Contract Law Overview
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Questions and Answers

FAS means

  • foreign alien state
  • free on board (correct)
  • free allotment security

In case of unilateral mistake

  • the contract is binding, except when the other party knows or should have known the mistake (correct)
  • the contract is not binding, except when the other party knows or should have known the mistake
  • the contract is binding

Joint venture contract can be entered

  • only by companies
  • only by individuals
  • by both companies and Individuals (correct)

A valid contract

<p>is an effective and enforceable contract (B)</p> Signup and view all the answers

A party who breaks off negotiations in bad faith

<p>is liable for losses (A)</p> Signup and view all the answers

An offer can be revoked by the offeror

<p>always except in case of option contract, unilateral contracts, UCC exception, promissory estoppel (A)</p> Signup and view all the answers

A quasi-contract is created

<p>by operation of law in order to avoid unjust enrichment of one party at the expense of another (C)</p> Signup and view all the answers

In an offer unstated terms

<p>may be implied or inferred by common sense (A)</p> Signup and view all the answers

According to CISG in case of material breach the non-breaching party may

<p>either performance or breach (A)</p> Signup and view all the answers

A voidable contract

<p>is binding on one party who has the option to withdraw from it or enforce it (C)</p> Signup and view all the answers

According to the duty of good faith

<p>parties should not fail in fulfilling their obligations (B)</p> Signup and view all the answers

Adequacy of consideration

<p>is not an issue in court (B)</p> Signup and view all the answers

Consideration is

<p>something a party provides in exchange for something from the other party (B)</p> Signup and view all the answers

Contract

<p>is a rule binding upon the parties (B)</p> Signup and view all the answers

Memoranda/Terms of agreement

<p>lay down the state of the negotiation process (B)</p> Signup and view all the answers

The essential elements of a contract are

<p>capacity, mutual agreement, consideration and legality of subject matter (A)</p> Signup and view all the answers

Unilateral contract

<p>involves one promise by one party and an act by another (B)</p> Signup and view all the answers

Pre-emption right is the right

<p>to be offered shares in a company before they are made available to anyone else (A)</p> Signup and view all the answers

Express contract is

<p>stated in words, written or oral, or partly written and partly oral (A)</p> Signup and view all the answers

Flashcards

Valid contract

A contract that is legally binding and enforceable by both parties. It meets all legal requirements.

Void contract

A contract that is not legally binding and cannot be enforced. It lacks essential elements or has a flaw that makes it invalid.

Voidable contract

A contract that is binding and enforceable by one party, but the other party has the option to withdraw from it or enforce it. It often involves circumstances like fraud or misrepresentation.

Unenforceable contract

An agreement where the parties intend to be legally bound, but the agreement lacks a legally required element, making it unenforceable.

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Consideration

Something of value that is exchanged between parties in a contract. It can be goods, services, money, or a promise.

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Express contract

An agreement that is reached through words, either written or spoken.

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Implied contract

An agreement that is implied by the actions or conduct of the parties, even if not explicitly stated.

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Unilateral contract

A contract where one party makes a promise, and the other party accepts by performing the requested act.

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Bilateral contract

A contract where both parties make promises, and each promise serves as consideration for the other.

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Revocation of offer

The act of withdrawing an offer before it is accepted. It can be done at any time before acceptance.

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Counteroffer

A response to an offer that changes the terms of the original offer, essentially creating a new offer.

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Accord

An agreement between parties to create a new contract that replaces the original contract. It typically involves settling a dispute.

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Satisfaction

The performance of the new agreement made under an accord. It discharges the original contract.

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Capacity

The ability of a party to enter into a legally binding contract. It is usually assumed unless there are factors like age or mental incapacity.

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Mutual assent

The agreement of all parties involved in a contract to the terms of the agreement.

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Quasi-contract

A legally binding contract that is created by operation of law, even if there was no explicit agreement. It often arises to prevent unjust enrichment.

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Material mistake

A mistake that involves a significant error in judgment that affects the fundamental terms of the contract.

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Duty of good faith

The legal principle that requires parties to a contract to act in good faith and fairly in their dealings.

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Fraudulent misrepresentation

A false statement made intentionally to deceive another party in order to induce them to enter into a contract.

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Promissory estoppel

A legal concept where one party makes a promise, and the other party reasonably relies on that promise to their detriment, making it enforceable even without formal consideration.

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Conversion

The intentional and unauthorized use of another person's property, causing loss or damage.

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Memoranda

The formal written record of the terms of an agreement, often used to provide evidence of the agreement in court.

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Preliminary agreement

A contract where the parties agree to postpone the final agreement until certain conditions are met.

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Franchise agreement

An agreement where one party grants another party the right to use its trademark, trade name, or business system in exchange for payment.

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Distribution agreement

A contract where a supplier appoints a distributor to sell its products in a specific territory.

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Contract

A legal document that details the terms of an agreement between two or more parties.

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CISG

The UN Convention on Contracts for the International Sale of Goods (CISG), a treaty that provides a uniform legal framework for international sales contracts.

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Study Notes

Contract Law Study Notes

  • Contract Types:

    • Unilateral contract: One promise by one party, and an action by the other.
    • Bilateral contract: Two promises made by each party.
    • Express contract: Stated in words (oral or written).
    • Implied contract: Inferred by conduct or circumstances.

  • Essential Elements of a Contract:

    • Mutual agreement (offer and acceptance).
    • Consideration (something of value exchanged).
    • Capacity (parties must be legally competent).
    • Legality of subject matter (contract must be for a lawful purpose).

  • Offer and Acceptance:

    • Offer: A proposal to enter into a contract.
    • Acceptance: Unconditional agreement to the terms of the offer.
    • An advertisement is generally not an offer, but an invitation to offer.

  • Termination of an Offer:

    • Revocation (offeror withdraws the offer).
    • Rejection (offeree refuses the offer).
    • Counteroffer (rejects the original offer and proposes new terms).
    • Lapse of time (offer expires after a reasonable time).
    • Death or incapacity of the offeror or offeree.

  • Consideration:

    • Something of value given in exchange for something else.
    • Past consideration is not valid consideration.

  • Intention to Create Legal Relations:

    • Parties must intend their agreement to be legally binding.

  • Capacity:

    • Parties must be of legal age and sound mind.

  • Legality of Subject Matter:

    • Contract must be for a lawful purpose.

  • Mistake:

    • Unilateral mistake: One party is mistaken, but the contract is often still binding.
    • Material mistake: A mistake that is significant enough to impact the validity.
    • Relevant mistake: Mistake about a relevant fact, value, or opinion could render the contract voidable.
    • Voidable contract is binding on a party who has the option to withdraw or enforce it.
    • A void contract is not valid and unenforceable.

  • Misrepresentation:

    • A false statement of fact that induces someone to enter a contract.
    • Fraudulent misrepresentation: Requires intent to deceive.
    • Innocent misrepresentation: Made without intent to deceive.

  • Breach of Contract:

    • Failure to fulfill the terms of a contract or obligation.

  • Remedies for Breach of Contract:

    • Monetary damages (compensatory, punitive).
    • Specific performance (court order to fulfill the contract).

  • Quasi-Contracts:

    • Contracts implied by law to prevent unjust enrichment.

International Contract Law

  • CISG (Convention on Contracts for the International Sale of Goods):
    • Governs international sales contracts.
    • Binding on parties whose places of business are in ratifying states, unless they exclude its application.
    • Applies where relevant.
  • Material Breach: The non-breaching party may demand performance or termination.

Other Terms

  • CIF: Cost, Insurance, and Freight
  • Good Faith: Honesty and fair dealing in contractual negotiations and performance.
  • Preliminary agreement: Agreements where parties intend to enter into a contract but subject to conditions.
  • Agency: One party (agent) acts on behalf of another party (principal).
  • Joint Venture: Two or more parties who pool resources for a specific business purpose.
  • Green Field Investment: Establishing a new business.
  • Distribution contract: Agreement where a supplier gives rights to an intermediary to sell its products in a particular territory.

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Description

This quiz covers the fundamental aspects of contract law, including different types of contracts, essential elements that constitute a valid contract, and the processes involved in offer and acceptance. Test your understanding of unilateral, bilateral, express, and implied contracts, as well as how offers can be terminated.

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