The Law of Contract
Contract law is an essential area of civil law which oversees the understanding between two parties in a legally binding agreement. It is a practical matter that governs the mutual rights, responsibilities, and duties of each party to the agreement. This means that each individual involved in the contract must comply with the terms and conditions of the agreement and any action that breaches this agreement may incur legal consequences.
Unlike some other areas of law, contract law is not restricted on a state by state basis; rather it is governed by the principles of the Uniform Commercial Code. This code is a part of United States law, so all states abide by the same set of rules in regards to contract law. As a result, contract law is one of the most commonly seen areas of law and affects the everyday lives of everyone.
Contracts can take many forms, but they are generally classified as either spoken (oral) or written. An oral contract generally involves an implied agreement between two parties, where the agreement relies on the promises made and accepted by each individual. On the other hand, a written contract is a formal document that is typically more detailed, containing all of the contractual terms and conditions between the two parties.
Contracts are made up of a few essential elements, including offer, acceptance, consideration, intention, and capacity. An offer is a proposal made by one party which may then be accepted by the other based on the terms stated in the offer. Acceptance is when the second party agrees to all of the terms stated in the offer. For a proposal to be legally binding, both acceptance and consideration must be present. Consideration is typically referred to as the price of entering into a contract as it reflects the value each party is to receive as a result of the agreement.
It is important to note that an individuals intention and capacity to enter into a legally binding contract must also be considered. This means that an individual exhibits intention by making the proposal and both parties possess the capacity to enter the agreement whether this be in terms of age or mental state. A contract ceases to exist when an individual breaches or violates any of the terms stated in the agreement.
Contract law is an area that governs the rights and obligations of individuals and organisations when entering into agreements. Every contract must contain the essential elements of offer, acceptance, consideration, and capacity. This means that any breach of a contractual agreement can incur legal consequences. As such, it is a critical area of law that plays a critical role in the everyday lives of individuals and organisations.
