Introduction to Contract Concepts

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Questions and Answers

What is the primary purpose of a contract concept in a business deal?

To create a persuasive argument

To sway the other party or the court

To determine the legal consequences of a business deal

To memorialize the business deal in a contract provision (correct)

What skill is required to translate a business deal into contract concepts?

The analytical skill of determining which contract concept best reflects the business deal (correct)

The analytical skill of applying the law to the facts

The negotiation skill of reaching a business deal

The persuasive skill of creating a persuasive argument

What do litigators do in the analytical skill of applying the law to the facts?

They draft contract provisions that memorialize the business deal

They determine the legal consequences of a business deal

They start from the business deal and find the contract concepts that best reflect it

They take the law and apply it to the facts to create a persuasive argument (correct)

What is the primary difference between the analytical skill of litigators and deal lawyers?

The starting point of the analysis Signup and view all the answers

What is the role of a drafter in translating a business deal into contract concepts?

To memorialize the business deal in a contract provision Signup and view all the answers

What is the relationship between the business deal and the contract concepts in the analytical skill of deal lawyers?

The business deal is translated into contract concepts Signup and view all the answers

What is the primary goal of a litigator in applying the law to the facts?

To sway the other party or the court Signup and view all the answers

What is the primary purpose of understanding contract concepts?

To express the parties' business deal clearly and unambiguously Signup and view all the answers

What is the difference between a representation and a warranty?

A representation is a statement of fact, while a warranty is a promise to indemnify Signup and view all the answers

What is the relationship between a covenant and a right?

A covenant is a promise to do or not to do something, and a right is the flipside of a covenant Signup and view all the answers

What is the purpose of a condition in a contract?

To specify a state of facts that must exist before a party is obligated to perform Signup and view all the answers

What is discretionary authority in a contract?

A choice or permission to act, sometimes subject to the satisfaction of a condition Signup and view all the answers

What is a declaration in a contract?

A fact as to which both parties agree, generally a definition or a policy for the management of the contract Signup and view all the answers

Why are contract concepts important to understand?

Because they are the foundation of every contract and necessary to express the parties' business deal Signup and view all the answers

What is the relationship between the seven contract concepts and the parts of a contract?

The seven contract concepts are integrated into the parts of a contract to result in a contract Signup and view all the answers

Study Notes

Understanding Contract Concepts

There are seven essential contract concepts: representations, warranties, covenants, rights, conditions, discretionary authority, and declarations.
These concepts form the foundation of every contract and are used to express the parties' business deal.

Defining Contract Concepts

A representation is a statement of a past or present fact, made as of a moment in time to induce a party to act.
A warranty is a promise to indemnify the other party for any damages suffered if the statement in the representation is false.
A covenant is a promise to do or not to do something, creating a duty to perform.
A right is the flipside of a covenant, entitling a party to the other party's performance.
A condition is a state of facts that must exist before a party is obligated to perform.
Discretionary authority gives a party a choice or permission to act, sometimes subject to the satisfaction of a condition.
A declaration is a fact as to which both parties agree, often a definition or a policy for the management of the contract, and may be subject to the satisfaction of a condition.

Translating the Business Deal into Contract Concepts

Each contract concept serves a different business purpose and has different legal consequences.
The analytical skill of determining which contract concept best reflects the business deal is called the translation skill.
This skill requires drafters to look at each specific agreement of the business deal and translate it into contract concepts.
The analytical skill of deal lawyers differs from that of litigators, as deal lawyers start from the business deal and use contract concepts to draft contract provisions, whereas litigators work backward from the law to a static set of facts.