Business Law Chapter 7-9

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Business Law 101 9A

Chapter 7, 8, 9

Chapter 7: Questions 1 - 5

1. What is a contract? It is an agreement that can be enforced in court. It is formed by two or more parties who agree to perform or to refrain some act in the present or the future.

What is the objective theory of contracts? The intent is determined by objective facts, not by the personal or subjective intent, or belief of a party.

2. What are the four basic elements necessary to the formation of a valid contract? 1) Agreement2) Consideration 3) capacity 4) legality

3. What is the difference between an implied-in-the fact contract and an implied-in-law contract (quasi contract)? The differences the implied-in-the fact contract is from the conduct of the parties and an implied-in-law contract is contract form by words or actions of the parties.

4. How does the void contract differ from a voidable contract? A void contract is no contract exists and a voidable contract is that a party has the option of avoiding or enforcing it.

What is an unenforceable contract? It is a valid contract that cannot be enforced because of a legal defense.

5. Why have plain language laws been enacted? So it is easier to understand and clear to both parties involved in a contract.

What rules guide the courts in interpreting contracts?
1. Reasonable, lawful, and effective meaning will be given to all of a contract’s terms. 2. A contract will be interpreted as a whole; individual, specific clauses will be considered subordinate to the contracts general intent. 3. Terms that were the subject of separate negotiations will be given greater consideration than standardized terms and terms that were not negotiated separately. 4. A word will be given its ordinary, commonly accepted meaning, and a technical word will be given its technical meaning. 5. Specific and exact wording will be given greater consideration than general language. 6. Written or...
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