Understanding Contracts: Definitions, Sources, and Elements, Quizzes of Introduction to Business Management

Download Understanding Contracts: Definitions, Sources, and Elements and more Quizzes Introduction to Business Management in PDF only on Docsity! TERM 1 Definition of contract DEFINITION 1 A legally enforceable exchange of promises or an exchange of a promise for an act. TERM 2 Sources of contract law DEFINITION 2 Grounded in the case law of the state and federal courts, as well as state and federal statutory law. TERM 3 Case law DEFINITION 3 Governs contracts dealing with real property, personal property, services, and employment contracts. TERM 4 The UCC DEFINITION 4 Its modifications of common law principles: In order to obtain uniformity among state laws, particularly as applied to sales contracts (Statutory law), the National Conference of Commissioners on Uniform State Laws and the American Law Institute drafted a set of commercial laws applicable to all states. This effort was called the UCC. TERM 5 Express Contract DEFINITION 5 Exchange of oral or written promises (equally enforceable) between parties which are enforceable in the court of law. TERM 6 Implied Contract DEFINITION 6 Established by the conduct of a party rather than by the partys written or spoken words. Existence and content are determined by reasonable person test: Would a reasonable person expect the conduct of these parties to constitute an enforceable contract? (Ex: Go to the emergency room because your fingers got chopped off; you have an implied contract that they will fix your chopped off fingers and you will pay for the service). TERM 7 Unilateral Contract DEFINITION 7 Exchange of a promise for an act. TERM 8 Bilateral Contract DEFINITION 8 Exchange of one promise for another promise. TERM 9 Void DEFINITION 9 - A contract is void if at its formation its object is illegal or it has serious defects in its formation (eg. Fraud). TERM 10 Voidable DEFINITION 10 A contract is voidable if one of the parties has the option of either withdrawing from the contract or enforcing it. TERM 21 Adequacy DEFINITION 21 If one party makes a bad deal with another party that is, if consideration is inadequate the courts will usually refuse to interfere. Unless a party can show fraud, duress, undue influence, or mistake, the court will not intervene on behalf of a plaintiff. TERM 22 Preexisting duty rule DEFINITION 22 If a party merely agrees to do what he/she is required to do, there exists no detriment to the promisee. There is an important exception to the pre-existing rule: The UCC, which applies to the sale of goods, states that an agreement modifying the original contract needs no consideration to be binding. TERM 23 Promissory estoppel DEFINITION 23 The courts have enforced certain contracts when the requirements of consideration were not met, using the doctrine of promissory estoppel to do so. This doctrine requires: - A promise justifiably relied on by the promissee - Substantial economic detriment to the promissee - An injustice that cannot be avoided except by enforcing the contract. TERM 24 Liquidated DEFINITION 24 Exists when there is no dispute about the amount or other terms of the debt. TERM 25 Unliquidated DEFINITION 25 -: Exists when there is a dispute between parties as to the amount owed by the debtor. TERM 26 Genuine Assent DEFINITION 26 Meeting of the minds, two parties legally enter an enforceable contract at their own free will and the two parties understand the content of the contract in the same way. TERM 27 Fraud DEFINITION 27 Consists of (1) a misrepresentation of a material (significant) fact, (2) made with the intent to deceive the other party, (3) who reasonably relies upon the misrepresentation, (4) and as a result is injured. TERM 28 Duress DEFINITION 28 - Any wrongful act or threat that prevents a party from exercising free will when executing a contract. TERM 29 Undue Influence DEFINITION 29 - If one party exerts mental coercion over the other party. Two court-established requirements. o There must be a dominant-subservient relationship between the contrasting parties o This dominant-subservient relationship must allow one party to influence the other in a mentally coercive way. TERM 30 Mistake DEFINITION 30 - Prevents a meeting of the minds, or genuine assent. If both parties made an error as to a material fact, a mutual, or bilateral, mistake has occurred, and as a general rule the courts will rescind such contracts. TERM 31 Competent parties DEFINITION 31 A persons ability to understand the nature of the transaction and the consequences of entering into it at the time the contract was entered into. TERM 32 Minors DEFINITION 32 Under the legal age of majority. Contracts made by minors are voidable and can be disaffirmed by the minor at any time before the minor becomes of a majority age or shortly thereafter. TERM 33 Insanity DEFINITION 33 If a person is adjudicated by a court of law to be insane, or is in fact insane at the time of entering into a contract, the individual will be allowed to disaffirm a contract. TERM 34 Intoxication DEFINITION 34 A person who is intoxicated to the degree that understanding the nature of the contract and its consequences is impossible will be able to disaffirm a contract in all cases but those involving necessaries. TERM 35 Legal Object DEFINITION 35 Subject matter of the agreement must be lawful.