BUSFIN 3500 FINAL EXAM
QUESTIONS WITH ACCURATE
SOLUTIONS
What makes a contract valid? -- Answer ✔✔ 1. agreement (offer and
acceptance)
2. consideration (what each person is willing to give up for the
contract, ex. money for item)
3. capacity (legal age, sober)
4. legal purpose (cannot break any laws)
how to interpret contracts? -- Answer ✔✔ objective theory
objective theory of contracts -- Answer ✔✔ A theory that says the
intent to contract is judged by the reasonable person standard and not
by the subjective intent of the parties.
-actions not intent
Plain Meaning Rule -- Answer ✔✔ A rule of interpretation which states
that words in a contract should be given their ordinary meaning.
,Contract Law -- Answer ✔✔ state law
-state courts
Common law -- Answer ✔✔ a system of law based on precedent and
customs
Uniform Commercial Code (UCC) -- Answer ✔✔ Body of laws governing
commercial transactions in the United States.
- statute
- similar for most states
Article 2- Sale of Goods UCC -- Answer ✔✔ Sets requirements for sales
contracts as well as duties and obligations of the parties involved in
the sales contract
Restatement of Contracts -- Answer ✔✔ a compilation of the general
principles of contract common law
- not law but helpful
Bilateral Contract -- Answer ✔✔ promise for a promise
- bill promises to clean tom's garage and tom promises to pay Bill $50
- binding
Unilateral Contract -- Answer ✔✔ promise in exchange for an act
,- tom promises to pay Bill $50 if Bill cleans his garage
- reward
Express Contract -- Answer ✔✔ A contract in which the terms of the
agreement are fully and explicitly stated in words, oral or written.
Implied Contract (quasi contract) -- Answer ✔✔ A situation where one
party has taken some action, where a reasonable person would expect
the other person to pay for that. reasonable situation, one person had
the opportunity to reject but didn't
- Tom typically shovels driveways for $20, tom shovels Bill's driveway
while Bill knows what he charges and stands outside and watches tom
shovel
- bill had the opportunity to tell tom not to shovel his driveway
- other person has to see what he's doing
unjust enrichment -- Answer ✔✔ one benefiting unfairly at another's
expense
Valid Contract -- Answer ✔✔ a contract which will be enforced by the
court
Void Contract -- Answer ✔✔ A contract having no legal force or binding
effect.
- illegal contactpur
, Voidable Contract -- Answer ✔✔ A contract that may be legally avoided
(canceled, or annulled) at the option of one of the parties.
Unenforceable Contract -- Answer ✔✔ A valid contract rendered
unenforceable by some statute or law.
- usually if it is not in writing
executory contract -- Answer ✔✔ A contract that has not yet been fully
performed.
- leasing some property
Executed Contract -- Answer ✔✔ A contract that has been completely
performed by both parties.
- buying something at the store
Formal Contract -- Answer ✔✔ A contract that by law requires a specific
form, such as being executed under seal, to be valid.
- contract under seal
- bail
- letters of credit
- negotiable instruments
Informal contract -- Answer ✔✔ A contract that does not require a
specified form or formality in order to be valid.
QUESTIONS WITH ACCURATE
SOLUTIONS
What makes a contract valid? -- Answer ✔✔ 1. agreement (offer and
acceptance)
2. consideration (what each person is willing to give up for the
contract, ex. money for item)
3. capacity (legal age, sober)
4. legal purpose (cannot break any laws)
how to interpret contracts? -- Answer ✔✔ objective theory
objective theory of contracts -- Answer ✔✔ A theory that says the
intent to contract is judged by the reasonable person standard and not
by the subjective intent of the parties.
-actions not intent
Plain Meaning Rule -- Answer ✔✔ A rule of interpretation which states
that words in a contract should be given their ordinary meaning.
,Contract Law -- Answer ✔✔ state law
-state courts
Common law -- Answer ✔✔ a system of law based on precedent and
customs
Uniform Commercial Code (UCC) -- Answer ✔✔ Body of laws governing
commercial transactions in the United States.
- statute
- similar for most states
Article 2- Sale of Goods UCC -- Answer ✔✔ Sets requirements for sales
contracts as well as duties and obligations of the parties involved in
the sales contract
Restatement of Contracts -- Answer ✔✔ a compilation of the general
principles of contract common law
- not law but helpful
Bilateral Contract -- Answer ✔✔ promise for a promise
- bill promises to clean tom's garage and tom promises to pay Bill $50
- binding
Unilateral Contract -- Answer ✔✔ promise in exchange for an act
,- tom promises to pay Bill $50 if Bill cleans his garage
- reward
Express Contract -- Answer ✔✔ A contract in which the terms of the
agreement are fully and explicitly stated in words, oral or written.
Implied Contract (quasi contract) -- Answer ✔✔ A situation where one
party has taken some action, where a reasonable person would expect
the other person to pay for that. reasonable situation, one person had
the opportunity to reject but didn't
- Tom typically shovels driveways for $20, tom shovels Bill's driveway
while Bill knows what he charges and stands outside and watches tom
shovel
- bill had the opportunity to tell tom not to shovel his driveway
- other person has to see what he's doing
unjust enrichment -- Answer ✔✔ one benefiting unfairly at another's
expense
Valid Contract -- Answer ✔✔ a contract which will be enforced by the
court
Void Contract -- Answer ✔✔ A contract having no legal force or binding
effect.
- illegal contactpur
, Voidable Contract -- Answer ✔✔ A contract that may be legally avoided
(canceled, or annulled) at the option of one of the parties.
Unenforceable Contract -- Answer ✔✔ A valid contract rendered
unenforceable by some statute or law.
- usually if it is not in writing
executory contract -- Answer ✔✔ A contract that has not yet been fully
performed.
- leasing some property
Executed Contract -- Answer ✔✔ A contract that has been completely
performed by both parties.
- buying something at the store
Formal Contract -- Answer ✔✔ A contract that by law requires a specific
form, such as being executed under seal, to be valid.
- contract under seal
- bail
- letters of credit
- negotiable instruments
Informal contract -- Answer ✔✔ A contract that does not require a
specified form or formality in order to be valid.
