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Accord and Satisfaction

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The settlement of a contract dispute

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American Rule

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(New York Rule) This rule provides that the first assignment in time prevails, regardless of notice. Most states follow this rule.

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Anti-assignment Clause

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A clause that prohibits the assignment of rights under the contract.

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Anti-dlegation Clause

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A clause that prohibits the delegation of duties under the contract.

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Approval Clause

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Such clauses require that the obligor approve any assignment of a contract.

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Assignee

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A party to whom a right has been transferred.

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Assignment and Delegation

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Occurs when there is a transfer of both rights and duties under a contract.

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Assignment of Future Right

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A person cannot assign a currently nonexistent right that he or she expects to have in the future.

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Assignment of Rights

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The transfer of contractual rights is called the assignment of rights.

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Assignor

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An obligee who transfers a right.

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Assumption of Duties

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A situation in which a delegation of duties contains the term assumption, I assume the duties, or other similar language. In such a case, the delegatee is legally liable to the obligee for nonperformance.

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Commercial Impracticability

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Nonperformance that is excused if an extreme or unexpected development or expense makes it impractical for the promisor to perform.

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Concurrent Condition

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A condition that exists when the parties to a contract must render performance simultaneously; each party's absolute duty to perform is conditioned on the other party's absolute duty to perform.

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Condition

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A qualification of a promise that becomes a covenant of it is met. There are three types of conditions, conditions precedent, conditions subsequent, and concurrent conditions.

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Conditional Promise

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A conditional promise is not as definite as a covenant.

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Condition precedent

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A condition that requires the occurrence of an event before a party is obligated to perform a duty under a contract.

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Condition Subsequent

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A condition whose occurrence or nonoccurrence of a specific event automatically excuses the performance of an existing contractual duty to perform.

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Covenant

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an unconditional promise to perform. Nonperformance of a covenant is a breach of the contract that gives the other party the right to sue.

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Creditor Beneficiary

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An original creditor who becomes a beneficiary under the debtor's new contract with another party.

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Creditor Beneficiary Contract

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A contract that arises in the following situation; 1) a debtor borrows money, 2) the debtor signs an agreement to pay back the money plus interest, 3) the debtor sells the item to a third party before the loan is paid off, 4) the third party promises the debtor that he or she will pay the remainder of the loan to the creditor.

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Delegate

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give an assignment to (a person) to a post, or assign a task to (a person)

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Delegatee

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A party whom a duty has been transferred.

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Delegator

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An obligor who has transferred his or her duty.

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Delegation of a Duty

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A transfer of contractual duties by an obligor to another party for performance.

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Discharge by agreement

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A mutual agreement to discharge the contractual duties. Parties can do so by mutual rescission, substituted contract, novation and accord and satisfaction.

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Discharge in Bankruptcy

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order of the bankruptcy court relieving the debtor from obligation to pay the unpaid balance of most claims

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Donee Beneficiary

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A third party on whom a benefit is to be conferred.

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Donee Beneficiary Contract

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A contract entered into with the intent to confer a benefit or gift on an intended third party.

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English Rule

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English Rule provides that the first assignee to give notice to the obligor (the person who owes the performance, money, duty, or other thing of value) prevails.

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Force Majeure Clause

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a clause in a contract in which the parties specify certain events that will excuse nonperformance

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Implied-in-fact-condition

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A condition that can be implied from the circumstances surrounding a contract and the parties' conduct.

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Impossibility of Performance

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A doctrine under which a party to a contract is relieved of his or her duty to perform when performance becomes objectively impossible or totally impracticable (through no fault of either party).

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Incidental beneficiary

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A party who is unintentionally benefited by other people's contracts.

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Intended third-party beneficiary

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A third party who is not in privity of contract but who has rights under the contract and can enforce the contract against the promisor.

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Mutual rescission

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requires parties to enter into a second agreement that expressly terminates the first one.

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Notice of Assignment

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When an Assignor makes an assignment of a right under a contract, the assignee is under a duty to notify the obligor that, 1) the assignment has been made and, 2) performance must be rendered to the assignee.

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Novation Agreement

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An agreement that substitutes a new party for one of the original contracting parties and relieves the exiting party of the liability on the contract, also known as a novation.

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Obligee

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A party who is owed a right under a contract is called the obligee

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Obligor

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A party who owes a duty of performance is called the obligor.

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Persosnal satisfaction Test

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A subjective test that applies to contracts involving personal taste and comfort.

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Personal service contract

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Contracts for the provision of personal services are generally not assignable. The parties may agree that a personal service contract can be assigned.

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Possession of tangible token rule

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A rule that provides that under either the American or English rule, if the assignor makes successive assignments of a contract right that is represented by a tangible token, such as a stock certificate.

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Privity of Contract

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The state of two specified parties being in a contract.

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Promisee

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The contracting party who directs that the benefit be conferred on another.

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Promisor

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The contracting party who agrees to confer performance for the benefit of the third person.

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Reasonable person test

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an objective test that applies to commercial contracts and contracts involving mechanical fitness

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Statute of Limitation

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A time limit established for filing lawsuits: may vary from state to state.

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Subsequent Assignee

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The assignee can assign the right to yet another person called a subsequent assignee or subassignee.

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Substituted contract

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a new contract accepted by both parties in satisfaction of the parties' duties under the original contract.

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Third-party beneficiary

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"Time is of the essence"

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