BUSFIN 3500 FINAL STUDY GUIDE
Contract - Answers - Set of legally enforceable promises
Necessary elements of a contract - Answers - 1. Agreement
2. Consideration
3. Legal Capacity
4. Legal Purpose
Agreement - Answers - Offer + Acceptance
*Offer - Offeror sets and presents the terms
*Acceptance - Offeree agrees to the terms
Consideration - Answers - - the bargained for exchange
- what each party gets in exchange under a contract
Capacity - Answers - the legal ability to enter into a binding contract
Legal purpose - Answers - a purpose that does not violate a statutory or public policy
Sources of law - Answers - 1. Common Law
2. Uniform Commercial Code
*UCC - a statutory source of contract in the US applicable to transactions involving sale
of goods
(Restatement, Contract - can be modified by each state)
BILL promises to clean TOM's garage
TOM promises to pay BILL $50 - Answers - Bilateral contract
TOM promises to pay BILL $50 if BILL cleans his garage - Answers - Unilateral contract
TOM typically shovels driveways for $20. TOM shovels BILL's driveway while BILL
stands outside and watches TOM - Answers - Implied contract or quasi contract
Defenses to contract - Answers - 1. Lack of genuine assent
*entered into freely without any improper means (fraud, duress, under influence or
misrepresentation)
2. Lack of proper form
*in writing
Bilateral Contract - Answers - Promise for promise
,AMY promises to pay AJ $70 for his promise to paint her car on July 1 - Answers -
Bilateral Contract
Unilateral Contract - Answers - Promise exchange for an action
*common ex. - REWARDS
JEFF lost his dog and post flyers across campus that states a $200 reward to find Toto.
ERICA calls him and says, "I WILL FIND YOUR DOG," and begins her search. What
contract is this and are they in a contract? - Answers - Unilateral contract & NO
JEFF has created a unilateral contract. He will will pay the $200 ONLY if the action has
been done.
*offeree has no obligation to the act and the offeror has the ability to revoke the offer
*to prevent injustice, the offeror must hold the offer open for a reasonable time if the
offeree has begun their performance
Express contracts - Answers - all terms are clearly set forth in either written or spoken
words
Implied contract - Answers - a contract that arises NOT from words of agreement, but
form the conduct of parties
In a dental emergency, the dentist pulls out your severely infected tooth without mention
or negotiation about payment. - Answers - You have entered into an implied contract,
and must pay for the service
Implied-in-fact - Answers - 3 conditions must be met:
1. plaintiff provided some property or service to the defendant
2. plaintiff expected to be paid for the service and the reasonable defendant expected to
pay
3. the defendant had an opportunity to reject the service (but did not)
Implied-in-law - Answers - Quasi contract
- a court-imposed contractual obligation to prevent UNJUST enrichment
TOM hears noise out his driveway. He looks out and sees a group of workers preparing
the resurface his drive-through. TOM ignores the doorbell, and goes into his basement
until the resurfacing has ended. The court told TOM to pay for his service. Why? -
Answers - TOM entered an implied contract, or quasi contract, which prevents unjust
enrichment.
Valid contract - Answers - All four elements of a contract has been included
, Unenforceable - Answers - contract cannot be enforced by the courts because of a law
Void contract - Answers - a contract that is not valid because its object is illegal or has
some serious defect
Voidable - Answers - a contract that one or both parties have the ability to either
withdraw from or enforce
Executed - Answers - a contract in which all of the terms have been fully performed
Executory contract - Answers - a contract in which not all of the terms have been fully
performed
SANDY hires PATRICK to paint his garage on Saturday for $800 with a $200 paid as
down payment and the balance due on completion of the job. What kind of contract is
this? - Answers - Executory contract because down payment has been paid, therefore,
the contract is in progress (or executory)
Formal contract - Answers - a contract that must have a special form or must be created
in a specific manner
The Restatement (Second) of Contracts identifies 4 types of formal contracts: - Answers
- 1. Contracts under seal
2. Recognizances
3. Letters of credit
4. Negotiable instruments
Contract under seal - Answers - a contract that has a seal certifying its legality
*require no consideration for them to be legal
Recognizance - Answers - an obligation in which a party acknowledges in court that
they will perform some specified act and/or pay a price on failure to do so
Letter of credit - Answers - a binding document that a buyer can request from a bnk to
guarantee that the payment for goods will be made to the seller
Negotiable Instrument - Answers - A written document signed by a person makes an
unconditional promise to pay a specific sum of money on demand or at a certain time to
the holder of the instrument; an acceptable medium for exchanging value from one
person to another
informal contract - Answers - a contract that requires no formalities
Intent - Answers - the intended purpose or goal of an action, especially in a contract
Contract - Answers - Set of legally enforceable promises
Necessary elements of a contract - Answers - 1. Agreement
2. Consideration
3. Legal Capacity
4. Legal Purpose
Agreement - Answers - Offer + Acceptance
*Offer - Offeror sets and presents the terms
*Acceptance - Offeree agrees to the terms
Consideration - Answers - - the bargained for exchange
- what each party gets in exchange under a contract
Capacity - Answers - the legal ability to enter into a binding contract
Legal purpose - Answers - a purpose that does not violate a statutory or public policy
Sources of law - Answers - 1. Common Law
2. Uniform Commercial Code
*UCC - a statutory source of contract in the US applicable to transactions involving sale
of goods
(Restatement, Contract - can be modified by each state)
BILL promises to clean TOM's garage
TOM promises to pay BILL $50 - Answers - Bilateral contract
TOM promises to pay BILL $50 if BILL cleans his garage - Answers - Unilateral contract
TOM typically shovels driveways for $20. TOM shovels BILL's driveway while BILL
stands outside and watches TOM - Answers - Implied contract or quasi contract
Defenses to contract - Answers - 1. Lack of genuine assent
*entered into freely without any improper means (fraud, duress, under influence or
misrepresentation)
2. Lack of proper form
*in writing
Bilateral Contract - Answers - Promise for promise
,AMY promises to pay AJ $70 for his promise to paint her car on July 1 - Answers -
Bilateral Contract
Unilateral Contract - Answers - Promise exchange for an action
*common ex. - REWARDS
JEFF lost his dog and post flyers across campus that states a $200 reward to find Toto.
ERICA calls him and says, "I WILL FIND YOUR DOG," and begins her search. What
contract is this and are they in a contract? - Answers - Unilateral contract & NO
JEFF has created a unilateral contract. He will will pay the $200 ONLY if the action has
been done.
*offeree has no obligation to the act and the offeror has the ability to revoke the offer
*to prevent injustice, the offeror must hold the offer open for a reasonable time if the
offeree has begun their performance
Express contracts - Answers - all terms are clearly set forth in either written or spoken
words
Implied contract - Answers - a contract that arises NOT from words of agreement, but
form the conduct of parties
In a dental emergency, the dentist pulls out your severely infected tooth without mention
or negotiation about payment. - Answers - You have entered into an implied contract,
and must pay for the service
Implied-in-fact - Answers - 3 conditions must be met:
1. plaintiff provided some property or service to the defendant
2. plaintiff expected to be paid for the service and the reasonable defendant expected to
pay
3. the defendant had an opportunity to reject the service (but did not)
Implied-in-law - Answers - Quasi contract
- a court-imposed contractual obligation to prevent UNJUST enrichment
TOM hears noise out his driveway. He looks out and sees a group of workers preparing
the resurface his drive-through. TOM ignores the doorbell, and goes into his basement
until the resurfacing has ended. The court told TOM to pay for his service. Why? -
Answers - TOM entered an implied contract, or quasi contract, which prevents unjust
enrichment.
Valid contract - Answers - All four elements of a contract has been included
, Unenforceable - Answers - contract cannot be enforced by the courts because of a law
Void contract - Answers - a contract that is not valid because its object is illegal or has
some serious defect
Voidable - Answers - a contract that one or both parties have the ability to either
withdraw from or enforce
Executed - Answers - a contract in which all of the terms have been fully performed
Executory contract - Answers - a contract in which not all of the terms have been fully
performed
SANDY hires PATRICK to paint his garage on Saturday for $800 with a $200 paid as
down payment and the balance due on completion of the job. What kind of contract is
this? - Answers - Executory contract because down payment has been paid, therefore,
the contract is in progress (or executory)
Formal contract - Answers - a contract that must have a special form or must be created
in a specific manner
The Restatement (Second) of Contracts identifies 4 types of formal contracts: - Answers
- 1. Contracts under seal
2. Recognizances
3. Letters of credit
4. Negotiable instruments
Contract under seal - Answers - a contract that has a seal certifying its legality
*require no consideration for them to be legal
Recognizance - Answers - an obligation in which a party acknowledges in court that
they will perform some specified act and/or pay a price on failure to do so
Letter of credit - Answers - a binding document that a buyer can request from a bnk to
guarantee that the payment for goods will be made to the seller
Negotiable Instrument - Answers - A written document signed by a person makes an
unconditional promise to pay a specific sum of money on demand or at a certain time to
the holder of the instrument; an acceptable medium for exchanging value from one
person to another
informal contract - Answers - a contract that requires no formalities
Intent - Answers - the intended purpose or goal of an action, especially in a contract
