

Statutes of limitation

rule that says how long you can wait to file a case for breach of the contract

Laches

standards allowing courts to dismiss claims if the plaintiff unreasonably delays bringing suit and the delay prejudice

Subjective vs Objective

Subjective (Feelings)

Objective (Facts)

offer

when a person proposes an agreement on specific terms, giving another person the power to conclude the transaction by agreeing to those terms

Elements of an offer

A manifestation of willingness to enter a bargain, that justifiably appears to invite an offeree's acceptance, and that acceptance justifiably appears to conclude the transaction

Preliminary negotiations

negotiations before an offer/contract

Misunderstood assent

When one person said or did one thing and the other party believed it was an assent to an offer, but was incorrect

jest

an agreement that was never intended to be taken seriously

Master of the offer

Both parties can control the offer; the offeror can create timelines or restrictions for acceptance. Offerees can delay accepting as long as the offer remains open. The one who has the final power over the offer is known as

Definiteness

A promise must be sufficiently clear to provide a court with a reasonable basis for determining whether a breach has occurred, and clear enough to provide a court with a reasonable basis for awarding a remedy for breach

Liquidated damage clauses

sometimes the parties may specify what damages will be awarded if one of the parties backs out of a contract before it is finalized or complete

How are advertisements generally treated in contract law

as an invitation

Auction

This activity is an offer to sell, It is the offer to sell to the highest bidder. Winning the bid is acceptance

Reserve

If the highest bid does not result in the sale of the item, it is because the seller included this as a condition of the sale

Revocation

withdrawing an offer

Revocation is effective when

when it is received by the offeree

Substance

an expression of assent to the terms of an offer in a manner authorized by the offer

Mirror image rule

Substance of the acceptance, its terms, to match the terms of the offer exactly if changed could mean counter offer