Business Law Test 2

7/27/2019 Business Law Test 2

1/11

(remedies) compesatory damages amount required to place party in as gooda position as they were before the breach.

(remedies) consequential damages damages owed to third parties from a

breach.

(remedies) incidental damages costs of collecting compensatory

damages

(remedies) liquidated damages agreement clause in contract that

preestablishes and limits damages.

Acceptance This is the offeree's positive response to the offeror'sproposed contract, and only persons to whom the

offer is made have the power of acceptance.

Accord and satisfaction An agreement to pay a certain amount,the payment of which constitutes full

payment (satisfaction) of that debt.

accord and satisfaction the agreement entered into as

settlement of a dispute debt.

Article 2 of the UCC This governs the sales of goods in all

states except Louisiana

Bargained for exchange This is what the parties give s up.

Bilateral contract This is one in which both parties

promise to perform certain things.


2/11

Bilateral contract A contract where both parties make

promises to perform.

Bill of lading This is a title document used to control the transfer ogoods, thus this is the receipt for the shipment issued

by the carrier to the seller.

bill of lading title document used to control

transfer of goods

capacity mental and age thresholds for valid

contracts.

Charitable subscriptions These agreements are enforced by courtsdespite the lack of consideration.

CISG These are the contracts for the internationalsale of goods; a proposed uniform law for

international commercial transactions.

commercial impractibility defence to performance of sales contractbased on objective impracticability.

Commercial impracticality Excuses performance if the basicassumptions the parties made when they

entered into the contract have changed.

Common law Was the first law of contracts that weretraditionally developed in the time of

William the conqueror in England.

Common law acceptance Mirror image rule followed


3/11

Common law application Services, real estate, employment

contracts

Common law consideration Always required

Common law defenses Must be free of all defenses for valid

contract

Common law offers Need subject matter, price, terms, full

details agreed upon

Common law options Need consideration

Common law rejection That act of the offeree partially or totallyrefusing to be bound by the terms of the

offer.

Common law writing requirement Real estate, contracts not to be performedin one year, paying debt of another

Compensatory damages They are damages to put a non-breachingparty in the same position he would have

been in had the breach not occurred.

Condition precedent Condition precedent refers to an event orstate of affairs that is required before

something else will occur.

conditions precedent advance events that must occur beforeperformance is due, for example obtaining

financing.


4/11

confidential relationship trust, confidence, reliance in a

relationship.

Consequential damages They are damages resulting from contract breach,such as penalties or lost profits. They may be

damages owed to a third party for a breach.

Consideration This is something of value exchanged bythe parties that distinguishes gifts from

contracts.

Consideration This is what distinguishes gifs from

contracts

Contract As "a promise or set of promises for breach of whichthe law gives a remedy, or the performance of which

the law in some way recognizes as a duty".

contract defense situation, term, or event that excuses

performance

Counter offerCounter offer n. an offer made in r esponse to a previous offer by the other party duringnegotiations for a final contract. Making a counter offer automatically rejects the prior offer, anrequires an acceptance under the terms of the counter offer or there is no contra ct. Example:Susan Seller offers to sell her house for $150,000, to be paid in 60 days; Bruce Buyer receives theoffer and gives Seller a counter offer of $140,000, payable in 45 days. The original offer is dead,despite the shorter time fo r pa yment since the price is lower

Duress In contract law, a defense that permits nonperformanceof a contract if the party can show that physical or mental

force was used to obtain the agreement to enter the

contract.( For example, the Godfather $1000)

Duress physical or mental force that deprivesparty of meaningful choice with repect to a

proposed contract.

ESIGN (electronic signatures in global

and national commerce Act of 2000)

The federal law that requires that

electronic signatures be recognized as

valid for purposes of forming contracts.


5/11

Exceptions to statute of fraudSome exceptions to the UCC and common law statute

of frauds provisions were created for situations in

which the parties have partially or fully performed

unwritten contract.

Exculpatory clause This is a clause that attempts to hold aparty harmless in the event of damage or

to another's property.

exculpatory clauses attempt to hold oneself harmless for

one's own conduct.

Executed contract This is Contract document signed by

all parties to it.

Express contract This is a contract that is written or orallyagreed to is an express contract.

Force majeure Clause in a contract that excusesperformance in the event of war,

embargo, or generally enforceable events

Fraud This is the knowing and intentional disclosure of falseinformation or the knowing failure to disclose

relevant information.

fraud intentional misrepresentation

Goods Items held for sale in the regular

course of business, as in a retail store

Implied contract This is a contract that arises from circumstances andnot from the express agreement of the parties is

called an implied contract.


6/11

Implied-in-fact contract This is the payment and treatment termsare implied from general professional

customs.

Impossibility of performance This is contract defense that excusesperformance when there is no objective

way to complete the contract.

Incidental damagesThey are damages suffered by the non-breaching

party to a contract as a result of the breach; for

example, late performance fees on a buyer's contract

because the seller failed to deliver on time.

letter of credit pledge by bank of availability of

funds for trasactions

Mailbox ruleThe timing rule for acceptance is called the mailbox

rule, and it applies in stipulated means offers so long

as the offeree uses the stipulated means to

communicate acceptance.

Mailbox rule Once the offeree has sent the letter of acceptance,declaring they accept the offer, the acceptance is

effective from when it is sent.

material fact basis of the bargain

Material breach a material breach gives rise to the right tosuspend performance but not to cancel the

contract until there is a total breach.

Merchant's firm offer Offer must be made by a merchant, put insome form of record and signed by the

merchant.

Merchants firm offer Under 2-205 of the UCC, an offer required to be heldopen if made in writing by a merchant, even though

no consideration is given.


7/11

Misrepresentation This is incomplete or inaccurate

information.

misrepresentation incomplete or inaccurate information

prior to contract execution

Novation agreement to change contract amoung allaffected, for example, agreement to

substitute parties.

NovationThis is the process of reworking a contract to

substitute parties or terms, so that the old contract is

abandoned and the new contract becomes the only

valid contract.

obligation of good faith must perform in a reasonable fashion;performance must meet commercial

standards.

Offer The offer is the first part of the

contact.

Offeree The person to whom the offer is made

is called the offeree

Offeror The person who makes the offer

Option An option is a contract in which the offereepays the offeror for the time needed to

consider the offer.

Parol evidence This is a means for stopping ongoingcontradictions to contracts that have been

entered into and finalized.


8/11

Parol evidence ruleOnce a contract is reduced to its final form and is complete and

unambiguous, the parties to the contract are not permitted to

contradict the contract terms. Thus this is a means for stopping

ongoing contradictions to contracts that have been entered into an

finalized.

Promissory estoppels This is used as a substitute for consideration in thosecases in which someone acts in reliance on a promise

that is not supported by consideration.

public policy standards of decency

puffing statements of opinion

Quasi contract The term quasi means "as if" and describesthe action of a court when it treats parties

who do not have a contract "as if" they did.

Quasi-contract - This is a theory used to prevent unjust enrichmentwhen no contract is formed; the court acts as if a

contract had been formed and awards damages.

Relationship of confidence This means there must be a relationship of trust and reliancebetween the parties, which occurs between attorneys and clients.Thus one may express items of concern to their attorney and the

attorney will give them advice however they will remain silent.

rescission setting aside a contract as a remedy

for, for example, misrepresentation.

Revocation This occurs when the offeror notifies theofferee that the offer is no longer good.

ScienterThis is knowledge that the information given is false. For example, Dave sells

two textile looms to John for US$300,000 and says they have never had a

problem and they run perfectly, however Dave really knows that they have been

having problems for the last year and a half and they can barely run 30 meter

of fabric an hour. However Dave keeps quiet and John gets a bad unethical

deal.


9/11

scienter knowledge that information given is

false

Stipulated means Some offerors give a required means ofacceptance called specified or

_____________.

Stipulated means offerSome offerors give a required means of acceptance

called specified of stipulated means, thus the

acceptance is effective sooner, and the mailbox rule is

utilized.

substancial performance performance that, for practical purposesis just as good as full performance.

Substantial performanceThis is the contract defense for performing a contract

slightly differently from what was agreed upon;

justification for substitute but equal performance;

generally applicable in construction contracts.

UCC acceptance Can have additional terms

UCC application Sales of goods

UCC consideration Required for contracts but not for

modification or firm offers

UCC defenses Must be free of all defenses for valid

contract

UCC offers Need subject matter (quantity) code

gives details


10/11

UCC options Merchants firm offerno

consideration needed

UCC statute to frauds Under the UCC, separate statutes of frauds provisionswere created for situations in which the parties have

partially or fully performed their unwritten contract.

UCC uniform commercial code The final draft of the UCC first appeared inthe 1940s with several revisions the code was

adopted In part in all of the states.

UCC writing requirement Sale of goods for $500 ($5000

revised UCC) or more

UCITA (The uniform computer

information transactions act)

This was promulgated in 1999 and has been adopted

in two states (Virginia and Maryland) UCITA allows

terms that are not disclosed to the buyer until after

payment and delivery to become part of the contract.

UETA (uniform Electronic

transactions Act)

This is a uniform law drafted in 1999 that was adopted in

46 states, it was promulgated in response to contracts

being formed over the internet and includes provisions on

issues such as electronic signatures.

Unconscionable This is a term used to describe contracts thatare grossly unfair to one side in the contract;

a defense to an otherwise valid contract.

unconscionable contract contract that is grossly unfair.

undue influence exerting control over another party

for purposes of gain.

Unenforceable contract This is a contract that cannot be honoredjudicially because of some procedural

problems.


11/11

Unilateral Contract A contract where one party makes a

promise to perform.

Unilateral contract The contracts that have one party issuinga promise and the other party simply

performing is called unilateral contract.

USURY This is the charging of interest above

the statutory maximum.

Valid revocationThis occurs when the offeror notifies the offeree that

the offer is no longer good. Acceptance by the offeree

cuts off the right to revoke. Options cannot be

revoked as well.

Void contract This is a contract that neither side isrequired to perform, for example an illegal

contract.

void contract contract that courts will not honor

Voidable contract This is a contract that can beunenforceable at the election of one of the

parties.

Voidable contract This is a contract that one side can choosenot to perform; for example, a minor can

choose not to perform his contract.

voidable contracts one party can choose not to honor the

contract.

Documents

Business Law Test 2