Overview of Contract Law and Property Rights

Promise

A declaration by a person (the promisor) to do or not to do a certain act.

Promisor

The person making a promise.

Promisee

The person to whom the promise is made.

Contract

A promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.

Objective Theory of Contracts

A theory under which the intent to form a contract will be judged by outward, objective facts as interpreted by a reasonable person, rather than by the party's own secret, subjective intentions.

Elements of a Contract

There are four requirements that must be met before a valid contract exists.

Agreement

An agreement to form a contract must be met through an offer from one party and an acceptance from another party.

Consideration

Any promises made by the parties to the contract must be supported by legally sufficient and bargained-for consideration.

Contractual Capacity

Both parties entering into the contract must have the contractual capacity to do so.

Legality

The contract must have an element of legality, meaning its purpose must be to accomplish some goal that is legal and not against public policy.

Defenses to Enforceability

The voluntary consent of both parties is required; if a contract was formed as a result of fraud, undue influence, mistake, or duress, the contract may not be enforceable.

Offer

A promise to perform or refrain from performing some specified act in the future.

Bilateral Contract

If the offeree can accept simply by promising to perform, referred to as a 'promise for a promise'.

Unilateral Contract

If the offer is phrased so that the offeree can accept the offer only by completing the contract performance, referred to as a 'promise for an act'.

Formal Contracts

Contracts that require a special form or method of creation to be enforceable.

Informal Contracts

Includes all other contracts; no special form is required as the contracts are usually based on their substance rather than their form.

Express Contract

The terms of an agreement are fully and explicitly stated in words (oral or written).

Implied Contract

A contract that is implied from the conduct of the parties.

Executed Contract

A contract that has been fully performed on both sides.

Executory Contract

A contract that has not been fully performed by the parties.

Valid Contract

Has the elements necessary to entitle at least one party to enforce it in court.

Voidable Contract

A valid contract but one that can be avoided at the option of one or both parties.

Enforceable Contract

When a court upholds the validity of promises.

Unenforceable Contract

One that cannot be enforced because of certain legal defenses against it.

Void Contract

No contract at all.

Quasi Contract

Not actual contracts, they are contracts implied in law.

Doctrine of Unjust Enrichment

Individuals should not be allowed to profit or enrich themselves inequitably at the expense of others.

Plain Meaning Rule

Contracts enforced based on clear written terms.

Ambiguity in Contracts

Occurs when contract language is unclear or uncertain.

Extrinsic Evidence

Evidence outside the written contract document.

Parol Evidence Rule

Prevents contradicting written terms with oral agreements.

Contract Interpretation

Rules for understanding contractual terms and intentions.

Specific Performance

Court order requiring fulfillment of contract terms.

Rescission

Cancellation of contract, restoring parties to original position.

Mitigation

Efforts to reduce damages after a breach.

Acceptance

Offeree's agreement to the terms of an offer.

Mirror Image Rule

Acceptance must exactly match the offer terms.

Counteroffer

Response altering terms of the original offer.

Mailbox Rule

Acceptance effective upon dispatch, not receipt.

Elements of Agreement

Necessary components for a valid contract agreement.

Offeror

Party making the offer in a contract.

Offeree

Party receiving the offer in a contract.

Revocation

Withdrawal of an offer by the offeror.

Negotiated Settlement

Agreement reached through discussion between parties.

Arbitration

Binding resolution of disputes by a third party.

Compensatory Damages

Monetary award for actual injuries or losses.

Consequential Damages

Compensation for indirect losses from a breach.

Liquidated Damages

Pre-agreed amount for breach specified in contract.

Nominal Damages

Minimal monetary award when no actual damage occurs.

Course of Dealing

Previous conduct between parties influencing contract interpretation.

Usage of Trade

Industry practices affecting contract meaning and terms.

Preliminary Agreement

Initial agreement binding if all essential terms are settled.

Contract Termination

Ending an offer through revocation, rejection, or counteroffer.

Option Contract

An irrevocable offer held open for a period.

Lapse of Time

Offer automatically terminates after specified time.

Destruction of Subject Matter

Termination due to loss of the offered item.

Death or Incompetence

Termination if either party cannot contract.

Supervening Illegality

Offer terminates if made illegal by law.

Unequivocal Acceptance

Clear agreement without conditions or doubts.

Silence as Acceptance

Silence may indicate acceptance in certain situations.

Express Authorization

Offeror specifies method for acceptance communication.

E-Contracts

Contracts formed electronically, requiring basic contract elements.

Acceptance of Terms

Clause indicating agreement to offer conditions.

Payment Provision

Details on payment methods for goods or services.

Return Policy

Seller's terms for refunds and returns.

Disclaimer

Limitations on liability for product use.

Limitation on Remedies

Specifies buyer's remedies for defects or breaches.

Privacy Policy

Seller's use of buyer's personal information.

Dispute Resolution

Terms for resolving contract disputes.

Forum-Selection Clause

Specifies location for resolving disputes.

Choice-of-Law Clause

Determines jurisdiction's law for contract disputes.

Restatement (Second) of Contracts

Compilation of common law contract principles.

Click-On Agreement

Agreement made by clicking 'I Accept' online.

Shrink-Wrap Agreement

Terms inside product packaging, accepted by use.

Browse-Wrap Terms

Terms presented during download, not requiring agreement.

Partnering Agreement

Pre-agreed terms for frequent electronic transactions.

E-Signature

Electronic signature valid under E-SIGN Act.

E-SIGN Act

Does not apply to all types of documents (excludes court papers, divorce decrees, evictions, foreclosures, health-insurance terminations, prenuptial agreements, and wills).

Uniform Electronic Transactions Act (UETA)

Created in 1999 and adopted by forty-eight states, it aims to remove barriers to e-commerce by giving the same legal effect to electronic records and signatures as paper documents.

Record

Information inscribed on a tangible medium or stored in an electronic or other medium that is retrievable in perceivable [visual] form.

Transaction

An interaction between two or more people relating to business, commercial, or governmental activities.

Consent Withdrawal

A person who has agreed to an electronic transaction can withdraw their consent and refuse to conduct further business electronically.

Security Procedures

Encouraged by the UETA, these procedures (such as encryption) are used to verify changes to electronic documents and to correct errors.

Electronic Record Sent

Considered sent when it is properly directed to the intended recipient in a form readable by the recipient's computer system.

Electronic Record Received

Considered received when it enters the recipient's processing system in a readable form, even if no individual is aware of its receipt.

Waiver

When a party intentionally relinquishes a right to enforce the contract.

Forbearance

The act of refraining from exercising a legal right.

Adequacy of Consideration

Concerns the fairness of the bargain and relates to how much consideration is given.

Recission

The unmaking of a contract to return the parties to their original positions before the contract was made.

Past Consideration

Something given or some act done in the past, which cannot ordinarily be considered for a later bargain.

Illusory Promise

A promise without consideration that is unenforceable.

Requirements Contract

A contract where a buyer agrees to purchase all goods of a designated type that they need from a seller.

Output Contract

A contract where a buyer agrees to purchase all that the seller produces or outputs.

Accord and Satisfaction

An agreement for payment (or other performance) between two parties, where the accord is the agreement and the satisfaction is the performance.

Liquidated Debt

A debt whose amount has been ascertained, fixed, agreed on, settled, or exactly determined.

Unliquidated Debt

A debt whose amount is not settled, fixed, agreed on, ascertained, or determined.

Release

A contract in which one party forfeits the right to pursue a legal claim against the other party.

Covenant Not to Sue

An agreement to substitute a contractual obligation for some other type of legal action based on a valid claim.

Promissory Estoppel

Enforceable promise despite lack of consideration.

Detrimental Reliance

Reliance on a promise causing substantial detriment.