Key Terms
GOOD EXAMPLE
"Residential Painting Services Agreement Between [Client Name] and [Contractor Name]" BAD EXAMPLE: "Agreement"
If a term is not defined
Legal terms get their legal meaning; ordinary words get their common meaning.
ACTIVE (good)
"Buyer will pay Seller ten dollars." PASSIVE (bad): "Seller shall be paid ten dollars." — Who pays? When?
EXAMPLE
A hurricane destroys goods mid-shipment in an international sale. Does the buyer or seller bear the loss?
TESTABLE DETAIL - Acceleration Clause
Makes all future payments due immediately upon breach. Common in installment payment contracts (loans, vehicle purchases
TESTABLE DETAIL - Liquidated Damages Clause
Parties agree in advance to the dollar amount of damages for a material breach. Saves litigation costs.
REPRESENTATIONS
Statements of fact made to induce someone to enter a contract.
WARRANTIES
Express promises that guarantee something in furtherance of the contract.
Choice of law
Determines which state's laws govern interpretation of the contract.
Choice of forum
Determines which state handles litigation.
Effect
Anything said or agreed to before the contract was signed that is NOT in the contract cannot be used to add to or change
Purpose
Determines which party absorbs the loss when an unforeseeable event destroys the subject matter of the contract.
Patent ambiguity
Contradiction visible within the contract text itself.
Latent ambiguity
Uncertainty that only surfaces during performance, not visible on the face of the contract.
Covenant
Formal promise to perform in a contract.