What Is Contract Law Definition? (2024)

What is contract law definition? Contract law is the legal body that encompasses both the origination, enforcement and ultimate enactment of all legal contracts or agreements. All those who engage in business transactions, at some point or another, engage in contract law. Companies and consumers alike use contracts in their everyday actions.

Contract Law Definition

A contract is essentially an agreement amidst separate parties initiating mutual obligations enforceable by law.

Contracts are crucial in facilitating both cooperation and trust. Not dependent on fear of reprisal or even the hope of reciprocity, one could instead enlist others to ultimately pursue common purposes, doing so through submitting to contracts as backed by impartial authority.

Contract Lawsuits

The law offers remedies if any contract's intended individual is breached — aiming to reinstate the person wronged into the position they'd usually occupy if the contract hadn't been breached, instead of simply punishing the breaching party. Adequate considerations will either benefit or detract from what the wronged party receives. This will reasonably and fairly induce them to make such a promise/contract. Therefore, gifts do not meet the standard of adequate consideration, as the promise to make any gift remains generally unenforceable.

Contract law may appear painful through its numerous doctrines and exceptions. Yet in reality, the vast majority of contracts receive compliance, and of these that go to court, the courts catch on quickly when people are simply seeking to get out of a deal by citing some remote point of contract law. In these cases, the courts do not offer relief.

Contract Requirements

Statutory law such as the Statute of Frauds could require some types of contracts to be put in writing — as well as executed with particular formalities — in order to be enforceable.

Otherwise, such parties could enter a binding agreement without even signing off on any formal written documents. For instance, the Virginia Supreme Court noted in Lucy v. Zehmer that agreements made on pieces of napkin could be considered valid contracts, if both parties involved were sane and showed equal assent and consideration.

There are certain legal exceptions relating to some conditions, but each of them is subject to its rightful interpretation within the courts.

Breach of Contract

Contracts get breached in two main ways:

• Actual breaches
• Anticipatory breaches.

Actual breaches occur when one party simply fails or refuses to honor their part of the contract.

For example, suppose Bob signs a commercial agreement to deliver 300 pavers on Monday, to his friend Mark, at his very home, for $150.00. Mark then pays Bob in full up front, yet Bob doesn't deliver, come Monday. After the pavers remain undelivered on Wednesday, Mark's angry and seeks a refund. Bob is now guilty of an actual breach of contract.

An anticipatory breach implies any intended or even anticipated failure of a party to perform its duties under the stated contract. This will occur when a party informs another party of its unwillingness or plain inability to deliver ahead of time. In such cases, the party negatively affected by the breach isn't required to wait until all terms, or any required date, have passed, before initiating legal action.

For example, imagine Anna moves out of her rental, to the location she just purchased with her new husband. She then contracts with a business to get a thorough cleaning of that rental on Thursday, one day after removing her every belonging, so she may walk-through with her landlord on Friday, which falls on the 31st of the month. She pays a $300 company fee in advance. Monday, three days before the scheduled cleaning, she gets a phone call telling her the job's been canceled.

The cleaning company has just committed an anticipatory breach of contract, telling Anna it can't perform its agreed-upon duties. If Anna can't find another service in time to complete this task, the original cleaner could be liable not only for the $300 but also for the incurred extra month's rent, due to its anticipatory breach of contract.

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