Chapter 16: Elements Of A Contract Flashcards
Valid contract
Contract (agreement enforceable by law) that includes all the essential elements; offer and acceptance, consideration, capacity, consent, legal purpose
Contract
Agreement enforceable by law including express and implied contracts, simple contracts or contracts under seal
Offer and acceptance
Proposal that expresses the willingness of one party to enter into a contract, followed by an assent by the other party in words or deed; called a “meeting of the minds”
Consideration
Sth of value exchanged b/w the parties to a contract; categorized as past, present, or future consideration
Capacity
Ability to understand the nature and effect of one’s actions, such as marriage; legal ability to enter a contract on one’s behalf
Consent
Agreement given freely and voluntarily, in good faith
Lawful purpose
Lawful (not illegal) reason or objective
Express contract
Oral or written contract (agreement enforceable by law) in which the terms and conditions are clearly defined and understood by the parties; the opposite of an implied contract
Implied contract
Contract that is suggested or understood without being openly and specifically stated; the opposite of an express contract
Simple contracts
Contracts that are either express or implied, oral or written, and not under seal
Contracts under seal
Written contract in formal language, signed and witnessed, and with a red seal to signify serious intent
Offeror
In a contract, the party who makes an offer
Offeree
In a contract, the party to whom the offer is made
Meeting of the minds
The arriving at a mutual understanding and binding agreement by an offerer and offeree
Invitation to treat
Encouragement, through advertising or display of goods, to prospective buyers to make offers
Performing
Carrying out, or completing, as in terms of a contract
Lapse
The termination, or ending, of an offer because it is not accepted
Revocation
In contract law, the cancellation or taking back of an offer by the offeree before it is accepted
Counteroffer
A new offer made in response to the original offer that varies or qualifies the original, and so brings the original to an end/nullifies it
E-commerce
Business transactions conducted over the internet or electronic systems of communication
Negative option marketing
A sales approach in which offerees are contractually bound to an offer unless they declare their rejection of it
Present consideration
Exchange of something of value b/w the parties to the contract at the time the contract is formed; usually money for goods or services
Future consideration
The promise of a future exchange of something of value b/w the parties to a contract
Past consideration
Promise to pay a person for services already performed; not legally binding
Necessaries
Goods and services needed to ensure a person’s health and welfare (clothes, food, shelter); as opposed to non-necessaries
Station in life
One’s social standing or rank in society
Void
Without legal force; invalid, as in a marriage or other contract
Voidable contract
Contract that may be valid or void at the option of one or both parties
Non-necessaries
Goods and services that are not required for one’s health and welfare
Caveat Emptor
Latin phrase meaning “let the buyer beware”; a principal in contract law
Misrepresentation
An untrue statement, or one that gives a false impression, about specific goods or services; can be innocent or fraudulent misrepresentation
Material fact
A truth (fact) that persuades a buyer to enter into a contract
Innocent misrepresentation
An untrue statement, or one that gives a false impression about specific goods or services made thinking the statement was true
Rescission
Cancellation or revocation of a contract
Fraudulent misrepresentation
Untrue statement or one that gives a false impression about specific goods or services that is made knowingly and with the intent of deceiving
Unilateral mistake
An error made by one party and recognized, but not corrected, by the other party; a one-sided mistake
Clerical mistake
An error caused by a clerk or other employee, typically involving numbers; an example of a unilateral mistake
Non est factum
Latin phrase meaning “It is not my deed”; a denial by one party that a contract was properly executed, based on the claim that he/she was ignorant of its nature
Undue influence
Improper pressure applied by one person to another in order to benefit from the result (ex. a will)
Duress
Illegal coercion; the threat or use of violence to force a person to do something against his/her will
Public policy
Guiding principle for the community as in the requirement that contracts not go against public policy, the public good (ex. a contract that is racist)
Restraint of trade
The limitation of competition in business, which can make a contract void if unreasonable or against public policy
Restraint of employment
Limitation of a worker’s employment (ex. software creator can’t work for two companies at the same time or for two years after); can make a contract void if the restraint is unreasonable
Common mistake
Error made by both parties and concerning a fundamental fact of a contract
