The Contract Law Paralegal - Terms

liable

legally responsible for a duty or obligation, especially in terms of financial compensation or legal penalties.

damages

the remedy that a party requests that the court award to make the injured party whole; granted if there was breach of duty or rights violation

compensatory damages

actual losses incurred due to breach of contract/duty

consequential damages

aka ‘special damages’, indirect damages that arise from special circumstances beyond the contract itself, known to both parties at the time of agreement; only recoverable if foreseeable by breaching party

incidental damages

minor expenses incurred due to breach (ex: finding a substitute supplier)

liquidated damages

pre-determined amount set out in contract as penalty for specific breach; usually if damages are hard to calculate —> courts enforce if reasonable amount

nominal damages

awarded but non-breaching party suffers no actual loss; damages are symbolic with insignificant compensation

equitable remedies

non-monetary solutions involving performance or rescission

specific performance

requires breaching party to fulfill obligations under contract; usually ordered if subject matter is unique (ex: real estate, rare items, artwork) —> courts more likely to award this if monetary damages are inadequate

rescission

allows non-breaching party to cancel contract entirely; common where there is fraud, misrepresentation, or material breach undermining contract’s purpose

reformation

equitable remedy where court modified contract to reflect true intent of the parties; rare but used to correct mistakes preventing proper enforcement (ex: clerical error in real estate sale —> court corrects if both parties have mutual assent)

material breach

breach that defeats the purpose of a contract; excuses non-breaching party from further performance and entitles them to remedies

minor/partial breach

breach in which the non-breaching party may still need to perform but can seek damages for losses incurred (ex: restaurant serves wrong dish —> may take it off the bill instead of comping whole meal)

anticipatory breach

aka repudiation, when one party of a contract states or demonstrates their intention to not fulfill their contractual obligations prior to performance/delivery deadline

statute of frauds (1677)

legal doctrine requiring specific types of contracts to be in writing and signed by the party against whom enforcement is sought (ex: real estate transactions or agreements over time)

pacta sunt servanda

roman concept in which agreements must be kept

mutual assent

aka ‘meeting of the minds’, where both parties understand and accept terms

consideration

something of value to be exchanged between parties to create an enforceable contract (ex: money, goods, services)

uniform commercial code (UCC)

comprehensive model set of laws that standardizes commercial and business transactions across the US:

• adopted to some extent in all 50 states

• advantage of flexibility; contracts still enforceable if some terms left undefined

• introduced battle of the forms, warranties, and performance obligations (ex: rules on inspections and acceptance of goods)

battle of the forms

UCC section 2-207, helps resolve conflicts where there are differing purchase orders, invoices, contracts —> last document exchanged is the final agreed contract

offer

a clear proposal by one party to another intending to form a contract upon acceptance

acceptance

clear and unequivocal agreement to the terms of an offer, completing a contract

adhesion contract

‘take it or leave it’, contract that one party presents with little or no opportunity for negotiation

bilateral contract

contract involving mutual promises where each party commits to fulfilling specific obligations

capacity

the legal ability to enter into a contract, often limited by age, mental condition, or intoxication

conditional contract

contract that is dependent on the occurrence or non-occurrence of a specified event

executed contract

contract that is fully performed by all parties

executory contract

a contract with remaining obligations for one or both parties

express contract

a contract with explicitly states terms, either written or verbal

firm offer

under the UCC, an irrevocable offer by a merchant to keep an offer open for a specified time

implied-in-fact contract

contract inferred from actions or conduct rather than written or spoken words

indemnity clause

clause requiring one party to compensate the other for certain damages or losses

promissory estoppel

legal doctrine that enforces a promise when a party has reasonably relied on it to their detriment (ex: job offer withdrawn after candidate relocates)

quasi/implied-in-law contract

contract that prevents unjust enrichment, imposed by the courts

third-party beneficiary

an individual who benefits from a contract between two other parties and may have rights to enforce it

unilateral contract

contract formed by a promise in exchange for performance, enforceable only upon completion of specific act (ex: ad to find lost dog)

void contract

unenforceable contract often due to illegality of subject matter or lack of essential elements (ex: no consideration)

voidable contract

a contract one party can legally void, often due to fraud, misrepresentation, or lack of capacity

waiver

the voluntary relinquishment of a known right, often included as a clause in contracts

conditional offer

an offer than includes specific conditions that must be met before offeree can accept (ex: obtaining financing or passing inspection)

counteroffer

response by the offeree that proposed different or new terms from OG offer, terminating OG offer and creating a new one

definite terms

essential elements in an offer to ensure clarity and enforceability by outlining rights and obligations of each party (ex: price, quantity, subject matter)

express offer

offer explicitly stated in writing or verbally, leaving no ambiguity in the terms or intent to form a contract

implied offer

offer inferred from actions or circumstances rather than written/verbally

intent to contract

the offeror’s clear and serious intention to be bound by the offer upon acceptance, assessed by on outward expressions rather than internal thoughts (objective theory of contracts)

invitation to negotiate

a preliminary communication that encourages further discussion and proposals without indicating an intent to form a binding contract

mailbox rule

rule that makes acceptance effective once it is dispatched (ex: mailed) vs. revocation, rejection, or counteroffers are effective upon receipt

option contract

contract where the offeror agrees to keep an offer open for a specific period in exchange for consideration, providing the offeree exclusive rights to accept

preliminary negotiations

early discussions that indicate interest in reaching an agreement but lack definite terms or intent to be legally bound

price quotation

a non-binding statement of price typically provided as an informational response to inquiring, without clear commitment to sell at that price

rejection

offeree’s refusal of the terms presented in the offer, terminating their ability to accept it later

revocation

the withdrawal of an offer by the offeror before acceptance, effectively ending the offeree’s ability to accept the original terms

supervening illegality

an event or legal change that renders an offer illegal, resulting in automatic termination of the offer

unilateral offer

an offer than can be accepted only through performance of a specific act by offeree, often seen in reward offers

accord and satisfaction

an agreement to accept a different performance than originally agreed upon to discharge an existing obligation

assignment

the transfer of contractual rights from one party to another, allowing the assignee to enforce the contract

breach

failure to performance any term of a contract without a valid legal excuse, giving the other party ground for remedies

burden of proof

the obligation of a party to prove facts in a dispute, often resting on the plaintiff in contract cases

causation

a link between one party’s breach and the resulting harm suffered by the other party, necessary for claiming damages

claim for damages

a demand for compensation due to a breach, intended to place the injured party in the position they would have been if the contract was performed

defenses to contract enforcement

legal reasons excusing a party from fulfilling contractual obligations:

• duress

• undue influence

  • mistake

delegation

transfer of contractual duties to a third party who performs on behalf of the original party

duress

coercion or threats used to force someone into a contract, potentially rendering the contract voidable

expectation damages

damages intended to put the non-breaching party in the position they would have been if the contract was performed as agreed

foreseeability

the anticipation that certain damages or losses might result from a breach, which affects claims for consequential damages

frustration of purpose

a doctrine where unforeseen events destroy the contract’s purpose, excusing both parties from performance

impracticability

a defense that allows a party to avoid performance when an unforeseeable event makes fulfilling the contract extremely difficult or costly

injunction

a court order requiring a party to do or refrain from doing a specific act, often used to prevent further harm

intended beneficiary

a third party who was meant to benefit from a contract and may have enforceable rights

liquidated damages

a predetermined amount of damages specified in the contract to be paid if a breach occurs

mitigation of damages

the requirement that an injured party takes reasonable steps to reduce or limit their losses after a breach

novation

substitution of a new contract or party in place of an old one, releasing the original party from obligations

parol evidence rule

rule that excludes evidence of prior agreements that contradict a written contract, barring certain exceptions

penalty clause

contract term specifying a monetary penalty for breach, not enforceable unless it is reasonable and resembles liquidated damages

precedent condition

a condition that must occur before a party’s contractual obligation becomes enforceable

quantum meruit

compensation for work performed when there is no enforceable contract, based on the reasonable value of services

quasi-contract

an implied in law contract where a court enforced payment to prevent unjust enrichment, even if no contract exists

restitution

restoration of benefits conferred to avoid unjust enrichment, often used in cases of rescinded contracts

substantial performance

fulfillment of enough contractual terms to warrant payment, even if minor deviations exist

misrepresentation

one party makes false statement of material fact, giving ground for rescission or damages

fraudulent

false statement made with knowledge of falsity

negligent

party fails to take reasonable care to ensure accuracy

innocent

made without fault, party believed it to be true

mistake

one or both parties have fundamental misunderstanding re key fact or nature of the contract

adequacy of consideration

the concept that the value exchanged need not be equivalent but must be legally sufficient

illusory promise

a statement that appears to promise action but lacks commitment or clarity of terms, making it unenforceable as consideration

past consideration

an act completed before the conract, generally not valid as current consideration

moral obligation

duties based on personal ethics, usually insufficient for enforceable consideration

preexisting duty

an obligation already required by law, which cannot serve as valid consideration for a new promise

settlement of claims

agreement to settle legal disputes, often involving compromises as consideration

usury laws

regulations setting limits on interest rates in lending, invalidating overly high interest agreements

unconscionable contracts

contracts so one-sided they are deemed unfair and uneforceable

non-compete agreement

clauses restricting parties from competing within a certain field or region for a set time

licensing agreements

conditions requiring parties to hold licenses for certain services or activities

contracts in restraint of trade

agreements that limit fair competition, often void for restricting market freedom

in pari delicto

doctrine denying relief to parties equally at fault in an illegal contract

mirror image rule

rule that mandates acceptance must exactly match the terms of an offer without alteration; strict in common law but flexible under UCC

bargained-for exchange

key element of consideration, must be something parties negotiated or agreed on

benefit conferred

any advantage, asset, value that one party provides to another, enhancing the receiving party’s position/resources

detriment incurred

party giving up a right, taking on obligation, forgoing something of value as party of agreement (not necessarily a loss)