Contract Law

This is a voluntary, deliberate, and legally binding agreement between two or more competent parties. It is also correct to refer to this as an agreement between persons which obliges each party to do or not to do a certain thing.

Contracts are usually written but may be spoken or implied, and generally have to do with employment, sale or lease, or tenancy.

A contractual relationship is evidenced by (1) an offer, (2) acceptance of the offer, and a (3) valid (legal and valuable) consideration. Each party to a contract acquires rights and duties relative to the rights and duties of the other parties. However, while all parties may expect a fair benefit from the contract (otherwise courts may set it aside as inequitable) it does not follow that each party will benefit to an equal extent. Existence of contractual-relationship does not necessarily mean the contract is enforceable, or that it is not void (see void contract) or voidable (see voidable Contract). Contracts are normally enforceable whether or not in a written form, although a written contract protects all parties to it. Some contracts, (such as for sale of real property, installment plans, or insurance policies) must be in writing to be legally binding and enforceable. Other contracts (see implied in fact contract and implied in law contract) are assumed in, and enforced by, law whether or not the involved parties desired to enter into a contract.


Ab Absurdo

An evidentiary suggestion or statutory interpretation that is, or leads to, an absurdity

Acceleration Clause

A clause in a contract that states that if a payment is missed, or some other default occurs (such as the debtor becoming insolvent), then the contract is fully due immediately


The final and unequivocal expression of assent to another's offer to contract

Accord and Satisfaction

The act of one party, having complied with its contractual obligation, accepting some type of compensation from the other party (usually money and of a lesser value) in lieu of enforcing the contract and holding the other party to their original obligation


Action or inaction which binds a person legally even though it was not intended as such

Adhesion Contract

A fine-print consumer form contract which is generally given to consumers at point-of-sale, with no opportunity for negotiation as to its terms, and which, typically, sets out the terms and conditions of the sale to advantage the seller


A fiduciary relationship between one person (a principal) and another (an agent) that the agent shall act on the principal's behalf


A person who has received the power to act on behalf of another, binding that other person as if he or she were themselves making the decisions

Aleatory Contract

Civil law: a contract which depends on an uncertain event


A piece of paper which has been attached to a contract, a check or any promissory note, on which to add signatures because there is not enough room on the main document

Animus Contrahendi

An intention to contract


To date back; retroactively


Civil law: the pledge of real property as security for a debt

Anticipatory Breach

When a party to a contract receives an indication from the other party that they intend on not performing their contractual obligations


A debt that is not paid on the due date adds up and accumulates in arrears

As Is

That a product is sold in the condition in which it then exists


To sell, give or otherwise transfer some legal right or responsibility to another.


Medieval era action for breach of contract

Bad Faith

Intent to deceive

A person who intentionally tries to deceive or mislead another in order to gain some advantage

Battle of the Forms

Two persons intending to contract but tendering differing form contracts rendering the conclusion as to the terms of the contract, or a determination as to whether there was a contract, difficult

Blue-Pencil Severance

Striking out an offending part of a legal document, such as a contract or a statute

Breach of Contract

A failure of a party to a contract to perform his or her obligations as agreed to within the contract

Call For Tenders

A property owner's invitation, sometimes at large, sometimes to a select group, for bids to complete a particular project

Caveat Emptor

Let the buyer beware or that the buyers should examine and check for themselves things which they intend to purchase and that they cannot later hold the vendor responsible for the broken condition of the thing bought

Certainty of Terms

A legal requirement of a valid offer to contract; that it must be precise and definite in order to be subject to acceptance


A medieval form of contract which allowed for several verifiable authentic versions

Choice of Law Clause

A term of a contract which sets the jurisdiction for dispute resolution, or the applicable law, in the event of any dispute between the contracting parties


Transportation contract acronym for "cost, insurance and freight" usually in reference to the sale price being inclusive thereof

Civil Code

A document in civil law jurisdictions that purports to be a compendium of the applicable law as it pertains to the citizen

Civil Law

A body of law derived and evolved directly from Roman Law, the primary feature of which is that laws are struck in writing; codified, and not determined, as in the common law, by the opinions of judges based on historic customs

Collective Bargaining Agreement

A contract on hiring, working conditions and dispute resolution between an employer and a union, the latter representing employees of a defined group

Common Law

Judge-declared law

Law which exists and applies to a group on the basis of customs and legal precedents developed over hundreds of years in Britain

Compensatory Damages

Damages that compensate the injured victim for injuries actually endured


An individual's ability to understand the nature and object of legal proceedings being presented, and to consult with counsel

Condition Precedent

A contractual condition that suspends the coming into effect of a contract unless or until a certain event takes place

Condition Subsequent

A condition in a contract that causes the contract to become invalid if a certain event occurs


Civil law: grounds for extinguishing a contractual obligation when creditor and debtor become the same person


Consensus Ad Idem

Latin: an agreement - a meeting of the minds between the parties where all understand the commitments made by each

A basic requirement for a contract


Some right, interest, profit or benefit accruing to the one party of a contract, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other


The legal process of interpreting a phrase or document; of trying to find its meaning


An agreement between persons which obliges each party to do or not to do a certain thing

Contract Law

That body of law which regulates the formation and enforcement of contracts


The right of a person who has discharged a common liability to recover proportionate share from the other(s) that were so liable

Counter Offer

A reply to an offer which is conditional


A written document in which signatories either commit themselves to do a certain thing, to not do a certain thing or in which they agree on a certain set of facts


A person to whom money, goods or services are owed by the debtor


A cash compensation ordered by a court to offset losses or suffering caused by another’s fault or negligence


An amount of money due and payable, from one person to another


A person who owes money, goods or services to another, the latter being referred to as the creditor


Willful or reckless misrepresentation or concealment of material facts with an intent to mislead

Deceptive Trade Practice

An intentional act or omission in the course of trade or commerce that has the tendency or capacity to mislead or create the likelihood of deception


A written and signed document which sets out the things that have to be done or recognitions of the parties towards a certain object


A side-contract which contains a condition which, if realized, could defeat the main contract


A firm yet irrational belief and which may affect an individual's capacity to contract


A renunciation or refusal of rights or liability which might otherwise fall upon the person


Where a person is prevented from acting (or not acting) according to their free will, by threats or force of another, it is said to be 'under duress'


The buying and selling of goods and services on the internet

Ejusdem or Eiusdem Generis

Of the same kind or nature

Emptio or Emtio

Latin for 'purchase' or referring to the contract in which something is bought


A branch of English law which developed hundreds of years ago when litigants would go to the King and complain of harsh or inflexible rules of common law which prevented "justice" from prevailing


When the performance of something is outstanding and a third party holds onto money or a written document (such as shares or a deed) until a certain condition is met between the two contracting parties.

Exceptio Non Adimpleti Contractus

Exception of a non-performed contract

Expressio Unius Est Exclusio Alterius

The expression of one thing is the exclusion of the other

Falsa Demonstratio Non Nacet

A wrong description of an item in a legal document (such as a will) will not necessarily void the gift if it can be determined from other facts

First In, First Out Rule

Each withdrawal in an account, made without particulars, is presumed to be a return of all or part of the oldest deposit


Acronym for 'free on board'; a contract whereby the seller of goods agrees to absorb the costs of delivering the goods to the purchaser's transporter of choice

Forward Contract

An agreement to buy or sell a specified thing at a fixed price at some future date


Deceitful or deceptive conduct designed to manipulate another person to give something of value

Freedom of Contract

That men and women have the liberty of contracting as they see fit with the expectation that those contracts will be judicially enforced if necessary, subject only to public policy


The inability to complete a contract because the object of it has been lost or fundamentally changed


A transfer of property with nothing given in return

Grand-Father Clause

A provisions in law or a contract which exempts persons already engaging in the activity which the law or contract prohibits, from adverse results from the subsequent law or contract.

Guarantee or Guaranty

A back-up debtor who steps in if the primary debtor defaults


A person who pledges payment or performance of a contract of another, but separately, as part of an independently contract with the obligee of the original contract

Rule in

A rule of contract law which limits the defendant of a breach of contract case to damages which can reasonably be anticipated to flow from the breach


An individual who lacks the ability to meet essential requirements for physical health, safety, or self-care


An individual who has a significant risk of personal harm based upon an inability to adequately provide for nutrition, health, housing, or physical safety


Contract with a third-party to perform another's obligations if called upon to do so by the third-party, whether the other has defaulted or not

In nominate Terms

An implied term of a contract which is neither classed as a condition or a warranty but somewhere in between; an intermediary or in nominate term


Disorder which impairs the human mind and prevents distinguishing between actions that are right or wrong

Inter Parties

Between, among parties

In Terrorem

In terror, fright, threat or warning

Inter Se

As between or amongst themselves

Intuitu Personae

Because of the person


To take effect, to result; to come into operation

Invitation to Treat

An invitation to another person to make an offer to contract

Joint and Several Liability

Liability of more than one person for which each person is liable to pay back the entire amount of a debt or damages.


A legal doctrine whereby those who take too long to assert a legal right, lose their entitlement to a right or compensation


French: leave alone

A theory of contract law that persons ought to have freedom of contract with minimal state or judicial interference

Lex Causae

Law of the cause


A legal obligation, either due now or at some time in the future

Liquidated Damages

Pre-determined damages


An individual who, though once of sound mind, can no longer manage his person or his affairs

Mailbox Rule

A contract law exception that makes a mailed acceptance of an offer valid as of posting

Mala Fides

Bad faith

Meeting of the Minds

The fact of contracting parties arresting their thoughts on a common set of fundamental terms

Memorandum of Understanding (MOU)

A document which generally is not intended to be legally binding but, if meeting the other criteria, can be, in law, a contract


The absorption of one corporation by another


A false and material statement which induces a party to enter into a contract


A fundamental error going to the root of a purported contract


Abbreviation of Memorandum of Understanding

A document intended to become a contract but which, if meeting other criteria, can be recognized, in law, as a contract


To render a thing imperfect by cutting off or destroying a part

Necessaries of Life

A product or service sold or provided to an individual not legally competent, which are useful to his or her comfort or convenience taking into account the age and condition of the individual

Non Compos Mentis

Not of sound mind

Non Est Factum

Latin for not his deed and a special defense in contract law to allow a person to avoid having to respect a contract that she or he signed because of certain reasons such as a mistake as to the kind of contract

Noscitur a sociis

That the meaning of a word may be known from accompanying words.


Substitute a new debt for an old debt, canceling the old debt.

Nudum Pactum

An empty pact; a contract for which there is no consideration


A legal requirement established by law, contract or as a result of unlawful harm caused to the person or property of another


The person who is to receive the benefit of someone else's obligation


A person who is contractually or legally, committed or obliged, to providing something to another person (the obligee)


A explicit proposal to contract which, if accepted, completes the contract and binds both the person that made the offer and the person accepting the offer to the terms of the contract

Open-Ended Agreement

A contract silent as to an essential term left either to the discretion of one of the contracting parties, or in making the duration of the contract indefinite

Pacta Sunt Servanda

Agreements must be kept

Pari Delicto

Of equal fault

Parol Evidence Rule

Verbal evidence is inadmissible to vary or contradict the terms of a written agreement

Performance Bond

A contract wherein a third-party, in exchange for a fee, secures another's fulfillment of a contract or performance of a duty

Personal Services Contract

A contract in which the skills or talents of a party are material


Civil law: an offer which has not been accepted

Postal Rule

A rule of contract law that makes an exception to the general rule that an acceptance is only created when communicated directly to the offeror


Potestative Condition

A condition made in a contract the fulfillment of which is entirely in the control of one of the parties to the contract

Private Law

Law which regulates the relationships between individuals

Privity of Contract

A doctrine of contract law that prevents any person from seeking the enforcement of a contract, or suing on its terms, unless they are a party to that contract


A person whom is to be the beneficiary of a promise, an obligation or a contract


The person who has become obliged through a promise (usually expressed in a contract) towards another

Promissory Estoppel

A promise made to another party to a contract that the contract will not be enforced in whole or in part and which, once acted upon, prevents subsequent proceedings to enforce the contract as against the person who relied on the promise


A comprehensive collection of legal rights over a thing


International agreements of a less formal nature than a treaty and which amends, supplements or clarifies a treaty

Public Policy

Certain acts or contracts are said to be against public policy if they tend to promote breach of the law, of the policy behind a law or tend to harm the state or its citizens

Quantum Meruit

Latin: as much as is deserved


A contract implied and imposed by law resulting from certain actions of a person

Quid Pro Quo

Something for something


The act by a principal, after the agent has acted, confirming that what the agent may have done without authority, is binding on the principal


A rebate of a debt or claim because of a right of the debtor arising out of the same transaction


Remedial judicial action to right a wrong or to prevent an infringement upon a legal right


To abrogate or cancel a contract putting the parties in the same position they would have been in had there been no contract

Restitutio In Integrum

Restitution to the original position

Restrictive Covenant

A contract in which a party agrees to be restricted in some regards as to future conduct.


The exchange of goods or services for consideration

Satisfaction Guaranteed

A term in a sales or services contract in which the seller defers to the buyer the sole and unilateral discretion as to whether or not the goods or services tendered are acceptable. In the event the price is not paid, no cause of action exists unless the buyer acting in good faith is satisfied, no matter how good the goods or services are in terms of quality.

Scott v Avery Clause

A contract between two parties that they will submit any dispute between them to arbitration before taking any court action


A waxed impression proving authenticity of a document


The taking of someones property, voluntarily (by deposit) or involuntarily (by seizure), by court officers or into the possession of a third party, awaiting the outcome of a trial in which ownership of that property is at issue


An agreement or the document which articulates the agreement, which sets or resolves rights


Medieval English law term for legal transactions involving a Jewish person

Statute of Frauds

A statute that set a minimum standard for enforceable contracts, usually requiring at a minimum something in writing or the actual exchange of reciprocal obligations, at least in part


The written laws approved by legislatures, parliaments or elected or appointed houses of assembly


The substitution of one person to the rights of another


The person who has pledged him or herself to pay back money or perform a certain action if the principal to a contract fails, as collateral, and as part of the original contract

Synallagmatic Contract

A civil law term for a reciprocal or bilateral contract: one in which both parties provide consideration

Third Party

A person who is not privy to a contract or a party in a lawsuit

Time-Bar Clause

A clause in a contract which sets a strict deadline within which either party may bring a dispute to either a court or to arbitration

Time of the Essence

A contractual term requiring performance within a specified time


The body of the law which allows an injured person to obtain compensation from the person who caused the injury


A formal agreement between two states signed by official representatives of each state


An old English and common law legal proceeding against a person who had found someone else’s property and has converted that property to their own purposes

Uberrimae Fidei

Of the utmost good faith


A bargain or contract which is clearly unfair, exorbitant, harsh, contrary to common sense or good conscience

Under Protest

A qualification made to a legal action taken by a person that the action is contrary to the intent or desire of the person making the protest

Undue Influence

The unconscientious use by one person of his/her power over another in order to induce the other to compromise a property right

Verba Fortius Accipiuntur Contra Proferentem

A contract is interpreted against the person who wrote it

Vinculum Juris

A legal bound


A legal entitlement, such as a contract, that is extinguishable at the option of a party

Void or Void Ab Initio

Not legally binding

A document that is void is useless and worthless; as if it did not exist

Wager of Law

An ancient English law defence to a claim of contractual debt


An intentional relinquishment or abandonment of a known right or privilege


A guarantee given on the performance of a product or the doing of a certain thing

With Prejudice

A statement or order that is conclusive between the parties as to the dispute between them

Yellow Dog Contract

A name given in American labor law to contract of employment by which the employee promises not to join a union or agrees to forfeit employment if he/she joins a union during the period of employment




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