Terms of Art and Contract Cases

Law

Acceptance

Agreeing to the terms that have been set forth in a contract

Acceptance by Performance

Doing and completing a specific act, no words are exchanged, but the act makes the contract binding
Requires that at least part of what the offer requests be performed or tendered and includes acceptance by a performance which operates as a return promise. Acceptance by a promise requires that the offeree complete every act essential to the making of the promise.

Advertisement

An invitation to make an offer, with exceptions to contracts forming through specific performance when the advertisement is clear and concise, a reward or challenge or adhesion contract
advertisements are understood to be mere requests to consider and examine and negotiate
if an advertisement is clear, definite, and explicit, and leaves nothing open for negotiation, then the advertisement constitutes an offer, acceptance of which will complete the contract
exception to the general rule for an offer of a reward.

Agents

An agent is a person authorized to act on behalf of another person. The party an agent is authorized to act for is known as the principal. A principal-agent relationship can either be intentionally created or created by implication through one's actions

Agreement

An agreement is a manifestation of mutual assent by two or more persons to one another. It is a meeting of the minds in a common intention, and is made through offer and acceptance. An agreement can be shown from words, conduct, and in some cases, even silence.

Agreement to agree

Not supposed to be enforceable as a contract, but reflect the parties desire to enter into a contract with one another at a later date
Not a contract -- Professor Reid

Allocation of Risk

Allocation of risk is central to all commercial contract negotiations. Each party to a commercial contract seeks to minimize its risk and maximize its reward, which creates an inherent tension between contracting parties. Parties can manage risk by carefully negotiating and drafting many common contractual provisions.
Attempting to predict future risks and determine what to accept in regards to those risks and a contract that deals in the future

Ambiguity

More than one definition of a word

Arbitration Clause

Written contracts may contain an arbitration clause. By using such a clause, the parties agree to arbitrate any future disputes. As with any clause, all parties must agree to it, and the following arbitration clause does not have to be used "as is" in order to use the services of United States Arbitration & Mediation.

Bad Faith

Persuading or taking actions that are not wholesome and are antagonizing, fearful and coercive

Bargain

§ 71. Requirement of Exchange; Type of Exchange
(1) To constitute consideration, a performance or a return promise must be bargained for.
(2) A performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise.
Comment b: "bargained for." In the typical bargain, the consideration and the promise bear a reciprocal relation of motive or inducement: the consideration induces the making of the promise and the promise induces the furnishing of the consideration. Here, as in the matter of mutual assent, the law is concerned with the external manifestation rather than the undisclosed mental state: it is enough that one party manifests an intention to induce the other's response and to be induced by it and that the other responds in accordance with the inducement.... But it is not enough that the promisee induces the conduct of the promise or that the conduct of the promisee induces the making of the promise; both elements must be present, or there is no bargain. Moreover, a mere pretense of bargain does not suffice, as where there is a false recital of consideration or where the purported consideration is merely nominal. In such cases there is no consideration and the promise is enforced, if at all, as a promise binding without consideration under §§82-94.

Bargained For

When people are making a deal they bargain for the best possible outcome for themselves

Bargaining Power

Bargaining power is the relative ability of parties in an argumentative situation to exert influence over each other. If both parties are on an equal footing in a debate, then they will have equal bargaining power, such as in a perfectly competitive market, or between an evenly matched monopoly and monopsony.

Battle of Forms

In a battle of the forms dispute over a contract for goods, between merchants, the final agreement is to contain the terms and conditions that match both parties' forms. The terms that do not match are eliminated and any terms that are added in the acceptance, but are not material, are also a part of the agreement.

Bilateral contract

A promise in exchange for a promise
Bilateral contract: also means that the contract is wholly executory. And what does that mean? It consists of unperformed obligations on both sides of the contract - that is, neither side has begun to perform. The contract at this point consists merely of an exchange of promises

Blue Pencil rule

When a court makes changes to restrictive covenants and eliminates grammatically severable or unreasonable provisions.

Boilerplate

Boilerplate is a colloquial term used to describe stock language in a legal document that appears in all instruments of that type; general, standardized language in a legal instrument.

Breach of Contract

Breaking the terms set forth in a binding contract

Browsewrap

In order for it to be binding, consumers must have reasonable notice of a company's "terms of use" and exhibit "unambiguous assent" to those terms-- usually only enforced against corporations and not individuals

Capacity to contract

If someone is not mentally sound, a minor, or being coerced they do not have capacity to contract

Click-Through Agreements

Online users agree by clicking through a series of screens or screen

Clickwrap

refers to the assent process by which a user must click "I agree" but not necessarily view the contract to which they are assenting

Commercial Contract

Commercial contracts are agreements regulating business relationships between individuals or businesses where they agree to perform some actions or refrain from doing others. Commercial contracts are usually in writing, but they can also be verbal.

Common Law Rules

Unwritten laws based on the legal precedents established by the courts

Communication

The exchange of information from one party to another, essential in creating and terminating contracts

Concealment

Hiding something or preventing it from being known

Condition Precedent

A condition precedent is an event or state of affairs that is required before something else will occur. In contract law, a condition precedent is an event which must occur, unless its non-occurrence is excused, before performance under a contract becomes due, i.e., before any contractual duty exists.

Conditions

A condition of the contract is a requirement or term of the contract with which one or both of the parties must comply. In other contexts, a condition of the contract refers to an uncertain future event which, if it occurs, affects the obligations in the contract.

Consequential Damages

otherwise known as special damages, are damages that can be proven to have occurred because of the failure of one party to meet a contractual obligation; a breach of contract damages.

Consideration

promise, performance, or forbearance bargained by a promisor in exchange for their promise. Consideration is the main element of a contract. Without consideration by both parties, a contract cannot be enforceable. Something in exchange for a promise. Usually of material value to be enforceable.

Contract of Adhesion

A contract that is set up by the seller and to a consumer, the consumer has no bargaining power, they can take it or leave it.
Contract of Adhesion: a contract on a printed standardized form that is offered on a take-it or leave-it basis -- usually by a merchant that monopolizes a particular market or whose bargaining power significantly outweighs that of the consumer. 7 part test
(1) document with lots of terms that looks like it is a contract(2) drafted by only one party for the sake of the transaction(3) drafting party has lots of transactions of the same type(4) presented to adhering party, drafter will only enter transaction on the terms presented(5) document is signed by adherent(6) adhering party enters into transaction of the type specified by the from(7) the principal obligation of the adhering party as a whole is to pay money

Contract with a Condition

An event that must occur before the parties are obligated to perform. For example, an insurance contract may require the insurer to pay to rebuild the customer's home if it is destroyed by fire during the policy period. The fire is a condition precedent.

Contracting Out

the addition of language ina contract which allows the offeror to step out of what otherwise would be a default rule

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Example: when an offeror states the agreement will be valid once I have the contract in my hand… then the mailbox rule will not apply

Counteroffer

an offer made in response to a previous offer by the other party during negotiations for a final contract. Making a counter offer automatically rejects the prior offer, and requires an acceptance under the terms of the counter offer or there is no contract.

Course of Dealing

§ 1-303
(b) A "course of dealing" is a sequence of conduct concerning previous transactions between the parties to a particular transaction that is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct.

Course of Performance

§ 1-303
(a) A "course of performance" is a sequence of conduct between the parties to a particular transaction that exists if: (1) the agreement of the parties with respect to the transaction involves repeated occasions for performance by a party; and (2) the other party, with knowledge of the nature of the performance and

Covenant of Good Faith and Fair Dealing

Implied covenant of good faith and fair dealing (often simplified to good faith) is a rule used by most courts in the United States that requires every party in a contract to implement the agreement as intended, not using means to undercut the purpose of the transaction. The rule applies in the performance of a contract, not to the negotiation of the contract, and the rule applies to generally any contract automatically without being stated in the agreement.
https://www.law.cornell.edu/wex/implied_covenant_of_good_faith_and_fair_dealing

Damages

What is paid to one party in a form of equity. Damages are caused by the defendant and then paid back by the defendant

Deal

take part in commercial trading of a particular commodity.

Death or incapacity (of offeror)

An offeree's power of acceptance terminates when the offeree or offeror dies or is deprived of legal capacity to enter into the proposed contract."
There must be two minds, at least, concurring at the moment the contract is completed.
This concurrence of minds cannot occur where one of the parties is dead or incompetent.
The death or incompetence of one party makes further action by that party impossible. He or she is unable to revoke the offer, terminate negotiations, or take the other steps required to from a contract.
"Therefore, the death of a party while a contract is being made, even though only a single act remains to be done, renders the completion of the contract impossible."
Where the performance of a contract depends on the personal skill or qualification of a party, contract is discharged on the illness or incapacity or death of that party. The man's life is an implied condition of the contract

Default rules

The governing rule as to various aspects of the agreement of the parties, though intending to be bound, have failed to address the particular term. If they don't put it in the terms, law dictates what will happen
In law, a default is the failure to do something required by law or to comply with a contractual obligation. Legal obligations can arise when a response or appearance is required in legal proceedings, after taking out a loan, or as agreed in a contract; failure to carry them out puts one in defaults of the obligations.
UCC allows you to leave open certain terms of a contract and they have gap fillers if there is an issue down the road. These are also called default rules.

Definiteness

The doctrine of definiteness, well established in contract law, means that a court cannot enforce a contract unless it is able to determine what in fact the parties have agreed to

Destroying the Offer

Restatement § 36(1) An offeree's power of acceptance may be terminated by:(a) rejection or counter-offer by the offeree, or(b) lapse of time, or(c) revocation by the offeror, or(d) death or incapacity of the offeror or offeree.(2) In addition, an offeree's power of acceptance is terminated by the nonoccurrence of any condition of acceptance under the terms of the offer.

Detriment

Injury, loss also : the cause of an injury or loss.
A giving up of a thing or mode of conduct to which one is entitled that constitutes consideration for a contract.

Direct Revocation

When the offeror explicitly states, in words, that they are revoking the offer

Disclaimer of Warranties

A limitation to the agreement (warranty) covering the product after purchase
If a buyer us aware of a disclaimer warranty, than it is effective, even if it is not conspicuous

Economic Duress

In contract law, economic duress also called business compulsion, refers to one party's improper or illegal conduct that causes the other party's fear of economic hardship and the fear prevents the party from engaging in a commercial agreement with free will.
1) Economic vulnerability2) Unavailability of alternative supplies3) Threat that cannot be reminded by breach of contract damages

Ejusdem Generis

Of the same class- a general word is limited by the more specific words with which it us used
Example: Lions, tigers, bears and other animals -- probably refers to a wolf, but not a goldfish

Elasticity

In reference to public policy --> it is capable of change depending on peoples values

Employment at will

At-will means that an employer can terminate an employee at any time for any reason, except an illegal one, or for no reason without incurring legal liability. Likewise, an employee is free to leave a job at any time for any or no reason with no adverse legal consequences

Enforceability

(of a law, rule, or obligation) able to be imposed so that it must be complied with.

Equitable Estoppel

A defense in cases for having no consideration in a contract (the shield)
The effect of the voluntary conduct of a party whereby he is absolutely precluded, both at law and in equity, from asserting rights which might, perhaps, have otherwise existed, either of property, of contract, or of remedy, as against another person who in good faith relied upon such conduct, and has been led thereby to change his position for the worse, and who on his part acquires some corresponding right , either of property, of contract or of remedy.

Exculpatory agreement

An exculpatory agreement is usually a provision contained in a contract between a service provider and a participant, relieving the service provider from any liability resulting from loss or damage sustained by the participant. The terms "waiver" and "release of liability" are usually used interchangeably.

Executory Contract

An executory contract is a contract that has not yet been fully performed or fully executed. It is a contract in which both sides still have important performance remaining. However, an obligation to pay money, even if such obligation is material, does not usually make a contract executory.

Express Warranty

Which are statement made or assurances given by the seller concerning the quality or characteristics of the goods subject to the contractArise from overt manifestations

Expressio Unius Exclusio Alterius

A Latin term literally meaning "the expression of one thing is the exclusion of the other". This is a common law principle for construing legislation which holds that a syntactical presumption may be made that an express reference to one matter excludes other matters.

Final expression in a Record

This Agreement is intended by the parties as a final expression of their agreement and as a complete and exclusive statement of its terms. This Agreement supersedes all prior proposals, negotiations, conversations, discussions and agreements among the parties concerning the subject matter hereof.

Firm Offer

offered by merchants in signed writing for the time stated, does not require consideration and is not revocable (only for sale of goods)

Forbearance

The action of refraining from exercising a legal right, especially enforcing the payment of a debt.

Freedom of Contract

Anyone can create a contract and create their own laws out of that contract

Fungible

Of goods contracted for without an individual specimen being specified, able to replace or be replaced by another identical item; mutually interchangeable.

Gift

Cannot be a contract if it is a gift, think of the hairpiece gift

Good faith

"Good faith" has generally been defined as honesty in a person's conduct during the agreement. The obligation to perform in good faith exists even in contracts that expressly allow either party to terminate the contract for any reason. "Fair dealing" usually requires more than just honesty.

Gratuitous Promise

When a party makes a promise to another, either within or outside the context of a contract, where that. promise places an obligation on the party but where that party does not receive anything in return (no. consideration), then the promise is said to be gratuitous. From the Oxford English Dictionary.

Illusory Promise

Something that appears to be a promise but upon further examination reveals that the promisor has not promised to do anything (page 293 of casebook problem as example)
A promise without consideration.
Different from a nudum pactum in form. Illusory promise is in a written contract where nudum pactum is oral.

Imperfect Acceptance

Accepting something, but on additional terms. Like yes I will buy your car, but you have to deliver it to me or fix the breaks on it first or something

Implied in Fact Contract

This term is used to express the idea that contracts might constitute more than what is contained on a written page. The agreement, which becomes enforceable, might contain unspoken assumptions about how business people conduct their affairs how construction contracts are let and bid, and so forth.

Implied Rejection

Not explicitly stating that the offeree reject the offer, but is rejecting it all the same

Implied Warranty of Merchantability

Assurances concerning the sellers title to the goods and their basic quality
Supplied by operation of law
Automatically apart of the contract

Indefiniteness

The quality of being vague and poorly defined. synonyms: indefinity, indeterminacy, indeterminateness, indetermination. types: inconclusiveness. the quality of being inconclusive.

Inquiry Notice

An inquiry notice is a type of legal notice purchaser has knowledge of facts or circumstances which would lead a reasonable person to believe that further investigation of the matter is warranted.

Integration Clause

The parties intend this statement of their agreement to constitute the complete, exclusive, and fully integrated statement of their agreement. (the contract itself).
A merger clause is integrating several documents into a single contract, different than an integration clause but courts sometimes use them interchangeably.

Joke Offer

An offer that is not real, and is supposed to be unrealistic or comical

Lack of Capacity

U.C.C. § 12 Capacity to contract
(1) no one can be bound by contract who has not legal capacity to incur at least viodable contractual duties...
(2) A natural person who manifests assent to a transaction has full legal capacity to incur contractual duties thereby unless he is
(a) under guardianship
(b) an infant
(c) mentally ill or defective
(d) intoxicated

Last Shot Rule

When parties are negotiation a deal or contract, the party that sends the last from gets to have all of their terms because they were the last one to send it and in order to complete the deal the other party has to accept their last form

Legal Fiction

A legal fiction is a fact assumed or created by courts, which is then used in order to help reach a decision or to apply a legal rule. The concept is used almost exclusively in common law jurisdictions. Basically it is the hypotheticals that are created.

Legal Formalism

A theory that legal rules stand separate from other social and political institutions. According to this theory, once lawmakers produce rules, judges apply them to the facts of a case without regard to social interests and public policy.

Legal Realism

Legal realism is a naturalistic approach to law. It is the view that jurisprudence should emulate the methods of natural science, i.e., rely on empirical evidence. Hypotheses must be tested against observations of the world.

Letter of Intent

A letter that states an intention to do some type of business, but not necessarily a binding contract

Mailbox Rule

unless the offer prescribes the contrary, an acceptance sent by reasonable means is effective on DISPATCH and not on receipt.

Manifestation

An event, action, or object that clearly show or embodies something, especially a theory or an idea or...contract

Materiality

Of importance or relevancy to the contract

Meeting of the Minds

A phrase courts will use routinely to describe the moment an agreement is reached --> misleading because its not really possible or desirable

Merger Clause

In contract law, an integration clause, merger clause, is a clause in a written contract which declares that contract to be the complete and final agreement between the parties. It is often placed at or towards the end of the contract. It supersedes any prior agreements.

Mirror Image Rule

Reference:Gresser V. Holzer
The material of the contract cannot change, and if it does the contract is not valid. Dates cannot change.
In the law of contracts, the mirror image rule, also referred to as an unequivocal and absolute acceptance requirement, states that an offer must be accepted exactly with no modifications.
-Applies to real estate, employment, things that are immovable and not goods

Misrepresentation

Giving a false or misleading representation of events or facts

Modification

A change to an existing contract is a modification. A contract modification could change the scope of the contract, the price of the contract, or both

Mutual Assent

Basically when there is an agreement between the two parties to enter a binding contract based on there terms that they have negotiated

Mutual Mistake

The parties have intended to make a contract but have failed to express their mutual obligations with perfect clarity
Restatement of Contracts § 20: Effect on Misunderstanding
(1) There is no manifestation of mutual assent to an exchange if the parties attach materially different meanings to their manifestations
(a) neither party knows or has reason to know the meaning attached by the other
(b) each party knows or each party has reason to know the meaning attached by the other
(2) the manifestations of the parties are operative in accordance with the meaning attached to them by one of the parties if:
(a) that party does not know of any different meaning attached by the other, and the other knows the meaning attached by the first part, or
(b) that party has no reason to know of any different meaning attached by the other, and the other has reason to know the meaning attached by the first party

Mutuality of Obligation

Under this doctrine, both parties must be bound to perform their obligations or the law will treat the agreement as if neither party is bound to perform. When an offeree and offeror exchange promises to perform, one party may not be given the absolute and unlimited right to cancel the contract
Example: the obligation on the employer to provide work and the obligation on the employee to accept that work. This is a necessary feature of the relationship between an employer and an employee.

Negotiation

The act of compromising before an agreement is made to get the best desired outcome for both parties

Nominal Consideration

Consideration in name only; a token

Non-Compete Clause

In contract law, a non-compete clause, restrictive covenant, or covenant not to compete, is a clause under which one party agrees not to enter into or start a similar profession or trade in competition against another party. Some courts refer to these as "restrictive covenants".

Non-Disclosure of Defects

Failing to disclose something to another party

Notice

When one party communicates their revocation of an offer to the other party, there needs to be proper notice

Nudum Pactum

A naked promise. A promise that is not enforceable and has no consideration.

Objective Theory of Contract Formation

The objective theory of contracts holds that an agreement between parties is legally binding if, in the opinion of a reasonable person who is not a party to the contract, an offer has been made and accepted.

Offer

A promise to do or refrain from doing something in exchange for something else. An offer must be stated and delivered in a way that would lead a reasonable person to expect a binding contract to arise from its acceptance

Option Contracts

Irrevocable for a period of time that is specified in the contract, you are literally buying time to get your affairs in order so you can complete another contract. This is a separate contract to complete another contract.
A contract that is designed to literally buy time in order to arrange affairs to complete a separate contract. Can be completed through lapse of time of through completing the second contract that time is being bought for.

Oral Agreement

When parties agree to do something orally and do not write those terms in words