Understand the Requirements of a Contract

In order to form a contract, five distinct aspects must be present. The first is that there must be consideration. The offer and acceptance of contracts is often referred to as an agreement.

Consideration in a contract does not apply if the contracted act is something legal prohibited. For instance, a contract cannot be entered into if the consideration of one of the parties is to kill another person, because the killing of another person is not normally a legal right.

Contracts can only be enforced legally if the parties involved in them are believed to have wanted the courts to become involved in them at the time the contract was created. Two parties who claim they are entering a “gentleman’s agreement” are usually not considered to have entered into a contract.

A contract cannot be considered to be valid unless both parties to the contract have the legal capacity to enter into the contract. Legal capacity has several elements. The first is that both parties must be of sufficient age to be considered above the age of majority. While a minor may become a party to a contract, they can disaffirm any contracts they enter into at any time. In the event a minor party to a contract disaffirms the contract, the minor must forfeit any goods they received.

Recently, minors voiding contracts have been held responsible for returning the items covered in the contract in the same State they were granted, as are adults. Of course, the minor is only responsible for returning the consideration if it is currently in their possession.

The final requirement to creating a contract is that there must be a formality to inform both parties that the contract is in effect. The formality, however, is not standardized. It may involve affixing signatures to a written contract or shaking hands to formalize a verbal contract.

Easy to Read Enforcing Contracts Overview

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.

Enforceable Contract

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.

Voidable Contracts

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.

Unenforceable Contracts

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.

Void Contracts

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

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.

Interpreting Contracts At A Glance

One of the essential tenets of business contract law is that the terms of the contract must be one to which a When interpreting a contract there are several things that an arbiter or jury must examine. The first is to determine the intention of the parties to the contract. There are many ways to do so including the plain-meaning-rule.

When determining intent, the judgment must conform itself to the intent of the parties and must be alert to times when the parties’ intents deviate from the what would normally be expected. An interpretation must also seek to not reward fraudulent intentions which may have been held by a party to the contract.

Uncover the Functions of Contract Law

Contract law has been construed historically that if ambiguous language is employed, then the contract will be interpreted in such a way as to give favor to the party that signed the contract, not the party that wrote the contract. Contracts law is derived from a common law heritage.

Another major function of a contract is to document what each party to a contract is obligated to do for the other. Contract laws also serve to assign consequences in the event either party is unable to perform the duties taken up under the terms laid out in the original contract.

Contracts law is also meant to uphold the basic processes by which the economy functions in the United States and in all countries throughout the world, though not every country has a common law basis for understanding contract law.

Contract law in other systems may have a heritage derived from civil law, Islamic law, socialist law, and/or from tribal law. Depending on each country’s specific views of contracts, law systems in the country may assign more protection to the consumer or may afford more protection to the corporation.

Find Out the Responsibility and Legal Capacity to Contract

Limited Liability Company

Similar to a corporation, the members of a limited liability company (LLC) are not liable for the debts or damages the LLC may incur. Another plus is that the members of the limited liability company will never be personally liable for contract agreements through the LLC.

A limited liability company receives the benefits of each form of business entity, while avoiding the disadvantages each one bears. The avoidance of double taxation and also not having to file taxes through the LLC are some of the key benefits of its kind. The creation of the LLC entity in recent times has made it convenient for individuals to be able to accumulate the benefits of each form of business entity, taking the pros and minus the cons.

Agents

When an individual receives the authority to act on behalf of another, they are known as principal agents. A contract is arranged in order to set up the guidelines on how the agent acts on behalf of the principal.

A principal agent has a fiduciary duty towards the principal. A principal agent is not to perform any additional duties which may conflict with a prior obligation to which he or she has committed. 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 power of attorney will automatically be revoked upon the death of the principal, or if he or she become mentally ill.

The power of attorney is usually stated separately from the contract since it is to be shown to others that the agent has the right to act on behalf of his or her principal. Each agent within various industries is specialized, which is the benefit of why principals seek agents to perform their duties based on credentials and competence.

Easy Uniform Commercial Code Overview

Background

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.

Articles of the UCC

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.

Understanding the Power of Attorney

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.

Appropriation

The Prior Appropriation Doctrine has been created in order to meet the needs of western and arid states. An arid State refers to a State which has insufficient water supply or lack of rain. This Doctrine caters on a first come first serve basis, meaning whoever makes use of the water first has the superior right to the water. All appropriation laws are not similar when going from State to State, as each varies based on the demand and what the State deems as beneficial use of the water.

Expropriation is the taking away or surrendering of the permit or right an owner has to the usage of water. This usually occurs when an owner violates regulations or breaches his contract of what is stated on the permit. Overall, the Government has put its own regulations on bodies of water, but makes sure to leave room for flexibility so that the states could apply the rules according to their needs.

Contract Law Simplified Background

Contract pacta sunt servanda, which translates to “agreements are to be kept.” The essential contract law basis is that contracts cannot violate the rights of either party to the contract.

The main contract law basis is to ensure that the contracts that parties enter into are honored by both parties. Contract law defines any agreement between two parties in which one agrees to provide something to another party in exchange for goods, services, or financial compensation as a contract.

Contract law defines most contracts as being made orally. One of the less understood or appreciated contract law basics is the idea that a purchase in a store for anything, ranging from a pack of gum to a high definition television, represents an oral contract. Contract law only prevents parties from entering into contracts that are trifling, indeterminate, or illegal.

Contracts

Easy Uniform Commercial Code Overview