Chapter 2

Acceptance – A clear and unequivocal statement of a desire to be bound by the terms of the offer, which is communicated to the offeror.

Instantaneous communication – A form of communication, such as fax or telephone, which is subject to the receipt rule (i.e., acceptance must be communicated to be effective).

Offer – An offer is a statement which is sufficiently certain and which the offeror intended, if accepted by the offeree, would constitute a binding agreement. 

Offeror – The person who makes the offer.

Offeree – The person to whom the offer is made.

Postal rule – An exception to the receipt rule whereby acceptance is effective on posting rather than on communication (receipt).

Revocation – The withdrawal of something. Revocation of an offer must be communicated before acceptance for the revocation to be effective.

Chapter 3

Capacity – A requirement that is needed in order to contract. Examples include being of sound mind, sober and aged 18 or over.

Consideration – Something of value in the eyes of the law which is given in exchange for a promise and makes that promise enforceable.

Duress – The coercion of a contracting party’s consent which renders the contract voidable. There can be physical duress where the coercion must be unlawful, or economic duress where it must be illegitimate pressure.

Forbearance – Where a person who has a legal right to perform an act refrains from doing so.

Implied assumpsit – An exception to the rule that past consideration will not amount to good consideration.

Intention to create legal relations – A requirement that parties to a contract must intend to be legally bound by their agreement.

Promisee – The person to whom the promise is made and who will attempt to enforce the promise.

Promisor – The person who makes the promise to the promisee.

Promissory estoppel – An equitable doctrine by which a promise to discharge a debt may be enforced.

Voidable – Where a contract is voidable, it is deemed to have been created, but the innocent party may choose to rescind the contract.

Chapter 4

Collateral contract – A secondary contract which exists alongside the primary contract. Collateral contracts are an exception to the parol evidence rule.

Condition – A condition is a term of a contract which is important to the contract. Where a condition is breached the innocent party can choose to repudiate the contract and/or claim damages.

Damages – This is the most common remedy in contract law and is designed to compensate the claimant.

Exclusion clause – Allows a party to exclude their liability in the event of a breach of contract.

Express terms – These are terms that the parties expressly agreed.

Implied terms – These are terms that have been implied into the contract by custom, the courts or statute.

Innominate terms – This is a term that is not classified in the contract as either a condition or warranty. Where such a term is breached, the courts will look at the seriousness of the breach to determine whether to award the remedy for breach of condition or breach of warranty.

Mere puff – A mere advertising puff (or ‘sales talk’) is an ambiguous statement which is not actionable for misrepresentation.

Misrepresentation – This cause of action is available where a false representation (statement of fact) induced the innocent party to enter into the contract. Misrepresentation can be fraudulent, negligent or innocent.

Parol evidence rule – The restriction of extrinsic evidence where a contract is in writing.

Repudiation – The parties’ obligations under the contract are brought to an end, although the innocent party can still claim damages.

Rescission – A remedy available where a contract is deemed to be voidable. The innocent party may choose to rescind (terminate) the contract or to affirm it. The parties’ obligations under the contract will be set aside and they will be returned to their original positions.

Warranty – A warranty is a term of a contract which is less important than a condition. Where a warranty is breached, the innocent party can only claim damages.

Chapter 5

Fraudulent misrepresentation – A false representation has been made (1) knowingly, or (2) without belief in its truth, or (3) recklessly, careless whether it be true or false. This is also the test for fraud in the tort of deceit.

Half-truth – Half-truths are an exception to the general rule that silence is not actionable. A half-truth is a statement which may be true in some respects and on a literal interpretation, but it is misleading in that it hides an untruth.

Inducement – The false statement of fact or law must induce the other party into entering into the contract. The statement need not be the sole inducement, but it must be an inducement.

Innocent misrepresentation – This is where the representor makes a false representation which is neither fraudulent nor negligent.

Negligent misrepresentation – There are two types of action for negligent misrepresentation: one under the common law (also known as the tort of negligent misstatement), and the other under s 2(1), Misrepresentation Act 1967.

Void – Where a contract is void, it is deemed not to have been created in the first place.

Chapter 6

Common mistake – Occurs where the parties have reached an agreement, but they have made a fundamental mistake which goes to the very root of the contract, so that the problem makes performance of the contract impossible or very different to what was intended.

Communication mistake – Also known as agreement mistake and is based upon the principles of offer and acceptance. The mistake is made when forming the agreement, so the parties are deemed never to have reached an agreement in the first place.

Mutual mistake – Occurs where, when forming the agreement, the contracting parties are talking at cross-purposes.

Unilateral mistake – Occurs where just one of the parties makes a mistake and the other party to the contract takes advantage of that mistake.

Chapter 7

Actual undue influence – Arises where undue influence is actually exerted on one party such that the free will of that party in deciding to enter into the contract is compromised.

Illegality – A court will refuse to enforce a contract where it is illegal under statute or the common law.

Illegitimate pressure – This is required for economic duress. It is more than the commercial pressures expected from the rough and tumble of the business negotiations.

Presumed undue influence – Arises where undue influence is presumed to have been exerted because of the relationship between the parties. There must be a special relationship of trust and confidence between the parties which has been exploited by one party.

Undue influence – An equitable doctrine which renders a contract voidable where one party unfairly exploits their relationship with the other contracting party in order to gain their consent.

Chapter 8

Agency – Where a person acts on another’s behalf to enter into contracts with third parties.

Privity – Only a person who is privy to a contract can enforce it.

Undisclosed principal – When the third party does not know they are contracting with the principal.

Chapter 9

Affirmation – Where the innocent party affirms the contract after there has been a breach which would allow him to repudiate the contract.

Anticipatory breach – Where the defendant, realising that they will be unable or are unwilling to perform their contractual obligations, contacts the innocent party in advance on the date required for performance and informs them that they be in breach of contract.

Divisible contracts – A contract that can be divided into parts, and that after each part has been completed, the party who has performed is entitled to payment.

Entire obligations rule – The entire performance of a contractual obligation must be completed before the party performing is entitled to payment.

Force majeure – A clause in a contract which provides for the discharge of the contract or for delay to the performance of contractual obligations upon the occurrence of an event.

Frustration – A contract is frustrated where an event that occurs after contracting renders performance of the obligations under the contract impossible, illegal or radically different.

Repudiatory breach – A breach that entitles the innocent party to discharge the contract.

Substantial performance – An exception to the entire obligations rule, which allows a party to recover payment if it has performed nearly all of its contractual obligation.

Chapter 10

Cost of cure – The cost of putting the defect right.

Expectation interest – Seeking to put the claimant in the position that they would have been in had the contract been performed.

Liquidated damages clause – A clause which specifies a sum of money to be paid to the innocent in the event of breach of contract. These clauses are valid so long as the sum payable is a reasonable pre-estimate of the innocent party’s loss at the time of contracting.

Mitigation of loss – A claimant must take reasonable steps to minimise his losses, which are caused by the defendant's breach of contract.

Penalty clause – A clause which specifies a sum of money to be paid to the innocent in the event of breach of contract, where the sum is not a genuine pre-estimate of the innocent party’s loss. These clauses are not valid.

Quantum meruit – A restitutionary remedy by which the court awards compensation to a party who has partially performed under the contract in order to prevent unjust enrichment of the other party.

Reliance interest – Seeking to put the claimant back in the position that they were in before entering into the contract.

Remoteness – A claimant can only recover damages that are not too remote (i.e., that arose naturally from the breach of contract or were reasonably within the contemplation of both parties at the time of contracting).

Restitutionary remedies – A remedy available at the courts’ discretion to prevent unjust enrichment by one party.

Specific performance – An equitable order by the court that one party must perform its obligations under the contract.