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chap 12
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chap 12

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Questions and Answers

What is essential for a release to be generally binding?

  • Good faith, signed writing, and consideration (correct)
  • The absence of any prior debts
  • Written documentation only
  • No need for any contract

    • Which type of debt is defined as uncertain in amount?

  • Settled Debt
  • Liquidated Debt
  • Unliquidated Debt (correct)
  • Fixed Debt

    • What does an 'accord and satisfaction' involve?

  • Full payment of the debt with interest
  • No payment at all
  • Partial payment accepted by the creditor (correct)
  • Transfer of debt to a third party

    • What is a covenant not to sue?

    <p>An agreement to substitute a contractual obligation for another legal action</p> Signup and view all the answers

    Which one of these features defines liquidated debt?

    <p>The amount has been fixed or determined</p> Signup and view all the answers

    Why might a party agree to a covenant not to sue?

    <p>To avoid lengthy litigation or disputes</p> Signup and view all the answers

    Which of the following is NOT a requirement for a release to be binding?

    <p>Presence of a witness</p> Signup and view all the answers

    Which option correctly distinguishes between liquidated and unliquidated debts?

    <p>Liquidated debts are fixed amounts, while unliquidated debts are uncertain</p> Signup and view all the answers

    What are the two essential elements of consideration in a contract?

    <p>Value and bargained-for exchange</p> Signup and view all the answers

    Under which circumstance can a promise be enforced despite a lack of consideration?

    <p>In cases of promissory estoppel</p> Signup and view all the answers

    Does a minor have the capacity to enter into an enforceable contract?

    <p>Yes, but only for necessities</p> Signup and view all the answers

    What does it mean for a minor to disaffirm a contract?

    <p>To terminate the contract and return to pre-contract status</p> Signup and view all the answers

    What is the primary effect of illegality on a contract?

    <p>It voids the contract from the beginning</p> Signup and view all the answers

    In what scenario does promissory estoppel typically apply?

    <p>When one party relies on a promise to their detriment</p> Signup and view all the answers

    Which concept refers to a promise that is enforced even when no consideration is given?

    <p>Promissory estoppel</p> Signup and view all the answers

    What is the legal capacity regarding individuals classified as minors?

    <p>Minors have limited capacity and may void contracts</p> Signup and view all the answers

    What is the main principle behind promissory estoppel?

    <p>Recovery is allowed based on reliance on a promise.</p> Signup and view all the answers

    Which of the following is NOT a requirement to establish promissory estoppel?

    <p>The promisee must have received consideration.</p> Signup and view all the answers

    In what contexts has promissory estoppel been applied?

    <p>In employment and family disputes.</p> Signup and view all the answers

    What age signifies the age of majority for contractual purposes in most states?

    <p>18 years</p> Signup and view all the answers

    Which of the following best describes contractual capacity?

    <p>The legal ability to enter into a contractual relationship.</p> Signup and view all the answers

    What does substantial detriment refer to in promissory estoppel?

    <p>Actual harm or disadvantage that results from reliance.</p> Signup and view all the answers

    What must a promisor expect regarding the promisee in order for promissory estoppel to apply?

    <p>The promisee will rely on the promise.</p> Signup and view all the answers

    Which statement regarding the enforcement of promises is true under promissory estoppel?

    <p>Enforcement is necessary to avoid injustice.</p> Signup and view all the answers

    What is the effect of a minor’s emancipation on minority status?

    <p>It may terminate the minority status.</p> Signup and view all the answers

    What must a minor do to disaffirm a contract?

    <p>Return the goods or consideration within their possession.</p> Signup and view all the answers

    Which of the following is NOT an exception to a minor’s right to disaffirm a contract?

    <p>Lease agreements for personal property</p> Signup and view all the answers

    What does ratification mean in the context of contracts?

    <p>To accept and give legal force to an obligation previously not enforceable.</p> Signup and view all the answers

    Under what condition can a contract entered into by an intoxicated person be enforced?

    <p>If the intoxicated person understood the legal consequences of the agreement.</p> Signup and view all the answers

    What is disaffirmance in legal terms?

    <p>The legal avoidance or setting aside of a contractual obligation.</p> Signup and view all the answers

    Which statement about parental liability for minor’s contracts is accurate?

    <p>Parents are not liable for contracts made by minors acting on their own.</p> Signup and view all the answers

    What occurs if a minor misrepresents their age while engaged in business?

    <p>The minor is held to the same standards as adults.</p> Signup and view all the answers

    What is one significant issue related to covenants not to compete?

    <p>Enforcement varies by state law, with some states prohibiting them.</p> Signup and view all the answers

    Which type of unconscionability involves the clarity and readability of contract terms?

    <p>Procedural unconscionability</p> Signup and view all the answers

    What is a primary characteristic of substantive unconscionability?

    <p>It addresses harsh or oppressive contract terms.</p> Signup and view all the answers

    What does an exculpatory clause do in a contract?

    <p>Releases a party from liability regardless of fault.</p> Signup and view all the answers

    Which of the following terms is used to describe a court-ordered correction of a written contract?

    <p>Reformation</p> Signup and view all the answers

    Which aspect of contracts pertains to the absence of an opportunity to review or ask questions?

    <p>Procedural unconscionability</p> Signup and view all the answers

    What might be a potential problem with contracts that are overly harsh?

    <p>They might be challenged for substantive unconscionability.</p> Signup and view all the answers

    What is commonly true about covenants not to compete in employment contracts?

    <p>They can sometimes be unenforceable if the employee receives no benefit.</p> Signup and view all the answers

    Study Notes

    Consideration

    • Consideration is the value given when a promise is made.
    • Legally Sufficient Value can be: a promise to do something, performance of an action, or refraining from doing something.
    • Bargained-for Exchange refers to the promise or action given in exchange for something else.
    • Unilateral and Bilateral Contracts: occur when a promise is exchanged for a promise (bilateral) or a promise is exchanged for performance of an action (unilateral).

    Agreement That Lack Consideration

    • Preexisting Duty: performing a preexisting duty is not legally sufficient consideration.
    • Past Consideration: promises based on past consideration are unenforceable.

    Settlement of Claims

    • Accord and Satisfaction: A debtor offers, and a creditor accepts, payment of a lesser sum than what was originally owed.
    • Liquidated Debt: A debt that has a clear and specific amount.
    • Unliquidated Debt: A debt that is uncertain in amount.
    • Release: A written contract that releases a party from liability. Releases must be accompanied by consideration and be made in good faith.
    • Covenant Not to Sue: An agreement that substitutes a contractual obligation for legal action.

    Promissory Estoppel

    • Promissory estoppel is known as detrimental reliance, meaning someone who reasonably relied on a promise is able to obtain some form of recover.
    • Promissory estoppel applies to situations involving gifts and donations to charities, business transactions, employment relationships, and disputes within families.

    Contractual Capacity

    • Contractual capacity is the legal ability to enter into contracts.
    • Minors: Individuals under the age of 18 do not have full contractual capacity.
      • Disaffirmance: Minors can avoid contracts.
      • Ratification: When a minor reaches the age of majority, they may decide to accept the contract made while they were a minor.
      • Emancipation: When minors are freed from parental control they often gain legal and contractual capacity.
    • Intoxicated Persons: Contracts made by intoxicated persons may be voidable or valid.
    • Mentally Incompetent Persons: Individuals who have been legally declared mentally incompetent lack legal capacity.

    Legality

    • Contracts that violate the law or are against public policy are unenforceable.
    • Contracts in Restraint of Trade: Contracts that restrict competition are generally against public policy.
      • Covenants Not to Compete: A type of restraint of trade that prohibits an individual from competing with a former employer or business partner.
      • Reformation: When courts adjust contracts to reflect the true intention of the parties, they are reforming the contract.
    • Unconscionable Contracts: Contracts that are oppressive or unfairly one-sided.
      • Procedural Unconscionability: The process by which contracts are formed is unfair. Potential issues include inconspicuous print, unintelligible legal jargon, lack of opportunity to read or ask questions, or adhesion contracts.
      • Substantive Unconscionability: The terms or the content of the contract is oppressive.
    • Exculpatory Clauses: Contracts that release a party from liability for harm or injury.

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    Description

    This quiz covers essential concepts of consideration in contract law, including legally sufficient value, the difference between unilateral and bilateral contracts, and the principles of accord and satisfaction. Test your understanding of how consideration affects enforceability and settlement of claims.

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