Contract Law Essay

Excerpt from Essay :

Law of Contract

Contract law

As to concerned definition of law there are many definition among various schools of thought of law such that no particular definition is acceptable to them as universal definition of law, but nevertheless there is a common acceptable definition as to what the law is composed of and that it is a collection of rules and regulations governing human conduct prescribed by human beings for the obedience of human beings. There are basically two concepts regarding law: general concept which is composed of the American society rules i.e. morals, norms or law of morality while law proper is composed of rules and regulations specifically enacted by the state through congress or other relevant authorities.

This essay basically focuses on different aspects of contract law and the impact it has on individuals and organizations in the society. In a bid to elaborate more on the law of contract the essay will not only look at contracts covered under common law but also contracts governed by the Uniform Commercial Code and the doctrines of promissory estoppels. The warranties of merchantability shall also be discussed and lastly the essay will come to a conclusion with case example of Drennan vs. Star Paving Company that relates to reliance, for a more understanding of the topic.

Contract law

Robert and Jody (2003, 98-140) are quoted in their studies as having defined contract as "an agreement between two or more parties with an intention to create legal relations or legally binding obligations." David (2002, 12-34) criticized this definition because it excluded domestic agreements, special contracts and promises. David (2002) continued to say that there are several types of contract but nevertheless contracts can be basically classified as under; valid contracts, voidable contracts and lastly void contracts. It is however important to note that this classification are dependent upon the presence, incomplete state as well as absence of what are known as the essential elements of a valid contract and which are as follows: offer, acceptance, genuine consent, contractual capacity, consideration, Intention to create legal relations and lastly legal object. These essential elements that have been mentioned below are the deciding factors of the legality of a contract and what the impact of contract law can have on individuals and organizations in the society.

Offer demotes the initial stage of a contract and for an offer in a contract to be complete it must fulfill the following conditions; offer must be made expressly or by implications, it must be made in rem or personam, must be communicated, must presume to result in legal consequences if accepted, the terms of the offer must be certain as well as capable of acceptance and most importantly if there are any conditions to the offer these too must be communicated.

Joseph (1999, 234-345) wrote that for acceptance to be complete in a contract it must also be expressed or implied, communicated, made in personam and made in a manner indicated in the offer and also within the period of time indicated in the offer or within a reasonable time. Acceptance must be made absolutely and without conditions, because conditions will amount to counter-offer which destroys the original offer. Moreover once the acceptance has been made it cannot be revoked without certain legal consequences.

Generally in law all persons are presumed to be able to contract and therefore capable of being held liable to such contacts however a certain category of persons due to the handicap of age, illness as well as state of mind are however an exception to the above rule but must nevertheless prove their particular disability to escape liability and these include; minors, lunatics and intoxicated persons. After the age of majority (amendment) act 18 years became the age everyone to be defined as an adult regardless of sex, creed and race, consequently contracts entered with minors are general considered void except contracts for necessities and for the benefit of the minor's welfare. In the case of lunatics, contracts entered with them during lucid intervals are valid and binding on the lunatic. However for the lunatic to escape liability he or she must prove that at the time of contract he was suffering from lunacy and that the other party was aware of it. For intoxicated persons, the law requires that they prove that at the time of contract he or she was so intoxicated that he could not understand the full implications of the transactions and that the intoxicant was administered without his knowledge and consent.

Referring to studies done by Antony (2004, 232-320) he defined consideration as the price paid by one party for the promise of the other. A contract is legally enforceable when each of the parties to it gives something and gets something. The something given or obtained is the price for the promise and is termed as consideration.

When looking at the intention to create legal relations, there are two basic presumptions that come up regarding agreements and these are: domestic agreements are presumed to be unenforceable in law not unless the parties indicate that their agreement is enforceable. For commercial agreements they are presumed to be enforceable in the American law not unless the parties to the agreement indicate that their agreement should be unenforceable in law.

The object of a contract must be legal otherwise the contract will be null and void in law. The objective of a contract maybe unlawful if it is contrary to positive law, to the rules of morality sanctioned by the United States of is they are contrary to the welfare of the U.S. By interfering with the administration of public policy. Illegal objectives of a contract can be enlisted to comprise of contracts in restraint of trade, contracts to commit crime, contracts tending to abuse the legal process, contracts interfering with the sanctity of marriage and contracts to break the laws of friendly nations or contracts of trade with enemy nations, among others.

The contract law in America requires that a party consent to enter into contract must be genuine i.e. both parties must be of the same mind on the same matter at the same time in the same way. However there are various factors that may operate to prevent this from being arrived at, they include mistake, duress, misrepresentation and undue influence.

If a party enters into a contract under a mistake of fact this renders the contract voidable at his option since mistake of fact is generally excusable, whereas if a party enters a contract under a mistake of law, the contract is held to be valid and binding on him or her as mistake of law is generally not excusable.

During the making of a contract several statements will be made by both parties to each other such that if they later turn out to be false they are known as misrepresentation. Misrepresentation can be either innocent misrepresentation or fraudulent misrepresentation. Innocent misrepresentation occurs when the statement is made believing that it is true or if it is made without reason to think that it is false. Fraudulent misrepresentation occurs when the statement is made willfully knowing that it is false or without reason to believe that it is true.

Duress and undue influence are recognized under common law and equity respectively however; undue influence is more present in contracts today. Duress occurs when a party's consent to enter into a contract is obtained either through threat of physical violence, threat of imprisonment or threat of criminal prosecution. Undue influence is said to occur in a contract when a party to the contract is in a superior/fiduciary position either due to age, knowledge or skill and uses such position causing the other party to enter into such contract which had the circumstance been different the inferior party would not or would have entered into such contract respectively. Undue influence is presumed in contracts involving the following relationships; doctor-patient, advocate-client or teacher-student.

Discharge of contracts

The following are the methods through which contracts may be discharged: performance, agreement, breach of contract, frustration or impossibility of performance, death or lapse of time. A contract being essentially an agreement for the performance of various obligations by both parties then it must come to an end once the parties have performed their particular duties under it, thus discharging it.

As a general rule the impossibility of performance or frustration does not discharge a contract except under certain exceptional circumstances that include statutory interference, accidental destruction of the subject-matter of the contract, personal incapacity, cessation of circumstances whose continuation formed the basis of the contract and fundamental change of circumstances.

Steven, (2006, 89-98) wrote that just as contract is brought into existence by the mutual agreement of the parties, then consequently it may be also be brought to end by mutual agreement of the parties thereby discharging the contract. However there are occasions where both parties may not have fully performed their obligations under the contract in which case a…

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