Contract law is the body of law that relates to making and enforcing agreements. A contract is anagreement that a party can turn to a court to enforce.Contract law is the area of law that governs makingcontracts, carrying them out and fashioning a fair remedy when there’s a breach.
In common law legal systems, a contract (or informally known as an agreement in some jurisdictions) is an agreement having a lawful object entered into voluntarily by two or more parties, each of whom intends to create one or more legal obligations between them. The elements of a contract are “offer” and “acceptance” by “competent persons” having legal capacity who exchange “consideration” to create “mutuality of obligation.”
Proof of some or all of these elements may be done in writing, though contracts may be made entirely orally or by conduct. The remedy for breach of contract can be “damages” in the form of compensation of money or specific performance enforced through an injunction. Both of these remedies award the party at loss the “benefit of the bargain” or expectation damages, which are greater than mere reliance damages, as in promissory estoppel. The parties may be natural persons or juristic persons. A contract is a legally enforceable promise or undertaking that something will or will not occur. The word promise can be used as a legal synonym for contract, although care is required as a promise may not have the full standing of a contract, as when it is an agreement without consideration.
Contract law varies greatly from one jurisdiction to another, including differences in common law compared to civil law, the impact of received law, particularly from England in common law countries, and of law codified in regional legislation. Regarding Australian Contract Law for example, there are 40 relevant acts which impact on the interpretation of contract at the Commonwealth (Federal / national) level, and an additional 26 acts at the level of the state of NSW. In addition there are 6 international instruments or conventions which are applicable for international dealings, such as the United Nations Convention on Contracts for the International Sale of Goods.
Contract law is based on the principle expressed in the Latin phrase pacta sunt servanda, which is usually translated “agreements must be kept” but more literally means “pacts must be kept”. Contract law can be classified, as is habitual in civil law systems, as part of a general law of obligations, along with tort, unjust enrichment, and restitution. The common law of contract originated with the writ of assumpsit, which was originally a tort action based on reliance.
Jurisdictions vary in their principles of freedom of contract. In common law jurisdictions such as England and Wales and the United States, a high degree of freedom is expected. For example, in American law, it was determined in the 1901 case of Hurley v. Eddingfield that a physician was permitted to deny treatment to a patient despite the lack of other available medical assistance and the patient’s subsequent death. This is in contrast to the civil law, which typically applies certain overarching principles to disputes arising out of contract, as in the French Civil Code. Other legal systems such as Islamic law, socialist legal systems, and customary law have their own variations.
However, in the case of the United States the principle of freedom of contract has eroded over time due to judicial deference to legislation affecting contracts. For example, the Civil Rights Act of 1964 restricted private racial discrimination against African-Americans. In the early 20th century the United States underwent the “Lochner era”, in which the Supreme Court of the United States struck down economic regulations on the basis of freedom of contract and the Due Process Clause; these decisions were eventually overturned and the Supreme Court established a deference to legislative statutes and regulations which restrict freedom of contract. The U.S. Constitution contains a Contract Clause, but this has been interpreted as only restricting the retroactive impairment of contracts.
Not all agreements are necessarily contractual, as the parties generally must have an intention to be legally bound (or the functional equivalent under the objective theory of contracts). In American English, a gentlemen’s agreement is one which is not intended to be legally enforceable; the equivalent concept can be expressed an agreement “binding in honor only.”
Contracts are widely used in commercial law, and form the legal foundation for transactions across the world. Common examples include construction contracts, product purchases (with associated warranties of quality), software licenses, employment contracts, insurance policies, real estate deeds to transfer title, professional services, wholesale merchandise supply, and various other uses.
Online contracts have become common. E-signature laws have made the electronic contract and signature as legally valid as a paper contract. It has been estimated that roughly 110 electronic contracts are signed every second.
From a legal point of view, in India, E-contracts are governed by the Indian contract act (1872), according to which certain conditions need to be fulfilled while formulating a valid contact. Certain sections in information Technology Act (2000) also provide for validity of online contract.