Contract Laws, Research Paper Example

Basics of Contract Law

In order for a contractual agreement to exist between two parties, there are certain elements that must exist in a contract to deem it legal. The elements include a ‘meeting of the minds’ or mutual consent, offer, acceptance, performance and delivery and mutual consideration or ‘exchange of something’. The buyer and seller must both understand according to the terms of the contract what product or service is being sold and purchased. This exchange does not have to be of ‘equal value’ but does have to be an exchange of mutual consideration that is agreed upon. In other words a seller cannot simply revoke a contract if he finds out he could have sold his product or service for a higher price after negotiating into a contract after the offer is accepted. Any counter-offer to the original offer will be deemed as a re-negotiation of the contract and void the original contract. If payment was made and delivery was not the buyer can revoke the contract unless there is a stipulation in the contract that says payment will be made after delivery is made. There can be no violation of public policy and it must be established that both parties are acting in good faith. You cannot intentionally advertise a car for sale knowing it has a bad transmission and advertise it as ‘nothing wrong’. However if you are unaware of the transmission problems then you are acting in good faith.  A party cannot enter into a contract under the pretenses for an illegal purchase. All parties to a contract must be of sound and competent mind. Contracts can be made ‘orally’ or ‘written’ however contracts with regard to the sale and purchase of land are mandated to be made in writing according to the Statute of Frauds. It is always easier to enforce a contract in writing than a contract that is made verbally because you will have to prove the verbal agreement was made if not made in the presence of a witness. It is always wise to put all agreements down to paper and make the exchange of consideration.

Example of a Contract and Major Elements that Makes it a Valid Contract

“Sample Agreement”

This sample contract agreement outlines the elements to be considered and included in an Independent Contractor Agreement.  This sample shall be amended to suit the particular assignment.

“Agreement for Services”

Parties: The parties to this agreement are Cunningham Advisors LLC, hereafter known as “Cunningham,” and (To be completed) hereafter known as (To be completed) their heirs and/or assigns.

“Purpose: The purpose of this agreement is to set forth the terms and conditions by which Cunningham will provide models, plans and other financial studies and services to: (To be completed)

Scope of Work: Cunningham is hereby retained to prepare models, plans and studies using various financial software on the following property: The overarching purpose of this assignment is to determine: (To be completed)

Representations: Cunningham is not responsible for representations made to third parties, particularly lenders and investors, as to the merchantability or fitness of Cunningham’s work, without Cunningham’s review and approval of such representations.

Fee: The price and fee schedule shall be as follows: (To be completed)

Payment and Terms: If the assignment is one a Project Basis, the total estimated fee shall be paid in one-third increments; one-third at the start, one-third upon 50 percent completion, and the balance upon delivery of cash flow models and other work. If the assignment is on an Hourly Basis, invoices shall be submitted the 15^th and last day of every month. Payment to be received 10 days from receipt of invoice.

Cancellation: This agreement may be cancelled by Cunningham, provided he gives 30 days written notice to client. Client may cancel this agreement at any time, provided it pays the fee for services up to the point of such cancellation.

Resolution of Disputes: The parties agree that any and all disputes concerning this agreement shall be submitted for arbitration to the Colorado Board of Arbitration, and that both parties agree to abide by the decision of that Board.

Confidentiality and Non-Disclosure: Cunningham agrees to hold all information concerning the project itself and/or the results of his financial analysis confidential and shall not disclose it without prior approval of client.

Authorization: The signatories to this Agreement agree they have authority to sign on behalf of their respective parties.

Miscellaneous: This agreement shall be governed by and construed under the laws of the State of Colorado. Each party represents and warrants that it has full power and authority to execute, deliver and perform this agreement.” (“Cunningham Advisors LLC”).

Signed:___________________         Date:_________________

Signed:___________________

Witness:__________________

Witness:__________________

What makes this contract valid? This contract is valid because there has been it has been established through ‘express terms’ of the contract that there is a ‘willingness to contract on certain established terms’ made with the intention that once the offer is ‘accepted’ there will be a binding contract in force. See: Carlill v Carbolic Smoke Ball Co. [1893] where it was distinguished that an offers can be made ‘bilaterally or unilaterally’ which means both parties agreeing to do something in return for a promise by the offeree or an offerer promising to give something in return for a condition performed as done in Carlill Acceptance of the offer is unequivocal and unconditional communication between the parties as a method of acknowledgment. There must be two assenting minds as distinguished in Tinn v Hoffman and Co. [1873]. A person cannot assent without knowledge of the offer at hand therefore a contract will be void if any of the parties are not knowledgeable of the products or services to the contract as distinguished in Fitch v Sneadaker, 38 NY 248 (1868). We have established that offer and acceptance have been determined valid through this contract above because the offer is very clear and precise, there is something promised in return for the service which is money, and both the offerer and offeree have consenting minds of the services offered. Consideration has been exchanged hence making the final elements of the contract established, assuming both contracting parties are of legal and sound mind. If a contract is uncertain by terms the judge will do everything within his power to try and enforce the contract under the law but the judge ‘cannot write the contract for the parties’. This contract must be signed to be enforced. Assuming it is signed the contract is enforced and valid from the day it is received by the Postal Service as per the Postal Rule and established in Adams v Lindsell.

Short Written Contract

I, ______________________ agree to sell ___________________my1997 Mazda RX7, Vin Number 5987X49879000  for $2000 on January 12, 2010 under the provisions of ‘buying the vehicle as is’. There is no warranty with this vehicle for it is considered a used vehicle and I, the offerer am not required to provide warranty to the buyer under any conditions. The buyer or offeree, ___________________________ accepts these conditions of purchase and agrees this sale is final. All parties to this contract are of competent mind and are under no duress whilst at the signing of this contract. This offer is valid for (5) five days from today and expires on the sixth day of this offer as dated above. Any re-negotiation or counter-offer of this contract will make the original contract void and the offerer has the option of whether to consider a counter-offer or accept the original offer and deem the contract as valid after the original signing of the contract.

_______________________________                      ______________________________

Offerer                                                                       Witness 1

________________________________                    _______________________________

Offeree                                                                       Witness 2

Last Type of Contract

The scenario presented for this question is an example of an ‘implied contractual’ agreement between the parties. This can also be described as an implied in fact or quasi contract because it would be unjust to remedy the other party because the work has already been performed after the two parties agreed ‘verbally to the services’ through express offer, acceptance and passing of consideration. The work had already been conducted by the offeror. Though there is no intention to be legally bound set forth in this unwritten contract prior to the work being done, the minute the offerer pays for the service she/he is stating she accepted the offer and is pleased with the service. It is at this point that the contact has been formed. Trollope and Colls v Atomic Construction [1959] where it was distinguished that a contact is deemed to be formed after work has been performed.

References

Statute of Frauds

Carlill v Carbolic Smoke Ball Co. [1893]

Tinn v Hoffman and Co. [1873]

Fitch v Sneadaker, 38 NY 248 (1868)

Postal Rule and established in Adams v Lindsell.

Trollope and Colls v Atomic Construction [1959]

Cunningham Advisors LLC Retrieved January 16, 2010 from, http://www.cunninghamadvisors.com/Sample%20Contract.htm