Contracts and Business Law Flashcards
7 cards from real PSI practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Contracts and Business Law flashcards as text
Which doctrine allows a court to refuse enforcement of a contract that is grossly unfair or oppressive to one party?
Answer: Unconscionability
Unconscionability allows courts to refuse to enforce contracts that are shockingly unfair or oppressive, typically where there was unequal bargaining power.
A contractor promises to complete work by a specific date and the owner relies on this promise by scheduling a grand opening. The contractor fails to perform. Under what theory may the owner recover?
Answer: Promissory estoppel
Promissory estoppel allows recovery when a party reasonably relies on a promise to their detriment, even without a formal contract.
Under the Uniform Commercial Code (UCC), what is the 'battle of the forms' rule regarding additional terms in acceptances between merchants?
Answer: Additional terms become part of the contract unless they materially alter it or the offer expressly limits acceptance
UCC §2-207 provides that between merchants, additional terms in an acceptance become part of the contract unless they materially alter the deal, the offer limits acceptance to its terms, or the offeror objects within a reasonable time.
What is the legal effect of a 'time is of the essence' clause in a real estate contract?
Answer: Missing the deadline is a material breach
A 'time is of the essence' clause makes strict compliance with deadlines a material term, so missing the deadline constitutes a material breach allowing the other party to terminate.
Which of the following is an example of a valid liquidated damages clause?
Answer: A clause setting damages at $500/day for delay where actual damages are difficult to estimate
A valid liquidated damages clause must be a reasonable pre-estimate of damages that would be difficult to calculate, not a penalty.
An agency relationship can be terminated by operation of law in which of the following circumstances?
Answer: The death of either the principal or agent
Death of either the principal or agent automatically terminates the agency relationship by operation of law, without any notice required.
What distinguishes an independent contractor from an employee for purposes of business law?
Answer: The hiring party controls only the result of work, not the manner of performance
The key distinction is behavioral control: an employee is controlled in both what to do and how to do it, while an independent contractor is only controlled as to the result.