Law of Contract
What is the Law of Contract?
The basis of a contract is
– An offer
– An obligation to carry out that agreement
When that obligation is not carried out on either sides of the contract, the court becomes involved to solve the dispute. Law of Contract is when the agreement is examined to see if it is legal, valid and enforceable. If the contract is valid the court determines the true nature and extent of the rights, duties and obligations of what was agreed. When these steps have been completed the court can settle the dispute.
What is the Law of Contract like?
The Law of Contract and Tort Law are two legal terms that appear frequently in courts when an individual or party has violated an agreement.
However, while contracts cover consented transactions for an item or a service, Torts cover injury or harm by another individual or party. Torts are similar to contracts due to the laws that everyone acknowledges e.g. driving at the correct speed limit.
What is the purpose of Law of Contract?
Its purpose is to provide support and control to the agreement insuring that the transaction occurs without any difficulties.
What are the different types of Contract Law?
Contracts under Seal: A traditional document in which a contract was only legal if it was stamped by a seal which represented the agreement of everyone involved.
Express Contracts: Where the terms of the contract are clearly expressed, either verbally or written (a written or verbal offer that is accepted in a way where consent is clearly shown).
Implied Contracts: An obligation from a mutual agreement or a promise, which has not been expressed either verbally or written.
Executed Contracts: A contract which has been completed.
Executory Contracts: A contract where an obligation is to be carried out at an agreed date/time.
Bilateral Contracts: A promise made by an individual or party in exchange for a service or item from the other individual or party.
Unilateral Contracts: A promise which is made by one individual or party.
Unconscionable Contracts: A contract which is unjust or in favour of one individual or party (one-sided).
Adhesion Contracts: Where an individual or party with an advantage drafts a contract where the other individual or party can only accept or reject the offer. No negation is involved.
Aleatory Contracts: A mutual agreement which is triggered by an event e.g. insurance – car, house, health etc.
Void Contracts: There are no legal rights or obligations upon the individuals or parties and is not enforceable by a court.
Voidable Contracts: A valid and binding contract that can be declared void on the basis of fraud, duress, lack of capacity etc.
What’s involved with complying with the law of contract?
Individuals need to be aware of their rights, duties and obligations as well as how to obtain compensation in the case of infringement as well as the rights, duties and obligations of their colleges and those that may come into contact with the business.
Where does compliance with the Law of Contract fit into the process of starting a business?
Individuals need to be knowledgeable about what current laws and legal requirements apply to their business, such as registrations, leases, licences and contracts. It is their duty and obligation to comply with these in order to provide a safe environment as there is usually an implied contract in place. When that promise is broken (e.g. injury, fraud etc.) the business will be taken to court for compensation.
How does the Law of Contract impact on different areas of a business?
Depending on the area (suppliers, employees etc.), there are different contracts in place. The impact of these different contracts is based on how the business manages them. Ineffective management can cause the business to infringement of their contracts leading to the other individual/party looking for compensation.
What terms are used in Law of Contract?
Contract: A written or spoken agreement.
Rights: A moral and/or legal privilege to have or do something.
Duties: A moral and/or legal responsibility.
Obligations: an act, course of action, duty or commitment which is morally and/or legally binding.
Tort: A wrongful act or an infringement of a right which is not always the result of something illegal but does harm or injury to another person.
Infringement: A violation or non-compliance with the terms of a law and/or agreement.
Where can I find more information about Law of Contract?
Graw, Stephen, 2008, An introduction to the law of contract, 6th ed.
Who would most benefit from this knowledge?
• An individual with no prior experience in the area.
• This knowledge would benefit workers of all job levels, organisations and industries.
• What jurisdiction has influence depends on the type of contract as different legislative bodies govern different areas.
• No cultural influence impacts on this area.
• Climate does impact on this area. If a service or product involves natural resources and the weather conditions are not ideal or extreme (e.g. flood) they may not be able to meet their end of the agreement.