Business Law Chapter 8 Contract Nature and Terminology

Voidable Contract

A contract that may be legally avoided (canceled, or annulled) at the option of one of the parties.

Valid Contract

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

Option Contract

A contract under which the offeror cannot revoke the offer for a stipulated time period. During this period, the offeree can accept or reject the offer without fear that the offer will be made to another person. The offeree must give consideration for the option (the irrevocable offer) to be enforceable.

Liquidated Debt

A debt for which the amount has been ascertained, fixed, agreed on, settled, or exactly determined. If the amount of the debt is in dispute, the debt is considered unliquidated.

Quasi Contract

A fictional contract imposed on the parties by a court in the interests of fairness and justice; usually imposed to avoid the unjust enrichment of one party at the expense of another.

cybernotary

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

agreement

A meeting of two or more minds in regard to the terms of a contract; usually broken down into two events—an 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.

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, a promise made by one party in exchange for the promise of another party; a promise for a promise

Acceptance

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

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.

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.

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; sometimes called a shrink-wrap license.

Forbearance

The act of refraining or abstaining from action, both parties agree to disagree and move on to the next issue without making a commitment one way or another.

Contract

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

Unilateral Contract

a contract that contains a promise by only one person to do something, if and when the other party performs some act.

e contract

a contract that is formed electronically

Unforceable Contract

one the court will not uphold generally because of some rule of law

Offeree

person to whom the offer is made

Executed Contract

A contract that has been completely performed by both parties.

Executory Contract

A contract that has not as yet been fully performed.

Promissary Estoppel

- Promises to make gifts are generally unenforceable. The courts have developed this concept to protect against injustice.

Informal Contract

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

Consideration

1. There must be a bargained for exchang

record

A collection of data about one entity in a database

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.

Accord and Satisfaction

A common means of settling a disputed claim, whereby a debtor offers to pay a lesser amount than the creditor purports to be owed. The creditor's acceptance of the offer creates an accord (agreement), and when the accord is executed, satisfaction occurs.

Implied in Fact Contract

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

Void Contract

A contract having no legal force or binding effect.

Release

A contract in which one party forfeits the right to pursue a legal claim against the other party

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.

recission

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 their conduct, or by court decree.

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.

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.

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."

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.

Promisee

a person to whom a promise is made

Promisor

a person who makes a promise

Promise

a verbal commitment by one person to another agreeing to do (or not to do) something in the future

Offerer

the party who makes an offer to enter into a contract

past-consideration

the performance of a promise cannot later be used to enter into a contract