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Business Law Exam 2
Chapter 14
24
Law
03/20/2011

Additional Law Flashcards

 


 

Cards

Term
Capacity
Definition

Ability to understand that a contract is being made and to understand its general meaning. 

(factual and temporary incapacity can void contract)

Term
Factual Capacity
Definition

Temporary or permanent: mental condition caused by medications, alcohol, illness, age. A person does not understand that a contract is being made. 

Ex: getting a tattoo when drunk.

Term
Legal Capacity
Definition

(Status Incapacity) Law protects classes by keeping them out of unwise contracts

 

Most important class today is minors.

Term
Minors
Definition

Under age 18. Lacks contractual capacity. Making contracts voidable. At election of the minor, minor may affirm or ratify contract on attaining majority at the election of the minor. 

 

Minors must pay reasonable value for necessaries

Term
Avoidance
Definition
A minor may disaffirm a contract by any expression of intention to revoke a contract. 
Term
Two Types of Minors
Definition

Misrepresenting Minors: (Fake ID) guilty of fraud. A misrepresentation still means a minor can disaffirm a contract. 

 

Innocent Minor: doesn't have to make restitution

 

Term
Necessaries
Definition
Things indispensable or absolutely necessary for the sustenance of human life. Includes things related to health, education, and comfort for minors. Minors are liable for necessaries like medical bills. 
Term
Ratification
Definition

If you enter into a K during minority and stay in it after majority then it becomes ratified.

 

Term
Mutual Mistake
Definition

Both parties enter into a K under mutually mistaken understanding concerning a basic assumption of fact or law. 

Voidable by the adversely affected party if mistake has a material effect on the agreed exchange.

Term
Unilateral Mistake
Definition
A mistake by only ONE of the parties
Term

Types of Mistakes

(LIST)

Definition

1. Mutual Mistake of Fact - Recession-->Yes

2. Unilateral Mistake of Fact - Recession -->No

3. Mutual Mistake of Law - Recession -->Maybe

4. Unilateral Mistake of Law - Recession -->No

Term
Fraud
Definition

Making of a material mispresentation of Fact with:

1.Knowledge of falicity

2. Intent that listener relies on it

3. Result that listener DOES rely on it

4. Consequence that listener was harmed.

 

Fraud utilizes subjective intent. You have to be injured.

Term

3 Parts of Fraud

(LIST)

Definition

1.Crime

2.Tort

3.Defense to formation of genuine Assent

Term
Assent
Definition

Agreeing to the contract that was made.

 

3 ways assent can be FALSE:

1.Fraud

2.Duress

3.Undo-Influence

Term
Confidential Relationship
Definition

Full confidence in ONE.

 

Failure to disclose information may be regarded as fraudulent.

Term
Nondisclosure
Definition

Serves to make K voidable, especially when deal with active concealment

 

Term
Material
Definition

Whether it is important or not.

Subjective test!

 

ex: saying there is low mileage on a car.

Term

Patent

 

 

Latent

Definition

That which is OBVIOUS

 

 

That which is NOT obvious

(have obligation to disclose it, or its fraud)

(Latent, you have to Look)

Term

Fraud in the FACTUM

 

 

Fraud in the ESSENCE

Definition

VOID

 

 

VOID

Term

Fraud in the PERSONEUM

 

 

Fraud in the INDUCEMENT

Definition

VOIDABLE

 

 

Getting you to do it. More common transactions. VOIDABLE

Term
Misrepresentation
Definition
Fraud without intent. Makes contract voidable.
Term
Duress
Definition
Conduct that deprives the victim of FREE WILL. Entered into to avoid danger. Requires the element of COERCION and no relationship can be physical, financial, economic, psychological pressure.
Term
Undue Influence
Definition
Takes place under fiduciary relationship (trust relationship). Person making K does NOT exercise free will. You can be competent but still be subject to undue influence. Comes from a relationship.
Term
Adjucated Incompetent
Definition
Having legal rights taken away. Once they are gone you can't get them back until you go before a judge again. Can't enter into a contract. Judge places guardian in charge of a person.