1. LESSON 15 Contract

2. In law, a contract (or informally known as an agreement in some jurisdictions) is an agreement having a lawful object entered into voluntarily by two or more parties, each of whom intends to create one or more legal obligations between them. The elements of a contract are "offer" and "acceptance" by "competent persons" having legal capacity who exchange "consideration" to create "mutuality of obligation."jurisdictionspartiesobligations

3. Proof of some or all of these elements may be done in writing, though contracts may be made entirely orally or by conduct. The remedy for breach of contractcan be "damages" in the form of compensation of money or specific performance enforced through an injunction. Both of these remedies award the party at loss the "benefit of the bargain" or expectation damages, which are greater than mere reliance damages, as in promissory estoppel.breach of contractspecific performanceinjunctionexpectation damagesreliance damagespromissory estoppel

4. The parties may be natural persons or juristic persons. A contract is a legally enforceable promise or undertaking that something will or will not occur. The word promise can be used as a legal synonym for contract, although care is required as a promise may not have the full standing of a contract, as when it is an agreement without consideration.juristic personsconsideration

5. Contract law varies greatly from one jurisdiction to another, including differences in common law compared to civil law, the impact of received law, particularly from England in common law countries, and of law codified in regional legislation. Regarding Australian Contract Law for example, there are 40 relevant acts which impact on the interpretation of contract at the Commonwealth (Federal / national) level, and an additional 26 acts at the level of the state of NSW. In addition there are several international instruments or conventions which are applicable for international dealings, such as the United Nations Convention on Contracts for the International Sale of Goods.common lawcivil lawreceived lawUnited Nations Convention on Contracts for the International Sale of Goods

6. In order for a contract to be formed, the parties must reach mutual assent (also called a meeting of the minds). This is typically reached through offer and an acceptance which does not vary the offer's terms, which is known as the "mirror image rule". If a purported acceptance does vary the terms of an offer, it is not an acceptance but a counteroffer and, therefore, simultaneously a rejection of the original offer.meeting of the mindsmirror image rule

7. In contrast, domestic and social agreements such as those between children and parents are typically unenforceable on the basis of public policy. For example, in the English case Balfour v. Balfour a husband agreed to give his wife £30 a month while he was away from home, but the court refused to enforce the agreement when the husband stopped paying. In contrast, in Merritt v Merritt the court enforced an agreement between an estranged couple.public policyBalfour v. BalfourMerritt v Merritt

8. Consideration is something of value given by a promissor to a promisee in exchange for something of value given by a promisee to a promissor. Typically, the thing of value is a payment, although it may be an act, or forbearance to act, when one is privileged to do so, such as an adult refraining from smoking. This thing of value or forbearance from some legal right is considered to be a legal detriment. In the exchange of legal detriments, a bargain is created. Consideration

9. Courts will typically not weigh the "adequacy" of consideration as long as the consideration is determined to be "sufficient", with sufficiency defined as meeting the test of law, whereas "adequacy" is the subjective fairness or equivalence. For instance, agreeing to sell a car for a penny may constitute a binding contract if a party desires the penny. This is known as the peppercorn rule, but in some jurisdictions, the penny may constitute legally insufficient nominal consideration. Parties may do this for tax purposes, attempting to disguise gift transactions as contracts. Transferring money may be sufficient, particularly if there is accord and satisfaction.accord and satisfaction

10. In addition to the elements of a contract: A party must have capacity to contract. The purpose of the contract must be lawful. The form of the contract must be legal. The parties must intend to create a legal relationship. The parties must consent.

11. Performance varies according to the particular circumstances. While a contract is being performed, it is called an executory contract, and when it is completed it is an executed contract. In some cases there may be substantial performance but not complete performance, which allows the performing party to be partially compensated.executory contractsubstantial performance