“A contract is a legally binding agreement between two or more parties which is enforceable by law or by a binding arbitration” (American Law and legal Information Organization 2). Contracts involve exchange of promises which if broken will attract monetary or other forms of compensation. Compensation can be in monetary or any other form depending with the contract’s terms and conditions. Usually, it is a payment of what would have otherwise been paid if the defaulter had honored the agreement. For a contract to be legally abiding, both parties must have an agreement concerning the terms and conditions.
The most important aspect of a contract is the offer and acceptance where one party offers an agreement and the other accepts (American Law and legal Information Organization 2). For a contract to hold any legal grounds, it must be a possible agreement, the parties must be of sound mind and must be above the required legal age for such kind of an agreement. Other than these conditions, consideration is a big part of the law of contracts. Consideration calls for a critical examination of how much a promise is going to cost. It must be sufficient, it must not be from the past and it must move from the promisee (American Law and legal Information Organization 2).
Case study
Case no. CA06-1281 was heard in Arkansas Court by Judge Karen R, Baker on 13 June, 2007. This was a breach of contract case. The plaintiff Steve Goldman claimed that the defendant had breached a contract. Steve Goldman entered into a contract with Hunter’s Green Development Co., LLC. Steve agreed to buy land from Hunter’s Green Development which would build a house on the land. David Carl was the developer.
The construction began in January 2000 and was complete by August 2002. Hunter’s Green Development stopped construction after Steve refused to make further draws on the construction loan in May the same year. Steve based his refusal on Hunter’s Green Development’ purported failure to pay subcontractors and suppliers and failure to secure lien as required by the law of contracts. Steve the plaintiff, finished the construction on his own and sued the company for breach of contract. The person who did wiring and Gloria Hopkins, the defendant’s neighbor testified and the court entered judgment against the defendant.
The trial court held that the law stated clearly, “where a contractor commits a material breach of contract, the owner is entitled to recision of the contract and restitution of any payments” (American Law and legal Information Organization). It was established that the remaining balance of contract at the time of defendant’s breach of contract was $50,225. The accrued interests on Mr. Steve Goldman’s the complainant construction loan amounted to $ 8, 071.
In this case, the plaintiff was entitled to hiring another contractor since he wanted the construction completed. Damages were the difference between the unpaid amount of the contract price and the reasonable cost the plaintiff had used for construction. In this case, the difference amounted to $ 12,558 which was the reasonable cost the complainant incurred in completing the construction. It was therefore the amount he was entitled to in damages. The court ordered the defendant to pay the amount plus the accrued interest.
Reference
American Law and legal Information Organization. Legal information on contracts, 2009. Web.