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BUSINESS LAW TERMINOLOGY ± CONTRACTS

ñ Intro to Contracts
ñ Mutual Assent
ñ Conduct Invalidating Consent
ñ Consideration
ñ Legality
ñ Contractual Capacity
ñ Contracts requiring a writing
ñ Third Party Contracts
ñ Performance, Breach and Discharge
ñ Remedies

Introduction to Contracts
1. Bilateral contract - A contract in which both parties exchange promises.
º. Breach - Wrongful failure to perform the terms of a contract.
Ñ. Contract - An agreement between two parties which is legally enforceable.
è. Executed contract - Contract fully performed by both parties.
ÿ. Executory contract - Contract partially or entirely unperformed by one or more of the
parties.
. Express contract - Agreement of parties that is expressed in words either in writing or
orally.
-. Dorbearance - A promise not to do an act.
[. Dormal contract - Agreement that is legally binding because of its particular form or
mode of expression.
r. Goods - Moveable, tangible personal property.
10.Implied-in-fact contract - Contract where the agreement of the parties is indicated by
(inferred from) their conduct.
11.Informal contract - All oral or written contracts other than formal contracts.
1º.Personal property - Property other than an interest in land.

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1Ñ.Promise - An indication of the intention to act or refrain from acting in a specific way, an
indication that the other party relies on.
1è.Promisee - Person to whom a promise is made.
1ÿ.Promisor - Person making a promise.
1.Promissory estoppel - A non contractual promise which is nonetheless enforceable to
avoid an injustice.
1-.üuasi Contract - An obligation that is imposed by the courts to avoid injustice or unjust
enrichment.
1[.Real Property - Land and anything permanently attached to it.
1r.Recognizances - Formal acknowledgements of indebtedness made in a court.
º0.Sale - Transfer of ownership of property from seller to buyer for consideration.
º1.Statute of Drauds - A law which states which types of contracts must be in writing.
ºº.Unenforceable contract - A contract for which there is no legal remedy.
ºÑ.Uniform Commercial Code - The law which governs contracts for sale of personal
property.
ºè.Unilateral contract - A contract in which only one party makes a promise
ºÿ.*alid contract - A contract which the courts will enforce because it meets all 4 basic
requirements.
º.*oid contract - A contract which has no legal force or binding effect.
º-.*oidable contract - A contract which is capable of being made void.

Mutual Assent
1. Acceptance - The demonstration of a willingness to enter into a contract on the terms of
the offer.
º. Counter offer - A counter proposal from the offeree that indicates a willingness to enter
into a contract but with different terms.
Ñ. Exclusive dealings contract - A contract that provides for the sole right to sell goods in a
defined market.
è. Dirm Offer - An offer that gives assurance that it will not be rescinded for a specific
period of time.
ÿ. Mirror image rule - An acceptance cannot deviate from the terms of the offer.

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. Mutual Assent - A meeting of minds as manifested by an offer and an acceptance.
-. Objective standard - What a reasonable person, under the same circumstances, would
believe or do.
[. Offer - The indication of a willingness to enter into a contract with another party.
r. Offeree - The party who receives an offer.
10.Offeror - The party who makes an offer.
11.Option Contract - A contract, supported by consideration, that provides that an offer
will stay open for a specified period of time.
1º.Output contract - A contract in which one party agrees to sell the entire output to the
other party.
1Ñ.Rejection - The refusal to accept an offer.
1è.Requirements contract - A contract where one party agrees to purchase the total needs
from the other party.
1ÿ.Revocation - Cancellation of an offer by an offeror.
1.Without reserve - An auctioneer may not withdraw the goods from the auction.

Conduct Invalidating Consent


1. Duress - Improper physical or mental force upon a person, whereby they are forced to do
some act against their will.
º. Diduciary - Person who owes a duty of trust, loyalty, and confidence to another.
Ñ. Draud - The act of false representation of a material fact made by defendant upon which
the other party relies and damages result.
è. Draud in the execution - Misrepresentation that deceives the other party as to the nature
or contents of a contractual document.
ÿ. Draud in the inducement - Misrepresentation regarding the subject matter of a contract
and inducing the other party to make it.
. Material - important, substantial.
-. Misrepresentation - A claim not in accordance with the facts.
[. Mutual mistake - Where both parties have a common but erroneous belief forming the
basis of a contract.

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r. Negligent misrepresentation - Misrepresentation made without due care in ascertaining
its truth or falsity.
10.Puffing - Exaggerated claims that are a matter of opinion and not fact.
11.Scienter - Done with intention or with the knowledge a statement or act would cause
harm.
1º.Undue influence - Taking unfair advantage of a person by reason of a dominant position
based on a special relationship of trust.

Consideration
1. Consideration - Some benefit (right, interest, profit) accruing to one party, or some
detriment (forbearance, loss, or responsibility) by the other.
º. Gift - A voluntary transfer of property without consideration.
Ñ. Illusory promise - A nonbinding or nonexistent promise.
è. Legal benefit - Obtaining something one had no legal right to obtain.
ÿ. Legal detriment - Doing an act you not legally obligated to do or not doing an act that
one has a legal right to do.
. Liquidated debt - Ascertained or settled debt.
-. Renunciation - A written and signed waiver of claims or rights under a contract.
[. Statute of limitation - Time period in which a lawsuit must be initiated.
r. Unliquidated debt - Uncertain debt or when the amount is contested.

Legality
1. Blue Laws - Laws which prohibit certain types of commercial activity on Sunday.
º. Exculpatory clause - A clause which excuses oneself from fault or tortuous liability.
Ñ. License - Formal authorization to engage in certain regulated activity.
è. Regulatory license - Licensing for the purpose of protecting the public interest.
ÿ. Revenue license - Licensing for the purpose of raising money.
. Unconscionable contract - A contract with unfair or unduly harsh terms.
-. Usury Laws - Laws stipulating the maximum interest rates allowed.
[. Usurious Loan - A loan where interest rates are in excess of those permitted by the usury
laws.

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Contractual Capacity
1. Disaffirmance - The exercise of the power of avoidance of a contract.
º. Guardian - A person appointed by a court to preserve and control the property of another
person.
Ñ. Guardianship - The relationship established between a guardian and the person whose
property is being preserved and controlled.
è. Intoxicated - Under the influence of drugs or alcohol to the extent that a person is unable
to understand the nature and consequences of his actions.
ÿ. Mentally incompetent - Due to a mental defect, one is unable to understand the nature
and consequences of one's acts.
. Minor - A person who has not attained the age of legal majority.
-. Necessity - Items needed to maintain one's position in life.
[. Ratification - The confirmation of a previous act done either by the party himself or by
another.

Contracts Requiring a Writing


1. Contract interpretation - Construction of the meaning of the contract.
º. Course of dealing - Previous conduct between the parties in general.
Ñ. Course of performance - Conduct between the parties concerning performance of the
particular contract.
è. Goods - Tangible personal property.
ÿ. Integrated contract - A complete and total agreement.
. Main purpose doctrine - The object of promisor/surety is to provide an economic
benefit for herself.
-. Parol evidence rule - When parties put their agreement in written, all previous and the
current agreements merge in the writing and a contract as written cannot be modified or
changed by parol evidence.
[. Statute of Drauds - A law which states which types of contracts must be in writing.
r. Surety - A promisor who provides security for the debt of another.
10.Usage of trade - The practice engaged in by a particular trade or industry.

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Third Party Contracts
1. Assignee - The party to whom contract rights are assigned.
º. Assignment of rights - The voluntary transfer to a third party of the rights arising from a
contract.
Ñ. Assignor - The party making an assignment of her rights.
è. Contract rights - The legal benefits a party to a contract acquires.
ÿ. Contract duties - The legal obligations a party to a contract creates.
. Delegatee - The third party to whom the delegator's duty is delegated.
-. Delegation of duties - The transferring all or part of one's duties created in a contract to a
third party.
[. Delegator - The party delegating his duty to a third party.
r. Express warranty (on Assignment) - An explicitly made contractual promise regarding
transferred property or contract rights.
10.Implied warranty (on Assignment) - An obligation imposed by law upon the transferor
of property or contract rights.
11.Incidental beneficiary - A third party whom the contracting parties have no specific
intention of benefiting but who would benefit anyway.
1º.Intended beneficiary - A third party whom one of the contracting parties specifically
wishes to gain from the contract.
1Ñ.Novation - A new contract substituting a new promisor for an existing promisor.
1è.Obligee - The party to whom a duty of performance is owed.
1ÿ.Obligor - The party who owes another a duty.
1.Partial assignment - The transfer of a portion of contractual rights to one or more
assignees.
1-.Third-party beneficiary contract - A contract in which one party promises to render a
performance to a third person.

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Performance, Breach and Discharge
1. Accord and satisfaction - Agreement (or "accord") to substitute a new duty for a prior
contractual duty which is thus discharged ("satisfaction") by performance of the new
duty.
º. Anticipatory repudiation - Breach of a contract before performance is due by the party
announcing that he will not perform or committing an act that makes it impossible for
him to perform his duties.
Ñ. Breach - Wrongful failure to perform the terms of a contract.
è. Commercial impracticability - Discharge from a contractual duty when performance of
it can be accomplished only at unforeseen and unjust hardship.
ÿ. Concurrent conditions - Performances by the parties are to occur simultaneously.
. Condition precedent - An event must occur before performance under a contract is due.
-. Condition subsequent - An event terminates a duty of performance when it happens.
[. Contract Conditions - Uncertain events that affect a contractual duty of performance.
r. Discharge - Termination of a contractual duty.
10.Express condition - Performance is contingent on the happening or non-happening of a
stated event.
11.Implied-in-fact condition - Contingencies understood to be a part of the contract but not
expressed by the parties.
1º.Implied-in-law condition - Contingency that arises from operation of law.
1Ñ.Impossibility of Performance - A situation where a contractual duty cannot possibly be
done.
1è.Material breach - Nonperformance that significantly impairs the aggrieved party's rights
under the contract.
1ÿ.Mutual rescission - Agreement between the parties to terminate their respective duties
under the contract.
1.Perfect tender rule - Requirement that seller's tender of delivery must conform exactly
to the contract.
1-.Performance - Fulfillment of a party's contractual obligations.
1[.Tender - An offer by one party, who is ready, willing and able to perform, to the other
party to perform his contractual duties.

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Remedies
1. Benefit-of-the-bargain damages - Difference between the value received and the value
of what the fraudulent party said they would get.
º. Compensatory damages - Contract damages placing the injured party in as good a
position as if the other party had performed.
Ñ. Consequential damages - Damages not occurring directly from a breach but as a
foreseeable result of the breach.
è. Damages - Losses occurring when a party breaches his contract.
ÿ. Equitable remedies - Relief for a breach which is non monetary in nature.
. Doreseeable damages - Loss that the party in breach had reason to know of when the
contract was made.
-. Incidental damages - Reimbursement for reasonable expenses directly arising out of the
contract when a breach occurs.
[. Injunction - Court order prohibiting a party from doing a specific act.
r. Liquidated damages - Reasonable damages agreed to in advance by the parties and
stated in the contract.
10.Mitigation of damages - Requirement that the injured party take reasonable steps to
lessen or avoid damages.
11.Monetary damages - Financial relief of various forms, awarded when a contract has
been breached.
1º.Nominal damages - A small sum of money awarded where the dollar loss is negligible
or unproved.
1Ñ.Punitive damages - Damages awarded in cases involving willful, wanton, or malicious
conduct.
1è.Reliance damages - Damages covering foreseeable loss caused by reliance on the
contract.
1ÿ.Restitution - Restoration of the injured party to the position he was in before the contract
was made.
1.Specific performance - Court decree ordering breaching party to render promised
performance.

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GLOSSARY OD TERMS (LATIN)

1. Ab initio† from the beginning


º. Acto personalis moritor cum persona† a personal action dies with the person
Ñ. Ad litem† with respect to a suit at law
è. Administrator cum testamento annexo† administrator with the will annexed (which the
court appoints him to administer)
ÿ. Administrator durante minore aetate: administrator during infancy (of the true
appointee)
. Administrator pendente lite† administrator during the litigation (of a disputed will)
-. Animus manendi† the intention to remain in that place or country
[. Animus revocandi† the intention to revoke
r. Audi alteram partem: hear the other side
10.Bona fide: in good faith
11.Bona vacantia† ownerless property
1º.Caveat emptor† let the buyer beware
1Ñ.Certiorari: to be informed
1è.Cestui que trust† the person for whose benefit a trust is created; a beneficiary
1ÿ.Chattels personal† personal goods
1.Chattels real: a lease, forming part of personality
1-.Chose in action† a thing in action; a personal right of property which can only be claimed
or enforced by an action at law and not by taking physical possession
1[.Chose in possession† a thing that is the subject of physical possession (contrast with
chose in action)
1r.Consensus ad idem† mutual agreement on the same point
º0.Cujus est solum ejus est usque ad caelum† the owner of land owns all the land below
the surface and all the space above the land
º1.Cum testament annexo† with the will attached
ºº.Curia Regis† the King¶s Court
ºÑ.Cy-près† so near; as nearly as possible
ºè.Demnum sine injuria† damage without legal injury (or wrong)
ºÿ.De facto† existing in fact

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º.Del credere† in the belief that (the buyer is solvent)
º-.Delegatus non potest delegare† one to whom power has been delegated cannot delegate
that power to another
º[.De minimis non curat lex† µthe law takes no notice of trifles¶
ºr.De novo† anew
Ñ0.Distress damage feasant† the right of an occupier of land to seize animals doing damage
thereon
Ñ1.Donation mortis causa† a gift in anticipation of death
Ѻ.Durante minore aetate† during infancy
ÑÑ.Ejusdem generis† of the same kind or nature
Ñè.Equitas sequitur legem† equity follows the law
Ñÿ.Escrow† a sealed writing delivered conditionally, which condition being performed it
operates immediately as a deed
Ñ.Ex gratia† as a matter of favour
Ñ-.Ex nudo pacto non oritur actio† a bare promise (without consideration) does not give
rise to any action
Ñ[.Ex officio† arising from an official position, by virtue of his office
Ñr.Ex parte† on the application of (an ex parte hearing is one at which only one side is
represented)
è0.Ex post facto† after the event
è1.Expressio unius est exclusio alterius† the express mention of one thing implies the
exclusion of another
èº.Ex turpi causa non oritur actio† no action arises out of a base cause
èÑ.Ibid / ibidem† in the same place
èè.Ignorantia juris haud excusat / ignorantia juris neminem excusat / ignorantia juris
non excusat† ignorance of the law excuses no one
èÿ.In consimili casu† in similar case to
è.In extremis† in imminent peril of death
è-.In pari delicto potior est conditio possidentis† where two parties are equally in the
wrong, the condition of possessor is the stronger

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è[.In pari delicto potior est conditio defendantis† of two wrongdoers it is better to be the
defendant
èr.In personam† an act, proceeding or a right in land which is good against a specified
person who is aware of it ± but not valid against any other person ± such as a buyer of the
property who is not aware of the right
ÿ0.In re: in the matter of
ÿ1.In rem† against a thing; a right in rem is a right in property such as land which is good
against the whole world
ÿº.In terrorem† as a threat, to cause fear
ÿÑ.Indenture† a deed to which there are two or more parties
ÿè.Injuria sine damno† legal wrong without damage
ÿÿ.Inter alia† among other matters
ÿ.Inter se† among themselves
ÿ-.Inter vivos† during life
ÿ[.ust accrescendi† right of survivorship
ÿr.us tertii† the right of a third party
0.Laches† delay, e.g. in pursuing a remedy at law
1.Lex loci contractus† the law of the place where the agreement was made
º.Locus sigilli† the place of the seal
Ñ.Mandamus† we command
è.Magnum Concilium† the Great Council
ÿ.Mens rea† guilty mind
.Mesne: intermediate
-.Nec per vim, nec clam, nec precario† peaceably, openly and as of right
[.Nemo dat quod non habet† no one can give what he does not have
r.Nemo judex in causa sua† no one shall be a judge in his own case
-0.Non est factum† µnot my act¶
-1.Noscitur a sociis† the meaning of a word can be gathered from its context
-º.Novus actus interveniens† a new development intervening (to damage the legal
situation)
-Ñ.Obiter dicta† sayings by the way

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-è.Overt: open
-ÿ.Pendente lide† during the litigation
-.Per incuriam† by oversight (of a judge)
--.Per se† by itself, by or through himself
-[.Per subsequens matrimonium† by subsequent marriage
-r.Per capita† by the number of individuals
[0.Prima facie† at a first view
[1.Puisne† lesser in importance
[º.Pur autre vie† for another¶s life
[Ñ.üuantum meruit† as much as he has deserved
[è.üuasi† as if, as it were
[ÿ.üuid pro duo: a mutual consideration; tit for tat
[.üui facit per alium facit per se† he who does a thing through another does it himself
[-.Ratio decidendi† the reason for the decision
[[.Res† thing
[r.Res extincta† the thing having ceased to exist
r0.Res ipsa loquitur† µthe thing speaks for itself¶
r1.Res sua† µthe thing being his own property¶
rº.Restitutio in integrum: restoration to the original position
rÑ.Sans recours† without recourse
rè.Sciens† knowing
rÿ.Scienti non fit injuria† one who knows cannot be harmed
r.Seisin† effective possession of land by a freeholder
r-.Sic utere tuo ut alienum non laedas† so use your own property as not to injure your
neighbour¶s
r[.Sine die: without fixing a day
rr.Stare decisis† to stand by past decisions

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OTHERS
1. Status quo† the state in which a thing exists
º. Sue† to take proceedings in a civil action
Ñ. Sui juris† of full legal capacity
è. Surrogate† deputy
ÿ. Tortfeasor† a person liable on a civil wrong other than a contractual or trust matter
. Trover: an early form of conversion in which a finding (trover) of the goods was alleged
-. Uberrimae fidei: of the utmost good faith
[. Ubi jus ibi remedium: where there is a right there is a remedy
r. Ubi remedium ibi jus† where there is a remedy there is a right
10.Ultra vires† beyond the powers of
11.*iva voce† by word of mouth
1º.*olens: willing
1Ñ.*olenti non fit injuria: no wrong can be done to one who consents to what is done

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CASE ANALYSIS ± EXAM TIPS
1. Summary

º. Raise the relevant issue

Ñ. Raise the relevant law

è. Use the relevant law to address/solve the issue

ÿ. Case to support your argument

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