In Law, Contract law is one of the most important branches. Students of law must be acquainted and familiar with all aspects of contract law on which often they are given assignment and case studies on. Assignments need many subtle details and thus, before starting with any kind of assignments or case studies on contract law, it is very necessary to understand concepts that are associated with Contract laws.
What does Contract law mean?
Generally, in all respect, a contract is an agreement, which is voluntary one between two or more parties, and laws, which govern and protect concerned agreement, abide these agreements. These governing laws protecting a contract are known as Contract law. Within each verbal and written agreements there happens to be an exchange of goods and services, properties or money or any kind of commodities. Laws, which are framed to govern this agreements, protects obligation of each party, there privatise, jurisdictions, terminations and limitations. If the contract is undertaken a path, which is not under the framework of these laws then there provisions for punishments and remedies and actions, are taken. Contract laws do not only rules commercial purposes but also takes care of civil purposes. Laws students often are tested with case studies and assignments.
Elements of contract
Students of laws need to know understand various elements and must bore a clear idea of these elements. Once they are well versed with elements of contract they can easily understand this subject.
Acceptance and offer
This is one of the most important elements of contract. Always for an offering, there has to be a point of willingness, which enables a contract to be in specific terms by the person who is offering called the offered. On the other hand, acceptance of order is referred to as-as an assent, which is unconditional in nature, by the offeree, who has been offered the contract, and it has been placed with intention of acceptance of the offer.
Intentions behind creating legal relations
When an agreement is undertaken, there is always presence of parties. These parties enter a legal agreement with the purpose of making contract effective. Due to legal binding, there comes a space for involvement among concerned parties and this creates a relation on the base of the legal terms. Significantly, it is very much necessary on part of the parties who have involved mainly the offerer and the offeree to know implication and consequences concerned to its legal aspects.
There has to be a binding sense in any kind of legal contracts. This binding must have a considerate ground. Consideration thus is referred to promise that is being made on the agreements about profits or benefits in subject to returns and benefits from concerned agreements. Institutions that deal with legal aspects will not question capability of agreements if there is a consideration, which backs an agreement. Consideration can be in any form, it can be service, right or monetary benefits. Court interferes into an agreement only when there is any rather complain from one party, that other party is influencing and coercing it. It is important to note that court restricts itself from intervening if any of the party thinks that they have engaged in bad deal.
When parties are engaging in a contract it is important to note that individuals who are engaging in a particular contract must be in sound mind, not mentally disabled or bankrupt, any kind of prisoners. In legal contract, any kind diversions in this above-mentioned state are not considered a part of contract. Thus, it is necessary to make sure about all this aspect when engaging in legal deals.
Legal contracts are synonymous to agreements. Agreements mean those who are engaging in this contract are agreeing to its terms and conditions. This aspect is very important because without anyone consent among parties a contract cannot be established. Any kind of force influences, or coercing is not advised nor have legal provisions of punishment in this. It is very important that contracts are based on consents of the people who are involved.
Contract Laws: All kind kinds of Queries are answered
It is understandable that contract laws are not a very easy subject. Considering its vastness students often fail to handle every aspect of contract law. They have numerous questions in their mind on these subjects. Following are significant aspects of contract law that is in detailed discussed
Breach of contract
When there is a contract, there is always a fear of breach, just like when there is a promise there is always fear that it can break. In here under legal arena, when any party refuses to abide or does not abide by the framework of law which protects the agreement, the other party can take legal action on the other party following the procedures laid by-laws. According to types on ground of severity and gravity of the breach, it can be classified in:
It is important to note that when minor breaches are referred to trivial violations on the other hand breaches, which are fundamental, are drastic violation.
Contract breaching consequences
When a party confronts breach of contract from other party, they first try to solve the disagreements through informal or mutual meetings. However, when the informal meeting does not work the party which has been victim can call for legal actions. Addressing to such situations are done through formal lawsuits or seeking the help of court system of the respective country. In this process, a unanimous arbitrator can also be hired who undertakes the task of reviewing breach or dispute that has taken place. When placed arbitrator too is unable to conclude any firm solution, the party seeks help of court of law. Court, when accept the charges, takes legal action against the breaching party and remedy is awarded to the victim party, which is borne by party who is charged.
Havoc damages can be done when there is a breach of contract, in these situations any monetary compensation is not sufficient and cannot mend the wrecks. In such situation, violator party has to perform specific tasks, which can amend the damages created. Compensation amount decision rests upon the victim party.
A damage which victim party has to deal with is often massive and this is impossible to be amended by monetary incentives. In such cases court orders the violator party to amend the wreckage by performing specific functions. Specific performance can be of many types, it can be any activity that is instructed by the court or any kind of service. However, this is only undertaken when compensation that is provided by the violator party is not capable of mending the damage. Except for Real Estate industry, which is unique in this because there cannot be duplicate property with similar facilities? This kind of decision is only taken by court when agreement is based on fair and equitable ground and restricts itself from providing any kind of benefits to any party.
Cancellation and Restitution
In case of breach of contract, a court can authorise the now- breaching or the victim party to cancel the contract, which has been breached, and sue the violator for restitution when violating party is bind to bring back position, which was in earlier state when contract was established. These are actual consequences of breach of contract. It is grievous offence.
Silence as Acceptance
Usually, we do not take silence as an acceptance sign. However, in some cases, this silence is accepted as acceptance signature. Although not without the existence of some requirements can silence be considered as consent? For instance when party A gives some commodities to party B and mentions that party A expects payment for the commodity but party B without responding use the commodity in this situation the silence is synonymous to acceptance or consent. Requirements, which need to be there which can take silence as consents, are:
- When one party has placed the offer and other party did not reject it.
- When who is offering is rendering a service to another person
- When the person who is offering the service is offering it with his own will and not influenced by another individual.
- When a person offering an offer, he expects payment in exchange of the product or service he renders.
- When offeree has information about all the things in the contract
- Offeree should use or accept service that is being provided by offerer
Above rule is applicable only when sale of goods is not concerned. However, goods, which are unsolicited in nature, come under this category and these requirements are applicable in that arena. The goods then are treated as gifts.
Basics of Contract Law
In order to establish any contract under the eye of law, there has to fulfilment of some requirements. When offers are concerned, there has to be acceptance of it, consideration, eligible parties their consents, purpose. Except for these rules, parties involved in a contract have to abide by additional requirements, which come into purview according to the type of contract that they have engaged into. Contract term is referred to the written document of agreement. This written element must be verified under court of law.
- Introducing clauses or provision
- Parties’ definition or key terms
- Purpose statement
- Each party’s obligation
- Warranties and assurance
- Signature block
Contract also can be divided into three stages,
Phase 1: Evaluate the deal
Before signing the deal, it is needful to examine and evaluate the contracts prospects by the parties involved in it.
Phase 2: Reaching the agreement
Phase two consist of the part where parties after evaluating and negotiate or provides their consent. A written document is prepared based on the consent.
Phase 3: Implementation and performance
After consent is provided and agreed upon in the contract, documents are signed. Points after signing the documents that should be kept in mind are obligations. Any party if fails to oblige then other parties can file suit against it.
Contracts and Law
The contract is established only with consents of more than one party. Accordingly, duties are shared and performed which are requirements in this contract. These rules of contract are applicable to any of the bodies who are involved. There are many laws, which govern contracts, are:
The Common Law
This is set of laws, which are mainly developed, by judges or courts or tribunals, which depend upon individual cases. Consistency principles are taken into consideration in this case where same set of law deals same cases.
The Uniform Commercial Code
Contracts when prepared or established, the common set of laws are not applicable in this, however, the law body that covers this is Uniform Commercial Code. Guidelines under this regulate the commercial transactions.
In regard to contracts nature, it can be divided into four categories:
Bilateral contract is one of the commonest forms of contract which involves two parties. In here two parties engage and share promises and provide consents mutually
A unilateral contract is a contract when there is only a party that promises to provide the service and the other party accepts the service but does not actively participates.
This is a type of contract where agreements which are mutually taken and where promises are stated to one another which are not supported by any kind of documents.
Seal conducted contract
This is a kind of traditional contract where seal authorisation plays a crucial role. Even today in some nations seal authorisation is a must for any kind of formal agreements. Seal has to be under the court of law.
This is a set of contract where parties involved in the contract agree to obligations in the contract. Parties who are involved in the contract show their willingness to enter into the contract which is valid.
Mutual agreements, which come into existence because of unforeseen events is called Aleatory contract. Both parties involved in the contract share risk for the events that can appear in future. For instance, contract regarding insurance.
Under this contract one of the parties, have more advantages in face of bargaining. Big businesses implement these or powerful individuals strategically usurp more power than the weaker body. This contract is often named as “take it or leave it to contract”.
This is another kind of agreement where agreement is mainly established between buyer and seller, which gives former the authority for choosing either to buy or also see a product on a future date conditioned on price. Mainly this kind of contract finds its implementation in commodities, securities, and in transactions of real estate. It is always seemed to be complicated in nature but has certain attributed benefits when price is in a jittery state.
List of contract are many and it does not end here, there are contracts like Executed contracts, Void contracts, unconscionable contracts.
Construction contracts are referred to an agreement, which is bound in terms of legal aspects. Mainly these contracts are applicable in areas like repairing, construction, alteration of buildings. This construction contract is divided into six types.
Lump Sum contract
Item rate contract
Lump Sum and scheduled contract
Cost plus fixed rate contract
Cost plus percentage of cost contract
Do all constructions contracts need to be written
Usually, all contracts are framed into document form. They have support in these written documents. Writing is the form in which most of the nations want to have their deals retained. Although the writing form of contract is not mandatory because of the transparency that is being provided by the written form of contract, it is advisable to keep a copy of contract in written form. Written form of contract requires signing of the bodies that are involved in the contract. Although it is not mandatory to have a written form of contract in certain cases, it is mandatory to have a written evidence of it.
- Construction loan financing
- Delay of construction by least one year.
- Involvement is purchasing expensive materials for construction
- Property or real estate sale
A contract under which one party becomes debtor and another guarantor is a Property contract.
In certain cases where the construction deal does not fall into this kind of categories, a written is always can be created and kept to avoid any kind misrepresentation of the deal.
Construction Contracts Require Consideration – Is it true?
The answer to this is yes. All kind of contract requires consideration. Consideration can of any form it can be money or service or any kind financial gain. However, if contractor s is forcing another party to provide more monetary incentives then, in that case, the party can file a suit.
Can an International Contract be illegal and how?
It so happens at times that companies belonging to two different nations take part in agreement, and after a period of time find it difficult to continue because of clauses which are acceptable to one another. In the cases of agreement, it is necessary for court to know of both the nation so that the agreement that is signed is clearly enforceable. International agreements need a lot of filtering subject to layers of requirements. As every nation has different set of rules and regulation it can always happen that an agreement becomes void according to clause of the different nation.
In this arena, it often occurs that, a contract becomes an illegal one when it does not oblige to the clauses of a nation, but obliges to another. Thus, before entering a contract, it is very important to frame contract on basis of clarity. All aspects must be reviewed and analyzed time and again. Any kind of diversion being found in foundation level of contract it must immediately modified.
Can an advertisement be considered as offering?
Advertising with time has entered all areas of business. In a day, we watch more advertisements than content. Through advertisements, every company wants to attract people and claims that they provide best of the products through their deals.
Not all requirements are satisfied by advertisements, which are needed in a contract. Rather than mentioning advertising to be a contract, it can be held as a trivial negotiation or a medium to be bid on. A rational contract comprises of mutual agreements for certain terms and conditions. However, in the case advertisement, these elements are absent. Thus, generally advertisements are considered as invitation, not a contract. However, in certain special cases, advertisements are treated as contracts, which happens when service or product that is being offered are assisted with other additional detail and promises certain kind of outcomes. These kinds of advertisements need to be assisted with clarity.
In any kind of business, there is always some kind of contracts and thus contractual parties. A business contract is of many types verbal, written but mostly all are lengthy in nature, which comprises:
- Lease agreements
- Employment contracts
- Financial agreements
- Insurance agreements
Just like all other contracts, in here too parties must be careful. In case of agreements, negligence can lead to termination of contracts. Termination of contracts takes place with consent of the party members if any one breaches the contract. When the termination of contract happens on the ground of breach a suit ids need to be filed.
Importance of accurate business contract
A contract must be signed not before analyzing the prospects of it and partner’s faithfulness. This is because a contract is not a causal ground, which can be established whenever felt like and terminated without giving proper efforts for it to be effective. Termination eats up a lot of energy, time and even financially, it must be avoided at all cost. Thus, it is necessary to understand the value of contract before stepping into it.
Mortgage contracts are contract, which is engaged into with multiple parties. In this, one party lends money to another party for the reason of buying a property or estate. In the whole process, we find offer of mortgage, process of conveyance, completion of deal. However, fraudulent deals are exceptions. One of the very significant exceptions under this is past doctrine performance through which a verbal mortgage is considered enforceable although unwritten. This kind of mortgages will take place when money is given for purchasing properties. It is always strictly advised for having a written document of the contracts.
8 reasons which advise not to breach a contract
Breaching of contract takes place when a party involved in contract violates obligations. In this case, there are many problems arise thus it advisable to not breach a contract whatsoever. Contract breaching is harmful to company’s image. Reasons behind not to breach contract
- Company’s reputation is damaged
- The other parties who are no breach parties lose their interest in contract
- Any damages because of contract breach can lead other parties to file suit against the violator party
- Violator, if sued, has to provide time and money for compensation, the amount of which is never meager.
- Court can call the violator party and order to perform specific performance.
- Court if finds violator party truly violated the contract then with punishments and fines even imprisonment can happen.
Contracts, which must be in writing
There are many requirements that the contract has and many, which requires having proper written documents on them. Such contracts, which must be in written form, are;
- Contract sales in real estates
- Agreements for paying someone else’s debts
- Delay in contract, which needs more than a year
- Monetary contracts which will be paid on a later date
- Contracts, which remains even after the parties leave
- Bonds, stocks of a company
- A contract on transfer in case deceased person
Significance of Signature in Contract
Without signature, a contract is not established. Signature implies the consent of a person who wants to be a party I n the contract. Thus, any kind of contract needs signature. Guidelines must be there on this that how a proper signature should be there on the documents of contract. Handwritten, photocopied, electronic pen stamped or engraved whichever but any of these ways can be opted for as signature. If there is a need of another person to sign on behalf of an individual that too can happen but it needs the authorization of the concerned party.
Offer: Things to Remember
There are points, which should be remembered while a contract is established. In here, we find four points, which are necessary to be remembered while establishing a contract.
No contract can be established without a purpose so all contract must have a purpose. It can range from sale of goods, a service promise or pledge for doing something. A contract can also be with a purpose of not doing something.
Terms of an Agreement
Agreements are always bounded by certain terms and conditions. Agreement should include clause and details of a party and obligations that are need of performing. An agreement must include material terms, which usually comprise of prices, subjects, timeframe of delivery and many other conditions. Thus, a contract cannot be detached from terms.
Consideration is very important in a contract. Offeree provides consideration and offer or, bit considers each other requirements. Although after agreement in implied, the consideration can be modified accordingly.
All the parties or the people those who are involved in the contract must have the capability to carry out the contract requirements. It is important to note that all individuals who are involved in the contract must have attained 18 years of age.
Remedies in Law
In the contract there various kinds of remedies:
This is one of the most common breaches of remedy. The violator party is ordered by the court to pay the cost of damage.
Under this, the court asks the violator to restore the health of contract back to established state. For which it is required for the company to pay the compensation or in money or service.
In this case, if the violator damages the contract in an unethical way. Then court orders Violator Company to pay a heavy amount of the damage occurred to the victim company.
Victim party can always sue the violator party if it finds that the other party has followed illegal ways and duped the victim party. There are conditions, which call for defences:
Defence to duress:
It is necessary for the companies to show in their agreement that they have participated in the contract out of their will and any not respond to any kind of influence. For instance, blackmail is a type of duress
A contract is based on parties
consent. This consent must not be a response to any kind of influence.
All kinds of queries regarding contract laws are answered. After this, for further help, you can refer to more contract law case studies samples
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