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Contract law
To be legally binding as a contract a promise must be exchanged for adequate consideration. Adequate consideration is a benefit or detriment which a party receives which reasonably and fairly induces them to make the promise/contract .For example, promises which are purely gifts are not considered enforceable because the personal satisfaction the grantor of the promise may receive from the act of giving is normally not considered adequate consideration.
Certain promises that are not considered contracts may, in limited circumstances,
be enforced if one party has relied to his detriment on the assurances
of the other party. Contracts are mainly governed by state statutory and common (judge-made) law and private law. Private law includes principally the terms of the agreement between the parties who are exchanging promises. This private law may override many of the rules otherwise established by state law. Statutory law may require some contracts be put in writing and executed with particular formalities. Otherwise, the parties may enter into a binding agreement without signing a formal written document.
See US$110 of The Restatement. Most of the principles of the common law of contracts are outlined in the Restatement Second of The Law of Contracts which is published by the American Law Institute. The Uniform Commercial Code, whose original Articles have been adopted in nearly every state, represents a body of statutory law that governs certain important categories of contracts.
The main Articles that deal with the law of contracts are Article 1 (General Provisions) and Article 2 (Sales). Sections of Article 9 (Secured Transactions) governs contracts to assign the rights to payment embodied in security interest agreements.
Contracts relating to particular activities or business sectors may be
highly regulated by state and/or federal law.See Law Relating To Other
Topics Dealing with Particular Activities or Business Sectors. In 1988, the United States joined the United Nations Convention on Contracts
for the International Sale of Goods which now governs contracts within
its scope. DOES A CONTRACT HAVE TO BE NOTARIZED? WHAT IS A CONTRACT? A contract is an agreement between two or more persons (individuals,
businesses, organizations or government agencies) to do, or to refrain
from doing, a particular thing in exchange for something of value. Contracts
generally can be written, using formal or informal terms, or entirely
verbal. If one side fails to live up to his/her/its part of the bargain,
there's a "breach" and certain remedies for solving the differences
are available. The terms of the contract - the who, what, where, when,
and how of the agreement - define the binding promises of each party to
the contract. WHAT ARE THE KEY ELEMENTS OF A BINDING CONTRACT?
Consideration - If the other side is to be held to the contract, you must give up something in exchange. This is called consideration. No side can have a free way out or the ability to obtain something of value without providing something in exchange. Money is the most common form of compensation, but it can also be property, giving up a right or valid claim, making a promise to do or not to do something, or anything of value. Agreeing to perform an illegal or illicit act is not consideration and the contract is void.
Mutual Assent or Meeting of the Minds - This means that each side must be clear as to the essential details, rights, and obligations of the contract. Putting the deal down on paper prior to signing it goes A LONG way to avoid future misunderstandings and disputes. Meeting of the minds sometimes can be expressed by words spoken or gestures made or can be inferred from the surrounding circumstances. There is no meeting of the minds if: (1) one side is obviously joking or bragging, (2) there is no actual agreement (i.e., the farmer who is selling a gelding and the buyer thinks the horse is a brood mare), or (3) both sides have made a material mistake as to the terms or details of the contract.
Words, gestures, or actions can signal an offer to enter into a contract and an acceptance. If you are forced to make an offer ("your money or life") it is not a valid offer. Similarly if you are tricked into accepting, it will not be deemed acceptance of the terms offered. To have a binding obligation on both sides, both sides must approve and accept the terms and conditions of the offer.
Offers remain open until: (1) accepted, (2) rejected, (3) retracted prior to acceptance, (4) countered, or (5) expired by their own terms.
COUNTER-OFFER If you reject an offer, you have no contract unless at a later date a new offer is put on the table (called a "counter-offer"). A counter-offer is a new set of terms and conditions given in response to the original offer. The difference between the original offer and the counter-offer may be just one clause in particular or multiple provisions or the entire contract.
RETRACTION Be mindful that you can take back or withdraw an offer at any time before the other side has agreed to the deal. This is called retraction (proving that you have withdrawn the offer before the other side accepted may present a problem). On the other hand, changing your mind after you have signed or agreed precludes retraction. Absent compelling reasons for not holding up to your end of the bargain, you will be a party to a contract.
ACCEPTANCE The response to the offering, trough the party express the will to be
binded to a contract. Express - a direct and absolute outward manifestation of agreement, such as, "I accept your offer." Implied - the acts of the parties show that the offer has been accepted, such as when both parties to a contract begin to perform the terms of the contract. Conditional - acceptance is conditional on the happening of something, such as, "I accept your offer so long as you trim my tree in the next two days." By its terms, a conditional acceptance is a counter-offer.
MUST THE CONTRACT BE IN WRITING?
STATUTES OF FRAUDS - CONTRACTS THAT MUST BE IN WRITTING Most states have laws (called "Statutes of Frauds") listing the types of contracts that must be written in order to be enforceable. The purpose of the Statutes of Frauds is to prevent fraudulent claims from arising. Although the laws vary from state-to-state, the most common examples of contracts that generally must be in writing are:
1. sales of real property; 2. promises to pay someone's debt obligations; 3. a contract that takes longer than one year to complete; 4. real property leases that run for more than a year; 5. contracts for an amount or other consideration that exceeds the state's threshold; 6. a contract that will go beyond the lifetime of the one performing the contract; 7. the transfer of property upon the death of the party performing the contract.
If you agree verbally to a type of contract listed in your state's Statutes of Frauds without getting the agreement in writing, the contract is not enforceable, although there are some exceptions. Because state laws vary in this area, it is strongly suggested that you consult with your attorney if only to review the proposed contract. Do not wait until after you have signed. That can be too late.
Both parties must live up to their end of the bargain in the contract to have closure. In other words, until both parties have properly performed under the contract, the contract remains open
1. one party to a contract makes it impossible for the other parties to the contract to perform; 2. a party to the contract does something against the intent of the contract; or 3. a party absolutely refuses to perform the contract.
CONTRACT KILLER: A material failing to perform any term of a contract, written or oral, without a legitimete legal excuse. It is the most common cause of lawsuits for damages.
COURT ORDERED SPECIFIC PERFORMANCE OF THE CONTRACT Not all breaches of contract are necessarily "contract killers" which would end up in a lawsuit. Much would depend on whether the breach is "material" or "immaterial" and who the parties are.
If the breach is immaterial, you may have the option to: 1. ignore or excuse the defect and continue on as if nothing occurred, point out the problem to the responsible side and give it/she/him an opportunity to fix it, 2. refuse to pay anything more until it is fixed, or 3. correct the work yourself and deduct the cost from any payment.
What makes sense for you will depend on the facts. Where the matter is substantial, the advice of an attorney can help you.
REMEDIES To achieve justice in any matter in which legal rights are involved. 1. Compensatory Damages - money to reimburse you for costs to compensate for your loss. 2. Consequential and Incidental Damages - money for losses caused by the breach that were foreseeable. Foreseeable damages means that each side reasonably knew that, at the time of the contract, there would be potential losses if there was a breach. 3. Attorney fees and Costs - only recoverable if expressly provided for in the contract. 4. Liquidated Damages - these are damages specified in the contract that would be payable if there is a fraud. 5. Specific Performance - a court order requiring performance exactly as specified in the contract. This remedy is rare, except in real estate transactions and other unique property, as the courts do not want to get involved with monitoring performance. 6. Punitive Damages - this is money given to punish a person who acted in an offensive and egregious manner in an effort to deter the person and others from repeated occurrences of the wrongdoing. You generally cannot collect punitive damages in contract cases. 7. Rescission - the contract is canceled and both sides are excused from further performance and any money advanced is returned. 8. Reformation - the terms of the contract are changed to reflect what the parties actually intended.
Bear in mind that it often makes sense for both parties to directly negotiate a settlement for a breach. However, if the matter involves a significant amount of money, a wise option would be to retain an attorney to help you propose settlement terms and to review any proposed settlement in advance.
DISPUTE RESOLUTION ALTERNATIVES: MEDIATION AND ARBITRATION Other alternatives for dispute resolution include mediation and arbitration. These avenues for obtaining a remedy may be more cost effective than simply filing a lawsuit and letting the court settle the dispute.
As a practical matter, many local merchants will have "return" policies that permit a buyer to return unused merchandise within a certain time for a full return with no questions asked. Some states have laws giving consumers the right to return merchandise within 7 to 14 days, unless the store predominately posts a "No Return" or "Final Sale" notice.
If the contract involves home repairs, you also have the right to change your mind, typically within 72 hours from signing the contract. The FTC and many states also have "cooling-off" laws involving major purchases, such as new cars.
MINOR AS PARTIES
Releases are often used in connection with a settlement of legal claims. For example, if you were involved in a car accident and the other driver's insurance company offers to fix your car, the insurance company will probably demand that you sign a release, agreeing that in exchange for the cost of your repairs, you will not sue the other driver under any circumstances.
GENERAL RELEASE If you sign a "General Release", you would be giving up your rights to sue should you have any physical injuries that you are unaware of or if a passenger in your car later sues you for her injuries in the accident. Signing any form of release without advice from a lawyer is like signing a blank check and giving it to a stranger.
Depending on state law and the circumstances of a specific case, damages may also include other expenses that were incurred because of the breach as well as costs of the lawsuit.
The more common defenses to a breach of contract claim are: 1. One side was not competent to enter into the contract, either due to age or mental illness; 2. One side had a "free way out" and really never provided any form of "consideration"; 3. One side was under pressure and duress or other undue influence to sign; 4. One side engaged in "fraud" to procure the contract; 5. One side prevented the other from fulfilling its/her/his end of the bargain; 6. The original contract was changed with the agreement of all parties; 7. There was a mistake of fact or mistake of law prior to signing the contract; 8. The contract has an illegal purpose or act; 9. Something happened, through no fault of either side, making the duties under the contract impossible to perform; 10. The side claiming the breach accepted the performance without claiming a breach had occurred.
COMMON TYPES OF LAWSUITS 1. Negligence Actions (TORTS). Tort is a civil obligation which source is a crime, felony or misdemeanor, where a victim is involved. A "tort" is a civil wrong. Say you were injured crossing a street by a driver speeding through the red light. You have incurred pain and suffering, medical and physical therapy expenses, and you missed work, using 20 days of sick leave. The driver's insurance company offered to pay only the doctor bills and you are unsatisfied with the proposed settlement offer.
You can file a tort action against the negligent driver in an effort to recover for both the out-of-pocket costs and the physical or emotional injuries you suffered. Tort-based lawsuits are frequently brought for injuries sustained as a result of negligence, defective products, medical malpractice, unsafe premises, unsafe products.
2. Contract Actions: You paid a supplier to deliver merchandise. The goods were defective. You want your money back. Or you paid a contractor to repair your leaky roof and after constantly badgering him to finish the job, hired someone else to do it. You want to "sue the tar out of him" but at least recover what it cost you to have someone else do the job. You can file a civil action claiming breach-of-contract.
3. Actions: A. The typical divorce and custody and support cases. B. Private nuisances: The proverbial "neighbor's dog incessantly howling day and night and the neighbor does nothing" story. You file a lawsuit to force you neighbor to do something about his/her howling mutt.
BANKRUPCY Although there are over a million of them
filed each year in Federal Bankruptcy Court, bankruptcy matters are not
really lawsuits. There is no plaintiff or defendant although there may
be claims raised in Bankruptcy Court that resemble lawsuits. RENTING OVERDUE IS TO STEAL
CONTRACT DAMAGES VALUATION:
In other words, if you agreed to sell a product for $1,000 that would
have cost you $600 to manufacture and deliver, and before you incurred
any costs the buyer changed its mind, the damages would consist of the
profit of $400 you lost. Even if you could prove that you would have invested
the $400 in a stock that later went up ten-fold, that extra amount would
be regarded as speculative and unrecoverable.  |
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