Chapter 20, Legal Terminology

Bankruptcy

A legal process under the Federal Bankruptcy Act that aims to give debtors who are overwhelmed with debt a fresh start and to provide a fair way of distributing a debtor's assets among all creditors.

Reasonable time

A time, left to the discretion of the judge, that may be fairly allowed depending on the circumstances.

Accord and satisfaction

An agreement to perform in a different manner than originally called for, and the completion of that agreed-upon performance.

Novation

An agreement whereby an original party to a contract is replaced by a new party, creating a completely new contract and ending the original one.

Legal tender

Coin, paper, or other currency that is sufficient under law payment of debts.

Compensatory damages

Compensate the plaintiff for actual losses resulting from the breach.

Intended beneficiary

Contract was made with the purpose of benefiting the third party.

Nominal damages

Damages in name only.

Liquidated damages

Damages that are agreed upon by the parties at the time of the execution of the contract in the event of a subsequent breach.

Impossibility

Defense that discharges contracts that are impossible to perform.

Substantial performance

Doctrine that allows a contracting party to sue the other party for breach even though slight omissions or deviations were made in their own performance of the contract.

Mitigate

Keep the damages as low as possible. Refers to the duty owed to a breaching party by the injured party.

Statutes of limitations

Laws that set forth time limits for bringing legal actions.

Consequential damages

Losses that flow not directly from the breach, but from the consequences of it.

Incidental damages

May be awarded to the injured party to cover reasonable expenses that indirectly result from a breach of contract.

Breach of contract

Occurs when one of the parties fails to carry out the terms of the contract.

Incidental beneficiary

One who is indirectly benefited by a contract.

Third-party beneficiary

Someone who is not a party to a contract, but is benefited by a performance in the contract.

Punitive OR exemplary damages

Such as double or triple the amount of actual damages, these are occasionally awarded to the plaintiff as a measure of punishment for the defendant's egregious acts related to breaching the contract.

Specific performance

The court will order the breaching party to do that which they agreed to do under the terms of the contract.

Privity of contract

The legal name for the relationship that exists between contracting parties.

Damages

The money lost as a result of a breach.

Performance

The parties do as they agreed to do under the terms of the contract.

Assignee

The person to whom the right is transferred.

Assignor

The person who transfers the right.

Delegation

The transfer of a duty.

Assignment

The transfer of a right.

Time is of the essence

Time is critical.

Toll

To bar, defeat, or take away.

Tender of performance

To offer to do that which one has agreed to do under the terms of the contract.

Tender of payment

To offer to the other party the money owed under the contract.

Anticipatory breach

When the breaching party announces before the time for performance that they are not going to perform.