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46 terms

Business Law Final Exam Review

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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