BUSA 2106 EXAM 2 QUESTIONS WITH VERIFIED
ANSWERS
Contract - Answers - A contract is a promise that is enforceable in a court of law.
Contract - Answers - A contract is a legally enforceable promise or set of promises.
4 basic elements of a contract - Answers - Agreement.
Consideration.
Capacity.
Legal Purpose.
void contracts - Answers - unenforceable contract
Voidable contract - Answers - a contract that can be cancelled (voided) by the party
lacking full capacity.
valid contract - Answers - enforceable
Agreement - Answers - Valid contract requires a valid offer and a valid acceptance
between the parties.
Meeting of the Minds - Answers - referred to as mutual agreement, mutual assent or
consensus ad idem) is a phrase in contract law used to describe the intentions of the
parties forming the contract. In particular it refers to the situation where there is a
common understanding in the formation of the contract.
Elements necessary for a valid offer - Answers - serious intention,
definite terms, and is
communicated to the offeree.
Are advertisements offers? - Answers - Advertisements are NOT treated by the US
courts as Offers - they are treated merely as invitations to negotiate.
Reasons to terminate an offer? - Answers - Operation of Law or
by Action of the Parties.
Time for acceptance has lapsed
Example: offer must be accepted by July 14, 2015, 1:00 pm EST.
Death or Incapacitation of either party
Destruction of the subject matter
Revocation - offeror can withdraw her offer any time prior to acceptance.
Rejection - by the offeree - " I reject your offer!"
Counter-offer - a counter-offer is a rejection of the offer and a new offer
, Mirror Image Rule: the acceptance must be exactly the same terms as what was
offered. If not, it will be treated as a counter-offer (rejection of the offer and a new offer)
Acceptance - Answers - The response by the person receiving the offer that indicates
her willingness to enter into the agreement proposed in the offer.
Mode of Acceptance:
General Rule: acceptance is effective upon dispatch
Mailbox rule: agreement is formed when the offeree puts the acceptance in the mailbox.
Mirror Image Rule: the acceptance must be exactly the same terms as what was
offered. If not, it will be treated as a counter-offer (rejection of the offer and a new offer)
Consideration - Answers - The formation of a valid contract requires each party must
transfer something of legal value, known as consideration, to the other.
Consideration can be money, an object, a service, a promise, or giving up of a right to
do something you have the legal right to do.
Capacity to Enter contracts - Answers - A valid contract requires both parties to possess
the capacity to enter into an agreement
Capacity - the persons ability to understand the nature and effect of an agreement.
Contracts with persons lacking full capacity are void, voidable, or valid.
Capacity for specific persons - Answers - Minors
General rule: a minor (under 18 years old) can enter into any contract an adult can
(exempt alcohol).
But because a minor does not have full capacity - contracts entered into by minors are
voidable at the option of the minor.
Intoxication
Contacts entered into while intoxicated are voidable by the intoxicated party.
Using reasonable person standard - must to too intoxicated to be aware of what you
were doing. If evidence proves you were aware of your actions the contract will be valid.
Incompetent
Contracts entered into by parties adjudged mentally incompetent by a court of law are
void.
Legality - Answers - Final requirement for a valid contract is the contract must have a
legal purpose.
If the contract is for an illegal purpose it will be considered VOID and unenforceable in a
court of law.
If a party to a contract fails to have a required license, the other party can refuse to
pay/perform
Other Contracts Contrary to Statute.
Usury statutes.
Illegal contracts:
Hiring a hit man
Buying illegal drugs
Prostitution
ANSWERS
Contract - Answers - A contract is a promise that is enforceable in a court of law.
Contract - Answers - A contract is a legally enforceable promise or set of promises.
4 basic elements of a contract - Answers - Agreement.
Consideration.
Capacity.
Legal Purpose.
void contracts - Answers - unenforceable contract
Voidable contract - Answers - a contract that can be cancelled (voided) by the party
lacking full capacity.
valid contract - Answers - enforceable
Agreement - Answers - Valid contract requires a valid offer and a valid acceptance
between the parties.
Meeting of the Minds - Answers - referred to as mutual agreement, mutual assent or
consensus ad idem) is a phrase in contract law used to describe the intentions of the
parties forming the contract. In particular it refers to the situation where there is a
common understanding in the formation of the contract.
Elements necessary for a valid offer - Answers - serious intention,
definite terms, and is
communicated to the offeree.
Are advertisements offers? - Answers - Advertisements are NOT treated by the US
courts as Offers - they are treated merely as invitations to negotiate.
Reasons to terminate an offer? - Answers - Operation of Law or
by Action of the Parties.
Time for acceptance has lapsed
Example: offer must be accepted by July 14, 2015, 1:00 pm EST.
Death or Incapacitation of either party
Destruction of the subject matter
Revocation - offeror can withdraw her offer any time prior to acceptance.
Rejection - by the offeree - " I reject your offer!"
Counter-offer - a counter-offer is a rejection of the offer and a new offer
, Mirror Image Rule: the acceptance must be exactly the same terms as what was
offered. If not, it will be treated as a counter-offer (rejection of the offer and a new offer)
Acceptance - Answers - The response by the person receiving the offer that indicates
her willingness to enter into the agreement proposed in the offer.
Mode of Acceptance:
General Rule: acceptance is effective upon dispatch
Mailbox rule: agreement is formed when the offeree puts the acceptance in the mailbox.
Mirror Image Rule: the acceptance must be exactly the same terms as what was
offered. If not, it will be treated as a counter-offer (rejection of the offer and a new offer)
Consideration - Answers - The formation of a valid contract requires each party must
transfer something of legal value, known as consideration, to the other.
Consideration can be money, an object, a service, a promise, or giving up of a right to
do something you have the legal right to do.
Capacity to Enter contracts - Answers - A valid contract requires both parties to possess
the capacity to enter into an agreement
Capacity - the persons ability to understand the nature and effect of an agreement.
Contracts with persons lacking full capacity are void, voidable, or valid.
Capacity for specific persons - Answers - Minors
General rule: a minor (under 18 years old) can enter into any contract an adult can
(exempt alcohol).
But because a minor does not have full capacity - contracts entered into by minors are
voidable at the option of the minor.
Intoxication
Contacts entered into while intoxicated are voidable by the intoxicated party.
Using reasonable person standard - must to too intoxicated to be aware of what you
were doing. If evidence proves you were aware of your actions the contract will be valid.
Incompetent
Contracts entered into by parties adjudged mentally incompetent by a court of law are
void.
Legality - Answers - Final requirement for a valid contract is the contract must have a
legal purpose.
If the contract is for an illegal purpose it will be considered VOID and unenforceable in a
court of law.
If a party to a contract fails to have a required license, the other party can refuse to
pay/perform
Other Contracts Contrary to Statute.
Usury statutes.
Illegal contracts:
Hiring a hit man
Buying illegal drugs
Prostitution
