Business Law Final Exam Review TOPICS CHAPTER 9 50 Multiple Choice T F Questions and choose 5 of 6 multiple choice Questions Note that Contract law comes from two places Common law and UCC Mailbox Rule Offer is considered accepted upon being put in the mailbox o If acceptance is not properly dispatched it will not be accepted until it o If the offering party wrote in the offer that acceptance is conditional reaches the person upon the item being received o If the offeree sends the acceptance after a rejection or counteroffer in order to get the mailbox rule the offerer must get the acceptance before the rejection or counteroffer Requirements of a valid contract 1 Agreement must include an offer and an acceptance 2 Consideration something of value received or promised such as money to convince a person to make a deal 3 Contractual capacity Both parties entering into the contract must have the contractual capacity to do so 4 Legality Contract s purpose must be legal Elements of an offer MUST HAVE ALL 4 It must Identify the parties involved Identify the time for performance Identify the price Identify the subject matter General rules of communication of offers Acceptance by someone other than the offeree the general rule is that the offer is only good as to the person who is on the other side an offer to one is not an offer to all Detrimental reliance offer that is made and one of the parties does something in reliance to the deal going through ex build a garage because you are buying a car Offerer may be forced to go through with deal Legal detriment as consideration If you are giving up the right to something you have such as drinking if you re 21 Legal Detriment is a change in position by one to whom a promise has been made or an assumption of duties or liabilities not previously imposed on the person due to the person s reliance on the actions of the one who makes the promise Consideration usually is defined as the value such as cash given in return for a promise Mistakes in Contracts Unilateral mistake only one party is mistaken example a cow is being sold and only one party thinks the cow is a bull the other knows it is a cow Unilateral mistakes will most of the time not invalidate the contract Mutual mistake both parties are mistaken to the fact example both parties think the cow being sold is a bull Mutual will usually allow the contract to be overturned Mistake of value parties mistake the worth of an item being sold person whom gets the good deal usually gets the benefit example a super rare coin is sold for 5 but turns out to be worth 5 000 the person who purchased it for 5 will get the benefit Offer a promise or commitment to perform or refrain from performing some specified act in future Counteroffers rejection of original offer simultaneous with a rejection of the original offer Acceptance voluntarily agreeing to all terms and conditions of an offer Rejection an offeree s expressed or implied manifestation not to accept an offer Mirror image rule if there is an acceptance of an offer the acceptance has to match the offer as to all terms if any terms are changed that is not an acceptance it is a counter offer Fraudulent misrepresentation three types In the Factum when one of the parties is completely unknowing as to the fact that he is entering a contract example signing a contract you thought was one thing of little importance but it turns out you were signing the deed to your house away In the Inducement parties understand that they are entering into a contract of some sort but there is intentional misconduct by one party to try and get the other party to accept for example a car salesman lies to you saying if you buy the car you will get a 1 000 gift card but after does not give you one In the Execution example forged signature What is the statute of frauds and what types of contracts does it cover at common law It requires certain kinds of contracts in writing They are listed as follows 1 Sale Real Property 2 1 yr more 3 Surety ship 4 Promises of an executor 5 Prenuptual agreements 6 Sale of goods 500 or more To ensure the above contracts are valid do as follows If you enter into an oral contract immediately send a written contract form of the deal If you do have objections make them immediately and in writing Sufficiency of consideration unless it looks fraudulent or made under direst then a peppercorn thing of the smallest value will suffice for the contract Preexisting duty if you have a pre existing duty to do something you cannot void the contract if nothing has changed between the parties you cannot just say I don t feel like performing anymore Past consideration promises that are made in return for acts that have already been performed are not sufficient consideration they are considered gifts Void verses Voidable contracts Void contracts void contracts cannot be saved they are never enforceable example contract to do something illegal such as be a Hit man Voidable contracts contract that looks bad but can be saved usually allow one person to perform at his option example contract entered into as a minor or a contract entered into while drunk o The main difference between the two void and voidable is that a void contract cannot be performed under the law while a voidable contract can still be performed although the unbound party to the contract can choose to void it before the other party performs Peppercorn rule metaphor for a very small payment used to satisfy the requirements for the creation of a legal contract CHAPTER 10 Perfect tender rule if the goods that are delivered fail to conform to the terms of the contract in any respect the buyer can accept the goods reject them in full or he can accept in part or reject in part exceptions to the rule if there is an agreement of the parties to wave the perfect tender rule Right to cure if there is time on contract is still left the seller has right to fix any mistake before the allotted time is up Substitution of carrier when the fact that the delivery method is unavailable and is not the fault of either party Mitigation of damages if you are harmed in some way you are not allowed to sit on your rights and wait example waiting while your roof continues to leak and further damage your property instead of attempted to temporarily fix it Complete performance job is completely done Substantial performance of contracts Most of the work in a contract has been completed but you are not quite done If you have done
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