Bus Law Today Ch. 9 Terms & Review Ed. Miller

Front 1

Privity of Contract

Back 1

The relationship that exists between the promisor and the promisee of a contract.

Front 2

Alienation

Back 2

The voluntary transfer of land out of one’s possession (thus “alienating” the land from oneself).

Front 3

Anticipatory Repudiation

Back 3

An assertion or action by a party indicating that he or she will not perform a contractual obligation.

Front 4

Assignee

Back 4

A party to whom the rights under a contract are transferred, or assigned.

Front 5

Assignment

Back 5

The transfer to another of all or part of one’s rights under a contract.

Front 6

Assignor

Back 6

A party who transfers (assigns) his or her rights under a contract to another party.

Front 7

Breach of Contract

Back 7

Failure, without legal excuse, of a promisor to perform the obligations of a contract.

Front 8

Commercial Impracticability

Back 8

A doctrine that may excuse the duty to perform a contract when performance becomes much more difficult or costly due to forces that neither party could have controlled or contemplated at the time the contract was formed.

Front 9

Concurrent Conditions

Back 9

Conditions that must occur or be performed at the same time—they are mutually dependent. No obligations arise until these conditions are simultaneously performed.

Front 10

Condition

Back 10

A qualification, provision, or clause in a contractual agreement, the occurrence or nonoccurrence of which creates, suspends, or terminates the obligations of the contracting parties.

Front 11

Condition Precedent

Back 11

A condition in a contract that must be met before a party’s promise becomes absolute.

Front 12

Condition Subsequent

Back 12

A condition in a contract that, if it occurs, operates to terminate a party’s absolute promise to perform.

Front 13

Consequential Damages

Back 13

Foreseeable damages that result from a party’s breach of contract but are caused by special circumstances beyond the contract itself.

Front 14

Delegatee

Back 14

A party to whom contractual obligations are transferred, or delegated.

Front 15

Delegation of Duties

Back 15

The transfer to another of all or part of one’s duties under a contract.

Front 16

Delegator

Back 16

A party who transfers (delegates) her or his obligations under a contract to another party.

Front 17

Discharge

Back 17

The termination of an obligation, such as occurs when the parties to a contract have fully performed their contractual obligations.

Front 18

Frustration of Purpose

Back 18

A court-created doctrine under which a party to a contract will be relieved of her or his duty to perform when the objective purpose for performance no longer exists (due to reasons beyond that party’s control).

Front 19

Impossibility of Performance

Back 19

A doctrine under which a party to a contract is relieved of his or her duty to perform when performance becomes objectively impossible.

Front 20

Incidental Beneficiary

Back 20

a third party who benefits from a contract even though the contract was not formed for that purpose. an incidental beneficiary has no rights in the contract and cannot sue to have it enforced.

Front 21

Incidental Damages

Back 21

Damages that compensate for expenses directly incurred because of a breach of contract, such as those incurred to obtain performance from another source.

Front 22

Intended Beneficiary

Back 22

A third party for whose benefit a contract is formed. an intended beneficiary can sue the promisor if the contract is breached.

Front 23

Liquidated Damages

Back 23

An amount, stipulated in a contract, that the parties to the contract believe to be a reasonable estimation of the damages that will occur in the event of a breach.

Front 24

Mitigation of Damages

Back 24

The requirement that a plaintiff do whatever is reasonable to minimize the damages caused by the defendant.

Front 25

Nominal Damages

Back 25

A small monetary award (often one dollar) granted to a plaintiff when no actual damage was suffered.

Front 26

Novation

Back 26

The substitution, by agreement, of a new contract for an old one, with the rights under the old one being terminated.

Front 27

Obligee

Back 27

One to whom an obligation is owed.

Front 28

Obligor

Back 28

One who owes an obligation to another.

Front 29

Penalty

Back 29

A contract clause that specifies a certain amount to be paid in the event of a default or breach of contract but that is designed to punish the breaching party rather than to provide a reasonable estimate of damages.

Front 30

Performance

Back 30

The fulfillment of one’s duties under a contract—the normal way of discharging one’s contractual obligations.

Front 31

Restitution

Back 31

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.

Front 32

Specific Performance

Back 32

An equitable remedy in which a court orders the parties to perform as promised in the contract. This remedy normally is granted only when the legal remedy (monetary damages) is inadequate.

Front 33

Tender

Back 33

An unconditional offer to perform an obligation by a person who is ready, willing, and able to do so.

Front 34

Third Party Beneficiary

Back 34

One for whose benefit a promise is made in a contract but who is not a party to the contract.

Front 35

What is an assignment? What is the difference between an assignment and a delegation?

Back 35

The transfer of contract rights to a third person is an assignment. The transfer of contract duties is a delegation. When rights are assigned unconditionally, the rights of the assignor are extinguished, and the assignee can demand per­formanc­e from the obligor. Normally, a delegation of duties does not relieve the delegator of the obligation to perform if the delegatee fails to do so.

Front 36

How are most contracts discharged?

Back 36

The most common way to discharge, or terminate, a contract is by the perform­ance of contractual duties.

Front 37

What is the standard measure of compensatory damages when a contract is breached? How are damages computed differently in construction contracts?

Back 37

In a contract for the sale of goods, the usual measure of compensatory damages is an amount equal to the difference between the contract price and the market price. When the buyer breaches and the seller has not yet produced the goods, compensatory dam­ages normally equal the lost profits on the sale rather than the difference between the contract price and the market price. On the breach of a contract for a sale of land, when specific performance is not available, the measure of damages is also the difference between the contract and the market price. The measure on the breach of a construction contract depends on who breaches, and when. Recovery for an innocent contractor is generally based on funds expended or expected profit, or both; and for a nonbreaching owner, the cost to complete the project.

Front 38

Under what circumstances is the remedy of rescission and restitution available?

Back 38

When fraud, mistake, duress, or failure of consideration is present, rescission is available. The failure of one party to perform under a contract entitles the other party to rescind the contract.

Front 39

What is a limitation-of-liability clause, and when will courts enforce it?

Back 39

A limitation-of-liability clause is a contract provision that states damages recoverable for certain types of breaches will be limited to a maximum amount. The clause may further limit a remedy to replacement, repair, or refund of the purchase price. Courts enforce such clauses in contracts between parties of equal bargaining power, but not if liability for fraudulent or intentional injury or the consequences of illegal acts is excluded.