Contracts make business matters more predictable and are integral to day-to-day business and personal life. Understanding how contracts are formed, the rules of contract law, and remedies the law has created to address harm that can result when formal contract rules do not apply, enables us to have greater control over our lives. Contract law has been shaped by judicial decisions. Judicial restraint makes the law less flexible, but more predictable. Judicial activism makes the law more flexible, but less predictable (YouTube.com).
People make promises every day. The law will enforce some but not others. Why is this? What distinguishes a promise the law will enforce, like a contract, from a promise the law will not enforce? One way to begin to understand the differences between unenforceable promises and contracts is to pose common examples of the former and ask yourself why the law would not enforce them. For example, suppose one student asked another student out on a date, the invited student goes out of his way to get ready, then at the appointed time the expected student fails to show up. Can the student who was stood up sue for breach of contract? Of course not; but, why is that so?
This other example has an offer and acceptance: “Would you like to go to the movies tomorrow night? Yes? OK, I’ll meet you at your apartment at 8 o’clock.” One of the elements of a contract is consideration. Consideration: each party promises to do something he or she is not otherwise obligated to do. And each gives his or her promise in exchange for the other’s promise. In this scenario, there was an exchange of promises but neither party intended to form a contract. There were no contractural expectations---no matter what emotional expectations may have been raised. However, if one changes the facts somewhat, for example, a business woman hiring an escort who does not show up, in that case, the parties expectations take on the aspect of contract. One purpose of contract law then is to distinguish unenforceable day-to-day promises from legally enforceable contracts. For a contract to be valid a number of elements must be present: an agreement, consideration, legal purpose, and capacity.
The first element of a contract is an agreement. Agreement means that one party promises to do something and that another party accepts that promise. Consideration means that each party has to bargain for what each party is expected to do under the contract. In addition, what the parties promise to do under the contract has to be legal or the contract will not be valid. Capacity means the parties are adults and have the cognitive capacity to enter into the contract.
Contracts are promises that are protected by the law. At first, only contracts that were written and had a seal were considered legal. Later, one of the parties had to have made some sort of payment before the contract would be considered valid. Now contracts have to be fair before the court would enforce them. There are many different types of contracts: bilateral versus unilateral, express versus implied, executory versus executed, and valid versus unenforceable versus voidable versus void. These types of contracts are defined as follows:
Bilateral contract: a contract involving mutual promises
- Unilateral contract: one party does something specific to accept a promise made by another party
- Express contract: the terms of their agreement are written in the contract
- Implied contract: what the parties said or how they behaved indicate mutual agreement (not a contract that the parties entered into, it is used as a remedy by the court when an express contract does not exist)
Executory contract: all the obligations under the contract have not been fulfilled
- Executed contract: all their obligations under the contract have been fulfilled
- Valid contract: an agreement that meets the requirements of the law
- Unenforceable contract: the law will not protect the contract agreements
- Voidable contract: the contract can be voided by one of the parties
- Void contract: the contract is voided by law
In conclusion, there are a variety of contracts that the law will protect, provided certain elements are present: agreement, consideration, legality, and capacity.
“Introduction to Contracts (Part 1of 2).” YouTube.com. Web. 5 Apr. 2012.