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Contracts

Generally
• - A contract is a promise that when broken, a remedy is provided at law (usually monetary). Essentially, some promises go beyond promising to return your neighbor’s DVD’s. The law governing contracts can be found in the common law as well as Article 2 of the Uniform Commercial Code. There are three types of contracts that essentially make up the legal theory regarding contract liability:
  • Express
    – This is a type of contract that is made up of language indicating some type of agreement between the parties and is usually in writing.
  • Implied
    – This is a type of contract is inferred by the conduct of the parties to the agreement. For example, it is unlikely that a party would paint his/her neighbor’s house without some type of agreement, so even if the agreement is not boiled down to words, the painter is still entitled to some type of recovery.
  • Quasi-Contract
    – This isn’t really considered a contract, rather, this is a prevention of unjust enrichment on the part of one of the parties to the agreement. For example, if person A agrees to build a garage for person B, and person A completes only half of the work, person A cannot recover the entire amount of the contract, but only the benefit the person B received (one half).

Contract formation
• - In order to form a valid contract, the following must be present in the transaction (remember that a contract need not be in writing):
  • Offer
    – There must be a quid pro quo (this for that) of some type between the parties (A offers B $1,000 to paint A’s house).
  • Acceptance
    – One party must accept the offer (B can start painting the house or can accept verbally or in writing)
  • Consideration
    – The parties to the contract must barter somehow (A offers money, B offers services).
  • No defenses
    – There can be no defenses (such as illegality) to contract formation. The list of defenses to contract formation is a long and complex one. An experienced attorney is necessary to explore all options when contract law is involved.

Enforcement of Contract Law
• - Restitution for a breach of a valid contract is wide and varied. As a general matter, specific performance is not a remedy for breach of contract (unless special circumstances exist, such as in the sale of real estate), and damages for are usually paid for any losses that may result. Such losses are usually boiled down to monetary form and the main goal is to put the non breaching party in the same position as though a breach had never occurred. As a general rule, punitive damages are almost never allotted in breach of contract cases. If you have any questions regarding breach of contract/contract formation, please call 1LAW for a free consultation. Also, it is very important to remember that the victim of a breached contract holds the duty to mitigate the damages. For example, when a lease agreement is breached by a tenant who moves out before the lease is up, the landlord/owner must make reasonable attempts to fill the space that has been leased (i.e. the landlord cannot sit back and expect the former tenant to pay rent on an empty apartment, he or she must make reasonable attempts to fill the apartment).

Statute of Fraud
• - The Statute of Frauds is an old term left over from common law contracts. The rule asserts that certain agreements must be in writing, otherwise, they are not enforceable at all. Contracts for the sale of land, promises to pay for the debt of another, and the sale of goods that hold the value of $500 or above, among others, must all be in writing in order to obtain a remedy for breach of contract.