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Contract Law

Contract Law

Contract law is the body of law that relates to making and enforcing agreements. A contract is an agreement that a party can turn to a court to enforce. Contract law is the area of law that governs making contracts, carrying them out and fashioning a fair remedy when there’s a breach. Anyone who conducts business uses contract law. Both companies and consumers use contracts when they buy and sell goods, when they license products or activities, for employment agreements, for insurance agreements and more. Contracts make these transactions happen smoothly and without any misunderstandings. They allow parties to conduct their affairs confidently. Contracts help make sure that the parties to a transaction are clear on its terms.

How Do You Form A Contract?

A valid contract has four parts:
• Offer: First, one party must make an offer. They must state the terms that they want the other party to agree to. If the other side agrees to the terms of the offer, the other side may accept it, and the contract is complete.
• Acceptance: Accepting another party’s offer makes a contract complete. The party that accepts the offer must accept it on the same terms as the terms of the original offer. They must make sure that the other side knows they accept it. If they propose different terms, there’s no contract. Instead, their terms are a counteroffer. It’s then up to the first party to accept the counteroffer or propose another counteroffer.
• Consideration: A valid contract requires each party to give something up. That’s called consideration. For example, in the case of an employment contract, one party agrees to give up money, and the other party agrees to give up labor. A contract is a two-way street with each party giving up something to get something else that they want.
• Mutual intent to enter into an agreement: To have a valid contract, both parties must intend to be bound by the contract. If a document says that it’s only a statement of intent, the parties may not have a mutual agreement to enter into a contract. Informal agreements between friends often fall into this category. Typically a promise or an offer of a reward in exchange for certain behavior creates an enforceable contract with the person who undertakes the activity. For example, if someone offers a reward for information that leads to an arrest for a crime, the person who provides the information can seek enforcement of the reward. On the other hand, an advertisement is not a contract without an additional, personalized invitation from the seller for the buyer to buy the good. A contract can be implied. For example, a person who seeks medical treatment has an implied contract with the doctor who treats them to pay a reasonable charge for services. Likewise, a person who orders dinner at a restaurant has an implied contract to pay for the meal that they order.

How Do The Courts Interpret A Contract?

To interpret a contract, a court looks at the clear language of the contract from the viewpoint of an objective and reasonable person. If the contract isn’t clear, the court may consider outside evidence including outside statements and the behavior of the parties. It’s best to put a contract in writing, and the statute of frauds may even invalidate some contracts.

Choice Of Law And Jurisdiction

When lawyers create contracts and handle contract disputes, they should be aware of choice of law and jurisdiction issues. Choice of law means the state law that the court uses to interpret the contract. Because most contract law is state law, choosing to litigate a contract dispute with the laws of one state over another can completely change the outcome of the case. Lawyers should carefully consider whether to incorporate a choice of law provision into the contract at the time of drafting. They should also be careful when they choose a jurisdiction to bring a contract dispute. Because the rules vary in each state, these considerations can have a large impact on the outcome of a case.

What Is A Breach Of Contract?

When there’s a disagreement about the terms of a contract or when there’s a breach of contract, the parties might involve a court to resolve the dispute. The party seeking damages must prove that a valid contract exists. They must also convince the court that there’s an appropriate remedy.

What Are The Remedies Available For Breach Of Contract?

There are several remedies that a party might ask a court to impose for a breach of contract. The most common is compensatory damages. These are the real, financial losses that a party has because of the breach of contract. If the parties agree in advance about damages if a breach occurs, that’s called liquidated damages. When a breach occurs without any real damages, the aggrieved party can still get a small amount of damages. That’s called nominal damages. In some cases, a party acts very poorly and inexcusably to breach a contract. When that happens, the court may award extra damages called punitive damages. However, this is rare. It’s also rare for a court to order the parties to perform the contract. That might happen in a case where compensatory damages are inadequate like in a contract of sale for a rare item.

Emerging Issues In Contract Law

Contract law grows and changes just like any other body of law. In recent years, the validity of electronic signatures on a contract has become a relevant and disputed issue in contract law. The practice of contract law includes identifying emerging issues and advocating for changes and extensions of law in order to allow the client to conduct business in a convenient and favorable way.

Who Practices Contract Law?

Lawyers throughout the United States practice contract law. A lawyer might specialize in contract law in private practice, or they might work for a corporation as in-house counsel. Contract lawyers work as solo practitioners, and they work at the largest law firms in the country. They might handle contract law exclusively, or they might handle contracts as part of a diverse practice. Even general practice attorneys who primarily handle unrelated matters are usually called on by a client to look at a contract matter at least a few times in their career. At Ascent Law, we have lawyers who regularly practice in Contract Law and would love to speak with you about your specific situation or your specific case.

Lawyers Create Contracts

To practice contract law, lawyers should know how to draft and evaluate contracts. They should know the state law that applies to contracts. They should be aware of issues like choice of law, jurisdiction for enforcement and mandatory arbitration clauses. Practicing contract law means knowing how to draft a contract that’s enforceable and that also has terms that are acceptable and valuable to the client.

Lawyers Handle Contract Disputes

When a contract dispute arises, lawyers work to help their client resolve the matter and advocate for the best possible result. Sometimes that means writing demand letters and contacting the other party in order to work towards a resolution. In other cases, it means litigating the matter in court. Some contract disputes rely on arbitration and mediation. Lawyers who practice contract law might do some or all of these tasks on behalf of their clients.

In a contract, words have meaning. Each word is important and even critical. For lawyers who like writing and enjoy the details, contract law is a good choice. When disputes happen, lawyers who enjoy litigation and conflict resolution can help deserving clients navigate these disagreements. Contract lawyers help people and companies conduct business. It’s important work. The work is often ongoing or repeat, so whether you work for yourself, a law firm or as in-house counsel, a focus on contract law is often the cornerstone of a sound career in the law.

How a Contract Works

Once the offer, acceptance and consideration have been determined, the contract describes in detail all the parts. A contract answers the who, what, how, where, how and when of the agreement. It is important that the terms of the agreements be clearly stated. The terms of the contract–the obligations, expectations, and responsibilities of all the parties–must be detailed and without ambiguity. Once all the parties have read and understood the contract, the parties sign and date the contract. The contract is legally binding which means that once signed all parties are legally obligated to do what they have agreed to. Contracts are legally enforceable as well. Breach of contract is when one party does not do what the party agreed to do in the contract. The other party then has the right to go to court to ask the judge to compel or force that party to follow the terms of the contact. This is how a contract is enforceable. Oral contract are much harder to enforce because there is no evidence, such as a written agreement, to show what the parties agreed to or what the consideration was.

Additional Information About Contracts

Not everyone can sign a contract. There are state laws which decide how old a person can be before she can sign a contract. In many cases a person must be over 18 years old, but 16 years of age is also possible. In other situations a parent must co-sign a contract if a child is a minor. Another requirement is that all parties signing a contract must be competent and sane. While this requirement is open to interpretation, people are expected to have the intellectual capacity to understand what they are signing. Contracts are also not binding if fraud is involved or if one of the parties misrepresents himself. An extreme example is selling a house that you don’t own or don’t have the legal right to sell. If such factors of a contract are uncovered, the contract is void and is unenforceable. Contracts can be one or several hundred pages long. No matter the length, it is your responsibility to understand what you are signing. Having an attorney look over any contract is always a good idea.

Express Contract

You’ll likely be a party to contracts in your everyday routine. Everything from eating at a restaurant to buying a home includes some form of a contract. The following are some of the most common contracts that are used. An express contract is the most common contract type. In this type of contract, all elements are specifically stated. This can be written or done orally. Either way, offer, acceptance and consideration must bind the parties together legally. And both parties must clearly understand the terms and conditions each is agreeing to. An oral contract works the same way. In an oral contract, like negotiating the price of a new car, the parties agree on a set price, a monthly payment schedule if applicable and any warranties or guaranties included in the offer. Once acceptance is made and consideration is exchanged, the contract for the vehicle is binding and enforceable. As long as both parties uphold their promise, the car cannot be returned at a later date, nor can the salesman request the car back from the new owner.

Implied In-Fact Contract

Not every contract is as transparent as an expressed contract. An implied in-fact contract binds parties together through a mutual agreement and intent, but there are no expressed terms of the agreement. The agreement holds mutual intention based on facts and circumstances and a reasonable assumption from the circumstances and relations between the parties. For an implied in-fact contract to be enforceable, there are a few elements that must be present:
• An unambiguous offer and acceptance
• Mutuality of both parties to be bound to the contract
• Consideration

What Are The Legal Rules As To a Valid Contract?

A valid contract is an agreement which is binding, certain and enforceable by law. A valid contract has several essentials like offer, acceptance, lawful object, lawful consideration etc.

The legal rules regarding valid contracts are as follows:-
• Offer and Acceptance – There must be valid offer followed by its valid acceptance. For an agreement there must be a lawful offer by one party followed by lawful acceptance of that offer by another party. The term lawful refers that both the offer and acceptance must satisfy the specific requirements.

• Intention to create legal relationship – The parties to an agreement must have intention to create legal relationship. Agreements of a social or domestic nature do not create legal relations and as such cannot give rise to a contract like A promises his friend B to go along with him to an exhibition but later refuses. Here there was no intention to create legal obligation so this is not a valid contract. In case of commercial agreements it is presumed that parties intend to create legal relations.

• Lawful Consent – It is another essential for a valid contract. Consent means that the parties must have agreed upon the same thing in the same sense i.e. meeting of minds of the parties. For a valid contract it is necessary that the consent acquired must be free. For e.g. if A compels B to enter into a contract at gunpoint then it is not a valid contract as the consent of B is not free.

• Lawful Object – It is also necessary that agreement should have a lawful object. The object for which the agreement has been entered into must not be fraudulent, illegal, immoral, or opposed to public policy. Every agreement of which the object or consideration is unlawful is illegal and the therefore void. This agreement is illegal as its object is unlawful.

• Certainty – “Agreements the meaning of which are not certain or capable of being made certain are void.” i.e. a contract must have specific and certain provisions.

• Lawful Consideration – Consideration is “something in return.” It is some benefit to the party. An agreement is enforceable only when both the parties get something and give something. The something given or obtained is the price of the promise and is called consideration. Consideration for one party may be paid by someone else.

• Parties must be competent to contract – An agreement is enforceable only if its parties possess contractual capacity i.e. they are neither minor, nor of unsound mind etc. It means that the parties to an agreement must be competent to contract. According to Section 11, in order to be competent to contract the parties must be of the age of majority and of sound mind and must not be disqualified from contracting by any law to which they are subject.

• Legal Formalities – According to Contract Act, a contract may be oral or in writing. But in certain cases it is necessary to complete certain formalities in certain contacts such as some contracts require registration, written document etc. Agreement must not be expressly void by law – An agreement must not be one of those, which have been expressly declared to be void by statute.

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It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

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Michael Anderson

About the Author

People who want a lot of Bull go to a Butcher. People who want results navigating a complex legal field go to a Lawyer that they can trust. That’s where I come in. I am Michael Anderson, an Attorney in the Salt Lake area focusing on the needs of the Average Joe wanting a better life for him and his family. I’m the Lawyer you can trust. I grew up in Utah and love it here. I am a Father to three, a Husband to one, and an Entrepreneur. I understand the feelings of joy each of those roles bring, and I understand the feeling of disappointment, fear, and regret when things go wrong. I attended the University of Utah where I received a B.A. degree in 2010 and a J.D. in 2014. I have focused my practice in Wills, Trusts, Real Estate, and Business Law. I love the thrill of helping clients secure their future, leaving a real legacy to their children. Unfortunately when problems arise with families. I also practice Family Law, with a focus on keeping relationships between the soon to be Ex’s civil for the benefit of their children and allowing both to walk away quickly with their heads held high. Before you worry too much about losing everything that you have worked for, before you permit yourself to be bullied by your soon to be ex, before you shed one more tear in silence, call me. I’m the Lawyer you can trust.