LSB 3213 - exam 2.docx

what is a contract? - correct answer legally enforceable promise or set of promises what are the four basic required elements of a valid contract? - correct answer Mutual Assent: parties to contract must indicate through words or behavior that they willingly agree to enter into contract Consideration: both sides must obtain something of value (legal benefit) and give something of value (legal detriment) Legality of purpose: contract must satisfy legal purpose Capacity: both parties to contract must have legal standing to enter into contracts what is the difference between valid, void, voidable, and unenforceable contracts? - correct answer Valid: when contract has the required elements Void: when agreement lacks one of the required elements or has not been formed in conformance with the law from the outset Voidable: when the law gives one or more parties right to cancel otherwise valid contract under the circumstances Unenforceable: although contract may have all required elements and be considered valid, it may be unenforceable because one party asserts a legal defense to performing the contract what is every contract in the United States premised on the notion of? - correct answer good faith What is the difference between a unilateral contract and a bilateral contract? - correct answer Unilateral Contract: where one party's legal detriment arises from its action or inaction rather than a promise Bilateral Contract: where legal detriment is incurred through the mutual promises the parties make to each other in general, what type of law governs contracts for services? - correct answer Common law contracts in general, what type of law governs contracts for the sale of goods? - correct answer UCC sales contract what is the statute of frauds? - correct answer law governing which contracts must be in writing to be enforceable what is the difference between an offeror and an efferee? - correct answer offeror makes valid offer to offeree, who must accept offer in order for parties to be bound by agreement's terms at what point after making an offer can an offeror no longer revoke the offer? - correct answer offeres in the form of an option contract what is an option contract? - correct answer offeror agrees to hold offer open and not enter into contract with another party for certain period of time in exchange for consideration according to the mailbox rule, when is an acceptance generally effective? - correct answer it is effective upon dispatch when sent in a commercially reasonable manner and not when the acceptance is received by the offeror what is consideration? - correct answer mutual exchange of benefits and detriments what is the rule regarding whether giving up something that is not of legal value constitutes consideration? - correct answer nominal consideration what is the difference an illusory promise, past consideration, and promissory estoppel? - correct answer Illusory promise: promises that do not support bargained - for exchange aspect of consideration Past consideration: promise made in return for a detriment previously made by promisee Promissory estoppel: is one party justifiably relies on promise of another to the relying party's detriment, under certain circumstances relying party may recover costs of the reliance form promisor even through original promise agreement lacked consideration how did the Virginia state supreme court rule in Lucy v. Zehmer (1954)? - correct answer The court held that evidence from the trial indicated that Zehmer took the transaction seriously and that Lucy was not unreasonable in believing that a contract was formed under the circumstances. The court made clear that actual mental intent is not required for formation of a contract. in general, what is the age below which a person is considered to lack full capacity to contract? - correct answer minors - 18 under what is the difference between ratification and disaffirmance? - correct answer Ratification: includes any act that indicated the minor intends to be bound by minor's promise