Comprehensive Contracts Law Lecture Review

A comprehensive vocabulary review set covering all core Contract Law principles from the lecture, including contract formation, consideration, promissory estoppel, defenses, the Statute of Frauds, interpretation, implied warranties, breach, conditions, and remedies.

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.

Sale (UCC §2-106(1))

The passing of title from seller to buyer for a price.

Good (UCC §2-105(1))

Things which are movable at the time of contract formation, excluding the money in which the price is to be paid, investment securities, and things in action.

Predominant Purpose Test

A test used in hybrid transactions to determine whether common law or the UCC applies by examining whether the transaction is primarily for service with goods incidentally involved or goods with labor incidentally involved.

Gravamen Test

A hybrid transaction test that evaluates whether the underlying legal complaint arose from the goods or from the service.

Objective Theory of Contracts

The doctrine holding that mutual assent is judged by an objective reasonable interpretation of outward expressions rather than by subjective intent.

Duty to Read

The legal principle established in Ray v. Eurice that parties are bound by the contracts they sign, regardless of whether they read or understood the terms.

Promise (R2C §2(1))

A manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made.

Offer (R2C §§24, 29, 33)

A manifestation of intent to enter a bargain with certain and definite terms, communicated to an identifiable person or group, which is reasonably understood to create a contract if accepted.

UCC Gap Fillers (UCC §2-204)

Statutory default provisions that permit courts to enforce contracts and imply missing terms, such as a reasonable price or delivery time, if the parties intended to enter a bargain.

Mirror Image Rule

The common law rule requiring an offeree's acceptance to match every single term of the offer exactly; any variation acts as a counteroffer.

Counteroffer (R2C §39)

A new offer made by an offeree proposing a different bargain relating to the same matter, which terminates the offeree's power of acceptance unless a contrary intention is manifested.

Mailbox Rule

The principle that acceptance of an offer is effective upon dispatch, whereas rejections, revocations, and other communications are effective upon receipt.

Option Contract

A contract supported by consideration that limits the offeror's ability to revoke an offer for a specified period of time.

Part Performance of a Unilateral Contract (R2C §45)

An option contract formed when an offeree tenders or begins the invited performance under a unilateral offer, conditioning the offeror's duty on completion of performance.

Merchant's Firm Offer (UCC §2-205)

An irrevocable offer by a merchant to sell goods given in a signed writing assuring it will be held open without consideration for a period not exceeding $3\text{ months}$.

Last Shot Rule

A common law doctrine where a party that performs after receiving an acceptance with varying terms is deemed to have accepted the terms of the final document exchanged.

Consideration

A bargained-for exchange where each party incurs a legal detriment or confers a legal benefit that induces the promise of the other.

Nominal Consideration

A mere formality or pretense of a bargain involving something of trivial value that does not serve as valid consideration because the promisor intended to make a gift.

Illusory Promise (R2C §77)

A promise or apparent promise where the promisor reserves a choice of alternative performance without committing to legal detriment, unless each alternative constitutes valid consideration.

Requirements Contract (UCC §2-306(1))

A contract measuring quantity by the actual good-faith requirements of the buyer, provided the demanded quantity is not unreasonably disproportionate to stated estimates or comparable prior requirements.

Output Contract (UCC §2-306(1))

A contract obligating the buyer to purchase all actual good-faith output produced by the seller, subject to stated estimates or comparable prior output.

Preexisting Legal Duty Rule (R2C §73)

The doctrine stating that performance of an existing legal duty owed to a promisor is not valid consideration unless it differs in a way reflecting more than a pretense of bargain.

Accord and Satisfaction

A modification mechanism where an obligee accepts an accord (an agreement for a different or additional performance) which suspends the original duty, followed by satisfaction (actual performance) which discharges it.

Novation

An agreement by all parties to extinguish an existing contractual obligation and replace the original obligor with a new obligor, releasing the original obligor from liability.

Account Stated

An agreement between debtor and creditor fixing a specified amount due on a prior transaction that settles a disputed debt.

Promissory Estoppel (R2C §90(1))

An equitable doctrine rendering binding a promise that the promisor should reasonably expect to induce action or forbearance, which actually induces such reliance, if injustice can be avoided only by enforcement.

Restitution (Quasi-Contract / Implied in Law)

An obligation imposed by law to prevent unjust enrichment when one party confers a non-officious, non-gratuitous benefit that the recipient retains with knowledge and appreciation.

Promissory Restitution (R2C §86)

A promise made in recognition of a benefit previously received from the promisee that is binding to the extent necessary to prevent injustice, unless conferred as a gift or disproportionate in value.

Statute of Frauds (MYLEGS)

The statutory requirement that contracts involving Marriage, Over One-Year, Land sales, Executor promises, Goods of $\$500$ or more, and Suretyship must be in a signed writing to be enforceable.

Sufficient Memorandum (R2C §131)

A writing signed by the party to be charged that reasonably identifies the subject matter, indicates that a contract was made, and states essential unperformed terms with reasonable certainty.

Merchant's Confirmatory Memo (UCC §2-201(2))

A written confirmation sent between merchants within a reasonable time that satisfies the statute of frauds against the recipient if they have reason to know its contents and fail to object within $10\text{ days}$.

Minor Incapacity

The defense rendering a minor's contracts voidable before or within a reasonable time after reaching the age of majority, subject to exceptions like necessities of life.

Cognitive Test (Mental Incapacity)

The traditional incapacity test assessing whether a party possesses the ability to understand the nature and consequences of the transaction through cause-and-effect reasoning.

Volitional Test (Mental Incapacity)

The incapacity test evaluating whether a person is unable to act in a reasonable manner in relation to the transaction and the other party has reason to know of their condition.

Duress (R2C §175(1))

A defense rendering a contract voidable when a party's manifestation of assent is induced by an improper threat that leaves the victim no reasonable alternative.

Undue Influence (R2C §177)

Unfair persuasion of a party who is under the domination of the person exercising the persuasion or justified in assuming that person will not act inconsistently with their welfare.

Fraudulent Misrepresentation (R2C §162(1))

An assertion not in accord with the facts made to induce assent when the maker knows or believes it is untrue, lacks confidence in its truth, or knows they lack the basis stated.

Material Misrepresentation (R2C §162(2))

A false assertion that would be likely to induce a reasonable person to manifest assent, or that the maker knows would likely induce the specific recipient to do so.

Active Concealment

The intentional act of purposely hiding a defect or preventing an investigation, which is legally equivalent to an affirmative fraudulent misrepresentation.

Procedural Unconscionability

Unfairness in the bargaining process demonstrated by gross inequality in bargaining power, lack of meaningful choice (adhesion), or unfair surprise from complex, hidden terms.

Substantive Unconscionability

Unfairness in the contract's actual terms shown by overly harsh, one-sided allocation of risks or extreme price disparities not justified by commercial circumstances.

Restraint of Trade (R2C §186)

A contractual promise that limits competition in business or restricts the exercise of a gainful occupation, unenforceable on public policy grounds if unreasonably broad.

Mutual Mistake (R2C §152(1))

A defense where both parties at contract formation share an erroneous belief regarding a basic assumption that materially affects performance, provided the adversely affected party did not bear the risk.

Bears the Risk of Mistake (R2C §154)

A rule allocating risk to a party by contract agreement, when they act with conscious ignorance of limited knowledge, or when allocated by the court as reasonable under the circumstances.

Commercial Impracticability (UCC §2-615)

A doctrine excusing seller performance when an unforeseen supervening event occurs without fault, causing extreme and unreasonable difficulty, expense, or loss contrary to a basic assumption.

Frustration of Purpose

An excuse for nonperformance arising when an unexpected supervening event destroys the principal purpose of the contract, rendering one party's performance virtually worthless to the other.

Parol Evidence Rule

A substantive rule governing whether prior or contemporaneous extrinsic evidence can be admitted to contradict or supplement a partially or totally integrated written agreement.

Course of Performance

A sequence of conduct between parties under a single contract that involves repeated occasions of performance accepted or acquiesced in without objection.

Course of Dealing

A pattern of previous conduct between parties across past contracts that establishes a common basis of understanding for interpreting their present expressions.

Trade Usage

Any regular practice or method of dealing in a vocation or trade having such regularity of observance as to justify an expectation that it applies to the transaction.

Contra Proferentem

The secondary rule of interpretation resolving contractual ambiguities against the party who drafted the agreement.

Express Warranty (UCC §2-313)

An explicit affirmation of fact, promise, description of goods, or sample/model made by a seller that becomes part of the basis of the bargain.

Implied Warranty of Merchantability (UCC §2-314)

An implied warranty by a merchant seller that goods pass without objection in trade, are of fair average quality, and are fit for the ordinary purposes for which such goods are used.

Implied Warranty of Fitness for Particular Purpose (UCC §2-315)

An implied warranty created when a seller has reason to know the buyer requires goods for a specific purpose and relies on the seller's skill or judgment to select suitable goods.

Breach Spectrum

The common law framework categorizing nonperformance into partial breach (substantial performance allowing damages), material breach (allowing suspension while awaiting cure), and total breach (discharging duties and allowing termination).

Perfect Tender Rule (UCC §2-601)

The UCC rule providing that if goods or tender of delivery fail in any respect to conform to the contract, the buyer may reject the whole, accept the whole, or accept any commercial units and reject the rest.

Imperfect Tender Framework

The UCC procedural framework outlining buyer options upon non-conforming tender (accept and keep or revoke acceptance) and seller cure rights upon timely rejection.

Anticipatory Repudiation

A definite and unequivocal statement or conduct by an obligor prior to the time performance is due indicating that they will commit a total breach.

Adequate Assurance of Performance (UCC §2-609 / R2C §251)

A written demand permitted when reasonable grounds for insecurity arise, allowing suspension of performance until assurance is given, and treating failure to provide assurance within $30\text{ days}$ as a repudiation.

Condition Precedent

An express or constructive event not certain to occur that must take place before a contractual duty or right arises.

Condition Subsequent

An event whose occurrence terminates or extinguishes an existing duty of contractual performance.

Expectation Interest

The primary measure of contract damages designed to put the non-breaching party in as good a position as if the contract had been fully performed.

General Damages Measures

Damages flowing naturally from breach, measured by standard formulas across real estate, employment, construction, and sales contracts.

Consequential Damages

Special damages beyond direct losses that are recoverable only if the breaching party had reason to foresee them at the time of formation as a probable result of breach.

Incidental Damages

Reasonable commercial expenses incurred in handling non-conforming goods or attempting to mitigate losses resulting from a breach.

Lost Volume Seller

A seller who possesses sufficient capacity such that an additional resale after a buyer's breach does not mitigate lost profit on the breached transaction.

Liquidated Damages

An agreed-upon damages clause enforceable only if it represents a reasonable forecast of anticipated or actual harm where actual damages are difficult to estimate, rather than a penalty.

Specific Performance

An equitable remedy ordering a breaching party to render promised performance, awarded when money damages are inadequate and terms are definite.

Intended Beneficiary

A third party who was purposefully meant by the promisee to receive a benefit under the contract (as a creditor or donee) and who possesses legal standing to enforce the promise.

Incidental Beneficiary

A third party who benefits incidentally from a contract without the promisee's intention to confer a gift or satisfy a debt, possessing no enforceable contractual rights.

Assignment of Rights

The transfer of a contractual right by an assignor to an assignee, extinguishing the assignor's ownership interest in the right.

Delegation of Duties

The transfer of a contractual duty from an obligor to a third-party delegate, which leaves the original obligor liable unless a novation occurs.