BUSN 460 Business Law Midterm Study Notes (Weeks 1 to 8)

Vocabulary flashcards covering key definitions, principles, remedies, and statutory provisions from Weeks 1 through 8 of the BUSN 460 Business Law Midterm Study Notes.

Consideration

The benefit that each party receives in return for making a promise in a contract; in simple words, something in return.

Promisor

The person making the promise in a contract.

Promisee

The person to whom the promise is made in a contract.

Past Consideration

An act performed before the promise was made; generally invalid under contract law, except when promising to compensate someone for services voluntarily performed in the past.

Present Consideration

Consideration that is exchanged immediately between the parties at the time the agreement is made.

Future Consideration

Consideration in which something is promised to be exchanged at a later time.

Natural Love and Affection (Section 25)

An exception to the rule of consideration where a written and registered agreement between closely related parties made out of natural love and affection is legally enforceable without fresh consideration.

Remission by Promisee (Section 63)

An exception to consideration allowing a creditor to accept less than the full amount due and discharge the remaining obligation without receiving an additional benefit.

Breach of Contract

An occurrence where a party fails to perform a contractual obligation or violates a term of a legally enforceable contract.

Aggrieved Party

The party suffering from a breach of contract who is entitled to claim an appropriate legal remedy.

Rescission (Section 75)

The cancellation of a contract, discharging the affected party from performing their own obligations when the other party refuses to perform.

Ordinary Damages

Monetary compensation arising naturally and directly from a breach of contract, usually measured by the actual financial loss suffered.

Exemplary Damages

Damages awarded to punish the guilty party as well as compensate the aggrieved party.

Liquidated Damages (Section 74)

A sum agreed in advance when the contract is made to address a possible breach, operating as the upper limit of reasonable recovery awarded by the court.

Nominal Damages

Small amounts of compensation awarded when contractual rights have been violated but no measurable financial loss was suffered.

Quantum Meruit

A contractual remedy meaning 'payment in proportion to the work performed,' claimable when partial work is completed and accepted or further work is prevented.

Specific Performance

A discretionary court remedy ordering a party to fulfill their contractual obligations, generally granted when financial compensation would not adequately address the breach.

Injunction

A court order restraining or preventing a person from performing a particular prohibited act.

Contract of Indemnity (Section 124)

An agreement in which one person promises to compensate another for a loss caused by the conduct of the promisor or another person.

Indemnifier

The person who promises to compensate for the loss in a contract of indemnity.

Indemnity Holder

The person who is protected against loss in a contract of indemnity.

Contract of Guarantee (Section 126)

An agreement in which one person promises to perform another person's obligation or discharge their liability if that person defaults.

Principal Debtor

The person who originally owes the money or must fulfill the obligation in a contract of guarantee.

Creditor

The person to whom money or an obligation is owed in a contract of guarantee.

Surety (Guarantor)

The person who promises to perform the obligation or discharge liability if the principal debtor defaults.

Specific Guarantee

A guarantee given for a single debt or particular transaction that ends once that specific guaranteed obligation is fulfilled.

Continuing Guarantee (Section 129)

A guarantee covering a series of transactions rather than a single transaction.

Contract of Bailment (Section 148)

The delivery of goods by one person to another for a specific purpose under a contract, where the goods must be returned or disposed of according to the owner's instructions once the purpose is fulfilled.

Bailor

The person who delivers goods under a contract of bailment while retaining ownership.

Bailee

The person who receives possession of goods for a specific purpose under a contract of bailment without acquiring ownership.

Unauthorized Use (Section 153)

A ground for terminating bailment that arises when the bailee acts inconsistently with the terms of the bailment contract.

Contract of Pledge (Section 172)

A special type of bailment in which movable goods are delivered as security for the repayment of a debt or the performance of a promise.

Pledgor

The person who provides movable goods as security in a contract of pledge.

Pledgee

The person who receives movable goods as security in a contract of pledge.

John Austin's Definition of Law

The theory that law consists of commands of the sovereign backed by sanctions.

Primary and Secondary Rules (H. L. A. Hart)

A legal concept where primary rules govern people's conduct, and secondary rules govern how legal rules are recognized, changed, and enforced.

Public Law

The branch of law regulating relationships involving the state and public authority, including constitutional, administrative, and criminal law.

Private Law

The branch of law regulating relationships between private individuals or organizations, including contract, property, family, and tort law.

Substantive Law

The body of law that defines legal rights and duties ('what the law says').

Procedural Law

The body of law that explains how legal rights and duties are enforced through legal processes ('how the law is enforced').

Subordinate Legislation

Detailed rules and regulations made by an authorized body under powers delegated by the legislature through an Act.

Natural Law

A jurisprudential theory arguing that law should reflect morality and principles of justice.

Positive Law

Law created or recognized through established human legal institutions, whether or not it reflects a particular moral view.

Alternative Dispute Resolution (ADR)

Processes for resolving legal disputes outside normal court litigation, including negotiation, mediation, and arbitration.

Mediation

An ADR method in which a neutral third party assists the disputing parties in reaching a settlement without imposing a decision.

Arbitration

An ADR method where a neutral third party (arbitrator) hears the dispute and delivers a decision that is generally binding.

Contract (Section 2(h))

An agreement enforceable by law ($\text{Contract} = \text{Agreement} + \text{Legal Enforceability}$).

Void Agreement

An agreement that is not legally enforceable from the beginning, creating no contractual rights or obligations.

Voidable Contract

A contract that is legally enforceable at the option of the affected party, giving them the choice to affirm or avoid it.

Express Contract

A contract formed through spoken or written words.

Implied Contract

A contract inferred from the acts and conduct of the parties rather than direct words.

Executed Contract

A contract in which both parties have fully completed their contractual obligations.

Executory Contract

A contract in which important contractual obligations are still outstanding and remain to be performed.

Unilateral Contract

A contract in which one party makes an offer that can be accepted by performing a specified act.

Bilateral Contract

A contract in which both parties enter into mutual promises with each other.

Sound Mind (Section 12)

A capacity requirement where a person must be capable of understanding the contract and forming a rational judgment regarding its effects on their interests at the time of contracting.