Adjudged Insane

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* adjudged insane

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A person who has been adjudged insane by a proper court or administrative agency. A contract entered into by such a person is void.

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competent party’s duty of restitution

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If a minor has transferred money, property, or other value to the competent party before disaffirming the contract, that party must place the minor back into status quo.

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contract in restraint of trade

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A contract that unreasonably restrains the trade

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contracts contrary to public policy

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Contracts that have a negative impact on society or interfere with the public’s safety and welfare.

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disaffirmance

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The act of a minor to rescind a contract under the infancy doctrine. Disaffirmance may be done orally, in writing, or by the minor’s conduct.

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emancipation

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When a minor voluntarily leaves home and lives apart from his or her parents.

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exculpatory clause

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A contractual provision that relieves one (or both) parties to the contract from tort liability for ordinary negligence.

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gambling statutes

Back 8

Statutes that make certain forms of gambling illegal.

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immoral contract

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A contract whose objective is the commission of an act that is considered immoral by society

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in pari delicto

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When both parties are equally at fault in an illegal contract.

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infancy doctrine

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A doctrine that allows minors to disaffirm (cancel) most contracts they have entered into with adults.

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insane, but not adjudged insane

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A person who is insane but has not been adjudged insane by a court or administrative agency. A contract entered into by such person is generally voidable. Some states hold that such a contract is void.

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legal insanity

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A state of contractual incapacity as determined by law.

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licensing statute

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Statute that requires a person or business to obtain a license from the government prior to engaging in a specified occupation or activity.

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minor’s duty of restoration

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As a general rule a minor is obligated only to return the goods or property he or she has received from the adult in the condition it is in at the time of disaffirmance.

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usury law

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A law that sets an upper limit on the interest rate that can be charged on certain types of loans.

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ratification

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The act of a minor after the minor has reached the age of majority by which he or she accepts a contract entered into when he or she was a minor.

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regulatory statute

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A licensing statute enacted to protect the public.

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revenue raising statute

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A licensing statute with the primary purpose of raising revenue for the government.

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Sabbath law

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A law that prohibits or limits the carrying on of certain secular activities on Sundays.

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accord

Back 21

An agreement whereby the parties agree to accept something different in satisfaction of the original contract.

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bargained-for exchange

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Exchange that parties engage in that leads to an enforceable contract.

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consideration

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Something of legal value given in exchange for a promise.

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gift promise

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A “completed gift promise” becomes a true gift, which by definition is irrevocable.

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illegal consideration

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A promise to refrain from doing an illegal act. Such a promise will not support a contract.

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illusory promise

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A contract into which parties enter, but one or both of the parties can choose not to perform their contractual obligations. Thus the contract lacks consideration.

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past consideration

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A prior act or performance. Past consideration (e.g., prior acts) will not support a new contract. New consideration must be given.

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preexisting duty

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A promise lacks consideration if a person promises to perform an act or do something he or she is already under an obligation to do.

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promissory estoppel

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An equitable doctrine that prevents the withdrawal of an offer by an offeror if it will adversely affect an offeree who has adjusted his position in justifiable reliance on the offer.

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satisfaction

Back 30

The performance of an accord.

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collateral contract

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A promise where one person agrees to answer for the debts or duties of another person.

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easement

Back 32

A given or required right to make limited use of someone else’s land without owning or leasing it.

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equal dignity rule

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A rule that says that agent’s contracts to sell property covered by the Statute of Frauds must be in writing to be enforceable.

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fixtures

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Personal property that is permanently affixed to the real property, such as built-in cabinets in a house.

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guarantor

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The person who agrees to pay the debt if the primary debtor does not.

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guaranty contract

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The contract between the guarantor and the original creditor.

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incorporation by reference

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When integration is made by express reference in one document that refers to and incorporates another document within it.

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integration

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The combination of several writings to form a single contract.

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lease

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A transfer of the right to the possession and use of the real property for a set term in return for certain consideration; the rental agreement between a landlord and a tenant.

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life estate

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An interest in the land for a person’s lifetime; upon that person’s death, the interest will be transferred to another party.

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main purpose or leading object exception

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If the main purpose of a transaction and an oral collateral contract is to provide pecuniary benefit to the guarantor, the collateral contract does not have to be in writing to be enforced.

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merger clause

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A clause in a contract that stipulates that it is a complete integration and the exclusive expression of the parties’ agreement. Parole evidence may not be introduced to explain, alter, contradict, or add to the terms of the contract.

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mortgage

Back 43

A collateral arrangement where a property owner borrows money from a creditor who uses a deed as collateral for repayment of the loan.

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one year rule

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An executory contract that cannot be performed by its own terms within one year of its formation must be in writing.

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parol evidence rule

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A rule that says if a written contract is a complete and final statement of the parties’ agreement, any prior or contemporaneous oral or written statements that alter, contradict, or are in addition to the terms of the written contract are inadmissible in court regarding a dispute over the contract.

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parol evidence

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Any oral or written words outside the four corners of the written contract.

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part performance

Back 47

An equitable doctrine that allows the court to order an oral contract for the sale of land or transfer of another interest in real property to be specifically performed if it has been partially performed and performance is necessary to avoid injustice.

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promissory estoppel

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An equitable doctrine that prevents the withdrawal of an offer by an offeror if it will adversely affect an offeree who has adjusted his position in justifiable reliance on the offer.

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real property

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The land itself as well as buildings, trees, soil, minerals, timber, plants, crops, and other things permanently affixed to the land.

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Statute of Frauds

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State statute that requires certain types of contracts to be in writing.

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UCC Statute of Frauds

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A rule that requires all contracts for the sale of goods costing $500 or more and lease contracts involving payments of $1,000 or more to be in writing.