Read More – Contracts
Read More – Contracts
A contract is a legally binding agreement between two parties. Generally, a contract is formed when three important legal facts exist: 1) an offer, 2) an acceptance of that offer, and 3) an exchange of consideration between the parties. While these are the minimal requirements to create a contract, quite often there are other legal requirements that a contract must meet in order to be legally binding and enforceable (for example, certain contracts must adhere to the requirements of the Statute of Frauds).
After a contract is validly formed, each party is required to perform its specific contracted duties. While performance of the parties’ duties fulfills the obligations of the contract, failure to perform a contractual duty is a breach of the contract. A contract breach arises when anything other than the promised performance is tendered. For example, if Jane offers to purchase John’s lawnmower for $500 and he accepts, a contract is formed. Satisfactory performance of the contract occurs when John provides the lawnmower and Jane reciprocates by paying the promised $500. However, if, for example, John provides a shovel in place of the lawnmower, or if Jane does not pay the full amount, then the contract is breached. Depending on the degree of the breach and the terms of the agreement, the breaching party would owe damages (usually in the form of money) to the other party.
As one can imagine, given the immense role that contracts play in the corporate/business setting, the possibility of mistake, breach, non-performance, or a similar problem is increased by the sheer amount of corporate/business contracts in existence.
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