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BUS 221 Exam 3
Terms in this set (62)
In Pari Delicto
At equal fault.
A standard-form contract, such as that between a large retailer and a consumer, in which the stronger party dictates the terms.
Age Of Majority
The age at which an individual is considered legally capable of conducting himself or herself responsibly. A person of this age is entitled to the full rights of citizenship, including the right to vote in elections. In contract law, one who is no longer an infant and can no longer disaffirm a contract.
State or local laws that prohibit the performance of certain types of commercial activities on Sunday.
The threshold mental capacity required by the law for a party who enters into a contract to be bound by that contract.
Convenant Not To Compete
A contractual promise to refrain from competing with another party for a certain period of time (not excessive in duration) and within a reasonable geographic area. Although covenants not to compete restrain trade, they are commonly found in partnership agreements, business sale agreements, and employment contracts. If they are ancillary to such agreements, covenants not to compete will normally be enforced by the courts unless the time period or geographic area is deemed unreasonable.
The legal avoidance, or setting aside, of a contractual obligation.
In regard to minors, the act of being freed from parental control; occurs when a child's parent or legal guardian relinquishes the legal right to exercise control over the child. Normally, a minor who leaves home to support himself or herself is considered emancipated.
A clause that releases a contractual party from liability in the event of monetary or physical injury, no matter who is at fault.
Necessities required for life, such as food, shelter, clothing, and medical attention; may include whatever is believed to be necessary to maintain a person's standard of living or financial and social status.
The act of accepting and giving legal force to an obligation that previously was not enforceable.
Charging an illegal rate of interest.
(pronounced sy-en-ter) Knowledge by the misrepresenting party that material facts have been falsely represented or omitted with an intent to deceive.
A false statement of fact or an act made in good faith that deceives and causes harm or injury to another.
Any manifestation through words or conduct that amounts to an untrue statement of fact made in circumstances in which a reasonable and prudent person would not have done (or failed to do) that which led to the misrepresentation. A representation made with an honest belief in its truth may still be negligent due to (1) a lack of reasonable care in ascertaining the facts, (2) the manner of expression, or (3) the absence of the skill or competence required by a particular business or profession.
An assertion or action by a party indicating that he or she will not perform an obligation that the party is contractually obligated to perform at a future time.
Breach Of Contract
The failure, without legal excuse, of a promisor to perform the obligations of a contract.
A doctrine under which a seller may be excused from performing a contract when (1) a contingency occurs, (2) the contingency's occurrence makes performance impracticable, and (3) the nonoccurrence of the contingency was a basic assumption on which the contract was made. Despite the fact that UCC 2615 expressly frees only sellers under this doctrine, courts have not distinguished between buyers and sellers in applying it.
Conditions in a contract that must occur or be performed at the same time; they are mutually dependent. No obligations arise until these conditions are simultaneously performed.
A possible future event, the occurrence or nonoccurrence of which will trigger the performance of a legal obligation or terminate an existing obligation under a contract.
A condition in a contract that must be met before a party's promise becomes absolute.
A condition in a contract that operates to terminate a party's absolute promise to perform.
The termination of an obligation. (1) In contract law, discharge occurs when the parties have fully performed their contractual obligations or when events, conduct of the parties, or operation of the law releases the parties from performance. (2) In bankruptcy proceedings, the extinction of the debtor's dischargeable debts.
Discharge In Bankruptcy
The release of a debtor from all debts that are provable, except those specifically excepted from discharge by statute.
Frustration Of Purpose
A court-created doctrine under which a party to a contract will be relieved of his or her duty to perform when the objective purpose for performance no longer exists (due to reasons beyond that party's control).
Impossibility Of Performance
A doctrine under which a party to a contract is relieved of his or her duty to perform when performance becomes impossible or totally impracticable (through no fault of either party).
An agreement between the parties to cancel their contract, releasing the parties from further obligations under the contract. The object of the agreement is to restore the parties to the positions they would have occupied had no contract ever been formed. See also Rescission
The substitution, by agreement, of a new contract for an old one, with the rights under the old one being terminated. Typically, there is a substitution of a new person who is responsible for the contract and the removal of an original party's rights and duties under the contract.
In contract law, the fulfillment of one's duties arising under a contract with another; the normal way of discharging one's contractual obligations.
An unconditional offer to perform an obligation by a person who is ready, willing, and able to do so.
Special damages that compensate for a loss that is not direct or immediate (for example, lost profits). The special damages must have been reasonably foreseeable at the time the breach or injury occurred in order for the plaintiff to collect them.
Losses reasonably associated with, or related to, actual damages resulting from a breach of contract.
An amount, stipulated in the contract, that the parties to a contract believe to be a reasonable estimation of the damages that will occur in the event of a breach.
Mitigation Of Damages
A rule requiring a plaintiff to have done whatever was reasonable to minimize the damages caused by the defendant.
A small monetary award (often one dollar) granted to a plaintiff when no actual damage was suffered or when the plaintiff is unable to show such loss with sufficient certainty.
A sum inserted into a contract, not as a measure of compensation for its breach but rather as punishment for a default. The agreement as to the amount will not be enforced, and recovery will be limited to actual damages.
A court-ordered correction of a written contract so that it reflects the true intentions of the parties.
An equitable remedy under which a person is restored to his or her original position prior to loss or injury, or placed in the position he or she would have been in had the breach not occurred. Returning of goods, property, or funds previously conveyed.
An equitable remedy requiring the breaching party to perform as promised under the contract; usually granted only when money damages would be an inadequate remedy and the subject matter of the contract is unique (for example, real property).
An intentional, knowing relinquishment of a legal right.
Exception To Basic Rule Of Disaffirmance
3) Fraud or misrepresentation
Mental Incompetence Contracts
1) Void - has been adjudged mentally incompetent.
2) Voidable - does not know he or she is entering into the contract or lacks the mental capacity to comprehend its nature
3) Valid - able to understand the nature and effect of entering into a contract yet lacks capacity to engage in other activities.
Unconscionable Contract or Clause
This is a contract or clause that is void for reasons of Public policy.
It occurs if a contract is entered into, or a term becomes part of, the contract because of a party's lack of knowledge or understanding of the contract or the term.
It occurs when a contract, or one of its terms, is oppressive or overly harsh.
Contracts Contrary To Statute
- Usurious loans.
- Gambling contracts
- Contracts to commit a crime
- Contracts on saturday
- Contracts by unlicensed persons
Contracts Contrary To Public Policy
- Contracts in restraint of trade
- Contracts to commit a tort
- Exculpatory clauses
- Adhesion contracts
- Unconscionable contracts
- Discriminatory contracts
- 1 mistaken party
- Mathematical mistake
- Both party are mistaking
- Either party can enforce the contract
Arises from special relationships, such as fiduciary relationships, in which one party's free will has been overcome by the undue influence of another. Usually, the contract is voidable.
Defined as forcing a party to enter into a contract under fear of threat.
1) A misrepresentation of a material fact has occurred.
2) There has been an intent to deceive.
Concerns one-sided bargains in which one party has substantially superior bargaining power and can dictate the terms of a contract.
1) By agreement
2) By Performance
3) By breach
4) By operation of law
5) By failure of a condition
Contract Discharge By Agreement
- Mutual Rescission
- Accord and satisfaction
Contract Discharge By Performance
Contract Discharge By Breach
- Material breach
- Anticipatory repudiation
Contract Discharge By Operation Of Law
- Material alteration
- Statute of limitations
- Impossibility or impracticability of performance
Contract Discharge By Failure Of A Condition
If performance is conditional, duty to perform does not become absolute until that condition occurs.
Remedies Available To Non Breaching Party
- Compensatory, consequential, punitive, nominal, liquidated.
2) Recision and restitution
3) Specific performance
A remedy whereby a contract is cancelled and the parties are restored to the original positions that they occupied prior to the transaction.
Recovery Based On Quasi-Contract
An equitable theory under which a party who confers a benefit on another with the reasonable expectation of being paid can seek a court order for the fair market value the of benefit conferred.
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