CONTRACT LAW

Date: 2015-10-07; view: 895.

ADDITIONAL TEXTS

Contract law is a huge area of law. It is important to realise that a contract does not have to be a formal document. As long as certain conditions are met, an exchange of emails or oral agreement may be interpreted as a legally binding contract. A contract may even exist if no words are spoken (if, for example, I park my car in a private car park, by my actions I agree to pay the car park owner's advertised fees).

An important question is therefore what exactly constitutes anenforceable contract (i.e. one which the courts will force the parties to carry out). One of the main requirements is the intention to create legal relations. The requirement is intended to distinguish between business agreements on the one hand and agreements between friends and family on the other. In the latter case (say, when a grandparent offers to pay for a family holiday), the intention to create legal rights does not go without saying.

There are several theoretical principles behind contract law, the most important of which is the subject of formation. ' There are two main requirements - agreement and consideration. Agreement refers to the transformation of negotiations into a settled deal and includes an offer and an acceptance of that offer. When a proper offer has been made by one party and accepted by the other, then there is agreement at the moment of acceptance.

Consideration means something of value: both parties must give the other consideration (e.g. party A gives a car = consideration) in exchange for party B's money (=consideration); party С pays a salary (= consideration) in exchange for party D's work (= consideration)). Consideration involves the idea of exchange. It refers to the value, service, information, etc. which is offered to another party in a contract in exchange for that party's agreeing to enter the contract. It is usually the price. In other jurisdictions (e.g. most civil-law jurisdictions), consideration may not be necessary in order for a contract to be enforceable (so a one-way promise may, in some situations, constitute a contract).

If a party to a contract fails to perform its obligations under the contract, it is a breach of contract which gives the other party the right to claim remediesfor the breach. Remedies very often take the form of damages (monetary compensation), and can be claimed by a non-breaching party to a contract from a breaching party. Remedies may serve as restitution (i.e. the non-breaching party may recover what it has given), compensation (i.e. damages to make up for a loss) or specific performance (i.e. the breaching party must perform the action promised in the contract).

When one of the parties fails to perform its obligations, the issue arises as to whether the non-breaching party may safely terminate the contract (without risking being sued by the breaching party). This problem centres on the distinction between two types of clause in a contract: conditions and warranties. A condition is an essential term. If one party fails to act in accordance with one of these conditions, the other party may terminate the contract. A warranty, on the other hand, is non-essential. If one is broken, the non-breaching party may claim damages, but may not terminate the contract. In this case, the clause in question is interpreted as a condition, because the non-­breaching party relied on the clause (i.e. he was unable to carry out his obligations as a direct result of the breaching party's failure).