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Dreana Marshall

Glossary - Contract
The Legal Environment
Common Law
Contract Terms
Contract Case
Offer & Acceptance
Contract Law
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Definitions of Contract Terms



Accepted check A check that the drawee bank has signed. This signature is a promise that the bank will pay the check out of its own funds.  

Acquit To find the defendant not guilty of the crime for which he was tried.  

Act of State doctrine A rule requiring American courts to abstain from cases if a court order would interfere with the ability of the president or Congress to conduct foreign policy.  

Actus reus The guilty act. The prosecution must show that a criminal defendant committed some proscribed act. In a murder prosecution, taking another person's life is the actus reus.  

Administrative law Concerns all agencies, boards, commissions, and other entities created by a federal or state legislature and charged with investigating, regulating, and adjudicating a particular industry or issue.   

Agent A person who acts for a principal.  

Amendment Any addition to a legal document. The constitutional amendments, the first ten of which are known collectively as the Bill of Rights, secure numerous liberties and protections directly for the people.  


Bilateral contract A binding agreement in which each party has made a promise to the other.  

Burden of proof The allocation of which party must prove its case. In a civil case, the plaintiff has the burden of proof to persuade the factfinder of every element of her case. In a criminal case, the government has the burden of proof.  


Capacity The legal ability to enter into a contract.  

Cheque An instrument in which the drawer orders the drawee bank to pay money to the payee.  

Civil law The large body of law concerning the rights and duties between parties. It is distinguished from criminal law, which concerns behavior outlawed by a government.  

Class action A method of litigating a civil lawsuit in which one or more plaintiffs or occasionally defendants seek to represent an entire group of people with similar claims against a common opponent.  

Common law Judge-made law, that is, the body of all decisions made by appellate courts over the years.  

Comparative negligence A rule of tort law that permits a plaintiff to recover even when the defendant can show that the plaintiff's own conduct contributed in some way to her harm.  

Compensatory damages Those that flow directly from the contract.  

Complaint A pleading, filed by the plaintiff, providing a short statement of the claim.  

Condition A condition is an event that must occur in order for a party to be obligated under a contract.  

Condition precedent A condition that must occur before a particular contract duty arises.  

Condition subsequent A condition that must occur after a particular contract duty arises or the duty will be discharged.  

Consequential damages Those resulting from the unique circumstances of this injured party.  

Consideration In contract law, something of legal value that has been bargained for and given in exchange by the parties.  

Constitution The supreme law of a political entity. The United States Constitution is the highest law in the country.  

Contract A legally enforceable promise or set of promises.  

Contributory negligence A rule of tort law that permits a negligent defendant to escape liability if she can demonstrate that the plaintiff's own conduct contributed in any way to the plaintiff's harm.  

Conversion A tort committed by taking or using someone else's personal property without his permission.  

Counterclaim A claim made by the defendant against the plaintiff.  

Criminal law Rules that permit a government to punish certain behavior by fine or imprisonment.  

Cross-examination During a hearing, for a lawyer to question an opposing witness.  


Damages  The harm that a plaintiff complains of at trial, such as an injury to her person or money lost because of a contract breach.  Money awarded by a trial court for injury suffered.  

Discharge  A party to a contract has no more duties.  A party to an instrument is released from liability.  

Disclaimer A statement that a particular warranty does not apply.  

Duress  A criminal defense in which the defendant shows that she committed the wrongful act because a third person threatened her with imminent physical harm.  An improper threat made to force another party to enter into a contract.  


Equity The broad powers of a court to fashion a remedy where justice demands it and no common law remedy exists. An injunction is an example of an equitable remedy.  

Error of law A mistake made by a trial judge that concerns a legal issue as opposed to a factual matter. Permitting too many leading questions is a legal error; choosing to believe one witness rather than another is a factual matter.  

Estate The legal entity that holds title to assets after the owner dies and before the property is distributed.  

Estoppel Out of fairness, a person is denied the right to assert a claim.  

Exclusionary rule In a criminal trial, a ban on the use of evidence obtained in violation of the Constitution.  

Exculpatory clause A contract provision that attempts to release one party from liability in the event the other party is injured.  

Executed contract A binding agreement in which all parties have fulfilled all obligations.  

Executory contract A binding agreement in which one or more of the parties has not fulfilled its obligations.  

Exhaustion of remedies A principle of administrative law that no party may appeal an agency action to a court until she has utilized all available appeals within the agency itself.  

Express contract A binding agreement in which the parties explicitly state all important terms.  

Express warranty A guarantee, created by the words or actions of the seller, that goods will meet certain standards.  


Frustration of purpose After the creation of a contract, an entirely unforeseen event occurs that eliminates the value of the contract for one of the parties.  


Illusory promise An apparent promise that is unenforceable because the promisor makes no firm commitment.  

Implied authority When a principal directs an agent to undertake a transaction, the agent has the right to do acts that are incidental to it, usually accompany it, or are reasonably necessary to accomplish it.  

Implied contract A binding agreement created not by explicit language but by the informal words and conduct of the parties.  

Implied warranty Guarantees created by the Uniform Commercial Code and imposed on the seller of goods.  

Implied warranty of habitability A landlord must meet all standards set by the local building code or otherwise ensure that the premises are fit for human habitation.  

Integrated contract A writing that the parties intend as the complete and final expression of their agreement.  

Intentional tort An act deliberately performed that violates a legally imposed duty and injures someone.  

Jurisprudence The study of the purposes and philosophies of the law, as opposed to particular provisions of the law.  

Justification A criminal defense in which the defendant establishes that he broke the law to avoid a greater harm.   


Liquidated damages A contract clause specifying how much a party must pay upon breach.  

Liquidated debt The amount of the indebtedness is not in dispute.  

Litigation The process of resolving disputes through formal court proceedings.  


Mailbox rule A contract doctrine holding that acceptance is effective upon dispatch, that is, when it is mailed or otherwise taken out of the control of the offeree.  

Minor A person under the age of 18.  

Misrepresentation A factually incorrect statement made during contract negotiations.  

Mitigation One party acts to minimize its losses when the other party breaches a contract.  


Nominal damages A token sum, such as one dollar, given to an injured plaintiff who cannot prove damages.  


Offer In contract law, an act or statement that proposes definite terms and permits the other party to create a contract by accepting those terms. 

Offeree The party in contract negotiations who receives the first offer. 

Offeror The party in contract negotiations who makes the first offer. 

Output contract An agreement that obligates the seller of goods to sell everything he produces during a stated period to a particular buyer. 


Parol evidence Written or oral evidence, outside the language of a contract, offered by one party to clarify interpretation of the agreement. 

Parol evidence rule In the case of an integrated contract, neither party may use evidence outside the writing to contradict, vary, or add to its terms. 

Private Law Refers to the rights and duties between individuals that they themselves have created, for example, by entering into a contract or employment relationship. 

Procedural law The rules establishing how the legal system itself is to operate in a particular kind of case. 

Promissory estoppel A doctrine in which a court may enforce a promise made by the defendant even when there is no contract, if the defendant knew that the plaintiff was likely to rely on the promise, the plaintiff did in fact rely, and enforcement of it is the only way to avoid injustice. 

Promissory note The maker of the instrument promises to pay a specific amount of money. 

Public Law Refers to the rights and obligations of governments as they deal with the nation's citizens, for example, by taxing individuals, zoning neighborhoods, and regulating advertisements. 

Punitive damages Money awarded at trial not to compensate the plaintiff for harm but to punish the defendant for conduct that the factfinder considers extreme and outrageous. 


Quantum meruit "As much as she deserved." The damages awarded in a quasi-contract case. 

Quasi-contract A legal fiction in which, to avoid injustice, the court awards damages as if a contract had existed, although one did not. 

Quid pro quo A Latin phrase meaning "this for that." It refers to a form of sexual harassment in which some aspect of a job is made contingent upon sexual activity. 


Ratification When someone accepts the benefit of an unauthorized transaction or fails to repudiate it once he has learned of it, he is then bound by it. 

Real property Land, together with certain things associated with it, such as buildings, subsurface rights, air rights, plant life, and fixtures. 

Reasonable doubt The level of proof that the government must meet to convict the defendant in a criminal case. The factfinder must be persuaded to a very high degree of certainty that the defendant did what the government alleges. 

Repudiation An indication made by one contracting party to the other that it will not perform. 

Rescind To cancel a contract. 

Respondeat superior A rule of agency law holding that a principal is liable when a servant acting within the scope of employment commits a tort that causes physical harm to a person or property. 

Restitution Restoring an injured party to its original position. 

Revocation The act of disavowing a contract offer so that the offeree no longer has the power to accept. 


Servant An agent whose work is closely controlled by the principal. 

Specific performance A contract remedy requiring the breaching party to perform the contract, by conveying land or some unique asset, rather than by paying money damages. 

Stare decisis "Let the decision stand." A basic principle of the common law, it means that precedent is usually binding. 

Statute A law passed by a legislative body, such as Congress. 

Statute of frauds This law provides that certain contracts are not enforceable unless in writing. 

Statute of limitations A statute that determines the period within which a particular kind of lawsuit must be filed. 

Statute of repose A law that places an absolute limit on when a lawsuit may be filed, regardless of when the defect was discovered. 

Statutory interpretation A court's power to give meaning to new legislation by clarifying ambiguities, providing limits, and ultimately applying it to a specific fact pattern in litigation. 

Subrogation The substitution of one person for another. For example, if an insurance company pays a claim, it acquires through subrogation whatever rights the insured had against any third parties. 

Substantial performance The promisor performs contract duties well enough to be entitled to his fullcontract price, minus the value of any defects. 

Substantive law Rules that establish the rights of parties. For example, the prohibition against slander issubstantive law, as opposed to procedural law. 

Summary judgment The power of a trial court to terminate a lawsuit before a trial has begun, on the grounds that no essential facts are in dispute.  

Summary jury trial A form of alternative dispute resolution in which a small panel of jurors hears shortened, summarized versions of the evidence. 

Supremacy Clause From Article VI of the Constitution, it declares that federal statutes and


Tender To make conforming goods available to the buyer. 

Tender offer A public offer to buy a block of stock directly from shareholders. 

Tort A civil wrong, committed in violation of a duty that the law imposes. 


Unconscionable contract An agreement that a court refuses to enforce because it is fundamentally unfair as a result of unequal bargaining power by one party. 

Undisclosed principal If a third party in an agency relationship does not know that the agent is acting for a principal, that principal is undisclosed. 

Undue influence One party so dominates the thinking of another party to a contract that the dominant party cannot truly consent to the agreement. 

Unilateral contract A binding agreement in which one party has made an offer that the other can accept only by action, not words. 


Verdict The decision of the factfinder in a case. 

Void agreement An agreement that neither party may legally enforce, usually because the purpose of the bargain was illegal or because one of the parties lacked capacity to make it. 

Voidable contract An agreement that, because of some defect, may be terminated by one party, such as a minor, but not by both parties. 

Voir dire The process of selecting a jury. Attorneys for the parties and the judge may inquire of prospective jurors whether they are biased or incapable of rendering a fair and impartial verdict. 


Warranty A guarantee that goods will meet certain standards. 

Dreana Marshall