Review Key Concepts: Chapter 7 Legal Terms-Contract Law

A contract between two parties for illegal activities is not valid.

• True

• False

A minor has the capacity to contract when...

• Always

• Only valid on contracts valuing over $1 Million

• For necessities like food, clothing, and lodging

• It depends on the state you live in

Which of the following is a contract?

• Betty offers to give a book to Lou. Lou accepts.

• Betty offers Lou the book in exchange for Lou’s promise to pay twenty-five dollars. Lou accepts.

• Betty offers to give Lou the book if Lou promises to pick it up at Betty’s house. Lou agrees.

• None of the above

Consideration is...

• a set of mutual promises in which each party agrees to give up something to the benefit of the other.

• The amount of time one has to accept an offer.

• The 5 minutes following an offer that must elapse before an acceptance can take place.

• The element of a contract that says the value of what each party is giving up must be equal.

The person receiving a gift is legally known as 

• the donor
• the donee
• the giftee
• the giftor

The specific time limit for bringing a lawsuit is set down in the statute of 

• litigations
• limitations
• estoppel
• release

A promise unsupported by consideration is generally unenforceable. 

• True
• False

When consideration is provided to keep an offer open, it creates

• an option contract
• a firm offer
• a promissory estoppel
• an illusory contract

_________________ is the legal ability to enter into a contract, so minors and those with mental impairments lack it.

• Executory

• Consent

• Acceptance

• Capacity

The purpose of contract needs to be for a lawful purpose.

• TRUE

• FALSE