Chapter 10-17 Key Terms

e-contract

A contract that is formed electronically.

Voidable Contract

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

Valid Contract

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

covenant not to compete

A contractual promise of one party to refrain from conducting business similar to that of another party for a certain period of time and within a specified geographical 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).

reformation

A court-ordered correction of a written contract so that it reflects the true intentions of the parties.

liquidated debt

A debt that is due and certain in amount.

unliquidated debt

A debt that is uncertain in amount.

promissory estoppel

A doctrine that applies when a promisor makes a clear and definite promise on which the promisee justifiably relies; such a promise is binding if justice will be better served by the enforcement of the promise.

commercial impracticability

A doctrine that may excuse the duty to perform a contract when performance becomes much more difficult or costly due to forces that neither party could control or contemplate at the time the contract was formed.

impossibility of performance

A doctrine under which a party to a contract is relieved of his or her duty to perform when performance becomes impossible or totally impracticable (through no fault of either party).

Bilateral Mistake

A mistake that occurs when both parties to a contract are mistaken about the same material fact.

unilateral mistake

A mistake that occurs when one party to a contract is mistaken as to a material fact.

penalty

A sum specified in a contract not as a measure of compensation for its breach but rather as a punishment for a default. The agreement as to the amount will not be enforced, and recovery will be limited to the actual damages.

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.

Bilateral Contract

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

Unenforceable Contract

A valid contract rendered unenforceable by some statute or law.

integrated contract

A written contract that constitutes the final expression of the parties' agreement. Evidence extraneous to the contract that contradicts or alters the meaning of the contract in any way is inadmissible.

release

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

prenuptial agreements

An agreement made before marriage that defines each partner's ownership rights in the other partner's property. Prenuptial agreements must be in writing to be enforceable.

click-on agreement

An agreement that arises when an online buyer clicks on "I agree," or otherwise indicates her or his assent to be bound by the terms of an offer.

covenant not to sue

An agreement to substitute a contractual obligation for some other type of legal action based on a valid claim.

shrink-wrap agreement

An agreement whose terms are expressed in a document located inside a box in which goods (usually software) are packaged.

liquidated damages

An amount, stipulated in the contract, that the parties to a contract believe to be a reasonable estimation of the damages that will occur in the event of a breach.

anticipatory repudiation

An assertion or action by a party indicating that he or she will not perform an obligation that the party is contractually obligated to perform at a future time.

Specific Performance

An equitable remedy in which a court orders the parties to perform as promised in the contract. This remedy normally is granted only when the legal remedy (monetary damages) is inadequate.

restitution

An equitable remedy under which a person is restored to his or her original position prior to loss or injury, or placed in the position he or she would have been in had the breach not occurred.

consequential damages

Special damages that compensate for a loss that is not direct or immediate (for example, lost profits). The special damages must have been reasonably foreseeable at the time the breach or injury occurred in order for the plaintiff to collect them.

novation

Substituting a new obligation for an old one or substituting new parties to an existing obligation.

browse-wrap terms

Terms and conditions of use that are 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 being able to install or use the product.

breach of contract

The failure, without legal excuse, of a promisor to perform the obligations of a contract.

performance

The fulfillment of one's duties under a contract—the normal way of discharging one's contractual obligations.

disaffirmance

The legal avoidance, or setting aside, of a contractual obligation.

discharge

The termination of an obligation, such as occurs when the parties to a contract have fully performed their contractual obligations.

consideration

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

contract

a binding agreement between two or more persons that is enforceable by law

agreement

a decision reached by two or more people or groups

latent defect

a hidden structural defect that would not be discovered by ordinary inspection

negligent misrepresentation

misrepresentation made without due care in ascertaining its truthfulness; renders agreement voidable

Undue Influence

occurs when one party to a contract is in a position of trust and wrongfully dominates the other party

innocent misrepresentation

party to a contract does not know that a statement he or she made is untrue

forbearance

patient self-control; restraint and tolerance

Unilateral Contract

promise in exchange for an act

informal contract

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

Executed Contract

A contract that has been completely performed by both parties.

Formal Contract

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

Quantum Meruit

"As much as he deserves" - the damages awarded in a quasi-contract case

Revocation

(n.) an act or instance of calling back, an annulment, cancellation

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.

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.

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.

employment contract

A contract between an employer and an employee in which the terms and conditions of employment are stated.

Implied Contract

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

Void Contract

A contract having no legal force or binding effect.

Express Contract

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

unconscionable

A contract or clause that is void on the basis of public policy because one party was forced to accept terms that are unfairly burdensome and that unfairly benefit the other party.

Promisee

A person to whom a promise is made.

Offeree

A person to whom an offer is made.

Promisor

A person who makes a promise.

Offeror

A person who makes an offer.

promise

A person's assurance that he or she will or will not do something.

offer

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

forum-selection clause

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

condition

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

rescission

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

parol evidence rule

A rule of contracts under which a court will not receive into evidence prior or contemporaneous external agreements that contradict the terms of the parties' written contract.

Mailbox Rule

A rule providing that an acceptance of an offer becomes effective on dispatch.

mitigation of damages

A rule requiring a plaintiff to have done whatever was reasonable to minimize the damages caused by the defendant.

collateral promise

A secondary promise that is ancillary (subsidiary) to a principal transaction or primary contractual relationship, such as a promise made by one person to pay the debts of another if the latter fails to perform. A collateral promise normally must be in writing to be enforceable.

nominal damages

A small monetary award (often one dollar) granted to a plaintiff when no actual damage was suffered.

adhesion contract

A standard-form contract in which the stronger party dictates the terms.

Statute of Frauds

A state statute that requires certain types of contracts to be in writing to be enforceable.

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.

tender

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

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."

Estopped

Barred, impeded, or precluded.

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.

incidental damages

Expenses that are caused directly by a breach of contract, such as those incurred to obtain performance from another source.

ratification

Formal approval

Past Consideration

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

emancipation

In regard to minors, the act of being freed from parental control.

Scienter

Knowledge by the misrepresenting party that material facts have been falsely represented or omitted with an intent to deceive.

voluntary consent

Knowledge of, and genuine assent to, the terms of a contract.

necessaries

Necessities required to maintain a standard of living, such as food, shelter, clothing, and medical attention.

partnering agreement

a seller and a buyer who frequently do business with each other agree in advance on the terms and conditions that will apply to all transactions subsequently conducted electronically

accord and satisfaction

an agreement made and executed in satisfaction of the rights one has from a previous contract

usury

charging an illegal rate of interest

Acceptance

conformity that involves both acting and believing in accord with social pressure

executory contract

contract not fully performed on both sides

Option Contract

contract to hold an offer to make a contract open for a fixed period of time

Quasi Contract

court-imposed obligation to prevent unjust enrichment in the absence of a contract

record

information provided to a journalist that can be released and attributed by name to the source

age of majority

the designated age at which an individual is recognized as an adult

contractual capacity

the legal ability to enter into a contractual relationship