A corporation, also referred to as an invisible hand, lacks no legal capacity since authority is granted to buy and sell real property. A corporation formed through state statutes, therefore, has jurisdiction within just the state unless there is a location of the corporation within another state. Since a corporation is an entity whose operations are performed by representatives, the authority of the corporation entering the contract, is performed by the representatives themselves by signing and accepting the contract on hand. 

In order for business contracts to be validated and completed, the representatives must receive the consent of the board of directors. You will never see one representative having the authority to complete business contracts for a corporation, there are checks and balances involved due to the size and legal compliance of a corporation in deeming business contracts.

The reasoning behind such checks and balances in the contract process is due to the interest of the amount of shareholders, directors, employees, creditors, and the community that receives direct impact based on the direction a corporation leads toward. There are five defining factors of a corporation; each factor plays a unique role in the formation and advancement of the corporation. 

(1) It has separate legal characteristics, meaning representatives of the corporation may will not be subjected to anything against the corporation unless committed upon personal interests. 

(2) Limited liability of the stockholders, meaning if bankruptcy occurs, stockholders are limited to receive what they initially inputted. 

(3) Being able to transfer shares through the stock exchange, this allows shares to bought, sold, or traded on the consent of the stockholder. 

(4) There is a delegated group of managment, also known as the board of directors, whose consent is needed whenever initiating a task on behalf of the corporation. 

(5) Interest of shareholders, which gives shareholders a piece of ownership of the corporation through their investments.

When an investor owns shares within a corporation, there needs to be some sort of perk involved other than collecting dividends off their stocks, which allows for the development of a sense of importance. Shareholders not only have the rights to dividends declared by the company, but they also have voting rights when there is a survey figuring out which direction to head in or what improvements may be enacted. They also have the rights to any return of capital upon advancement or bankruptcy of the corporation itself.

All in all, a corporation consists of the highest value out of all the forms of business in our modern times. A corporation is the only form in which the representatives are completely protected from being liable on behalf of anything the corporation itself is charged with, even within the business contracts realm.

This is primarily due to the fact that there is not one sole decision maker within the firm that may enforce the contract. Each decision on behalf of the corporation involves a body of individuals which hold authority with, and against each other. This is to promote the checks and balances the corporate figures hold over each other.

Contract law forms the basis of nearly all commercial interactions in modern society. Although many people do not realize it, they enter into several contracts each day.

Contracts include the obvious examples, such as leases, rental agreements, employment contracts, and real estate sales, but also include the purchase of a soda from the neighborhood convenience store. It would be very difficult to imagine a modern society that was not dominated by contracts in the way that the United States and much of the world is currently.

Contract law takes its basis from the Latin phrase pacta sunt servanda, which means “agreements are to be kept.” The understanding of contract law that is held in the United States is based on the British common law system and has been modified by the Uniform Commercial Code.

 

Contract law places obligations on all parties that enter into contracts which are mutually binding. In most circumstances, these contracts cannot be broken without the breaking party being required to provide compensation to the other party. To learn more about the history of contract law, please read this link.

Contract law is based on a common law heritage inherited by America from Great Britain. Under the common law system, the laws governing contracts were not codified as they are today. Instead, the governance of contracts was based on previous rulings by the justices. Contract law is based in both the common law and equity court systems of England.

 

As a result, American contract law is concerned both with ensuring that contracts are enforced when the fairest course of action is to enforce the contract, but when it would place an unreasonable burden on one of the parties, the courts often abridge contracts. The preference of non-interference in contractual relationships is found in the Contract Clause of the Constitution.

The UCC, or Uniform Commercial Code, is a national attempt to streamline the laws governing commerce across the United States. It consists of 11 Articles. Ten of these Articles have been adopted in every State. Louisiana is the only State that has not adopted every Article.

Although the UCC is not the specific law in any jurisdiction, it does provide the basis for each State’s commercial laws. Each State adjusts the organization of the Code to adhere to its particular tradition, but the essential elements remain the same from State to State. For more information on the UCC, please click the link.

Contract law exists to record the obligations each party to a contract has to the other party. Contracts also are meant to protect the rights of both parties to the contract. In addition to laying out the responsibilities of the contracted parties, contract laws also assign each party with rights. Contract laws also lay out penalties in the event a contractual obligation is not upheld. To learn more about the fundamentals of contract law, please click the link.

The objective theory of contracts states that contracts will only be enforceable if a reasonable observer watching contractual negotiations would believe the terms being laid out are fair.

This is an essential element of contract law because it serves a court examining a contract with a reasonable baseline against which to compare the terms of a contract. It allows an advertisement of ridiculous terms to not be considered a serious invitation to treat. For a more thorough examination of the theory please follow the link.

There are five common elements that must be present to form a legally enforceable contract. These elements are agreement (which constitutes offer and acceptance), consideration, the intention to be bound by the contract, the legal capacity to enter into a contract, and the formalization of the contract. It is also essential that the contract be for a legal purpose. For a more thorough examination of these aspects, click the link.

There are six different types of contract. These contract types constitute three different categories. There are bilateral and unilateral contracts. Formal and informal contracts form the next classification. The final category of contracts is express contracts and implied-in-fact contracts. Each type of contract can best be explained by following the comparisons found here.

When attempting to enforce a contract, the courts divide contracts into two broad categories of contracts. Valid contracts include enforceable contracts, voidable contracts, and unenforceable contracts. If a contract is not valid, it is considered a void contract.

A quasi-contract may be formed either through a statute that imposes contractual obligations between two parties or affords protections to circumstances that the Government finds needs the protection. For a more thorough examination of the ways in which contracts are enforced, follow the link.

When charged with interpreting contracts, the courts will usually attempt to interpret them in a manner that most clearly adheres to the original intentions of the parties at the time the contracts were formed. If the intentions of the contracting parties cannot be determined, the courts will attempt to base their interpretation on the fairest interpretation of the terms. 

In the event that evidence suggests that the party which drafted the terms of the contract left the wording intentionally vague, the courts will interpret the contract in a way most beneficial to the party which did not draft the contract. For an analysis of how the courts typically imbue meaning to the contracts before them, follow the link.

The legality of a contract can be attacked from several fronts by a litigant. A litigant may argue that a contract should be invalidated because it is a contract contrary to statute. A litigant may also claim that a contract they have entered into should be declared void or voidable because it is contrary to public policy.

At any point when a contract is before the court, the court can declare that a contract is illegal because it has been formed in order to engage in the commission an illegal act. If only a specific clause causes the contract to be illegal, and the clause can be stricken without fundamentally changing the contract, then the courts may enforce an existing severable clause or create one if it does not already exist.

The legality of a contract may also be disputed if a litigant claims that their assent was not genuine. There are several reasons that the courts may hold this to be an acceptable reason to rescind a contracts standing as valid. To examine the legal challenges that may be filed against a contract, please see the link.

The courts can become involved in enforcing contracts in the event there is a dispute between the parties in a contract. The courts may establish that a contract is enforceable, voidable, unenforceable, or void. The court may also rule that a quasi-contract is in effect. Enforceable contracts, voidable contracts, and unenforceable contracts are all considered examples of valid contracts.

When issuing a judgment, a court may declare a contract void or valid, and may declare the ruling to apply to the contract as a whole or to just a part of the contract. If only a portion is declared void, and the remainder of the contract can still be considered valid, the contract will remain in effect.

If the court rules that the contract is enforceable, it means that the two parties are bound by the terms of the contract to which they had previously agreed. An enforceable contract is a category of a valid contract. Enforceable contracts compel action on behalf of both parties.

A voidable contract is a specific category of enforceable contract. A voidable contract exists when one or both of the parties has the ability to release itself from the contract without a finding of fault. A voidable clause can be specifically inserted during the drafting of a contract by either party.

Any contract involving a minor is automatically considered a voidable contract. A minor may terminate the contract within two year of reaching the age of majority. In a voidable contract only the party with the right to void the contract may file suit for breach of contract.

An unenforceable is a valid contract which a legal body cannot compel one or both of the parties to fulfill the terms of because there is a statute or public policy with which the contract is in conflict.

A void contract is an oxymoron. A contract that is void is a contract which could not exist in the first place. A contract may be declared void by the courts in several circumstances. If one of the parties has been adjudicated to be incompetent, the contract may be declared void. A contract undertaken to commit an illegal act will be declared void as well.

Quasi-contracts are instances where two parties never specifically entered into a contract for the service in question, but a law creates an obligation for one party to provide compensation to another for services rendered.

When a principal agent relationship is created based on an arrangement of a contract, the power of attorney rights are automatically conveyed to the agent. The power of attorney held by the agent, is clearly specified within the contract on how to act on behalf of the principal. The agent in this case may also be referred to as an attorney-in-fact. The term attorney-in-fact has been implemented to decipher between them and attorneys of the law. The fact is represented by the fiduciary duty labeled based on the facts of the contract arranged.

The power of attorney is usually stated separately from the contract. This is due to the fact that others are to be shown that the agent has the right to act on behalf of his or her principal. Although the general power of attorney may be either written or oral, most entities require it to be in writing. When an attorney-in-fact, the agent has to be completely loyal and honest with his or her principal. There are many examples of principal agent relationships within real property law. 

Power of attorney is granted to a real estate broker to place offers on a house, when the principal is buying; or when accepting an offer on behalf of the principal, when the principal is the seller. An attorney becomes the agent when overlooking and creating the various contracts required, since the principal may not have the knowledge to do so, hence he relies on the attorney while the attorney is being compensated.

General power of attorney can be granted in most circumstances. For each industry, there are specified state laws regarding the guidelines on the ethical and procedural behavior the power of attorney must abide by. Each agent within various industries, are specialized, that is the benefit of why principals seek agents to perform their duties based on credentials and competence. The power of attorney will automatically be revoked upon the death of the principal, or if he or she become mentally ill. 

The only exception to such revocation is if it is clearly stated within the contract, that the agent was granted a “durable” power of attorney, in which there is no revocation involved. Majority of the time, it is more than beneficial for the agent to have insurance when catering to fiduciary duties towards others. This is in case the principal feels as if there was a breach of contract in where the agent had performed acts which were not specifically stated within the contract. The outcome would be a lawsuit in which in the best interest of the agent is to obtain insurance covering his or her agent responsibilities.

There are six types of contracts, which can be broken down into three pairs of related terms. The first pair is bilateral and unilateral contracts. Bilateral and unilateral contracts are distinguished by the relationships between the offeror and offeree.

 

 

In a bilateral contract, both parties must agree to the terms of the contract before it goes into effect. In a unilateral contract, the offeror presents terms to the general public. A unilateral contract only becomes binding once a second party seeks to collect on the contract. A unilateral contract is formed if Megan puts up a poster offering a reward for her lost wallet, while a bilateral contract would be formed if Megan offered Rosemary $50 to find her wallet.

 

 

Although formal and informal contracts were both once common, informal contracts have largely replaced formal contracts. A formal contract is any contract which is required by law to take a specific form. An informal contract is any other type of contract.

 

 

An express contract is formed when both parties state what they intend to do while the contract is being formed. An implied-in-fact contract is formed by the actions of the parties. An implied contract does not require any verbal statement by the parties to be put into eff

There are two forms of partnerships: a general and a limited type. Both of these are subject to special authorizations when undergoing a contractual process. In a general partnership, in order to complete a general contract, all partners must consent. The contractual processes may be handled and performed by a separate entity, if hired to do so, on their behalf.

A review of partnership agreements is a necessity in order to ensure that each agreement was valid if all the members’ consents were not given. A partnership is formed with two or more people who are looking to earn a profit. Within the partnership, there is a superior partner, who has more liability than the other partners due to their co-signing or amount of investment put forth.  

The Uniform Partnership Act establishes rules and standards for partnerships, A partnership is not a taxpaying entity; it is a tax reporting entity, forming a pass-through taxation which is a key perk. There is a joint liability amongst all the partners for their partnership’s obligations. 

In a limited partnership, there are also two types of partners: limited and general. The limited partners have just as much authority in most cases, but they lack the authority to override decisions and commit agreements on behalf of the partnership without the consent of the general partners. The limited partners also have limited liability, where they are not as liable as general partners. Thus, the main decision-making is in the hands of the general partners.

General contracts need to be approved and agreed upon by all general partners. Approval is also needed from limited partners in a majority of the agreements, unless they are not present. General contract review is necessary at the end of each quarter in order to ensure that each agreement was done not only legally, but also with the approval of the general partners.

If a general contract is not approved by a general partner due to their absence, those general contracts are also overlooked at the end of the quarter in order to make sure that the general contracts were agreed upon by the other general partners within the partnership.

General partners owe more liability to the partnership either because they were appointed as a general partner, they had put up more of an investment, they have more capital in which the other partners stay protected, or because they are more experienced and the partnership revolves around their expertise.

General contracts are to be signed by majority of the partners, all of them if possible. If there is a debate to whether a general contract should be signed, it goes into a voting system in which the limited partners’ votes may count as 1 vote, while the general partners may count as 1 1/2 or 2 votes each. This method is designed to maintain an equilibrium within the partnership and to ensure that the partners with more expertise have more of a leverage when it comes to voting on general contracts.

The UCC, or Uniform Commercial Code, developed as an attempt to streamline business laws across different jurisdictions within the United States. The ten of the eleven Articles have been met with universal adoption.

The UCC was considered essential as a result of corporations engaging in interstate commerce more frequently throughout history. As interstate commerce proliferated, corporations complained about the fact that they were having to deal with what were sometimes radically different standards for completing a single commercial transaction. 

There are eleven Articles which comprise the Uniform Commercial Code. Article 1 of the UCC is known as the General Provisions of the UCC, and the other Articles are: Article 2, Sales; Article 2a, Leases; Article 3, Negotiable Instruments; Article 4, Bank Deposits; Article 4a, Funds Transfers; Article 5, Letters of Credit; Article 6, Bulk Transfers and Bulk Sales; Article 7, Warehouse Receipts, Bills of Lading and Other Documents of Title; Article 8, Investment Securities; and Article 9, Secured Transactions.

In 2003, Article 2 and Article 7 were modernized in a major revision, though the revisions to Article 2 have not been adopted by any states yet. Although Article 6 is considered obsolete by the National Conference of Commissioners on Uniform State Laws, it remains in effect in many jurisdictions.

Despite being present in one document, each Article of the UCC bears only the slightest connection to any other. Most Articles bear little relevance on the others. The exception is that each Article uses terms defined in Article 1, and Article 9 covers the paperwork required to support the intermediate Articles.