What is Contract Law?
A contract is a legally binding agreement between two or more individuals or parties who share mutual obligations. Contract law is therefore, the scope of law that regulates and enforces certain obligations attached to a contractual agreement. The typical remedy attached to a breach of contract, in contract law, is the delivery of “damages” or monetary compensation. This remedy can be delivered--by the individual or party who breaches the contract—through a specific performance that was previously required in the contract or through injunctions. Both forms of remedies will ultimately award the damaged party the “benefit of the bargain” or by compensating the damaged party through the delivery of monies.
Basic Principles of Contract Law:
Contract law is predominantly based on the principles expressed in the phrase “agreements to be kept”; this foundation of contract law simply means that when a contract is agreed upon between two parties, the stipulations latent in the contract must be upheld by both entities. A failure to abide by these stipulations and to ultimately neglect the obligations within the contract will result in a penalty that is enforced through the adherence of contract law.
Contract law, in essence, can be classified as part of a general law of obligations; through this definition, contract law can be grouped within tort law, restitution and unjust enrichment. As a means of economic ordering, contract law will rely on the notion of consensual exchange; in American jurisdictions, contract law is a broader scope of law that will encompass a larger category of agreements.
As is common with many legal principles, the basic characteristics of contract law will vary between jurisdictions. In the United States, contract law requires three foundational elements: a contract will require an offer, an acceptance and consideration in order to manifest itself into a legally valid contract. In addition to these characteristics, many courts will also look to the legality of the contract when determining its validity. If a contract requires a part to do something illegal, it will be considered void.
Contract Law in Common Law:
Within common law, the elements of a contract are consideration and mutual assent. In a common law jurisdiction, mutual assent is reached through the initial offer and acceptance of the contract, meaning the offer is met with an acceptance that does not vary in terms or stipulations. If a party agrees to accept the contract but does not agree to all the terms within the contract, the agreement in common law, is not regarded as an acceptance. This agreement is labeled a counteroffer and, therefore, can be classified as a formal rejection to the original offer.
The most important feature of contract law is that one party must make an offer for an agreement that the other party accepts. When the agreement is made tangible through a signature, the agreement takes the form of a legally-binding document.