Contract Law Basics Quiz

FAS Definition

• FAS stands for foreign alien state

Unilateral Mistake

• Contract is binding, except when the other party knows or should know of the mistake
• Contract is not binding if the other party knows or should know of the mistake

Joint Venture Contract

• Can be entered into by companies
• Can be entered into by companies and individuals
• Can be entered into by individuals only

Valid Contract

• Meets all legal requirements and is enforceable by either party
• Is an effective and enforceable contract

Party Breaking Off Negotiations in Bad Faith

• Liable for losses
• Bound to restart the negotiation

Offer Revocation

• Generally allowed, except in option contracts, unilateral contracts, etc.
• Offers can be revoked in specific cases

Quasi-Contract

• Created by operation of law to avoid unjust enrichment of one party
• Created by operation of law for unconscious parties

Unstated Terms in an Offer

• Terms should be clarified before agreement for offers
• Terms may be implied by common sense

Material Breach (CISG)

• Non-breaching party can demand performance or breach and discharge if a breach is material

Voidable Contract

• Binding on one party but can be enforced by the other
• Binding on one party, but the other party can choose whether to enforce

Duty of Good Faith

• Parties should fulfill obligations and not withdraw from negotation
• Parties should not enter into negotiations if not sincerely seeking contract

Consideration

• Price or something exchanged for goods
• Something provided by one party in exchange for something from the other party

Contract Enforceability

• Contract is a rule binding parties and is enforceable
• Contract is a rule to be enforced as a law

Memorandum/Agreement

• May or may not be legally binding
• Lays out details of the negotiation process

Contract Essential Elements

• Oral/written agreement
• Capacity
• Mutual agreement
• Consideration
• Legality of subject matter

Implied Contract

• Inferred by conduct
• Inferred by a judge or reasonable person

Unilateral Contract

• One promise made by one party, other party performs
• Involves a unilateral conduct

Pre-Emptive Right

• Right to buy shares at a lower price
• Right to buy company shares before they are made available publicly

Void Contract

• Cannot be enforced

Express Contract

• Agreement that is clearly and unequivocally shown
• Can be stated in words, writing or both

Negotiation Ends

• When minds meet or a reasonable time if no agreement
• Needs good faith

Offer

• Clearly identifies goods/services
• States essential terms

Advertisement

• Generally not an offer; invitation to offer
• Specific offers to individuals/groups can be an offer

Acceptance

• Clear and unconditional
• Can be addressed in a reasonable manner
• Can be implied by actions
• Can occur within specified or reasonable time

Consideration (In Contract)

• Any lawful alteration of responsibility exchanged
• Given for another consideration; something given for something
• Lawful exchange of responsibilities, service or goods

Intent of Parties

• Determined by words and actions
• Found in the document itself
• Determining a party's intent for contract

Offer Expiration

• Offer expires within the specified or reasonable time

Past Consideration

• Not generally binding unless a new agreement follows
• Something already performed, with no expectation of obtaining something else in return

Material Mistake

• Concerns related facts, values or opinions
• Contract can be voidable because of a mistake

Justifiable Reliance

• Mistaken party reasonably relied on misrepresentation
• Party had a reasonable belief in misrepresentation

Fraud

• Misrepresentation of relevant facts, intent to defraud
• Justifiable reliance, causing injury to other party

Made Knowingly

• Means actual knowledge
• Includes careless indifference to the truth

Defrauded Party's Options

• Rescind or affirm the contract

Acceptance of Contract

• Must be clear and unconditional

Types of Joint Ventures

• Incorporated, contractual, bilateral, multilateral

International Contracts

• Conventions/principles guide good faith
• Contracts guided by good faith
• Subject-matter of contract

Subject Matter of International Contracts

• Transfer of movable goods

Preliminary Agreements

• Not binding, but part of negotiation
• Parties agree to contract later

Preliminary Agreements

• Part of negotiation process for contracts
• Agreements outlining future contractual terms

Agency

• Business organization

Breach of Preliminary Agreement

• Breach of agreement is subject to damages, expenses, costs, and specific performance
• Relevant to the agreement

Distribution Contract

• Type of sale/purchase contract
• Alternatively a hiring method of a market advisor

Breach of Confidentiality

• Non-breaching party can be compensated
• Damages are potentially recoverable based on breach actions

Green Field Investment

• New company formation by partners
• Creating a new company, partners invest resources