MGMT 480 EXAM QUESTIONS WITH VERIFIED SOLUTIONS LATEST UPDATE 2026

MGMT 480 EXAM QUESTIONS WITH VERIFIED SOLUTIONS LATEST UPDATE 2026 Contract Definition - Answers A voluntary exchange of promises, creating obligations that, if defaulted on, can be enforced and remedied by the courts. Freedom of Contract - Answers Parties can enter into almost any type of contract they choose as long as it meets common law requirements. Consensus - Answers Mutual agreement to commit themselves to the terms. Consideration - Answers A commitment by each party to do or abstain from doing something; it is the price each side is willing to pay. Capacity - Answers Each party must be legally capable of understanding and entering into the agreement (e.g., infants, intoxication). Legality - Answers The object of the contract must be legal and not against public policy. Intention - Answers Both parties must intend that legally enforceable obligations will result from the agreement. Verbal Agreements - Answers Just as binding as written agreements, except for those required to be in writing by the Statute of Frauds. Express Contract - Answers A contract where the terms are expressly set out. Implied Contract - Answers A contract inferred from the actions of parties, such as putting money in a vending machine. Void Contract - Answers An element is missing so the contract is not legally binding; goods must be returned to the seller. Voidable Contract - Answers Exists and has legal effect, but one of the parties has the right to terminate the contract. Unenforceable Contract - Answers One that is required to be in writing pursuant to the Statute of Frauds and is not. Illegal Contract - Answers Involves the performance of an unlawful act and is void; courts will generally not assist in returning parties to original positions. Bilateral Contract - Answers Involves an exchange of promises where both parties have obligations and commitments. Unilateral Contract - Answers A promise followed by an act, such as an offer of a reward for a lost item. Meeting of the Minds - Answers Shared agreement; failing to read or understand a contract is not recognized as a legal excuse. Offer - Answers Contains all of the terms to be included in a contract; only needs consent or denial from the other party. Invitation to Treat - Answers An offer to the world at large to enter negotiations (like an ad); it is not a binding offer. Offer by Conduct - Answers Inferred by behavior, such as bringing goods and money to a cashier in a store. Communication of Offer - Answers An offer must be communicated to the party accepting it; you cannot accept an offer you did not know about. End of Offer - Answers Occurs via end of specified time, death/insanity, revocation, rejection, counteroffer, or destruction of goods. Acceptance - Answers An 'all or nothing' proposition where the contract is formed; adding terms creates a counteroffer. Silence as Acceptance - Answers Not usually considered acceptance unless there is an ongoing business relationship where it is inferred. Postbox Rule - Answers Acceptance is effective when and where it is dropped in the postbox. Gratuitous Promise - Answers A one-sided agreement where only one side has obligations; it is not enforceable. Past Consideration - Answers Adequate consideration is not found in acts that occurred before the promise was made. Illegal Consideration - Answers Not good consideration; for consideration to be valid, it must be possible to perform. Quantum Meruit - Answers A court-imposed obligation to pay a reasonable price for services. Capacity Definition - Answers The legal entitlement of a person to enter into a binding contract; certain categories of people receive special protection from the courts[cite: 138, 139]. Minors (Infants) - Answers Persons under the age of majority who are generally not bound by a contract, though the adult they contract with may be[cite: 140, 145]. BC Infants Act - Answers Legislation in British Columbia confirming that no contract is enforceable against a minor, except those made specifically liable by legislation like student loans[cite: 145, 147]. Necessities Exception - Answers Outside of BC, minors are typically bound by contracts for necessities and service; in BC, even necessity contracts are generally unenforceable against them[cite: 146, 147]. Repudiation - Answers The act of a minor rejecting a contract; this must often be done within a reasonable time after becoming an adult to avoid obligations[cite: 148, 149]. Parental Liability - Answers General rule that parents are not responsible for their children's contracts unless the child is an agent, the parent guarantees the debt, or for necessities[cite: 151, 152, 153, 154]. Insanity and Drunkenness - Answers To qualify for incapacity, a person must prove they could not understand the nature of the act and that the other party knew or ought to have known of their state[cite: 160, 162]. Burden of Proof (Incapacity) - Answers The responsibility to prove mental incompetence or intoxication lies with the party claiming to be incapacitated[cite: 161]. Corporate Capacity - Answers A corporation's ability to contract is determined by legislation and its own incorporating documents, which may limit its powers[cite: 166, 168]. Legality Requirement - Answers A contract must be legal and not against public policy to be binding; illegal formation makes a contract void[cite: 184, 186, 190]. Legality of Performance - Answers Illegality in how a lawful contract is carried out; remedies vary and may include enforcing the contract or restoring parties to original positions[cite: 185, 187]. Severance - Answers When a court removes an illegal portion of a contract while keeping the remainder, or "notionally" rewrites a portion[cite: 193, 194]. Restraint of Trade - Answers Contracts that unduly limit competition, such as non-competition clauses, which may be found illegal or against public policy[cite: 196, 208]. Intention Test - Answers The "reasonable person test" used to determine if a promise was serious and meant to be legally binding[cite: 211]. Domestic and Social Relations Presumption - Answers The legal assumption that agreements made between family members or friends are not intended to be binding[cite: 215]. Commercial Relations Presumption - Answers The legal assumption that agreements made in a business context are intended to be legally binding[cite: 214]. Statute of Frauds - Answers A law requiring certain contracts to be in writing to be enforceable; BC has repealed the specific Act but retained provisions in the Law and Equity Act[cite: 221, 222]. Unenforceable vs Void - Answers A contract failing the writing requirement is unenforceable (courts won't help), but it is not void (it is still binding if remedies exist outside court)[cite: 233, 234]. Land Dealings Requirement - Answers In BC, most contracts affecting land interests must be in writing, except for leases shorter than three years[cite: 228]. Guarantees and Indemnities - Answers Both of these types of agreements must be in writing to be enforceable in British Columbia[cite: 229]. Essential Terms - Answers The rule that the entire contract does not need to be written, but all critical terms must be documented and signed by the party denying the contract[cite: 231, 232]. Partial Performance - Answers Actions like property construction that may waive the writing requirement; in BC, a deposit alone is not considered part performance[cite: 223]. Misrepresentation - Answers A false statement of fact that persuades someone to enter into a contract[cite: 249]. Allegation of Fact - Answers The requirement that a misrepresentation must be a statement of fact, not an opinion (unless made by an expert)[cite: 251, 252]. Inducement - Answers The requirement that the false statement actually persuaded or led the person to enter the contract[cite: 256]. Innocent Misrepresentation - Answers When a person makes a false statement without knowing it is false; remedy is rescission only[cite: 261]. Negligent Misrepresentation - Answers When a person makes a false statement they should have known was false; remedy is rescission and damages[cite: 262]. Fraudulent Misrepresentation - Answers When a person makes a statement knowing it is false; remedy includes rescission, damages, and potentially punitive damages[cite: 263]. Rescission - Answers A remedy that attempts to return both parties to the position they were in immediately prior to signing the contract[cite: 264]. Duress - Answers When a person is forced into a contract through threats of violence, imprisonment, or disclosure of scandalous information; makes a contract voidable[cite: 267, 268]. Undue Influence - Answers Pressure from a dominant or trusted person that makes it impossible for the other party to bargain freely; makes a contract voidable[cite: 269, 270]. Unconscionable Transaction - Answers A contract involving unequal bargaining positions where one party is taken advantage of and the consideration is grossly unfair[cite: 271]. Privity of Contract - Answers A principle where only the parties to a private agreement can enforce or be bound by it; outsiders generally cannot rely on its terms[cite: 273]. Substantial Performance - Answers A situation where a party has fulfilled most obligations, requiring the other party to perform but allowing for a claim of compensation for minor deficiencies[cite: 309, 310]. Breach of Condition - Answers A significant breach of an essential term that deprives the victim of the major benefit of the contract; allows the victim to end the contract and sue[cite: 317, 318]. Breach of Warranty - Answers A breach of a minor or peripheral term; does not relieve the other party of their obligations but allows them to sue for the deficiency[cite: 319, 320]. Discharge by Agreement - Answers When both parties mutually agree to terminate or modify their obligations under a contract[cite: 323, 328]. Condition Precedent - Answers A "subject to" clause specifying that a particular event must occur before the parties are bound by the contract[cite: 335]. Condition Subsequent - Answers A term specifying that the contract will terminate if a particular event occurs[cite: 336]. Frustration - Answers Occurs when an unforeseen outside event makes the basic object of the agreement unobtainable, discharging the parties' obligations[cite: 339, 340]. Damages (Contract) - Answers A remedy that looks forward to put the victim in the place they would have been if the contract had been properly performed[cite: 370]. Specific Performance - Answers An equitable remedy where the Court orders the breaching party to complete the contract; used when damages are inappropriate[cite: 373].