Contract law is made up of seven key basic elements. They include mutuality, capacity, offer, legality, acceptance, certainty, and consideration.
Contract law is a law that contains pacts between individuals, commerce, and groups. When the dealings are not followed, it is referred t as a breach of contract.
A contract is a spoken or written agreement intended to be enforced by law. Contract means the absolute legal responsibility resulting from the individuals' agreement as impacted by the Uniform commercial code and any other applicable law rules. The law offers a remedy that the rule, in other ways, acknowledges as a responsibility.
Sources of contract law are grouped into four, namely administrative law, the Constitution, federal and state case law, and federal and state statutes. The case law and statutes are ones that the lesson will focus on.
The following are the importance of a contract:
Contract law is a field of study concerned with establishing rules and lawmaking as it permits contracts. A contract can be a legally binding document, given that the practices mentioned there are legalized. At least two individuals agree on numerous contracts and encompass four points. The most vital is one party offering an offer to the other party to accept.
An agreement is counted as reached when the offer accepted is met with a ''mirror image'' acceptance. Contract law is founded on the code that contracts have to be reserved, and the law recognizes breach of contract, and remedies can be provided.
Contract law has seven key elements for its creation, namely:
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The primary source of contract law includes statutory law and common law. The common law is signified by the ruling of courts and the Restatement of agreements, books, and articles printed concerning contract law. Individual judges made up the law in the common-law court as they involve rules to dispute resolution in front of them.
The following are different types of institutional sources of contracts.
There are two main sources of contract laws: common law, also known as case law, and the uniform commercial code, which will be discussed below in detail.
Common law, sometimes referred to as case law, is a body of unwritten laws grounded on legal precedents formed by the law court. These laws affect the concluding process in rare cases where the impact cannot be measured based on prevailing statutes or written law rules. Common law rests on the precedent set by prior court rulings as it uses previous case law to create present case law. The magistrate ruling over a case controls which guides apply to that case.
An acceptance is an exhibition of consent to the agreements completed by the offeree in a way needed by the offer. In deciding if an offeree acknowledged a proposal and formed a pact, a law court will view the evidence of three factors: entering the contract, accepting the terms proposed by the offeror, and communicating acceptance to the offeror.
The traditional contract law rule is that an agreement must reflect the offer's image. The Mirror Image Rule says that acknowledgment must be accurate to the terms indicated in the contract. Attempts by offerees to change the offeror's terms and add or deduct terms to the contract are viewed as invalid since they indicate the intention by the offeree to discard the proposal instead of bound to the terms.
Take, for example, Benny wants to sell his old fish tank. Now that he had acquired a cat, it seemed less than responsible for leaving his fish alone with the feline. Doogie liked the tank and made an offer of $100 by email. Benny accepted the offer and sent a formal contract to Doogie via fax machine. Doogie crossed out the $100 price, changed it to $20, and sent the fax back to Benny. In this case, the parties do not have a contract, and the image rule applies.
The Uniform Commercial Code is a complete established law leading all commercial transactions in the United States. It is a uniformly adopted state law but not federal law. Uniformity of law is vital in this section for the national transaction of business.
UCC is significant because it aids corporations in various states to transact with one another by offering an ordinary lawful and pledged framework. It regulates sales of personal property and various other transactions. If a business or a vehicle is purchased, a UCC-1 statement is signed, and the title is still held in the lender's ownership until the loan is completed.
Simple performance of a term means doing what you must do under the agreement. An individual is supposed to follow the given order, deliver as needed, and pay whenever necessary without any hitch. In case of the absence of specific payment terms, he is breaching the contract, which is typically satisfactory grounds for a charge. An example of a simple performance is when Bill ordered a bushel of zucchini from Zeke's Farm. The order was made over the phone. Zeke delivered the vegetables the next day, and Bill paid him. When in times of contracts related to purchasing and vending goods, the UCC contains certain laws concerning the seller's performance. Once a customer orders a product or service from the producer and the producer delivers in perfect condition as agreed, the buyer is bound to pay the producer or else be sued.
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The fraud statute can be described as a legal notion that needs certain pacts to be carried out in writing. It requires that a contract is in written form. Some authentic contracts must be in writing to be enforceable by a court of law. The necessity where a bond is supposed to be in writing is usually reliant upon the theme of the treaty. The importance of these statutes is that they are designed to prevent fraud in forming contracts.
For the contract to be granted as valid, it has to be in written form, the subject of the contract needs to be identified understandably, the essential terms must be spelled out, and both parties should sign the agreement.
The statutes covering contracts of the following types are needed to be in writing in almost all jurisdictions:
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The two sources of contract law are UCC and Common law. The following are the examples of the two sources of contract law:
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A contract is a verbal or printed arrangement supposed to be enforced by decree. Sources of contract law are grouped into four: the Constitution, federal and state statutes, federal and state case law, and administrative law. There are different elements of contract law, namely certainty, offer consideration, Mutuality, signatures, Capacity, and legally accepted terms. The contract law comes from common law and statutory law. Common law is a set of unrecorded laws based on legal precedents formed by the court. Common law uses previous case law to create present case law.
The Mirror Image Rule states that acceptance must be exactly as the terms indicated in the contract. The Uniform Commercial Code is an inclusive establishment of laws leading all business dealings. Simple performance of terms simply implies carrying out the needed activity under the agreement. It follows the given order, delivering, and paying without a hitch. The statute of fraud requires that a contract is in writing form. It covers a contract for selling land and sales of goods worth more than $500, and it also covers a contract that exists for specific goods manufactured for the company and cannot be utilized by another buyer.
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Contract law controls most agreements between parties, whether oral or written, that involve goods, services, money, employment contracts and real estate deals. Let's use an example to put contract law into motion.
Maurice wanted to sell his vintage car, so he placed a classified ad on a popular website offering the car for a whopping $35,000. Kendall noticed the ad and quickly emailed Maurice requesting a test drive. After zipping around town, Kendall accepted Maurice's offer of $35,000 without a single negotiation. The parties have offer and acceptance.
Once this is done, they drafted a contract for the sale of the car. When Kendall coughed up the $35,000 cash, and Maurice handed over the keys, there was an exchange of something of value to both parties and the element of consideration was met. As long as the remaining elements are satisfied, the deal is as good as done!
The law recognizes this as a contract, meaning a legal document containing signatures of two or more parties that is binding and enforceable. Of course, there are certain other elements that must be present, like:
However, even when all elements are met, this does not always mean that both parties will commit to the promises made in the contract. For this, the set of laws or rules were developed that govern how contracts are written and executed. In short, they ensure that both parties to a contract adhere to their promises. The law sets some ground rules everyone has to follow, so that neither party loses out on a promise made to him.
The umbrella of contract law is divided into two areas:
Both areas of contract law work in similar ways, but the difference lies in the type of contract. And, both require that certain elements of a contract be present. The most significant difference is in acceptance, an important element to any contract.
Common law contracts require strict adherence to the mirror image rule, while the UCC allows for minor changes to a contract that do not significantly impact its terms. We will focus on the element of acceptance. Common law is like a precedent set by prior court rulings. In other words, no set-in-stone law applies to common law decisions. And, decisions may vary by court or state.
Next, common law contracts also use the mirror image rule, meaning acceptance must be for the exact same terms and conditions presented in the offer. Nothing is permitted to change or the offer is no longer valid. To make this a bit clearer, let's revisit Maurice and Kendall. We know that Maurice and Kendall were in the midst of working out a deal for the sale of his sports car.
Suppose when Maurice presented Kendall with the contract for $35,000, Kendall slashed through the $35,000 and returned the signed contract with a price reduction of $2,500 written in pen. Mirror image rule would say that there is no longer a valid contract. Acceptance of the original offer of $35,000 stands. Even though Kendall signed the contract, the price was changed. The element of acceptance has no longer been met and no contract exists. The Uniform Commercial Code is a bit less restrictive.
Unlike common law, the Uniform Commercial Code deals specifically with commercial contracts. It is actually a set of laws that governs transactions between states and in business transactions. It was designed to create a uniform set of standards that regulate fairness in commercial transactions. The Uniform Commercial Code is a comprehensive set of nine articles or laws and rules. For our purposes, we will focus on Article 2 - Sales.
Article 2 was written so that transactions between businesses would be more elastic than, say, the mirror image rule, to allow flexibility making contract formation easier to facilitate. This is because acceptance and consideration work a bit differently. In common law, for a contract to be binding, one party offers, the other party accepts and something of value is exchanged.
The terms of offer, acceptance and consideration - amongst other elements - are written or expressed orally in a very specific way. The Uniform Commercial Code does require that whatever promises each party makes must be fulfilled but not in such strict terms.
Let's say you were a jalapeño farmer. Pico's Tacos buys most of its peppers from your farm. They do this by emailing your sales department with their order on a weekly basis. Since you have been selling jalapeños to Pico's for years at the price of $50 a case, there is an assumption that the peppers will remain $50 a case.
When the peppers arrive, Pico notices that you raised the price to $60 a case. Pico can either accept the peppers at the higher price, or he can refuse the shipment and send the pepper truck driver packing. Pico accepted the peppers at the higher price. The important nuance: Acceptance came after the delivery and the price change.
In common law, the price cannot be changed after an agreement has been made and a contract signed. By accepting the higher-priced peppers, Pico accepted a change in the terms of the contract. This type of flexibility makes for smoother and faster commerce. Suppose Pico recommended you to his friend, Carlos. Carlos calls you and asks if he can pick up 100 pounds of peppers by tomorrow. You say yes, and tell him the peppers are $1.00 a pound.
When Carlos arrives to pick up his peppers and pays you, a contract now exists. Prior to the transaction, nothing was written or agreed upon. Carlos inquired whether peppers were available. You, in turn, stated yes and for a certain price. Simple performance created the basis of the contract. A few other important things to consider are:
In fact, in many cases, a contract does not even have to be written if under a certain dollar value. The exception falls under the statute of frauds, which states that a contract for the sale of goods over $500 is not enforceable unless it is written. Simple performance is not enough. The statute of frauds also says that if goods were specifically manufactured for the buyer and cannot be used by another buyer, a contract must be written.
Both common law and Uniform Commercial Code serve to protect contract parties. Common law offers a higher level of protection in that is has certain requirements that create a binding agreement. The Uniform Commercial Code is more flexible, which allows commerce to move more swiftly.
To sum things up, a contract is a legal document containing signatures of two or more parties that is binding and enforceable. For a contract to be enforceable, it must contain the elements of offer, acceptance and consideration, as well as mutuality, capacity and legally accepted terms. Contract law controls most agreements between parties, whether oral or written, that involve goods, services, money, employment contracts and real estate deals.
There are two areas of contract law:
Common law is like a precedent set by prior court rulings. This area of contract law relies on the mirror image rule, meaning acceptance must be for the exact same terms, and conditions presented in the offer must also be followed. The Uniform Commercial Code deals specifically with commercial transactions. It is actually a set of laws that governs transactions between states and business transactions.
It is more flexible in that it does not require mirror image and, in many cases, a written or oral agreement. Simple performance of the contract terms is enough to bind parties. A few more differences also exist:
However, the statute of frauds states that a contract for the sale of goods over $500 is not enforceable unless it is written. Simple performance is not enough. The statute of frauds also says that if the goods were specifically manufactured for the buyer and cannot be used by another buyer, a contract must be written.
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