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Essential Contract Law: History and Theory Report

Origin Of The English Law Of Contract

Contract law is primarily state common law. It has developed through decades of judicial opinions that have resolved virtually every contract dispute. When English courts began to resolve conflict disputes in the early 1800s, they made express reference to the law merchant, which were commercial rules that merchants devised over centuries of doing business across national boundaries (Meiners & Stone, 2011). One indispensable source was the Roman law of contracts, a surprisingly sophisticated body of law that reflected the extensive commercial relationships of an empire covering much of Europe, Middle East and the North Africa. Hence, contract law reflects real business experiences and time-tested principles.

Definition Of Key Terms In A Contract

In modern times, the Restatement of Contracts is an authoritative document that provides a summary of the common law of contract (Stone, 2009). Sir William Blackstone, a famous British jurist, defined a contract as ‘an agreement, upon sufficient thought, to do or not do a something’. Modern definitions of contract center on a ‘promise’, which is an element common to all contracts. Section 1 of the Restatement of Contracts defines a contract as ‘a promise or a set of promises for breach of law which the law provides a remedy or the performance of which the law in some way recognizes as a duty’ (Whincup, 2006). This document goes ahead to define a promise as ‘a manifestation of a party to act or refrain from acting in a specific manner’ (Stone, 2009). A contract, therefore, is the lawful liaison that comprises of the rights and duties of the parties in agreement growing out of promises. Contract law governs the enforceability of that relationship. There are a number of essential requirements of a contract that must be present for a contract to be binding and enforceable. If a party fails to perform a nonbinding promise, contract law will not provide a remedy (Street, 1999). This makes the need to meet the requirements of a contract when the parties want their exchange of promises to be legally binding.

Requirements For A Contract To Be Legally Binding

Contracts may be created by formal writing or oral discussions, or they may be anecdotal by the behavior of the parties. A contract is an express contract if there is a written or oral expression of intent by the parties to enter into a lawfully obligatory agreement. On the other hand, a contract is an implied contract if it arises from the actions rather than the expressions of the parties (Charman, 2007). That is, given the way the parties have acted with respect to each other, the court infers that a contract exits. A contract gives parties the confidence that bargained-for exchanges will be enforceable. While many contracts consist of standardized norms, the elements that make a contract legally binding are constant. These are agreement, consideration, and legal capacity to contract, lawful subject matter, and genuine consent to the contract (Andrews, 2011).

The fundamental nature of a contract is a legally binding accord, that is, a reciprocal appreciation among the parties, in regard, to the essence of the contract. This agreement between the parties is reached through a process of offer and approval. An offer is an undertaking to do something or to desist from doing some specific thing (Monahan, 2001). As defined in the Restatement of Contracts, an offer is the demonstration of readiness to go into a deal, so made as to rationalize another person in accepting that his consent to that deal is welcomed and will conclude it. The party making an offer is called the offeror or offerer; the offeree is the party to whom the offer is made (Charman, 2007).

Since the offeror is allowing the offeree the opportunity to create a binding promise by making a valid acceptance of the offer, the offeror controls the terms of the offer. For the offer to be effective, there are a number of requirements that must be met. To begin with, a clear intent by the offeror must exist in order to become contractually bound. Second, the fundamental stipulations and conditions of the offer must be clear and certain. Third the offer must be properly communicated (Mulcahy & Tillotson, 2004). The second requirement for a contract to be legally binding is consideration. This is a valuable thing bargained for in substitute for a promise. It is this characteristic of the contract that keeps it from being a gift. If consideration is absent, neither party can be enforced to the promise or agreement (Mulcahy & Tillotson, 2004).

An exchange is consideration if it creates a legal detriment to the promise or legal benefit to the promisor. A legal detriment is an act or a promise to act, or the refraining from an action, such as giving up a legal right (Monahan, 2001). For instance, suppose the contestants and the celebrity judges Simon’s TV reality show enter into an agreement, they will suffer a legal detriment (for giving their services and participation) in exchange of the price of being the company’s manager (in the case of contestants), or the agreed sum of money (for the judges). Simons will suffer a legal detriment (for paying the judges).

Another requirement for a contract to be legally binding is the contractual capacity to contract, or legal ability to enter into a contract. Capacity is the predisposition of a party to perform lawfully suitable acts, get legal rights, and sustain lawful liabilities. Generally, minors, intoxicated persons, and the mentally disabled have limited capacity to contract (Andrews, 2011). Most adults have complete capacity to contract. If a person, perhaps as a result of mental disability, does not have the capacity to contract, a contract entered into is not enforceable. A contract that does not exist at law, and so cannot be enforced, is a void contract. A contract is void if it about an illegal, subject matter. In the case of Simons, the subject matter in which the parities are entering into a contract is lawful; hence, the contract is legally binding (Richards, 2006).

Reality and genuineness of consent is also another requirement for a contract to be legally binding. Freedom of consent founded on the individual’s right to freely enter into the bargains of their choice. As part of this, the parties must mutually consent to the proposed term of a contract for it to be enforceable (Meiners & Stone, 2011). The manifestation of the intent of the parties to be bound to terms of an agreement is discerned from their conduct or exchanges. Under some circumstances, a person may enter into an agreement without knowing key information about the real nature of the transaction. Without knowledge, there is no reality of consent by the parties, and the contract may be void (Whincup, 2006). As such, if the contract between Simmons and the international judges and contestants is to be legally binding, the parties have to enter into it by consent. In addition, Simons should provide all the necessary information for the contract such as the remuneration of the judges, the number of days the reality show is going to take, and so on.

Consequences Of Breaching The Law Of Contract

Having looked at the requirements that are necessary for a contract to be legally binding, it is now time to look at what happens when the contract is breached. This happens when a party does not perform as required. If one party hinders or prevents the other party to a contract from performing her duties, then a breach occurs (Whincup, 2006). The party injured by the breach may be entitled to a remedy. In order to determine the remedy that may be provided, the court will look at the extent of the breach. For instance, if the performance provided by a party does not meet contracts requirements, then, there is a material breach (Meiners & Stone, 2011).

Suppose the international celebs interests to be judges in Simon’ reality show do not perform their duties to the expected standards, then Simons has a right to sue them for a breach of contract. Simons would be discharged from its performance promised under the contract, and the judges may end up losing their dues (Charman, 2007). On the other hand, if the judges perform their part of the contract but Simons fails, the judges will be discharged from their performance, and can sue Simons for a remedy to a breach of their contract. The common, popular remedial method for the contract breach is the monetary damages. The party who suffered from a breach seeks a judgment for lost profits and other expenses particular to the breach (Monahan, 2001).

Reference List

Andrews, N., 2011. Contract law. Cambridge: Cambridge University Press.

Charman, M., 2007. Contract law. London: Willan Publishing.

Meiners, R., & Stone, R., 2011. The legal environment of business. New York: Cengage Learning.

Monahan, G., 2001. Essential contract law. London: Routledge.

Mulcahy, L., & Tillotson, J., 2004. Contract law in perspective. London: Routledge.

Richards, P., 2006. Law of contract. London: Pearson Longman.

Stone, R., 2009. The modern law of contract, 7th edition. London: Taylor & Francis.

Street, T. A., 1999. The history and theory of English contract law. London: Beard Books.

Whincup, M., 2006. Contract law; Eglish syatem with Scottish, Commonwealth, and Continental comparison. London: Kluwer Law International.

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IvyPanda. (2020) 'Essential Contract Law: History and Theory'. 28 May.

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