BLAW Unit 2

Contract

A set of promises constituting an agreement between parties, giving each a legal duty to the other and the right to seek a remedy for the breach of the promises or duties.

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 parties’ own subjective intentions.

agreement

includes an offer and an acceptance. One party must offer to enter into a legal agreement, and another party must accept the terms of the offer.

consideration

Any promises made by the parties to the contract must be supported by legally sufficient and bargained-for consideration (something of value received or promised, such as money, to convince a person to make a deal).

contractual capacity

Both parties entering into the contract must have the contractual capacity to do so. The law must recognize them as possessing characteristics that qualify them as competent parties.

Legality

The contract’s purpose must be to accomplish some goal that is legal and not against public policy.

voluntary consent

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

form

The contract must be in whatever form the law requires. Under state laws collectively known as the Statute of Frauds, for instance, certain contracts must be in writing to be enforceable.

statute of frauds

A state statute under which certain types of contracts must be in writing to be enforceable.

bilateral contract

A type of contract that arises when a promise is given in exchange for a promise.

unilateral contract

A contract that results when an offer can be accepted only by the offeree’s performance.

formal contracts

An agreement that by law requires a specific form for its validity.

informal contracts

A contract that does not require a specific form or method of creation to be valid.

express contract

A contract in which the terms of the agreement are stated in words, oral or written.

implied contract

A contract formed in whole or in part from the conduct of the parties.

executed contract

A contract that has been fully performed by both parties.

executory contract

A contract that has not yet been fully performed.

valid contract

A contract that results when the elements necessary for contract formation are present.

voidable contract

A contract that may be legally avoided at the option of one or both of the parties.

unenforceable contract

A valid contract rendered unenforceable by some statute or law.

void contract

A contract having no legal force or binding effect.

offer

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

revocation

The withdrawal of a contract offer by the offeror. Unless an offer is irrevocable, it can be revoked at any time prior to acceptance without liability.

option contract

A contract under which the offeror cannot revoke the offer for a stipulated time period (because the offeree has given consideration for the offer to remain open).

mirror image rule

A common law rule that requires the terms of the offeree’s acceptance to exactly match the terms of the offeror’s offer for a valid contract to be formed.

acceptance

The act of voluntarily agreeing, through words or conduct, to the terms of an offer, thereby creating a contract.

mailbox rule

The common law rule that acceptance takes effect, and thus a contract is formed, at the time the offeree sends or delivers the acceptance using the communication mode expressly or impliedly authorized by the offeror

consideration

The value given in return for a promise or performance in a contractual agreement.

forbearance

The act of refraining from an action that one has a legal right to undertake.

Rescission

A remedy whereby a contract is canceled and the parties are returned to the positions they occupied before the contract was made.

past consideration

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

contractual capacity

The legal ability to enter into contracts. The threshold mental capacity required by law for a party who enters into a contract to be bound by that contract.

unconscionable

a contract clause that is void on the basis of public policy because one party was forced to accept terms deemed unfair

unitlateral mistake

mistake made by only of the parties

bilateral mistake

mistake made by both parties

fraudulent misrepresentation

misrepresentation that is consciously false and is intended to mislead another

scienter

knowledge on the part of the misrepresenting party that material facts have been falsely represented with an intent to deceive

duress

both a defense to the enforcement of a contract and a ground for the rescission of a contract

privacy of contract

the relationship that exists between the promisor and the promisee of a contract

assignment

the transfer of a contractual right to a third party

delegation

the transfer of a contracutual duty to a third party

third party beneficiary

one for whose benefit a promise is made in a contract but who is not a party to the contract

intended beneficiary

a third party for whose benefit a contract is formed, can sue the promisor if the contract is breached

discharge

the termination of an obligation

performance

the fulfillment of one’s duties arising under a contract with another

condition

a qualification, provision, or clause in a contractual agreement, the occurrence or non occurrence of which creates, suspends, or terminates, the obligations of the contracting parties

condition precedent

a condition that must be met before a party’s promise becomes absolute

tender

An unconditional offer to perform an obligation by a person who is ready, willing, and able to do so.

anticipatory repudiation

An assertion or action that indicates a party will not perform a contractual obligation to perform at a future time.

mutual rescission

An agreement between the parties to cancel their contract, releasing them from further contractual obligations.

release

An agreement in which one party gives up the right to pursue a legal claim against another party.

accord and satisfaction

An agreement between two parties to accept performance that is different from what was promised in the original contract.

novation

The substitution of a new contract for an old one with the rights under the old one being terminated, including a substitution of a new party for an original party.

perfect tender rule

allows a buyer to reject a shipment if the goods or the delivery fail to conform to the contract in any respect

liquidated damages

amount owed by a party if the contract is breached

liquidated debt

a debt that is due and certain in amount

types of damages

compensatory, consequential, putative, nominal

compensatory damages

cover direct losses and costs

consequential damages

cover indirect and foreseeable losses

punitive damages

punish and deter

nominal damages

recognize wrongdoing when no monetary loss is shown

warranty

a relience on what the sales person indicates

sales contract

contracts for the sale of goods under which ownership of goods is transferred from a seller to a buyer for a price

predominant factor test

a test utilized by courts to determine whether a contract is primarily for the sale of goods or for the sale of services

tangible property

property that has phsyical existence and can be distinguished by the sense of touch and sight

intangible property

property that cannot be seen or touched, but exists only conceptually, such as stocks and bonds

merchant

a person who deals in goods of the kinds involved in the sales contract or who holds themselves out as having skill or knowledge to the practice or goods being purchased or sold

firm offer

an offer by a merchant that is irrevocable without consideration for a period of time

conforming goods

goods that conform to the contract specifications

cover

a buyer or lessee's purchase on the open market of goods to substitute for those promised but never delivered by the seller

cure

the right of a party who tenders nonconforming performance to correct their performance within the contract period

express warranty

a seller’s oral or written promise as to the quality, description, or performance of the goods being sold

firm offer

an offer that is irrevocable without consideration for a period of time

implied warranty

a warranty that the law derives by inference from the nature of the transaction or circumstances of the parties

merchant

a person who deals in goods of the kind involved in the sales contract

predominant factor test

a test courts use to determine whether a contract is primarily for the sale of good vs services

tender of delivery

under the Uniform Commercial Code, a seller’s or lessor’s act of placing conforming goods at the disposal of the buyer and giving the buyer whatever notification is necessary to enable the buyer to take delivery

certification mark

a mark used by one or more persons, other than the owner, to certify the characteristic of specific goods/services

collective mark

a mark used by members of an organization to certify characteristics of specific goods/services

copyright

the exclusive right of an author or originator of a literary or artistic production to publish, print, sell or use that production for a statutory period of tim e

intellectual property

property resulting from intellectual and creative processes

license

an agreement by the owner of intellectual property to permit another to use a trademark, copyright, patent, or trade secret for a certain limited purpose

patent

A property right granted by the federal government that gives an inventor an exclusive right to make, use, and sell an invention for a limited time

royalties

payments made by a licensee to a licensor as part of an agreement for the ongoing use of the licensor’s trademarked asset

service mark

a trademark that is used to distinguish the services of one person or company from those of another

trade dress

the image and overall appearance of a product

trade name

a name that a business uses to identify itself and its brand.

trade secret

a formula, device, idea, process, or other information used in a business that gives the owner a competitive advantage in the market place

trademark

a distinctive word, symbol, sound or design that identifies the manufacturer as the source of particular goods and distinguishes its products from those made or sold by others

trademark dilution

the unauthorized use of a distinctive and famous mark in a way that impairs the marks distinctiveness or harms its reputation