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Exculpatory Clause
A provision in a contract that relieves a party of blame or liability for damages if they are caused during the execution of the contract.
Restitution
A remedy that restores an aggrieved party to the position they were in before a contract was made.
Parol Evidence Rule
A legal rule that prevents parties from using oral or written agreements outside of a written contract to contradict or modify it.
Strict performance
Requires complete adherence to the contract terms without any deviations or defects. Any minor deviation may result in a breach.
Offer
Part of contract negotiations where a party agrees to do or not do something in exchange for consideration.
Acceptance
To agree to the terms of an offer.
Consideration
A promise, performance, or forbearance bargained by a promisor in exchange for their promise. Can be money, products, labor, etc.
Intention to create legal relations
One of the four elements required for a contract.
Unilateral contract
Involve one party making a promise to a general group of people in exchange for a specific action. Only one party is legally bound.
Bilateral contract
A binding agreement between two parties exchanging promises to perform and fulfill one side of a bargain.
Plaintiff
The party who initiates a lawsuit in a civil matter, filing a complaint with a court against the defendant.
Defendant
An individual (or business) against whom a lawsuit is filed.
Executory contract
An ongoing agreement between two parties who are responsible for completing certain obligations over a set period of time.
Executed contract
A finalized agreement that has passed the sign stage and been agreed to by all necessary parties. It is now enforceable.
Void Contract
A contract that isn't legally enforceable, starting from the time it was created.
Voidable Contract
A formal agreement between two parties that may be rendered unenforceable for qualified legal reasons.
Unenforceable Contract
A valid contract, law, or agreement that will not be enforced by a court.
Objective theory of contracts
The idea that a contract is not just an agreement between two parties, but rather a series of actions that give the appearance of an agreement. The intentions of parties are not as important as their actions.
Counteroffer
A rejection of an offer to enter into a contract, as well as a new offer that materially changes the terms of the original offer.
Rejection
Occurs when the offeree decides not to accept the offer, effectively ending the negotiation. It can be communicated explicitly or implied through actions that indicate a lack of acceptance.
The Common Law of Contracts
Governs contractual transactions with real estate, services, insurance, intangible assets, and employment. Must contain valid consideration.
Revocation
Specifically refers to the cancellation of an offer by the offeror before it has been accepted.
Mirror Image Rule
A doctrine specifying that any acceptance of an offer is deemed to be an unconditional agreement to the terms of the offer exactly as it is, without any changes or modifications.
Mailbox Rule
The principle that an acceptance becomes effective, and binds the offeror, once it has been properly mailed, rather than when the offeror receives the letter in the mail.
Illusory promise
A promise that is unenforceable due to indefiniteness or lack of mutuality, where only one side is bound to perform.
Forbearance
The act of delaying from enforcing a right, obligation, or debt.
Pre-existing duty
If someone is already obligated to do something under a contract, they can't get extra credit for doing it.
Contractual capacity
The legal competence or ability of an individual or organization to enter into binding legal agreements/contracts.
Minors
Any individual under the specified "age of majority" for their state or territory.
Intoxicated
The condition of being drunk as the result of drinking alcoholic beverages and/or use of drugs.
Mentally incompetent
One who, because of injury or disease, lacks the mental capacity to contract or to manage his or her own affairs, including disbursement of funds without limitation.
Mutual mistake
Refers to a situation where both parties to a contract had the same mistaken or erroneous belief about something in a contract that concerns one or more basic assumptions on which the contract was made. Can either result in a void or voidable contract.
Unilateral mistake
The mistaken belief that is held by only one of the parties, and is not shared by the other party to the contract. This could result in a voided or reformation of the contract.
Undue influence
A defense used to argue against the formation of a binding contract. It occurs when one party exerts excessive persuasion on another, undermining their free will and leading to a contract that benefits only the persuader.
Duress
A situation where one person makes unlawful threats or otherwise engages in coercive behavior that causes another person to commit acts that they would otherwise not commit.
Misrepresentation
A false or misleading statement or a material omission which renders other statements misleading, with intent to deceive.
Fraud
The intentional use of deceit or trickery to gain an unfair advantage or deprive someone of their legal rights.
Adhesion contract
A legal agreement that is drafted by one party, but not the other. The party signing the agreement had no chance to bargain for the agreement's terms.
Rescind / Rescission
An equitable remedy that results in the cancellation of a contract, restoring the parties involved to the state they were in before the contract was made.
Reformation
The correction or change of an existing document by court order upon petition of one of the parties to the document.
Specific performance
A legal remedy that requires a breaching party to fulfill their contractual obligations, rather than paying damages. In short, it is an equitable remedy rather than a monetary remedy.
Promissory estoppel
A legal principle that allows a promise to be enforced even if it was made without formal consideration.
Quasi-Contract
A defendant is ordered to pay restitution to the plaintiff, or a constructive contract, meaning a contract that is put into existence when no such contract between the parties exists. Also known as an implied contract.
Doctrine of unconscionability
A defense against the enforcement of a contract or portion of a contract. If a contract is unfair or oppressive to one party in a way that suggests abuse during its formation, a court may find it unconscionable and refuse to enforce it.
Types of contracts that fall under UCC Article 2
Transactions involving most things that are moveable. The sale of goods like electronics, large-piece equipment—rigs, pumps, compressors, aircraft, engines, food products, crops, and hydrocarbons.
Merchant
Someone who regularly buys or sells specific types of goods and is considered an expert in those goods. This person might be knowledgeable about the goods they deal with because of their job or they hire someone.
Goods
All things that are movable at the time of identification to the contract for sale other than the money in which the price is to be paid, investment securities, and things in action.
Modification contract
Refers to the act of changing, altering, or amending something that is already established, such as a contract, statute, court order, or legal document.
Merchant's firm offer
A promise made by a seller to keep an offer open for a certain period of time.
Statute of Frauds
A statute requiring certain contracts to be in writing and signed by the parties bound by the contract to prevent fraud or injury.
Contract conditions
A requirement or limitation involved in a contract, trust, law, or other legally recognized document that changes the rights and duties of those involved.
Waiver
A demonstration, usually in written form, of a party's intent to relinquish a legal right or claim.
Estoppel
A legal principle that prevents someone from arguing something or asserting a right that contradicts what they previously agreed to or said.
Settlement agreement
A legally binding contract that outlines how a dispute will be resolved. Settlement agreements are common in many types of disputes, including divorce, property, personal injury, and employment.
Remedy
A form of court enforcement of a legal right resulting from a successful civil lawsuit. Designed to address the harm suffered by a party due to the unlawful actions or omissions of another party. A way of finding a solution using law.
Substantial performance
Means that a party has most fulfilled their contractual obligations, even if there were minor deviations from the contract terms. This allows the party to receive payment or other benefits despite not completing every detail perfectly.
Material breach
A breach that strikes so deeply at the heart of the contract that it renders the agreement irreparably broken.
Minor breach
A breach of contract that is less severe than a material breach and it gives the harmed party the right to sue for damages but does not usually excuse him from further performance.
Compensatory damages
The money awarded in a court case to a plaintiff to compensate for damages or other incurred losses, such as injuries.
Consequential damages
Damages that result from a breach of contract, but are not necessarily direct consequences of the breach. Examples include loss of income or business reputation.
Nominal damages
A small amount of money awarded to a plaintiff in a lawsuit to verify he/she was right but suffered no substantial harm.
Incidental damages
Damages directly resulting from a breach of contract.
Liquidated damages
An exact amount of money, or a set formula to calculate the amount of money, a party will owe if it breaches a contract, to compensate the injured party for its losses.
Privity of contract
A doctrine of contract law that says contracts are only binding on the parties signing the contract.
Third-party beneficiaries
A person or entity that receives benefits from a contract, even though they are not a party to the contract.
Mitigate
Legal requirement for a party to take reasonable steps to reduce the financial impact of a breach of contract.
Doctrine of Standing (Locus Standi)
The capacity of a party to bring a lawsuit in court. Limits who can sue in court by requiring a party to demonstrate a connection to and harm from the law or action being challenged.
Federal diversity jurisdiction
Allows federal courts to hear civil actions between citizens of different states or between a US citizen and a foreign subject if the amount in controversy is more than $75,000.
Right of discovery
A pretrial procedure that allows both sides of a lawsuit to gather evidence from each other.
UCC: Statute of limitations for breach of contract
Four years after the cause of action, or one year after the breach was discovered, whichever is later.
Concurrent jurisdiction
When multiple courts have the power to hear a case, such as when both federal and state courts can hear a breach of contract case.
Original jurisdiction
The court's authority to hear and decide a case for the first time, before any appellate review occurs.
Limited jurisdiction
A court has authority to hear and decide cases only of a particular subject matter.
Exclusive jurisdiction
A clause in a contract that states that a specific court has the sole authority to hear a case to the exclusion of all other courts.
Ratify
Means that all parties involved in a contract have formally agreed to its terms and conditions, making it legally binding. A minor can do this to a contract after reaching the age of majority to make it legally binding.
Substantial vs Strict Performance
Substantial: Means that a party has most fulfilled their contractual obligations, even if there were minor deviations
Strict: Requires complete adherence to the contract terms without any deviations or defects.
Federal Question Jurisdiction
A type of subject matter jurisdiction that gives US district courts the power to hear civil cases that arise under the Constitution, laws, or treaties of the United States.
Liability
The legal obligation of a party to a contract to compensate another party for losses or damages.
Jurisdiction
The authority of a court or legal body to hear and resolve a dispute arising from a contractual agreement.
Jurisprudence
The study of law, including its nature, features, and how it relates to morality, politics, and practical reason. The philosophy of law.
Long-arm statute
A statute that allows for a court to obtain personal jurisdiction over an out-of-state defendant on the basis of certain acts committed by an out-of-state defendant, provided that the defendant has a sufficient connection with the state.
Summary judgement
A pretrial judgement that promptly resolves legal actions where the parties have no genuine issues with any material fact.
Mens rea
A Latin term that translates to "guilty mind" and refers to a defendant's criminal intent or state of mind at the time of a crime. Evil intent.
Court Summons
Informs a defendant that they are being sued in court. It's a way to officially notify the defendant that they are being sued and that they must respond to the lawsuit.
Precedent
Legal rules from prior cases. A court decision that is considered an authority for deciding subsequent cases involving identical or similar facts, or similar legal issues.
Mediation
A voluntary process where a neutral mediator helps parties resolve a dispute. A form of alternative dispute resolution.
Reasonable time
A vague term that refers to a period of time in which an action should be performed. It's used when there's no requirement to do something quickly, and the circumstances and nature of the action determine what's reasonable.
Stare Decisis
A legal doctrine that requires courts to follow previous rulings when deciding similar cases. States that like cases should be decided alike.
Power of Attorney
A legal document that gives one person the authority to act on behalf of another person.
Preponderance of the Evidence
The standard of proof in contract law.
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