AIC 301 Study Guide
contract - correct ansa legally enforceable agreement between 2 or more parties
agreements - correct ansnot all __________________ are legally binding contracts
1) agreement
2) capacity
3) mutual assent
4) consideration
5) legal purpose
6) form required by law - correct ans6 elements of a legally binding contract
promisor - correct ansparty making a promise
promisee - correct ansparty to whom a promise is made
privity of contract - correct ansthe relationship that exists between 2 parties to a contract
privity - correct ansa party cannot sue for breach of contract without being in ______________ of
contract with the other party
third-party beneficiary - correct ansa person who is not a party to a contract but who benefits from it
and has a legal right to enforce the contract if it is breached by either of the contracting parties
breach of contract - correct ansthe failure without legal excuse, to fulfill a contractual promise
,agreement - correct ansmust include an offer and its acceptance
offeror - correct ansparty making the offer
offeree - correct ansparty who makes a promise or acts in return for something offered by another party
definite - correct ansoffers must include _____________ terms and be communicated to and received
by the offeree
counteroffer - correct ansif the offeree requests changes to conditions of the offer
mentally competent - correct ansall parties must be ______________ _________________ for a
contract to be legally binding
mutual assent - correct ansthe act of 2 or more parties deliberately negotiating all terms to achieve
consensus
consideration - correct anssomething of value that is given in return for a promise
legal purpose - correct ansa contract must serve a legal purpose to be legally enforceable
form required by law - correct anscontracts must be in a proper, legally stipulated form to be binding
1) sale of real estate
2) agreements that can't be performed within 1 year
3) transactions > $500
4) agreements to pay a debt owed - correct ans4 examples of contracts that have to be in writing
,bilateral contract - correct ansa contract where each party promises to perform an act in exchange for
an act by the other party
unilateral contract - correct ansa contract where one party promises to pay for the act of the other party
executed contract - correct anscontract where nothing more is required of either party to be fulfilled
executory contract - correct ansa contract that hasn't been fully executed
express contract - correct anscontract where terms and intentions are clearly stated
implied contract - correct anscontract where terms and intentions are indicated by the actions of the
parties to the contract and the surrounding circumstances
implied-in-fact contracts - correct ansparties presumably intended, either by tacit understanding or by
the assumption that it already existed
implied-in-law contracts - correct ansan obligation that is not an actual contract but that is imposed by
law because of the parties' conduct or some special relationship between them or because one of them
would otherwise be unjustly enriched
implied-in-law contracts - correct anssometimes called "quasi-contracts"
voidable contract - correct ansa contract that one of the parties can reject (avoid) based on some
circumstances regarding its execution
behavior - correct ansthe _______________ of one of the contracting parties can make a contract
voidable
void contract - correct ansan agreement that despite that parties' intentions, never reaches contract
status and is therefore not legally enforceable or binding
, void contact - correct ansex. agreement to commit a crime (what type of contract?)
1) fraud
2) mistake
3) duress
4) undue influence
5) innocent misrepresentation - correct ans5 factors lacking for mutual assent
fraud - correct ansan intentional misrepresentation resulting in harm to a person or an organization
1) rescission
2) sue for damages - correct ans2 remedies that can be sought if fraud is proven
rescission - correct ansa legal act of cancelling something and making it void
sue for damages - correct ansaction taken if rescission can't make the plaintiff whole
1) insured knew the fact concealed was material
2) insured concealed the fact with the intent to defraud - correct ans2 things insurers need to prove to
establish fraudulent concealment
unilateral; bilateral - correct ansmistakes can be ______________ or _________________
duress - correct ansthe use of restraint, violence, threats of violence, or wrongful pressure to compel a
party to act contrary to their wishes or interests
undue influence - correct ansthe improper use of power or trust to deprive a person of free will and
substitute another's objective, resulting in lack of genuine assent to a contract
1) gifts & wills
contract - correct ansa legally enforceable agreement between 2 or more parties
agreements - correct ansnot all __________________ are legally binding contracts
1) agreement
2) capacity
3) mutual assent
4) consideration
5) legal purpose
6) form required by law - correct ans6 elements of a legally binding contract
promisor - correct ansparty making a promise
promisee - correct ansparty to whom a promise is made
privity of contract - correct ansthe relationship that exists between 2 parties to a contract
privity - correct ansa party cannot sue for breach of contract without being in ______________ of
contract with the other party
third-party beneficiary - correct ansa person who is not a party to a contract but who benefits from it
and has a legal right to enforce the contract if it is breached by either of the contracting parties
breach of contract - correct ansthe failure without legal excuse, to fulfill a contractual promise
,agreement - correct ansmust include an offer and its acceptance
offeror - correct ansparty making the offer
offeree - correct ansparty who makes a promise or acts in return for something offered by another party
definite - correct ansoffers must include _____________ terms and be communicated to and received
by the offeree
counteroffer - correct ansif the offeree requests changes to conditions of the offer
mentally competent - correct ansall parties must be ______________ _________________ for a
contract to be legally binding
mutual assent - correct ansthe act of 2 or more parties deliberately negotiating all terms to achieve
consensus
consideration - correct anssomething of value that is given in return for a promise
legal purpose - correct ansa contract must serve a legal purpose to be legally enforceable
form required by law - correct anscontracts must be in a proper, legally stipulated form to be binding
1) sale of real estate
2) agreements that can't be performed within 1 year
3) transactions > $500
4) agreements to pay a debt owed - correct ans4 examples of contracts that have to be in writing
,bilateral contract - correct ansa contract where each party promises to perform an act in exchange for
an act by the other party
unilateral contract - correct ansa contract where one party promises to pay for the act of the other party
executed contract - correct anscontract where nothing more is required of either party to be fulfilled
executory contract - correct ansa contract that hasn't been fully executed
express contract - correct anscontract where terms and intentions are clearly stated
implied contract - correct anscontract where terms and intentions are indicated by the actions of the
parties to the contract and the surrounding circumstances
implied-in-fact contracts - correct ansparties presumably intended, either by tacit understanding or by
the assumption that it already existed
implied-in-law contracts - correct ansan obligation that is not an actual contract but that is imposed by
law because of the parties' conduct or some special relationship between them or because one of them
would otherwise be unjustly enriched
implied-in-law contracts - correct anssometimes called "quasi-contracts"
voidable contract - correct ansa contract that one of the parties can reject (avoid) based on some
circumstances regarding its execution
behavior - correct ansthe _______________ of one of the contracting parties can make a contract
voidable
void contract - correct ansan agreement that despite that parties' intentions, never reaches contract
status and is therefore not legally enforceable or binding
, void contact - correct ansex. agreement to commit a crime (what type of contract?)
1) fraud
2) mistake
3) duress
4) undue influence
5) innocent misrepresentation - correct ans5 factors lacking for mutual assent
fraud - correct ansan intentional misrepresentation resulting in harm to a person or an organization
1) rescission
2) sue for damages - correct ans2 remedies that can be sought if fraud is proven
rescission - correct ansa legal act of cancelling something and making it void
sue for damages - correct ansaction taken if rescission can't make the plaintiff whole
1) insured knew the fact concealed was material
2) insured concealed the fact with the intent to defraud - correct ans2 things insurers need to prove to
establish fraudulent concealment
unilateral; bilateral - correct ansmistakes can be ______________ or _________________
duress - correct ansthe use of restraint, violence, threats of violence, or wrongful pressure to compel a
party to act contrary to their wishes or interests
undue influence - correct ansthe improper use of power or trust to deprive a person of free will and
substitute another's objective, resulting in lack of genuine assent to a contract
1) gifts & wills
