Contract Law Quiz

FAS Definition

• FAS means foreign alien state

Unilateral Mistake

• A contract is binding in cases of unilateral mistake, except when the other party knows or should have known about the mistake.
• If the other party knows or should have known, the contract is not binding.

Joint Venture Contracts

• Can be entered into by companies.
• Can also be entered into by both companies and individuals.
• Can also be entered into by individuals only.

Valid Contract

• Meets all legal requirements and is enforceable by either party.
• An effective and enforceable contract.

Party Breaking Off Negotiations

• A party that ends negotiations in bad faith is liable for losses.
• Must restart negotiations.

Offer Revocation

• An offer can be revoked by the offeror.
• Exceptions include: option contracts, unilateral contracts, UCC exception, promissory estoppel.
• Can be revoked in any case except in specific instances.

Quasi-Contract

• Created by operation of law on behalf of unconscious party.
• Aimed to avoid unjust enrichment of one party at the expense of another.
• Created by law in order to avoid unjust enrichment of one party at the expense of another.

Unstated Terms in Offers

• Unstated terms in an offer can be clarified before an agreement is reached.
• Terms may depend on common sense.
• They must be clarified before the agreement is reached.

Material Breach of Contract

• In case of material breach, the non-breaching party has options.
• They can demand performance.
• Or demand discharge of the contract.

Voidable Contract

• Binding on either party, but only enforceable by one party.
• One party has the choice of enforcing or withdrawing.
• Both parties are bound by the agreement.

Duty of Good Faith in Negotiations

• Parties should not fail to fulfill their obligations.
• Parties should not withdraw from negotiations once started.
• Parties should not intend to negotiate in bad faith.

Consideration

• Consideration is the price or something a party provides in exchange for something else from the other party.
• Consideration is a rule to be enforced binding upon the parties in a contract.

Memorandum/Terms of Agreement

• Not necessarily legally binding statements.
• They do, however, outline the current state of negotiation.

Essential Elements of a Contract

• Essential elements include mutual agreement (or implied agreement), consideration, subject matter & capacity.

Implied Contract

• A contract that can be inferred by conduct.
• A contract can be inferred by a judge or a reasonable person.

Unilateral Contract

• One party makes a promise, and the other party performs an act in response.

Void Contract

• Cannot be enforced.

Express Contract

• A legally enforceable agreement stated clearly in words or writing.

Negotiation End

• Negotiation concludes when both parties reach an agreement.

Offer Elements

• An offer must clearly identify the good or service.
• State the essential terms of the contract.

Advertisement Offer

• An advertisement is generally not considered an offer but an invitation to offer.
• Some advertisements could constitute an offer if they specify a particular person.

Acceptance

• Acceptance must be communicated.
• The method of communication must be reasonable.

Consideration Definition

• Consideration is something of value exchanged between parties.
• Consideration must be something of value to either party to make the contract valid.

Valid Contract Period

• A contract lasts for a specified or a reasonable time if no specific period is mentioned.

Breach of Agreement

• When a party fails to fulfill their responsibilities in an agreement (legally enforceable contract) according to the terms of the agreement.

Misrepresentation

• A false statement about a material fact made knowingly by one party, intending to induce justifiable reliance by another party.
• This can make the contract voidable.

Fraud

• A misrepresentation of a material fact made knowingly with the intent to defraud
• The other party justifiably relies on the misrepresentation, causing injury.

Material Mistake

• A mistake related to a relevant fact, value, or opinion.
• A mistake can make a contract voidable and not binding either party.

Justifiable Reliance

• The mistaken party must have reasonably relied on the misrepresentation.
• This involves the intent to defraud to be justifiable.

Joint Venture & Agreement

• A joint venture means an agreement by 2+ businesses for a business project.
• Joint Venture contract determines the means of accomplishing the shared goal.

International Sales Contracts

• CISG (Convention on Contracts for the International Sale of Goods) is a set of rules for handling discrepancies for parties who are citizens of different nations and have made a contract.
• It has rules determining the validity and rules about international business deals and contracts.
• The convention is binding on the parties if they choose it to be binding upon them.

Preliminary Agreements

• Preliminary agreements are not binding agreements.
• They are steps in negotiating.
• Some agreements have conditions that must be met before the final agreement is signed.

Types of Joint Ventures

• Different types are identified to clarify the goals, expectations and procedures for the venture.

Green Field Investment

• A process of creating a new company.