The Law of Contracts

Author: Garry Crystal

A detailed view of the law of contracts shows that the main reason for this law is to enforce promises and agreements that have been made. If a broken contract is taken to the law courts then there will be certain criteria that a judge will look at before deciding whether or not the contract can be enforced.

The Elements of a Contract

For any contract to be considered legally binding the elements of offer and acceptance must exist. The origin of a contract or agreement will begin with the offer. With the unconditional acceptance of the offer the contract will then be formed. But there are other contract elements that are required by the law, and if these are not present the courts may decide there is no contract.

The Offer and Acceptance

With an offer there must be a willingness from the accepting party to enter into the contract. In order to make the contract complete there must also be specific terms and conditions set out and accepted. Once all terms and conditions have been offered and accepted, and no further negotiations intended then the contract can said to be complete or full.

Consideration

Another important element in the law of contracts is consideration. A contract may not be deemed to be enforceable by law if there was no consideration included. This means that there must be mutual consideration on either side; one person promises to provide a service and the other pays in return.

Intention

The fourth element in a contract is intention. When parties make an agreement with no intention of the agreement becoming legally binding then it will not be judged to be a contract under the eyes of the law. In some cases, such as commercial contracts, there is an assumption that the contract is intended to be legally binding. If one of the parties does want to bring the matter to court and argue that there was never any intention of a binding contract then they will need to have some form of clear written evidence.

The Terms and Conditions

If a contract dispute is brought to the law courts then great emphasis will be placed on the terms and conditions of the contract. A contract cannot be said to be complete if the terms and conditions are not fully laid out. These conditions must not be vague or ambiguous. A contract will not usually be seen as legally binding if the terms and conditions are unclear. However, every court case is different, and a judge may at times try to clarify the terms and conditions of the disputed contract.

Type of Contract

In most cases it makes sense to take the precaution of formalising all agreements with a written contract. But a contract may be upheld even if it is made verbally. There are certain circumstances where contracts must be made in writing, such as the sale of property or tenancy agreements. If no written contract or statement does exist, and the contract dispute has reached the courts, then the judge may look at how services, promises, and exchanges were carried out in practice in order to make a decision.

Contract Discharge

A contract can come to end in one of four ways; breach, performance, agreement and frustration. Discharge by performance means that all the obligations of the contract have been accomplished by both parties. Agreement of discharge can mean that both parties agree to end the contract or one party releases the other party from the agreement. Frustration means that events have occurred that made the completion of the contract impossible and the obligations of the contract could not be met.

Breaching a Contract

A breach of contract can occur if one party does not fulfil one or more of the specified terms and conditions. It can also occur if the work carried out is defective or if one party makes the other aware that they will not be carrying out the agreed work. The law can then be brought to judge on this contract dispute and can award the innocent part damages.

The law of contracts can be a complicated matter, and serious consideration should be given along with expert legal advice if the court process is to be considered. Financial damages may only be awarded if the innocent party can prove financial loss. Court costs and solicitors fees should be weighed up against the likelihood of any damages awarded before proceeding with court cases.

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Moomin 8 Mar 2019

I appplied for, and was offered my Civil Service pension as a lump sum under the "Trivial Commutation" scheme. We were informed several times that I was entitled, had met the eligibility criteria and that we would receive the funds on the 27th of Febrruary, later postponed to the 7th of March. I signed and returned an unconditional offer of acceptance. On the 7th of March, while awaiting the bank transfer of my pension (which we desperately needed and had used as a basis for financial and employment decisions), I was imformed by a senior advisor at the Pensions Service that I was not, after all, entitled to my pension because my Civil Service pension would be used to make up a shortfall in my national pension under the "Guarranteed Minimum Pension" arrangement. This news was devastating to us and we are trying to find out if we can fight it.

susan 8 Jan 2016

hi i have worked flexibly for an LLP ( my brother was a director ) for 2 years the first year i was paid through my own company , but it was verbally agreed that, as i got paid 14 months late, that a zero hours contract should be put in place for myself and an action (we recorded actions on a list at our meetings ) was put onto my brother to look this, he did so the action was classed as done at the last meeting the contract was drawn up by both me and my brother and filed. now after i have handed my notice in ( my brother has already resigned ) they are stating they didnt know anything about the contract and because it wasnt reviewed and signed by all 3 directors it is invalid therefore they do not have to pay me for the 9 months work i have done for them , help !!!!!

ContractsAndAgreements Editor 7 Oct 2015

I'm not quite sure of the question you are asking. You would have to give more details before it can be answered.

tidychick 6 Oct 2015

Can someone tell me if in a contract I've signed for £700 but they've admitted and told me and emailed that its £500 is the contract void? Many thanks

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