Business Law Chapter 9 - Nature of Traditional and E-Contracts

legally enforceable contract

a contract in which if one party fails to perform as promised, the other party can use the court system to enforce the contract and recover damages or other remedy

offeror

the party who makes an offer to enter into a contract

offeree

the party to whom an offer to enter into a contract is made

common law of contracts

contract law developed primarily by state courts, become precedent for later decision.

Uniform Commercial Code (UCC)

a comprehensive statutory scheme which includes laws that cover aspects of commercial transactions

Restatement of the Law of Contracts

a compilation of model contract law principles drafted by legal scholars, the restatement is NOT law

objective theory of contracts

a theory that says the intent to contract is judged by the reasonable person standard and not by the subjective intent of the parties

Uniform Computer Information Transactions Act (UCITA)

a model act that establishes uniform legal rules for the formation and enforcement of electronic contracts and licenses

bilateral contract

a contract entered into by way of exchange of promises of the parties; "a promise for a promise"

unilateral contract

a contract in which the offeror's offer can be accepted only by the performance of an act by the offeree; "a promise for an act"

formal contract

a contract that requires a special form or method of creation: includes Negotiable instruments, Letters of credit, Recognizance, Contracts under Seal

informal contract

also called simple contracts, a contract that is not formal, valid informal contracts are fully enforceable and may be sued upon if breached

valid contract

A contract that results when the 4 elements necessary for contract formation (agreement, consideration, legal purpose, and contractual capacity) are present.

void contract

a contract that has no legal force or binding effect ; a nullity, contract to commit crime is void

voidable contract

a contract in which one or both parties have the option to avoid their contractual obligations, if a contract is avoided, both parties are released from their contractual obligations

unenforceable contract

a contract in which the essential elements to create a valid contract are met but there is some legal defense to the enforcement of the contract

executed contract

a contract that has been fully performed on both sides; a complete contract

executory contract

a contract that has not been fully performed by either or both sides

express contract

an agreement that is expressed in written or oral words

implied-in-fact contract

a contract in which agreement between parties has been inferred from their conduct

quasi-contract (implied-in-law contract)

an equitable doctrine whereby a court may award monetary damages to a plaintiff for providing work or services to a defendant even though no actual contract existed, the doctrine is intended to prevent unjust enrichment and unjust detriment

equity

a doctrine that permits judges to make decisions based on fairness, equality, moral rights, and natural law

Elements of a Contract

1) Agreement

2) Consideration

3) Contractual Capacity

4) Lawful Object

Defenses to the Enforcement of a Contract

1) Genuineness of Assent - the consent of parties must be genuine

2) Writing and Form - law requires that certain contracts be in writing or a certain form

acceptance

A voluntary act by the offeree that shows assent, or agreement, to the terms of an offer; may consist of words or conduct.

agreement

A meeting of two or more minds in regard to the terms of a contract; usually broke down into two events and offer by one party to form a contract and an acceptance of the offer by the person to whom the offer is made.

browse-wrap term

A term or condition of use that is presented to an Internet user at the time certain products, such as software, are being downloaded but that need not be agreed to (by clicking "I agree," for example) before the user is able to install or use the product.

click-on agreement

An agreement that arises when a buyer, engaging in a transaction on a computer, indicates assent to be bound by the terms of an offer by clicking on a button that says, for example, "I agree"; sometimes referred to as a click-on license or a click-wrap agreement.

consideration

Generally, the value given in return for a promise or performance. the consideration, which must be present to make the contract legally binding, must be something of legally sufficient value and bargained for

contract

An agreement that can be enforced in court; formed by two or more competent parties who agree, for consideration, to perform or to refrain form performing some legal act now or in the future.

contractual capacity

The threshold mental capacity required by the law for a party who enters into a contract to be bound by that contract.

counteroffer

An offeree's response to an offer in which the offeree rejects the original offer and at the same time makes a new offer.

covenant not to complete

a contract which provides that a seller of a business or an employee will not engage in a similar business or occupation within a specified geographical area for a specified time following the sale of the business or termination of employment, aka non-compete clause

cybernotary

A legally recognized authority that can certify the validity of digital signatures.

e-contract

A contract that is formed electronically.

e-signature

As defined by the Uniform Electronic Transactions Act, "an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record."

exculpatory clause

A clause that releases a contractual party from liability in the event of monetary or physical injury, no matter who is at fault.

executed contract

A contract that has been completely performed by both parties.

executory contract

A contract that has not as yet been fully performed.

express contract

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

formal contract

A contract that by law requires a specific form, such as being executed under seal, to be valid.

forum-selection clause

A provision in a contract designating the court, jurisdiction, or tribunal that will decide any disputes arising under the contract.

implied contract

A contract formed in whole or in part from the conduct of the parties (as opposed to an express contract).

informal contract

A contract that does not require a specified form or formality in order to be valid.

mailbox rule

A rule providing that an acceptance of an offer becomes effective on dispatch (on being placed in a mailbox), if mail is, expressly or impliedly, an authorized means of communication of acceptance to the offeror.

mirror image rule

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

objective theory of contracts

A theory under which the intent to form a contract will be judged by outward, objective facts (what the party said when entering into the contract, how the party acted or appeared, and the circumstances surrounding the transaction) as interpreted by a reasonable person, rather than by the party's own secret, subjective intentions.

offer

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

option contract

A contract under which the offeror cannot revoke the offer for a stipulated time period.

Partnering Agreement

An agreement between a seller and a buyer who frequently do business with each other concerning the terms and conditions that will apply to all subsequently formed electronic contracts.

promise

An assertion that something either will or will not happen in the future.

promisee

A person to whom a promise is made

promisor

a person who makes a promise

rescission

A remedy whereby a contract is canceled and the parties are returned to the positions they occupied before the contract was made; may be effected through the mutual consent of the parties, by the parties' conduct, or by court decree.

revocation

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

unconscionable

A contract of clause that is void on the basis of public policy because one party, as a result of his or her disproportionate bargaining power, is forced to accept terms that are unfairly burdensome and that unfairly benefit the dominating party.

unenforceable contract

A valid contract rendered unenforceable by some statute or law.

contract

agreement enforceable by a court of law or equity, a promise or set of promises for the breach of which the law gives a remedy or the performance of which the law in some way recognizes a duty