2Introduction The definition of a contract Contract v. agreement Requirements for a valid contractVoid and voidable contractsUnenforceable contractsBreach of contract
3ContractA legally binding agreement between two or more parties which the court will enforceAgreement – an exchange of promises; not every agreement is a contractContract – a legally enforceable agreement – the agreement that generates rights and obligations that may be enforced in the courts
4Contract and agreement The law does two things in transforming an agreement into an enforceable contract:1. It determines whether the contract meets all the requirements of the law2. The law, and not the contracting parties, has the final say on whether there is a contractual obligation and what the scope of the obligation is
5Express and implied terms Express terms: what the parties said or wroteImplied terms: terms that have not been agreed by the parties, but the law makes them part of the contract anyway
6Requirements for a valid contract The parties must possess legal capacity to enter contractOne party must have made a binding offer, and the other one has to accept itThe contract must be supported by considerationThe resulting agreement must have been a genuine oneSome contracts must be made in a particular formThe object of the contract must not be disapproved of by the law
7Legal capacity Parties must be competent Natural persons: age of majority (consent), mental capacityLegal persons: properly registered companies
8Offer and acceptanceOne party must have made a binding offer to the other, and the offer must have been acceptedSuch an offer must be binding; parties must accept legal consequences.In legal terminology, an offer is a statement of willingness by the offeror to enter into a contract if the other party accepts all the terms of the offer
9ConsiderationEvery contract must be supported by consideration (the court only enforces a bargain, not a one-sided promise).The doctrine of consideration: any promise not supported by consideration is unenforceable.If the party that makes a promise gets nothing in return, the contract is unenforceable: each party must benefit.
10Genuine agreement The resulting agreement must have been a genuine one The contract must reflect the actual exchange of promises, not a false one
11Contracts in particular form In certain exceptional cases, the contract must have been made in a particular formMarriageContracts which must be in writing: a transfer of shares, an assignment of copyright, a contract to pay someone else’s debt...To enforce one of these contracts, a claimant must produce a writing signed by the other party that contains evidence of the contract
12The object of the contract The object of a contract must be approved of by the law- f.e. “to take a contract on the rival” is not a contract in lawSuch an agreement is not legally enforceable
13Void contracts Any contract that lacks one of essential requirements It does not give rise to any legal rights or dutiesIt does not exist as far as the law is concerned
14Voidable contractsValid to start with, but may be avoided at the option of one of the partiesA contract affected by a flaw (fraud, duress, misrepresentation, undue influence)F.e. The doctrine of duress allows a party to get out of a contract when he was forced to enter into contract by threats from the other party
15Unenforceable contracts Contract that is valid in all respects, but cannot be enforced by an action in law because the party wishing to enforce it lacks some kind of evidence (evidence in writing)
16Breach of contractContract typically creates an obligation to do or avoid doing something, or to pay a sum of moneyBreach of contract is the refusal or failure by a party to a contract to perform an obligation imposed on them under the contractIf one party does not do what they have promised to do, they are in breach of contractThe injured party is entitled to a legal remedy
17Remedies for breach of contract Equitable remedies:quantum meruit, ‘as much as he deserves’ – for partial performance;Specific performance – an order to make a party perform his obligatons under the contractInjunction – a court order to stop someone breaching a term of the contract
18DamagesThe aim of damages in contract law is to put the claimant in the position he would have been in if the contract had been performed properlyDamages are designed to compensate for the loss one has sufferedExpectation damagesUnliquidated damages – the court decides how much will be awarded in damagesLiquidated damages – parties decide in advance
20Vocabulary revisionFill in the blanks with the most appropriate words from the list below:consideration, sue, obligation, illegal, breach, fraud, mutual, capacityA contract is an agreement that creates a binding _________________ upon the parties. The essentials of a contract are as follows: _________________ agreement, a legal ________________, which need not be financial; parties who have legal ________________ to make a contract; absence of __________ or duress; and a subject matter that is not __________________ or against public policy.In case of a _____________ of contract, the injured party may go to court to __________ for damages, for injunction, or for specific performance if financial compensation would not compensate for the breach.
21Answer keyA contract is an agreement that creates a binding obligation upon the parties. The essentials of a contract are as follows: mutual agreement, a legal consideration, which need not be financial; parties who have legal capacity to make a contract; absence of fraud or duress; and a subject matter that is not illegal or against public policy.In case of a breach of contract, the injured party may go to court to sue for damages, for injunction, or for specific performance if financial compensation would not compensate for the breach.