IDEA ON CONTRACTS

CONTRACTS

Contracts are very essential in this present business era, they are necessary at all levels from concept to end, from product to service and. The basic rule applied by the courts in determining whether contracts are enforceable in law is that the presence of elements like offer, acceptance. Contract law has been written, interpreted and rewritten by the legal experts and courts for years and further framed by statute and European law. What the average business is now left with innumerable confusions and contradictory rules determining how and to what extent contracts should be enforceable.

The general approach of the English courts in commercial contracts is that businesses are on a more or less equal footing for negotiations and should therefore bear the consequences of the contracts that they sign without too much assistance or interference from the court. The doctrine of freedom of contract is the guiding principle. The key areas in which the law does not merely interpret the agreed wording include:

THE BASICS OF A CONTRACT

A contract cannot exist without some concepts which are central to all types of contract, from employment contracts to buying milk. In simple legal terms these are offer, acceptance and consideration. Business contracts are generally straight forward except there are a few issues which are required to be spotted. Contracts are both verbal as well as written depending on the type it. Though it is highly advisable for a contract to be in writing, a verbal contract is equally binding and equally enforceable. The main setback with the verbal contracts is proving what the terms are from an evidential point of view. The offer needs to be clear and contain sufficient terms that, if accepted, enable the courts to identify what the contract is for. The absence of key terms, such as price can be fatal for a contract. The acceptance must be absolute. In the absence of an agreement including all key terms, a contract may have no binding effect. Rejection of some terms is likely to be a counter-offer and therefore no binding contract would be in place. If the contract was partially performed it would be difficult for a court to establish what the terms of the contract were. The ‘battle of the forms’ - offers are made on the standard terms of one party and accepted on the standard terms of the other. Consideration in a contract means that there has to be something of value passing both ways between the parties. The courts will not assess the adequacy of the consideration and there is no requirement for the value of the consideration passing each way to be equal but there must be consideration for a contact to be enforceable, unless it is made in a deed. Circumstances such as fraud, illegal contracts and contracts obtained by means of duress or if one of the parties does not have capacity – because of their age or health - will render contracts void and unenforceable. Contracts can be affected by mistake and misrepresentation so that if a party enters into a contract under the influence of a mistake of fact or law or due to a misrepresentation the contract may subsequently be revoked even if the contract would otherwise be enforceable. Contracts are agreements. They can be changed or replaced at any time by a new agreement between the same parties. In some circumstances, the law implies changes based on uncontested conduct of the parties over a period of time. There are a number of ways in which terms can be incorporated into contracts however it is not possible to incorporate additional terms after the offer has been accepted without the agreement of the other party. This is a common mistake where companies include printed terms and conditions on their invoices.

Read more:

·        The Unfair Contract Terms Act 1977.

·         http://guidebook.dcma.mil/18/commer.htm

·         Contract law. Book ;

      By Robert Duxbury - Sweet & Maxwell (2009)