Legal Terms Chapter 19 - Contract Requirements

Question 1

Adhesion contract

Answer 1

A contract that is drawn by one party to the party’s benefit and whose terms must be accepted, as is, on a take-it-or-leave-it basis, if a contract is to result.

Question 2

Affirm

Answer 2

Approve.

Question 3

Avoided

Answer 3

Made void.

Question 4

Bilateral mistake

Answer 4

Another name for mutual mistake.

Question 5

Boilerplate

Answer 5

Standard language used commonly in documents of the same type; stock legal language.

Question 6

Charitable subscription

Answer 6

A promise to make a donation or gift to a charitable organization (religion, civic, educational, etc.); a gratuitous promise is binding.

Question 7

Collateral promise

Answer 7

A secondary assurance, usually made for paying someone else’s debt that is not for the maker’s benefit.

Question 8

Consideration

Answer 8

The legal ability to be able to enter into a contract.

Question 9

Contractual capacity

Answer 9

The legal ability to be able to enter into a contract.

Question 10

Defective agreements

Answer 10

Certain agreements that initially seem legitimate but are, in fact, defective, and therefore not recognized as valid, binding contracts.

Question 11

Duress

Answer 11

The overcoming of a person’s free will by the use of threat or physical harm.

Question 12

Exculpatory clause

Answer 12

A clause that is used in a contract allowing a party to the contract to avoid legal responsibility.

Question 13

Failure of consideration

Answer 13

A defense available when the consideration provided for an agreement is not in fact given to the party being sued.

Question 14

Firm offer

Answer 14

A merchant’s written promise to hold open an offer for the sale of goods; requires no consideration to be binding.

Question 15

Forebearance

Answer 15

Refraining from taking action; promising not to do something that one has the right to do.

Question 16

Fraud

Answer 16

One party to the contract makes a misrepresentation of a material, existing fact which the other party relies on and thereby suffers damages; also exists in tort law.

Question 17

Fraud in the execution

Answer 17

Fraud as to the essential nature of the transaction; also called fraud in esse contractus.

Question 18

Fraud in the inducement

Answer 18

Fraud that causes another person to enter into a contract.

Question 19

In pari delicto

Answer 19

In equal fault; court will not aid either party in an illegal contract and will leave them where they placed themselves.

Question 20

Lack of consideration

Answer 20

A defense available to a party being sued for breach of contract when no consideration is contained in the agreement that is the subject of the suit.

Question 21

Locus

Answer 21

Exact parcel of land; locality.

Question 22

Locus sigilli

Answer 22

Place of the seal (what L.S. stands for).

Question 23

Memorandum

Answer 23

The writing that is necessary to satisfy the statute of frauds.

Question 24

Merchant

Answer 24

A person who sells goods of the kind sold in the ordinary course of business who has knowledge or skills peculiar to those goods, or who relies on the expertise of a merchant when dealing in goods.

Question 25

Mutual mistake

Answer 25

The situation that exists when both parties are mistaken about an important or material aspect of an agreement; also called bilateral mistake.

Question 26

Nudum pactum

Answer 26

A barren promise with no consideration; a naked agreement.

Question 27

Option contract

Answer 27

A binding promise to hold an offer open.

Question 28

Parole evidence rule

Answer 28

The rule of oral evidence of prior contemporaneous negotiations between the parties is not admissable in court to alter, vary, or contradict the terms of a written agreement.

Question 29

Promisee

Answer 29

One to whom a promise is made.

Question 30

Promisor

Answer 30

One who makes a promise.

Question 31

Promissory estoppel

Answer 31

A doctrine under which no consideration is necessary when someone makes a promise that induces another’s action or forebearance, and injustice can be avoided only by enforcing the promise.

Question 32

Public policy

Answer 32

Underlying foundational principles that bind various people into a close-knit society.

Question 33

Quid pro quo

Answer 33

Something for something; one thing in return for another.

Question 34

Rescinded

Answer 34

Cancelled.

Question 35

Rescission

Answer 35

Cancellation that restores the parties to original position.

Question 36

Seal

Answer 36

A mark, impression, the word “seal,” or the letters L.S. placed on a written contract next to a party’s signature.

Question 37

Statute of frauds

Answer 37

A law that deems that certain contracts must be in writing and signed to be enforceable.

Question 38

Unconscionable

Answer 38

An act or contract that is so harshly one-sided and unfair that the court’s conscience is shocked.

Question 39

Undue influence

Answer 39

The overcoming of a person’s free will by misusing a position of trust and taking advantage of the other person who is relying on the trust relationship.

Question 40

Unilateral (one-sided) mistake

Answer 40

When only one of the parties makes a mistake as to a material element of the contract.

Question 41

Usury

Answer 41

The charging of a greater amount of interest than is allowed by law; illegal in all states.