B-Law Chapter 6

Agreement

Any meeting of the minds resulting in mutual assent to do or refrain from doing something.

unilateral contract

A contract involving one promise followed by one performance, which then triggers a second performance from the offeror.

express contact

A contract that is created when the parties have knowingly and intentionally agreed on the promises and performances.

Implied contract

A contract in which the agreement is reached by the parties’ actions rather than their words.

quasi- contract

A classification that permits a contract to be enforceable in cases where no express or implied contract exists and one party suffers losses as a result of another party’s unjust enrichment.

valid contract

A contract that has the necessary elements and, thus, can be enforceable.

void contract

A contract that lacks one or more of the basic required elements of a contract or that has not been formed in conformance with the law from the outset of the agreement and, thus, cannot be enforced by either party.

Voidable contract

A contract that one party may, at its option, either disaffirm or enforce.

unenforceable contract

A contract that meets the elements required by law for an otherwise binding agreement but is subject to a legal defense.

state common law

The body of law governing contracts for services or real estate.

State statutory law

The body of law governing contracts for goods or products; based on the Uniform Commercial Code.

hybrid contract

A contract that involves terms for both goods and services; the source of law is established by determining the predominant thrust of the subject matter.

Digital contract

An agreement that is expressed in the form of electronic data interchange and is signed, concluded, and transferred via an electronic or code-based system.

mutual assent

For the formation of a valid contract, the broad underlying requirement that the parties must reach an agreement using a combination of offer and acceptance and that the assent must be genuine.

offer

A promise or commitment to do (or refrain from doing) a specified activity. In contract law, the expression of a willingness to enter into a contract by the offeror’s promising an offeree that she will perform certain obligations in exchange for the offeree’s counterpromise to perform.

acceptance

The offeree’s expression of agreement to the terms of the offer. The power of acceptance is created by a valid offer.

objective intent

For an offer to have legal effect, the requirement that, generally, the offeror must have a serious intention to become bound by the offer and that the terms of the offer must be reasonably certain.

revocation

An action terminating an offer whereby the offeror decides to withdraw the offer by expressly communicating the revocation to the offeree prior to acceptance.

rejection

An action terminating an offer whereby the offeree rejects the offer outright prior to acceptance.

counteroffer

An action terminating an offer whereby the offeree rejects the original offer and proposes a new offer with different terms.

operation of law (contracts)

Termination of an offer by the occurrence of certain happenings or events, which generally include lapse of time, death or incapacity of the offeror or offeree, destruction of the subject matter of the contract prior to acceptance, and supervening illegality.

irrevocable offers

Offers that cannot be withdrawn by the offeror; include offers in the form of an option contract, offers that the offeree partly performed or detrimentally relied on, and firm offers by a merchant under the Uniform Commercial Code.

detrimental reliance

Situation in which the offeree acts, based on a reasonable promise made by the offeror, and would be injured if the offeror’s promise is not enforced.

mirror image rule

Principle stating that the offeree’s response operates as an acceptance only if it is the precise mirror image of the offer.

lapse of time

An event covered under operation of law in which a contract may be terminated once either the offeror’s expressed time limit has expired or a reasonable time has passed.

mailbox rule

Principle stating that the acceptance of an offer is effective upon dispatch of the acceptance via a commercially reasonable means and not when the acceptance is received by the offeree; governs common law contracts.

mistake

In contract law, an erroneous belief that is not in accord with the existing facts.

mutual mistake

An erroneous belief held by both parties that concerns a basic assumption on which a contract was made.

unilateral mistake

An erroneous belief held by only one party about a basic assumption in the terms of an agreement.

consideration

The mutual exchange of benefits and detriments; for the formation of a valid contract, the requirement that each party receives something of value (the benefit) from the other and that each party gives up something of value (the legal detriment) to the other, resulting in a bargained-for exchange.

forbearance

The giving up of a legal right as consideration in a contract

nominal consideration

Consideration that is stated in a written contract even though it is not actually exchanged.

preexisting duty

A duty that one is already legally obligated to perform and, thus, that is generally not recognized as a legal detriment.

bargained-for exchange

The aspect of consideration that differentiates contracts from illusory promises by holding that a performance or return promise is bargained for only if it was exchanged for another promise.

illusory promise

A promise that courts will not enforce because the offeror is not truly bound by his vague promise or because a party cannot be bound by their promise due to the lack of a bargained-for exchange. Promises of gifts and deathbed promises are two examples.

past consideration

A promise made in return for a detriment previously made by the promisee; does not meet the bargained-for exchange requirement.

promissory estoppel

Theory allowing for the recovery of damages by the relying party if the promisee actually relied on the promise and the promisee’s reliance was reasonably foreseeable to the promisor.

capacity

For the formation of a valid contract, the requirement that both parties have the power to contract. Certain classes of persons have only limited powers to contract, including minors and those with mental incapacity.

minors

Category of individuals who have limited capacity to enter into a contract; includes those younger than the majority age of 18. Until a person reaches their majority age, any contract that they may enter into is voidable at the minor’s option.

mental incapacity

Category of individuals who have limited capacity to enter into a contract; includes anyone who is unable to understand the nature and consequences of the contract and anyone who is unable to act in a reasonable manner in relation to the transaction when the other party has reason to know of that person’s condition.

lucid

Sane and thinking clearly.

legality

For the formation of a valid contract, the requirement that both the subject matter and performance of the contract must be legal.

public policy

Part of the legality requirement for a valid contract; necessitates that the terms be consistent with public policy objectives.