contract law

Definition

A benefit conferred or a detriment incurred by a party in exchange for another's promise. Valuable consideration may be non-monetary as long as it is of some value to one or both parties. Also called good and valuable consideration and legal consideration.

Illustrative caselaw

See, e.g. Digital Equipment Corp. v. Desktop Direct, Inc., 511 U.S. 863 (1994).

See also

• Consideration

• Contract

Definition

An obligation imposed by law to prevent unjust enrichment.  Also called a contract implied in law or a constructive contract, a quasi contract may be presumed by a court in the absence of a true contract, but not where a contract—either express or implied in fact—covering the same subject matter already exists.

An attachment or exhibit to a document, such as a contract.  For example, a contract to manufacture widgets may have an adendum listing the specifications for said widgets.  As this modifies the original document, it should be signed or executed with the same formalities.

The ability of parties to bargain and create the terms of their agreement as they desire without outside interference from government.

A third party beneficiary where the creation of such a relationship is not intended, where the donee beneficiary receives a gift of performance from one of the contracting parties, and there is an exchange of consideration between the contracting parties in order for the donee beneficiary to receive the gift. Contrast with intended beneficiary.

A third party beneficiary where the creation of such a relationship was intended, in that two contracting parties intended to benefit the third party beneficiary, and consideration is provided by one of the parties to the contract to insure the other party performs and in some way that benefits the intended beneficiary. Contrast with donee beneficiary.

In contract law, a defense used by one party to argue that a contract is invalid. In order to use the defense of mutual material mistake to argue that formation of the contract was improper, a party must argue that: (1) there was a mistake; (2) that the mistake must be material, meaning, that it must concern substantive characteristics of the subject of the contract; and (3) the mistake was mutual, meaning both parties had the same mistaken belief.

A principle under contract law that states that if a party to a contract is under a pre-existing duty to perform, then no consideration is given for any modification of the contract and the modification is therefore voidable.

Under section 2 of the Uniform Commercial Code, course of performance is often used to aid in interpreting contracts, particularly with gap filling. Course of performance is often the best evidence of what parties intended since it calls for looking to how both parties have performed up to the present time under the particular contract at issue.