Contracts Flashcards
Response by the person receiving the offer that indicates willingness to enter into the agreement proposed in the offer
Acceptance
Formed when the creditor accepts the debtor’s offer to settle the dispute for an amount less than the creditor claims is due
Accord
agreement to accept performance that is different from what is called for in the contract.
Accord and satisfaction
When one party knows ahead of time (before performance is due) that the other party will breach the contract
Anticipatory repudiation (of a contract)
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)
Capacity
Damages that compensate for the economic loss caused by the breach of contract
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
Conditional subsequent
The plaintiff is entitled to it in addition to damages that compensate for the breach itself: 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 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 to another offer
Counteroffer
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 service
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 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
general release
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 impractical. As a rule, … is difficult to prove
impracticability
In addition to compensatory and consequential damages, a nonbreaching party may incur lesser, relatively minor damages known as …
incidental damage
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 … are frequently used in real estate and construction contract
liquidated damages clauses
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 … . A … is itself a type of contract and, as such, requires a valid offer, acceptance, and consideration
mutual rescission
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
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
The person making the offer
Offeror
… 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, parol (that is, oral) evidence 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
A … is someone who makes a promise to a promisee
promisor
The legal enforcement of an otherwise unenforceable
contract due to a party’s detrimental reliance on the
contract. 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
Under the doctrine of …, the agency’s
default on payment renders the entrepreneur liable to
the publication for the value of the benefit the
entrepreneur received
quantum meruit
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
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)
Requirements contract
… 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
To take back – to cancel
Revoke
the discharge 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 … to the contract.
third party (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
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
