Term
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Definition
| The state of two specified parties being in a contract |
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Term
| Assignment of Rights (Assignment) |
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Definition
| The transfer of contractual rights by an obligee to another party. |
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Definition
| An obligee who transfers a right to an assignee |
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Term
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Definition
| A clause that prohibits the assignment of rights under the contract |
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Term
| Delegation of a Duty (Delegation) |
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Definition
| A transfer of contractual duties by an obligor to another party for performance |
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Term
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Definition
| An obligor who has transferred his or her duty |
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Definition
| A situation in which a delegation of duties contains the term assumption, I assume the duties, or other similar language. In such a case, the delegatee is legally liable to the obligee for nonperformance. |
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Term
| Assignment and Delegation |
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Definition
| Occurs when there is a transfer of both rights and duties under a contract |
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Term
| Intended third-party beneficiary |
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Definition
| A third party who is not in privity of contract but who has rights under the contract and can enforce the contract against the promisor |
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Term
| Donee Beneficiary contract |
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Definition
| A contract entered into with the intent to confer a benefit or gift on an intended third party |
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Term
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Definition
| A third party on whom a benefit is to be confirmed |
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Term
| Creditor beneficiary contract |
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Definition
| A contract that arises in the following situation: (1) a debtor borrows money, (2) the debtor signs an agreement to pay back the money plus interest, (3) the debtor sells the item to a third party before the loan is paid off, and (4) the third party promises the debtor that he or she will pay the remainder of the loan to the creditor |
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Term
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Definition
| An original creditor who becomes a beneficiary under the debtor's new contract with another party |
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Term
| Who do you sue in a creditor beneficiary contract? |
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Definition
| The creditor beneficiary may (1) enforce the contract against the original debtor-promisor, or (2) enforce the new contract against the new debtor-promisor. |
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Term
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Definition
| A party who is unintentionally benefited by other people's contracts. No rights to sue or enforce a contract |
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Term
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Definition
| An unconditional promise to perform |
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Term
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Definition
| A qualification of a promise that becomes a covenant if it is met. There are three types of conditions: conditions precedent, conditions subsequent, and concurrent conditions |
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Term
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Definition
| A condition that requires the occurrence of an event before a party is obligated to perform a duty |
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Term
| Personal satisfaction test |
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Definition
| A subjective test that applies to contracts involving personal taste and comfort |
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Term
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Definition
| An objective test that applies to commercial contracts and contracts involving mechanical fitness |
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Term
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Definition
| A condition whose occurrence or nonoccurrence of a specific event automatically excuses the performance of an existing contractual duty to perform |
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Term
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Definition
| A condition that exists when the parties to a contract must render performance simultaneously; each party's absolute duty to perform is conditioned on the other party's absolute duty to perform |
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Term
| Implied-in-fact condition |
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Definition
| A condition that can be implied from the circumstances surrounding a contract and the parties' conduct |
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Term
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Definition
| When both parties agree to enter into a second agreement that expressly terminates the first agreement. Must be mutual. |
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Term
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Definition
| A new contract that revokes and discharges an existing contract. |
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Term
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Definition
| An agreement that substitutes a new party for one of the original contracting parties and relieves the existing party of liability on the contract. |
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Term
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Definition
| The settlement of a contract dispute |
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Term
| Impossibility of performance |
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Definition
| Nonperformance that is excused if a contract becomes impossible to perform. It must be objective impossibility, not subjective. |
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Term
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Definition
| A clause in a contract in which the parties specify certain events that will excuse nonperformance |
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Term
| Commercial Impracticability |
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Definition
| Nonperformance that is excused if an extreme or unexpected development or expense makes it impractical for the promisor to perform |
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Term
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Definition
| A contracting party's failure to perform an absolute duty owed under a contract |
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Term
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Definition
| A situation in which a party to a contract renders performance exactly as required by the contract. Complete performance discharges that party's obligations under the contract |
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Term
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Definition
| An unconditional and absolute offer by a contracting party to perform his or her obligations under a contract. Also known as a tender. |
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Term
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Definition
| Performance by a contracting party that deviates only slightly from complete performance |
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Term
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Definition
| A breach that occurs when a party renders substantial performance of his or her contractual duties |
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Term
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Definition
| A breach that occurs when a party renders inferior performance of his or her contractual duties |
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Term
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Definition
| A situation in which a party fails to perform express or implied contractual obligations and impairs or destroys the essence of a contract |
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Term
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Definition
| A breach that occurs when one contracting party informs the other that he or she will not perform his or her contractual duties when due |
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Term
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Definition
| An award of money intended to compensate a nonbreaching party for the loss of the bargain. Compensatory damages place the nonbreaching party in the same position as if the contract had been fully performed by restoring the "benefit of the bargain" |
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Term
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Definition
| A nonbreaching party's legal duty to avoid or reduce damages caused by a breach of contract |
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Term
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Definition
| Foreseeable damages that arise from circumstances outside a contract. To be liable for these damages, the breaching party must know or have reason to know that the breach will cause special damages to the other party |
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Term
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Definition
| Damages that parties to a contract agree in advance should be paid if the contract is breached |
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Term
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Definition
| Damages awarded when the nonbreaching party sues the breaching party even though no financial loss has resulted from the breach. Nominal damages are usually $1 or some other small amount. |
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Term
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Definition
| An order of the court that enables a government officer to seize property of the breaching party and sell it at auction to satisfy a judgment |
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Term
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Definition
| An order of the court that orders that wages, bank accounts, or other property of the breaching party held by third persons be paid to the nonbreaching party to satisfy a judgment |
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Term
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Definition
| An action to rescind (undo) a contract. Rescission is available if there has been a material breach of contract, fraud, duress, undue influence, or mistake |
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Term
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Definition
| The return of goods or property received from the other party to rescind a contract. If the actual goods or property are not available, a cash equivalent must be made. |
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Term
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Definition
| A remedy that orders the breaching party to perform the acts promised in the contract. Specific performance is usually awarded in cases in which the subject matter is unique, such as in contracts involving land, heirlooms, and paintings |
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Term
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Definition
| An equitable doctrine that permits the court to rewrite a contract to express the parties' true intentions |
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Term
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Definition
| A court order that prohibits a person from doing a certain act |
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Term
| Intentional interference with contractual relations |
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Definition
| A tort that arises when a third party induces a contracting party to breach the contract with another party |
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Term
| Covenant of good faith and fair dealing |
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Definition
| An implied covenant under which the parties to a contract not only are held to the express terms of the contract but are also required to act in "good faith" and deal fairly in all respects in obtaining the objective of the contract |
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Term
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Definition
| The large body of common law that governs agency; a mixture of contract and tort law |
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Term
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Definition
| The principal-agent relationship; the fiduciary relationship which results from the manifestation of consent by one person to another that the other shall act in his behalf and subject to his control, and consent by the other so to act |
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Term
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Definition
| A party who employs another person to act on his or her behalf |
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Term
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Definition
| A party who agrees to act on behalf of another |
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Term
| Principal-agent relationship |
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Definition
| A relationship formed when an employer hires an employee and gives that employee authority to act and enter into contracts on his or her behalf |
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Term
| Employer-employee relationship |
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Definition
| A relationship that results when an employer hires an employee to perform some task or service but the employee has not been authorized to enter into contracts on behalf of his employer |
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Term
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Definition
| A person or business that is not an employee but is employed by a principal to perform a certain task on behalf of the principal |
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Term
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Definition
| An agency that occurs when a principal and an agent expressly agree to enter into an agency agreement with each other |
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Term
| Exclusive agency contract |
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Definition
| A contract a principal and agent enter into that says the principal cannot employ any agent other than the exclusive agent |
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Term
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Definition
| An agency that occurs when a principal and an agent do not expressly create an agency, but it is inferred from the conduct of the parties |
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Term
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Definition
| An express agency agreement that is often used to give an agent the power to sign legal documents on behalf of the principal |
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Term
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Definition
When an agent possesses certain implied authority to act beyond his express agency powers
(Real estate broker sees a water leak in a house when the owner is gone. The broker has incidental authority to fix the leak) |
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Term
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Definition
| An agency that occurs when (1) a person misrepresents him- or herself as another's agent when in fact he or she is not and (2) the purported principal ratifies (accepts)the unauthorized act. |
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Term
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Definition
| Agency that arises when a principal creates the appearance of an agency that in actuality does not exist |
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Term
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Definition
| A duty that a principal owes to pay an agreed-upon amount to the agent either upon the completion of the agency or at some other mutually agreeable time |
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Term
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Definition
The principal must pay the agent money spent on his or her behalf if:
1) Authorized by the principal
2) Within the scope of the agency
3) Necessary to discharge the agent's duties in carrying out the agency |
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Term
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Definition
| An agent's duty to a principal that includes (1) performing the lawful duties expressed in the contract and (2) meeting the standards of reasonable care, skill, and diligence implicit in all contracts |
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Term
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Definition
| Information that is learned by an agent that is attributed to the principal |
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Term
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Definition
| A duty that an agent owes to maintain an accurate accounting of all transactions undertaken on the principal's behalf. Also known as the duty of accountability |
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Term
| An agency is terminated by: |
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Definition
1) Mutual agreement
2) Lapse of time
3) Purpose achieved
4) Occurrence of a specified event |
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Term
| Agency coupled with an interest |
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Definition
| A special type of agency that is created for the agent's benefit and that the principal cannot revoke |
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Term
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Definition
| The termination of an agency contract in violation of the terms of the agency contract. The nonbreaching party may recover damages from the breaching party. |
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Term
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Definition
| A fiduciary duty owed by an agent not to act adversely to the interests of the principal |
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Term
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Definition
| A rule that says an employer is liable for the tortious conduct of its employees or agents while they are acting within the scope of its authority |
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Term
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Definition
| A situation in which an agent does something during the course of his or her employment to further his or her own interests rather than the principal's |
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Term
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Definition
| A rule that says a principal is generally not liable for injuries caused by its agents and employees while they are on their way to or from work |
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Term
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Definition
| An errand or another act that a principal requests of an agent while the agent is on his or her own personal business. |
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Term
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Definition
| A test that determines whether an agent's motivation in committing an intentional tort is to promote the principal's business; if so, the principal is liable for any injury caused by the tort |
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Term
| Intentional Misrepresentation |
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Definition
| A decit in which an agent makes an untrue statement that he or she knows is not true |
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Term
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Definition
| An agency in which a contracting third party knows (1) that the agent is acting for a principal and (2) the identity of the principal |
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Term
| Partially disclosed agency |
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Definition
| An agency in which a contracting third party knows that the agent is acting for a principal but does not know the identity of the principal |
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Term
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Definition
| An agency in which a contracting third party does not know of either the existence of the agency or the principal's identity |
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Term
| Implied warranty of authority |
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Definition
| A warranty of an agent who enters into a contract on behalf of another party that he or she has the authority to do so |
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Term
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Definition
| A situation in which a principal accepts an agent's unauthorized contract |
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Term
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Definition
| A person who contracts with another to do something for him who is not controlled by the other nor subject to the other's right to control with respect to his physical conduct in the performance of the undertaking |
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Term
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Definition
| A person who forms and operates a new business either by himself or herself or with others |
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Term
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Definition
| A form of business in which the owner is actually the business; the business is not a separate legal entity |
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Term
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Definition
| An association of two or more persons to carry on as co-owners of a business for profit. Also known as an ordinary partnership |
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Term
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Definition
| Persons liable for the debts and obligations of a general partnership. Also known simply as partners |
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Term
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Definition
| A written agreement that partners sign. Also called articles of partnership |
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Term
| Right to participate in management |
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Definition
| A situation in which, unless otherwise agreed, each partner has a right to participate in the management of a partnership and has an equal vote on partnership matters |
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Term
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Definition
| The right of a partner to be reimbursed for expenditures incurred on behalf of the partnership |
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Term
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Definition
| A duty that a partner owes not to act adversely to the interests of the partnership |
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Term
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Definition
| The obligation partners owe to use the same level of care and skill that a reasonable person in the same circumstances. A breach of duty of care is negligence. |
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Term
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Definition
| A duty a partner owes to inform his or her co-partners of all information he or she possesses that is relevant to the affairs of the partnership |
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Term
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Definition
| A duty that requires partners to adhere to the provisions of the partnership agreement and the decisions of the partnership |
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Term
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Definition
| A formal judicial proceeding in which the court is authorized to (1) review the partnership and the partner's transactions and (2) award each partner his or her share of the partnership assets. |
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Term
| joint and several liability - General Partners |
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Definition
| Tort liability of partners together and individually. A plaintiff can sue one or more partners separately. If successful, the plaintiff can recover the entire amount of the judgment form any or all the defendant-partners who have been found liable |
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Term
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Definition
| Liability of partners for contracts and debts of the partnership. A plaintiff must name the partnership and all the partners as defendants in a lawsuit. |
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Term
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Definition
| A partnership created for a fixed duration |
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Term
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Definition
| A partnership created with no fixed duration |
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Term
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Definition
| The change in the relation of the partners caused by any partner ceasing to be associated in the carrying on of the business |
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Term
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Definition
| The process of liquidating a partnership's assets and distributing the proceeds to satisfy claims against the partnership |
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Term
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Definition
| A situation in which a partner withdraws from a partnership without having the right to do so at that time |
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