Traditional Contract Law

Traditional Contract Law



Traditional Contract Law

Part 1:

Traditional Contract Law

A contract is a promise between two or more persons involving the exchange ofsome good or service. Some of the basic elements of a contract include: an offer and an acceptance; "capacity," or being of legal age and sound competence; "mutual assent," or agreement on the terms of a contract; and "consideration," or compensation for goods or services rendered. The element that distinguishes a contract from an informal agreements is that it is legally binding:the law provides a remedy in the event that the promise is not fulfilled. Bylaw, certain types of contracts must be in writing, but oral contracts are valid in many situations. An oral contract may be held to exist even in the absence of agreement as to all its terms (Pill Poole, 2004).

When interpreting contracts courts tend to avoid questions regarding the intent of the parties involved in the contract and rely on the contract itself, particularly when the contract is in written form. Under the "plain meaning" rule, the words of a contract are to be read according to their plain, everyday meanings, with the exception of terms that have been specifically defined in the contract. To discourage the drafting of deliberately ambiguous language, any ambiguous terms in a contract is interpreted in a way that penalizes the party that drafts the document. In other words, if "party X" deceptively drafts a contract with ambiguous language such that the terms of the contract benefit the interests of "party X" over "party Y," the ambiguous language of the contract will deliberately be interpreted to benefit "party Y (Murray, John Edward., 1990)."

Contracts are frequently modified to reflect a change in preference by one ofthe parties or because unforeseen circumstances arise. For instance, a person may contract with a builder to have a house constructed but during the course of construction he or she may desire that more rooms be included, or the builder may be forced to change the agreed-upon completion date due to problems with the weather. Both the initial contract and the subsequent modifications may be in written or oral form. Contracts can be designed to accommodate future complications by including provisions that leave matters open. For example, a contract may leave certain matters to be resolved at a later date to reflect future conditions such as changes in prices or availability of goods. Such modifications may be in writing but are more often simple oral agreements.

Interpreting contracts is often difficult because of the complexity and subjectivity of the agreement. To simplify the process a set of standard procedures for interpretation are usually followed. First, the latest and most final agreement of the parties is considered to be the valid contract. Second, written agreements are given much more weight than oral agreements. In fact, in cases involving written contracts, oral evidence that either contradicts or supplements a written agreement, may not be introduced if the written contract is deemed final and ...