WORDS AND PHRASES – CONTRACTS
Chapters 10, 11 & 12
VALID
VOIDABLE- One party has the option to CONDITIONS
cancel due to a legal issue ACCORD & SATISFACTION
EXPRESS/IMPLIED MISTAKE – UNILATERAL/BILATERAL
ILLEGAL -VOID - not legally enforceable 1. FRAUD – A false statement about
UNENFORCEABLE -lacks proper form or a material fact.
violates a law (like Statute of Frauds 2. Intent to deceive (scienter).
BILATERAL/UNILATERAL 3. Justifiable reliance on
UNCONSCIONABLE misrepresentation.
EXECUTED/EXECUTORY 4. Harm or damages caused by the
ORAL/WRITTEN misrepresentation
OFFER/ACCEPTANCE UNDUE INFLUENCE A contract is
CONSIDERATION voidable if one party dominates the other
CAPACITY unfairly, often based on a presumption in
LEGALITY certain relationships.
EXPIRATION/REASONABLE TIME
REVOCATION OF OFFER DURESS -A contract is voidable when one
TERMINATION OF THE OFFER – time, party is forced to agree through illegal
death, subject destruction,new laws threats or coercion, and the victim can
OPTION rescind the contract.
COUNTEROFFER assignment is the transfer of rights
MAILBOX RULE - acceptance of an offer o ASSIGNOR: The party who
is effective when it is sent by offeree transfers their rights.
(The offerer is the one who offers o ASSIGNEE: The party who receives
something, and the offeree is the one the rights.
who has the choice to accept or reject it.) o OBLIGOR: The party who is
required to perform an obligation
MINORS - RATIFICATION under the contract.
DIVISIBLE o OBLIGEE: The party who benefits
QUASI CONTRACT from the performance of the contract
(often the one whose rights are being
PROMISSORY ESTOPPLE-. If the offeree assigned).
takes action or changes their position based o Assignment and delegation does not
on the promise, if the offerer makes a clear release the assignor obligation
promise and the offeree relies on it, the o For the seller,old mcdonald
offerer may be held accountable. (assignor)they are still responsible
for it in case of assignee (new
Mistake of value can’t rescind obligor) stop paying for it unless
Intent to Deceive (Scienter)
obligee(landlord)agree otherwise.
o Assignee Takes Rights Subject to
Defenses Conditions of Performance in Contracts
For example, if the obligor has a
valid reason to withhold payment Absolute Promises:
from the assignor, they can still use Conditional precedent: condition that must
that same defense against the be fulfilled before a party’s performance
assignee. Restoration Motors agrees to repair a car for
a customer, but only if the customer first
Privity of contract generally means provides specific documents (e.g., proof of
that only the contracting parties have ownership, payment).
rights, but assignments allow third
parties to receive benefits. Tender is an attempt to fulfill the contract
terms by presenting the goods, services, or
Delegation refers to the transfer of performance to the other party.
duties (obligations) under a Tender is the offer to perform the contract.
contract. Complete performance means full
compliance with the contract terms.
Generally, an assignor remains liable even Substantial performance occurs when most
after assigning rights and delegating duties terms are fulfilled with minor variations that
unless the obligee(landlords) releases them. do not significantly change the overall
Unless they sign the novation, the assignor benefits.
still has liability.
Assignor: The original party transferring Material Breach ( the delivery didn’t arrive
their rights and duties (e.g., the original , the store is discharged and not longer have
tenant in a lease). to pay)
Assignee: The new party receiving the Satisfaction of another - when the
rights and duties (e.g., the buyer taking construction didn’t follow what the clients
over the lease) want like pool size, they have to redo to
Obligee: The party to whom the obligation satisfy the client
is owed (e.g., the landlord expecting rent Time for performance - Time of essence
payments). ( you have to performed by march 19, you
Obligor: The party responsible for are in breach if you didn’t finish in march
performing the obligation (e.g., the original 20)
tenant before assigning the contract).
Anticipatory Repudiation: A party indicating
Novation results in the replacement of the in advance they will not perform the
original contract and parties, whereas contract, allowing the other party to treat it
assignment transfers rights or benefits but as breached.
keeps the original contract intact.
BUSINESS SALE
Third Party Beneficiaries PLEDGE
Intended beneficiary - .Always have ADVERTISEMENT
standing to sue
Incidental Beneficiary (No Legal Rights)
PRIVITY OF CONTRACT MATERIAL BREACH
ASSIGNMENT/DELEGATION A waiver means that one party voluntarily
SUBROGATION gives up the right to enforce a breach of
THIRD PARTY – BENEFICIARY contract.
- INTENDED AND INCIDENTAL
NOVATION
Contract Provisions Limiting Remedies
Exculpatory Clauses employment
STATUTE OF FRAUDS - APPLICATION Excuse a party from liability for damages,
LIQUIDATED DAMAGES a pre-agreed even if they were at fault.
amount of money written into a contract that Often found in risky activities (e.g., gyms,
one party must pay if they breach the skydiving).
contract. Courts may not enforce them if they go
Penalties are amounts written into a contract against public
that are meant to punish the breaching party, Limitation-of-Liability Caps the
not to fairly compensate for loss. amount of damages one party may owe
❌ Courts do NOT enforce penalties (enforced if reasonable)
EQUITABLE REMEDIES – TYPESR
COMPENSATORY DAMAGE the injured What it
Remedy When Used
party in the position they would have been Does
in if the contract had been performed. Fraud,
CONSEQUENTIAL DAMAGES - awarded Cancels the
Rescission mistake,
for losses that are not directly caused by the contract
duress, etc.
breach but are a result of the breach. Returns both
Punitive damages if a party acts with parties to Along with
fraudulent intent while breaching a contract, Restitution
original rescission
the court may award punitive damages to positions
punish the wrongdoer. Real estate,
Orders party
rare items,
Specific to do what
NOT
MITIGATION OF DAMAGES The non- Performance was
personal
breaching party must try to reduce promised
services
(mitigate) their losses, even though they
didn’t cause the breach If a seller breaches REPUDIATION Prior to the time set
a real estate deal, the buyer must try to performance, the performer says they are not
find a similar property, rather than just gonna perform and stated that they will be in
waiting and suing for full losses. breach.
LOTTERY
FULL PERFORMANCE
SUBSTANTIAL PERFORMANCE
COMMERCIAL CODE
Uniform Commercial Code (UCC) governs
Article 2 – Sales contracts Statute of
limitations: You must sue for breach
within 4 years of the breach earthq
REJECTION/ACCEPTANCE
Article 2A – Lease contracts Failure to Give Notice:
SALE OF GOODS The buyer must notify the seller within a
MERCHANTS reasonable time if they want to revoke
Merchant” = someone who regularly deals acceptance of the goods.
in goods of that kind or has special PROMISE TO SHIP
knowledge about them REQUIREMENTS/OUTPUT
1. Employer as broker, agent, or WARRANTIES - ALL TYPES
other intermediary that has OUTPUT/REQUIREMENTS
merchant status
Tender of Delivery
FIRM OFFER One party the seller tried, the buyer didn’t
Option Contracts: Offeree pays something accept
(even $1) to keep the offer open for a set
time. Perfect tender rule
Firm Offers (UCC – for sale of goods): Under the code, when goods are delivered,
Merchant’s written promise to keep offer the buyer has the duty to pay for it.
open for a set time (no consideration If failed in any respect, the buyer has rights
needed)— is binding for a short time. to accept goods, reject the entire shipment,
lessor (owner of goods) and the lessee accept part and reject part.
(user) of the goods.
The mirror image rule does not apply. Under Expectation to PerfectTender Rule
the UCC, acceptance can vary from the The right to cure(correcting the order)
offer, and the contract is still valid unless the Delivery is rejected because of
offeror specifies exact terms. nonconforming goods
Performance (e.g., shipping goods) counts as Performance time nt expired
acceptance; notify within a reasonable time
No new consideration is required to modify Seller or lessor required to arrange substitute
a contract under the UCC, unlike common Buyer or lessee
law.
Special Rules for Contracts Between Commercial Impracticability Applies to
Merchants unforeseen problems making contract
Upon oral agreement, merchant sends signed performance difficult or impossible.
written confirmation to the other merchant
within a reasonable time
Exceptions to the Statute of Frauds
Exception: Oral contracts for goods that are
specially manufactured for a specific buyer
or lessee don’t need to be in writing.
The goods must be made for a particular
buyer (not suitable for resale or lease to
others in the ordinary course).
SPECIAL STANDARDS
QUANTITY TERM
