ab initio
'from the beginning. A contract terminated ab intitio returns the parties to pre-contractual position
accord and satisfaction
the accord is the agreement to discharge a contract, and the satisfaction is the consideration needed
affirm
if a contract has been affirmed, in other words, accepted by a party once he knows of a defect, the rights the contract is lost
agreements to agree
not binding but simply an expression of the intentions of the party.Include letter of intent, memorandum of understanding, or heads of agreement
anticipatory breach
where a party makes it clear before the performance date is due that he will not perform his obligations under contract
bars to recission
the right is lost where there has been an affirmation, restituo in integrum is impossible or third party right have intervened
bilateral discharge
where both parties have not performed under the contract, discharge by agreement takes place by an exchange of promises not to enforce the original contract
breach of contract
the refusal or failure by a party to a contract to perform an obligation imposed on him under the contract. Damages are available for any breach, but if the defaulting party has committed a very serious breach, the innocent party has the right to choose whether to end the contract as well as the right to claim damages
business efficacy rule
a court may be prepared to imply in a term if the agreement was clearly intended to create a legal relationship and, unless a term is implied in, the contract cannot function
capacity
the ability of a natural or legal person to enter into a contract
caveat emptor
'let the buyer beware'
collateral contract
one party enters into the main contract on the basis of a promise made by the other party
collective agreements
agreements between trade unions and an employer
common mistake
both parties mistakenly believe the same thing, and the mistaken assumption was based on reasonable ground
condition
a fundamental term of the contract. If breached, the innocent party may claim damages AND also opt to treat the contract as ended
condition precedent
a condition stating that a right will not be granted until some future event
condition subsequent
condition stating that the contract can be modified or ser aside if some event occurs later
consensus as idem
latin term referring to the need for a meeting of minds in order for there to be contractual agreement between the parties
consequential loss
unusual or special loss that would not necessarily be caused by the breach
consideration
the bargain. each party gives value to the other either by exchanging promises or by a promise given in exchange for an act
construction
where the court interprets the meaning of words
contracts in restraint of trade
contracts preventing the free exercise of trade or business. they are prima fade void unless it can be shown that the provision is reasonable as between the parties and not against the public interest
contra proferentem rule
an exclusion clause is interpreted strictly, so if there is any ambiguity in the wording of an exclusion clause, the clause will be construed as narrowly as possible against the one relying on the clause
discharge
release from the obligations under a contract. discharge may be by performance, agreement, breach or frustration
discharge by agreement
both parties agree to end the contract
discharge by breach
a contract may be discharged by breach where the party in default has repudiated the contract either before performance is due or before it has been fully performed, or where there has been fundamental breach
discharge by frustration
parties are excused from the contract if, through no fault of either party, after the formation of the contract it becomes impossible to carry out the contract or the contract has become commercially sterile or futile
discharge by performance
the obligations under the contract have been carried out
duress
violence or threats of violence in order to make someone enter into a contract
economic duress
party must show that he was put under economic pressure to enter the contract and that pressure was of an illegitimate nature, going beyond acceptable commercial practice. the coercion was such that it undermined the requirement of a voluntary acceptance of an offer
entire contract
a contract that is not divisible into sets of obligations
exceptio non adimpleti contractus
civil law, allows the innocent party to suspend his own performance of the contract unti the other party has fulfilled an agreed obligation
executed consideration
where one party performs an act in fulfillment of a promise made by the other, as in a unilateral contract
executory consideration
the term used to refer to an exchange of promises to perform acts in the future
expectation damages
damages the innocent party can claim in a breach of contract action, where the damages take into account the profit the innocent party should have received if the defaulting party had performed the contract as agreed
ex post facto warranty
if the innocent party chooses to continue the contract, even though a condition has been breached, then the condition is treated as a warranty, and the obligation is then referred to as an ex post facto warranty and only damages can be claimed
express terms
terms explicitly stated by the parties, either oral or written
firm offer
the offer is unequivocal
force majeure
clause that lists events considered to be outside the control of the parties and for which the parties cannot be considered to be in breach
fraudulent misrepresentation
the person knew the statement was untrue, or was reckless as to whether it was true
frustration of the common venture
a contract can be discharged by frustration where there is no physical destruction of the subject matter, but the essential commercial purpose of the contract no longer exists
guarantee
a legally enforceable promise that the goods are of good quality and will work properly
honour clause
makes clear that there is no intention to create legal relations
implied terms
terms that can be read into the contract, either by custom, bu statute or by the courts
incorporation
the exemption clause must have been incorporated into the contract, either by including it in a signed document or by giving notice of it where there is no written document
indemnify
to reimburse someone for the damage that he has suffered, a statement of liability to pay compensation for a loss or for a wrong in a transaction
indemnity
an order of rescission may be accompanied by the court ordering an indemnity. an indemnity is to put parties back to pre-contractual position, so that the innocent party is neither better of or worse than before
innocent misrepresentation
the maker of the statement had reasonable grounds for believing that it was true
innominate term
a term is classed as innominate where it is uncertain whether it is to be treated as a condition or as a warranty
invitation to treat
stage in negotiations where one party is inviting others to make an offer, which he is free to accept or reject. an invitation to treat is not an offer
just apportionment
statute law makes provision for a fair adjustment of costs incurred under a contract discharged by frustration
last shot rule
where the parties have exchanged their own standards contracts, the last shot rule means that the conditions laid down in the acceptance will be the ones to determine the contract
letter of comfort
written in support of someone who is applying for a loan and offers the potential offeror reassurance
letter of guarantee
this letter takes the form of a declaration to guarantee the payment of a debt incurred by another if that other fails to repay
'lie where they fall'
at common law there is no just appointment for costs incurred when a contract is discharged by frustration. it is generally not possible to recover money due or paid before the frustrating event
liquidated damages (specified damages)
the parties themselves, rather than the courts, have determined the level of damages
liquidated damages clause
a proper attempt to pre-estimate the loss that would result if the other breaches the contract
mandatory injunction
a court order requiring the defendant to act
main purpose rule
it is presumed that an exemptuon clause is not intended to defeat the main purpose of the contract
misrepresentation
where the representation is a false statement
mistake
where the mistake is of an operative and fundamental character, which goes to the very substance of the contract, and existed at the time the contract was entered into, the contract will be void
mistake as to identity
unilateral mistake where one party is mistaken about the identity of the other party
mistake as to quality
mistake as to the quality of the subject matter of the contract is not usually sufficient to make the contract void
mitigation
the innocent party must take reasonable steps to minimise his loss
mutual mistake
the parties are at cross purposes, the offer being made in one sense and accepted in another
negligent misrepresentation
a lack of reasonable care was taken in making the statement
nominal consideration
something of minimal value exchanged in order to make the other party's promise legally enforceable
non est factum
in general, a person is bound by the terms of a document that he has signed, even if he has not read it or understood it. the non est factum defense forms an exception to this rule in certain circumstances
notice of default
notice is given to the defaulting party that he is in breach of contract, and a period of time is usually specified within which the defaulting party must fulfil his obligations. notice is not a general requirement in english law, although certain exceptions are made, for example, notice of default must be given in a consumer hire purchase contract. parties are also free to agree to give such notice
parol evidence rule (four corners rule)
where a contract is embodied in a written document, then extrinsic (parol) evidence is not admissible to add to, vary, subtract from or contradict the terms of the written document. the rights and duties created by the written agreement must be looked for only within the four corners of the writing itself
partial performance
where the performance is not exact and complete
penalty clause
the penalty is meant to punish the other party for a breach, or deter him from breaching the contract. in english law, penalty clauses are in principle unenforceable
peppercorn rent
where nominal consideration has been given in order to make the agreement legally binding
postal rule
in english law, where acceptance is to be communicated by post, the the acceptance is complete when the letter is posted, even if the letter is never delivered
prima facie
'at first sight'
principle of good faith
negotiations and contractual relations should be characterised by honesty and fairness, by the intention to carry out contractual obligations, and with no intention seek an unfair advantahe or purposefully act to the detriment of the other party. this principle is not operative in the common law of contract
privity of contract
a contract only confers rights and obligations on the parties to the contract
promissory estoppel
equitable principle. it may make a one-sided promise binding where there is an existing legal relationship and the promisor has promised not to enforce a legal right. having induced reliance on this promise, it would be inequitable not to enforce the promise
quantum meruit
'as much as he deserves'
rebut
to refute or oppose, for example, to rebut a claim or a presumption
presumption
the law makes certain assumptions based on a set of facts
reliance loss damages
a party to a contract has the right to claim damages with respect to expenses that have been incurred because the party had relied upon the other party performing his obligations under contract
remoteness of damage
the loss suffered by the innocent party must be either a natural cause of the breach or reasonably within the contemplation of the parties as the probable result of a breach. If not, the damage is too remote and no damages can be claimed
representation
it is a statement that induces the contract but does not itself form a part of that contract
repudiation
the other party makes it clear, either explicitly or implicityly, that he will not perform or continue to perform the contract
recision
the representee can opt to have a voidable contract set aside. he is said to rescind the contract - equity
restituo in integrum
'to restore something to its original state'
revoke
an act of annulment, such as withdrawing an offer
rule in Pinnel's case
the payment of a lesser amount than is owed cannot discharge the obligation to pay the full amount, even if the creditor has agreed to accept the lesser amount, unless there is fresh consideration
rule of construction
interpretation of a clause, such as an exclusion clause, in order to reflect the parties' intention when making the clause
rule of law
unlike a rule of construction, this must be applied whether it would mean giving effect to the parties' intention or not
sale of goods
a contract for the sale of goods is one which the seller transfers property in goods to the buyer for money consideration.
property
in sale of goods, means ownership as opposed to possession. Contracts that pass possession but not the legal title are not considered for the sale of goods
set aside
to annul or make void
sit on the breach
there is a duty on the claimant to take all the reasonable steps to mitigate loss. He should not simply do nothing and let the situation deteriorate even further
specific performance
a court order to make a person carry out his obligations under a contract. this is a discretionary remedy and wont be ordered if damages are a sufficient remedy
statement of fact
to be classified as a misrepresentation, the statement must be a statement of fact, not an opinion
suspension of performance
in common law, there is no general principle allowing an innocent party to suspend his own performance because the other party is in breach
tender
an offer to provide goods or services for a specified price
termination
a contract is terminated when it is brought to an end, the term termination should be used rather than recision, where the contract is discharged by breach
trade usage
where the contract is silent on the matter, a term can be incorporated into a contract reflecting local custom or trade usage in a particular sector
uberrimae fidei
'of the utmost good faith.' in contracts that are ubberimae fidei there is a duty of full disclosure
unconscionability/unconscionable inadequacy
allows a contract to be set aside when there is an inconscionable bargain - this is a bargain that is so detrimental to one of the contracting parties as to be an affront to what can be considered reasonable
undue influence
refers to improper pressure other than violence to make someone enter a contract
unilateral contract
there is no exchange of promises. instead, one party provides consideration in the form of a promise and the other provides consideration in the form of an act
unilateral discharge
where there has been performance or partial performance by only one party, there can only be discharge if the other party draws up a deed or provides fresh consideration in the form of an act
unilateral mistake
a ground for making a contract void, where only one of the parties to a contract is mistaken, and the other party is aware of the mistaken assumption. most cases involving unilateral mistake also involve a misrepresentation. in deciding to sue for unilateral mistake or misrepresentation, the innocent party should bear in mind that mistake makes a contract void from the outset, so no legal title to property can pass, and misrepresentation makes a contract voidable, meaning that a title can be passed before the contract is set aside
unliquidated damages (unspecified damages)
the quantification of damages is at the discretion of the courts
vitiating factor
a defect that was present in the agreement at the time the contract was concluded. the defect is sufficiently serious to have the contract set aside. Includes:
misrepresentation
mistake
duress
undue influence
waiver
where one party voluntarily gives up his right to insist upon precise performance under the contract
warranties and indemnities
here, a warranty refers to a statement made by one party promising the other party that the facts are a sstated. it is usually connected to a promise to indemnify the promisee for any loss he sustains from having relied on the promise if the promise is false
warranty
a term of lesser importance than a condition. its breach would not give the innocent party the option to end the contract, but it would give the innocent party the right to claim damages.