Key Terms -Chapter 9 Flashcards
accord and satisfaction
A new agreement by contracting parties that is satisfied by full performance, thereby terminating a prior contract.
assignment
A complete transfer of all legal rights and obligations by one party to another.
bilateral contract
An agreement based on mutual promises of specified consideration.
breach of contract
Failure without legal excuse to perform a promise that forms the whole or part of a contract.
compensatory damages
The compensation an injured party is entitled to receive for any financial loss caused by the breach as may be awarded by the court.
consideration
Anything of value as recognized by law offered as an inducement to contract such as money, action, or forbearance, or a promise to act or a promise to forbear.
contractual capacity
Having the ability to understand the terms of a contract and the consequences of nonperformance.
counteroffer
A promise or a request by an offeree that terminates the original offer from an offeror by rejecting it and substituting a new offer in its place.
duress
The inability of a party to exercise his or her free will because of fear of another party.
earnest money
A deposit of money made by a buyer at the time of making an offer to demonstrate the earnest intent to purchase. Also called binder, good faith deposit, or escrow deposit
executed contract
An agreement that has been fully performed.
executory contract
An agreement that has not been fully performed.
express contract
One created verbally or in writing by the parties.
full performance
The usual manner of terminating contracts.
illusory offer
One that does not obligate the offeror.
implied contract
One created by deduction from the conduct of the parties rather than from the direct words of the parties. Opposite of an express contract.
land contract
A contract of sale and a financing instrument wherein the seller agrees to convey title when the buyer completes the purchase price installment payments. Also called installment land contract, land contract, and conditional sales contract.
liquidated damages
A predetermined amount of money to be paid and received as compensation for a breach of contract.
mutual assent
The voluntary agreement of all parties to a contract as evidenced by an offer and acceptance.
negligent misrepresentation
An unintended misrepresentation of a material fact that the party did not make knowingly but should have known the truth by exercising due skill, care, and diligence
novation
The substitution of a new contract for a prior contract.
offeree
One to whom an offer is made.
offeror
One making an offer
Parol Evidence Rule
Rule of evidence and law that states the written words contain all of the agreement and that oral statements not agreeing with the written word are to be disregarded.
ready, willing, and able
Describes a buyer who is ready to buy, willing to buy, and financially able to pay the asking price.
unilateral contract
An agreement wherein one party makes a promise of compensation to the other party and the second party returns an action in response to the promise, although he is not legally obligated to do so
valid contract
An agreement that is legally binding and enforceable.
void contract
An agreement that is absolutely unenforceable and has no legal force or effect
voidable contract
One which appears valid, but may be avoided by one of the parties without legal consequences because it contains a defect. If the party who may avoid the contract based on the defect, does not identify the defect and takes action to avoid the contract, the contract is valid and enforceable.
