Business Law 10-17

57 terms by mrz_h

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Definitions for chapters 10-17 of business law 253

condition

a possible future event, the occurrence or nonoccurrence of which will trigger the performance of a legl obligation or terminate an existing obligation under a contract.

condition precedent

a condition that must be fulfilled before a party's performance can be required; it precedes the absolute duty to perform.

conditons present in contracts

1. conditions precedent
2. conditions subsequent
3. concurrent conditions
4. express or implied

conditions subsequent

when a condition operates to terminate a party's absolute promise to perform; it follows or is subsequent to the arising of an absolute duty to perform; if condition occurs, the party's duty to perform is dishcharged.

concurrent conditions

when each party's performance is conditioned on the other party's performance or tender of performance; occur only when contract calls for parties to perform respective duties simultaneously.

Types of performance

- complete performance
- substantial performance
- performance to satisfaction of another

material breach of contract

nonperformance of a contractual duty; entitles nonbreaching party to sue for damages.

anticipatory repudiation

before either party to a contract has a duty to perform, one of the parties may refuse to carry out his/her contractual obligations; treated as a material brech of contract.

mutual rescission

parties must make another agreement that also satisfies the legal requirements for contract; must be an offer, acceptance, and consideration.

novation

occurs when both parties to a contract agree to substitute a third party for oe of the original parties.

requirements of novation

1. previous valid obligation
2. agreeemnt by all parties to a new contract
3. extinguishing of old obligation (discharge)
4. new contract that is valid

discharge by substituted agreement

a compromise, or settlement agreement that arises out of a genuine dispute over the obligation under an existing contract.

discharge by accord and satisfaction

parties must agree to accept performance that is different from the performance originally promised.

discharge by alteration of contract

law operates to allow an innocent party to be discharged when the other party has materially altered a written contract without consent.

discharge by statute of limitation

restricts the period during which a party can sue on a particular cause of action.

discharge by bankruptcy

bar enforcement of most of debtor's contracts by the creditors.

objective impossibility

it can't be done

subjective impossibility

i'm sorry, i simply can't do it

discharge based on impossibility of performance

1. when one of the parties to a personal contract dies or becomes incapacitated prior to performance.
2. when the specific subject matter of the contract is destroyed.
3. when a change in law renders performance illegal.

temporary impossibility

an occurrence or event that makes performance temporarily impossible; parties must perform contract as originally planned when impossibility ceases unless the lapse in time or change in circumstances make it substantially more burdensome for parties to perform the promised act.

commercial impracticability

when a supervening event does not render performance objectively impossible, but does make it much more difficult or expensive to perform; anticipated performance must become significantly more difficult or costly than originally contemplated at time contract formed and must not have been known by parties when contract made.

frustration of purpose

a contract will be discharged if supervening circumstances make it impossible to attain the purpose both parties had in mind when making the contract; must not have been reasonably foreseeable at the time of the contracting.

assignment

the transfer of contractual rights to a third party

delegation

the transfer of contractual duties to a third party

privity of contract

a contract is a private agreement between the parties who have entered into it, and traditionally these prties alone have rights and liabilities under the contrct.

third party

one who is not a direct party to a particular contract- normally does not have rights under that contract

beneficiary contract

a contract in which the parties to the contract intend that the contract benefit a third party.

rights that can not be assigned

- statute expressly prohibits assignment
- personal in nature
- significantly changes the risk or duties of the obligor
- contract prohibits assignment

exceptions to prevention of assignment

- right to receive monetary payments
- rights in real estate
- negotiable instruments
- right to receive damages for breach of contract/payment

duties that can not be delegated

- personal in nature
- performance by 3rd party will vary from what's expected be obligee
- contract prohibits delegation

intended beneficiary

- to whom performnce is rendered directly
- who has the right to control the details of the performance or
- who is designated a beneficiary in the contract

CAN SUE TO ENFORCE THE CONTRACT

incidental beneficiary

- who benefits from contract but whose benefit ws not purpose of contract
- who has no rights in the contract

CANNOT SUE TO ENFORCE CONTRACT

types of intended beneficiaries

- creditor beneficiary
- donee beneficiary (life insurance)

statue of frauds

certain agreements are required by law to be in writing

contracts within statute of frauds

- involving interests in land
- cannot by terms be performed within one year from day after date of formation
- collateral, or secondary contracts
- promises made in consideration of marriage
- contracts for the sale of goods price at $500 or more

oneyear rule

a contract that cannot, by its own terms, be performed within one year frm the day after the contract is formed must be in writing to be enforceable.

collateral promise

secndary promise- one that is ancillary (subsidiary) to a principal transaction or primary contractual relationship; one made by a 3rd party to assume the debts/obligations of a primry party to a contract if that party does not perform; falls under Statute of Frauds

Main Purpose rule

an oral promise to nswer for the debt of another is covered by the Statute of Frauds unless the guarantor's mainpurpose in incurring a secondary obligation is to secure a personal benefit.

prenuptial agreements

agreements made before marriage that define each partner's ownership rights in the other's partner's property.

exceptions to contracts for sale of goods price at $500 or more

- memorandum
- customized goods
- admission (quantity)
- partial performance
- merchants confirm in writing

exceptions to contracts involving interests in land

- memorandum
- partial performance
- admission
- promissory estoppel

exceptions to contracts that cannot be performed within 1 year

- memorndums
- admission
-promissory estoppel

exceptions to conracts containing collateral promises

- memorandum
- main purpose rule
- admission
- promissory estoppel

parole evidence rule

if a court finds that the parties intended their written contract to be a complete and final statement of their greement, then it will not allow either party to present parol evidence (testimony or other evidence of communications between the parties that are not contained in the contract itself).

exceptions to the parole evidence rule

- contracts subsequently modified
- voidable or void contracts
- contracts containing ambiguous terms
- incomplete contracts
- prior dealing, course of performance, or usage of trade

integrated contracts

intended to be a complete and final embodiment of the terms of the parties' agreement (fully or partially)

bilateral (mutual) mistakes of fact

occurs when both parties are mistaken as to an existing material fact.

unilateral mistake of fact

occurs when only one of the contracting parties is mistaken about a material fact; does no afford the mistaken party any right to relief from the contract

mistakes of value

if a mistake concerns the future market value or quality of the object o the contract; can be bilateral or unilateral; do not serve as a basis for avoiding a contract.

fraudulent misreprentation

1. a misrepresentation of a material fact must occur
2. must be an intent to deceive
3. innocent party must justifiably rely on the misrepresentation

misrepresentation by concealment

takes place takes specific action to conceal a fact that is material to the contract.

misrepresention of law

ordinarilty does not entitle a party to relief from contract, except when the misrepresenting party is in a profession that is known to require greater knowledge of the law than the average citizen possesses.

misrepresentation by silence

contract can not be set aside ecept if the seller knows of serious potential problem that could not reasonably be suspected by the buyer - then seller may have duty to speak.

intent to deceive

knowledge on the part of the misrepresenting party that facts have been falsely represented

scienter

guilty knowledge

innocent misrepresentation

if a person makes a statement thqat he/she believe to be true but that actually misrepresents material facts.

negligent misrepresentation

make a misrepresentation through carelessness, believing the statement is true; if a person fails to exericise reasonable care in uncovering or disclosing the facts or does not use the skill and competence that his/her business or profession requires.; equal to scienter

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