Chapter 10 Study Guide 1. What kind of law is Contract Law? Common Law 2. What does Contract Law Govern?

All contracts except when statutes or administrative regulations have modified or replaced it. 3. What type of law is the Uniform Commercial Code (UCC) & what does it cover? Statutory Law All contracts for sales of goods. 4. What is the function of Contract Law? Ensures compliance with a promise and entitles a nonbreaching party to relief when a contract is breached. 5. What do all contractual relationships involve? Promises 6. Does a promise always establish contractual relationships? No 7. Why are most contractual promises kept? Keeping a promise is generally in the mutual self-interest of the promisor and the promisee. 8. What is a Contract? An agreement that can be enforced in court. 9. When is a contract formed? When 2 or more parties promise to perform or to refrain from performing some act now or in the future. 10. When a party does not fulfill their promise what are they subject to and what can they be required to do? Sanctions They may be required to pay damages or, in some circumstances, be require to perform the promise. 11. What type of promises will a court not recognize? Gifts

12. What is the Objective Theory of Contracts? Intent to enter into a contract is judged by objective (outward) facts as interpreted by a reasonable person, rather than by a partys subjective intention. 13. What 3 things do Objective Facts include? 1. What the party said when entering into the contract. 2. How the party acted or appeared. 3. The circumstances surrounding the transaction. 14. This can also be defined as: Not what you were thinking, but What people understand you to say. 15. What are the 4 requirements of a Valid Contract? Agreement Consideration Contractual Capacity Legality 16. What 2 things are required for an agreement? Offer & Acceptance One party must offer to enter into a legal agreement, and another party must accept the offer. 17. What is Consideration? Promises must be supported by legally sufficient and bargained-for consideration. 18. What is Contractual Capacity & what is not included in Contractual Capacity? Characteristics that qualify the parties to a contract as competent. Sales of Alcohol & Tobacco & persons who are mentally incapacitated. 19. What is Legality? Give an Example. The purpose must to accomplish a goal that is legal / not against public policy. Ex. Cant be for the sale of pot crops. 20. What are 2 Defenses to the Enforceability of a Contract? Genuineness of Assent Form 21. What is Genuiness of Assent and what does it deal with? The apparent consent of both parties must be genuine. Deals with fraud or misrepresentation. Ex. Sales of a product with a known defect. 22. What is Form? A contract must be in whatever form the law requires. Some contracts must be in writing

23. Name 4 types of contract formation. Bilateral, Unilateral, Express, Implied-in-Fact 24. Most types of Contracts are Bilateral and they are basically a promise for. A promise 25. Most types of Contracts are Bilateral 26. To accept the offer, the offeree need only promise what To perform. 27. What type of contract is a promise for an act? Unilateral Ex. Crimestoppers 28. In a Unilateral Contract, the offeree can accept only by what? Performance 29. A problem arises when the promisor attempts to revoke the offer after the promise has begun performance but before The act has been completed. 30. In Revocation Modern-Day View, the offer cannot be revoked after. Performance begins 31. What type of contract fully and explicitly states the terms of the agreement in words (oral or written)? Express 32. What type of contract is implied from the conduct of the parties Implied-in-fact 33. Give examples of Express & Implied Contracts Express Telephone Agreement Implied-In-Fact All conditions are not stated Services at a Salon 34. A contract that has been fully executed by both sides is considered to be an Executed Contract 35. A contract that has not been fully performed by one or more parties is considered to be an Executory Contract 36. A Valid, or Legal Contract is one that Has all the elements necessary for contract formation.

37. What type of contract has no binding effect or legal effect? Void Contract Ex. A contract where one party was mentally incapacitated or the basis of the contract is illegal. 38. A valid contract that can be avoided by one or more parties is called a Voidable Contract Ex. 16 Yr. old who sells guitar. (they are not of legal age) 39. A contract that cannot be enforced because of certain legal defenses is an Unenforceable Contract Ex. Contracts that require a signatureReal Estate 40. In the absence of an actual contract, a court may impose this to avoid the unjust enrichment of one party at the expense of another? Quasi Contract 41. Can a Quasi Contract be enforced if there is a written contract? No. 42. Give an example of when a Quasi Contract may by created in court? When you let someone perform a service for you knowing it is not supposed to be for you. 43. Rules of contract interpretation provide guidelines for Determining the meaning of contracts. 44. What is the primary purpose of these rules? To determine the parties intent from the language of their agreement and to give effect to that intent. 45. Plain language laws require what and who has them? Require an agreement and other legal documents and forms to be written clearly, coherently, and in words of common, everyday meaning. They must be simple enough for people to understand. Federal Government & some states. 46. The Plain Meaning Rule states that Words have a certain meaning. When the writing is clear and unequivocal, it will be enforced according to its plain terms. The meaning of the terms is determined from the written document alone.

47. Rules for Interpretation of Terms means that When the writing contains unclear terms, courts use the following rules. If the terms are still unclear, a court will consider extrinsic evidence to prove what the parties intended. 48. A reasonable, lawful & effective meaning is given to all Terms 49. A contract is interpreted as a whole; individual, specific clauses are considered subordinate to the contracts general intent. All writings that are part of the same transaction are interpreted Together 50. Terms that were negotiated separately are given greater consideration than Standard terms and terms that were not negotiated separately. 51. A word is given its ordinary, common, meaning, and a technical word its technical meaning, unless The parties clearly intended otherwise. 52. Specific, exact wording is given greater weight than General Language. 53. Written or typewritten terms prevail over Preprinted ones 54. When the language has more than one meaning, it is interpreted against The party who drafted the contract. 55. Evidence of trade usage, prior dealing, and course of performance may be admitted to Clarify Meaning.