Term
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Definition
| A promise for a promise (to accept the offeree must only promise to perform;car purchase) |
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Term
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Definition
| A promise for an act (Acceptance is the completed or substantial performance of the contract by the offeree) (i.e. Reward for a lost pet) May be revoked. |
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Term
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Definition
Requires a special contract form for contract formation
1. Contracts under seal
2. Recognizances
3. Negotiable Instruments
4. Letters of Credit |
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Definition
| Agreement that can be enforced in court through monetary damages or equitable relief |
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| Requires no special form; anything not a formal contract. |
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Definition
| A person who makes a promise |
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Term
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Definition
| a person to whom a promise is made |
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Term
| Objective Theory of Contracts |
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Definition
| Theory under which the intent to form a contract will be judged by outward, objective facts (what the party said when entering the contract, how the party acted or appeared, and the circumstances surrounding the transaction) as interpreted by a reasonable person, rather than the party's own secret, subjective intentions. |
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Definition
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Term
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Definition
| party to whome the offer is made |
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Definition
| A contract in which the terms of the agreement are fully and explicitly stated in words, oral or written. |
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Term
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Definition
| A contract implied from the conduct of the parties-aka implied-in-fact contract. Requirements: 1. Plaintiff furnished some service or property 2. plaintiff expected to be paid for that service or property, and the defendant knew or should have known that payment was expected 3. The defendant had a chance to reject the services or property and did not. |
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Definition
| contract that has been fully performed on both sides |
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Term
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Definition
| contract that has not been fully performed on both sides. |
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Term
| valid contract; 4 elements |
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Definition
| 1. An agreement (offer and acceptance) 2. Legally sufficient consideration 3. Legality of purpose 4. Contractual Capacity (5. FORM) |
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Term
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Definition
| valid contract that can be voided at the option of one or both of the parties. The party having the option can elect either to avoid any duty to perform or to ratify the contract. If the contract is avoided, both parties are released from it. If it is ratified, both parties must fully perform their obligations. (Contracts made by minors, fraudulent contracts) |
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Term
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Definition
| A contract exists, but it cannot be enforced because of a legal defense. |
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Definition
| no contract at all; does not meet one of the requirements for a valid contract. |
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Term
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Definition
| conracts implied in law; may be implied by a court to prevent unjust enrichment |
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Term
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Definition
| parties agree on terms of contract: evidenced by an offer and an acceptance |
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Term
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Definition
| promise or commitment to perform or refrain from performing some specified act in the future. Elemnents: 1. Must be serious, objective intention by the offeror. 2. terms of the offer must be reasonably certain, or definite, so that the parties and the court can ascertain the terms of the contract. 3. Offer must be communicated to the offeree |
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Term
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Definition
| offeror's act of withdrawing an offer |
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Term
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Definition
| offeror promises to hold an offer open for a specified period of time in return for payment given by the offeree |
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Term
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Definition
| rejection of the original offer and simultaneous making of a new offer |
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Definition
| offeree's acceptance must match the offeror's offer exactly. |
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Term
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Definition
| voluntary act by the offeree that shows assent to the terms of an offer. May consist of words or conduct, must be unequivocal and must be communicated to the offeror |
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Term
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Definition
| if the authorized mode of communication is the mail, then an acceptance becomes valid when it is dispatched, not when it is received by the offerror. |
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Term
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Definition
| Value given in return for a promise; 1. Legally sufficient value 2. Bargained-for-Exchange |
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Term
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Definition
| unmaking of a contract so as to return the parties to the positions they occupied before the contract was made |
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Term
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Definition
| no consideration at all--promises made in return for actions or event that have already taken place. Cannot bargain for something that has already taken place. |
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Term
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Definition
| debtor offers to pay, and a creditor accepts, a lesser amount than the creditor originally claimed was owed. Only occurs when amount of debt is in dispute. |
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Term
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Definition
| contract in which one party forfeits the right to pursue a legal claim against the other party. Binding if 1. Given in good faith 2. Stated in a signed writing and 3. Accompanied by consideration |
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Term
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Definition
| AGREEMENT TO SUBSTITUTE A CONTRACTUAL OBLIGATION FOR SOME OTHER TYPE OF LEGAL ACTION BASED ON A VALID CLAIM. |
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Term
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Definition
| Doctrine that applies when a promisor makes a clear and definite promise on which the promisee justifiably relies; such a promise is binding if justice will be better served by the enforcement of the promise. Elements: 1. Clear and definite promise 2. Justifiable reliance 3. Reliance of a substantial and definite character 4. Justice will be better served by the enforcement of the promise. |
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Term
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Definition
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Term
| Requirements of the Offer |
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Definition
| 1. Intent - must be serious, objective intention by the offeror to become bound by the offer. Nonoffer situations: expressions of opinion, statements of intention, preliminary negotiations, advertisements, catalogues, price lists, circulars, solicitations for bids made by an auctioneer. 2. Definiteness -- must be sufficiently definite 3. Communication -- offer must be communicated to the offeree |
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Term
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Definition
1. By action of the parties: revocation, rejection, counteroffer.
2. By operation of law: lapse of time, destruction of the specific subject matter of the offer, death or incompetence, illegality |
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Term
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Definition
1. Can be made only by the offeree or the offeree's agent
2. Must be unequivocable. (mirror image rule)
3. Acceptance of a unilateral offer is effective on full performance of the requested act.
4. Acceptance of a bilateral offer can be communicated to the offeree by any authorized mode of communication and is effective ond ispatch. Unless mode of communication is expressly specified by the offeror, the following methods are implied authorized: same mode used by the offeror or a faster mode; mail, when the two parties are at a distance; in sales contracts, by any reasonable medium. |
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Term
| Contracts that Lack consideration |
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Definition
| 1. preexisting duty 2. past consideration 3. illusory promises |
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Term
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Definition
| 1. Accord and satisfaction 2. Release 3. covenant not to sue |
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Term
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Definition
| legal ability to enter into a contractual capacity |
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Term
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Definition
| Legal avoidance, or setting aside, of a contractual obligation. |
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Term
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Definition
| basic needs (food, clothing, shelter, medical services--level of value based on minor's standard of living or financial and social status) To qualify as a contract for necessaries: 1. Item contracted must be necessary to the minor's existence 2. the value of the necessary item may be up to a level required to maintain the minor's standard of living 3. the minor must not be under the care of a parent or guardian who is required to supply this item |
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Term
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Definition
| act of accepting and giving legal force to an obligation that previously was not enforceable |
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Term
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Definition
| when a child's parent or legal guardian gies up the legal right to exercise control over the child. Normally, a minor who leaves home to support himself or herself is considered emancipated. |
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Term
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Definition
| a lender who makes a loan at an interest rate above the maximum has committed usury |
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Term
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Definition
| state or local laws that prohibit the performance of certain types of commercial activities on Sunday |
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Term
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Definition
| contract stating the terms and conditions of employment |
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Term
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Definition
| Contractual promise of one party to refrain from conducting business similar to that of another party for a certain period of time and within a specified geographic area. Courts commonly enforce such covenants if theya re reasonable in terms of time and geographic area and part of, or supplemental to, an employment contract or a contract for the sale of a business. |
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Term
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Definition
| A court-ordered correction of a written contract so that it reflects the true intentions of the parties |
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Term
| unconscionable contract/clause |
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Definition
| contract or clause that is void for reasons of public policy. 1. Procedural Unconscionability: occurs if a contract is entered into, or a term becomes part of the contract, because of a party's lack of knowledge or understanding of the contract or its term. 2. Substantive Unconscionability: when a contract or one of its terms is oppressive or overly harsh |
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Term
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Definition
| contract drafted by the dominant party and then presented to the adhering party on a "take it or leave it" basis |
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Term
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Definition
| release a party from liability in the event of monetary or physical injury, no matter who is at fault. Some courts refer to such clauses in terms of unconscionability |
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Term
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Definition
| State laws that regulate the offer and sale of securities |
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Term
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Definition
| Contracts with minors are voidable at the option of the minor. 1. Disaffirmance-the legal voidance of a contractual obligation. a. Can take place at any time during minority and within a reasonable time after the minor has reached the age of majority b. If minor disaffirms part of a contract, entire contract must be disaffirmed c. When disaffirming executed contracts, the minor has a duty to return received goods if they are still in the minor's control or (in some states) to pay their reasonable value. d. A minor who has committed fraud will be denied the right to disaffirm by some courts e. A minor may disaffirm a contract for necessaries but remains liable for the reasonable value of the goods. 2. Ratification--the acceptance or affirmation of a legal obligation; may be express or implied. a. Express: exists when the minor, through a writing or an oral agreement, explicitly assumes the obligations imposed by the contract b. Implied: exists when the conduct of the minor is inconsistent with disaffirmance or when the minor fails to disaffirm an executed contract within a reasonable time after reaching the age of majority 3. Parents' liability--Generally, except for contracts for necessaries, parents are not liable for contracts made by minor children acting on their own, nor are parents liable for minors' torts except in certain circumstances 4. Emancipation--occurs when a child's parent or legal guardian relinquishes the legal right to exert control over the child. Normally a minor who leaves home to support him/herself is considered emancipated. |
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Term
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Definition
| 1. Contract entered into by an intoxicated person is voidable at the option of the intoxicated person if the person was sufficiently intoxicated to lack mental capacity, even if the intoxication was voluntary. 2. A contract with an intoxicated person is enforceable if, despite being intoxicated, the person understood the legal consequences of entering into the contract. |
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Term
| Mentally Incompetent Persons |
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Definition
| 1. A contract made by a person ajudged to be mentally incompetent is void. 2. A contract made by a mentally incompetent person not ajudged by a court to be mentally incompetent is voidable at the option of the mentally incompetent person. |
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Term
| Contracts contrary to statute |
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Definition
| 1. Usury 2. Gambling 3. Sabbath Laws 4. Licensing statutes--contracts entered into by persons who do not have a license, when one is required by statute, will not be enforceable unless the underlying purpose of the statute is to raise government revenues (not to protect the public from unauthorized practitioners.) |
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Term
| Contracts contrary to public policy |
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Definition
| 1. Contracts in restraint of trade--Contracts to reduce or restrain free competition are illegal. Exception: Covenant not to compete 2. Unconscionable contracts and clauses 3. Exculpatory clauses |
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Term
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Definition
| State statute under which certain types of contracts must be in writing to be enforceable. |
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Term
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Definition
| A secondary promise that is ancillary to a principal transaction or primary contractual relationship, such a sa promise made by one person to pay the debts of another if the latter fails to perform. Normally must be in writing to be enforceable. |
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Term
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Definition
| agreements made before marriage that define each partner's ownership rights in the other partner's property. |
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Term
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Definition
1. Unilateral--Generally, the mistaken party is bound by the contract UNLESS a) the other party knows or should have known of the mistake or b) the mistake is an inadvertent mathematical error-such as an error in addition or subtraction-committed without gross negligence.
2. Bilateral--When both parties are mistaken about the same material fact, such as identity, either party can avoid the contract. If the mistake concerns value or quality, either party can enforce the contract. |
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Term
| Fraudulent Misrepresentation-Defense to Contract Enforceability |
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Definition
| When fraud occurs, usually the innocent party can enforce or avoid the contract. Elements necessary to establish fraud 1. Misrepresentation of material fact must occur 2. There must be an intent to deceive 3. The innocent party must justifiably rely on the misrepresentation. |
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Term
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Definition
| Undue influence arises from special relationships, such as fiduciary or confidential relationships, in which one party's free will has been overcome by the undue influence exerted by the other party. Usually, the contract is voidable. |
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Term
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Definition
| tactic of forcing a party to enter into a contract under the fear of a threat--party forced to enter the contract can rescind the contract. |
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Term
| Statute of Frauds-Requirement of a writing |
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Definition
| 1. Contracts involving interests in land 2. Contracts whos terms cannot be performed within one year 3. Collateral Promises 4. Promises made in consideration of marriage 5. Contracts for the sale of goods priced at $500(0) or more |
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Term
| Statute of Frauds-Sufficiency of the writing |
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Definition
| 1. Writing must be signed by the party against whom enforcement is sought 2. Must name the parties 3. Must identify the subject matter 4. Must state with reasonable certainty the essential terms of the contract. 5. In a sale of land, price and description of the property may need to be stated with sufficient clarity to allow them to be determined without reference to outside sources. |
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Term
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Definition
| Basic principle that third parties have no rights in contracts to which they are not parties. |
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Term
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Definition
| transfer of contract rights by assignor to a third person (assignee) |
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Term
| Rights that may not be assigned |
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Definition
| a. assignment expressly prohibited by statute (i.e. workers' comp benefits) b. when a contract calls for the performance of personal services c. when the assignment will materially increase or alter the risks or duties of the obligor d. when the contract itself stipulates that the rights cannot be assigned (with some exceptions) |
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Term
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Definition
| transfer of duties under a contract to a third party (delegatee) who then assumes the obligation of performing the contractual duties previously held by the one making the delegation (delegator) |
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Term
| Duties that may not be delegated |
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Definition
1. performance depends on the personal skills or talents of the obligor
2. When special trust has been placed in the obligor
3. When performance by a third party will vary materially from that expected by the obligee under the contract 4. when the contract expressly prohibits delegation |
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Term
| Third party beneficiaries |
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Definition
1. Intended beneficiary--one for whose benefit a contract is created. When the promisor fails to perform as promised, the third party can sue the promisor directly.
2. Incidental beneficiary--a third party who indirectly benefits from a contract but for whose benefit the contract was not specifically intended. Incidental beneficiaries have no rights to the benefits received and cannot sue to have the contract enforced. |
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Term
| Conditions of performance |
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Definition
1. Condition precendent--a condition that must be fulfilled before a party's promise becomes absolute
2. Condition subsequent--condition that operates to terminate a party's absolute promise to perform
3. Concurrent conditions--conditions that must be performed simultaneously. Each party's absolute duty to perform is conditioned on the other party's absolute duty to perform. |
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Term
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Definition
| Contract may be discharged by complete or substantial performance. Totally inadequate performance constitutes a material breach of contract. An anticipatory repudiation of a contract allows the other party to sue immediately for breach of contract. |
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Term
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Definition
1. By rescission--mutual agreement to rescind the contract
2. By novation--a new party is substituted for one of the primary parties to a contract.
3. By accord and satisfaction--The parties agree to render and accept performance different from that on which they originally agreed. |
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Term
| Discharge by operation of law |
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Definition
1. Contract alteration
2. Statutes of limitations
3. Bankruptcy
4. Impossibility of performance |
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Term
| Rights that may be assigned if a contract prohibits assignment or delegation |
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Definition
1. Rights to receive money
2. Ownership rights in real estate
3. Rights to negotiable instruments
4. Rights to sales contract payments or damages for breach of a sales contract |
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Term
| Five types of contract discharge (diagram) |
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Definition
1. By agreement
2. By performance
3. By breach
4. By operation of law
5. By failure of a condition |
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Term
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Definition
| possible future event, the occurrence or nonoccurrence of which will trigger the performance of a legal obligation or terminate an existing obligation under contract. |
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Term
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Definition
| unconditional offer to perform by a person who is ready, willing, and able to do so. |
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Term
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Definition
| Before either party has a duty to perform, one of the parties refuses to perform her or his contractual obligation. Treated as a material breach of contract, and nonbreaching party is permitted to bring an action for damages immediately. Until the nonbreaching party treats the early repudiation as a breach, the breaching party can retract the anticipatory repudation by proper notice and restore the parties to their original obligations. |
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Term
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Definition
| Before either party has a duty to perform, one of the parties refuses to perform her or his contractual obligation. Treated as a material breach of contract, and nonbreaching party is permitted to bring an action for damages immediately. Until the nonbreaching party treats the early repudiation as a breach, the breaching party can retract the anticipatory repudation by proper notice and restore the parties to their original obligations. |
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Term
| Mutual rescission elements |
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Definition
| offer, acceptance, and consideration must be present. |
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Term
| Types of remedies available to nonbreaching party |
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Definition
1. Damages
2. Rescission and Restitution
3. Specific performance
4. Reformation
5. Recovery Based on Quasi Contract |
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Term
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Definition
1. Compensatory damages
2. Consequential damages
3. Punitive damages
4. Nominal damages
5. Liquidated damages |
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Term
| Compensatory damages, breach and remedies |
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Definition
Damages that compensate the nonbreaching party for injuries actually sustained and proven to have arisen directly from the loss of the bargain resulting from the breach of contract.
1. In breached contracts for the sale of goods, the usual measure of compensatory damages is the difference between the contract price and the market price.
2. In breached contracts for the sale of land, the measure of damages is ordinarily the same as in contracts for the sale of goods.
3. In breached construction contracts, the measure of damages depends on which party breaches and at what stage of construction the breach occurs. |
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Term
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Definition
| Damages resulting from special circumstances beyond the contract itself; the damages flow only from the consequences of a breach. For a party to recover consequential damages, the damages must be the foreseeable result of a breach of contract, and the breaching party must have known at the time the contract was formed that special circumstances existed that would cause the nonbreaching party to incur additional loss on breach of the contract. Also called special damages. |
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Term
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Definition
| Damages that may be specified in a contract as the amount to be paid to the nonbreaching party in the event the contract is breached in the future. Clauses providing for liquidated damages are enforced if the damages were difficult to estimate at the time the contract was formed and if the amount stipulated is reasonable. If the amount is construed to be a penalty, the clause will not be enforced. |
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Term
| Rescission and Restitution |
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Definition
1. Rescission--A remedy whereby a contract is canceled and the parties are restored to the original positions that they occupied before the transaction. Available when fraud, a mistake, duress, or failure of consideration is present. The rescinding party must give prompt notice of the rescission to the breaching party.
2. Restitution--When a contract is rescinded, both parties must make restitution to each other by returning the goods, property, or funds previously conveyed. |
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Term
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Definition
| An equitable remedy calling for the performance of the act promised in the contract. Available only in special situations--such as those involving contracts for the sale of unique goods or land--and when monetary damages would be an inadequate remedy. Not available as a remedy in breached contracts for personal services. |
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Term
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Definition
| An equitable remedy allowing a contract to be "reformed" to reflect the parties' true intentions. Available when an agreement is imperfectly expressed in writing. |
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Term
| Recovery based on Quasi contract |
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Definition
An equitable theory imposed by the courts to obtain justice and prevent unjust enrichment in a situation in which no enforceable contract exists. Party seeking recovery must show:
1. A benefit was conferred on the other party
2. The party conferring the benefit did so with the expectation of being paid.
3. The benefit was not volunteered.
4. Retaining the benefit without paying for it would result in the unjust enrichment of the party receiving the benefit. |
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Term
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Definition
| When a breach of contract occurs, the injured party is held to a duty to mitgate, or reduce, the damages that he or she suffers. |
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