Contracts

Final Exams

Goods

Items that are produced for sale or trade.

Merchant

A person or business engaged in commercial trade, typically buying goods to sell them at a profit.

Offer

A proposal to buy or sell goods or services at a specified price.

Manifestation of Assent

The expression of agreement by one party to the terms set by another, indicating a willingness to enter into a contract.

Revocation of An Offer

The formal withdrawal of an offer by the offeror before it has been accepted, rendering the offer no longer valid.

Option

A contractual agreement that gives a party the right, but not the obligation, to buy or sell an asset at a predetermined price within a specified time period.

Firm Offer Rule

A legal principle that states an offer made by a merchant is irrevocable for a certain period if it is in writing and signed.

Rejection of an Offer

The refusal of an offer by the offeree, which terminates the offer and prevents any future acceptance.

Counter Offer

A response to an offer in which the original terms are altered, creating a new offer that the original offeror can accept or reject.

Conditional Acceptance

An acceptance of an offer that modifies the terms and makes acceptance contingent upon the proposed changes. This effectively acts as a counter offer.

Mirror Image Rule

A legal doctrine stating that an acceptance must exactly match the terms of the offer to create a binding contract.

2-207(1) CONTRACT

A section of the UCC that addresses the effect of additional or different terms in an acceptance, allowing a contract to be formed even if the acceptance includes modifications. This section allows for the formation of a contract despite differing terms, unless the acceptance is expressly made conditional on the original terms.

2-207(3) CONTRACT

A provision in the UCC that states when a contract has been formed under subsection (1), the additional terms are considered proposals for addition to the contract unless both parties are merchants.

Acceptance

The act of agreeing to the terms of an offer, thereby forming a contract.

Unilateral

contract in which only one party makes a promise or performs an act in exchange for the other party's performance.

Bilateral

A type of contract in which both parties make mutual promises to perform their respective obligations.

Consideration

Something of value exchanged between parties to a contract, essential for its validity.

Bargained For

exchange in a contract that involves something of value.

Legal Detriment

When a party incurs a loss or sacrifice as part of a contractual agreement, which is necessary for establishing consideration.

Pre-Existing Legal Duty Rule

A principle that holds that a promise to fulfill a duty that one is already legally obligated to perform cannot constitute consideration for a new contract.

Modification Agreement

a contract that changes the terms of a previous agreement between parties, often requiring new consideration.

Promissory Estoppel

A legal doctrine that prevents a party from withdrawing a promise made to another party if the latter has relied on that promise to their detriment.

Parol Evidence Rule

A rule that prohibits the introduction of extrinsic evidence to alter or contradict the terms of a written contract, ensuring that the written agreement is considered the final and complete expression of the parties' intentions. Excludes extrinsic evidence of a prior oral agreement that is inconsistent with, or contradicts, the integrated written agreement.

Integration

a doctrine that states when a written contract is intended to be a complete and final expression of the parties' agreement, any prior oral or written agreements cannot be used to vary the terms.

Complete Integration

occurs when a written contract is intended to be the sole and final agreement between the parties, preventing the introduction of any evidence that contradicts its terms.

Partial Integration

occurs when a written contract is intended to supplement prior agreements or terms but is not considered the final agreement. As such, evidence of prior agreements may be admissible, but terms in the written document are still binding.

Merger Clause

a clause in a contract that indicates it is the final and complete agreement between the parties, thereby excluding any prior agreements or understandings.

Plain Meaning/Four Corners

rule that limits contract interpretation to the written words within the document, excluding external evidence to understand its meaning.

Course of Performance

refers to how the parties have acted under the terms of a contract during performance, which can help interpret ambiguous terms or conditions based on their conduct.

Course of Dealing

refers to the historical conduct and communication between parties in prior transactions, which can inform the interpretation of a current contract and clarify intentions.

Custom and Usage A/K/A Trade Custom

refers to established practices and norms within a particular industry or community that can help interpret contract terms, reflecting what is commonly accepted or expected among parties in similar circumstances.

Implied Warranty of Merchantability

is a legal assurance that goods are fit for their ordinary purpose and meet the standards of quality and performance typically expected by buyers in the market.

Implied Warranty of Fitness

is a legal assurance that goods are suitable for a particular purpose as specified by the buyer, provided the seller has reason to know of that purpose.

Economic Duress

occurs when one party is forced to agree to a contract under threat or coercion that leaves them with no reasonable alternative.

Unconscionability

is a legal doctrine that refers to unfair or overly harsh agreements that result in an outcome that is shocking to the conscience, often due to a significant disparity in bargaining power.

Substantive Unconscionability

refers to the actual terms of a contract being oppressive or unfair, leading to an unreasonable advantage for one party over another.

Procedural Unconscionability

describes flaws in the process of contract formation, often involving issues such as lack of meaningful choice or unfair surprise that can make an agreement fundamentally unfair.

Misrepresentation of existing fact

occurs when a false statement is made about a fact that is currently true, which induces another party to enter into a contract. This can lead to legal consequences, including the possibility of rescission of the contract.

Mistake of existing fact

occurs when one or both parties have a false belief about a fact that is material to the contract at the time it was formed, potentially rendering the agreement voidable.

Bears the risk of the mistake

refers to the party in a contract who assumes the consequences of a mistake, meaning they cannot seek recourse against the other party for the mistake.

Statute of Frauds

requires certain contracts to be in writing to be enforceable, typically including agreements involving the sale of real estate, contracts that cannot be performed within one year, and guarantees. This statute aims to prevent fraud and misunderstandings by ensuring clarity of contractual terms.

Within the Statute

of Frauds, contracts must be written to be enforceable, covering specific agreements such as real estate sales or contracts that cannot be completed within a year.

Satisfying the Statute

of Frauds requires that certain agreements be documented in writing to ensure enforceability in a court of law.

Material Breach

occurs when a party fails to perform a significant part of a contract, undermining its essential purpose and allowing the non-breaching party to terminate the agreement.

Anticipatory Repudiation

is a situation in which one party indicates they will not fulfill their contractual obligations before the performance is due, allowing the other party to seek remedies.

Condition

a specific requirement or event that must occur before a party is obligated to perform their duties under a contract.

Strict Compliance

refers to the requirement that a party must adhere exactly to the terms and conditions of a contract without deviation, ensuring that all obligations are met as specified.

Force Majeure

a clause in contracts that frees both parties from liability or obligation when an unexpected event occurs that prevents fulfillment of the contract.

Impossibility/Impracticability

a legal doctrine that relieves parties from their contractual obligations when an unforeseen event makes performance impossible or commercially impracticable.

Frustration of Purpose

a legal concept where a party's principal purpose for entering into a contract is no longer achievable due to unforeseen events, leading to the potential discharge of the contract's obligations.

Nondisclosure

a legal agreement preventing the sharing of confidential information between parties.

Concealment

the act of intentionally hiding or failing to disclose relevant information that should be revealed, often in a contractual context.

Specific Performance

a legal remedy where a court orders a party to perform their contractual duties as agreed, rather than awarding monetary damages.

Expectation Interest

the monetary value that a party loses due to the failure of the other party to fulfill their contractual obligations, aiming to put them in the position they would have been if the contract was performed.

Reliance Interest

the monetary value that a party loses due to their reliance on a contract, typically covering costs incurred in preparation for or in performance of the contract.

Reinstitution Interest

the monetary value that restores a party to the position they would have been in had the contract never been formed, often used to prevent unjust enrichment.

Consequential Damages

monetary compensation for losses that occur as a foreseeable result of a breach of contract, beyond direct damages.

Avoidable Damages

financial losses that could have been avoided by the injured party through reasonable efforts.

Liquidated Damages

predetermined amounts specified in a contract that are to be paid in the event of a breach, designed to estimate damages ahead of time.

Limitation of Remedies

a contractual clause that restricts the types or amounts of remedies available to an injured party in case of a breach.

Third Party Beneficiary

A person or entity that benefits from a contract made between two other parties, even though they are not a party to the contract.

Assignment

the transfer of rights or benefits under a contract from one party to another.

Assignor

The party that transfers their rights or benefits under a contract to another party, known as the assignee.

Assignee

The party to whom rights or benefits under a contract are transferred from the assignor. This party holds the rights or benefits and is entitled to enforce the contract.

Obligor

The party that has an obligation to perform a duty or pay a debt under a contract.

Delegation

The act of transferring responsibility for performance of a duty under a contract from one party to another, while the original party remains liable.

Delegator

The party that transfers their responsibilities or duties under a contract to another party, known as the delegatee.

Delegatee

The party that receives the duties or responsibilities from the delegator in a contract delegation.

Obligee

The party in a contract to whom a duty is owed. The obligee is entitled to receive the performance or benefits specified in the contract. The person or entity that has the right to receive the fulfillment of an obligation under a contract.