How Do Contract Laws Impact Business Transactions?

Contractual agreements are an integral part of our daily lives.

The primary goal of contract law is to enable people to conduct business, as contracts are an essential, common, and everyday component of economic activity. Contracts are used by both businesses and consumers to ensure that transactions run smoothly, such as the sale of goods, the licensing of products or services, the basis of employment agreements, and so on.

Contracts seek to eliminate ambiguity and misunderstanding, allowing all parties involved to conduct business confidently, business operations and disputes on clear terms. Moreover, if you are a student and are required to write a contract law assignment then you can get help from Assignment Writer UK to secure good marks.

What is contract law?

According to Famous Researcher, a contract is a legally binding promise (written or verbal) made by one party to fulfil an obligation to another in exchange for consideration. They state that a basic binding  and thus legally enforceable - contract must include 4 key elements:

• Offer: One party, the offeror, makes an offer.

• Acceptance: Another party, the offeree, accepts the offer.

• Consideration: Each party gives the other consideration, which could be a payment or any other value given at the counterparty's request.

• Intent to create legal relations: All contracting parties intend to be legally bound by the terms of the contract.

With the influence of contract laws, all parties involved must have contractual capacity. This means they are legal entities recognised by law. Companies, limited liability partnerships; and individuals of at least 18 years of age.

Contract law is the body of civil law that governs the formation and enforcement of contractual agreements. It governs their formation and execution, as well as the resolution of contractual breaches.

Various types of contracts

Contracts vary greatly and are determined by a variety of factors, including the parties involved, the considerations, the specifics of the given situation, and the transactional terms of the contract. Here are some examples of different contract types:

• Express contracts are explicitly stated.

• Conditional contract is one where the accomplishment of the contract depends upon particular performance criteria or conditions.

• A joint contract has more than one party.

• An implied contract, on the other hand, is an agreement made either orally where it is situational rather than explicit.

• Unconscionable contracts are those in which one party has significantly more bargaining power, or another kind of power, than the other. Contracts characterized by unconscionability are often unfair.

• Adhesion contracts are those in which one party has more influence than the other.

• Option contracts enable the parties to opt for a different contract at a later time.

• A fixed-price contract is a contract in which the parties agree upon a fixed price.

The phrase "freedom of contract" refers to the ability of involved parties to bargain and agree on whatever terms they want, without government intervention.

What is a breach of contract?

Although it's important that the right contract is in place with any transaction, sometimes breaches of contract by one party will arise even with the best preparation of written documents or good working relationships.

A breach occurs when one or more of the parties fails to fulfil at least one of the agreement terms and conditions of a binding agreement. The law of privity of contract, providing that all parties are bound by the contract and come with an obligation in some form, covers breaking the terms of the offer. There are legal implications for breaking privity. For example, suppose a property owner hires a building contractor for an extension of his property, and the contractor fails to deliver all aspects of the contract provided in the agreement. In that case, there has been a breach of contract. Similarly, if the contractor completed the job and the house owner did not pay him according to the contract, then he would be in breach of contract. In this case, both parties take the position of promisor and promisee. 

What happens if there is a breach of contract?

There are two primary options: seeking the intervention of a lawyer expert in contract law or institute court proceedings against the other party. The parties can refer a case to the Court of Appeal. Another possible course would be arbitration: the parties select an independent, impartial third party who will make a ruling on the dispute.It includes the Financial Ombudsman Service, which resolves disputes between customers and financial service providers.

Unfair Contract Terms Act 1977 limits the amount of liability for breach of contract, negligence or other violations of duty that is allowed to be excluded by exclusion clauses of a contract. Where the breach of contract is found, legal remedies often include:

• Compensatory damages

• Punitive damages

• Paying more money to compensate or markup the wronged party

When is a contract considered void?

Many businesses – as well as people – believe that in the absence of a written contract, no contract exists at all; that is wrong, but many circumstances consider a contract null and void.

During the contract formation process, there cannot be any vitiating factors, which are aspects of the contract which consider it invalid. Vitiating factors can include the law of mistake such as mutual mistake and common mistake; misrepresentation; undue influence; Non est Factum; economic duress; and illegality. In such cases, rescission can often be granted to the plaintiff and repudiation of the contract may occur.

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