Chapter 11: Contracts and Sales

Contract

a set of agreements between parties that enforces duties and responsibilities, the breach of which require remedies or compensation

Common law

a set of laws developed historically and by judicial precedent

Restatement (Second) of Contracts

the general summary of the common law of contracts

Bilateral contract

a contract in which both parties make promises to perform

Uniform Commercial Code (UCC)

the set of uniform laws (pertaining to states) that govern commercial transactions

Unilateral contract

a contract in which one party issues a promise and the other party simply performs

Express contract

a spoken or written agreement that specifies the terms and limitations of an employee or an agent’s authority

Implied-in-fact contract

a contract that arises from factual circumstances, professional circumstances, or custom

Quasi contract

a theory for enforcing a contract, even though there is no formal contract, because the parties behaved as if there were a contract

Implied contract

a contract that arises from the parties’ voluntary conduct and not from express agreements

Implied-in-law contract

a legally implied contract to prevent unjust enrichment; also known as a quasi-contract

Void contract

an agreement to do something illegal or against public policy; courts will not enforce it

Unenforceable contract

an agreement for which the law affords no remedy

Voidable contract

a contract in which one party can choose not to honor it

Executory contracts

contracts where performance has been promised but not yet completed

Executed contracts

contracts where all parties have fully performed

Truth in Lending Act (TILA)

a law requiring disclosure in credit contracts and protecting consumers

Offeror

the person making an offer

Offeree

the recipient of an offer

Offer

the first step in forming a contract

Revocation

the offeror’s cancellation of an offer with notice to the offeree

Merchant’s firm offer

a signed written offer by a merchant that cannot be revoked for a certain time

Options

a contract where the offeree pays for time to consider the offer

Counteroffers

rejection/modification of an original offer creating a new offer

Acceptance

the offeree’s positive response to an offer

Stipulated means

a required method of acceptance set by the offeror

Mailbox rule

acceptance is effective when sent if proper method is used

Consideration

something of value exchanged between parties

Charitable subscriptions

enforceable promises to make gifts

Bargained-for exchange

the requirement that value be exchanged to form a contract

Promissory estoppel

reliance used to enforce an otherwise unenforceable promise

Uniform Electronic Transactions Act (UETA)

state recognition of electronic signatures (ESIGN)

Merchants’ confirmation memoranda

signed memo by one party confirming an oral agreement that can satisfy statute of frauds

CISG

international equivalent of the UCC for goods contracts

Parol evidence

outside evidence not allowed to contradict a final written contract

Bill of lading

receipt and contract for shipment showing ownership of goods

Force majeure

uncontrollable events (war, disasters, etc.) that impact contract performance