Contract Law Review: Principles and Practices

Flashcards covering the essential vocabulary and legal principles of contract law based on the provided lecture transcript.

Agreement in Fact

The actual understanding between the parties in a transaction.

Uniform Commercial Code (UCC)

A statutory source of law that only applies to the sale of movable goods.

Binding Precedent

A prior case decision that a court must follow because it was decided by the same court or by an appellate court of higher rank in the same jurisdiction.

Persuasive Precedent

Precedents from lower courts or other jurisdictions that a judge is free to disregard if found unconvincing.

Distinguishing a Precedent

The act of avoiding a binding precedent because the facts of the present case have different material facts.

Overruling

A drastic action where a court changes the legal rule for subsequent cases by rejecting an earlier binding decision.

Statute of Frauds

Statutory law requiring certain types of contracts, such as land sales or goods over $500, to be evidenced by a signed writing to be enforceable.

American Law Institute (ALI)

The organization formed in 1923 to create the Restatements, which intended to be accurate authoritative summaries of common law rules.

Samuel Williston

The reporter for the original Restatement of Contracts who argued that law was a set of abstract rules used to decide cases by deduction.

Arthur Corbin

Legal scholar who assisted in the first Restatement and believed the task of a scholar was to discover what courts were actually doing to create working rules.

Requirement of a Bargain

As stated in R2 $§ 17$, the formation of a contract requires a manifestation of mutual assent to the exchange and a consideration.

Mutual Assent

The combination of an offer and an acceptance between parties.

Subjective View of Contract Formation

A theory that the actual intention of the party, rather than their outward conduct, determines their obligations.

Objective View of Contract Formation

A theory that looks at the conduct of the parties from the perspective of a hypothetical reasonable person.

Unilateral Mistake

An error made by only one party in interpreting an agreement; generally, the contract remains enforceable absent fraud or duress.

Parol Evidence

Extrinsic evidence, such as oral testimony or prior agreements, offered to interpret, supplement, or contradict a written contract.

Reason to Know

Information from which a person of ordinary intelligence would infer that a fact in question does or will exist.

Disparity in Bargaining Power

A situation where one party is significantly more knowledgeable than the other, potentially leading to a higher standard if a mistake is made.

Duty to Read

The general principle that a signing party is held to the terms of a contract regardless of whether they actually read it.

Bilateral Contract

An exchange of promises in which each party promises to do something for the other.

Offer

A direct, complete proposal for a contract providing for an exchange of defined performances.

Fixed Purpose Rule

A rule stating that a communication is not an offer if the person addressed knows the maker does not intend it as a final expression of purpose until further assent is given.

Option Contract

A promise to keep an offer open for a set period that is binding on the offeror, usually requiring consideration.

Mailbox Rule

A common law rule where an acceptance is treated as effective as soon as it is dispatched, shifting risk of loss to the offeror.

Battle of Forms

A situation in merchant transactions where two different forms contain conflicting or additional terms, governed by UCC $§ 2-207$.

Expectation Interest

A contract remedy aimed at putting the plaintiff in the position they would have occupied if the contract had been fully performed.

Reliance Interest

A remedy aimed at putting the plaintiff back in as good a position as they were in before the promise was made.

Restitution Interest

A remedy aimed at forcing the defendant to disgorge value received from the plaintiff to prevent unjust enrichment.

Specific Performance

An equitable remedy that forces a defendant to cooperate with a contract as originally agreed, often used for real property.

Unilateral Contract

A contract in which one party commits to performance only if the other party first accepts by actually rendering performance.

Substantial Performance (Unilateral)

The threshold at which an offer for a unilateral contract becomes irrevocable once the offeree has begun the requested tasks.

Agreement to Agree

An unenforceable future covenant that fails for lack of certainty if material and essential terms are left to future negotiations.

Open Price Term

Governed by UCC $§ 2-305$, it allows a contract for the sale of goods to be concluded even if the price is not settled, provided the parties intended to be bound.

Letter of Intent

A document that is enforceable as a contract only if both parties intended it to be contractually binding despite the contemplation of a later formal writing.

Consideration

The requirement of an exchange, either as a benefit to the promisor or a detriment to the promisee, as defined in R2 $§ 71$.

Bargained-for Exchange

The core of the bargain theory, where one party's performance is the price of another's and vice versa.

Forbearance

The voluntary limitation of one's legal rights or freedoms, which can serve as adequate consideration in a contract.

Past Consideration

A performance or benefit delivered before a promise is made, which is generally not legally sufficient to form a contract.

Evidentiary Function of Formality

The purpose of legal formality that provides evidence of the existence and purport of a contract in case of controversy.

Cautionary Function of Formality

The purpose of legal formality acting as a check against inconsiderate action by inducing a circumspective frame of mind.

Executed Gift

A gift that has been delivered by the donor with intent and accepted by the donee, making it irrevocable.

Testamentary Gift

A gift given through a will that can be freely revoked by a later will and is subject to the debts of the estate.

Agency Relationship

A consensual, fiduciary relationship where one person agrees to act on behalf of and subject to the control of another.

Apparent Authority

A situation where a principal's manifestations lead a third party to reasonably believe an agent has authority to act, even if actual authority is absent.

Ratification

The principal's approval of an agent's unauthorized act after it has occurred, creating liability on the contract.

De minimis non curat lex

A legal principle meaning the law disregards trifles; used to dismiss claims deemed trivial or a waste of court resources.

Illusory Promise

A promise that promises nothing and does not bind or confine the freedom of the promisor in any way.

Mutuality of Obligation

The concept that both parties must be bound or neither is bound, though R2 asserts this is not a strict requirement if consideration is met.

Goods

Defined by UCC $§ 2-105$ as all things that are movable at the time of identification to the contract, excluding money and securities.

Predominant Purpose Test

A test used in mixed transactions to determine if UCC Article 2 applies by seeing if the contract is primarily for goods or services.

Mirror Image Rule

A common law rule stating that an acceptance must be unequivocal and unqualified to form a contract; any variation acts as a rejection.

Last Shot Rule

A principle where a party is deemed to have accepted a counter-offer by conduct indicating a lack of objection to the final form exchanged.

Knockout Rule

A rule in Battle of Forms where conflicting terms in an offer and acceptance cancel each other out and are replaced by UCC gap fillers.

Promissory Estoppel

The doctrine under R2 $§ 90$ that enforces a promise if the promisor should reasonably expect it to induce action and such action is induced, to avoid injustice.

Equitable Estoppel

A doctrine that applies when one party makes a misstatement of fact, rather than a promise, upon which another party relies.

Charitable Pledge

An oral or written promise to give property to a charity, enforceable if there is evidence of donative intent and consideration or reliance.

Merchant

Under UCC $§ 2-104$, a person who deals in goods of the kind or holds themselves out as having specialized knowledge or skill.

Firm Offer

Under UCC $§ 2-205$, an offer by a merchant in a signed writing to buy or sell goods that is irrevocable without consideration for up to three months.

Contract Implied in Law

Also called a quasi-contract, it is an obligation imposed by law to prevent unjust enrichment regardless of assent.

Quantum Meruit

An equitable remedy meaning as much as he deserves, providing restitution for the reasonable value of services rendered.

Material Benefit Rule

Under R2 $§ 86$, a promise made in recognition of a material benefit previously received is binding to the extent necessary to avoid injustice.

Integrated Agreement

A writing or writings constituting a final expression of one or more terms of an agreement.

Completely Integrated Agreement

An agreement adopted by parties as a complete and exclusive statement of all terms, barring even consistent additional terms.

Partially Integrated Agreement

An agreement that is final on some terms but not complete, allowing the addition of consistent collateral terms.

Merger Clause

A provision in a contract stating that the writing is the final and complete expression of the agreement, intended to signify integration.

Four Corners Doctrine

An approach where the question of integration is determined by looking only at the face of the document.

Usage of Trade

Any practice or method of dealing having regularity of observance in a place or vocation to justify expectations in a transaction.

Course of Dealing

A sequence of previous conduct between parties fairly regarded as establishing a common basis of understanding for interpretation.

Good Faith and Fair Dealing

An implied obligation in every contract prohibiting parties from destroying the other party's right to receive the fruits of the contract.

Caveat Emptor

A common law doctrine meaning buyer beware, where the seller originally bore no responsibility for the quality of the product.

Express Warranty

Created by affirmations of fact, promises, descriptions, or samples that become part of the basis of the bargain under UCC $§ 2-313$.

Implied Warranty of Merchantability

Under UCC $§ 2-314$, a warranty that goods are fit for their ordinary purposes and would pass without objection in the trade.

Implied Warranty of Fitness for a Particular Purpose

A warranty under UCC $§ 2-315$ that goods are suitable for a specific use identified by the buyer who relied on the seller's judgment.

Infancy Doctrine

Protects individuals under $18$ from their lack of judgment by allowing them to disaffirm contracts, making them voidable.

Mutual Mistake

Where both parties share a mistaken belief regarding a basic assumption of the contract that materially affects performance, rendering it voidable.