Contract Law

Promises which create legal rights.

Basic Terms
• Party – The persons and/or entities which are involved in legal
proceedings.
• In contract law, generally there are two parties.
• Example: Both parties have agreed to the terms and conditions of the
contract.
• Common Law – Laws created from judicial rulings rather than
legislative bodies.
• Also known as judicial precedent, or case law.
• Example: Gay marriage is legal in the US due to judicial precedent (or
common law). Obergefell v. Hodges. Abortion is also legal in the US due to
case law. Roe v. Wade.
What is needed to form a binding
contract?
• A binding contact is a legal obligation which cannot be broken.

A legally binding contact must contain three things:

I. An Offer
II. Acceptance
III. Consideration
I. An Offer
• A promise by one party to do something
• An offer can include:
• A promise to perform or not perform an action (work or job).
• A promise to pay for an action to be performed.
• A promise to provide goods.
• A promise to pay for goods.
II. Acceptance
• The approval or agreement (acceptance) by another party of the offer
from the first party.
• In other words, one party makes an offer and the other party accepts.

• In some legal systems, an offer and acceptance are all which are needed to form a
binding contract.
III. Consideration
• Something of value to both parties which is exchanged.
• Each party must provide consideration.
• Consideration is generally the basic reason parties enter into a contract.
• Consideration generally must be mutually beneficial.
• Consideration can include:
• Money
• Performance (or non-performance)
• Property
• Goods
• Services
Counter-offer
• If the offer and acceptance do not match each other, the party which
is supposed to accept has made a counter-offer.
• In this case, the original offering party now may become the accepting party if
they agree.
Essential Terms
• Basic provisions and requirements from both parties.
• Essential Terms include:
• The parties
• Definitions and interpretations of specific terminology (‘business day’)
• Payment provisions (how much, in what form, when, etc..)
• Descriptions of goods or services (what exactly is being sold?)
• Term of contract (how long is the contract valid?)
• CONDITIONS
Conditions (IF…THAN…)
• Provisions in a contract which provide resolution, clarity and course of action for any act or
event which may affect a party’s contractual duty or the contract terms.
• Conditions cover the ‘what ifs’ in a contract.
• Example: If a party doesn’t complete a job on time, a condition in the contract might call for a reduced
payment.
• Conditions can include:
• Change of company control
• Dispute resolution
• Indemnity (compensation for loss or damage)
• Force Majeure (Contract can’t be completed due to situations neither party can control. [natural
disasters or civil unrest]).
• Termination and payment provisions
• Goods and services provisions
Warranties
• A warranty is a guarantee or promise issued to a buyer from a
manufacturer or seller, committing to repair or replace a faulty
product within a certain period of time.
• A Warranty is an assurance given about the state of a product.
• Warranties vs Conditions:
• If a condition is not met in a contract, the result can be termination of
the contract and damages (monetary compensation)
• If a warranty is not met in a contract, the result can only be damages.
Rights and Obligations
• Rights – something positive which a party wants to receive from a
contract
• money, work performed, property, goods, services, etc..

• Obligations – something which a party must do or give up in order to

receive those rights.
• The payment of money, performing work or services, the giving of goods.
Breach of Contract
• A breach of contact is when one party does not do what is required
according to the contract. The contract has been broken by one party.

• The breaching party is the party which does not adhere to the contract
requirements.

• The injured party is the non-breaching party.

Remedies for breach of contract
• Damages – Monetary compensation from the breaching party to the
injured party ordered by a court.

• Specific Performance – A court orders the breaching party to perform

the contract (to complete the obligations of the contract).

• Rescission – When court nullifies or cancels the contract.