ICAB CL Business Law key terms

A clear statement of terms by one party showing willingness to be bound as soon as the other party accepts, made with the intention that it becomes binding on acceptance.

Unqualified agreement to every term of an offer, communicated to the offeror by the offeree or an authorised agent, creating a binding contract at that moment.

A preliminary communication inviting others to make offers or enter negotiations, which cannot itself be accepted so as to form a contract, such as goods displayed in a shop window.

A response that varies the terms of the original offer, operating as a rejection that destroys the offer so it cannot later be accepted by the original offeree.

Something of value given by each party in exchange for the other's promise, such as money, goods, services or a forbearance, which must be sufficient but need not be adequate.

The requirement that parties objectively intend their agreement to be legally enforceable, presumed in commercial dealings but presumed absent in domestic and social arrangements.

The legal ability of a person to enter a binding contract, which may be limited by age, mental disorder, intoxication or the status of a company or unincorporated body.

A person below the age of legal majority, whose contracts are generally voidable or unenforceable against them except for necessities and beneficial contracts of service.

An agreement that has no legal effect from the outset because it lacks an essential element or is prohibited by law, so neither party can enforce it.

A valid contract that one party may choose to rescind or affirm because of duress, undue influence, misrepresentation or incapacity, remaining effective until avoided.

A false statement of existing fact or law made by one party that induces the other to enter the contract, giving remedies such as damages or rescission depending on fault.

A false representation made knowingly, without belief in its truth, or recklessly as to its truth, entitling the innocent party to damages in deceit and rescission.

Unfair pressure arising from a relationship of trust and confidence that prevents a party exercising free judgment, rendering the resulting contract voidable at their option.

Illegitimate pressure, such as threats of violence, unlawful detention or economic coercion, that compels a party to enter a contract, making it voidable.

A term fundamental to the contract, breach of which entitles the innocent party to terminate performance and claim damages, often described as going to the root of the contract.

A lesser contractual term collateral to the main purpose of the contract, breach of which gives a right to damages only and does not permit termination.

A contractual term classified neither as a condition nor a warranty, whose breach permits termination only if the consequences substantially deprive the innocent party of the whole benefit.

A term purporting to exclude or restrict liability for breach of contract or negligence, enforceable only if properly incorporated, clear, and not limited by statute.

The interpretive rule that ambiguous words in a contract, especially exemption clauses, are construed against the party who drafted them and relies on them.

Automatic discharge of a contract where an unforeseen event outside the parties' control makes performance impossible, illegal or radically different from what was agreed.

A contractual clause listing extraordinary events, such as natural disasters or war, that excuse or suspend performance and set out consequences for the affected party.

A breach so serious that it amounts to refusal to perform the contract or deprives the innocent party of substantially the whole benefit, justifying termination and damages.

A clear indication before the performance date that a party will not perform, allowing the innocent party to terminate immediately and sue or to await performance.

The rule limiting recoverable losses to those arising naturally from the breach or within the reasonable contemplation of the parties when contracting, excluding unforeseeable consequential loss.

The duty of a claimant to take reasonable steps to reduce losses flowing from a breach, failing which damages are reduced by the loss that could have been avoided.

An equitable remedy ordering a party to perform its contractual promise, granted at the court's discretion where damages are inadequate and continuous supervision is not required.

An equitable order restraining a party from doing something, commonly used to enforce negative covenants or to prevent threatened breach of contract.

The doctrine that only parties to a contract may sue on it or be sued under it, subject to statutory exceptions allowing third parties to enforce conferred benefits.

A relationship in which one person, the agent, is authorised to act on behalf of another, the principal, creating legal relations between the principal and third parties.

Authority that appears to exist because the principal's words or conduct lead a third party reasonably to believe an agent is authorised, binding the principal despite lack of actual authority.

Retrospective adoption by a principal of an act done without authority, placing the principal and third party in the position they would have occupied had authority existed.

A relationship between persons carrying on a business in common with a view of profit, governed by partnership legislation and often by a written partnership agreement.

The principle that shareholders or members of an incorporated company are liable for its debts only up to the amount unpaid on their shares or their agreed guarantee.

The attribute of an incorporated company by which it is a legal person distinct from its members, owning property and contracting in its own name.

A court's disregard of a company's separate personality, typically in cases of fraud, sham or statutory provision, to impose liability on controlling members.

A document representing a right to payment that can be transferred by delivery or endorsement, giving the holder a right to sue in their own name.

A person who takes a negotiable instrument in good faith, for value and without notice of defects in the transferor's title, obtaining an indefeasible right to payment.

The process by which courts determine the meaning of legislation, using literal, golden, mischief and purposive approaches together with established aids and presumptions.

The legal reasoning essential to a court's decision, which binds lower courts in later cases involving materially similar facts under the doctrine of precedent.

A remark by a judge on law or facts not necessary to the decision, which is persuasive rather than binding in later cases.