The dominant ideology is that contractual parties should be as free as possible to make agreements on their own terms without the interference of the courts by way of statute and their agreements should be respected and upheld and enforced by the courts.-Discuss
Introduction
Contract:
An agreement with specific terms between two or more persons or entities in which there is a promise to do something in return for a valuable benefit known as consideration. Since the law of contracts is at the heart of most business dealings, it is one of the three or four most significant areas of legal concern and can involve variations on circumstances and complexities. The existence of a contract requires finding the following factual elements: a) an offer; b) an acceptance of that offer which results in a meeting of the minds; c) a promise to perform; d) a valuable consideration (which can be a promise or payment in some form); e) a time or event when performance must be made (meet commitments); f) terms and conditions for performance, including fulfilling promises; g) performance. A unilateral contract is one in which there is a promise to pay or give other consideration in return for actual performance. (I will pay you $500 to fix my car by Thursday; the performance is fixing the car by that date). A bilateral contract is one in which a promise is exchanged for a promise.. Contracts can be either written or oral, but oral contracts are more difficult to prove and in most jurisdictions the time to sue on the contract is shorter (such as two years for oral compared to four years for written). In some cases a contract can consist of several documents, such as a series of letters, orders, offers and counteroffers. There are a variety of types of contracts: “conditional” on an event occurring; “joint and several,” in which several parties make a joint promise to perform, but each is responsible; “implied,” in which the courts will determine there is a contract based on the circumstances. Parties can contract to supply all another’s requirements, buy all the products made, or enter into an option to renew a contract. The variations are almost limitless.
Contracts for illegal purposes are not enforceable at law
Importance Of contract
Our society depends upon free exchange in the marketplace at every stage. The interactions in the market all the times depend upon voluntary agreements between individuals or other “legal persons”. Such voluntary agreements can never become binding without a legal contract.
The origin of the contract law can be traced from the development of common law and it is also alleged to be an offspring of tort law, as both contracts and torts give rise to obligations. The difference between them lies in the fact that the tort obligations are imposed by law; on the other hand contracts are a medium through which people willingly create commitment between themselves.
Contract law is based on a number of Latin legal principles, out of which consensus ad idem is the most important, which means a meeting of the minds between the parties i.e. an agreement among them. It is said to be a part of “private law” because it does not bind the state or persons that are not parties to the contract. Thus, contracts are voluntary and require an “exercise of the will of the parties”. But not all agreements are contracts e.g. Non-business agreements, religious agreement, or charitable agreements etc.
A contract an agreement between two or more persons, creating an obligation upon them to fulfill or not to fulfill some duties laid down specifically in the agreement. This agreement creates a legal relationship of rights and duties on the parties and if these obligations in the agreement are not fulfilled then stringent action could be taken by the courts on the party. There are three key elements for the conception of a contract. These are offer, acceptance, consideration and an intention to create legal relations. Contracts can be written, oral, or implied also. Generally the parties to a written contract comprehend that they have entered into a binding agreement, but they do not always grasp this point when making an oral or implied contract. It is always difficult to prove the terms of an oral or implied contract than those of a written one.
There are many important points that have to be kept in mind while forming a valid contract; after making the offer to the promisee, the contract will be formed when the promisee communicates his acceptance to the contract. The person making the offer is free to withdraw the same before the acceptance of the offer. Once the agreement is made, the following clauses should be present in the same.
1. There should be some consideration offered for the agreement.
2. The parties should be competent to contract.
3. The consent to the agreement should be free.
4. The object of the agreement should be lawful.
Consideration
This is one of the important aspects which is necessary for a party to enter into a contract. This is the return which a person gets for performing the obligations of the contract. This needs to be of some value but it is not necessary that it should be specified in the contract. An agreement made without consideration is void, Persons competent to contract.
All persons are legally authorized to enter into a contract except for the following:
• Minors, who are above 18 years of age and when a guardian is appointed for them the age is increased to 21 years.
• Mentally incompetent persons.
• Person who is ineligible from entering into the contract by law.
Companies have a separate legal entity to enter into contracts through the acts of their agents, officers and workers.
Consent to the contract
Unless the consent of the contract is obtained through, coercion, undue influence, fraud, misrepresentation or mistake, it is presumed that the consent is free. Relief given to the aggrieved party generally the party who has suffered due
Contract: The Elements of a contract
The first step in a contract question is always to make sure that a contract actually exists. There are certain elements that must be present for a legally binding contract to be in place.
The first two are the most obvious:
- An offer: an expression of willingness to contract on a specific set of terms, made by the offeror with the intention that, if the offer is accepted, he or she will be bound by a contract.
- Acceptance: an expression of absolute and unconditional agreement to all the terms set out in the offer. It can be oral or in writing. The acceptance must exactly mirror the original offer made.
- A counter-offer is not the same as an acceptance. A counter-offer extinguishes the original offer: you can’t make a counter-offer and then decide to accept the original offer! But…
- A request for information is not a counter-offer. If you ask the offeror for information or clarification about the offer, that doesn’t extinguish the offer; you’re still free to accept it if you want.
It is very important to distinguish an offer from an invitation to treat – that is, an invitation for other people to submit offers. Some everyday situations which we might think are offers are in fact invitations to treat:
- Goods displayed in a shop window or on a shelf.
- When a book is placed in a shop window priced at £7.99, the bookshop owner has made an invitation to treat.
- When I pick up that book and take it to the till, I make the offer to buy the book for £7.99.
- When the person at the till takes my money, the shop accepts my offer, and a contract comes into being.
- Goods displayed in a shop window or on a shelf.
- Adverts basically work in the same way as the scenario above. Advertising something is like putting it in a shop window.
- Auctions:
- The original advertising of the auction is just an invitation to treat.
- When I make a bid, I am making an offer.
- When the hammer falls, the winning ‘offer’ has been accepted. The seller now has a legally binding contract with the winning bidder (so long as there is no reserve price that hasn’t been reached)
N.B: an offer can be revoked at any time before it is accepted, so long as you inform the person you made the offer to that the offer no longer stands.
- Consideration: each party to the contract must receive something of value.
This is best illustrated by an example: suppose I promise to give you my watch, but you don’t give me anything in return. If I break my promise and keep my watch, you can’t then go to court and make me give it to you. The contract isn’t legally binding: you didn’t give me any consideration for my promise.
So put simply, consideration is the price paid for the other’s promise.
There are four legal maxims that apply to consideration:
- Consideration must move from the promisor;
- Consideration need not move to the promisee;
- Past consideration is not good consideration;
- The consideration given must be sufficient, but it need not be adequate.
The detail isn’t necessary here, but there is a separate note on them if you’re interested.
Intention to create legal relations: if my brother offers me a lift to London, and I say I’ll contribute to the cost of the petrol and then don’t, there isn’t necessarily a binding contract that he can sue me under. If the arrangement is an informal, social one, then my offer to pay for petrol probably wasn’t made with the intention of being legally bound (see the definition of ‘offer’ above).
In general, arrangements of a social nature are presumed not to be legally binding, whilst commercial arrangements are presumed to be intended as binding contracts. Of course, these presumptions can always be rebutted in court by producing evidence to the contrary
Essentials elements are:
Offer and Acceptance
Intention to create legal relation
Lawful consideration
Lawful Object
Capacity to contract
Free consent
Certainty
Possibility of Performance
Written and Registered
I) Offer and Acceptance
§ There must be a lawful offer and a lawful acceptance of the offer, thus resulting in an agreement. The adjective ‘lawful’ implies that the offer and acceptance must satisfy the requirements of the Contract.
Example: if an offer be a valid offer it should be acceptance I want sell my car at 100000 its only offer there have no acceptance when a person will be accept my offer it will be valid offer
§ Rules regarding offer:
An offer may be express or may be implied from the circumstances:
An offer may be made in two ways:
I. by words, spoken or written and
ii. By conduct.
An offer may be made to a definite person; to some definite class of people; or to the world at large.
Example: I want to rent my house only for bachelor this offer only for bachelor not other people
Legal relationship is required:
.The terms of the offer must be certain, definite, unambiguous and not vague:
Example: I think to rent my house it is not clear so it not be an offer it should be clearly express by oral or written
A mere statement of intention is not an offer
i. intention to sell:
ii. Quotation of prices :
iii. Advertisements :
iv. Catalogue :
v. time-table
vi. Question and Reply :
vii. Auction
Offer must be communicated to the offeree:
Example
An offer may be conditional
i. Strict enforcement of Clauses:
ii. No reasonable notice
iii. Against public interest :
iv. unreasonable :
Conditional offers are invalid under the following circumstances
i. Lack of reasonable notice.
ii. Unreasonable terms.
iii. Breach of fundamental rights.
iv. Tortuous action by offeror:
· Who can Accept- To whom the offer is intended?
i. An individual
ii. Any member of the Class
iii. Any person of the World
Where is Contract Law used today?
As was mentioned above on several occasions, contract law permeates our day-to-day lives, and often we are not aware of its presence. In the first instance it would be a useful exercise to list a few of the various instances of contract law coming into play when we may not expect it.
· Public Transport
· Employment
· Any purchase of goods or services
· Buying a house
Contract Law: Duty-Imposing or Power-Conferring
Some theories of contract law characterize it as a private power-conferring rule, others as a duty-imposing one. Hart suggests contract is a legal power:
Legal rules defining the ways in which valid contracts or wills or marriages are made . . . provide individuals with facilities for realizing their wishes, by conferring legal powers upon them to create, by certain specified procedures and subject to certain conditions, structures of rights and duties within the coercive framework of the law.
On this picture, the point of contract law is to grant persons the power to modify, within limits, their legal obligations to one another. As Ernest Weinrib puts it, the “contract effects a voluntarily assumed change in the pre-existing legal relationship between the contracting parties . . . .Or in Randy Barnett’s words, to “make a contract . . . a party must explicitly or implicitly manifest an intent to be legally bound. According to the alternative, duty-imposing picture, contract law is concerned with extralegal wrongs such as breaking a promise, causing reliance harms, or unjustly enriching oneself at the expense of another. Consider, for example, Charles Fried’s claim that “since a contract is first of all a promise, the contract must be kept because a promise must be kept, or Patrick Atiyah’s arguments that contract law is designed to compensate for reliance-based harms and prevent unjust enrichment. While Fried and Atiyah make very different claims about the point of contract law, they agree that it is meant to impose duties on persons who enter into agreements for consideration.
This variety among contract theories is remarkable. It is usually easy to tell whether a law is duty imposing or power conferring. While there are many possible points of disagreement with respect to, for example, the criminal law or Article I of the U.S. Constitution, no one doubts that the point of the one is to impose duties and the other to confer powers. Why such deep disagreement in the case of contract law?
The answer requires a more general account of the difference between power-conferring and duty-imposing rules and of how we identify a given law as of one or the other type. The function of a duty-imposing law is to give persons subject to it a new reason to act in accordance with the rule—in Hart’s words, “whether they wish to or not. The function of a power-conferring law, by contrast, is to enable persons to determine, within bounds, what the law is or requires. As Joseph Raz puts it, power-conferring laws attach legal consequences to certain acts because “it is desirable to enable people to affect norms and their application in such a way if they desire to do so for this purpose. These different functions impose different design requirements on duty-imposing and on power-conferring rules.
Consider power-conferring rules. A rule can give legal actors the ability to effect normative change, when they wish, only if it is structured such that those actors commonly satisfy the rule’s requirements because they want the resulting change. More precisely, the distinctive function of laws that create powers entails two features that together distinguish them from laws that impose duties. First, a law that creates powers must be designed in a way that underwrites an expectation of its purposive use—an expectation that persons will satisfy the law for the sake of the legal consequences. Second, that expectation must be the law’s reason for attaching those legal consequences to acts of that type. Evidence of this second feature can be found in rules that facilitate or enable the law’s purposive use. To identify whether any given law is power creating, we can look to see whether it exhibits these characteristic features.
Legal area/condition of a contact
Purpose
- General conditions provide the legal framework for the construction contract and promote fairness among all contracting parties. When referenced in other owner and contractor sub-agreements, they maintain vital order and consistency.
Roles
- General conditions detail the rights, responsibilities and relationships of the owner, contractor and prime architect or engineer who will be working with both parties throughout construction.
Rules
- These conditions stipulate rules regarding subcontractors, changes, time, payments, completion, protection of persons and property, insurance, bonds, correction, termination, suspension, claims and disputes.
Revisions
- Supplementary conditions may revise or add to the general conditions and supersede them.
Conclusion:
The law of contract is applicable not only to the business community, but also to others. Every one of us enters into contracts almost every day, and most of the time we do so without even relishing what we are doing from the point of law.