Business Law Chapter Review Paper
Course: MAN 224: Business Law
College: California College San Diego
Instructor: Mr. Henry Rau
Student: Mr. Tyrell Wilson
Subject: Week 2: Assignment 2: Chapter Review Questions: 5 thru 13
Due Date: February 5, 2015 @ 11:59 PM
I. Chapter 5: Nature and Classes of Contracts
1. Why are contract so important to business?
Answer: Contracts are extremely important in business because they form the very foundation upon which all modern business rests.
2. Name the five requirements of a valid contract.
Answer: The parties to do or not do a specific thing must base it on a mutual agreement. Parties who are competent to enter into a contract that will be enforceable against both parties must make it. The promise or obligation of each party must be supported by consideration. It must de for a lawful purpose the contract must not be illegal such as the unauthorized buying and selling of narcotics. The contract must meet certain formal requirements such as being in writing or under seal. …show more content…
3.
How does the subject matter of a contract normally distinguish it from unenforceable agreements?
Answer: An agreement with no legal effect is void. A void agreement sometimes called a void contract must be distinguished from an unenforceable contract. An agreement not enforceable in a court of law does not come within the definition of a contract.
4. How does a voidable contract differ from a valid contract?
Answer: Voidable contracts are an enforceable agreement, but because of circumstances or the capacity of a party, one or both parties may set aside. Valid contracts are an agreement that courts will enforce against all parties.
5. What two items must be expressed in order to have an express contract?
Answer: Express contract the parties express their intentions by words, whether in writing or orally, at the time they make the argument. Both their intention to contact and the terms of the agreement are expressly stated or
written.
II. Chapter 6: Offer and Acceptance
1. What are the two essential elements of a contract?
Answer: An offer, either expressed or implied, and an acceptance, either expressed or implied.
2. What does an offeror express by making an offer?
Answer: The willingness to enter into a contractual agreement with a party or parties for mutual business agreement.
3. When may an offeree accept an offer?
Answer: When the communication to the offeror has been accepted by words, oral or written or by some act that clearly shows an intention to accept.
4. What are common types of invitations to make an offer?
Answer: Advertisements, window displays, catalogs, price lists, and circulars.
5. When may an offer be revoked? What is the effect of death or insanity of the offer?
Answer: An offer is terminated by the lapse of time specified in the offer. If no time is specified in the offer, it is terminated by a lapse of a reasonable time after being communicated to the offeree. Death and insanity of the offer automatically terminates the offer.
III. Chapter 7: Capacity to Contract
1. What is the legal presumption regarding capacity to contract and what is the effect of this presumption?
Answer: The general rule is that the law presumes that all parties have capacity. This means that anyone alleging incapacity must offer proof of incapacity to overcome that presumption.
2. What does it mean to say a contract of a minor is voidable at the minor’s option?
Answer: If the minor so desires, the minor can avoid the contract. If the minor wishes to treat a contract made with an adult as valid, the adult is bound by it.
3. If a minor contracts to purchase necessaries, must the contract price be paid?
Answer: The minor’s liability is quasi-contractual in nature. The reasonable value of what is actually received must be paid in order to prevent the minor from being unjustly enriched. The minor is not however, required to pay the contract price.
4. If a minor wants to disaffirm a contract, must the disaffirmance always be within a reasonable time after attaining majority?
Answer: A minor cannot ratify of a contract and disaffirm another part; all or none of it must be ratified. Ratification must be within a reasonable time after reaching majority. A reasonable time is a question of fact to be determined in light of all surrounding circumstances.
5. What is the obligation of a minor upon disaffirming a contract?
Answer: Upon electing to disaffirm contracts, minors must return whatever they may have received under the contracts, provided they still have possession of it.
IV. Chapter 8: Consideration
1. What is consideration?
Answer: Consideration is whatever the promisor demands and receives as the price for a promise.
2. When may a promise constitute consideration?
Answer: When the promise must impose an obligation upon the person making it.
3. What is the relevance of a grossly inadequate consideration given by one party to a contract?
Answer: If the consideration given by one party is grossly inadequate, this is a relevant fact proving fraud, undue influence, duress, or mistake.
4. If a boy promises his father that he will not own and operate an automobile until he is 18 in exchange for his father’s promise to pay him $2,000.00 is this a valid contract.
Answer: No, because this particular case would fall under Refraining or Promise to Refrain from Doing What one Has No Right to Do called forbearance. Consideration is invalid when it consists of a promise to forbear doing something that one has no right to do.
5. If Davis owes Dennis $10,000.00, and Dennis offers to settle for $7,000.00, what must be done to make the contract binding?
Answer: A new contract needs to be put in place. For this new contract to be enforceable there must be some added features that benefit both parties, though not necessarily to an equal extent.
V. Chapter 9: Defective Agreements
1. What is the difference between mutual mistake and a unilateral mistake?
Answer: Mutual mistake is when both parties to a contract make the same mistake. Unilateral mistake is when only one party makes a mistake regarding the contract.
2. How do courts classify a mutual mistake contract and what is its effect?
Answer: Some courts say such a contract is void because no genuine assent by the parties existed. Other courts say the contract is voidable. Some courts are not precise about whether the contract is void or voidable. However they classify a mutual-mistake contract, courts do not find them enforceable.
3. Under what circumstances does a unilateral mistake invalidate a contract?
Answer: When there has been a unilateral mistake of a fact, the mistaken party sometimes receives relief. Courts will generally allow a unilateral mistake of fact to impair the enforceability of a contract if the non-mistaken party has caused the mistake or knew or should have known of the other party’s mistake and the mistaken party exercised ordinary care.
4. Is there any way to avoid the law’s provision about the effect of a mistake on the validity of a contract?
Answer: Most states recognize the exceptions to the rule on mutual mistakes; however, significant variation occurs among the states regarding whether exceptions to the unilateral rule are recognized.
5. Are there any mutual mistakes that do not make a contract defective?
Answer: The area of mistake is one in which significant variations exist among the states and also where exceptions to the general rules have been established in order to avoid harsh results. In some states it is much easier than in other states to get the courts to agree with a party that a contract should not be enforced when there has been a mistake.
VI. Chapter 10: Illegal Agreements
1. Why is a contract void unless it is for a lawful purpose achieved in a lawful manner?
Answer: A contract must be for a lawful purpose, and this purpose must be achieved in a lawful manner. Otherwise the contract is void. If this were not true, the court might force one party to contract to commit a crime. If the act itself is legal, but the manner of committing the act that is called for in the contract is illegal, the contract is void.
2. What difference does it make whether an illegal contract is indivisible or divisible?
Answer: If the contract is indivisible, that is, it cannot be performed except as an entity, and then illegality in one part renders the whole contract invalid. If the contract is divisible, so that the legal parts can be performed separately, the legal parts of the contract are enforceable.
3. Does a contract that is void for illegality necessarily involve the commission of a crime?
Answer: A contract that is void because of illegality does not necessarily involve the commission of a crime. It may consist merely of a private wrong the commission of a tort such as an agreement by two persons to slander a third. A contract contrary to public policy is also illegal.
4. Is a loan taken out to obtain money for private gambling enforceable in states that do not permit private gambling?
Answer: Under early common law private wagering contracts were enforceable, but they are now generally prohibited in all states by statute. In general the courts will leave the parties to a private gambling contract where it finds them and will not allow one party to sue the other for the breach of gambling debt.
5. What are usury laws?
Answer: State laws that limit the rate of interest that may be charged for the use of money.
VII. Chapter 11: Written Contracts
1. Is an oral contract as effective and enforceable as a written contract?
Answer: An oral contract is just as effective and enforceable as a written contract unless it is one of the few types specially required by statute to be in writing.
2. Does the statute of frauds apply to all contracts?
Answer: The Statute of Fraud only applies only to executor contracts. If two parties enter into an oral contract that falls under the Statute of Frauds and both parties have performed according to its terms, neither party can seek to set aside the transaction on the ground that there was no writing.
3. Under what types of circumstances will courts enforce oral contracts even when the law requires them to be in writing?
Answer: During An Agreement to Sell Land or Any Interest in or Concerning Land. Frequently, oral contracts relative are performed before any questions of their validity are raised. The law will compel payment of the rent agreed to for the time that premises was occupied.
4. Why must a contract that cannot be performed in one year be in writing to be enforceable?
Answer: The law requires all contracts that cannot be performed within one year to be in writing. This provision of the Statute of frauds means that if the terms of the contract are such that, by their nature, they cannot be performed within one year from the date of the contract, then the contract must be in writing. The contract is so worded that it may not be completed for 50 years, yet if it is physically possible to complete it within one year, it needed not be in writing.
5. What must be included in a note or memorandum required by the Statute of Frauds?
Answer: The Statute of Frauds requires either that the agreement be in writing and signed by both parties, or that there be a note or memorandum in writing signed by the party against whom the claim for breach of promise is made. With the enactment of the federal Electronic Signatures in Global and national Commerce Act, that signature no longer has to be n paper. This law makes electronic signatures legally enforceable.
VIII. Chapter 12: Third Parties and Contracts
1. How can a third party become involved in a contract?
Answer: A third party can become involved in a contract in several common ways. These included as a third-party beneficiary, by novation, by assignment, and by delegation.
2. When did courts begin to make exceptions to the common law rule that only the parties to a contract could sue upon or seek to enforce it?
Answer: The courts began to make exceptions to the rule when it seemed evident that the contracting parties intended to benefit a third person called the third-party beneficiary.
3. What is a novation?
Answer: Novation is the termination of a contract and substitution of a new one with the same terms but new party.
4. May a right to personal services be assigned? Explain.
Answer: A right to personal services cannot be assigned because an employee cannot be requires to work for a new employer without the employee’s consent.
5. What is the difference between an assignment of a contract and the delegation of duties under it?
Answer: A party to contract may wish to assign the rights or to delegate the duties under the contract or to do both. If one party transfers the contract in its entirely, it is as assignment of rights and a delegation of duties. An assignment means that one party conveys rights in a contract to another who is not a party to the original undertaking. Furthermore, delegation is the transfer of duties alone without a transfer of rights. Neither party can delegate the duties under a contract as readily as the rights can be assigned because a personal element more frequently exists in the performance aspect of a contract.
IX. Chapter 13: Termination of Contracts
1. How is a contract discharged by performance?
Answer: When all the terms of a contract have been fulfilled, the contract is discharged by performance.
2. If a contract states when performance is to be rendered, must these provisions always be followed?
Answer: If the contract states when performance is to be rendered, the contract provisions must be followed unless all the circumstances performance on the exact date specified is not vital. I the contract states no time for performance, then performance must ordinarily be rendered within a reasonable time.
3. What is the effect of a tender of performance?
Answer: The tender performance will discharge the obligation of one making the tender so long as the tender conforms to the agreement.
4. To have a valid tender of payment what must the debtor offer?
Answer: The debtor must the exact amount due, including interest, costs, and attorney’s fee, if any required. Furthermore, the debtor must pay or offer the creditor the amount due.
5. May the performance of a contract ever be refused on the ground that the performance is not satisfactory to the particular contracting party?
Answer: If the performance is clearly intended to be subject to the personal taste or judgment of one of the parties, however, it may be rejected on the ground that is not satisfactory to that particular party.
References
Ashcroft, J. E. (2005). Law for Business (15th ed.). Mason, OH: Thomson South-Western West
Pre-Press Company, Inc.
College: California College San Diego
Instructor: Mr. Henry Rau
Student: Mr. Tyrell Wilson
Subject: Week 2: Assignment 2: Chapter Review Questions: 5 thru 13
Due Date: February 5, 2015 @ 11:59 PM
I. Chapter 5: Nature and Classes of Contracts
1. Why are contract so important to business?
Answer: Contracts are extremely important in business because they form the very foundation upon which all modern business rests.
2. Name the five requirements of a valid contract.
Answer: The parties to do or not do a specific thing must base it on a mutual agreement. Parties who are competent to enter into a contract that will be enforceable against both parties must make it. The promise or obligation of each party must be supported by consideration. It must de for a lawful purpose the contract must not be illegal such as the unauthorized buying and selling of narcotics. The contract must meet certain formal requirements such as being in writing or under seal. …show more content…
3.
How does the subject matter of a contract normally distinguish it from unenforceable agreements?
Answer: An agreement with no legal effect is void. A void agreement sometimes called a void contract must be distinguished from an unenforceable contract. An agreement not enforceable in a court of law does not come within the definition of a contract.
4. How does a voidable contract differ from a valid contract?
Answer: Voidable contracts are an enforceable agreement, but because of circumstances or the capacity of a party, one or both parties may set aside. Valid contracts are an agreement that courts will enforce against all parties.
5. What two items must be expressed in order to have an express contract?
Answer: Express contract the parties express their intentions by words, whether in writing or orally, at the time they make the argument. Both their intention to contact and the terms of the agreement are expressly stated or
written.
II. Chapter 6: Offer and Acceptance
1. What are the two essential elements of a contract?
Answer: An offer, either expressed or implied, and an acceptance, either expressed or implied.
2. What does an offeror express by making an offer?
Answer: The willingness to enter into a contractual agreement with a party or parties for mutual business agreement.
3. When may an offeree accept an offer?
Answer: When the communication to the offeror has been accepted by words, oral or written or by some act that clearly shows an intention to accept.
4. What are common types of invitations to make an offer?
Answer: Advertisements, window displays, catalogs, price lists, and circulars.
5. When may an offer be revoked? What is the effect of death or insanity of the offer?
Answer: An offer is terminated by the lapse of time specified in the offer. If no time is specified in the offer, it is terminated by a lapse of a reasonable time after being communicated to the offeree. Death and insanity of the offer automatically terminates the offer.
III. Chapter 7: Capacity to Contract
1. What is the legal presumption regarding capacity to contract and what is the effect of this presumption?
Answer: The general rule is that the law presumes that all parties have capacity. This means that anyone alleging incapacity must offer proof of incapacity to overcome that presumption.
2. What does it mean to say a contract of a minor is voidable at the minor’s option?
Answer: If the minor so desires, the minor can avoid the contract. If the minor wishes to treat a contract made with an adult as valid, the adult is bound by it.
3. If a minor contracts to purchase necessaries, must the contract price be paid?
Answer: The minor’s liability is quasi-contractual in nature. The reasonable value of what is actually received must be paid in order to prevent the minor from being unjustly enriched. The minor is not however, required to pay the contract price.
4. If a minor wants to disaffirm a contract, must the disaffirmance always be within a reasonable time after attaining majority?
Answer: A minor cannot ratify of a contract and disaffirm another part; all or none of it must be ratified. Ratification must be within a reasonable time after reaching majority. A reasonable time is a question of fact to be determined in light of all surrounding circumstances.
5. What is the obligation of a minor upon disaffirming a contract?
Answer: Upon electing to disaffirm contracts, minors must return whatever they may have received under the contracts, provided they still have possession of it.
IV. Chapter 8: Consideration
1. What is consideration?
Answer: Consideration is whatever the promisor demands and receives as the price for a promise.
2. When may a promise constitute consideration?
Answer: When the promise must impose an obligation upon the person making it.
3. What is the relevance of a grossly inadequate consideration given by one party to a contract?
Answer: If the consideration given by one party is grossly inadequate, this is a relevant fact proving fraud, undue influence, duress, or mistake.
4. If a boy promises his father that he will not own and operate an automobile until he is 18 in exchange for his father’s promise to pay him $2,000.00 is this a valid contract.
Answer: No, because this particular case would fall under Refraining or Promise to Refrain from Doing What one Has No Right to Do called forbearance. Consideration is invalid when it consists of a promise to forbear doing something that one has no right to do.
5. If Davis owes Dennis $10,000.00, and Dennis offers to settle for $7,000.00, what must be done to make the contract binding?
Answer: A new contract needs to be put in place. For this new contract to be enforceable there must be some added features that benefit both parties, though not necessarily to an equal extent.
V. Chapter 9: Defective Agreements
1. What is the difference between mutual mistake and a unilateral mistake?
Answer: Mutual mistake is when both parties to a contract make the same mistake. Unilateral mistake is when only one party makes a mistake regarding the contract.
2. How do courts classify a mutual mistake contract and what is its effect?
Answer: Some courts say such a contract is void because no genuine assent by the parties existed. Other courts say the contract is voidable. Some courts are not precise about whether the contract is void or voidable. However they classify a mutual-mistake contract, courts do not find them enforceable.
3. Under what circumstances does a unilateral mistake invalidate a contract?
Answer: When there has been a unilateral mistake of a fact, the mistaken party sometimes receives relief. Courts will generally allow a unilateral mistake of fact to impair the enforceability of a contract if the non-mistaken party has caused the mistake or knew or should have known of the other party’s mistake and the mistaken party exercised ordinary care.
4. Is there any way to avoid the law’s provision about the effect of a mistake on the validity of a contract?
Answer: Most states recognize the exceptions to the rule on mutual mistakes; however, significant variation occurs among the states regarding whether exceptions to the unilateral rule are recognized.
5. Are there any mutual mistakes that do not make a contract defective?
Answer: The area of mistake is one in which significant variations exist among the states and also where exceptions to the general rules have been established in order to avoid harsh results. In some states it is much easier than in other states to get the courts to agree with a party that a contract should not be enforced when there has been a mistake.
VI. Chapter 10: Illegal Agreements
1. Why is a contract void unless it is for a lawful purpose achieved in a lawful manner?
Answer: A contract must be for a lawful purpose, and this purpose must be achieved in a lawful manner. Otherwise the contract is void. If this were not true, the court might force one party to contract to commit a crime. If the act itself is legal, but the manner of committing the act that is called for in the contract is illegal, the contract is void.
2. What difference does it make whether an illegal contract is indivisible or divisible?
Answer: If the contract is indivisible, that is, it cannot be performed except as an entity, and then illegality in one part renders the whole contract invalid. If the contract is divisible, so that the legal parts can be performed separately, the legal parts of the contract are enforceable.
3. Does a contract that is void for illegality necessarily involve the commission of a crime?
Answer: A contract that is void because of illegality does not necessarily involve the commission of a crime. It may consist merely of a private wrong the commission of a tort such as an agreement by two persons to slander a third. A contract contrary to public policy is also illegal.
4. Is a loan taken out to obtain money for private gambling enforceable in states that do not permit private gambling?
Answer: Under early common law private wagering contracts were enforceable, but they are now generally prohibited in all states by statute. In general the courts will leave the parties to a private gambling contract where it finds them and will not allow one party to sue the other for the breach of gambling debt.
5. What are usury laws?
Answer: State laws that limit the rate of interest that may be charged for the use of money.
VII. Chapter 11: Written Contracts
1. Is an oral contract as effective and enforceable as a written contract?
Answer: An oral contract is just as effective and enforceable as a written contract unless it is one of the few types specially required by statute to be in writing.
2. Does the statute of frauds apply to all contracts?
Answer: The Statute of Fraud only applies only to executor contracts. If two parties enter into an oral contract that falls under the Statute of Frauds and both parties have performed according to its terms, neither party can seek to set aside the transaction on the ground that there was no writing.
3. Under what types of circumstances will courts enforce oral contracts even when the law requires them to be in writing?
Answer: During An Agreement to Sell Land or Any Interest in or Concerning Land. Frequently, oral contracts relative are performed before any questions of their validity are raised. The law will compel payment of the rent agreed to for the time that premises was occupied.
4. Why must a contract that cannot be performed in one year be in writing to be enforceable?
Answer: The law requires all contracts that cannot be performed within one year to be in writing. This provision of the Statute of frauds means that if the terms of the contract are such that, by their nature, they cannot be performed within one year from the date of the contract, then the contract must be in writing. The contract is so worded that it may not be completed for 50 years, yet if it is physically possible to complete it within one year, it needed not be in writing.
5. What must be included in a note or memorandum required by the Statute of Frauds?
Answer: The Statute of Frauds requires either that the agreement be in writing and signed by both parties, or that there be a note or memorandum in writing signed by the party against whom the claim for breach of promise is made. With the enactment of the federal Electronic Signatures in Global and national Commerce Act, that signature no longer has to be n paper. This law makes electronic signatures legally enforceable.
VIII. Chapter 12: Third Parties and Contracts
1. How can a third party become involved in a contract?
Answer: A third party can become involved in a contract in several common ways. These included as a third-party beneficiary, by novation, by assignment, and by delegation.
2. When did courts begin to make exceptions to the common law rule that only the parties to a contract could sue upon or seek to enforce it?
Answer: The courts began to make exceptions to the rule when it seemed evident that the contracting parties intended to benefit a third person called the third-party beneficiary.
3. What is a novation?
Answer: Novation is the termination of a contract and substitution of a new one with the same terms but new party.
4. May a right to personal services be assigned? Explain.
Answer: A right to personal services cannot be assigned because an employee cannot be requires to work for a new employer without the employee’s consent.
5. What is the difference between an assignment of a contract and the delegation of duties under it?
Answer: A party to contract may wish to assign the rights or to delegate the duties under the contract or to do both. If one party transfers the contract in its entirely, it is as assignment of rights and a delegation of duties. An assignment means that one party conveys rights in a contract to another who is not a party to the original undertaking. Furthermore, delegation is the transfer of duties alone without a transfer of rights. Neither party can delegate the duties under a contract as readily as the rights can be assigned because a personal element more frequently exists in the performance aspect of a contract.
IX. Chapter 13: Termination of Contracts
1. How is a contract discharged by performance?
Answer: When all the terms of a contract have been fulfilled, the contract is discharged by performance.
2. If a contract states when performance is to be rendered, must these provisions always be followed?
Answer: If the contract states when performance is to be rendered, the contract provisions must be followed unless all the circumstances performance on the exact date specified is not vital. I the contract states no time for performance, then performance must ordinarily be rendered within a reasonable time.
3. What is the effect of a tender of performance?
Answer: The tender performance will discharge the obligation of one making the tender so long as the tender conforms to the agreement.
4. To have a valid tender of payment what must the debtor offer?
Answer: The debtor must the exact amount due, including interest, costs, and attorney’s fee, if any required. Furthermore, the debtor must pay or offer the creditor the amount due.
5. May the performance of a contract ever be refused on the ground that the performance is not satisfactory to the particular contracting party?
Answer: If the performance is clearly intended to be subject to the personal taste or judgment of one of the parties, however, it may be rejected on the ground that is not satisfactory to that particular party.
References
Ashcroft, J. E. (2005). Law for Business (15th ed.). Mason, OH: Thomson South-Western West
Pre-Press Company, Inc.