Business Law Exam Review: Chapters 11, 12, and 14

A set of vocabulary-style flashcards covering the nature, formation, and consideration elements of business contracts based on lecture notes.

Contract

A legally binding agreement or a promise or set of promises for the breach of which the law gives a remedy or the performance of which the law in some ways recognizes as a duty.

Elements of a Contract

The core requirements including an agreement, competent parties, genuine assent, consideration, lawful objective, and proper form if required by law.

Promisor

The person who makes a promise in a contract.

Promisee

The person to whom a promise is made.

Obligor

The promisor on whom a binding promise imposes a duty or obligation.

Obligee

The promisee who can claim the benefit of a binding obligation.

Privity

The chain or relationship to the same thing or right, also known as privity of contract.

Formal Contracts

Contracts enforced because of the formality with which they are executed, such as contracts under seal, contracts of record (recognizance), and negotiable instruments.

Recognizance

An obligation entered into before a court to do some act, also known as a contract of record.

Informal Contracts

All enforceable contracts that are not classified as formal contracts.

Expressed Contract

A contract in which the terms are manifested by the parties' words, whether spoken or written.

Implied Contract

A contract in which the agreement is shown by the acts and conduct of the parties rather than by words.

Valid Contract

An agreement that is binding and enforceable by law.

Voidable Contract

An agreement that is otherwise binding but may be rejected at the option of one of the parties due to circumstances like lack of capacity.

Void Agreement

An agreement that contemplates the performance of an act prohibited by law and is incapable of enforcement.

Executed Contract

A contract that has been completely performed where nothing remains to be done by either party.

Executory Contract

A contract where something remains to be done by one or both parties.

Bilateral Contract

A contract where the offeror extends a promise and asks for a promise in return, such as promising to paint a house for $1,000$ if the other person agrees.

Unilateral Contract

A contract where the offeror promises to do something or pay money only when the offeree does an act, such as a reward offer or a contest.

Optional Contract

An agreement to hold an offer open for a fixed period of time, giving one party the freedom of choice to buy within that period.

Right of First Refusal

The right of a party to meet the terms of a proposed contract before it is executed.

Cost-Plus Contract

A contract where the contractor is due payment for all project costs plus a stated percentage as profit.

Fixed Price Contract

A contract where the contractor is due a total amount stated in the contract reflecting all estimated costs and profits.

Quasi Contract

An obligation imposed by law to avoid unjust enrichment, requiring payment for the reasonable value of a benefit conferred.

Quantum Meruit

An action brought for the value of services rendered when no express contract exists, allowing recovery of the fair and reasonable value of work performed.

Offer

The expression of willingness by the offeror to enter into a contractual agreement regarding a particular subject.

Divisible Contract

An agreement consisting of two or more parts calling for corresponding performances of each part by the parties.

Requirement Contract

A contract in which a buyer agrees to purchase all of their needs from a particular seller.

Output Contract

A contract where a producer agrees to sell its entire production or output to a specific buyer.

Firm Offer

An offer that states it is to be irrevocable for a stated period of time.

Counteroffer

A rejection of the original offer that replies with a different offer, changing or adding terms.

Acceptance

The expression of assent by the offeree to the terms of the offer, which must be absolute and unconditional.

Postal Reorganization Act

A law providing that individuals who receive unordered mailed merchandise from a commercial sender may keep or use it without obligation to the seller.

Mailbox Rule

A rule where a properly addressed, postage-paid acceptance takes effect when placed in the control of the U.S. Postal Service or a private third-party carrier.

Consideration

The bargained-for exchange; what each party gives up to the other (benefit received or detriment incurred) in making an agreement.

Forbearance

Refraining from doing an act that an individual has a legal right to do, which can serve as valid consideration.

Illusory Promise

A promise that contains no real obligation or only an apparent obligation, causing the contract to lack mutuality.

Composition of Creditors

An agreement where each creditor accepts a partial payment as full payment in consideration of other creditors doing the same.

Past Consideration

Something that has been performed in the past and cannot serve as legal consideration for a new promise in the present.

Promissory Estoppel

A doctrine, also called detrimental reliance, where a promisor is prevented from asserting a promise is unenforceable due to the promisee's substantial reliance on it to avoid injustice.