A contract is a legal agreement entered by two or more parties all having legal responsibility to undertake. Once two or more agree to perform an agenda, they either put themselves into an oral or written obligation. Failure to meet the agreement known as a breach has a penalty that the breaching party incurs. Oral contracts are used for social agreements such as preposition bets where the obligation is not serious. Written contracts on the other hand serve as a crucial document when it comes to businesses, governments and unions in which have significance impact on the parties involved. This is because oral contracts are hard to prove when it comes to court of law since it has no physical evidence compared to a written one (Farnsworth, E. A. 1982).
A contract has several particular components. An offer is what is brought forth by an interested party to the affiliate party that it wants to indulge the offer with. If the affiliate party agrees on the offer, then the two parties meet to discuss the terms of the pact. Upon agreement, the parties decide to agree to perform the specified tasks. A valuable consideration is put in place on the event of meeting the contract agreement. This is also known as compensation or payment after the party or parties accomplish their part of the contract. A contract also contains the time frame under which all the tasks should be done and accomplished. A contract contains terms and conditions for the undertaking, including fulfilling promises involved and eventually the actual performance (Cataldo, B. F. 1967).
There are two types of written contracts. Unilateral contracts promises to give consideration after the actual performance is done. For example, a car owner and a mechanic decide on a contract that the car owner will pay the mechanic after fixing his car within two days. This means that if the mechanic fails to fix the car and on time, he breaches the contract and is open for penalty stated under the contract or the federal law. A bilateral contract comprises of two promises that have to be done on certain time scale. On the unilateral, the payment can be done on any time. On a bilateral contract, the specified time to pay the performance is always stated. This contract contains two promises serving both parties (Cataldo, B. F. 1967).
Contracts mostly have a witness who takes part in taking into account the event of an agreement to enter a contract. In most companies, lawyers are included in the signing of contracts. This means they take part in verifying the terms of the contract and watching as the parties sign in the contract. They are also custodians of a copy of the contract and incase of a breach, they act as witnesses and representatives of the parties involved in a court of law (Fouche, M. A. 2004).
Acceptance of an Offer
An offer is a gesture of a party to another on their willingness to contract on agreed terms without any further negotiations. A contract exists when a party accepts an offer given by the interested party. In this case, the offeree is communicated through letters, emails, and any written media by the offeror which leads to a written agreement by the two parties to venture in a contract. Acceptance is made to an offer if the offer is not withheld without authorization of both parties. The classical approach to contracts has been disoriented through law developments such as misleading conduct, misinterpretation and unjust enrichment (Fouche, M. A. 2004).
Concept of Consideration and Assessment of legal Sufficiency
Equality of a contract forms a factor that will assess the sufficiency of a contract. This means that the parties have to be content that what they are receiving from each other is equal to what they are offering to the table. Evidence of the offer must also be present in that the offers placed on the table should be real. The parties should ensure the credibility of the other party and the deal offered on the table is real to prevent being conned (Miller, R. L. R., & Jentz, G. A. 2011).
Remedies for Breaching a Contract
In the event of breaching of a contract, the non- breaching party reserves the right of compensation under the federal law. This is because the non- breaching party has incurred damages by the failing to perform by the breaching party. There are several ways that the non- breaching party can decide to seek compensation. First is the out of court settlement. The two parties can decide to renew the contract. This entails scrapping the former contract and coming up with a new one. The non- breaching party can decide to let the breaching party compensate it by the contract terms without involving the court. This means paying in terms of money or assets equivalent to the damages done as agreed upon in the contract. Upon payment, the contract is terminated. The non- breaching company can decide to take the case to court of law where it is decided by the judge and jury after all parties present their cases (Fouche, M. A. 2004).
Types of Damages and Equitable Remedies
Equitable remedies include specific performance which dictates the breaching party performs its tasks as per the contract by the law. Compensatory damages entail the breaching party pay financial compensation to the losing party. Consequential damages are damages caused indirectly by breaching a contract such as a company closing for maintenance because a machine stops working. The machine company has to pay for the damages done in monetary payments. Liquidated damages are incurred as specified in the contract itself. For example a contractor has to pay for not finishing a job as per the deadline. Punitive damages include punishing the breaching party other than economic penalties such as jail sentences. One usually cannot recover from in a contract lawsuit (Miller, R. L. R., & Jentz, G. A. 2011).
Remedies for the Non- breaching Party under State Law
The non- breaching party is entitled to a relief under the law. This is through damages, which is mostly monetary compensation under the court. This is to return the losing party to their initial financial position before the breach of contract. Specific Performance dictates the breaching party to accomplish their part of the contract under the court of law. Failure leads to jail term or any legal punishment the court sees fit under the law. Through cancellation and Restitution, the non- breaching party can cancel the contract under the court of law and sue for restitution if the non- breaching party has given a benefit to the breaching party (Miller, R. L. R., & Jentz, G. A. 2011).
Question 2: Fraud
Fraud is termed as the intentional aspect of representing misleading allegations or hiding of otherwise important information that should have been disclosed. Fraud cases is mostly common in real estate, stocks, copyrights buying and selling property. Fraud is proved through five elements. First, a false statement, the knowledge by the party that they provided false statement, the intent to deceive the other party, justified reliance on the false statement by the victim and finally fact that the victim suffered loss from the false statement (Fouché, M. A. 1995).
Common Law Doctrine of Election of Remedies from Business Contract
The common law doctrine of election of contract remedies that a judge invokes at a ruling has two aspects, procedural and a substantive. Procedural comes from an overriding goal of common law pleading until there is one issue for trial. In substantive aspect, the doctrine automatically becomes a part of the law of remedies rather than of procedural law seeking to prevent double recovery (Fouché, M. A. 1995).
Invalidation of a Contract through Fraud
Through these elements, a contract can be invalidated by the parties and the court of law. A misleading statement is considered fraud especially if the providing party has superior information of the related deal account. This happens for example, when a real estate agency sells out a house that he knows it has bad drainage, he is giving false information in which can invalidate and contract and attract fraud charges in court of law. A contract can also be invalidated if the statement produced by a party seeks to exploit the other party’s trust. This mostly happens with professional service where one party seeks advice from an expertise who in turn takes advantage to rip off the client. Example includes a doctor who rips a patient through giving her insufficient information or medication of reducing weight. The client ends up using a lot of money buying service and medication that is not equivalent with the money she pays for. On notice the client can charge the doctor in a court of law (Brookner, A. 1992).
Silence can invalidate a contract as fraud. Intentional silence involves voluntary hiding of information which is important as part of the contract. Many pharmaceutical companies are known to hide ingredients that they use to make the drugs. This ends up damaging people’s health further resulting to more complications and even death. This choice of omission of information can invalidate a contract attracting charges. False pretence is also a major invalidation of a contract. A party can pretend to be not what they are and on entering a contract, they can rip the other party off. On realizing the situation the victim party can terminate the contract causing its invalidation. This majorly happens in freight agencies where con men use contracts claiming they ship cargo only to con their clients’ money and valuables intended for shipping services (Bevans, N. R. 2011).
Duress is an act that involves a party that compels the other party to enter a contract involuntarily. This happens as a mode of black mail, threats of physical violence among other reasons hinder a balanced contract resulting into invalidation. This includes parties mechanically placing the person’s hands to sign a signature a contract or being forced to sign at gun point. This mostly happens in cases of inheritance where a party can be forced to sign their inheritance by their family members than murdered. In the event of a case, then the victim party can involve the court of law making the contract unenforceable (Brookner, A. 1992).
Undue influence is unlawful control by one party to influence the mind of the other party to enter into a contract that is not what is seems. In the first place, the party takes advantage of the psychological position of the other party. For example, a party can be on drug influence in which they are subjected to sign a contract without knowing what they are doing. The drug influenced party can also take advantage to forfeit the contract on the basis that they were on drugs invalidating the contract. This is why many contracts are signed under sober minds and in a drug free environment such as offices and courts of law. Taking advantage of a psychologically disabled person through making them sign a contract is also a reason to invalidate a contract. Many assets are transferred to the wrong people simply because a rich person with a mental condition is influenced to sign a contract that leads to them losing what they have involuntarily signed for. All the fraud cases are taken very seriously by the courts of law. The defendant attracts very heavy charges if found guilty (Smith, J. C., & Center for Computer-Assisted Legal Instruction. 2001).
In conclusion, contracts help validate the cooperation of two parties in which acts as evidence that the parties are in assignment with each other. Invalidation leads to charges and penalties outside or inside the court of law. Termination of contracts is based on the parties involved deciding on withdrawing from the contract that leads to the consequences as per the contract.
Farnsworth, E. A. (1982). Contracts. Boston: Little, Brown.
Cataldo, B. F. (1967). Introductory cases on law and the legal process. New York: Wiley.
Fouche, M. A. (2004). Legal principles of contracts and commercial law. Durban: LexisNexis.
Miller, R. L. R., & Jentz, G. A. (2011). Business law today: Text & summarized cases : e-commerce, legal, ethical, and international environment. Mason, Ohio: South-Western Cengage Learning.
Fouché, M. A. (1995). Legal principles of contracts and negotiable instruments. Durban: Butterworths.
Brookner, A. (1992). Fraud. New York: Random House.
Bevans, N. R. (2011). Consumer law & protection: A practical approach for paralegals and the public. Durham, N.C: Carolina Academic Press.
Smith, J. C., & Center for Computer-Assisted Legal Instruction. (2001). Landlord and tenant: Statute of frauds. (CALI library of materials.) Minneapolis, MN: Center for Computer-Assisted Legal Instruction.