Cost-Plus Contract – A way of sharing risk

Sham Consideration – Stated consideration did not really occur

Illusory – An illusion; stated consideration does not really obligate the party

Accord and Satisfaction – Agreement to accept and give payment or performance, different from that originally required by contract

Subject Standard – Imposed or influenced by individual position or bias

Incentive consideration – Consideration changes to motivate faster or better performance

Waiver – Intentional relinquishment of right, claim, or privilege

Formal contracts – Contracts under seal

Output Contract – Contract under which buyer agrees to purchase all that seller produces; court may impose requirement of reasonable performance

Liquidated debt – Debt that is not in dispute

Needs Contract – Contract under which buyer agrees to purchase all of buyer’s needs from seller (see exclusive dealing); court may impose requirement of reasonable performance

Unliquidated debt – Debt, the amount of which is in dispute; settlement of an unliquidated debt can constitute consideration

Exclusive Dealing – Contract under which parties agree to deal only with each other with respect to particular needs

Bargained for – Each party is induced to enter contract by consideration offered by other party

Objective Standard – Used to determine whether parties had “meeting of the minds,” looks to what a reasonable person would believe, based on circumstances

Nominal – Minimal

Condition Subsequent – Event that may “undo” an executed contract

Rescind – To terminate a contract before all of its terms are completely performed

Condition Precedent – Event that must occur before the contemplated transaction is completed

Allowances – Contract total price includes “estimates” for components; if actual price of components differs from allowances, total contract price changes

Consideration – Something promised, given, refrained from, or done that has the effect of making an agreement a legally enforceable contract

Recitals – Short statements that provide background or explain the reasons for the contract; not technically part of a contract