Chapter 20 Key Terms & Definitions Flashcards
Acceptance
A promise to accept an offer
Assignment
A transfer of rights from one party of a contract to another. The rule of privity of contract does not apply under this scenario.
Breach
A breach of contract occurs when one party to the contract fails or refuses to fulfill his or her obligations as contained within the contract
Condition subsequent
A clause in a contract that describes a future event that must occur for the contract to be cancelled
Consideration
Something of value exchanged between parties to a contract
Contract
A legally enforceable agreement made between two or more parties
Damages
Damages are an award of money made by the court designed to put the innocent party in the position he or she would have been had the contract been performed
Duress
A threat or act, whether aimed at personal property or a person, that induces or causes another person to perform some act against his or her will
Frustration
Frustration occurs when an event outside of the control of the parties to a contract makes performance of the contract impossible
Injunction
A court order that prohibits a party from doing something or acting in a certain manner
Legal capacity
Parties must be approximately equivalent in bargaining power and must meet minimum standards in regard to maturity and intellect to be deemed to have the legal capacity to enter into a contract
Legal relationship
The intention of the parties entering into an agreement to form a legally binding agreement
Legality requirements
Every contract must meet certain legality requirements. It must have a legal purpose. To be considered legal this purpose cannot violate any law, statute, or public policy. In addition, there are other legality requirements which may be required to be met under specific circumstances.
Material alterations
A change in a contract substantial enough to change the legal meaning and interpretation of a contract
Misrepresentation
A false statement that causes or helps to cause a party to enter into a contract
Mistake
A misunderstanding about a fundamental term or condition of the contract
Offer
A promise made by one party to another to do something
Operation of law
The Bankruptcy and Insolvency Act states that upon discharge of the bankruptcy contracts contained within the bankruptcy are discharged
Option to Terminate
A written clause in a contract that allows a party to terminate the contract whenever he or she decides, based on meeting the conditions of the option
Performance
Completing the obligations under a contract
Privity of contract
The doctrine of privity in contract law creates a situation in which only the parties to a contract may enforce it. A contract cannot confer rights or impose obligations on any individual except those parties in the contract.
Quantum meruit
Latin for “as much as is deserved” and is an amount determined by a court, where the contract stipulates that an amount of consideration will be paid but where the amount of that consideration has not been stipulated in the contract
Rescission
An order designed to put the parties to a contract in the position they would have been in had the contract never been made
Right
Discharge by right occurs when there is a clause written into the contract that provides one or both parties with the option to cancel the contract before performance
Specific performance
An order requiring the defendant to perform a specific task, usually the major condition of the contract
