Contract Law was chosen to be an suggestion of two connected notions that the rules of contract law could be constructively for the studied through analysis, integrative tribulations and that those rules, once mastered, could be resourcefully used by attorneys to solve the problems of their clients. Between that time and today, much has changed. Contract law is generally well thought-out one of the more stable areas of law, but it too has been evidently in it state of variation. Contract, normally notes an union between two or more individual, not merely a common belief, but a general understanding as to somewhat is to be prepared in the future by one or both of them. For lawyers, contract more often than not is used to refer to an agreement that has legal effect; that is, it creates obligations for which some variety of legal enforcement will be accessible if performance is not forthcoming as promised. Thus, it will sometimes be necessary to make a distinction among three elements in a transaction, contract;
(1) The agreement-in-fact between the parties.
(2) The agreement-as-written.
(3) The set of right and duties created by (1) and (2).
Without trying at this point to state a short but comprehensive definition of law (if that were possible), it is perhaps sufficient to suggest that they will be survey the conduct in which such agreements are prepared and enforce it in our legal structure, the responsibility of lawyers and judges in creating contract, in deciding dispute that may come up with respect to their performance, and in fashion suitable remedy for commit a breach.
It has been said, “Law is a prediction of what the courts will do” (Peter, 2000). There is a great degree of truth in this statement. If they know the law of contracts, for example, in many instances they will be able to foresee what the courts will do in a given case. They will be able to predict the result of a specified course of action because they will know a specific, uniform set of rules lat the court will apply.
If there were no set rules, there could be no prediction of what the courts will do. We would be reduced to guessing about how the judge might feel about a given problem, as opposed to what the law required. Thus, to enable men to proceed in their affairs with confidence, the courts follow clear, uniform rules for interpreting contracts and deciding disputes arising out of contract. The interpretation of contracts is for the most part a matter of common sense. They will find that the rules or interpretation are very comparable to what our own common sense would decide. Thus, as they proceed to read the general rules they will now present stop and think about how down-to-earth and simple they are.
A contract is an agreement between two parties, resulting in an obligation or legal tie, by reason of which one party is entitled to have certain predetermined acts perform or forborne by the other. There are many definitions of a contract. A contract is also so-called to be an agreement enforceable by law, made between two or more persons, by which rights are acquired by one or more to acts or forbearances on the element of the other or other. The word contract is used to designate every narrative of agreement or requirement, whether spoken or written, with or without seal, by which one party is bound to another to perform or omit to perform a predetermined act.
Where does contract law fit into this picture? Our society recognizes and protects a diversity of types of material goods and personal rights. Ownership of property ordinarily includes the right to make use of and consume the thing owned, but in numerous cases it will be more to the benefit of the owner to transfer, or pass on the right of ownership to some other person in exchange for something else of assessment (money perhaps), or the ownership of some other property; however, it is much more common for both the development and the performance to be spread over a substantial period of time. The law of contracts is our society’s legal instrument for shielding the expectations that arise from various types of performance, such as the conveyance of property (tangible and intangible), the performance of services, and the payment of money. Such agreements are often referred to as executory contracts.
Any society that acknowledged property rights is obliged to also concentrate on the question of how it should respond when someone violates those rights, and property rights are not the only type of individual rights that may require legal protection. Even societies that do not authorize private ownership of affluence to the extent that ours does are likely to be familiar with the personal rights of individuals to be free from certain kinds of conduct such as to the infliction of bodily injury or supplementary interferences with their individual self-determination or dignity. Criminal law and torts deal with diverse aspects. Criminal law focus on individuals violations of personal and property rights that society deems severe enough to be deterred by threat of rigorous punishment for their commission (robbery, rape, and murder are obvious examples).
Tort law considers what remedy should be made available to the individuals so injured. Because of the nature of the conduct regulated, criminal law and tort law overlap to a great degree, but they are not congruent. Many acts are criminal but not tortious, because they are offenses not in favor of individuals but against the state disloyalty.
In history, contract law developed as judge-made law, set of rules distilled from a combination of court decisions in prior cases (Burton, 2002). Our judicial system of decision making is commonly said to be one of stare decisis obedience to past decisions, or precedents. A precedent is a prior decision with facts sufficiently similar to the case under adjudication that the court feels obliged to pursue it and to deliver a comparable decision. A regime of law based primarily on precedent is commonly justified on two grounds. First, it offers a high degree of predictabi1ity of decision, enabling those who so desire to order their affairs in accordance with ascertainable rules of law. Second, it puts a rein on what may otherwise be the natural inclination of judges to decide cases on the basis of prejudice, personal emotion, or other factors that they might regard as improper grounds for decision (Burton, 2002).
There will be times, however, when a common law judge concludes at unsighted loyalty to precedent would produce an unjust result in there are a number of ways such a result may be avoided. To begin with, a precedent is considered to be “binding” on a court only if it was decided by that same court or by an appellate court of higher rank in the same jurisdiction. Other precedents from lower courts or from other jurisdictions are said to be merely persuasive. If a precedent of the latter type is in fact unpersuasive, the judge is free to disregard it. If the precedent is not merely persuasive, but binding, it cannot simply be ignored. It may, however, be avoided. If the facts of the present case do not include a fact that appears to have been a fundamental material to the earlier decision, the court may distinguish the precedent and render a different decision. If the earlier precedent is indeed binding but is difficult or impossible to distinguish, there is one other way to avoid its consequence.
If the court of decision is the one that created the precedent or is a higher court, it can simply overrule the earlier decision. Some cases cannot be decided on the basis of precedent alone, either not exists or because the applicability of precedent to the case at hand is uncertain. In these cases courts turn to policy to resolve the case. Policy may be regarded in general as any public goal that will be furthered by a particular decision. Often a court will discern a public policy in statutes or court decisions, even when those do not apply directly to the case at hand; at other times the court will apparently be following the judge’s own good judgment of what is just or moral.
Having presented our general definition of contract law, their subsequently face the question: Where is this law to be found? From what sources what “authority” do courts derive the rules of law they submit an application to come to a decision of contract disputes? The types of authority they will consider fall generally into two categories: primary and secondary. Primary authority, generally viewed by lawyers and judges as “the law” itself, consists of previous judicial decisions which jointly make up what they call the “common law” and statutes, ordinances, and the resembling expressions of the determination of a duly constituted legislative body on a subject matter within its proper sphere of action. Secondary authority might be very freely defined as anything else that may well appropriately persuade a court.
The English Parliament enacted what is frequently referred to as the “statute of frauds”, subsequently adopted in just about on every American state, this statute requires certain types of contracts to be evidenced by a signed writing to be enforceable in court. With this prominent exception, until the twentieth century contract law has been largely judge-made. Even the statute of frauds has itself become so overlaid by court decisions that it has more of the quality of common law than of a modern statute. The common law character of contract law changed significantly in the twentieth century, although it is still accurate to characterize contract law as predominantly judge-made rather than statutory. Probably the most important inroad on the historical character of contract law was the development t of the Uniform Commercial Code, begun in the 1940s (Arnold, 2000).
Although its name suggests otherwise, the Uniform Commercial Code (UCC or the Code) does not govern all commercial transactions. It does not apply, for example, to transactions in real estate or to personal service contracts. Nevertheless, it has become the major statute with general importance to all phases of contract law. The UCC, like contract law in general, has not been static. The Permanent Editorial Board of the UCC is responsible for monitoring developments in the law and proposing revisions to the Code, since the Code’s widespread implementation in the 1960s.The Permanent Editorial Board has presented a number of revisions to various articles of the Code, and this processing is ongoing.
When a court decides a case governed by a statute, its reasoning differs with the aim of the used of common law principles are applied. Any court, even the highest court of the jurisdiction, is bound to pursue the provisions of a legally binding statute that be relevant to the dispute before it. This sense of duty stems from a fundamental political standard of our society. The legislature has influential lawmaking power so long as it acts within the limitations of its constitutional authority. Therefore, the legislature may if it wishes modify or do away with any of the rules of common law. Every now and then, of course, the language of a statute possibly will be subject matter to conflicting interpretations; in such cases, courts customarily seek to determine the legislature’s intention in enacting it, in order to adopt a practical way that will best effectuate that principle.
As we have seen, the National Conference of Commissioners on Uniform State Laws and its diverse model acts represented one response to the growing uncertainty and lack of uniformity in commercial law. In the early fort emerged to address these problems. In 1923, the American Law Institute (ALI) was formed. The major project undertaken by this organization was the preparation and proliferation of what purported accurate and authoritative summaries of the rules of common law in various fields, including contracts, torts, and property. The first such “Restatement” to be issued – and perhaps the most successful in terms of acceptance and use by the bench and bar – was the Restatement of Contracts, officially adopted by the ALI in 1932.
None of the ALI Restatements have the force of law, as does a statute or an-individual court decision. Although they constitute only secondary authority, the Restatements have in fact proved to be remarkably persuasive; not infrequently, a court will justify its decision by simply citing and quoting (perhaps with approving discussion) the Restatement’s rule on a given point. Recognizing that contract law had undergone substantial development since 1932, the ALI in 1962 began to prepare a revised version of its Restatement. Finally adopted in full in 1979, the Restatement (Second) of Contac reflects some shifts in philosophy from the original Restatement. The first Restatement tended to emphasize generalization and predictability, at the expense of diversity and flexibility; the second attempts, with more extended supporting commentary and editorial notes, to acknowledge some of the complexity the first Restatement preferred to ignore and to suggest a freer rein for judicial discretion.
Although they are no more than secondary authority, the Restatements of Contracts have clearly had a powerful effect in shaping judicial views of the common law of contract ought to be. Perhaps no other secondary authority has had quite that impact on the law, but over the years a variety of published articles, books, and multivolume treatises has been devoted to analyzing, evaluating, and synthesizing the immense body of contract cases that bas accumulated in the reported decisions of American courts.
International Commercial Law
Most transactions in which lawyers are involved take place within the United States, but international commercial transactions are of growing importance to our economy. Today, exports and imports of goods are a signify cant percent of gross domestic product. Moreover, it is likely that international business will continue to grow in importance as various legal and technological barriers to cross-border dealings diminish. Historically, tariffs have probably been the most significant barrier to international trade. Countries erect tariffs on imported goods for a variety of reasons, including to protect domestic industries and to raise revenue. The United States has been a member of the General Agreement on Tariffs and Trade (GATT) since its inception, although Congress did not give its formal approval of United States participation until ratification of the 1994 amendments to GATT, which created a central body [or administering GATT, the World Trade Organization (WTO). Lack of uniformity of the rules governing international commercial transactions has been another major barrier to international trade attempts to overcome this problem.
The United Nations Commission on International Trade Law (UNCITRAL), a number of countries adopted a treaty, the United Nations Convention on the International Sale of Goods, commonly known as the “CISG.” The CISG does not purport to cover all issues of international contract law. To fill in the gaps left by the CISG, a private organization, the International Institute for the Unification of Private Law (UNIDROIT), has sponsored preparation of Principles of International Commercial Contracts.
THE FORMATION OF CONTRACTS
There has to be an offer and acceptance, the essential elements of a contract are the offer and acceptance (constituting the agreement), the consideration or the seal, the parties and the subject matter. The presence of all of these elements creates a valid contract. If one is absent, there is no contract. The term “agreement,” in its most general sense, means the concurring of two minds in the same opinion or purpose. At least two parties are required to constitute an agreement. But the agreement which enters into the formation of a contract must be something more than a mere concurrence of the minds. In general, this agreement or assent of the parties must be a mutual compliance to enter upon and be bound by an under stood agreement. There is no contract unless the parties’ assent to the same thing and in the same sense. But this does not impose a union of the undisclosed thoughts and intentions of the parties. Likewise, the motives which motivate the parties to enter into a contract are as a rule not material. All that is necessary is the noticeable consent of both sides of the contract to the same thing and in the same general sense. This assent or agreement originates from an offer and an acceptance.
An offer that may be accepted and create a contract must possess certain characteristics:
First, an offer must be communicated to the offeree (the person to whom the offer is made) and from the offerer (the one who makes the offer), necessarily it possible for one to assent to something of which he is ignorant. Therefore, the offeree must be informed that an offer exists. The communication of the offer may be in whatsoever mode the offerer chooses.
Second, the offer as communicated must be complete.
Third, the offer must be intended seriously. A mere joke, which no one would reasonably consider a serious offer, may not be accepted for the purposes of contract, but even if the offer were not intended seriously. Thus, if a reasonable man would be justified, in treating the offer seriously, and the offeree acted on the offer to his injury, the offerer would be bound.
Duration of offers
The offerer may withdraw his offer at any time before acceptance, but he is irrevocably bound after accept5 no acceptance and no revocation, the determination of what is a reasonable length of time depends upon the circumstances of the particular case. In fact, a reasonable time may vary from a few minutes in some cases to a much longer time in other situations. Furthermore, where there are many decisions involving like situations, what is a reasonable time may become a matter of law rather than a question of fact, and then is determined by the judge and not by the jury.
Termination of Offer
An offer can be terminates by the offeree at any time before the offer is accepted , when the time fixed in its terms for acceptance has passed without any acceptance by the offeree, the death of either the offerer or offeree, and the offeree does not accept in the manner provided for by the offer.
Only the person to whom an offer is made may accept the offer. But if an offer is made generally, anyone who complies with its terms, knowing of the offer, may become the other party to the contract. . The common example is a reward which is generally advertised. Generally, where the intention of the parties after a series of negotiations is to reduce the terms of the proposed agreement to writing, there is no contract until the writing is made. Similarly, where the parties come to a complete understanding, but contemplate the privilege of withdrawal until the contract is reduced to a final writing, there is no contract until the instrument is signed. But if the parties do come to a complete understanding by their correspondence, a contract is created.
The law requires that every simple contract be based upon what it considers a valuable consideration. Consideration is that which moves from the promisee to the promisor, at the Latter’s request, in return for his promise. It is said that where there is a benefit to the promisor, and a detriment to the promisee, there is a consideration. The modern conception of the -principles of consideration declares that the bona fide test of a adequate consideration is whether or not there is a damage to the promisee, and that the presence of a benefit to the promisor is unnecessary. However, enforce legal rights that were similar to those arising under contracts today. In particular, the English courts allowed two causes of action of a contractual nature; covenant and debt. Each of these had its own particular limitations.
The action of covenant was available only to enforce a promise made in writing and under seal. The action of debt had more practical importance, because it was available booth formal promises through the action of debt “sur obligation” and informal ones debt “sur contract” (Burton, 2002). The debt action had a different limitation, however: It was unavailable unless the plaintiff claimed that it was owed a definite or certain sum of money. This limitation did not prevent the action of debt from being used to enforce informal promises, such as loans, purchases of goods, and agreements to pay for services rendered, so long as the plaintiff could claim a definite sum and could establish, debt.
Originally in the common law there were no conditions except express Dues. This seems to have remained true until after simple bilateral contracts were enforced. But as justice demanded the finding of conditions, the courts would scrutinize contracts under seal containing mutual covenants for express conditions, and they did so even before simple bilateral contracts were recognized. This gave great importance to the precise terms in which mutual covenants were expressed, and it not infrequently happened that a single word turned the scale; this undue emphasis on such a word as “for” as importing an express condition was the result of the feeling of the judges that perform performance at a time when the judges had not yet reached the conception of conditions as capable of implication. Express conditions may exist both in bilateral and unilateral contracts.
Bilateral and unilateral contract
Perhaps no aspect of the classical contract law system was more vividly impressed on the minds of generations of law students than the distinction between bilateral and unilateral contracts. As we have seen, a bilateral contract is formed when the parties exchange promises of performance to take place in the future: Each party is both a promisor and a promise; the offeree’s communicated receiving furthermore constitutes in effect her promise to perform. However, if the offeror be supposed to offer to exchange his promise of a return for the offeree’s actual rendering of performance, rather than her plain guarantee of future performance, then the transaction would offer ascend to a unilateral contract. In that case, only one party (the offeror) would be a promisor and the offeree’s rendering of performance would constitute her acceptance of the offer. A bilateral contract is one where there are give and take promises, so that there is somewhat to be done or forborne on both sides. Such a contract consists of mutual executory promises. A unilateral contract is one in which there is a promise on one side only. “Therefore where the consideration is executed on one side and executory on the other, the contract is unilateral” (Burton, 2002). Examples of unilateral contracts are promissory notes.
Classification of contracts
The subject of contracts has been variously classified. With respect to form, contracts are: (l) Formal contracts; (2) Quasi-formal contracts and (3) Simple contracts.
Formal contracts: These obligations are dependent for their validity upon their form, and may be divided into contracts of record and contracts under seal. An example of a contract of record is a judgment of a court, or a recognizance. These are not true contracts, however, for the obligation is imposed by law, and not by the agreement of the parties (Clarkson Kenneth W., 2006).
Quasi-formal: Quasi-formal contracts are those which are partly dependent on form and partly on consideration. They are more commonly included under the term simple contracts. An example is a bill of exchange (Clarkson Kenneth W., 2006).
Simple contracts: All other contracts are simple contracts, whether they be oral or in writing (Clarkson Kenneth W., 2006).
Contracts are further divided into express and implied contracts. The latter class often is made to include what are more properly termed quasi-contracts. Express contracts are so stated, either by word or in writing, that the terms and the promises are fully known to each of the contracting parties. An implied contract arises where the parties have not so fully stated the terms, but have actually made a contract. In such cases the terms of the contract are determined by the conduct of the parties and the inferences properly deducible from the attending circumstances. In short, the parties are actually contracting but not expressly and fully. This idea is important, because it distinguishes such implied contracts from another class, sometimes called implied contracts, or contracts implied in law, but in mod.ern jurisprudence termed quasi-contracts.
The general distinction between express and implied contracts is in the mode of proof. An express contract is proved by evidence of the words used or writing executed. In implied contracts the intention of the parties is determined by proving the facts and circumstances surrounding them. But when a contract is established in either of these ways, it is of the same validity and effect, and the consequences of a breach of the contract are the same. There can be no implied contract where there is an express contract between the parties in reference to the same subject matter.
In general, the parties may contract about whatever they choose. This freedom of contract is limited, however, to this extent: certain objects are illegal (l) either by statute or (2) by common law, or (3) they are forbidden because of public policy (Burton, 2002). Although all of the other requisites of a valid contract are present, if the parties have in mind one of these prohibited objects, the contract will not be enforced. But if the contract can be performed in two ways, one legal and the other illegal, the law presumes, in the absence of proof to the contrary, that the legal method was intended, and this presumption will be adopted.
The three-fold classification given above is mainly for the sake of convenience. Objects cannot be placed with certainty into anyone of the three classes, for a particular object may be illegal by statute in one state and by the common law in another jurisdiction. Whether an object is expressly forbidden by statute, positive rule of the common law, or is merely against the policy of the law in any particular state, depends to a great extent upon the way in which public sentiment has expressed itself in that state.
Contracts in civil law
The term commutative contract is used in the civil law to designate a contract in which each of the contracting parties gives and receives the same. Commutative contracts are declared to be those in which what is done, given or promised by one party is considered as equivalent to, or a consideration for, what is done, given or promised by the other. (Knapp, Crystal, & H., 2000)
Discharge of the contract
In general as contract results from agreement, and agreement requires two or more assenting minds, it follows that there must be at least two parties to every contract. The parties to a contract may be individuals, or aggregations of persons, as corporations, partnerships, and the like; they may act for themselves, or represent others as their agents, attorneys, servants and the like; and they may act jointly or severally. While freedom of contract is a constitutional right which ought not to be interfered with except for good cause, individuals cannot be permitted to do or fail to do anything the performance or exception of which is in any degree clearly detrimental to the public. They have stressed the role of the lawyer as counselor, negotiator, and drafter as well as advocate in the hope of making they aware from the outset of a very simple but important truth: Contract law in action is not just a body of rules.
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