Exam 2 Vocabulary Flashcards
The value given in return for a promise or performance in a contracted agreement
Consideration
Refraining from an action that one has a legal right to undertake
Forberance
The unmaking of a contract so as to return the parties to the positions they occupied before the contract was made
Recission
Promises made in return for actions or events that have already taken place are unenforceable
Past Consideration
An act that takes place before the contract is made and that ordinarily, by itself, cannot be consideration for a later promise to pay for the act
Past Consideration
A common means of settling a disputed claim, whereby a debtor offers to pay a lesser amount than the creditor is owed
Accord and Satisfaction
A debt whose amount has been ascertained, fixed, agreed on, settled, or exactly determined
Liquidated Debt
A contract in which one party forfeits the right to pursue a legal claim against the other party
Release
An agreement to substitute a contractual obligation for some other type of legal action based on a valid claim
Covenant Not to Sue
A doctrine that can be used to enforce a promise when the promise has justifiably relied on it and when justice will be better served by enforcing the promise
Promissory Estoppel
Also called detrimental reliance
Promissory Estoppel
Barred, impeded, precluded, or prevented
Estopped
The legal ability to enter into a contractual relationship
Contractual Capacity
The capacity required by law for a party who enters into a contract to be bound by that contract
Contractual Capacity
In regard to minors. the act of being freed from parental control
Emancipation
The legal avoidance or setting aside of a contractual obligation
Disaffirmance
Necessities required for life, such as food, shelter, clothing, and medical attention
Necessaries
The acceptance or confirmation of an act or agreement that gives legal force to an obligation that previously was not enforceable
Ratification
When the individual, reaching the age of majority, states orally or in writing, that she or he intends to be bound by the contract
Expressed Ratification
When the individual, reaching the age of majority, behaves in a manner inconsistent with disaffirmance
Implied Ratification
A condition in which a person’s normal capacity to act or think is inhibited by alcohol or some other drug
Intoxication
Charging an illegal rate of interest
Usury
The creation of risk for the purpose of assuming it
Gambling
A contractual promise of one party to refrain from conducting business similar to that of another party for a certain period of time and within a specified geographical area
Covenant Not to Compete
A contract between an employer and an employee in which the terms and conditions of employment are stated
Employment Contract
A court ordered correction of a written contract so that it reflects the true intentions of the parties
Reformation
A contract or clause that is void on the basis of public policy because one party was forced to accept terms that are unfairly burdensome and that unfairly benefit the stronger party
Unconscionable Contracts or Clauses
A standard-form contract in which the stronger party dictates the terms
Adhesion Contract
A clause that releases a contractual party from liability in the event of monetary or physical injury, no matter who is at fault
Exculpatory Clauses
State laws that regulate the offering and sale of securities for the protections of the public
Blue Sky Laws
Knowledge by a misrepresenting party that material facts have been falsely represented or omitted with an intent to deceive
Scienter
A statute that requires certain types of contracts to be in writing to be enforceable
Statute of Frauds
A secondary promise to a primary transaction, such as a promise made by one person to pay the debts of another if the latter fails to perform
Collateral Promises
An agreement made before marriage that defines each partner’s ownership rights in the other partner’s property
Prenuptial Agreements
A rule of contracts under which a court will not receive into evidence prior or contemporaneous oral statements and agreements that contradict the terms of the parties’ written contract
The Parol Evidence Rule
Testimony or other evidence of communications between the parties that is not contained in the contract itself
Parol Evidence
Determination of whether evidence will be allowed basically depends on whether the written contract is intended to be a complete and final statement of the terms of the agreement
Integrated Contract
A written contract that constitutes the final expression of the parties’ agreement
Integrated contract
Evidence extraneous to the contract that contradicts or alters the meaning of the contract in any way is inadmissable
Integrated Contract
The relationship that exists between the promisor and the promisee of a contract
Privity of Contract
The transfer of contract rights to a third person
Assignments
A party who transfers his or her rights under a contract to another party
Assignor
A party to whom the rights under a contract are transferred or assigned
Assignee
One to whom an obligation is owed
Obligee
One who owes an obligation to another
Obligor
The voluntary transfer of land ownership
Alienation
The transfer to another of all or part of one’s duties arising under a contract
Delegation of Duties
A party who transfers her or his obligations under a contract to another party
Delegator
A party to whom contractual obligations are transferred, or delegated
Delegatee
One for whose benefit a third person a contract is made in a contract but who is not a party to the contract
Third Party Beneficiary
A third party for whose benefit a contract is formed
Intended Beneficiary
A third party who benefits from a contract even though the contract was not formed for that purpose
Incidental Beneficiaries
The termination of an obligation such as occurs when the parties to a contract have fully performed their contractual obligations
Discharge
The fulfillment of one’s duties under a contract
Performance
The normal way of discharging one’s contractual obligations
Performance
A qualification, provision, or clause in a contractual agreement, the occurrence or nonoccurrence of which creates, suspends, or terminates the obligations of the contracting parties
Condition
A condition in a contract that must be met before a party’s promise becomes absolute
Conditions Precedent
A condition in a contract that, if it occurs, operates to terminate a party’s absolute promise to perform
Conditions Subsequent
Conditions that must occur or be performed at the same time
Concurrent Conditions
They are mutually dependent
Concurrent Conditions
No obligations arise until these conditions are simultaneously performed
Concurrent Conditions
An unconditional offer to perform an obligation by a person who is ready, willing, and able to do so
Tender
The nonperformance of a contractual duty
Breach of Contract
The failure, without legal excuse, of a promisor to perform the obligations of a contract
Breach of Contract
An assertion or action by a party indicating that he or she will not perform a contractual obligation
Anticipatory Repudiation
The substitution, by agreement, of a new contract for an old one, with the rights under the old one being terminated
Novation
A doctrine under which a party to a contract is relieved of his or her duty to perform when performance becomes objectively impossible or totally impracticable
Impossibility of Performance
A doctrine that may excuse the duty to perform a contract when performance becomes much more difficult or costly due to forces that neither party could control or contemplate at the time the contract was formed
Commercial Impracticability
A court-created doctrine under which a party to a contract will be relieved of her or his duty to perform when the objective purpose for performance no longer exists due to reasons beyond that party’s control
Frustration of Purpose
Damages that compensate for expenses directly because of a breach of contract
Incidental Damages
Foreseeable damages that result from a party’s breach of contract but are caused by special circumstances beyond the contract itself
Consequential Damages
Recognizes wrongdoing when no monetary loss shown
Nominal Damages
A small monetary award granted to a plaintiff when no actual damage was suffered
Nominal Damages
The requirement that a plaintiff do whatever is reasonable to minimize the damages caused by the defendant
Mitigation of Damages
An amount stipulated in a contract, that the parties to the contract believe to be a reasonable estimation of the damages that will occur in the event of a breach
Liquidated Damages
A contract clause that specifies a certain amount to be paid in the event of a default or breach of contract but is unenforceable because it is designed to punish the breaching party rather than to provide a reasonable estimate of damages
Penalty
An equitable remedy under which a person is restored to his or her original position prior to loss or injury, or placed in the position he or she would have been had the breach not occurred
Restitution
An equitable remedy in which a court orders the parties to perform as promised in the contract
Specific Performance
Normally granted only when the legal remedy (monetary damages) is inadequate
Specific Performance
A contract for the sale of goods
Sales Contract
The passing of a title to property from the seller to the buyer for a price
Sale
Property that has physical existence and can be distinguished by the senses of touch and sight
Tangible Property
Property that cannot be seen or touched, but exists only conceptually, such as corporate stocks
Intangible Property
A test courts use to determine whether a contract is primarily for the sale of goods or for the sale of services
Predominant Factor Test
A person who deals in goods of the kind involved in the sales contract
Merchant
A person whom by occupation, holds himself or herself out as having special knowledge and skill related to the practices or goods involved in the transaction
Merchant
A person who employs a merchant as a broker, agent, or other intermediary
Merchant
A transfer of the right to possess and use goods (not property) for a period of time in exchange for payment
Lease
An agreement in which one person agrees to transfer the right to the possession and use of property to another person in exchange for rental payments
Lease Agreement
A person who transfers the right to the possession and use of goods to another in exchange for rental payments
Lessor
A person who acquires the right to the possession and use of another’s goods in exchange for rental payments
Lesee
The buyer agrees to purchase and the seller agrees to sell all or up to a stated amount of what the buyer needs or requires
Requirements COntracts
Seller agrees to sell and the buyer agrees to buy all or up to a stated amount of what the seller produces
Output Contract
An offer by a merchant that is irrevocable without the necessity of consideration for stated period of time or, if no definite period is stated, for a reasonable time, neither period to exceed three months
Firm Offer
Within a specified time period or, if no period is specified, within a reasonable time
Seasonably
A sequence of previous actions and communications between the parties to a particular transaction that established a common basis for their understanding
Course of Dealing
Any practice or method of dealing that is so regularly observed in a place, vocation, or trade that the parties justifiably expect or should expect to be observed in their transaction
Usage of Trade
The conduct that occurs under the terms of a particular agreement
Course of Performance
In a sale of goods, the express designation of the goods provided for in the contract
Identification
Goods that are alike by physical nature, agreement, or trade usage
Fungible Goods
A contract for the sale of goods in which the seller is required or authorized to ship the goods by carrier
Shipment Contract
The seller assumes liability for any losses or damage to the goods until they are delivered to the carrier
Shipment Contract
A contract for the sale of goods in which the seller is required or authorized to ship the goods by carrier and tender delivery of the goods at a particular destination
Destination Contract
The seller assumes liability for any losses or damage to the goods until they are tendered at the destination specified in the contract
Destination Contract
A paper exchanged in the regular course of business that evidences the right to possession of goods
Document of Title
A condition in which a person cannot pay his or her debts as they become due or ceases to pay debts in the ordinary course of business
Insolvent
A purchaser who buys without notice of any circumstance that would cause a person of ordinary prudence to inquire as to whether the seller has valid title to the goods being sold
Good Faith Purchaser
The rule that entrusting goods to a merchant who deals in goods of that kind gives that merchant the power to transfer those goods and all rights to them to a buyer in the ordinary course of business
Entrustment Rule
A party who, by a bull of lading, warehouse receipt, or other document of title, acknowledges possession of goods and/or contracts to deliver them
Bailee
The rights of a party who tenders nonconforming performance to correct his or her performance within the contract period
Cure
A property interest in goods being sold or leased that is sufficiently substantial to permit a party to insure against damage to the goods
Insurable Interest
