Chapter 9

Commercial impracticability

A Uniform Commercial Code (UCC) defense to contractual nonperformance based on happenings that greatly increase the difficulty of performance and that violate the parties' reasonable commercial expectations.

Anti-assignment clause

A contractual provision that prevents a party from assigning rights or delegating duties without the permission of the other party.

Liquidated damages

A contractual provision that specifies a predetermined amount of damages or a formula for such a determination to be utilized if a breach of contract occurs.

Restitution

A contractual remedy involving one party returning to another party the value previously received.

Rescission

A contractual remedy that cancels the agreement and returns the consideration exchanged to each party.

Injuction

A court order directing a party to do or to refrain from doing some act.

Impossibility of performance

A defense to contractual nonperformance based on special circumstances that render the performance illegal, physically impossible, or so difficult as to violate every reasonable expectation the parties have regarding performance.

Condition subsequent

A fact that will extinguish a duty to make compensation for breach of contract after the breach has occurred.

Complete performance

A party performs all of its obligations under a contract.

Creditor beneficiary

A person who is not a party to a contract to whom the promisor of a contract owes an obligation or duty.

Equitable remedy

A remedy fashioned by a court when money damages are not adequate (i.e., there is "no adequate remedy at law"). Examples include injunctions and rescission of a contract.

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.

Delegatee

A third party, who is not an original contracting party, to whom contractual duties are transferred. This party will perform under the original contract.

Assignee

A third party, who is not an original contracting party, to whom contractual rights or duties or both are transferred. This party may enforce the original contract.

Delegate

A transfer of contract duties.

Condition precedent

An event in the law of contracts that must occur before a duty of immediate performance of the promise arises. Contracts often provide that one party must perform before there is a right to performance by the other party. For example, completion of a job is often a condition precedent to payment for that job. One contracting party's failure to perform a condition precedent permits the other party to refuse to perform, cancel the contract, and sue for damages.

Waiver

An express or implied relinquishment of a right.

Assignor

An original contracting party who assigns or transfers contractual rights or duties or both to a third party.

Delegator

An original contracting party who delegates or transfers contractual duties to a third party.

Express conditions

Conditions that are explicitly set out in a contract.

Implied conditions

Conditions to a contract that are implied by law rather than by contractual agreement.

Substantial performance

Degree of performance recognizing that a contracting party has honestly attempted to perform but has fallen short. One who has substantially performed is entitled to the price promised by the other less that party's damages.

Specific performance

Equitable remedy that requires defendants in certain circumstances to do what they have contracted to do.

Parol evidence rule

Extrinsic evidence. In contracts, the parol evidence rule excludes the introduction of evidence of prior written or oral agreements that may vary, contradict, alter, or supplement the present written agreement. There are several exceptions to this rule. For example, when the parties to an agreement do not intend for that agreement to be final and complete, then parol evidence is acceptable.

Discharge

In bankruptcy, the forgiving of an honest debtor's debts. In contract law, an act that forgives further performance of a contractual obligation.

Duty of performance

In contract law, the legal obligation of a party to a contract.

Material breach

Materially deficient or nonexistent performance of one's obligations under a contract.

Punitive damages

Monetary damages in excess of a compensatory award, usually granted only in intentional tort cases where defendant's conduct involved some element deserving punishment. Also called exemplary damages.

Concurrent condition

Mutual conditions under which each party's contractual performance is triggered by the other party's tendering (offering) performance.

Quasi-contract

Often referred to as an implied-in-law contract, is not a true contract. It is a legal fiction that the courts use to prevent unjust enrichment and wrongdoing. Courts permit the person who conferred a benefit to recover the reasonable value of that benefit. Nonetheless, the elements of a true contract are not present.

Third-party beneficiary

Persons who are recognized as having enforceable rights created for them by a contract to which they are not parties and for which they have given no consideration.

Consequential damages

The amount of money awarded in a breach-of-contract case to the non-breaching party to pay for the special damages that exceed the normal compensatory damages. Lost opportunities may create consequential damages if the breaching party was aware of the special nature of the contract.

Tender performance

The offer by one contracting party to perform a promise; usually associated with the offer to pay for or to ship items under the contract.

Delivery

The physical transfer of something. In sale-of-goods transactions, delivery is the transfer of goods from the seller to the buyer.

Release

The relinquishment of a right or claim against another party.

Novation

The substitution of a new contract in place of an old one.

Assignment

The transfer of contractual rights to a third party.

Donee Beneficiary

Third party who benefits from contract in which promisor agrees to give a gift to the third party. Donee beneficiaries can sue the party who owes them a performance under a breach contract, but they cannot sue the party who contracted to give them a gift.

Mitigate

To lessen the consequences of. Usually used to refer to the contractual duty to lessen damages following breach of contract.

Compensatory damages

Usually awarded in breach-of-contract cases to pay for a party's losses that are a direct and foreseeable result of the other party's breach. The award of these damages is designed to place the non-breaching party in the same position as if the contract had been performed.