Glossary of terms

An A-Z list of key terms used throughout this book.

• Acceptance: an unqualified assent given in response to an offer, which creates an agreement.
• Actual breach: failure at the time required by the contract.
• Agent: a person employed to act on behalf of, or represent, another person (the principal).
• Agreement – one of the requirements for the creation of a contract, normally consisting of an ‘offer’ and an ‘acceptance’, which may arise expressly or be inferred from conduct, between two or more people.
• Agreement to sell: where the property in the goods is to be transferred at some later date, or when some condition has to be fulfilled, such as payment of the price.
• Anticipatory breach: the threatened failure to perform and can occur expressly or by implication.
• Anton Piller order: an order that is available only where it can be shown that the defendant has incriminating evidence that is necessary to the plaintiff’s case and which may be destroyed before ‘discovery’ can be made.
• Ascertained goods: goods which, in a contract for the sale of unascertained goods, have become identified and agreed on by the parties.
• Assignment: transfer.
• Beneficial contracts of service: contracts that are for the minor’s benefit and are not oppressive, including employment, education, apprenticeship and training contracts.
• Broker: a person who buys and sells things for other people for a commission and are common in the financial world.
• Caveat emptor: is Latin for ‘let the buyer beware’ and means that the buyer is buying the goods at their own risk.
• Chattels: any property other than freehold land; articles of personal property.
• Chose in action: a personal property right to an intangible object such as a debt.
• Civil law system: a complete legal system with its origins in Roman law and the Napoleonic Code.
• Collateral contract: a separate or subsidiary contract to the main contract, which may be verbal or written, and which exists independently of the main contract (that is, it is not a term of the main contract
• Common law: that part of English law developed from the common custom of the country as administered by the common law courts.
• Common mistake: both parties are mistaken as to existence or identity of the subject matter
• Condition – a stipulation going to the root of the contract, allowing the injured party the right to rescind and/or claim damages
• Condition precedent: a precondition that, depending on its analysis, stops a contract from coming into existence until the occurrence of some specified event.
• Condition subsequent: a term of the contract that must be complied with after the contract is made or the other party can terminate for non-fulfillment.
• Consideration: the ‘price’ paid to buy the other person’s promise; it must be in every simple contract.
• Contract – an agreement containing promises made between two or more parties, with the intention of creating certain rights and obligations, which is enforceable in a court of law.
• Contract for the sale of goods: under the Goods Act, a contract whereby the seller transfers, or agrees to transfer, the property in goods.
• Contributory negligence: negligence by the plaintiff that has contributed to their loss, damage or injury.
• Corporation: a legal entity (also known as a legal person) created by the Corporations Act 2001 (Cth); also known as a ‘company’.
• Counter-offer – an offer made in response to an offer which implies rejection and terminates the original offer.
• Customary law: the term used to describe the common law rights and interests of tribal people in land according to their laws, traditions and customs.
• Damages: compensation in monetary form for the loss suffered by the plaintiff, which puts the plaintiff back in the position they would have been in had the breach not occurred.
• Del credere agent: a person as a broker for the principal but who also guarantees payment by a third party to the principal after the transaction is completed and who may become liable for that amount.
• Divisible contract: a contract that is capable of being divided into separate parts.
• Duress: threats of, or use of, force that deprives the innocent party of exercising their free will
• e-contract – a contract created electronically in the course of e-commerce, generally by email or SMS.
• Equity: fairness or natural justice.
• Escrow: an assurance in the form of a deed, money or bond held by a third party on behalf of two transacting parties that the transaction can be completed.
• Estoppel: a legal principle that prevents a person from going back on an action or statement that they made in the past.
• Exclusion clause – a contractual term that attempts to limit or exclude the liability of the person inserting the term into a contract
• Exemplary damages: punitive damages.
• Existing goods: goods owned or possessed by the seller at the time of the contract.
• Expectation damages: (also known as ‘expectation losses’) arise from your expectation of prospective benefits arising out of or created by the contract.
• Factor: a type of trader who takes possession of goods, or the documents of title to the goods, on consignment for a principal for commission and sell them in their own name.
• Force majeure: clause operates to suspend a party’s obligations under a contract when an event occurs that is outside their control, causing them to be incapable of carrying out their obligations under the contract for the period of the event.
• Form – in the sense it is used in contract law, those statutory procedural requirements that need to be satisfied for some contracts to be enforceable
• Formal contract or deed – a contract that has been signed, sealed and delivered, and does not require consideration.
• Frustration: the discharge of a contract rendered impossible to perform because of the operation of external factors beyond the contemplation of the parties.
• Future goods: goods to be manufactured or acquired by the seller after the making of the contract for sale.
• Goods: broadly defined, all ‘chattels personal other than things in action and money’. This generally includes only physical and movable things, ownership of which transfers to the buyer for a money consideration, called the price.
• Gratuitous promise: a promise undertaken voluntarily and lacking consideration, so is not enforceable in court.
• Infant: a person under the age of 18 years; also known as a ‘minor’.
• Injunction: a discretionary remedy in equity restraining a party from doing something.
• Intermediate or innominate terms – contractual terms, the remedy for the breach of which depends on the seriousness of the breach rather than on the classification of the term as a condition or a warranty
• International law: that body of law concerned with regulating conduct between nation states.
• Joint and several liability: where two or more persons agree together, as well as having made separate agreements to repay the loan individually.
• Joint promises: where two or more persons jointly agree to provide consideration jointly and both can be sued, that is, A and B promise to pay C K100.
• Legal tender: currency that may be lawfully tendered in payment of a debt.
• Liquidated damages: an agreed sum based on a genuine pre-estimate of the actual loss that would be suffered by the plaintiff in the event. of a breach of the contract.
• Market overt: an open, public, and legally constituted market regulated by the rules framed by a local government.
• Mercantile agent: also known as a ‘factor’ is a person who has authority to buy and sell goods, or consign them, on behalf of his principal.
• Misrepresentation: a false statement of fact, which may be intentionally or unintentionally made
• Mitigation: the steps taken by the plaintiff to minimize their loss.
• Municipal (or domestic) law: that body of law concerned with regulating the relations or conduct between individuals and organisations within a state’s borders.
• Mutual mistake: where both parties to a contract are mistaken, but about different things
• Necessaries: goods or services that are reasonably necessary to the ‘station in life’ of an infant and their actual requirements (defined in the Goods Act 1951, s 4)
• Negligence: an indirect interference with the person or property of the plaintiff
• Negligent misstatement: a false or inaccurate statement of fact made by a person recklessly or knowingly that there were no reasonable grounds for such a belief
• Nominal damages: compensation awarded where the plaintiff’s rights have been infringed but they have suffered no actual loss
• Non est factum: ‘not my doing’ or ‘not my deed’; where a party under a disability is mistaken about the very nature of a document that they are signing, believing it to be one thing when in fact it is something quite different
• Novation: the substitution of a new contract for an old one; the new contract extinguishes the rights and liabilities that were in effect under the old contract
• Objective test: would the words or conduct of the parties lead a reasonable person to believe, on the balance of probabilities, that legal relations were intended
• Occupier’s liability: as an occupier of premises, whether you own or rent, if you have control over the property, you must take reasonable care to ensure anyone who comes onto your premises is reasonably safe, although what is reasonable will vary according to the circumstances
• Offer – a communication amounting to a promise to do (or not do) something
• Offeree – the one to whom an offer is made
• Offeror – the one who makes the offer
• Ordinary damages: the amount awarded by the court on its assessment of the loss suffered by the plaintiff as a result of the breach
• Organic law: defined in s 12 of the PNG Constitution as laws passed by the National Parliament and which have the status of constitutional laws and are superior to an Act of Parliament
• Parol evidence rule – A rule of evidence which states that additional oral evidence is not considered by the courts to contradict, vary, add to or subtract from its terms when a contract is complete on its face
• Penalty: in contract, a damages clause that is not a genuine pre-estimate of the actual damage or loss suffered by a party as a result of the breach
• Personal property: any property that is not land, buildings or fixtures to land such as cars, boats, furniture
• Plaintiff: the party commencing a civil action in a court of first instance
• Possession of goods: the control or custody of goods
• Presumption: a belief (as the word is used here it is a reference to what the courts assume)
• Principal: a person who gives authority or capacity to another person (the agent) to act on the principal’s behalf and create legal relations with a third party.
• Private law: that body of law concerned with regulating the relationships between individuals within the state—for example, contract law and tort law
• Privity of contract: only those who are a party to the contract are affected by it
• Product liability: as far as manufacturers are concerned, at common law they owe a duty of care to consumers who purchase their goods and that the goods are fit for purpose. There is an overlap here with the Goods Act 1951 and the Independent Consumer and Competition Act 2002 which provide protection for the consumer
• Promisee: the person who is receiving, or the recipient of, the promise
• Promisor – the person undertaking the promise
• Property in goods: ownership of, or title to, goods
• Public law: that body of law concerned with the relationship between the state and the individual—for example, criminal law and constitutional law
• Quantum meruit: an equitable remedy that means as much as a person has earned or as much as that person deserves
• Ratification: the legal confirmation of the adoption of a transaction by a principal of an act of their agent
• Rectification: an equitable remedy to correct an omission in a written contract that both parties had failed to correct by mistake at the time of making the contract
• Rejection – occurs where the party to whom the offer was made (the offeree) tells the party making the offer (the offeror) that they are not accepting the offer, which terminates it
• Reliance damages: (or ‘wasted expenditure damages’) arise from expenditure incurred by you relying on the defendant’s promise and which is wasted because of the defendant’s breach
• Representation: a statement of fact
• Res ipsa loquitor (‘the facts speak for themselves’): a doctrine that provides that the elements of duty, breach and damage can sometimes be inferred from the nature of the accident even though the exact act of negligence cannot be exactly identified
• Rescission: a common law or equitable remedy that entitles the injured party to elect to rescind the contract and restores the injured party to their pre-contractual position
• Restitution: an equitable remedy available for the unjust enrichment of the defendant at the plaintiff’s expense
• Restraint of trade – an agreement in which a party agrees to restrict or restrain their activities in the future to carry on their trade, profession or business with other persons who are not a party to the contract
• Retrospective laws: laws that change what people’s rights were in the past
• Revocation – occurs where the offeror withdraws an offer, which then terminates it
• Romalpa clause: a retention of title clause that is often used in contracts for the sale of goods that title remains with the seller until the buyer meets a predetermined condition such as payment of the purchase price
• Sale of goods: the transfer of ownership (or property) from the seller to the buyer at the time of the contract
• Secret commission: a commission or profit which has not been accounted for by the principal and which is like a bribe and may result in both a criminal and a civil law action
• Separation of powers: the vesting of the legislative, executive and judicial arms of government into three separate branches with none of the three branches able to exercise total power
• Several liability: where two or more persons agree to provide consideration but each promises separately, that is, A promises to pay K50 to C and B promises to pay K50 to C
• simple contract – a contract that is made orally or in writing (or both) involving an agreement between parties with the intention of creating legally enforceable obligations and which requires consideration to be valid
• Social agreements: agreements made between friends or acquaintances
• Specific goods: goods identified and agreed on at the time of the contract of sale
• Specific performance: an equitable remedy compelling a person to carry out their contractual obligations where damages would be an inadequate remedy for breach of the agreement. It is not obtainable for contracts of personal service
• Standard form contracts – contracts that incorporate terms of a standard nature, often in fairly wide terms, applicable to all persons making a particular type of contract
• Statute law: laws passed by Parliament
• Strict liability: liability regardless of fault where the defendant is held liable even though they were not at fault
• Termination – bringing the contract to an end before it is fully performed
• Tort: a civil wrong other than a claim for a breach of contract
• Unascertained goods: goods that are defined by description only. They are not identified when the contract is made, and they may or may not be future goods
• Unconscionable contract: an unfair or unjust contract
• Undue influence: the improper use of power
• Unilateral mistake: where one party is mistaken about some aspect of the contract, but the other party is not
• Unliquidated damages: (also called ‘general damages’) damages for a loss, where the value of the loss cannot be accurately determined or exactly calculated
• Variation clause: often a clause within a contract (but can be oral) where both parties agree to change part of a contract from the way they originally agreed to while the remainder of the contract remains unchanged
• Vicarious liability: where a person is held responsible for the acts or omissions of another even though they may not have personally been at fault, for example, employer and employee
• Void – of no legal effect
• Voidable – an agreement that may be affirmed or rejected at the option of one of the parties
• Voluntary agreements: agreements where the parties volunteer their services, usually for no money
• Voluntary assumption of risk: where the plaintiff freely and voluntarily understood and assumed the risk that caused the injury.
• Waiver: one party leads the other to reasonably believe that strict performance will not be insisted on
• Warranty – a term of lesser importance to the main purpose of the contract which, if breached, only allows.