Chapter 14 - Contracts Overview

Question 1

Consideration

Answer 1

aka valuable consideration - is anything of value such as money, services, goods or promises given to induce another to enter into a contract. It is a promise to give something of value

Question 2

Acceptance

Answer 2

Agreeing to the terms of an offer to enter into a contract, thereby creating a binding contract; taking delivery of a deed.

Question 3

Offer

Answer 3

Is one party (the offeror) proposing a contract to another party (the offeree).

Question 4

Statute of Fraud

Answer 4

is a law that requires certain types of contracts to be in writing and signed in order to be enforceable.

Question 5

Material Breach

Answer 5

is a breach of contract important enough to excuse the non-breaching party from performing any contractual obligations

Question 6

Time is of the essence

Answer 6

the phrase emphasizes timely performance as an essential party of the contract, and failure to perform on time is a material breach.

Question 7

Specific Performance

Answer 7

a legal remedy in which a court orders someone who has breached a contract to perform as agreed, rather than simply paying damages

Question 8

Rescission

Answer 8

The destruction, annulment or termination of a contract and all parties to the contract must give back anything acquired under it to the other party

Question 9

Assignment

Answer 9

one of the parties (assignor) transfers rights or interests under a contract to another person (assignee).

Question 10

Novation

Answer 10

the substitution of a new contract for an earlier agreement

Question 11

Option

Answer 11

is a contract giving one party the right to do something within a designated time period, without obligation to do so, meaning the contracts for options are unilateral contracts.

Question 12

Right of first refusal

Answer 12

another type of option that gives someone the right to have the first opportunity to buy or least property if the owner decides to sell or least it.

Question 13

Illinois Electronic Commerce Security Act

Answer 13

a law that removes barriers to conducting business electronically by accepting electronic records, signatures, and requirements for originals; does not apply to instruments that convey property

Question 14

Bilateral

Answer 14

a contract in which each party promises to do something

Question 15

Unilateral

Answer 15

When only one party makes a legally binding promise and the other has not. The promise will become legally binding if the other party chooses to accept it (similar to an offer)

Question 16

Executed contract

Answer 16

contract under which both praties hve completely performed their contractual obligations

Question 17

Executory Contract

Answer 17

a contract under which one or more parties have not yet completed performance of their obligations

Question 18

Liquidated damages

Answer 18

A sum of money the parties to a contract agree in advance (at the time of entering into the contract) will serve as compensation in the event of a contract breach

Question 19

Meeting of the Minds

Answer 19

Acceptance of the terms of an offer

Question 20

Void

Answer 20

Having no legal force or effect

Question 21

Voidable

Answer 21

A contract that one of the parties can disaffirm, without liability, because of a lack of legal capacity or negative factor such as fraud or duress.