Contract Interpretation Flashcards
Define
A statement made to induce someone to enter into a contract
Representation
Define
A statement of fact, not opinion, made by one party, of sufficient weight to induce the other party to enter into a contract
Material representation
Define
A provision of a contract; can be conditions or warranties
Term
Define
An essential term of a contract, the breach of which denies the innocent party the benefit of the contract or defeats the purpose of the contract
Condition
Define
A minor term of a contract, the breach of which does not defeat the contract’s purpose
Warranty
Define
If a contract is in writing and is clear, no other written or oral evidence is admissible to contradict, vary, or interpret the agreement
Parol Evidence Rule
What is the Golden Rule?
Using plain language with ordinary meaning, as long as it does not lead to an absurdity
What are some exceptions to the Parol Evidence Rule?
- Ambiguous contract language
- essential collateral agreement
- condition precedent existing outside the contract
- remedy of rectification
Where a term agreed to in negotiations is inadvertently omitted from the written document, a party may ask to have that term included by way of rectification or correction of the document, provided that…
- a mistake in recording the intention of the parties,
- there is evidence of a common intention, or
- there is clear and cogent evidence of the mistake
Define
a remedy whereby a court orders a change in a written document to reflect what it ought to have said in the first place
Rectification
Define
a contract clause that limits the parties’ liability
exclusion/exemption clause
notice must be given prior to entering into contract
Define
contra proferentem rule
a rule used is the interpretation of a contract when dealing with ambiguous terms according to which a court will choose the interpretation favoring the party who did not draft the contract
The following are the most common forms of what:
* low compensation
* prohibit lawsuit
* ore-assessed damages
Penalty clauses
Define
A contract term imposing a penalty for default or breach for a predetermined amount of damages that may be far in excess of the actually damages suffered
Penalty clause
Define
A term in a contract that attempts to reasonably estimate the damages that will be suffered if the contract is breached
Liquidated damges clause
Define
the relationship that exists between the parties to a contract
Privity
What are some exceptions to privity in a contract?
- partnerships
- insurance (ie beneficiaries)
- contracts with restrictions on real property
Define
A requirement that the parties to a contract agree to substitute a new contract for an existing one, thereby terminating the existing contract
Novation
Define
The performance of obligations inder a contract by a third party in circumstances which the original party remains responsible for proper performance
Vicarious performance
Define
An assignment that does not fulfill the statutory critera for a legal assignment but is enforced by the courts in the interest of equitability, justice, and fairness
Equitable assignment
Define
A transfer by one party of their rights under a contract to a third party
Assignment
Define
An intangible right of ownership in a tangible thing that carries the right to take legal action on it - eg debts, insurance policies, negotiable instruments, contract rights, patents, copyrights
Chose/thing in action
Define
An assignment that fulfills the critera set out in the relevent statutes and is enforced by the courts
Statutory assignments
An asignee to a statutory assignment may enforce a contract without involving the assignor if..
- the assignment of rights is absolute and unconditional
- the assignment is in writing and signed by the assignor
- express notice of the assignment, in writing, is given to the party to be charged
