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Ch 4 Key Terms

Ch 4 Key Terms - C h 4 Key Terms Acceptance reflects the...

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Ch. 4 Key Terms Acceptance – reflects the offerees agreement to the terms in the contract. An acceptance must be unconditional, unequivocal, and legally communicated. Agency by Estoppel – When a principal confirms an agency relationship by not preventing his agent on acting in his behalf when he knows of his actions. If this happens the principal is estopped or prevented from denying the agency relationship. Agency by Law – normally in emergency situations such as medical emergencies when a decision must be made and parents or legal guardians are not available to make the decision. Agency by Ratification – This happens when someone acts without the agreement of the principal. If the principal agrees to the actions the agent has already done on his behalf, then agency by ratification occurred. If the principal does not agree with the agents actions then the agent has bound himself to the agreement with the third party and the principal has no liability. Agent – a representative of a principal and can bind the principal to third parties in contracts and in tort law. Apparent Authority – creates an Agency by Estoppel. Apparent Authority results when a reasonable third party believes that an agent has the right to act, binding the principal to the contract even if the agent did not have real authority. If someone is acting as your agent without permission, you must do everything in your power to stop him/her before you are bound to these contracts. Bilateral Contract – a return promise is required, and both parties are promisors. The painter promises to paint your house for $1000, and you promise to pay him $1000, that is a bilateral contract. A promise for a promise.
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Capacity – refers to the ability of a contracting party to understand that a contract is being made and to understand its general nature. Capacity usually exists unless one or both of the parties are intoxicated, insane, or minors. Complete Performance – required by common law before the acceptance of a unilateral contract has occurred. Conditional Contract – there is no duty to perform unless certain conditions are met. They can be concurrent, subsequent, or precedent. Condition Concurrent – exist when each party’s absolute duty to perform is conditioned on the other party’s absolute duty to perform. They only occur when the parties expressly or impliedly are to perform their respective duties simultaneously. Condition Precedent – a clause in a contract that identifies some event that must occur prior to the creation of an obligation under the contract. Condition Subsequent – a condition that follows, or is subsequent to, the duty to perform. Consideration – for a promise to be enforceable it must be supported by consideration. Consideration is something of value that is given up in return for the promise of the other party to the contract. Often consideration for a promise is in the form of a return promise. Consideration assists the court in determining whether or not the parties actually intended to be bound by their
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