example of contract law essay

example of contract law essay

The Importance of Contract Law in Modern Society

1. Introduction

Contract law is one of the most important laws governing trade, and it is important to have a good understanding of it. A contract is a promise or agreement made freely between two or more parties with the intention of performing an act. Contract law is key to business and personal relations. A contract can range from a simple to-do list to a sale of property. The law must consider agreements to carry out services, whether paid or not, an exchange of promises, or a statement of intention between two parties. The legal implications are not always at the forefront of the parties’ minds, and sometimes informal agreements can have serious consequences, so it is important to be informed. In this essay, I am going to explain the various ways in which contract law can affect business. I will also provide a scenario involving a consumer and an explanation of what the law is and how it applies.

2. Definition and Purpose of Contract Law

A misrepresentation is where one party to a contract makes an untrue statement of fact to the other, which then induces them to enter into a contract on those terms and subsequently suffer loss. The terms misrepresentation and lie are often confused, but in law, to misrepresent, there is no need for fraudulent intent, and the representation can be made innocently. The party that was deceived can claim damages, or in the event of a serious misrepresentation, the contract can be voidable and damages assessed on a tort measure.

Purpose of contract law: The purpose of contract law is to determine the circumstances in which a contract will be enforced and the parties will be held to their promises. If these requirements are not met, the contract will either be void or voidable. In such cases, there will be no legal obligations between the parties. And in certain circumstances, it could be found to be a misrepresentation or a breach of the contract terms. In this event, damages can be awarded to return the innocent party to the position they would have been in if the breach did not occur, or in some cases, to act in the best interests of the innocent party, to enforce specific performance, and to cancel the contract and restitution.

The terms and conditions of the agreement must be legal and not violate any legislation. The agreement must be possible to perform, meaning it cannot be illegal or physically or commercially impossible to carry out. And the contract must be supported by valuable consideration. The consideration, an act or promise to do something in return, is what makes the contract legal.

The parties concerned must have the capacity to contract. That is, they are of legal age and sound mind and are not disqualified from any legislation to which they may apply. The contract must show a clear intention to create legal relations. This means that the parties must agree that the contract is to be binding on them. There must be an offer and acceptance, although it may not have to be expressly found. There needs to be a concept of the offer by one party and acceptance of that offer by the other.

Definition of contract: A contract is an agreement between two or more parties to perform a service, provide a product, or commit to an act and is enforceable by law. There are several elements that must be present in order for a contract to be legally binding on the parties involved.

3. Key Principles and Elements of Contract Law

Finally, the terms of the contract must be certain and not vague. This was shown in the case of Sweeney v Lee, where the respondent offered to sell a lease of their luxury apartment to the appellant. This very vague offer was subject to contract, with concealment of the identity of the actual lessor. In this case, it was held that there was no concluded contract because the fact that the completion of the sale was subject to the contract, the contract itself was merely a preparation of some future contract. Any contract terms that are uncertain may be void for uncertainty, and any future agreement to enter into a contract may only be a mere agreement to agree, which may not be legally binding.

The general rule of a contract is that any oral or written agreement can be a valid contract. However, there are five instances where the agreement will not be valid because of an absence of contract elements: capacity, consent, lawful object, possibility, and intention. If all these five elements are present, then the contract will be a valid one. Failure to satisfy these does not necessarily mean that a contract will not be entered into. An agreement can be made whereby the parties agree to enter into a further contract at a later date with smaller negotiations and agreement into the terms in different elements.

The principles and elements of contract law are based on the reliability of the system in order for agreements to be upheld. The law is willing to assist in the enforcement of promises and intentions when agreements are made. There are two general types of contracts: bilateral and unilateral contracts. A bilateral contract is where two parties each make a promise to the other. This was shown in the case study of ITCC v Borneo Sabah, where ITCC promised to pay Borneo Sabah RM6 million and in return Borneo Sabah promised to give ITCC a piece of land. A unilateral contract is where only one party makes a promise. This was shown in the case study of Placer Development Ltd v Commonwealth, where the government promised to pay anyone RM5000 if they could find the shipwreck Venn on the Australian coast. A contract can be formed when there has been an offer by one party to another and that offer is accepted. This offer and acceptance, or consensus ad idem, is the most fundamental part of a contract and there cannot be a contract without it.

4. Significance of Contract Law in Business Transactions

Basically, the significance of contract law lies in the agreement between two or more parties in the business industry. In today’s globalized world, the readiness of parties to make agreements has increased. Contracts serve as the foundation for agreements between parties. In a more advanced context, parties can be multinational corporations or a government with a business entity. This is because the contract binds the business entities and makes the agreement legally binding. A contract is not just an agreement, but a legal agreement between two parties, and the written document serves as strong evidence. Usually, business parties are unaware of the legal effects of agreements and the deal itself. The law is vast, and there are many laws other than contract law. In such cases, they will hire a lawyer to settle the dispute. This shows the importance of contract law in business, even though there are many laws based on terms and conditions, as mentioned in this research.

The significance of contracts in business is the application of all essentials of a contract, whether it is written or verbal, and the terms and conditions imposed by the business parties of the agreement. In the modern business world, various problems occur when the parties are under contract. This is because there is an application of terms and conditions between the parties. Furthermore, contracts are made to prevent one party from infringing on the other party’s interests, which can cause damage. If damage occurs, there will be a breach of contract. So when a dispute occurs, contract law will clarify the terms and conditions and find the best solution for the interests of both parties. Usually, the aim is to perform the contract or determine an award for damages. The damages are awarded to put the non-breaching party in the position it would have been in had the contract been fully performed.

5. Conclusion

This paper has highlighted the importance of law in the society generally and more particularly dealing with the law of contract considering the functions and duties of the law of contract in the society. Significantly, the law of contract facilitates the voluntary transfer of rights, title, or interest in property and therefore most transactions in the modern economies are conducted through contracts. Hence, contract is a very important tool in the society and the law that governs it helps to ensure the enforcement of promises and it provides a framework within which transactions or agreements can be carried out with a reasonable assurance that expectations will be fulfilled. Remember the circumstances as applicable at the time when the contract is made because the common law will only imply terms as being reasonable and it is usually for the judge to determine what is reasonable. The parties may expressly state the terms and any provision to the contrary of these terms may be voided.