Business Law Today

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acceptance

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In contract law, a voluntary act by the offeree that shows assent, or agreement, to the terms of an offer; may consist of words or conduct. In negotiable instruments law, the drawee’s signed agreement to pay a draft when presented.

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accord and satisfaction

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A common means of settling a disputed claim, in which a debtor offers to pay a lesser amount than the creditor purports to be owed. The creditor’s acceptance of the offer creates an accord (agreement), and when the accord is executed, satisfaction occurs.

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agreement

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A meeting of two or more minds in regard to the terms of a contract; usually broken down into two events—an offer by one party to form a contract, and an acceptance of the offer by the person to whom the offer is made.

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consideration

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Generally, the value given in return for a promise. The consideration must result in a detriment to the promisee (something of legally sufficient value and bargained for) or a benefit to the promisor

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counteroffer

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An offeree’s response to an offer in which the offeree rejects the original offer and at the same time makes a new offer

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covenant not to sue

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An agreement to substitute a contractual obligation for some other type of legal action based on a valid claim.

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estopped

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An agreement to substitute a contractual obligation for some other type of legal action based on a valid claim.

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forbearance

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The act of refraining from an action that one has a legal right to undertake.

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mailbox rule

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A rule providing that an acceptance of an offer becomes effective on dispatch (on being placed in an official mailbox), if mail is, expressly or impliedly, an authorized means of communication of acceptance to the offeror.

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mirror image rule

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A common law rule that requires that the terms of the offeree’s acceptance adhere exactly to the terms of the offeror’s offer for a valid contract to be formed.

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offer

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A promise or commitment to perform or refrain from performing some specified act in the future.

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option contract

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A contract under which the offeror cannot revoke his or her offer for a stipulated time period, and the offeree can accept or reject the offer during this period without fear that the offer will be made to another person. The offeree must give consideration for the option (the irrevocable offer) to be enforceable.

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past consideration

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An act that takes place before the contract is made and that ordinarily, by itself, cannot be consideration for a later promise to pay for the act.

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promissory estoppel

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A doctrine that applies when a promisor makes a clear and definite promise on which the promisee justifiably relies; such a promise is binding if justice will be better served by the enforcement of the promise

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release

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A contract in which one party forfeits the right to pursue a legal claim against the other party.

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rescission

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A remedy whereby a contract is canceled and the parties are returned to the positions they occupied before the contract was made; may be effected through the mutual consent of the parties, by the parties’ conduct, or by court decree.

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revocation

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In contract law, the withdrawal of an offer by an offeror. Unless the offer is irrevocable, it can be revoked at any time prior to acceptance without liability.