Glossary

Arbitration. The parties may provide in the contract itself, or in a self-standing separate agreement, that any disputes relating to their contract will be resolved by a neutral third party (an arbitrator). By agreeing to arbitrate disputes, the parties forego the right to litigate, and they bind themselves to the arbitrator’s disposition.

Assignment and delegation. Assignment is the transfer of a contractual right, and delegation is the transfer of a contractual duty. Sometimes “assignment” is used more loosely to mean the transfer of a contract in its entirety, which involves the transfer of both rights and duties under the contract.

Assumpsit. (Latin: “He undertook.”) One of the common law forms of action under which suit was brought for damages for the breach of a contractual promise. Assumpsit, an extension of the tort action of trespass, was originally only available where the defendant performed improperly, causing harm to the plaintiff (misfeasance). It was later extended to cover situations in which the defendant broke his promise by failing to perform at all (nonfeasance). As assumpsit developed, it became the most flexible, efficient and comprehensive form of action for contract. It eventually overtook the other contractual writs of Covenant and Debt, emerging as the forebear of modern contract law.

Assurance of performance. See Prospective nonperformance.

Avoidable contract and avoidance. An avoidable contract is one that has some defect (typically resulting from improper bargaining, illegality, or incapacity) that allows one of the parties to rescind or disaffirm the contract. If that party does not elect to rescind, the contract is enforceable. An avoidable contract must be distinguished from a void contract, which is a nullity and cannot be enforced by either party.

Balance of the equities. See Equitable balancing.

Bargain theory. See Consideration.

Battle of the forms. A nickname given to the situation in which the buyer and seller of goods attempt to form a contract by exchanging writings with mismatching terms. Often these terms are preprinted standard provisions, designed to protect the interests of the sender.

Bilateral contract. All contracts have two or more parties, so every contract is at least bilateral (or, if not, multilateral) in the lay sense. However, in contract law, the word “bilateral” is a term of art, meaning that at the instant of contract formation, there are promises outstanding by both parties. This is in contrast to a unilateral contract, under which the offeree’s act of acceptance is also her act of performance, so that at the instant of formation, the offeree has already performed, and only the offeror’s promise is outstanding. Most contractual relationships involve an exchange of promises, so most contracts are bilateral. Unilateral contracts are less common. See also Unilateral contract.