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Legal Survey Vocab 3
Legal Survey vocab review for paralegal test 3 - contracts
| Question | Answer |
|---|---|
| Contract | An agreement that can be enforced by law |
| Uniform Commercial Code (UCC) | Model code governing commercial transactions |
| Bilateral Contract | A promise is exchanged for a promise |
| Unilateral Contract | A promise is exchanged for an act |
| Express Contract | Contract formed through words, either oral or written |
| Implied-in-fact contract | Contract formed through conduct, not words |
| Formal Contract | Contract made under seal; a recognizance; negotiable instrument. A check or a real estate transfer are examples. |
| Informal Contract | Contract that does not have to meet a special formality to be followed |
| Executory Contract | Contract in which promises have been made, but not yet fulfilled |
| Executed Contract | Contract in which all promises have been fully performed |
| Valid Contract | Contract which has all essential elements needed for a binding contract |
| Void Contract | Contract that is invalid even if it is not repudiated by either party |
| Voidable Contract | A contract that can be set aside at the option of one party; such as a contract with a minor; minor can void contract |
| Unenforceable Contract | A valid contract that cannot be imposed because of a procedural error, such as the passage of the statute of limitations |
| Elements of a binding contract | 1. offer, 2. acceptance, 3. consideration |
| Offer | A promise do to something that is conditioned on the other party’s promising to do something in return |
| Requirements contract | A contract in which one party agrees to buy all it needs of a particular product from another party |
| Output contract | A contract in which one party agrees to deliver its entire stock or production of a particular product to the other party |
| Option contract | A contract in which the buyer gives the seller consideration to keep the offer open for a stated period of time |
| Merchant’s firm offer | An offer made by a merchant in a signed writing that assures the buyer the offer will remain open for a specific period of time. It does not require consideration to be binding. |
| Mirror Image Rule | The requirement that the acceptance be exactly the same as the offer, or the acceptance will be viewed as a counteroffer. |
| Quasi-contract | Although no contract was formed, the courts will fashion an equitable remedy to avoid unjust enrichment. |
| Consideration | Anything of value; it must be present for a valid contract to exist, and each side must give it |
| Promissory estoppel | aka Detrimental Reliance; Occurs when the courts allow detrimental reliance to substitute for consideration |
| Accord and satisfaction | Payment of money, or other thing of value, usually less than the amount demanded, in exchange for cancellation of a debt that is uncertain in amount. |
| Quantum Meruit | When a person does something for another, without any agreement as to his compensation, the law implies a promise (quasi-contract) for “as much as it’s worth” |
| Advertisement | A solicitation of an offer to buy |
| Peppercorn Theory of Law | Consideration can be unequal in value |
| Pre-existing legal duty | Doing what you’re obligated do can’t take the place of consideration |
| Past Consideration | Not consideration. It happened before any offer, etc. |
| Illusory Promise | Uncertain performance, consideration is too indefinite |
| Unforeseen Difficulties | No one could have expected the situation, so if parties agree to change contract, it’s valid even though no change in consideration on one side |
| Settlement of liquidated claims | A payment which is fixed and undisputed cannot be negotiated for consideration |
| Moral obligations | Just because you should do something, doesn’t mean you’re bound |
| Modification of Contracts | Under UCC, 2-209, merchants can modify a contract without new consideration |
| Lack of Contractual Capacity | Infancy, intoxication, mental incompetence |
| Usury laws | Laws regarding interest rates |
| Unconscionable Contract | A contract formed between parties of very unequal bargaining power where the terms are so unfair as to “shock the conscience” |
| Disaffirm | The ability to take back one’s contractual obligations |
| Necessaries | Food, clothing, shelter, medical treatment |
| Covenant not to compete | A promise not to compete within a given geographical area for a specific time period; enforced if reasonable; violates public policy if unreasonable |
| Adhesion contract | A contract formed where the weaker party has no realistic bargaining power. Typically a form contract is offered on a “take it or leave it” basis; violates public policy if deemed unconscionable |
| Exculpatory clause | A provision that purports to waive liability for negligence. Courts generally disfavor them & find them against public policy. |
| Lack of genuineness of assent | No “meeting of the minds” |
| Rescission | The act of canceling the contract and returning the parties to the positions they were in prior to the contract having been formed |
| Blue laws | designed to enforce moral standards, particularly the observance of the Sabbath; e.g. You can’t buy alcohol before noon on Sunday. |
| Contracts in restraint of trade | Contracts which have the effect of restricting a person's freedom to conduct business; void & unenforceable (violates public policy) if unreasonable |
| Pari Delicto | “in equal fault” if the fault is more or less equal then neither party can claim breach of the contract by the other |
| Misrepresentation | if intentional = rescission +damages + punitive damages (if also tort fraud); if negligent = rescission +damages; if innocent = rescission |
| Caveat Emptor | Let the buyer beware - old common law |
| Unilateral Mistake | Binding unless one party knew the other was mistaken |
| Bilateral Mistake | Both are mistaken |
| Mutual mistake of material fact | Court will often rescind - cow was thought to be barren, wasn’t |
| Mutual mistake of value | Court won’t often rescind - old violin was really a Stradivarius |
| Undue influence | Unfair persuasion by a trusted person |
| Duress | Threat that is unlawfully made which causes involuntary acceptance because there is no alternative |
| Warranty | A guarantee, made by the seller or implied by law, regarding the character, quality, or title of the goods being sold |
| Warranty of title | Under the terms of the UCC any contract of sale automatically includes an implied promise that the seller owns the goods being offered for sale and that they will be delivered free from any security interest, lien, or encumbrance |
| Implied warranty of merchantability | An implied promise that the goods being sold will be usable for the purpose for which they were sold. UCC 2-314 |
| Implied warranty of fitness | An implied promise that the goods being sold will satisfy a special purpose. UCC 2-315 |
| Express warranty | A seller or manufacturer's oral or written promise or affirmation of fact, promise, or description of the product at the time of sale. Becomes part of the “basis of the bargain.” UCC 2-313 |
| Statute of frauds | A statutory requirement that in order to be enforceable certain contracts must be in writing |
| 5 categories to be in writing | 1. real estate; 2. collateral contracts - promises to pay the debt of another; guarantor of a loan; 3. marriage considerations - prenup; 4. goods over $500 (UCC); 5. those that can’t be completed in a year |
| Exceptions to statute of frauds for UCC (over $500) rule | MAPS; Merchant’s written confirmation; Admissions in court; Part performance; Specially manufactured goods |
| Parol Evidence Rule | written contract can't be modified or changed by prior verbal agreements. (forbids introduction of extrinsic evidence which would change the terms of a later written contract.) |
| Merchant’s written confirmation | If one merchant sends a writing sufficient to satisfy the statute of frauds to another merchant, and the receivor does not object to the confirmation within 10 days, the confirmation is good to satisfy the statute as to both parties. |
| Admissions in court | If the party against whom enforcement is sought admits in court that a contract for sale was made, the court can enforce it even though there’s no writing, but the contract is not enforceable under this provision beyond the quantity of goods admitted |
| Part performance | The agreement is enforceable up to the amount already paid, delivered, etc. |
| Specially manufactured goods | Custom orders are enforceable even if not in writing |
| Integration clause | The part of a written agreement that merges all previous oral agreements into the new written document. It is a term in the language of the contract that declares it to be the complete and final agreement between the parties. |
| Exceptions to parol evidence rule | 1.to clear up an ambiguous statement; 2. if it changes only a minor detail; 3. to prove duress or fraud |
| Condition precedent (pre-see-dent) | A provision of contract that suspends the coming into effect of a contract or a term of the contract unless or until a certain event takes place. (if…then) |
| Condition subsequent | A happening which terminates the duty of a party to perform (I will…unless) |
| Complete performance | Contract is terminated once executed |
| Substantial Performance Standard | Although a breach of contract, performance is so nearly equivalent that it would be unreasonable for the owner to deny the agreed upon payment. Owner remains obligated to pay, less any damages suffered as a result of the deficiencies in workmanship. |
| Perfect Performance Standard | e.g. contracts for a loan of money must be perfectly to contract promises; wording such as “time is of the essence” make it clear that a perfect performance standard applies. Substantial performance not good enough. |
| Perfect Tender Rule | The requirement that the goods delivered exactly meet the contractual specifications; Common law rule adopted by the UCC (2-601) |
| Rescission | The act of canceling the contract and returning the parties to the positions they were in prior to the contract having been formed |
| Novation | When a third party is substituted for one of the original parties. This creates a new contract and differs from assignment or delegation. |
| Impossibility | Termination of a contract because no one can fulfill it |
| Commercial Impracticability | Termination of a contract because unforeseen conditions are as such that at least one party no longer receives any benefit (not applicable to market fluctuations) |
| Bankruptcy | Termination of your contracts with others once you are legally declared incapable of paying your debts |
| Alteration of the contract | Termination of a contract occurs if one party has, without permission, changed the contract |
| Assignment | The transfer by one of the original parties of part or all of his interest to a third party. You transfer your right to receive the benefit. (Obligor, Assignor, Assignee) |
| Delegation | The transfer by one of the original parties of his obligations to a third party; original party remains obligated if the third party fails to perform (Obligee, Delegator, Delegatee) |
| Obligor | Person under a contractual obligation to perform |
| Obligee | The party to whom performance is owed |
| Assignor | Individual who transfers a right to another person. |
| Assignee | Individual to whom a right has been transferred. |
| Delegator | The party who incurred the obligation to perform under the original contract |
| Delegatee | The person who assumes the responsibility to perform someone else’s duty |
| Exceptions to assignment/delegation | 1. “Anti-assignment clause” 2. for personal services; 3. public policy issues (garnishing wages); 4. material alteration of a risk or obligation (e.g. you can’t assign your insurance policy to the new tenant) |
| Third-Party Beneficiary | Relationship with a third person that is created at the time the contract is formed. |
| Intended Beneficiary | An explicit third-party beneficiary who has the right to enforce the contract |
| Incidental Beneficiary | An implicit third-party beneficiary who has no right to enforce the contract |
| Creditor beneficiary | created where party A owes some debt to party C, and party A agrees to provide some consideration to party B in exchange for party B's promise to pay party C some part of the amount owed. |
| Donee beneficiary | created where party A wishes to make a gift to party C, and party A agrees to provide some consideration to party B in exchange for party B's promise to pay party C the amount of the gift. |
| Compensatory damages | Direct, actual damages; promised performance-actual performance-mitigation+expenses |
| Mitigation of damages | The requirement that the non-breaching party take reasonable steps to limit his damages |
| Specific performance | Equitable remedy of ordering the breaching party to perform his contractual obligations |
| Cover | UCC term for the finding of substitute goods |
| Consequential damages | Aka special damages; indirect but foreseeable |
| Nominal damages | Monetary damages that are possible when there has been a breach but no provable damages. |
| Liquidated damages clause | A contract provision that specifies what will happen in case of breach |
| Restitution | If one party already has part of the consideration, he must give it back. Court orders the defendant to give up his gains to the claimant (sometimes profit made by breach of contract can be included) |
| Replevin | Old term referring to the legal process of recovering your goods |
| Contract reformation | When court is allowed to “rewrite” contract provisions to conform to what the parties understood or agreed to. |
| Implied waiver | History of ignoring part of a contract (like a late fee), therefore you can’t arbitrarily begin to enforce it without warning |
Created by:
Paralegal
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