Ch 7: Contract enforceability

Rescission

Cancellation of a contract that occurs when both parties agree to discharge each other from all duties under the contract and end the agreement, no matter what has been done or left undone.

mutual consent

Circumstance under which contracting parties may be discharged from their obligation although neither party has fully performed because they agree to cancel the contract.

Total Breach

Discharges the promisee's obligation, allowing her to withhold performance, terminate the contract and bring suit to recover damages related to the full value of the contract.

Anticipatory Breach/Repudiation

If one party indicates inability or lack of desire to perform the contract before the performance of a contract takes place (anticipate the breach)

discharge

In contract law, the removal of all legal obligations under the agreement.

______________ beneficiaries may not sue to enforce contractual rights.

Incidental

Parole Evidence Rule

Interpretation rule stating that any writing intended by the parties to be the final expression of their agreement may not be contradicted by any oral or written agreements made prior to the writing.

____________ damage provisions are commonly used in license agreements, such as a software user's license.

Liquidated

Substantial Performance

Occurs when one party fulfills enough of its contract obligations to warrant payment

third party beneficiary

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

__________ Is a remedy designed to prevent unjust enrichment of one party in an agreement.

Restitution.

_____________is a(n) _______________ remedy whereby a court orders the breaching party to render action of performance.

Specific performance, equitable.

Supervening Illegality

The enactment of a statute, regulation, or court decision that makes the contract's offer illegal. This action terminates the offer.

True or false: In some cases after the parties have formed a contract, unexpected events can discharge a contract by operation of law.

True

True or false: An injunction is an equitable remedy.

True.

good faith

honesty in fact and the observance of reasonable commercial standards of fair dealing

There are some cases in which __________ is/are insufficient to compensate the non-breaching party or when one party was unjustly enriched at the other party's expense.

monetary damages.

An award of _________ are (or is) one of the ways in which the law provides a __________ to compensate the non-breaching party for losses suffered.

money damages, remedy

When a court rewrites a contract it is engaging in the equitable remedy of:

reformation.

duress

the use of any form of unfair coercion by one party to induce another party to enter into or modify a contract; basis for avoiding a contract.

assignment v. delegation

when a party delegates duty, the delegator remains liable for the obligation. Thus, if the delegatee fails to perform, the delegator must either perform or suffer liability for the breach of contract.

Four Types of Impossibility

(1) Destruction of the subject matter, (2) Death or incapacitation of one of the parties, (3) means of the contract cannot be performed, and (4) Supervening Illegality.

Types of equitable relief

(1) Special performance, (2) injunctive relief, and (3) reformation.

condition precedent

A condition in a contract that must be met before a party's promise becomes absolute.

condition subsequent

A condition in a contract that operates to terminate a party's absolute promise to perform.

convenant not to compete

A contractual promise of one party to refrain from competing with another party for certain period of time and within a certain geographic area.

Frustration of Purpose

A court-created doctrine under which a party to a contract will be relieved of his or her duty to perform when the objective purpose for performance no longer exists (due to reasons beyond that party's control).

Undue Influence

A defense that gives legal relief to a party who was induced to enter into a contract through the improper pressure of a trusted relationship.

Unconscionability

A defense that may allow a party to potentially avoid a contract on the grounds that she suffered a grossly unfair burden that shocks the objective conscience.

Accord and Satisfaction

A doctrine that allows one party to create an agreement, or accord, with the other party to accept a substitute performance in order to satisfy the original performance; the completion of the new duty discharges the old one.

Duty to Mitigate

A duty placed on a party injured by breach, requiring that party to avoid damages by making reasonable efforts.

Statute of Frauds

A law requiring that certain contracts must be in writing to be enforceable.

intended beneficiary

A third party for whose benefit a contract is formed. In this case, the beneficiary can sue the promisor if such a contract is breached.

incidental beneficiary

A third party who incidentally benefits from a contract but whose benefit was not the reason the contract was formed. An incidental beneficiary has no rights in a contract and cannot sue to have the contract enforced.

Temporary Impossibility

An occurrence or event that makes the performance of a contractual obligation temporarily impossible operates to suspend performance until the impossibility ceases.

Tender of Performance

An offer or attempt to perform what is required under a contract.

fradulent misrepresentation

Any misrepresentation, either by misstatement or by omission of a material fact, knowingly made with the intention of deceiving another and on which a reasonable person would and does rely to his or her detriment.

Concurrent Conditions

Conditions that must occur or be performed at the same time; they are mutually dependent. No obligations arise until these conditions are simultaneously performed.

_____________ compensate the non-breaching party for foreseeable indirect losses not covered by compensatory damages.

Consequential damages.

Reformation

Contract modification in which the court rewrites the contract to conform to the parties' actual intentions when the parties have imperfectly expressed their agreement and the imperfection results in a dispute.

omitted terms

Contract terms that are left out or absent. In contract law, courts may supply a reasonable term in a situation where the contract is silent.

Ambiguous Terms

Contract terms that are vague and indefinite. In contract law, these terms are construed by the court against the interest of the side that drafted the agreement.

The statute of frauds primarily applies to five types of contracts:

Contracts that involve the sale of interest in land. Contracts that cannot be (i.e., are not able to be, by their terms) performed in under one year. Contracts to pay the debt of another (e.g., a loan surety). Contracts made in consideration of marriage (e.g., a prenuptial agreement). Contracts for the sale of goods for $500 or more and lease transactions for goods amounting to $1,000 or more (UCC contracts).

A type of substitute agreement in which the duties of the contract remain the same but a new, 3rd party assumes the duties of an original party from further obligation.

Delegation

Impracticability

Doctrine that excuses performance when an extreme circumstance occurs or reveals itself that destroys the value of the performance to the party and that circumstance was not the fault of either party and was not reasonably foreseeable.

In a breach of contract claim, all of the following would be considered remedies at law:

Liquidated damages, compensatory damages, and restitution.

material

Something that is important to the contract by being necessary and generally indispensable to the contract.

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.

Enforceability

The ability of a properly formed contract to be enforceable in a court of law; determined by examining whether the contract is a product of genuine assent and is in writing (under certain circumstances).

Delegation

The transfer of one party's current duties under a contract to a third party to perform, with the original party remaining liable for any breach.

Grossly unequal consideration may be grounds for a court to refuse to enforce a contract under what doctrine?

Unconscionability

Unilateral Rescission *.

When r scones a contact- which is not permissible- both parties must agree

injunctive relief

a court order to refrain from performing a particular act

restitution

a remedy designed to prevent unjust enrichment of one party in an agreement. In the event that one party is in the process of performing the contract and the other party commits a material breach, the non-breaching party is entitled to rescind (cancel) the contract and receive fair market value for any services rendered.

assignment

a transfer of current rights (not future rights) under a contract by one party in a contract to a third party. The party making the assignment is known as the assignor, and the third party receiving the rights is the assignee.

Under the doctrine of ________ _____ __________, the parties agree to accept substitute performance in discharge of the existing performance obligation.

accord and satisfaction

The Statute of Frauds Is a(n) ______________ defense to a breach of contract claim.

affirmative

Genuine Assent

agreement to enter into a contract that is evidenced by words or conduct between the parties

special performance

an equitable remedy whereby a court orders the breaching party to render the promised performance by ordering the party to take a specific action. This remedy is available only when the subject matter of the contract is sufficiently unique so that money damages are inadequate

condition

an event that must occur before a party becomes obligated under a contract

Compensatory damages includes _______ damages and even potential _______ that would have been earned if performance had occurred.

an out-of-pocket, profits.

Any threatened breach must be a material, or a total breach for the non-breaching party to exercise its right to claim an ______________ _____________.

anticipatory repudiation

A(n) ___ Is a transfer of current (not future) ___ under a contract by one party In a contract to a third party.

assignment, rights.

A party who transfers all her rights in a contract to a third party Is called a(n): ______________.

assignment.

The party making the assignment is known as the ____________ and the third party receiving the rights Is the ____________.

assignor, assignee.

Generally, the anticipatory ________ occurs before contractual performance Is due.

breach

The equitable maxim of ________ as applied to contract enforcement requires that the party show that it had no fault in the breaching of the contract.

clean hands.

Consequential Damages

compensate the nonbreaching party for foreseeable indirect losses not covered by compensatory damages. An aggrieved party is entitled to recover damages if the damages are caused by unique and foreseeable circumstances beyond the contract itself.

Fraudulent misrepresentation can occur when a party: ___________.

conceals a material fact.

compensatory damages

damages that are meant to make the injured party whole again.

liquidity damages

damages that the parties agree to ahead of time. In some cases it may be very difficult to determine actual damages, so parties may agree at the time of the contract that a breach would result in a fixed damage amount. Liquidated damage provisions are commonly used in license agreements

When the parties complete their promises and obligations to each other, the contract Is said to be ____________.

discharged

The rule preventing recovery for reasonably avoidable damages is often called the:

duty to mitigate.

The most common way for the parties to discharge their obligations is by: ___________.

good faith performance.

In most cases a(n) _________ will make performance ___________ impossible.

illness, temporarily

___________ occurs when one party to an agreement makes a promise or representation about a material fact that is not true.

misrepresentation

A substitute agreement, also known as a(n) ____________ is generally used to compromise when two parties have a dispute as to the performance of the contract and wish to amend its terms.

modification

Duties involving special personal skills, such as those of an attorney, physician, portrait artist, or actor, are usually ________.

nondelegable.

breach of contract

one party fails to fufill the contract

The _____________ rule states that writing intended to be the final expression of an agreement may not be contradicted by a prior agreement.

parol evidence.

The frustration of purpose occurs when events destroy a party's _________ In entering into the contract even though performance of the contract itself is not ________________ impossible.

purpose, objectively

If neither party has fully performed, the parties may agree to cancel the contract, also known as ______________.

rescission

In a breach of contract claim, all of the following would be considered remedies at law: ____________,

restitution, liquidated damages, and compensatory damages.

misrepresentation

stating an untrue fact

If both parties agree to the terms of a contract pursue good faith performance, but one party cannot give perfect performance, his performance is said to be ________ performance.

substantial

Generally, courts allow the party who has ___ to be paid the full amount of the contract price less any costs suffered.

substantially performed

Partial Breach

the innocent party may not rescind the contract and must still perform his/her promise-the remedy is to bring an action for damages caused by the partial breach

The signature of the ___ is the one element of contract formality that is uniformly required.

the party against whom enforcement Is sought.

In terms of the statute of frauds writing requirement, the one element that is uniformly required is

the signature of the party against whom enforcement of the contract is sought

treble damages

three times the damages actually sustained

the defense of __________________ gives the court the tools to refuse to enforce a contract where the consideration is grossly unequal.

unconscionability

If __________ ____________ is proven, the influenced party can avoid the contract.

undue influences

Generally, anticipatory repudiation occurs when one party uses _______ language to ________ the contract in which case the non-breaching party has the right to file an immediate lawsuit.

unequivocal, repudiate

If the burden is both ___ and ___ , courts may hold the performance is impracticable and allow the burdened parties' obligations to be discharged before performance.

unforeseeable, extreme.