Contracts Law Outline: Everything You Need to Know
A contracts law outline is something that every person or organization that is planning to enter into a contract should read. 3 min read
A contracts law outline is something that every person or organization that is planning to enter into a contract should read. Signing a contract makes a party obligated to an agreement that is enforceable by law. If it is not done with full knowledge of what the agreement entails, it can result in unfavorable consequences. As such, it is essential to at least understand the basics of contracts law before committing to a contract.
What is Contracts Law?
The rules governing how a contract should be formed and interpreted are largely based on the common law. There are several different kinds of contracts, each of which has its own terms and conditions. A contract refers to an expressed or written agreement between parties with a lawful objective to complete a task or purchase a product or service in exchange for something of similar value.
In most cases, the core of a contract consists of a set of promises made by the parties involved. Known as “consideration” in legal terminology, these promises clearly define the parties' rights and obligations. Basically, there are six elements that make a contract legally binding, including:
An offer from one party with a detailed description of the exact products or services that will be provided:
- Acceptance of the offer by the other party
- Consideration, such as money or another valuable item, to be exchanged between the two parties
- The parties' competency levels, such as ages and mental capability
- Parties' intent to fulfill their promises
- Object of the contract, or terms and conditions
A contract is usually written and signed by the consenting parties. Nonetheless, there are other kinds of contracts that are regarded as enforceable. In addition, there are contracts that are not enforceable and exist only to enable a court to determine the parties' obligations.
In most cases, a contract has two main types of recovery, which are damages and specific performance. Damages refer to the amount of money equivalent to the value that a party is expected to receive if the contract had not been breached. Specific performance, on the other hand, is a party's obligation to fulfill his or her contractual duties. In a sense, a contract is a private law that is formed through an agreement made by the parties involved. The parties' rights and obligations depend on the terms of the contract, which are subject to limits set by relevant statutes.
Types of Contract
From buying a home to dining in a restaurant, almost every activity involves getting into some form of a contract. The most common types of contracts include:
An express contract can be written or created orally. It specifically and clearly states all elements of an agreement. It legally binds the parties together with an offer, acceptance, and consideration.
Unlike an express contract, an implied-in-fact contract does not provide expressed terms of an agreement. Instead, it is created through a mutual agreement between the parties. This type of contract is only enforceable if it has several elements, including:
- Unambiguous offer
- Unambiguous acceptance
- Mutuality of the parties to contract
Implied In-Law Contract
Also referred to as a quasi-contract, an implied-in-law contract does not specifically state the elements of an agreement. It is actually used to remedy situations when a party in a quasi-agreement receives unfair benefits by not making payment for a product or service provided.
Why is a Written Contract Better Than an Oral Contract?
When they are writing down the terms of the contract and signing the contract, both parties are forced to think carefully about their obligations. It is easier for the parties to have second thoughts if they enter into a contract orally. When they write down the terms, the parties are more likely to create a more thorough and complete agreement than they will in an oral contract.
An oral agreement that is hastily created is more likely to have gaps that need to be fixed later when misunderstandings and disagreements occur. A written contract ensures that there will be no disputes. Certain kinds of contracts must be written in order to be enforceable.
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