business law chapter-2

  1. contract
    • a legally enforcable agreement. must have four elements to be considered legally enforcable:
    • 1.agreement
    • 2.capacity to contract
    • 3.consideration
    • purpose
  2. promisor
    the party to a contract making a promise
  3. promisee
    the party to a contract to whom a promis is made.
  4. privity of contract
    the relationship that exists between the parties in a contract
  5. third-party beneficiary
    a person who is not a party to a contract but who benifits from it and has a legal right to enforce the contract if its breached by either of the contracting parties.
  6. breach of contract
    the failure,without legal excuse, to fulfill a contractual promise
  7. bilateral contract
    a contract in which each party promises a performance.
  8. unilateral contract
    a contract in which one party promises a perfomance or under takes the requested performance.
  9. executed contract
    nothing left to be done in the contract
  10. express contract
    a contract whose terms and intentions are explicitly stated.
  11. implied contract
    a contract whose terms and intentions are indicated bythe actions of the parties to the contract and the surrounding circumstances.
  12. implied-in-fact contract
    a contract that is not express but that the parties presumably inteded,either by tacit understanding or by the assumption that it existed.
  13. voidable contract
    a contract that one of the parties can reject(avoid)based on some circumstance surrounding its execution
  14. void contract
    an agreement that despite the parties intentions,never reaches contract status and is therefore not legally enforceable or binding.
  15. compare bilateral and unilateral contracts
    bilateral contracts exits between 2 parties each of which is a promisor and a promisee. a unilateral contract exists where a promise is made in exchange for an action
  16. contrast voidable and void contracts
    a voidable contract is a valid contract that can continue in force, and the paries can execute it completely unless an innocent or injured party chooses to avoid it. void contracts are agreements that the parties intend to be contracts that never actually become contracts. void contracts are not legally enforceable or binding.
  17. offer
    a promise that requires some action by the intended recipient to make an agreement.
  18. offeror
    the party to a contract who promises to give something in return for a promis or an act by another party
  19. offeree
    the party to a contract who makes a promise or acts in return for something offered by another party.
  20. counteroffer
    a proposal an offeree makes to an offeror that varies in some material way from the original offer, resulting in rejection of the original offer and constituting a new offer.
  21. describe the three requirements for an offer to be valid for contract pruposes
    • intent to contract: offeror must intend,or appear to intend, to create a legally enforceable contract if the offeree accepts the offer.
    • definite terms: makes an agreement enforceable and makes it possible to determine whether the parties have fulfilled their promises.
    • communication to offeree: an offeree can not accept a proposal before knowing about it.
  22. explain how lapse of time affects an offer for contract purposes
    an offer ceases to be binding when the time the offer specifies expires or absent a specific time,when a reasonable amount of time passes.
  23. under what circumstances can an offeror revoke an offer
    anytime before an offer has been accepted.
  24. acceptance
    • must meet 3 requirements
    • 1. the acceptance must be made by the offeree
    • 2. the acceptance must be undonditional and unequivocal.
    • 3. the offeree must communicate the acceptance to the offeror by appropriate word or act
  25. forbearance
    the act of giving up or the promise to give up a legal right.
  26. substantial performance
    the performance of the primary, necessary terms of an agreement
  27. who can accept these types of offers?
    1. an offer made to one person
    2. an offr made to a group of people
    3. an offer made to the public
    • 1. the person to whom the offer was made.
    • 2. any one of the group
    • 3. any member of the public
  28. contrast acceptance of an offer with a counteroffer.
    an acceptance must be unconditional and unequivocal any deviation of the original offer constitutes a counteroffer
  29. explain the different requirements for communication in unilateral and bilateral contracts.
    in a unilateral contract, performance of the contract is both acceptance and performance. usually no communication other than performance or forearance is required. in a bilateral contract, the offeree is typically required to communicate acceptance to the offeror.
  30. competent party
    a party to a contract who has the basic or minimal ability to do something and the mental ability to understand problems and make decisions
  31. restitution
    the return of specific property by court order
  32. explain the concept of legal capacity to contract
    for an agreement to qualify as a contract, the parties to it must have legal capacity to contract. capacity refers to one's ability to sue or be sued or to enter into an enforceable contract. capacity includes the ability to understand the consequences of one's actions. a party deemed competent to contract is one who has the mental ability to understand problems and make decisions
  33. describe the four parties who typically lack capacity to contract
    • minors: individuals who have not met the age of majority
    • insane persons: those adjudged insane or those who claim insanity or mental incompetence.
    • intoxicated persons: under the influence of alcohol or drugs
    • artificial entities: such as insurers, that are restricted by law or corporate charter from entering into certain contracts.
  34. discuss the extent of a corporation's competence to enter into contracts
    corporations, although artificial creations of the state, are persons in the eyes of the law. they can enter into contract, and most states do not restrict the types of contracts they can make. however,the extent of the competenceof a corporation to enter into a contract may be restricted by its corporate charter or, in the case of insureanc,banking,and transportation corporations, by license or regulation.
  35. consideration
    something of value or bargained for and exchanged by the parties to a contract.
  36. good consideration
    considreation based on natural love or affection, or on moral duty, that is not sufficient to support a contract.
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business law chapter-2
business law