CH 7 - Contracts Flashcards
___ is a response by the person receiving the offer that indicates willingness to enter into the agreement proposed in the offer
Acceptance
An ___ is formed when the creditor accepts the debtor’s offer to settle the dispute for an amount less than the creditor claims is due
Accord
An ___ is an agreement to accept performance that is different from what is called for in the contract.
accord and satisfaction
An ___ of a contract occurs when one party knows ahead of time (before performance is due) that the other party will breach the contract
anticipatory repudiation
rejection of a proposal or idea.
repudiation
A ___ is a promise given in exchange for another promise. One party agrees to do one thing, and the other party agrees to do something in return
Bilateral contract
A violation of the terms of a contract
Breach of contract
___ (no party is a minor or incompetent person unless that party ratifies contract)
In contracts between an adult and an infant, adults are bound but infants may escape contracts at their option (i.e. the contract is voidable). Infants may ratify a contract on reaching age of majority.
Capacity
Damages that compensate for the economic loss caused by the breach of contract are ___
Compensatory damages
The party’s duty to perform requires that each party perform for the other at the same time
Condition concurrent
An event that must or must not occur before performance is due
Condition precedent
The party has a duty to perform until a future event occurs that discharges the party
Condition subsequent
in addition to damages that compensate for the breach itself, the plaintiff is entitled to ___ —that is, compensation for losses that occurred as a foreseeable result of the breach
consequential damages
Each party must transfer something of legal value to the other
Consideration
A ___ is a legally enforceable promise or set of promises. If the promise is broken, the person to whom the promise was made—the promisee—has certain legal rights against the person who made the promise—the promisor
contract
An offer made in retort (answer) to another offer
Counteroffer
A ___ is an agreement, generally part of an employment contract or a contract to sell a business, in which one party agrees to refrain from competing with the other party for a specific period of time and within a particular area
Covenant not to compete
Promises to do or refrain from doing something
Covenants
Procure substitute goods or services
Cover
If the promisee entered into the contract to discharge a duty he or she owed to the third party, then the third party is a ___ and has the right to enforce the contract between the promisor and promisee
Creditor beneficiary
When an offeree has changed his or her position because of justifiable reliance on the offer
Detrimental reliance
When the contractual obligations have been satisfied or terminated in other words ___.
Discharged
A ___ is created when the promisee does not owe an obligation to the third party, but rather wishes to confer a gift
Donee beneficiary
A contract is voidable if one party was forced to enter into it through fear created by threats. Thus, inducing someone to sign a contract by physical threat, blackmail, or extortion is ___
Duress
Under the ___, if an agent acts on behalf of another (the principal) in signing an agreement of the type that must, under the statute of frauds, be in writing, the authority of the agent to act on behalf of the principal must also be in writing
equal dignities rule
A contract under which the parties have continuing obligations to perform
Executory (started and not yet finished) contract
___ give the nonbreaching party the benefit of its bargain, putting the plaintiff in the cash position it would have been in if the contract had been fulfilled.
Expectation damages
___ occurs when, because of a misrepresentation, or untrue statement of material fact, one party does not understand that he or she is entering into a contract or does not understand one or more essential terms of the contract
Fraud in the factum
___, occurs when a party makes a false statement to persuade the other party to enter into an agreement
Fraud in the inducement
___ occurs when performance is possible, but changed circumstances have made the contract useless to one or both of the parties
Frustration of purpose
A ___ purports to relieve the owner of the facility of any liability, including liability for negligence that results in injuries to a person using the facility
The user of a facility is sometimes asked to sign a ___, especially before embarking on a dangerous activity, such as skydiving or race car driving.
general release = is a document in which one person releases another from any claims or threats of lawsuits
appear to be or do something, especially falsely.
purport
Promise that imposes no obligation on the promisor
Illusory promise
Every contract contains an___that imposes on each party a duty not to do anything that will deprive the other party of the benefits of the agreement
Implied covenant of good faith and fair dealing
If for some unforeseen unpredictable reason, a contract is not possible to perform then there would be no entitlement to financial compensation for the hurt party. However, must fit extreme rules for what is impossible
Impossibility
Closely related to impossibility is the concept of ___ , where performance is possible but commercially i___. As a rule, ___ is difficult to prove
Impracticality
In addition to compensatory and consequential damages, a nonbreaching party may incur lesser, relatively minor damages known as ___
Incidental damages
A court order forcing the promisor to perform the promise.
Injunction
At some point in the negotiations, the parties will usually manifest an intention, either orally or in writing, to enter into a contract
Intent to be bound
___ cannot be terminated by the offeror
Irrevocable offer
The parties to a contract may include a clause that specifies the amount of money to be paid if one of them should later breach the agreement. Such ___ clauses are frequently used in real estate and construction contract
Liquidated damages
An agreement between two companies to combine into a single entity
Merger agreement
The traditional concept of contract formation requires that what the offeree accepts must be exactly the same as what the offeror has offered. If it is not, the ___ dictates that no contract has been formed
Mirror image rule
Untrue statement of material fact
Misrepresentation
Like a misunderstanding due to ambiguity, a ___ by both parties can make a contract voidable
mistake of fact
A ___ occurs when the parties make an erroneous assessment about some aspect of what is bargained for
mistake of judgment
Lessen the amount of damages that flow from a breach
Mitigate
If both parties agree, they may also terminate the contract by ___ .___ is itself a type of contract and, as such, requires a valid offer, acceptance, and consideration
Mutual rescission (the revocation, cancellation, or repeal of a law, order, or agreement.)
The corollary of consideration in the case of bilateral contracts is the concept of ___. To be enforceable, a bilateral contract must limit the behavior of both parties in some fashion. If one party has full freedom of action, there is no contract
Mutuality of obligation
corollary
a proposition that follows from (and is often appended to) one already proved
One technique is ___, by which a new party is substituted for one of the original parties, and a new contract is written (with the consent of all original and new parties) to effect the desired change
Novation
An ___ is a manifestation of willingness to enter into a bargain that justifies another person in understanding that his or her assent will conclude the bargain
offer
Intended recipient
Offeree
___ arises from an inequality of bargaining power that results in no real negotiation and an absence of meaningful choice for one party to the contract
Oppression
An ___ is created when an offeror agrees to hold an offer open for a certain amount of time in exchange for some consideration from the other party
option contract
Agreement to purchase all of a particular producer’s production (exclusive contract)
Output contract
Under the ___ , when there is an unambiguous written contract that the parties intended would encompass their entire agreement, __ l (that is, oral) __ of prior or contemporaneous statements is inadmissible in court and cannot be used to interpret, vary, or add to the terms of the written contract
parol evidence rule
___ to authorize a person, called an attorney in-fact (who need not be a lawyer), to sign documents on their behalf
Power of attorney
Liability imposed on a party for losses caused to the other party during negotiations that fail to ripen into a binding contract
Precontractual liability
An agreement entered into before marriage that sets forth the manner in which the parties’ assets will be distributed and the support to which each party will be entitled in the event of divorce.
Prenuptial agreement
A ___ can maintain an action on a promise made to him
Promisee
The primary exception to the rule that only promises supported by consideration will be enforced is the doctrine of ___. ___l (sometimes referred to as detrimental reliance or unjust enrichment) applies only if the injured party can prove that (1) there was a promise on which the promisee justifiably relied, (2) the reliance was foreseeable, and (3) injustice would result if the court provided no relief to the promisee
Promissory estoppel
___ occurs when one party makes a promise without any intention of carrying it out. This is a misrepresentation of intent, rather than a misrepresentation of fact
Promissory fraud
occurs when a salesperson “gives voice to ‘the exaggerations reasonably to be expected of a seller as to the degree of quality of his product, the truth or falsity of which cannot be precisely determined.’
Puffing
A court will order restitution under the doctrine of ___ if one party has received a benefit for which it has not paid the other party, even though there was no contract between the parties.
restitution (the restoration of something lost or stolen to its proper owner.)
Quantum meruit is a Latin phrase meaning “what one has earned”. In the context of contract law, it means something along the lines of “reasonable value of services”.
To ___ is to (subsequently agree to be bound by) contracts after they reach majority or gain competency
Ratify
___ compensate the nonbreaching party for any expenditures it made in reliance on the contract
Reliance damages
Mergers and acquisitions are usually highly negotiated transactions that are governed by detailed acquisition agreements containing ___ . Statements about the entity being sold and the buyer
Representations and warranties
Occurs when a seller agrees to supply the needs of a buyer (exclusive contract)
A contract under which the buyer agrees to buy all of a specified commodity the buyer needs from the seller and the seller agrees to provide that amount.
Requirements contract
Whereas reliance damages look at what the plaintiff has lost, ___ looks at what the other party has gained from the transaction. The usual measure of ___ is the amount it would cost the recipient of the benefit to buy that benefit elsewhere.
Restitution= the restoration of something lost or stolen to its proper owner.
To take back – to cancel
Revoke
___ is the discharge (To liberate or free) of the debt.
Satisfaction
According to the ___, the government generally cannot be held liable for breach of contract due to legislative or executive acts
Sovereign acts doctrine
Instead of awarding monetary damages, a court may order the breaching party to complete the contract as promised, a remedy known as
Specific performance
Although most oral contracts are enforceable, many states have a statute, called the ___, that requires certain types of contracts to be evidenced by some form of written communication
Statute of frauds
___ arises when the terms of the contract are hidden in a densely printed form drafted by the party seeking to enforce these terms
Surprise
A person who is not a party to a contract can sometimes still enforce it, this person would be a third party to the contract.
Third party beneficiary
A contract term is ___ if it is so oppressive or fundamentally unfair as to “shock the conscience” of the court
Unconscionable
Under the related doctrine of ___, a court may invalidate an agreement if one party exercised improper persuasion on the other, making genuine assent impossible
undue influence
the expression of approval or agreement.
assent
A promise given in exchange for an act
Unilateral contract
Synonym for Promissory estoppel
Unjust enrichment
Sometimes a statute will expressly make certain types of contracts illegal. For example, ___ limit the interest rate on loans and usually provide that any loan agreement in violation of the statute is unenforceable
Usury statutes
Contract has no legal effect, null
void
Capable of being void, IE if someone is mentally incapable of entering a contract
Voidable
