General Definitions Flashcards
a legally enforceable agreement, express or implied
Contract
the relationship that exists between the parties to an agreement, allowing them to sue each other to enforce the agreement, but preventing a third party from doing so.
Privity of Contract
tangible chattels which are moveable and identifiable to the contract at the time of formation
Goods
a comprehensive uniform law covering most commercial transactions (e.g., banking, sale of goods)
Uniform Commercial Code
An assessment of whether Article 2 of the Uniform Commercial Code (UCC) applies to an exchange, conducted by considering whether the exchange’s chief aspect, viewed in light of all circumstances, is the sale of goods.
Predominant Factor Test
i. Under the UCC, a person who regularly deals in a particular type of goods. ii. One who deals in goods or has knowledge or skill with regard to goods
Merchant
A manifestation of present contractual intent which includes certain and definite terms; is communicated to the offeree; proposes a bargain in which the offeror’s act, forbearance to act, or promise is exchanged for the offeree’s act, forbearance to act, or return promise; and creates a power of
acceptance in the offeree.
Offer
the act of putting an end to a standing offer and ending the offeree’s power of acceptance.
Termination of Offer
the canceling, annulling, or otherwise voiding of an offer.
Revocation of Offer
an offer that by its express or implied terms is to remain open for a certain period.
Firm Offer
an unequivocal assent to an offer in accordance with its terms
Acceptance
legal principle that the offer and acceptance, in order to form a contract, must mirror each other exactly (the terms must all be the same).
Mirror Image Rule
the requirement that the parties agree to enter into a contractual relationship, including terms and conditions. It is
usually proved by showing that one party made a valid offer and the other party made a valid acceptance.
Mutual Assent
The historic rule holds that mutual assent exists if there was a “meeting of the minds” between the parties, meaning that the parties subjectively intended to enter into a legally binding contract and agreed to the terms and conditions of the contract.
Meeting of the Minds
The modern rule holds that mutual assent exists if a reasonable person would objectively have understood the outward actions and statements of the other party to indicate an intent to enter into a legally binding contract and agreement to terms and conditions of the contract.
Objective Theory of Contracts
any lawful alteration of responsibilities (any action, nonaction, or promise); one of the requirements for a valid contract.
Consideration
the relinquishment of some legal right that a promise would have otherwise been entitled to exercise.
Legal Detriment
Enough consideration as a matter of law to support a contract. Also referred to “due consideration”, and “adequate consideration”.
Sufficiency of Consideration
An exception to the rule that bargains are consideration which holds that a promise to perform an act that the promisor has a preexisting legal duty to perform (i.e., a legal duty that existed before the new promise) does not constitute consideration, even if bargained for.
Preexisting Duty Rule
the principle that a promise made without consideration may nonetheless be enforced to prevent injustice if the promisor should have reasonably expected the promisee to rely on the promise and if the promisee did actually rely on the promise to his or her detriment.
Promissory Estoppel
A previously existing duty that has become inoperative by positive law, such as a statute of limitations. In the law of contracts, a moral obligation is sufficient to support an express promise as valuable consideration because it amounts to the voluntary revival or creation of a duty that existed once before but had been dispensed with.
Moral Obligation Code
a promise that appears to be real but in fact imposes no legal obligation upon the promisor.
Illusory Promise
The landmark case in which the court held that in the absence of fraud, duress, or material mistake, a party to a contract with the capacity to understand a written document will be bound by his or her signature whether or not he read the document.
Merit Music v. Sonneborn
Established in the case of Adams v. Lindsell, an acceptance of an offer for a bilateral contract, dispatched by an authorized mode of communication, is effective when dispatched. A rejection of an offer is effective when received.
Mailbox Rule
if an offer states that it will be open for a certain number of days, the first day is the day the offeree receives the offer.
Caldwell v. Cline
The old rule held that the offer for a unilateral contact was revocable until performance was complete. The modern rule and the one embodied in Restatement (Second) of Contracts holds that an offer for a unilateral contract cannot be revoked once performance has begun, unless performance is not competed within a reasonable time. The modern rule is subject to a possible exception in case of reliance by the offeree. The rationale of the modern rule is that an offer for a unilateral contract includes an implied promise to hold the offer open for a reasonable time if the offeree makes a substantial beginning of performance prior to revocation.
Unilateral Contract (Revocation of Offer Rule)
in contract law, the offeree’s manifestation of unwillingness to accept an offer.
Rejection
a cross offer by the offeree that has the effect of rejecting the original offer and proposing a new one
Counteroffer
A counteroffer is an implied rejection of the original offer. It is, in effect, a new offer available for acceptance.
Counteroffer as an implied Rejection
when parties use standardized forms to make offers and acceptances. Such forms contain fixed contractual language (boilerplate) which often conflicts with the terms included in the other party’s forms. Thus, although a contract may be formed through the exchange of such forms, the parties may disagree as to which terms govern the contract.
Battle of the Forms
a contract created by an exchange of promises
Bilateral Contract
a contract based on the exchange of a promise by one party for an action of the other
Unilateral Contract
a contract fully performed by both parties
Executed Contract
a contract that has not been fully performed by one or both parties
Executory Contract
a conscious, specific contract; it must be written or oral, or partly written and partly oral
Express Contract
a contract formed in whole or in part from the conduct of the parties (as opposed to an express contract); a promise or agreement inferred from conduct other than language.
Implied in Fact Contract
A contract made in which one party is required to compensate another for a benefit conferred in order to avoid unjust
enrichment, rather than because there has been an actual or implied-in-fact promise to pay for the benefit
Implied in Law Contract (Quasi Contract)
Latin for “as much as he/she earned”; the compensation permitted by law to the actor in a quasi-contract
Quantum Meruit
reasonable value that is deserved as payment for goods, and is awarded in a quasi-contract claim.
Quantum Valebant
a contract whereby the buyer agrees to purchase all of his/her requirements of certain goods from a single, specified seller.
Requirements Contract
a contract whereby the seller (usually a manufacturer) agrees to sell all or a stated amount of the seller’s output or production of certain goods to a single, specific buyer
Output Contract
A contract to keep an offer open for a specified time
Option Contract
an agreement having no legal force or effect; null from the very beginning.
Void Contract
an agreement subject to being declared of no legal effect as a result of action (e.g., nullification, a lawsuit) by one of the parties.
Voidable Contract
A legally immature or mentally incapacitated person has the power to disaffirm a contract by manifesting to the other party an unwillingness to continue to be bound by the contract.
Power of Disaffirmance
Under the UCC, a contact which requires or authorizes the delivery of goods in separate lots to be separately
accepted or rejected.
Installment Contract
a provision in a contract excusing one or both parties from the legal consequences of his/her or their actions or negligence
Exculpatory Clause
A promise to answer for the debt, default, or miscarriage of another.
Guaranty
The requirement that certain types of contracts be evidenced by a writing signed by the party to be charged, the defendant in a civil action.
Statute of Frauds
contracts law principle that bars extrinsic evidence contradictory to the terms of a written agreement intended to be the final and complete expression of the parties’ contract.
Parol Evidence Rule
complete and total agreement as found in a written agreement
Integrated Contract
A sequence of previous performance by either party after an agreement has been entered into, when a contract involves repeated occasions for performance and both parties know the nature of the performance and have an opportunity to object to it.
Course of Performance
An established pattern of conduct between parties in a series of transactions. If a dispute arises, the parties’ course of dealing can be used as evidence of how they intended to carry out the transaction
Course of Dealing
A practice or method of dealing having such regular observance in a region, vocation, or trade that it justifies an expectation that it will be observed in a given transaction; a customary practice or set of practices relied upon by person conversant in, or connected with, a trade or business
Usage of Trade
A standard form contract prepared by one party, to be signed by another party in a weaker position, usually a consumer, who adheres to the contract with little choice about the terms
Contract of Adhesion
An agreement that no promisor with any sense, and not under a delusion, would make, and that no honest and fair promisee would accept.
Unconscionable Contract
A contract that directly benefits a third party and that gives the third party a right to sue any of the contracting parties for breach.
Third Party Beneficiary Contract
A case in which Defendant promised debtor that he would repay debtor’s debt to plaintiff in return for consideration. The promise was supported by consideration and the promise to debtor was implied to plaintiff, so plaintiff could maintain a suit against defendant.
Lawrence v. Fox
A third-party beneficiary who is intended to benefit from the contract and thus acquires rights under the contract as well as the ability to enforce the contract once those rights have vested.
Intended Beneficiary
A third-party beneficiary of a contract who is owed a debt that is to be satisfied by another party’s performance under the contract.
Creditor Beneficiary
A third-party beneficiary who is intended to receive the benefit of the contract’s performance as a gift from the promise.
Donee Beneficiary
A third-party beneficiary who, though benefiting indirectly, is not intended to benefit from a contract and thus does acquire rights under the contract.
Incidental Beneficiry
A third party donee beneficiary has no rights against the promisee by reason of the promisor’s failure to perform the contract. The “creditor” beneficiary, however, can sue the promisee on the original obligation since it remains unaffected by the third-party beneficiary contract
Rights Against the Promisee
a transfer of a contractual right. A contractual right is an intangible property and is called a “chose in action.” When a valid assignment has been made, the person receiving the transfer (the assignee) steps into the shoes of the person making the transfer (the assignor) and is now the proper party to enforce the contract
Assignment
a transfer of a contractual obligation. It involves a situation in which the assignor transfers his or her duty of performance to another. The person transferring the duty of performance is known as the delegator and the person who assumes the duty is known as the delegatee.
Delegation and Assumption of Duties
A future and uncertain event on which the existence or extent of an obligation or liability depends; an uncertain act or event that triggers or negates a duty to render a promised performance
Condition
An act or event, other than a lapse of time, that must exist or occur before a duty to perform something promised arises
Condition Precedent
A condition that must occur or be performed at the same time as another condition, the performance by each party separately operating as a condition precedent; a condition that is mutually dependent on another, arising when the parties to a contract agree to exchange performances simultaneously
Condition Concurrent
A condition that, if it occurs, will bring something else to an end; an event the existence of which, by agreement of the parties, discharges a duty of performance that has arisen
Condition Subsequent
A condition that is the manifested intention of the parties. Also, a condition that is explicitly stated in an instrument; a contractual condition that the parties have reduced to writing
Express Conditions
A contractual condition that the parties have implicitly agreed to by their conduct or by the nature of the transaction
Implied in Fact Conditions
The doctrine that holds that the fulfillment of a promise in a bilateral contract can be construed to be a condition of the other party’s performance even in the absence of an express provision to that effect.
Doctrine of Constructive Conditions
Performance of the primary, necessary terms of an agreement.
Substantial Performance
implied in a contract whenever the cooperation of the promisee is necessary for the performance of the promise
Implied Condition of Cooperation
when a party to a contract voluntarily relinquishes his or her known right to assert the non-performance of a condition.
Waiver of Condition
A divisible or severable contract is a bilateral contract in which the performance is divided into two or more separate units, either as to subject matter or time, and performance of each part by one party is the agreed exchange for a corresponding part by the other party. Some typical examples are construction contracts, contracts for the sale of goods and employment contracts.
Divisible (or Severable) Contracts
A change to something; an alteration or amendment. Also, a qualification or limitation of something
Modification
The doctrine that holds that additional terms which were intended by the parties and included in a separate agreement may be enforced even though such terms were not included in the original contract if this collateral agreement is one which 1) does not contradict any express provision of the main contract and 2) might naturally be made as a separate agreement between the parties.
Collateral Agreement Doctrine
An accord is an agreement to compromise an existing obligation which has become the subject of a good faith dispute. Acceptance of the accord results in “satisfaction,” meaning that the original obligation has been discharged with the accepting party no longer being able to charge the performing party with a breach of contract.
Accord and Satisfaction
an agreement among contracting parties and an outside third party that the third party will perform the duties (and receive the rights) of one of the original parties to the contract – the new party completely substitutes for (replaces) that original party, who contract duties are thus discharged.
Novation
at common law, it was a complete discharge of existing contractual obligations given by one party to the contract to the other in a written document under seal. Modernly, in those jurisdictions that do not use the formal seal, it is generally considered valid if supported by consideration.
Release
an agreement by the parties to an existing executory contract to consider their contract null and void. This rescission is a contract in itself and requires mutual assent and consideration. The consideration for rescission is usually found in the fact that all parties incur a legal detriment by giving up their right to sue each other
Mutual Rescission
a contractual situation when one contract supersedes or incorporates another
Merger
occurs when one party to a contract fails to perform pursuant to the terms of the contract.
Breach
A breach of contract caused by a party’s anticipatory repudiation, i.e., unequivocally indicating that the party will not perform when performance is due. Under these circumstances, the non-breaching party may elect to treat the repudiation as an immediate breach and sue for damages
Anticipatory Breach
If a breach is minor in nature the plaintiff has a cause of action for damages caused by the breach, but the contract remains in effect.
Minor Breach
the relationship that exists between the parties to an agreement, allowing them to sue each other to enforce the agreement, but preventing a third party from doing so.
Privity of Contract
A breach is material if it is so substantial that it defeats the purpose of the parties in making the contract or if it is so significant as to destroy the value of the contract. Whether a breach is material is a question of fact. If a breach is material, the plaintiff is justified in treating the entire transaction as ended and may thereafter sue for damages.
Material Breach
A previously existing duty that has become inoperative by positive law, such as a statute of limitations. In the law of contracts, a moral obligation is sufficient to support an express promise as valuable consideration because it amounts to the voluntary revival or creation of a duty that existed once before but had been dispensed with.
Moral Obligation Code
