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BLS test 3
chapter 16-Capacity and legality
21
Business
11/29/2010

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Term
Capacity
Definition
one who has the mental ability to understand his or her rights and obligations under a contract and therefore will presumably be able to understand how to comply with the terms of the agreement
Term
incapacity (incompetence)
Definition
some sort of mental or physical defect that prevents a natural person from being able to enter into a legally binding contract
Term
emancipation
Definition
when a minor's parents or legal guardians give up their right to exercise legal control over the minor, typically when the minor moves out of the parents house and begins supporting himself or herself
Term
contract for a necessary
Definition
contract that supplies the minor with the basic necessities of life, generally thought of as food, clothing, shelter, and basic medical services
Term
express ratification
Definition
occurs when after reaching the age of majority, the person states, either orally or in writing that he or she intends to be bound by the contract entered into as a minor
Term
implied ratification
Definition
occurs when the former minor takes some action after reaching the age of majority that is consistent with the intent to ratify the contract
Term
usury
Definition
occurs when a party gives a loan at an interest rate exceeding the legal maximum
Term
gambling
Definition
refers to agreements in which parties pay consideration(money placed during bets) for the chance, or opportunity, to obtain an amount of money or property
Term
sabbath laws
Definition
limit the types of business activities in which parties can legally engage on Sundays
Term
anticompetitive agreements
Definition
agreements that restrain trade are viewed as being harmful to consumers and against public policy
Term
covenants not to compete (restrictive covenants)
Definition
restraint on trade is reasonable as determined by the courts and the restraint is part of a subordinate or ancillary clause, the restraint
Term
ongoing
Definition
refers to the status of the business being sold: the business is still running and will still run on its own
Term
unconscionable
Definition
refers to the fact that the agreement in question is so unfair that it is void of conscience
Term
procedural unconscionability
Definition
relates to the condition that would impair one party's understanding of a contract, as well as to the integration of terms into a contract
Term
adhesion contract
Definition
contract created by a party to an agreement that is presented to the other party on a take it or leave it basis; presented as complete, as well as given as the only chance the presented party will have to enter into the agreement
Term
substantive unconscionability
Definition
involves overly harsh or lopsided substance in an agreement
Term
exculpatory clause
Definition
statement releasing one of the parties to an agreement from all liability, regardless of who is at fault or what the injury suffered is
Term
in pari delicto
Definition
when both parties are equally responsible for an illegal agreement
Term
justifiable ignorance of facts
Definition
one party's lack of knowledge regarding a provision of the agreement that would make it illegal
Term
severable contracts (divisible contracts)
Definition
those that contain multiple parts which can each be performed separately; separate consideration is offered for each individual part; numerous contracts in one
Term
indivisible contract
Definition
one requiring complete performance by both parties, even if it appears as if the contract contains multiple parts, similar to a severable contract