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Managers & the Legal Environment > Chapter 7 Contracts > Flashcards

Chapter 7 Contracts Flashcards

1
Q

acceptance

A

An agreement to the amount offered for certain services or products. Acceptance may be verbal, written, or implied by action.

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2
Q

accord and satisfaction

A

An agreement to accept performance that is

different from what is called for in the contract.

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3
Q

anticipatory repudiation

A

If a party indicates before performance is due that it will breach the contract, there is an anticipatory repudiation of the contract.

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4
Q

bilateral contract

A

A promise given in exchange for another promise.

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5
Q

capacity

A

The ability (requisite presence of mind) to enter into a binding contract.

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6
Q

choice-of-forum provision

A

The clause in a contract wherein the parties agree in advance to the jurisdiction in which a dispute arising out of their agreement must be litigated.

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7
Q

choice-of-law provision

A

A provision in a contract that specifies which state’s or country’s laws will govern matters such as contract interpretation, performance, and remedies. Can also include a statute or treaty specifying which jurisdiction’s laws govern disputes involving parties from more than one state or country.

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8
Q

close

A

To consummate a transaction.

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9
Q

compensatory damages

A

In an action for breach of contract, the amount necessary to make up for the economic loss caused by the breach.

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10
Q

condition

A

An event or state of facts.

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11
Q

condition concurrent

A

Conditions that are mutually dependent and are to be performed at the same time or simultaneously.

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12
Q

condition precedent

A

A condition that must be met before a party’s

obligations to perform arise under a contract.

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13
Q

condition subsequent

A

In contracts, a provision giving one party the right to divest itself of liability and obligation to perform further if the other party fails to meet the condition.

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14
Q

consequential damages

A

Compensation for losses that occur as a foreseeable result of a breach of contract. Actual damages represent the damage, loss, or injury that flows directly and immediately from the act of the other party; in contrast, consequential damages refer to damage, loss, or injury flowing from some of the consequences or results of such act.

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15
Q

consideration

A

A thing of value (money, services, an object, a promise, forbearance, or giving up the right to do something) exchanged in a contract.

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16
Q

contract

A

A legally enforceable promise or set of promises.

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17
Q

counteroffer

A

A new offer by the initial offeree that rejects and modifies the terms originally proposed by the offeror.

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18
Q

covenant not to compete

A

An agreement, generally part of a
contract of employment or a contract to sell a business, in which the covenantor agrees for a specific period of time and within a particular area to refrain from competition with the covenantee. Also called a noncompete agreement.

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19
Q

covenants

A

The borrower’s promise to the lender that it will or will not take specific actions as long as either a commitment or a loan is outstanding.

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20
Q

cover

A

A buyer’s obligation to buy substitute goods elsewhere after the seller has defaulted.

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21
Q

creditor beneficiary

A

Third party to a contract that the promisee enters into in order to discharge a duty to said third party.

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22
Q

detrimental reliance

A

Occurs when an offeree has changed his or her position because of justifiable reliance on an offer.

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23
Q

discharged

A

Relieve.

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24
Q

donee beneficiary

A

Third party to a contract to whom promisee does not owe an obligation, but rather wishes to confer a gift or a right of performance.

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25
Q

duress

A

Coercion.

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26
Q

equal dignities rule

A

Under this rule if an agent acts on behalf of another (its 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.

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27
Q

expectation damages

A

In the case of breach of contract, refers to remuneration that puts a plaintiff into the cash position the plaintiff would have been in if the contract had been fulfilled.

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28
Q

fraud in the factum

A

A type of fraud that occurs when a party is persuaded to sign one document thinking that it is another.

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29
Q

fraud in the inducement

A

A type of fraud that occurs when a party makes a false statement to persuade the other party to enter into an agreement.

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30
Q

frustration of purpose

A

Frustration of purpose occurs when performance is possible, but changed circumstances have made the contract useless to one or both of the parties.

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31
Q

general release

A

An agreement by person engaging in a dangerous activity to assume all risks and hold the party offering access to said dangerous activity free of all liability.

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32
Q

illegal contracts

A

A contract is illegal if its formation or performance is expressly forbidden by a civil or criminal statute, or if a penalty is imposed for doing the act agreed upon.

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33
Q

illusory promise

A

A promise that either does not in fact confer any benefit on the promisee or subject the promisor to any detriment.

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34
Q

impossibility

A

An excuse for nonperformance based on the destruction of something vital to the performance of the contract or another unforeseen event that makes performance of the contract impossible.

35
Q

impracticability

A

A situation in which performance of a contract is possible but commercially impractical.

36
Q

incidental damages

A

In an action for breach of contract, the lesser and relatively minor damages that a non-breaching party incurs in mitigating damages resulting from the breach, such as the charges, expenses, and commissions incurred in stopping delivery; the cost of the transportation, care, and custody of goods after a breach; and the expenses incurred in connection with the return or subsequent disposition of goods that are the subject of the contract.

37
Q

intent to be bound

A

An oral or written statement or an action signaling that a party intended to enter into a contract.

38
Q

irrevocable offer

A

An offer that cannot be revoked. Arises (1) when an option contract has been entered into or (2) when an offeree has relied on an offer to its detriment.

39
Q

liquidated damages

A

The amount of money stipulated in a contract to be paid to non-breaching party should one of the parties breach the agreement.

40
Q

materially breached

A

A failure to perform a significant obligation under a contract, such as by not performing a service after receiving payment. A material breach discharges the non-breaching party from its obligations and provides grounds to sue for damages.

41
Q

merger agreement

A

An agreement between two companies to

combine those companies into one.

42
Q

mirror image rule

A

A common law contract rule that requires acceptance to contain the exact same terms as the offer.

43
Q

misrepresentation

A

A misleading or false representation of the facts intended to deceive another party.

44
Q

mistake of fact

A

A mistake about an underlying fact that may make a

contract voidable.

45
Q

mistake of judgment

A

A mistake of judgment occurs when the parties make an erroneous assessment about the value of what is bargained for.

46
Q

mitigate

A

Lessen.

47
Q

mutual rescission

A

An agreement by both parties to a contract to terminate the contract. A mutual rescission is itself a type of contract.

48
Q

mutuality of obligation

A

Both parties in a bilateral contract are obligated to perform their side of the bargain.

49
Q

novation

A

The method of contract modification by which the original contract is canceled and a new one is written with perhaps only one change, such as substitution of a new party.

50
Q

offer

A

A proposal to enter into a contract. Proposal may be verbal, written, or implied by action.

51
Q

offeree

A

A person to whom an offer is made.

52
Q

offeror

A

A person making an offer.

53
Q

oppression

A

An inequality of bargaining power that results in no real negotiation and an absence of meaningful choice for one party to the contract.

54
Q

option contract

A

A contract in which the offeror promises to hold an offer open for a certain amount of time.

55
Q

output contract

A

A contract under which a buyer promises to buy all the products that the seller produces.

56
Q

parol evidence rule

A

If there is a written contract that the parties intended would encompass their entire agreement, oral evidence of prior or contemporaneous statements will not be permitted to vary or alter the terms of the contract.

57
Q

power of attorney

A

A written instrument that authorizes a person, called an attorney-in-fact (who need not be a lawyer), to sign documents or perform certain specific acts on behalf of another person.

58
Q

pre-contractual liability

A

The claims by the disappointed party if contract negotiations fail before a contract has been finalized.

59
Q

prenuptial agreement

A

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 the parties get divorced.

60
Q

privity of contract

A

The relationship which exists between the parties

to a contract.

61
Q

promisee

A

In contract law, the promisee is the person to whom the promise (contract) was made.

62
Q

promisor

A

In contract law, the promisor is the person who made the promise.

63
Q

promissory estoppel

A

A promise that the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and that does induce such action or forbearance can create liability for reliance damages if injustice can be avoided only by providing some relief when promise is broken.

64
Q

promissory fraud

A

A type of fraud that occurs when one party induces another to enter into a contract by promising to do something without having the intention to carry out the promise.

65
Q

quantum meruit

A

A basis for equitable relief by a court when there was no contract between the parties, but one party has received a benefit for which it has not paid.

66
Q

ratify

A

An agreement by an individual, after the individual becomes competent or reaches the age of majority, to be bound by contracts entered into while the person was incompetent or a minor; a principal’s agreement to be bound by the acts of an agent.

67
Q

reliance damages

A

The awards made to a plaintiff for any expenditures made in reliance on a contract that was subsequently breached.

68
Q

representations and warranties

A

Highly negotiated provisions in a purchase-and-sale contract concerning the parties and the stock, goods, or other assets being sold.

69
Q

requirements contract

A

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.

70
Q

restitution

A

An award made to a plaintiff of a benefit improperly obtained by the defendant.

71
Q

revoke

A

To annul an offer by rescission.

72
Q

sovereign acts doctrine

A

The government cannot be held liable for breach of contract due to legislative or executive acts of general application.

73
Q

specific performance

A

A court order to a breaching party to complete

the contract as promised.

74
Q

statute of frauds

A

A statute that requires that certain contracts, such as contracts conveying an interest in real property, must be in a signed writing to be enforceable in a court.

75
Q

surprise

A

The extent to which the supposedly agreed on terms of the bargain are hidden in a densely printed form drafted by the party seeking to enforce the disputed terms.

76
Q

target

A

The subject of a tender offer or hostile corporate takeover attempt. Also a company that another firm controls after acquiring it via merger, a sale of stock by the target’s shareholders, or a sale of substantially all the assets of the target.

77
Q

third-party beneficiary

A

One who does not give consideration for
a promise yet has legal rights to enforce the contract. A person is a third-party beneficiary with legal rights when the contracting parties intended to benefit that person.

78
Q

unconscionable

A

A contract term that is oppressive or fundamentally unfair.

79
Q

undue influence

A

Sufficient influence and power over another as to make genuine assent impossible.

80
Q

unilateral contract

A

A promise given in exchange for an act. Offer can be accepted only by performing the act.

81
Q

unjust enrichment

A

The unfair appropriation of the benefits of negotiation of contracts for the party’s own use.

82
Q

usury statutes

A

Laws that limit the interest rate on loans and usually provide that any loan agreement in violation of the statute is unenforceable.

83
Q

voidable

A

Unenforceable at the option of one party.

Managers & the Legal Environment (11 decks)

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