Business Law Final Exam Review

46 terms by wlayden93 

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Contract

Any agreement enforceable by law

3 theories of contract law

1.Equity theory- exchanged items of equal value
2.Will theory- free will. Not a forced contract
3.Formalist theory- study of both parties actions and words to determine if there was a "meeting of the minds," used today

6 elements of a contract

1. Offer
2. Acceptance
3.Genuine Agreement
4. Consideration
5. Capacity
6. Legality

Offer

A proposal by one party to another

Acceptance

second party agrees to the offer (Must agree to all parts of the contract)

Genuine Agreement

Meeting of the minds (agreements cannot be genuine if there is a mistake, fraud, encouragement)

Capacity

legal ability (age, state of mind) to enter a contract

Legality

Contract pertains only to legal activities or trades

Valid Contract

A legally binding contract

Void

Contract is void if it has no legal effect

Voidable

If either party has the ability to void a contract

Express Contract

a contract stated in words or orally created

Implied contract

comes about from the actions of both parties (gas station example)

Bilateral Contract

A contract that contains two promises (If you drive me to work on Monday, I will give you a ride on Tuesday)

Unilateral Contracts

A contract that contains a promise by one party to do something when the second party preforms some act (reward agreements- if you find my dog, I will give you a dollar)

Oral Contract

a contract created by word of mouth between two people

Written Contract

a contract in writing

offeror

person who makes an offer

offeree

person who receives an offer

3 requirements of an offer

1. Made seriously
2. Definite and certain
3. Communicated to the offeree

'made seriously'

offer that is made must be serious ( no jokes or contracts made in the heat of anger)

'Definite and certain'

must have a specific amount and offer must have no vague points

'Communicated to the offeree'

Offer expressed clear and effectively

Invitations to negotiate

Advertisements (one exception is first come, first serve)

Requirements of acceptance

1. Unconditional
2. Must follow the methods of acceptance to correctly accept the contract

Mirror Image Rule

Acceptance must not change the contract

Counteroffer

any change in the terms of a contract (this flip-flops the offerer and offeree)

Exceptions to the Mirror Image Rule

Contracts for the sale of goods are exceptions to the mirror image rule

Uniform Commercial Code

regulates the sale of goods in the US (except in LA)

Exceptions to the UCC

Non-merchants- Us!
Btwn. Merchants

Methods of Acceptance

Time- important b/c when an acceptance takes place is when the contract comes into existence. (date postmarked)

Unenforceable

Contract that the courts will not uphold (statute of limitations)

Fraud

a deliberate deception to gain

5 elements of fraud

1. False representation of fact
2. Knowledge of the falsity by the party making the false representation
3. Intent to deceive
4.reliance from innocent party
5.Actual loss must be suffered by innocent party ($)

False representation of fact

False representation of a material fact (a fact that is important and matters to both parties, not an opinion)

Concealment

Covering up of a fact, and falsely representing that the fact doesn't exist

Duress

Physical Duress= void
Emotional= voidable

Undue influence

circumstances such as ill health, old age, mental immaturity, etc that places one person in a weaker position. (make contract voidable by innocent party)

Rebuttable presumption

when two parties enter a contract, they are permitted by law toe presume the other party has the capacity to also enter the contract

Minor

not at legal adult (18)

Majority

old enough to be in the majority

Emancipated

minor that is no longer under the control of their parents or married (responsible for contracts)

"Abandoned"

Still protected by contract law

Ratification

After reaching the age of majority, a former minor can ratify a contract either through writing or letting the contract continue

Guardian

Someone who makes a contract on someone else's behalf (if a contract is made without the guardian present, the contract is void

Requirements of consideration

No gratuitous agreements
Something of value

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