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An Overview of Contracts Law

What is a contract? A contract is an agreement between two parties. This may be an agreement between two individuals, or an agreement between an individual and a company or organization, or an agreement between two organizations/companies. Not all contracts are legal, valid contracts in the eyes of the law, but in the vernacular, a contract is merely an agreement for a service or product. The only fundamental difference between a legal contract and a non-legal contract is enforceability. If one party fails to meet the obligations agreed to in a valid, legal contract, the other party can sue for relief in a court of law. In a non-legal contract, parties have no such recourse. For instance, a contract for murder is not legal, therefore the party contracting for service cannot sue if the other party failed to commit the murder. In the next section, we’ll discuss the elements of a valid contract and what happens when one party fails to deliver or uphold their end of the contract, often referred to as a “breach of contract.”

Valid Contracts and Breach of Contract

There are five elements to a legal contract. All five of these elements must be satisfied for an agreement to be a legal, enforceable contract.

  • Legal Purpose. A contract must have a legal purpose to be enforceable. John signs an agreement to purchase 100 lbs. of pure Colombian cocaine from Jim. Within the terms of the agreement, John pays Jim $50,000 up front and agrees to pay Jim the remaining $50,000 upon receipt of the product. Jim reneges on the agreement and fails to deliver any cocaine to John. Jim keeps the $50,000 paid up front. John has no legal recourse against Jim and cannot recover the $50,000 already paid to Jim because the sale and possession of cocaine in the United States is illegal. Therefore, the contract is null and void.
  • Mutual Agreement. This is colloquially referred to as a “meeting of the minds.” It means that both parties must agree to the terms and conditions stipulated to in the contract. Harold signs a contract with Mark’s Auto. The contract outlines the scope of work Mark will perform on Harold’s car. Harold and Mark have a mutual agreement regarding the work that will be done.
  • Consideration. In the most generic terms, this means that both parties to the contract will give up something of value in exchange for something else of value. Going back to the example above, Harold agrees to pay a certain sum of money to Mark and Mark agrees to tint the windows on Harold’s car. Harold gives up his money, but gains back his car altered to his desire. Mark gives up his time and effort for working on Harold’s car, but receives payment for the service.
  • Competent Parties. This element is exactly as it sounds. Both parties to the contract must be of sound mind, legal age, and not under the influence of substance(s) that would impair their judgment, like drugs or alcohol. Minors cannot enter into a legal contract.
  • Genuine Assent. This means that the parties to the contract must be able to consent to the terms of the agreement freely and without duress. Issues like mistakes by one of the parties, fraud, bribery, harassment, or imminent threat of harm would make a contract null and void.

After a legal, valid contract has been signed and agreed to by both parties, the law expects both parties to fulfill their obligations as per the terms of the contract. When one party fails to fulfill the terms of the contract, or outright violates all or part of the contract, that party is in breach of contract. When a breach of contract occurs, the other party can attempt to seek relief through the court system, either through mediation or a lawsuit.

What a Contracts Attorney Can Do

Contracts law is extremely vast and complex, but it is considered so critically important in the canon of law that virtually all law schools in the United States dedicate part of their mandatory curriculum to the examination of contracts law. Contracts lawyers are experts in the field of contracts. Different contracts for different goods or services will have different provisions that ought to be included in a well-drafted contract. Contracts lawyers help businesses and individuals in drafting good contracts, protecting their client’s interests through making sure the provisions included are fair and legal. They also represent clients who are being sued for breach of contract. When contracts are breached, contracts lawyers can advise clients on the course of action that may yield the highest probability of a satisfactory result for the client.

Why Should I Hire a Contracts Attorney?

We make contracts in many areas of our lives. Since civil law is such an important aspect of the jurisprudence in the United States, each of us inevitably engage in numerous contracts on an almost daily basis. Every time iTunes needs to update, Apple will ask you to agree to the new terms and conditions for use. When you agree, you’ve engaged in a contract with Apple. The service agreement you signed with your cell phone service provider like Verizon or AT&T is a contract. Whenever you agree to work a job for an employer, you sign an employment contract. Waivers of liabilities are contracts. It can be tremendously useful to hire a contracts lawyer to protect your rights, help you determine the limits of your obligations within a contract, and advocate on your behalf if you’ve been sued for breach of contract. A contracts lawyer can help you determine whether the contract you’ve been presented is legally valid. They are also able to help you negotiate the terms of a contract to get a better deal.

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