The law of contract is a set of rules governing the relationship, content and validity of an agreement between two or more persons regarding the sale of goods, provision of services or exchange of ownership or interests. While this is a wide definition it does not cover the full ambit of situations in which contract law will apply. The reason for this is due to the vast number of examples in which contracts can arise in everyday life.
There must be an offer and this must be accepted to make an agreement. While this would in the first instance appear to be self explanatory, it is important to distinguish between what the law says amounts to a valid offer. An offer can be made orally, in writing or by way of conduct. Regardless as to the manner of the offer, it is the willingness or intention of the person making the offer which is of importance, and that is clearly subjective. If a person says that I want to sell this orange for £1.00 but then mistakenly advertises it for 1p, and that offer is accepted, then a valid agreement will be upheld. Simply because there was a mistake in the offer, it does not invalidate the contract. There was an intention to sell on the part of the offered. It is important to distinguish at this point however between an offer and an “invitation to treat”.
© 2001-2012 Perry Z. Binder
WHAT IS A CONTRACT
Contracts are enforceable in the courts. If one party meets its contractual obligations and the other party doesn’t (“breaches the contract”), the nonbreaching party is entitled to receive relief through the courts.
Law of 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.
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. In some cases a contract can consist of several documents, such as a series of letters, orders, offers and counteroffers.
A contractual relationship is evidenced by (a) an offer, (b) acceptance of the offer, and a (c) valid (legal and valuable) consideration. Each party to a contract acquires rights and duties relative to the rights and duties of the other parties. However, while all parties may expect a fair benefit from the contract it does not follow that each party will benefit to an equal extent. Existence of contractual-relationship does not necessarily mean the contract is enforceable, or that it is not void (see void contract) or voidable. Contracts are normally enforceable whether or not in a written form, although a written contract protects all parties to it. Some contracts, (such as for sale of real property, installment plans, or insurance policies) must be in writing to be legally binding and enforceable. Other contracts are assumed in, and enforced by, law whether or not the involved parties desired to enter into a contract.
Copyright © 1981-2005 by Gerald N. Hill and Kathleen T. Hill. All Right reserved.
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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. While legally qualified individuals may be aware every time a contract comes into existence and note phrases such as “the customer uses this at their own risk” with a wry smile, the majority of society lives in blissful ignorance of how deeply indebted to contract law they are.
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.
It should be mentioned here that such express terms that form part of the contract must be present at the moment it was entered into. The terms of importance will usually be on display either around the point where a ticket is bought, or it will direct the customer to a full list of the conditions elsewhere.
- Any purchase of goods or services – while this is dealt with in more detail below, the sale of goods or services is the most basic form of contract. While we may not appreciate the scope of the law and its impact upon a basic purchase of e.g. a new car, the terms and conditions of sale, the various pieces of legislation importing terms and the case law stretching back more than 100 years on similar issues all have a bearing upon a customer’s rights and obligations. It is of course rare for anyone to be made aware of all the terms in existence and the “small print” usually covers most things of relevance.
- Buying a house – most people who have become involved in the convincing process will recall the stress of waiting for the solicitor to confirm that they have “exchanged contracts”. While the ownership of a property in England & Wales can only pass by way of deed, the contract is pivotal. The contract will set out the terms of sale, including the price, items of furniture and fixtures that are being left behind and the date of completion. Once the purchase is completed and the monies paid, any issue that may be taken between the parties will have to be raised as a breach of contract. What can be seen above is that Contract Law is everywhere. From the purchase of a newspaper in the Cached – Similar
Purpose of Contract
The purpose of a contract is to establish the agreement that the parties have made and to fix their rights and duties in accordance with that agreement. The courts must enforce a valid contract as it is made, unless there are grounds that bar its enforcement.
Statutes prescribe and restrict the terms of a contract where the general public is affected. The terms of an insurance contract that protect a common carrier are controlled by statute in order to safeguard the public by guaranteeing that there will be financial resources available in the event of an accident.
The courts may not create a contract for the parties. When the parties have no express or implied agreement on the essential terms of a contract, there is no contract. Courts are only empowered to enforce contracts, not to write them, for the parties. A contract, in order to be enforceable, must be a valid. The function of the court is to enforce agreements only if they exist and not to create them through the imposition of such terms as the court considers reasonable.
It is the policy of the law to encourage the formation of contracts between competent parties for lawful objectives. As a general rule, contracts by competent persons, equitably made, are valid and enforceable. Parties to a contract are bound by the terms to which they have agreed, usually even if
OFFER AND ACCEPTANCE
A contract is formed when one party (the “offeror”) makes an offer which is accepted by the other party (the “offeree”). An offer – a proposal to form a contract – can be as simple as the words, “I’ll wash your car for you for $5.” An acceptance – the offeree’s assent to the terms of the offer – can be as simple as, “You’ve got a deal.” Sometimes acceptance can be shown by conduct rather than by words.
Adams v. Lindsell (1818) 1 B. & Ald. 681
Olley v. Marlborough Court Ltd (1949) 1 K.B. 53
WHO CAN ENTER INTO A CONTRACT
2. Mentally, Physically capable
3. Not a defaulter banned by the bank.
Types of Contract
An agreement made with spoken words and either no writing or only partially written. An oral contract is just as valid as a written agreement. The main problem with oral contracts is proving its existence or the terms. An oral contract is often provable by action taken by one or both parties which is obviously in reliance on the existence of a contract. The other significant difference between oral and written contracts.
The remedy of specific performance presupposes the existence of a valid contract between the parties to the controversy. The terms of the contract must be definite and certain. This is significant because equity cannot be expected to enforce either an invalid contract or one that is so vague in its terms that equity cannot determine exactly what it must order each party to perform. It would be unjust for a court to compel the performance of a contract according to ambiguous terms interpreted by the court, since the court might erroneously order what the parties never intended or contemplated.
A written document that is official verification that a condition or requirement has, or has not, been met. A written assurance issued from a court that is notification to another officer, judge, or court of procedures practiced therein. A document prepared by an official during the course of his or her regular duties, and which may be used as evidence for certain purposes. A document certifying that one has fulfilled certain requirements and may practice in a field.
Contracts under Seal
Traditionally, a contract was an enforceable legal document only if it was stamped with a seal. The seal represented that the parties intended the agreement to entail legal consequences. No legal benefit or detriment to any party was required, as the seal was a symbol of the solemn acceptance of the legal effect and consequences of the agreement. In the past, all contracts were required to be under seal in order to be valid, but the seal has lost some or all of its effect by statute in many jurisdictions. Recognition by the courts of informal contracts, such as implied contracts, has also diminished the importance and employment of formal contracts under seal.
In an express contract, the parties state the terms, either orally or in writing, at the time of its formation. There is a definite written or oral offer that is accepted by the offered in a manner that explicitly demonstrates consent to its terms.
Executed and Executor Contracts
An executed contract is one in which nothing remains to be done by either party. The phrase is, to a certain extent, a misnomer because the completion of performances by the parties signifies that a contract no longer exists. An executor contract is one in which some future act or obligation remains to be performed according to its terms.
Bilateral and Unilateral Contracts
The exchange of mutual, reciprocal promises between entities that entails the performance of an act, or forbearance from the performance of an act, with respect to each party, is a Bilateral Contract. A bilateral contract is sometimes called a two-sided contract because of the two promises that constitute it. The promise that one party makes constitutes sufficient consideration (see discussion below) for the promise made by the other.
An Unconscionable contract is one that is unjust or unduly one-sided in favor of the party who has the superior bargaining power. The adjective unconscionable implies an affront to fairness and decency. An unconscionable contract is one that no mentally competent person would accept and that no fair and honest person would enter into. Courts find that unconscionable contracts usually result from the exploitation of consumers who are poorly educated, impoverished, and unable to shop around for the best price available in the competitive marketplace.
Void and Voidable Contracts
Contracts can be either void or Voidable. A void contract imposes no legal rights or obligations upon the parties and is not enforceable by a court. It is, in effect, no contract at all.
A voidable contract is a legally enforceable agreement, but it may be treated as never having been binding on a party who was suffering from some legal disability or who was a victim of fraud at the time of its execution. The contract is not void unless or until the party chooses to treat it as such by opposing its enforcement. A voidable contract may be ratified either expressly or impliedly by the party who has the right to avoid it. An express ratification occurs when that party who has become legally competent to act declares that he or she accepts the terms and obligations of the contract. An implied ratification occurs when the party, by his or her conduct, manifests an intent to ratify a contract, such as by performing according to its terms. Ratification of a contract entails the same elements as formation of a new contract. There must be intent and complete knowledge of all material facts and circumstances. Oral Acknowledgment of a contract and a promise to perform constitute sufficient ratification. The party who was legally competent at the time that a voidable contract was signed may not, however, assert its voidable nature to escape the enforcement of its terms.
Copyright © 1981-2005 by Gerald N. Hill and Kathleen T. Hill. All Right reserved.
Breach of contract
Failing to perform any term of a contract, written or oral, without a legitimate legal excuse. This may include not completing a job, not paying in full or on time, failure to deliver all the goods, substituting inferior or significantly different goods, not providing a bond when required, being late without excuse, or any act which shows the party will not complete the work. Breach of contract is one of the most common causes of law suits for damages and/or court-ordered “specific performance” of the contract.
According to the discussion I can say that the law gives you the power to make an agreement with any person, a class of persons and the whole world. So easily someone make agreement with someone with out any tension because law gives him the chance and be tension free from future result.
Copyright © 1981-2005 by Gerald N. Hill and Kathleen T. Hill. All Right re
Copyright © 1981-2005 by Gerald N. Hill and Kathleen T. Hill. All Right reserve
- Gregory Klass is Associate Professor, Georgetown University Law Center: This Editorial is based on the following full-length Article: Gregory Klass, Three Pictures of Contract: Duty, Power, and Compound Rules, 83 N.Y.U. L. REV. 1726 (2008).
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