CONTRACT LAW DEFINITIONS

  • Elements of a Contract:
    • Mutual Assent: The requirement that each party to a contract must agree to the same thing and must know what the other party intends.
    • Offer: Outward manifestation of present contractual intent communicated to an identified offeree containing definite and certain terms (Quantity, Time, Identity of Parties, Price, Subject Matter).
    • Acceptance: Must know of offer; must be person to whom offer was made (BUT, Options can be assigned). Unequivocal assent to the terms. UCC any reasonable means.
    • Consideration: Legally sufficient, bargain for exchange which induces current performance, and is a binding obligation on both parties.
    • Lawful Purpose: Illegal subject matter makes an agreement void.
  • Bilateral Contract: Promise for a Promise.
  • Unilateral Contract: Promise for an Act.
  • Adams v. Lindsell – postal acceptance rule: Acceptance of an offer is considered accepted once it is post stamped on the side of the sender.
  • Option: An option is a contract to purchase the right for a certain time, by election, to purchase property at a stated price. An option may be a right to purchase property or require another to perform upon agreed-upon terms.  By purchasing an option, a person is paying for the opportunity to elect or “exercise” the right for the property to be purchased or the performance of the other party to be required.
  • Firm Offer: An offer that will remain open for a certain period or until a certain time or occurrence of a certain event, during which it is incapable of being revoked. As a general rule, all offers are revocable at any time prior to acceptance, even those offers that purport to be irrevocable on their face.
  • Caldwell Cline: An offer made by mail is made when received by the offeree.
  • Revocation:  A revocation of offer is the withdrawal of a previous offer to engage in some sort of legally binding contract. The previous offer had to have been such that it would have immediately become legally binding if the other party had formally agreed to it.
    • Revocation Effective Upon receipt by Offeree:  For revocation to be effective, it must be received by the offeree before they post their letter of acceptance. One rationale given for the rule is that the offeror nominates the post office as his or her implied agent, and thus receipt of the acceptance by the post office is regarded as receipt by the offeror.
    • Unilateral Contract: Revocation of Offer Rule
      • traditional rule:  To accept an offer of a unilateral contract an offeree must tender a performance rather than a reciprocal promise. The consequences of a revocation are especially acute when an offeror revokes such an offer after the offeree has begun performing. The early common law rule required full performance for acceptance.
      • more recent rule: More recent decisions have rejected this traditional approach. Courts now protect the offeree who has begun performance by barring revocation of the offer until the offeree has had a reasonable opportunity to complete the requested performance. The Restatement (Second) of Contracts sensibly describes the resulting obligation as an option contract.  
  • Rejection:  Rejection is a refusal to accept a contractual offer. Rejection means a refusal to accept tendered goods as contractual performance. Under the Uniform Commercial Code, a buyer’s rejection of nonconforming goods should be made within a reasonable time after tender or delivery, and the seller should be notified about the rejection.
    • Rejection Effective when Received
  • Counteroffer
    • Counteroffer as an Implied Rejection
  • Illusory Promise:
  • Promissory Estoppel: The doctrine of promissory estoppel is an alternative to the doctrine of consideration. It refers to a contract that cannot be withdrawn because one party acted on the other parties’ promise. In most cases, one party was harmed or served injustice because of the broken promise that they relied on. The promissory estoppel acts as a legal shield against the other’s claim, even though they did not give any consideration.
  • Moral Obligation Rule: A Duty that one owes to another based on past moral act which cannot be used as the basis of consideration in an enforceable contract.
  • Legal Detriment
  • Failure of Consideration
  • Want of Consideration
  • Sufficiency of Consideration
  • Executed Contract
  • Executory Contract
  • Meeting of the Minds
  • Outward Manifestation Theory
  • Merit Music Sonneborn
  • Express Contract
  • Implied in Fact Contract
  • Implied in Law Contract (Quasi Contract)
  • Quantum Meruit
  • Quantum Valebant
  • Requirement Contract
  • Output Contracts
  • Option Contract
  • Void Contract
  • Voidable Contract
  • Power of Disaffirmance
  • Exculpatory Clause
  • Contract of Adhesion
  • Unconscionable Contract
  • Condition
  • Condition Precedent
  • Condition Concurrent
  • Condition Subsequent
  • Express Conditions
  • Implied in Fact Conditions
  • Constructive Conditions
  • Doctrine of Constructive Conditions
  • Substantial Performance
  • Implied Condition of Cooperation
  • Waiver of Condition
  • Excuse of Conditions
  • Assignment
  • Divisible (or Severable) Contracts
  • Lawrence Fox
  • Delegation and Assumption of Duties
  • Creditor Beneficiary
  • Third Party Beneficiary Contract
  • Donee
  • Beneficiary Intended
  • Beneficiary Incidental
  • Beneficiary
  • Distinguishing between Donee and Creditor
  • Beneficiary Rights Against the Promisee
  • Guaranty
  • Statute of Frauds
  • Parol Evidence Rule
  • Modification
  • The Collateral Agreement Doctrine
  • Termination by Accord and Satisfaction
  • Termination by Novation
  • Termination by Release Merger
  • Termination by Mutual Recision
  • Breach of Contract
  • Termination by Impossibility of Performance
  • Anticipatory Breach
  • Material vis-a-vis
  • Minor Breach
  • Termination by Economic or Commercial Impracticability
  • Prospective Failure of Condition
  • Termination by Frustration of Purpose
  • Liquidated damages
  • Compensatory Damages
  • Consequential Damages
  • Nominal Damages
  • Mitigation of Damages
  • Punitive or Exemplary Damages
  • Contract Formation Requirement of a Writing: Statute of Frauds
  • Parole Evidence Rule: Defense to Formation
  • Interpreting the Contract Terms
  • Performance: The fulfillment or accomplishment of a promise, contract, or other obligation according to its terms.
  • Doctrine of Substantial Performance: Doctrine of substantial performance is a legal principle which says that if a good faith attempt is made to perform the requirements of the agreement even if it does not precisely meet the terms of the agreement or statutory requirements, the performance will still be considered complete if the essential purpose is accomplished.
  • Breach of Contract and Remedies
  • Third Party Beneficiary Contracts
  • Assignment of Contracts
  • Damages at Common Law and under the U.C.C.
  • Impossibility of Performance and Frustration of Purpose
  • Discharge of Contracts
  • Comparison of Common Law and U.C.C.
  • Informal Contracts Without Assent or Consideration
  • Categories of Contracts Covered by the Statute of Frauds
  • Statute of Frauds: Satisfaction by Memorandum
  • Statute of Frauds: Effect of Non-Compliance, Oral Rescission and Modification
  • Statute of Frauds Remedies Scope of Parole Evidence Rule Exceptions to the Parole Evidence Rule
  • Process of Interpreting Terms
  • Deciding Omitted Terms
  • Nature of Conditions
  • Express and Constructive Conditions
  • Excuse of Conditions
  • Rights of Defaulting Plaintiff
  • Substantial Performance
  • What Constitutes Breach of Contract
  • Material v Minor Breach
  • Determining Materiality of Breach
  • Doctrine of Divisibility
  • Anticipatory Repudiation
  • Remedies for Breach of Contract
  • Requirements for Third Party
  • Beneficiary Contracts
  • Rights of Intended Beneficiary: Modifiable Unless Vested
  • Rights and Liabilities where Promisor Refuses to Perform
  • Terminology and Basic Principles of Assignment
  • Assignment of Rights
  • Generally What Can be Assigned
  • Covenants Not to Assign
  • Revocation of Assignments
  • Defenses of Obligor when Performance is Demanded
  • Delegation of Duties
  • Kinds of Interest
  • Expectation Damages
  • Reliance Damages Restitution
  • Foreseeability in Damages
  • Avoidable Damages
  • Nominal and Punitive Damages
  • Liquidated Damages
  • Damages in Sales Contracts
  • Substituted Agreement
  • Account Stated
  • Release and Covenant Not to Sue
  • Defenses Which Will Prevent Formation of a Contract
  • Discharge by Impossibility
  • Discharge by Impracticability
  • Discharge by Frustration of Purpose