Business Law Contracts, Remedies & UCC Sales: Chapters 10–12

VALID CONTRACT

A contract that meets all legal requirements and can be enforced by a court.

VOID CONTRACT

An agreement that has no legal effect as a contract.

VOIDABLE CONTRACT

A contract that one party has the legal right to cancel or avoid.

EXPRESS CONTRACT

A contract in which the agreement is stated in spoken or written words.

IMPLIED CONTRACT (IMPLIED-IN-FACT)

A contract shown through the actions and behavior of the parties rather than directly stated words.

ILLEGAL CONTRACT — VOID

An agreement with an illegal purpose that generally cannot be enforced by a court.

UNENFORCEABLE CONTRACT

An agreement that cannot be enforced in court because of a legal rule or problem.

BILATERAL CONTRACT

A contract in which each party exchanges a promise.

UNILATERAL CONTRACT

A contract in which a promise is exchanged for an action or performance.

UNCONSCIONABLE CONTRACT

A contract with extremely unfair terms or an unfair process of making the agreement.

EXECUTED CONTRACT

A contract in which the parties have completed their obligations.

EXECUTORY CONTRACT

A contract in which at least one party still has obligations to complete.

ORAL CONTRACT

A contract made through spoken words rather than a written agreement.

WRITTEN CONTRACT

A contract whose terms are recorded in writing.

OFFER

A proposal to make a contract that shows serious intent, has definite terms, and is communicated to the other party.

ACCEPTANCE

An agreement to the terms of an offer.

CONSIDERATION

Something of legal value exchanged between parties, such as money, a promise, or an action.

CAPACITY

The legal ability to enter into a contract.

LEGALITY

The requirement that a contract have a lawful purpose.

EXPIRATION

The ending of an offer when its stated deadline passes.

REASONABLE TIME

The amount of time that is fair under the circumstances when no specific deadline is given.

REVOCATION OF OFFER

When the person making an offer takes it back before it is accepted.

TERMINATION OF OFFER

When an offer ends and can no longer be accepted.

OPTION CONTRACT

An agreement supported by consideration that keeps an offer open for a specified period.

COUNTEROFFER

A response that rejects the original offer and proposes different terms.

MAILBOX RULE

A rule that generally makes a properly sent acceptance effective when it is dispatched, rather than when it is received.

MINORS

People who have not reached the age of majority, generally under 18.

RATIFICATION

When someone approves or accepts a contract that they previously had the right to avoid, such as a minor affirming a contract after reaching adulthood.

DIVISIBLE CONTRACT

A contract that can be separated into parts, with each part treated as a separate obligation.

QUASI CONTRACT

A legal remedy that may require someone to pay for a benefit received to prevent unfair enrichment, even when there is no actual contract.

PROMISSORY ESTOPPEL

A legal principle that may enforce a promise when someone reasonably relies on it and would suffer unfair harm if it were not honored.

CONDITIONS

Events that must occur, or must not occur, for a contractual duty to begin, continue, or end.

ACCORD AND SATISFACTION

An agreement to accept a different performance or payment to settle an existing obligation, followed by completion of that agreement.

UNILATERAL MISTAKE

When only one party is mistaken about an important fact. The contract is generally enforceable unless an exception applies.

BILATERAL MISTAKE

When both parties share a mistaken belief about an important fact. This may make the contract voidable.

FRAUD — ELEMENTS

Fraud generally involves a false statement about an important fact, intent to deceive, justifiable reliance, and harm for a damages claim.

SCIENTER

Knowledge that a statement is false, or awareness of its falsity, when making the statement.

UNDUE INFLUENCE

When someone uses a position of trust or power to unfairly influence another person's decision.

DURESS

When someone is forced into an agreement through improper threats or pressure.

BUSINESS SALE

The sale of a business, which may involve special contract terms, including reasonable restrictions designed to protect the business's goodwill.

PLEDGE

A promise or commitment to give or do something. The exact legal effect depends on the circumstances and whether the promise is legally enforceable.

ADVERTISEMENT

Generally, an invitation for customers to make offers rather than an offer that can automatically be accepted.

PRIVITY OF CONTRACT

The relationship between parties to a contract, which generally determines who can enforce its terms.

ASSIGNMENT

The transfer of a contractual right from one party to another.

DELEGATION

The transfer of a contractual duty to another person.

SUBROGATION

When someone who pays another person's obligation gains the right to pursue the original claim against the responsible party.

THIRD-PARTY BENEFICIARY

Someone who is not a party to a contract but may benefit from it.

INTENDED BENEFICIARY

A third party the contracting parties intended to benefit, who may have the right to enforce the contract.

INCIDENTAL BENEFICIARY

Someone who benefits from a contract by chance but generally cannot enforce it.

NOVATION

An agreement that replaces an existing contract or party with a new one and releases the original obligation or party as agreed.

STATUTE OF FRAUDS

A law requiring certain types of contracts to be in writing to be enforceable.

LIQUIDATED DAMAGES

An amount agreed upon in advance as damages if a contract is breached, generally enforceable when actual damages are difficult to estimate and the amount is reasonable.

COMPENSATORY DAMAGES

Money intended to compensate the injured party for losses caused by a breach.

CONSEQUENTIAL DAMAGES

Additional losses resulting from a breach that occur because of the particular circumstances and were sufficiently foreseeable.

MITIGATION OF DAMAGES

The requirement that an injured party take reasonable steps to reduce their losses.

FULL PERFORMANCE

When a party completely fulfills their contractual obligations.

SUBSTANTIAL PERFORMANCE

When a party completes most of the contract's important requirements but has minor defects or incomplete details.

MATERIAL BREACH

A serious failure to fulfill a contractual obligation that substantially affects the agreement.

EQUITABLE REMEDIES

Court-ordered solutions other than ordinary money damages, such as rescission, restitution, specific performance, and reformation.

PENALTY

An excessive amount intended to punish a party for breaching a contract; generally unenforceable as a contract-damages provision.

REPUDIATION

When a party clearly indicates that they will not fulfill their contractual obligations.

LOTTERY

A game of chance involving prizes. Contracts connected to illegal gambling may be unenforceable; the exact rule depends on applicable law.

RESCISSION

Cancellation of a contract, generally with the goal of returning the parties to their original positions.

RESTITUTION

Returning money, property, or benefits to prevent one party from unfairly keeping what they received.

SPECIFIC PERFORMANCE

A court order requiring a party to carry out the contract, generally used when money damages are inadequate, such as for unique property.

REFORMATION

A court's correction of a written contract so it reflects the parties' actual agreement when a qualifying mistake or similar problem occurred.

COMMERCIAL CODE (UCC)

The Uniform Commercial Code, which provides rules for commercial transactions, including sales of goods.

SALE OF GOODS

A transaction in which ownership of physical, movable items transfers from seller to buyer for a price.

MERCHANTS

People or businesses that regularly deal in particular goods or have special knowledge or skills related to them.

FIRM OFFER

Under the UCC, a qualifying written and signed assurance by a merchant to keep an offer open, which can be irrevocable for the legally permitted period without consideration.

SPECIAL STANDARDS

Rules that apply differently to merchants because of their special knowledge, experience, or role in commercial transactions.

QUANTITY TERM

The amount of goods involved in a contract. Under the UCC, quantity generally must be stated for an offer to be sufficiently definite.

REJECTION

When the person receiving an offer refuses it. A rejection generally ends the offer once it reaches the offeror.

ACCEPTANCE UNDER THE UCC

Agreement to an offer, which may be shown by a prompt promise to ship or by shipment of goods, as allowed by the UCC.

ACCEPTANCE IN A BILATERAL CONTRACT

Acceptance by promising to perform what the offer requires.

PROMISE TO SHIP

A seller's promise to send goods to the buyer, which can serve as acceptance of an offer to buy goods under the UCC.

REQUIREMENTS CONTRACT

A contract in which the buyer agrees to purchase their actual good-faith needs for a product from a seller.

OUTPUT CONTRACT

A contract in which a buyer agrees to purchase the seller's actual good-faith production of a product.

WARRANTIES

Promises or assurances about goods, such as their quality, condition, performance, or ownership.

EXPRESS WARRANTY

A specific promise, description, sample, or model that becomes part of the basis of the bargain.

IMPLIED WARRANTY OF MERCHANTABILITY

A warranty that goods sold by a qualifying merchant are fit for the ordinary purposes for which such goods are used.

IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE

A warranty that goods are suitable for a particular purpose when the seller has reason to know that purpose and the buyer relies on the seller's judgment.

WARRANTY OF TITLE

A warranty that the seller has the legal right to transfer the goods and that the transfer is rightful.

PERFECT TENDER RULE

Under the UCC, a buyer may generally accept goods, reject the entire delivery, or accept part and reject part if the goods or tender fail to conform to the contract, subject to applicable exceptions and limits.

CONFORMING GOODS

Goods that meet the requirements of the contract.

TENDER OF DELIVERY

When the seller makes conforming goods available to the buyer in the required manner and at the appropriate time and place.

GOOD FAITH

Honesty in conduct and compliance with reasonable standards of fair dealing.

STATUTE OF FRAUDS — UCC SALES

A qualifying sale-of-goods contract generally needs a signed writing indicating a contract and stating a quantity to be enforceable, subject to exceptions.

MERCHANT CONFIRMATION RULE

Between merchants, a qualifying written confirmation of an oral agreement can satisfy the writing requirement against the receiving merchant if the legal requirements are met and the recipient does not object within the required time.

SPECIALLY MANUFACTURED GOODS EXCEPTION

A writing may not be required for specially made goods unsuitable for resale to others when the seller has substantially begun making them or made qualifying commitments.

ADMISSION EXCEPTION

A qualifying oral sales contract may be enforceable to the extent a party admits in court that the contract was made.

PARTIAL PERFORMANCE EXCEPTION

A qualifying sales contract may be enforceable for goods paid for and accepted, or goods received and accepted, depending on the circumstances.

SELLER'S REMEDIES

If the buyer breaches, the seller may have rights such as canceling, withholding delivery, reselling the goods, or seeking permitted damages.

BUYER'S REMEDIES

If the seller breaches, the buyer may have rights such as canceling, rejecting goods, obtaining substitute goods, seeking damages, or requesting specific performance when appropriate.

PERFECT TENDER — BUYER'S OPTIONS

When a delivery fails to conform, the buyer may generally accept all, reject all, or accept part and reject part, subject to applicable rules.

LEASES

Transactions that give someone the right to use goods for a period of time in exchange for payment.