November 24, 2014
1.
Offer and Acceptance, pp 110-120 a.
Why is contract law so important to building a successful competitive economic system? Provides confidence to businessmen and consumers that they will not be cheated in their business dealings, making them more likely to proceed with business activity. Higher levels of business activity led to higher standards of living.
b.
What are the six requirements of an enforceable contract and who was the teacher for each?
1.
Offer and Acceptance – Mr. B
2.
Genuine Assent (No Duress or Mistakes) – Mollie, Diana
3.
Legality – John, Danielle
4.
Consideration - Alexis
5.
Capacity - Simone
6.
Statue of Frauds (some contracts must be in writing) - Kiana
2.
Genuine Agreement, pp 126-130 a.
Define:
1.
Rescission Return to situation prior to contract

2.
Ratification Actions which indicate agreement to a contract b.
Do you think it is ethical to convince another party to sign a contract by:
1.
Threatening illegal actions, such as violence or blackmail? No
2.
Threatening to report a crime? No
3.
Threatening to sue? No c.
Does American contract law generally reflect the ethics of our people? Yes
3.
Mistake, Misrepresentation and Fraud, pp 131-135 a.
Unilateral Mistakes, if not induced by the other party, generally do not invalidate contracts, but Mutual Mistakes do. T F b.
If a misrepresentation is intentional or reckless, is it Fraud and can result in compensatory damages AND at times punitive damages. T F
4.
Mutual Consideration, pp 140-153 a.
For a contract to be legal, consideration must be somewhat equal, according to a reasonable, average person. T F b.
The promise of refraining from an action is not considered consideration. T F c.
Name a situation where Mutual Consideration is not required to make a contract valid (hint: known as the doctrine of promissory estoppel) Pledge to give money to charity which then takes action based on pledge

5. Capacity, pp 156-167 a. Name three types of persons who lack capacity to contract:
1. Minors
2. Intoxicated
3. Mentally Impaired b.
Is it a businessman or citizen’s responsibility to insure they are contracting with a counterparty who has authority to sign?
_____ Yes _____ Is it a businessman or citizen’s responsibility to insure their counterparty meets the three capacity requirements listed in (a)? ____ Yes ______________
6.
Illegal Contracts and Enforceability of Illegal Contracts, pp 168-179 a.
While our courts generally hope to enforce contracts, other laws will in almost all cases take precedence over contract law. T F b.
Ordinarily our courts do not help EITHER party to an illegal contract.
T F c.
Unconscionable contracts are ones which are grossly unfair and which parties would not accept under normal circumstances. Will courts typically enforce unconscionable contracts, as long as the signees had legal capacity? ___ No __________ d.
Courts can enforce portions of a contract and declare illegal portions invalid. T F
7.
Statute of Frauds, pp 181-187 a.
Do all contracts need to be written to be valid? No b.
Name four types of contracts that in New Jersey must be in writing to be valid?
1. Greater than $10,000
2. Longer than one year
3. Real Estate
4. Involving a third party

c. Why would a party wish to avoid signing a contract? They may not intend to carry out all aspects of the agreement if conditions change
8. How Contracts are Interpreted, pp 188-195 a. True or False – In general, written contract terms will be given priority over oral conversations. True b. To insure written contracts terms are without any doubt given priority over oral contracts, or any other written contracts, clear language is often included in a contract. Create an example of an
“integration clause”: “This agreement overrides any previous contracts or oral agreements and represents the entirety of the agreement between the parties.”
9. Transfer of Obligations and How Contracts Are Satisfied, pp 197-207 a. Define “Assignment” of contract rights to another party.
Transfer of Rights and Duties b.
Name the most common example of contract assignment, one we are all likely to encounter in our adult lives. Car loans or home mortgages are often assigned to finance companies. You will make payments to a party other than the one you originally contracted with.
c. Generally, parties may only assign contractual rights if it will not change performance required.
10. Remedies for Breach of Contract, and Denial of Remedies for Breach of
Contract, pp 210-219 a. Can an injured party refuse to perform their duties if the breach of contract is minor? Generally no If not, what can they do?
Attempt to resolve the issue

b. When filing suit, the injured party must specify the remedy they seek:
Specific Performance, Damages (money) or Recission T F c. Can an injured party seek both monetary damages and specific performance? Yes d. Must an injured party seek to mitigate damages? Provide an example. Yes
11.
Define “Statute of Limitations”. Time limit for filing lawsuit
12. Sales Contracts and Transfer of Ownership, pp 229-238 a. Must delivery and sales be made at the same time for a valid sales contract? No If not, what document should a businessman receive when the sales becomes final? Receipt b. Define “Unconscionable” Sales Contracts So one-sided it is considered unfair c. Does ownership and the risk of loss transfer at the same time? If not, give an example. Usually but not always. Risk of loss in transit could be transferred from the seller to the buyer at the time a good leaves the factory and the buyer must insure against loss in transit.
a.
Give an example of a barter transaction. Trading one good for another b.
In what way are Merchants held to different standards than casual sellers? Why? They are allowed to take “shortcuts” reducing the administrative burden of transacting, because they conduct certain activities often in their course of business

13. Power to Transfer Ownership, pp 247-250 a. Homogenious goods of an commonly interchangeable nature are known as fungible, and ownership of these goods can be transferred without inspection necessary. T F b. Negotiated Bills of Lading allow oil or lumber in transit to be bought and sold multiple times before arriving at their destination. T F
14. Risk of Loss and Insurable Interest, pp 251-254 a. What type of delivery indicates where the seller must deliver and where risk transfer occurs? FOB (“Free on Board”) b. What type of delivery requires payment, and risk transfer, at delivery? COD (“Cash on Delivery”) c. When is ownership transferred at an auction? At the time the bidding ends and the winning bid is announced.