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