Business Law Concepts Quiz

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Questions and Answers

What must a mistake be to be considered relevant in a contract?

  • Unilateral
  • Material (correct)
  • Mutual
  • Subjective

What does the term 'quasi contract' mainly aim to prevent?

  • Mutual agreement
  • Misrepresentation
  • Unjust enrichment (correct)
  • Fraudulence

What is required for fraud to be considered relevant?

  • Occur in a formal agreement
  • Determine a misrepresentation
  • Be reported to authorities
  • Cause an injury to the other party (correct)

Which statement best defines duress?

<p>Coercion, either physical or mental, that deprives a person of free will (A)</p> Signup and view all the answers

What is the correct definition of a void contract?

<p>Not binding on both parties (A)</p> Signup and view all the answers

Which classification of contracts includes 'executed' and 'executory'?

<p>Express/implied (A)</p> Signup and view all the answers

What must an offer indicate to be valid?

<p>It must be communicated (D)</p> Signup and view all the answers

What does the term 'discharge' imply in a contract?

<p>Completion or termination of the contract (D)</p> Signup and view all the answers

What is an invitation to offer best described as?

<p>A solicitation for proposals (B)</p> Signup and view all the answers

What does silence or inactivity typically indicate in a contract context?

<p>Cannot be deemed as acceptance (C)</p> Signup and view all the answers

What can a Letter of Intent (L.O.I.) do?

<p>Outline the chief terms of a perspective deal (D)</p> Signup and view all the answers

What defines a Principal in an agency context?

<p>Any person for whom an agent acts (B)</p> Signup and view all the answers

What is the role of an agent?

<p>Can be an employee (D)</p> Signup and view all the answers

What is a Power of Attorney?

<p>A written document setting out the appointment of an attorney (A)</p> Signup and view all the answers

When the principal is partially disclosed, what does the third party know?

<p>That they are dealing with an agent but not the principal's identity (C)</p> Signup and view all the answers

What does a sole agency mean for a principal?

<p>The principal is prevented from appointing new agents in the territory (A)</p> Signup and view all the answers

Which of the following statements about agents and distributors is accurate?

<p>An agent is only compensated after closing a deal (D)</p> Signup and view all the answers

What do Memoranda or Terms of Agreement signify?

<p>A summary of the negotiation process (D)</p> Signup and view all the answers

Which statement is true about preliminary agreements?

<p>They can lead to the creation of future agreements (A)</p> Signup and view all the answers

What does the term attorney commonly refer to?

<p>Legal representative or lawyer (D)</p> Signup and view all the answers

Flashcards

Void Contract

An agreement that is not legally binding because it lacks a necessary element, such as the capacity of the parties or a proper offer and acceptance.

Voidable Contract

A contract that is valid, but which one or more of the parties can choose to invalidate. One party may have been disadvantaged in the contract by a mistake, fraud, or duress.

Silence/Inactivity (in Contract)

An action that gives the impression that a party is accepting the offer, but actually is not.

Executory Contract

A contract that is binding on both parties, but not yet fully performed. One or both parties need to fulfill their obligations.

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Executed Contract

A contract that has been fully performed by both parties. There are no outstanding obligations.

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Bilateral Contract

A contract where both parties exchange promises to do something in the future. For example, one party promises to pay for a service, while the other party promises to provide that service.

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Unilateral Contract

A contract where only one party makes a promise. The other party accepts this promise by performing a specific action. For example, if a company offers a reward for finding a lost pet, they're making an offer. You accept that offer by finding the pet and claiming the reward.

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Implied Contract

A contract that is formed by the actions of the parties, rather than their express words.

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Express Contract

A contract that is formed by the written or spoken words of the parties. There's a clear agreement.

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Undue Influence

A situation where a party takes advantage of another's vulnerability, due to their weakened position or lack of understanding, leading to an unfair contract.

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Letter of Intent (LOI)

A preliminary agreement outlines the main terms of a potential deal but isn't legally binding.

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Memoranda / Terms of Agreement

Memoranda and Terms of Agreement lay out the current state of negotiations, not necessarily a binding contract.

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Preliminary Agreements

A preliminary agreement where parties commit to reaching a final agreement, but only if certain conditions are met.

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Agent

A person who acts on behalf of another, the 'Principal', carrying out tasks or making decisions.

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Power of Attorney

A written document officially appointing someone as an attorney, granting them authority to act on another's behalf.

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Principal

The person or entity for whom an agent works.

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Attorney

A legal professional who can represent someone in court.

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Partially disclosed agency

The agent is known, but the principal's identity is not revealed to the third party.

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Sole Agency

A type of agency agreement where the principal cannot appoint other agents in the territory.

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Agent vs. Distributor

Distributors get paid once they finalize a deal, whereas agents get paid after the deal is closed.

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Study Notes

Business Law Concepts

  • Mistake (to be relevant): Must be mutual.
  • Moral Rules: Legally non-binding.
  • Quasi Contract: Intended to protect the weak party, avoid unjust enrichment.
  • Fraud (to be relevant): Must cause injury to the other party.
  • Unconscionability: The effect of drug or mental illness that renders a contract void.
  • Duress: Physical violence, coercion (physical or mental), or threat of violence that deprives someone of free will.
  • Undue Influence: Occurs when one party takes advantage of another due to their superior position, particularly in labor contracts.
  • Capacity of the Parties: Necessary for a valid contract.
  • Once a Contract is Closed: Parties are bound by the agreement; they can't change their minds unless the contract is voidable.
  • Voidable Contract: Binding on one party only if the other party chooses to enforce it. Otherwise, the contract is not legally binding on both parties.
  • Void Contract: Not binding on either party.
  • Contracts Classification: Can be general/specific, direct/indirect, express/implied, bilateral/unilateral, executed/executory, valid/void/voidable, written/oral, formal/informal, registered/unregistered.
  • Offer Requirements: Must be comprehensive, voluntary, indicate intent clearly and definitely, and communicated properly.
  • Agent: A person authorized to act on behalf of another.
  • Discharge: Termination or completion of the contract.
  • Invitation to Offer: An invitation to make a proposal, not an offer itself.
  • Silence or Inactivity: Not considered acceptance unless the offer states otherwise.
  • Waiver: Voluntary and intentional relinquishment of a contract right.
  • L.O.I. (Letter of Intent): Not a legally binding agreement, but may outline essential terms and contain binding provisions.
  • Memorandum/Terms of Agreement: Sets out the terms of the negotiation process; not necessarily legally binding unless otherwise specified.
  • Preliminary Agreements: Not legally binding; parties intend to reach an agreement later based on certain conditions.
  • Principal: The person for whom an agent acts.
  • Agent/Distributor: Often paid after a deal is closed.
  • Attorney: A representative (typically a lawyer or solicitor).
  • Power of Attorney: A written document authorizing someone to act on your behalf.
  • Principal Disclosed/Partially Disclosed: Third parties know the agent's role and may or may not know the identity of the principal.

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