Contract Law and the Uniform Commercial Code (UCC)

Comprehensive vocabulary flashcards covering the fundamentals of contract law, defenses, third-party rights, remedies, and UCC sales and warranties.

Contract

An agreement that the law will enforce.

Offer

A serious proposal with reasonably clear terms, communicated to the other person.

Acceptance

An agreement to an offer that must generally be clear and cannot add new conditions.

Counteroffer

A response that adds or changes terms to an offer, which rejects the original offer and creates a new one.

Bilateral contract

A contract in which both sides exchange promises.

Unilateral contract

A contract where one person promises something in exchange for an act.

Express contract

A contract whose terms are stated in words, either spoken or written.

Implied-in-fact contract

A contract where the parties' actions show that they made an agreement.

Executed contract

A contract in which the parties have completed their obligations.

Executory contract

A contract in which some obligations still need to be completed.

Option contract

An agreement where the offeror promises to keep an offer open for a certain time, usually in exchange for something of value.

Mailbox rule

A legal rule stating that acceptance generally becomes effective when it is sent (if the proper communication method is used), whereas rejection or revocation generally takes effect when received.

Consideration

The value exchanged in a contract, which can be money, goods, services, or a promise to do or not do something.

Preexisting duty

A legal duty a person already has to do something, which usually prevents a promise to do it from counting as consideration.

Past consideration

A promise based only on an event that occurred in the past, which usually does not qualify as consideration.

Illusory promise

A promise that does not actually commit the person to anything and thus fails to count as consideration.

Promissory estoppel

A legal doctrine where a court enforces a promise because someone reasonably relied on it and would be harmed if the promise were not kept.

Quasi contract

A court-imposed obligation requiring payment to prevent one person from unfairly benefiting at another person's expense, even without an actual contract.

Capacity

The legal ability of a person to enter into a contract.

Disaffirm

The act of a minor canceling a voidable contract.

Ratify

Choosing to keep a contract upon reaching adulthood.

Fraud

An intentional lie or misrepresentation utilized to induce someone to agree to a contract.

Scienter

Knowledge that a statement was false, or making a statement recklessly.

Duress

Agreement to a contract caused by an improper threat or pressure.

Undue influence

Unfair pressure applied by someone who utilizes a position of trust or power to get another person to agree.

Void contract

An agreement that has no legal effect from the beginning, often because its purpose is illegal.

Voidable contract

A contract where one party possesses the legal choice to cancel it.

Unenforceable contract

A contract that may be a real agreement, but a legal rule prevents a court from enforcing it.

Procedural unconscionability

Unfairness in how an agreement was formed, such as concealing important terms in tiny print.

Substantive unconscionability

Contract terms that are overly harsh or one-sided.

Privity of contract

The legal relationship meaning that the parties to a contract generally hold the rights and duties under it.

Assignment

The transfer of a contract right to another individual.

Delegation

Arranging for someone else to perform a contract duty.

Intended beneficiary

A non-party whom the contracting parties specifically meant to benefit, giving them the potential ability to enforce the promise.

Incidental beneficiary

A non-party who benefits from a contract merely by chance and generally cannot enforce it.

Novation

Replacing a contract party or obligation with a new one through universal agreement, releasing the original party from the duty.

Subrogation

The process where one party steps into another party's legal rights, typically after paying a debt or an insurance claim.

Statute of Frauds

A legal rule requiring specific contracts—such as land sales, agreements lasting over one year, promises to pay another's debt, or goods sales of $\$500$ or more under the UCC—to be in writing to be enforceable.

Accord and satisfaction

An agreement to accept different performance—often a smaller payment—to settle an existing dispute, where the accord is the new agreement and the satisfaction is carrying it out.

Divisible contract

A contract that can be split into separate parts, allowing each part to be performed and paid for separately.

Condition

An event that must happen before a party's duty becomes due.

Substantial performance

Completion of most work under a contract with only minor defects, entitling payment minus the cost of repairing the defects.

Material breach

A serious contractual failure that substantially affects the contract and may excuse the non-breaching party from performing.

Repudiation

A party's clear indication before the due date that they will not perform their contractual obligations.

Compensatory damages

Money awarded to cover the loss directly caused by a contract breach.

Consequential damages

Extra losses caused by a breach that were reasonably foreseeable when the contract was made.

Liquidated damages

A preset amount agreed upon by the parties in advance, enforceable if actual damages are difficult to estimate and the sum is reasonable.

Mitigation

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

Rescission

An equitable remedy that cancels the contract and attempts to return the parties to their original positions.

Restitution

An equitable remedy that returns money or property given under a contract.

Specific performance

A court order requiring a party to perform their promise, typically used when money is inadequate, such as for unique land or goods.

Reformation

An equitable remedy correcting a written contract so that it reflects what the parties actually agreed upon.

Predominant-factor test

A legal standard used by courts when a transaction includes both goods and services to identify which aspect constitutes the main purpose of the deal.

Merchant

A person who regularly deals in specified goods or possesses special knowledge or skill related to them.

Merchant's firm offer

A signed written assurance by a merchant to keep an offer open, irrevocable for the period stated, or for a reasonable time up to the UCC limit if no period is stated.

Perfect tender rule

A rule under the UCC generally permitting the buyer to accept goods, reject the whole shipment, or accept some and reject the rest if the goods do not match the contract.

Right to cure

The seller's legal opportunity to fix or replace nonconforming goods under certain conditions, particularly if the delivery deadline has not yet passed.

Express warranty

A seller's factual promise, description, sample, or model that becomes part of the bargain without requiring the explicit terms 'warranty' or 'guarantee.'

Implied warranty of merchantability

An automatic promise by a merchant seller that goods are fit for their ordinary purpose.

Implied warranty of fitness for a particular purpose

A warranty applicable when a seller knows the buyer's special purpose and the buyer relies on the seller's judgment to select suitable goods.

Warranty of title

A seller's promise that they hold the legal right to sell the goods and that the items are free from undisclosed claims.