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Overview of the Contracts Chapter

15 January, 2016 - 09:32
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Although contract law has many wrinkles and nuances, it consists of four principal inquiries, each of which will be taken up in subsequent chapters:

  1. Did the parties create a valid contract? Four elements are necessary for a valid contract:
    1. Mutual assent (i.e., offer and acceptance), The Agreement
    2. Real assent (no duress, undue influence, misrepresentation, mistake, or incapacity), Real Assent
    3. Consideration, Consideration
    4. Legality, Legality
  2. What does the contract mean, and is it in the proper form to carry out this meaning? Sometimes contracts need to be in writing (or evidenced by some writing), or they can’t be enforced. Sometimes it isn’t clear what the contract means, and a court has to figure that out. These problems are taken up in Form and Meaning .
  3. Do persons other than the contracting parties have rights or duties under the contract? Can the right to receive a benefit from the contract be assigned, and can the duties be delegated so that a new person is responsible? Can persons not a party to the contract sue to enforce its terms? These questions are addressed in Third-Party Rights .
  4. How do contractual duties terminate, and what remedies are available if a party has breached the contract? These issues are taken up inDischarge of Obligations and Remedies .

Together, the answers to these four basic inquiries determine the rights and obligations of contracting parties.

KEY TAKEAWAY

Contract law developed when the strictures of feudalism dissipated, when a person’s position in society came to be determined by personal choice (by mutual agreement) and not by status (by how a person was born). Capitalism and contract law have developed together, because having choices in society means that people decide and agree to do things with and to each other, and those agreements bind the parties; the agreements must be enforceable.

EXERCISES

  1. Why is contract law necessary in a society where a person’s status is not predetermined by birth?
  2. Contract law serves some economic functions. What are they?
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