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A contract is any promise or set of promises made by one party to another for the breach of which the law provides a remedy. The promise or promises may be express (either written or oral) or may be implied from circumstances.Typically, the remedy for breach of contract is an award of money damages intended to restore the injured party to the economic position that he or she expected from performance of the promise or promises (known as an " expectation measure " of damages).
Occasionally a court will order a party to perform his or her promise (an order of " specific performance" or " quantum meruit"), but this remedy is unusual. In the civil law, contracts are considered to be part of the general law of obligations.
Contract claims (where there is usually some kind of preexisting relationship between the parties) are usually contrasted against tort claims (where there may be no such relationship).
1 Scope of common law contract law
Basic common law contract law addresses four sets of issues:
- When and how is a contract formed?
- When may a party escape obligations of a contract (such as a contract formed under duress or because of a misrepresentation)?
- What is the meaning and effect to be given to the terms of a contract?
- What is the remedy to be given for breach of a contract?
Contract formation: Generally, formation of a contract requires that parties mutually assent to a bargain and a consideration or consideration substitute.
Escape from contract: A party may in some cases escape obligations established by a contract for one of the following reasons:
- Mutual or unilateral mistake as to a basic assumption upon which the contract was made
- Misrepresentation of facts inducing one of the parties to enter the contract
- Duress inducing one of the parties to enter the contract
- Lack of capacityCapacity when used with the mathematics meaning, is also called volume . Capacity is a legal term that refers to the ability of persons to enter into contracts. Some categories of people have had their freedom to enter into contracts restricted. These cat to contract (such as infancy, influence of drugs, alcohol or mental illness)
- Unconscionability
- Violation of a public policyGeneral Definition According to Thomas A. Birkland's book An Introduction to the Policy Process there is a "lack of a consensus definition of public policy. Thomas Dye argues that this search for a definition of public policy can degenerate into a word ga or illegality
- Absence of a writing evidencing formation of the contract
- Impossibility or unwillingness to perform the contract (" repudiation ")
- Misleading or deceptive conduct by one of the parties (the tort of deceit), and
- Frustration of purpose of the contract without defaultIn law, a default is the failure to do something required by law or to appear at a required time in legal proceedings. For example, when a party has failed to file meaningful response to pleadings within the time allowed, with the result that only one sid of either party.
Many contract disputes involve a disagreement between the parties about what the contract requires. Hence, many rules of contract law pertain to interpretation of terms of a contract that are vague or ambiguous.
2 Validity of contracts
For a contract to be valid, it must meet the following criteria:
- Mutual agreement - (offer and acceptance): There must be an express or implied agreementThe term agreement has a variety of meanings. Law: It may be used to acknowledge the existence of a legally binding contract that can be enforceable in a court of law. Law: It may also refer to an understanding between individual to follow a specific cour. In modern practice, whether there has been an agreement is determined objectively, not subjectively. Thus, it is no defenseIn most litigation under the common law adversarial system the defendant, perhaps with the assistance of counsel, may allege or present defenses (or defences in order to avoid liability, civil or criminal. Criminal law defenses In criminal law these defen to an action based on a contract for the defendant to claim that he never intended to be bound by the agreement if under all the circumstances it is shown at trial that his conduct was such that it communicated to the other party or parties that the defendant had in fact agreed. Signing of a contract is one way a party may show his assent. Alternatively, an offer consisting of a promise to pay someone if the latter performs certain acts which the latter would not otherwise do (such as paint a house) may be accepted by the requested conduct instead of a promise to do the act. The performance of the requested act indicates objectively the party's assent to the terms of the offer.
- The essential requirement is that there be evidence that the parties had each from an objective perspective engaged in conduct manifesting their assent. This manifestation of assent theory of contract formation may be contrasted with older theories, in which it was sometimes argued that a contract required the parties to have a true meeting of the mindsThe Meeting of the Minds (also referred to as mutual assent is a term in contract law used to describe the intentions of the parties forming the contract. In particular it refers to the situation where there is a common understanding in the formation of t between the parties. Under the "meeting of the minds" theory of contract, a party could resist a claim of breach by proving that although it may have appeared objectively that he intended to be bound by the agreement, he had never truly intended to be bound. This is unsatisfactory, as the other parties have no means of knowing their counterparts' undisclosed intentions or understandings. They can only act upon what a party reveals objectively to be his intent. Hence, an actual meeting of the minds is not required.
- A contract will be formed [assuming the other requirements are met] when the parties give objective manifestation of an intent to form the contract. Of course, the assent must be given to terms of the agreement. Usually this involves the making by one party of an offer to be bound upon certain terms, and the other parties' acceptance of the offer on the same terms. The acceptance of an offer may be either a statement of agreement, or, if the offer invites acceptance in this way, a performance of an act requested in the terms of the offer. For instance, if one tells a neighbor kid that if the kid mows the offeror's lawn, the offeror will pay $20.00, and the kid does mow the lawn, the act of mowing constitutes the manifestation of the kid's assent. For a contract based on offer and acceptance to be enforced, the terms must be capable of determination in a way that it is clear that the parties assent was given to the same terms. The terms, like the manifestation of assent itself, are determined objectively. They may be written, or sometimes oral, although some kinds of contracts require a writing as evidence of the agreement to be enforced.
- Consideration: There must be consideration given by all the parties, meaning that every party is conferring a benefit on the other party or himself sustaining a recognizable detriment, such as a reduction of the party's alternative courses of action where the party would otherwise be free to act with respect to the subject matter without any limitation.
- Competent, Adult ( Sui Juris ) Parties: Both parties must have the capacity to understand the terms of the contract they are entering into, and the consequences of the promises they make. For example, animals, minor children, and mentally disabled individuals do not have the capacity to form a contract, and any contracts with them will be considered void or voidable . Although corporations are technically legal fictions, they are considered persons under the law, and thus fit to engage in contracts.
- For adults, most jurisdictions have statutes declaring that the capacity of parties to a contract is presumed, so that one resisting enforcement of a contract on grounds that a party lacked the capacity to be bound bears the burden of persuasion on the issue of capacity.
- Proper Subject Matter: The contract must have a lawful purpose . A contract to commit murder in exchange for money will not be enforced by the courts. It is void ab initio, meaning "from the beginning."
- Mutual Right to Remedy: Both parties must have an equal right to remedy upon breach of the terms by the other party
- Mutual Obligation to Perform: Both Parties must have some obligation to fulfill to the other. This can be distinct from consideration, which may be an initial inducement into the contract.
