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Contracts, Contract Law, And Society
Contract Law
Contracts are legally-binding agreements between two or more self-regulating parties for the purpose of furthering their commercial goals (Eisenberg, 1994). The elements of contracts, together with the laws that provide protections for the parties involved, are theoretically straightforward and appeal to common sense principles, but in practice the forging of contracts and their enforcement can at times be complex. The theories and principles that underlie contract law also remain somewhat controversial and refractory to unequivocal definitions (Schwartz & Scott, 2003). To gain a better understanding of why contracts are so important to society this essay will review the essential element of contracts and the theories supporting their use, from a social, economic, and legal perspective.
Elements of a Contract
The four basic elements of a contract are: (1) mutual assent, (2) consideration, (3) capacity, and (4) legality (Legal Information Institute, 2010). Mutual assent implies that both parties are consenting to enter into a contract voluntarily, but objective proof of mutual assent requires proof of an offer by one party and acceptance of that offer by the other party. An example would be sales contract by a tire dealer (promisor) to sell a set of tires at a fixed price to customers, whereas acceptance would constitute payment of the price by...
Consideration, using the above example, would be the cash payment from the customer to the tire store, but consideration can take many forms, such as forbearance, and must have sufficient value. Capacity implies that the parties involved in the contract have the ability to satisfy their respective obligations. If the customer in the tire store tries to write a rubber check to pay for the set of tires then he or she lacks capacity. Legality simply means that the purpose of the contract must be legal. If the tire store had instead advertized heroin for sale, any contract governing its sale would not be enforceable in the U.S.
These elements must be included in a contract and all terms must be clearly stated for a contract to be valid (Legal elements, n.d.). Missing terms may render a contract invalid, but some courts have decided to enforce contracts by inserting missing terms themselves. Missing provisions or provisions left open for future negotiations will render the contract unenforceable.
Information Included in Contracts
The information that should be included in the contract is basically everything, down to the last detail. The California licensing board for contractors warns consumers that everything must be spelled out, including any provisions for cancellation, payment schedules, and down payments (Contractors State License Board,…
References
Contractors State License Board. (2012). What should I look for in a contract and binding agreements? California Department of Consumer Affairs. Retrieved from: http://www.cslb.ca.gov/consumers/hireacontractor/contractsandbindingagreements.asp.
Eisenberg, M.A. (1994). Expression rules in contract law and problems of offer and acceptance. California Law Review, 82(5), 1127-1180.
"Legal Elements of a Contract." (n.d.). Kansas State University. Retrieved from http://www.hfrr.k-state.edu/doc3109.ashx.
Legal Information Institute. (2002). U.C.C. -- Article 2 -- Sales (2002). Retrieved from: http://www.law.cornell.edu/ucc/2.
Legal Information Institute. (2010). Contract. Cornell University Law School. Retrieved from: http://www.law.cornell.edu/wex/contract.
Legal Information Institute. (n.d.). §2-210. Delegation of performance; Assignment of rights. Cornell University Law School. Retrieved from: http://www.law.cornell.edu/ucc/2/2-210.
Schwartz, A. & Scott, R.E. (2003). Contract theory and the limits of contract law. Faculty Scholarship Series, Paper 308, 1-81. Retrieved from: http://digitalcommons.law.yale.edu/fss_papers/308.
SEMI. (2013). Standard contract elements. Retrieved from: http://www.semi.org/en/IndustrySegments/SecondaryMarket/CTR_028902.
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