LSB 3213 - exam 2 - A contract is defined as a legally enforceable promise or a set of promises. - The four essential elements required for a valid contract are:
1. **Mutual Assent**: Both parties must express their willingness to enter into the contract, either
through words or behavior.
2. ...
LSB 3213 - exam 2
- A contract is defined as a legally enforceable promise or a set of promises.
- The four essential elements required for a valid contract are:
1. **Mutual Assent**: Both parties must express their willingness to enter into the contract, either
through words or behavior.
2. **Consideration**: Each party must receive something of value (a legal benefit) and give something
of value (a legal detriment).
3. **Legality of Purpose**: The contract must have a lawful objective.
4. **Capacity**: Both parties must have the legal ability to enter into a contract.
- The differences among valid, void, voidable, and unenforceable contracts are:
- **Valid**: A contract that possesses all required elements.
- **Void**: An agreement that lacks one or more essential elements or does not comply with legal
standards from the outset.
- **Voidable**: A contract that one or more parties can cancel due to specific circumstances, even
though it is otherwise valid.
- **Unenforceable**: A contract that contains all necessary elements but may not be enforceable due
to a legal defense presented by one party.
- Every contract in the United States is based on the principle of good faith.
- The difference between a unilateral contract and a bilateral contract is:
- **Unilateral Contract**: Involves a legal detriment arising from one party's actions or inaction rather
than from a promise.
- **Bilateral Contract**: Involves legal detriment sustained through mutual promises made by the
parties.
- Generally, contracts for services are governed by common law, while contracts for the sale of goods
are governed by the Uniform Commercial Code (UCC).
, - The Statute of Frauds is the law that specifies which contracts must be in writing to be enforceable.
- The difference between an offeror and an offeree is:
- The **offeror** makes a valid offer, and the **offeree** must accept the offer for the parties to be
bound by the terms of the agreement.
- An offeror can no longer revoke an offer once the offer has been accepted in the form of an option
contract.
- An **option contract** is an agreement where the offeror promises to keep the offer open for a
specified period in exchange for consideration.
- According to the mailbox rule, an acceptance is generally considered effective upon dispatch when
sent in a commercially reasonable manner, not when received by the offeror.
- **Consideration** refers to the mutual exchange of benefits and detriments in a contract.
- The rule regarding giving up something of no legal value as consideration is that it constitutes
**nominal consideration**.
- The differences among an illusory promise, past consideration, and promissory estoppel are:
- **Illusory Promise**: Promises that do not fulfill the bargained-for exchange requirement of
consideration.
- **Past Consideration**: A promise made in return for a detriment that the promisee has already
provided.
- **Promissory Estoppel**: A situation where one party relies on another’s promise to their detriment,
allowing the relying party to recover costs arising from that reliance even if the original agreement
lacked consideration.
- In the case of **Lucy v. Zehmer** (1954), the Virginia State Supreme Court ruled that evidence
indicated Zehmer took the transaction seriously and that Lucy was justified in believing a contract was
formed. The court emphasized that actual mental intent is not required for contract formation.
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