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Exam 2 - Contract Law
N/A
72
Business
Undergraduate 3
03/25/2013

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Term
contract
Definition
a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty
Term
agreement, consideration, capacity, legality
Definition
4 elements of a valid contract
Term
offer and acceptance
Definition
2 parts to an agreement
Term
offer
Definition
a promise or commitment to do or refrain from doing some specified thing in the future
Term
intent, definiteness of terms, communication of the offer
Definition
3 elements to an offer
Term
1. revocation
2. rejection
3. counteroffer
Definition
Termination of the Offer by action of the parties (3 ways)
Term
1. lapse of time
2. destruction
3. death or incompetence
4. illegality
Definition
Termination of the Offer by operation of law (4 ways)
Term
The Mirror Image Rule
Definition
requires acceptance to match the offer exactly. An attempt to include different terms is a rejection of the original offer and a simultaneous making of a new one
Term
consideration
Definition
the value given in return for a promise
Term
a bargained-for exchange and something of legal value
Definition
2 elements of consideration
Term
capacity
Definition
generally implied, persons who are minors, intoxicated, or mentally incompetent can enter into a contract, but can normally avoid liability under the contract
Term
minors
Definition
not legally bound to contracts; subject to certain exceptions and contracts can be voidable
Term
intoxication
Definition
the transaction is voidable at the option of the person in question, even if it was purely voluntary
Term
mentally incompetent
Definition
if court-ruled and a guardian is in place, no contract can be entered into by the person in question
Term
legality
Definition
to be enforceable, a contract must not violate any statutes or public policy
Term
genuineness of assent and form
Definition
2 defenses to the enforceability of a contract
Term
mistakes, undue influence, misrepresentation, duress, and adhesion contracts
Definition
Types of genuineness of assent
Term
bilateral mistakes, unilateral mistakes
Definition
2 types of mistakes
Term
bilateral mistakes
Definition
when both parties make a mistake, either party can rescind the contract
Term
unilateral mistakes
Definition
does not afford the mistaken party relief, must be held to the contract
Term
fraudulent, non-fruadulent
Definition
2 types of misrepresentation
Term
fraudulent misrepresentation
Definition
if an innocent party is induced to enter into a contract, the contract can normally be voided
Term
undue influence
Definition
occurs when a contract enriches a party at the expense of another who is dominated by the enriched party; is voidable
Term
duress
Definition
involves forcing a party to enter into a contract by threatening the party with a wrongful act
Term
adhesion contracts
Definition
to void the contract, you must be able to show that the parties had substantially unequal bargaining positions and that enforcement would be fair or oppressive
Term
form
Definition
some contracts must be in writing to be enforceable
Term
contracts involving interests in land, One Year Rule, collateral (or secondary promise), promises made in consideration of marriage, contracts for the sale of goods of $500 or more
Definition
types of contracts required to be in writing
Term
discharge by performance, discharge by agreement, discharge by operation of law
Definition
3 types of performance and discharge
Term
discharge by performance
Definition
discharge by the parties performing their promises
Term
discharge by rescission, discharge by novation, discharge by substituted agreement, discharge by accord and satisfaction
Definition
4 types of discharge by agreement
Term
discharge by rescission
Definition
the process by which a contract is canceled and the parties are returned to the positions they occupied prior to forming the contract
Term
discharge by novation
Definition
when the parties to a contract agree to substitute a third party for one of the original parties
Term
discharge by substituted agreement
Definition
worked out as a compromise in a genuine dispute substitutes as a new contract (no third party)
Term
discharge by accord and satisfaction
Definition
the parties agree to accept performance that is different from the performance originally promised
Term
impossibility of performance, bankruptcy, statute of limitations
Definition
examples of discharge by operation of law
Term
damages, rescission and restitution, specific performance, reformation, recovery based on quasi contract
Definition
Types of Breach of Contract and Remedies
Term
damages
Definition
compensate a non-breaching party for the loss of a bargain; goal is to place the nonbreaching party in the position they would have occupied if the contract had been performed
Term
compensatory, consequential, nominal, liquidated damages
Definition
types of damages
Term
compensatory damages
Definition
designed to compensate a party for the loss of a bargain
Term
consequential damages
Definition
designed to give the injured party the entire benefit of the bargain including all foreseeable losses caused by special circumstances beyond the contract
Term
nominal damages
Definition
designed to recognize wrongdoing when no monetary loss is shown
Term
mitigation of damages
Definition
the innocent injured party is held to a duty to reduce the damages that the breaching party suffers
Term
liquidated damages provisions
Definition
specifies a certain amount to be paid in the event of a breach
Term
penalties provisions
Definition
specify a certain amount to be paid in the event of a breech; designed to penalize the breaching party and are not enforceable
Term
rescission
Definition
an action to undo a contract and to return the contracting parties to the positions they occupied before the transaction
Term
unilateral rescission
Definition
available in the case of fraud, bilateral mistake, duress, undue influence, misrepresentation, lack of capacity, or a party's failure to perform
Term
specific performance
Definition
only available if damages are an inadequate remedy; will be decreed if goods are unique
Term
reformation
Definition
used when the parties have imperfectly expressed their agreements in writing; allows the contract to be rewritten to reflect original intentions
Term
recovery based on quasi contract
Definition
provides relief when no enforceable contract exists
Term
contracts involving interests in land, One Year Rule, collateral (or secondary promise), promises made in consideration of marriage, contracts for the sale of goods of $500 or more
Definition
types of contracts required to be in writing
Term
discharge by performance, discharge by agreement, discharge by operation of law
Definition
3 types of performance and discharge
Term
discharge by performance
Definition
discharge by the parties performing their promises
Term
discharge by rescission, discharge by novation, discharge by substituted agreement, discharge by accord and satisfaction
Definition
4 types of discharge by agreement
Term
discharge by rescission
Definition
the process by which a contract is canceled and the parties are returned to the positions they occupied prior to forming the contract
Term
discharge by novation
Definition
when the parties to a contract agree to substitute a third party for one of the original parties
Term
discharge by substituted agreement
Definition
worked out as a compromise in a genuine dispute substitutes as a new contract (no third party)
Term
discharge by accord and satisfaction
Definition
the parties agree to accept performance that is different from the performance originally promised
Term
impossibility of performance, bankruptcy, statute of limitations
Definition
examples of discharge by operation of law
Term
damages, rescission and restitution, specific performance, reformation, recovery based on quasi contract
Definition
Types of Breach of Contract and Remedies
Term
damages
Definition
compensate a non-breaching party for the loss of a bargain; goal is to place the nonbreaching party in the position they would have occupied if the contract had been performed
Term
compensatory, consequential, nominal, liquidated damages
Definition
types of damages
Term
compensatory damages
Definition
designed to compensate a party for the loss of a bargain
Term
consequential damages
Definition
designed to give the injured party the entire benefit of the bargain including all foreseeable losses caused by special circumstances beyond the contract
Term
nominal damages
Definition
designed to recognize wrongdoing when no monetary loss is shown
Term
mitigation of damages
Definition
the innocent injured party is held to a duty to reduce the damages that the breaching party suffers
Term
liquidated damages provisions
Definition
specifies a certain amount to be paid in the event of a breach
Term
penalties provisions
Definition
specify a certain amount to be paid in the event of a breech; designed to penalize the breaching party and are not enforceable
Term
rescission
Definition
an action to undo a contract and to return the contracting parties to the positions they occupied before the transaction
Term
unilateral rescission
Definition
available in the case of fraud, bilateral mistake, duress, undue influence, misrepresentation, lack of capacity, or a party's failure to perform
Term
specific performance
Definition
only available if damages are an inadequate remedy; will be decreed if goods are unique
Term
reformation
Definition
used when the parties have imperfectly expressed their agreements in writing; allows the contract to be rewritten to reflect original intentions
Term
recovery based on quasi contract
Definition
provides relief when no enforceable contract exists
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