Study Guide for Business Law Exam 2 PDF

Study guide 1 1. Contract Basics and Types: Promise: Declaration to perform or not perform an act. Contract: Legally binding agreement between two competent parties. ○ Express Contract: Clearly defined and stated. ○ Implied-in-Fact Contract: Based on conduct and rea...

Study guide 1 1. Contract Basics and Types: Promise: Declaration to perform or not perform an act. Contract: Legally binding agreement between two competent parties. ○ Express Contract: Clearly defined and stated. ○ Implied-in-Fact Contract: Based on conduct and reasonable expectations. ○ Quasi-Contract: Imposed by a court for fairness. ○ Bilateral Contract: Mutual exchange of promises. ○ Unilateral Contract: Accepted through performance. 2. Validity and Enforceability: Valid Contract: Contains all essential elements. Void Contract: Not recognized by law. Voidable Contract: Valid initially but can be voided with legal defense. Enforceable/Unenforceable Contracts: Meets all criteria but may have defenses to nullify enforcement. 3. Contractual Concepts: Objective Theory of Contracts: Judged by outward facts. Subjective Theory: Focuses on parties' intentions. Detrimental Reliance: Relying on a promise to one’s detriment. Unjust Enrichment: Gaining at another's expense without a contract. 4. Acceptance and Termination: Rejection: Offeree declines the offer. Revocation: Offeror withdraws before acceptance. Counteroffer: New offer, rejecting the original. Termination by Law: Events like death or destruction nullify the offer. Mirror Image Rule: Acceptance must match the offer exactly. 5. Consideration and Legal Value: Consideration: Bargain or exchange of value. Preexisting Duty: Existing duty doesn’t count as new consideration. Past Consideration: Not valid for new contracts. Illusory Promises: Lacks certainty and is unenforceable. 6. Special Contract Types: Option Contract: Exclusive period to accept an offer.  E-Contracts: Digital agreements with e-signatures. Shrink-Wrap & Click-On Agreements: Acceptance through use or clicking “I agree”. 7. Contractual Capacity: Age of Majority: Legal adult age (18). Disaffirmance: Legal avoidance of a contract by a minor. Ratification: Acceptance of a previously unenforceable obligation. 8. Defenses Against Enforcement: Duress: Forced into a contract (economic or physical). Undue Influence: Overbearing influence on a party. Misrepresentation: Innocent or negligent, leading to harm. Unconscionable Contracts: Unfair terms due to unequal power. Adhesion Contracts: Standard contracts dictated by the stronger party. 9. Other Important Terms: Usury: Charging illegal interest rates. Covenant Not to Sue: Agreement to not pursue legal claims. Reformation: Court adjustment to reflect true intent. Rescission: Canceling a contract and restoring pre-contract positions. Promissory Estoppel: Recovery based on reliance on a promise. Key Focus Areas for Review: Contract classifications and essential elements. Legal defenses and consequences of misrepresentation. Special digital contract laws and agreements. Understanding terms related to consideration and consent. Comprehensive Study Guide 2 Chapter 11: Fundamentals of Contracts Offer and Acceptance: ○ Offer: Proposal by the offeror (promisor) to enter into a contract. ○ Offeree: Party to whom the offer is made. ○ Acceptance: Offeree’s agreement to the terms of the offer. Key Definitions: ○ Promise: Declaration to do or not to do an act. ○ Quasi-Contract: Court-imposed to prevent unjust enrichment. ○ Express Contract: Clearly stated terms. ○ Implied-in-Fact Contract: Based on conduct and reasonable expectations. Types of Contracts: ○ Simple vs. Formal: Simple: Basic with all elements present. Formal: Requires formalities, such as witnesses. ○ Valid, Void, Voidable: Valid: Meets all legal criteria. Void: No legal effect. Voidable: Can be voided with a legal defense. Execution Status: ○ Executory: Not fully performed. ○ Executed: Fully performed by all parties. Contract Theories: ○ Objective Theory: Judged by outward facts. ○ Subjective Theory: Focuses on party intent. Chapter 12: Contract Terms and Enforcement Mutual Assent and Agreement: ○ Proper offer and acceptance. ○ Mirror Image Rule: Acceptance must match the offer exactly. Contract Termination: ○ Revocation: Withdrawal before acceptance. ○ Rejection: Offeree declines the offer. ○ Counteroffer: New proposal rejecting the original. ○ Lapse of Time: Delayed response terminates the offer. ○ Supervening Illegality: New law makes acts illegal.  ○ Death or Incapacity: Offer ends if either party is affected before acceptance. ○ Destruction of Subject Matter: Offer terminates if the subject is destroyed. Electronic Contracts: ○ E-contracts: Formed online. ○ E-signatures: Digital validation. ○ Click-On and Shrink-Wrap Agreements: Require user consent. ○ Partnering Agreements: Common for recurring business. Chapter 13: Consideration and Its Requirements Consideration: ○ Definition: Exchange of value. ○ Adequacy: Fair exchange check. Legal Sufficiency: ○ Preexisting Duty: Existing obligations don’t count as new considerations. ○ Past Consideration: Invalid for new contracts. ○ Illusory Promises: Uncertain terms are non-binding. Debt Settlement: ○ Accord and Satisfaction: Settlement for less than owed. ○ Liquidated vs. Unliquidated Debts: Liquidated: Fixed amount. Unliquidated: Disputed amount. Promissory Estoppel: ○ Used to prevent unfairness from reliance on a promise. Chapter 14: Capacity and Legality Contractual Capacity: ○ Legal ability to enter a contract. ○ Age of Majority: Usually 18. ○ Disaffirmance: Minor’s ability to void a contract. ○ Ratification: Acceptance of obligations post-majority age. Legality: ○ Usury: Illegal interest rates. ○ Contracts Against Public Policy: Void if harmful. ○ Unconscionable Contracts: Unfair terms due to power imbalance. Defenses: ○ Exculpatory Clauses: Limit liability; often restricted. ○ Covenants Not to Compete: Must be reasonable. Chapter 15: Defenses to Contract Enforcement Voluntary Consent: ○ Must be given without coercion.  Mistakes: ○ Bilateral Mistake: Both parties mistaken; voidable. ○ Unilateral Mistake: One-sided error; usually enforceable unless known by the other party. Misrepresentation: ○ Innocent: Unintentional harm. ○ Negligent: Careless statements. ○ Fraudulent: Intentional deceit. Duress and Undue Influence: ○ Duress: Coercion into a contract. ○ Undue Influence: Exploiting trust for personal gain. Legal Doctrines: ○ Rescission: Contract cancellation. ○ Reformation: Court adjustment. ○ Covenant Not to Sue: Agreement to avoid litigation. ○ Estoppel: Prevents contradicting previous actions.