An Overview of Contract Law
Contract law is a body of law that regulates how contracts are written and construed. In the examples below, contract law specifies what remedies will be available to an aggrieved party if the other side breaches the contract, and what the terms of the contract will be if the parties cannot come to an agreement.
Contract law governs the way contracts are made and enforced. A contract can be written or oral, but the provisions contained within them can vary greatly depending on the industry or purpose. Written contracts typically hold up better in a court of law, but oral contracts are legally enforceable in the right circumstances. A contract is defined as "an agreement with specific terms between two or more persons or entities in which there is a promise to do something in return for a valuable benefit that is promised." In layman’s terms, a contract is a deal. In many cases, the deal could be worth many thousands of dollars. When conflicts arise , both parties are usually not aware of what their legal obligations are and how they are protected. An experienced attorney can make sure that you are fully protected and that your rights are secured.
Many contracts contain "exculpatory clauses" which limit the liability of one party. Examples of this are limitations of liability and disclaimers of warranties. Courts will generally uphold these clauses, but sometimes they will not. Contractual obligations are also general obligations, as they are basically promises. A breach, or non-performance, of those obligations can be any deviation from the requirements of the agreement. Depending on the type of breach, damages will have to be paid. There are two types of breaches of contract. The first type is a minor breach of contract, which is defined as one where only some minor element of the contract was violated. The second type of breach occurs when a material element of the contract is violated. If, for example, one party agreed to provide cars for sale and did not provide any cars, this would be a material breach.
The Different Categories of Contract Law Services
When it comes to contract law services, it’s important to understand what you need. Here’s a breakdown of the various types of services offered in this area:
Contract drafting: This service can range from writing an entirely new agreement to providing legal templates for contracts that may be frequently utilized. Lawyers can draft the terms and conditions of a contract that suit the needs of both parties involved.
Contract review: A person involved in a contract should always seek to have the terms of the agreement reviewed by an attorney before signing it. This allows the attorney the opportunity to ensure all necessary legal clauses are included in the document and that the terms of the contract provide fair representation of what each party expects from one another.
Contract negotiation: Often, parties sign contracts without having ever spoken to the other about the terms in the document. This is a mistake that can lead to issues down the road, but doesn’t always need to happen. When all parties involved have a say in the drafting process, it can provide equal footing that allows negotiations to take place in a more amicable fashion. Legal counsel can be provided to help offer advice for the types of changes to request when negotiating changes to the deal.
Contract breach: If one or both parties to a contract breach the terms of their agreement, it may be necessary to pursue legal action. Having the support of an attorney can help avoid unnecessary litigation or provide guidance in getting the most out of settlement negotiations if a contract breach has occurred.
Why Professional Legal Support is Crucial
When it comes to creating, negotiating or litigating contracts, the stakes are high. The complexities of contract law often require a strong legal foundation and professional guidance. From carefully reviewing, drafting, and redrafting proposed agreements to making sure that all necessary provisions are included, the consequences of a poorly drafted or understood contract cannot be overstated.
While it may be tempting to go it alone and write your own contract, this could prove to be a costly mistake. An improperly written contract can lead to liabilities, unexpected risks, and losses of time, money, and business relationships. Business owners would be wise to remember that the price of hiring a professional legal service to write a contract is far less than the dangers that can result from attempting to navigate such a complex area of law alone.
A competent attorney will help you to identify your primary objectives concerning the contract you wish to create, and will make sure that these objectives are fulfilled in the written contract. They will also help you in negotiating the terms of the contract, and during performance when issues may arise.
With their experience dealing with a full range of contract issues and their knowledge of relevant laws, they will serve as your most valuable resource.
The Essential Components of a Valid Contract
When it comes to a contract in any area of law, there are key things that must be fulfilled in order to make that contract valid. Contract law services and business lawyers generally will cover these key areas in any case.
Here are the key elements of a valid contract:
- Offer. One party must offer terms for an agreement to the other party. This can come in the form of a written contract, email or even verbal agreement. The offer is essentially the terms of the deal.
- Acceptance. The person who would receive the offer then must accept the terms of the deal. This must be an unconditional acceptance, which means they cannot change the terms of the deal in any way before agreeing to it, as that would be a counter offer. This can be done verbally or in writing, but remember, in order to be legally binding, a contract must be in writing.
- Consideration. The exchange of things of value to show that each party intends to enter into the agreement is called the consideration. Generally this is money and/or services.
- Consent. The parties must enter into the deal freely, without being forced or coerced, under duress, uncertainty or fraud. A deal is not a deal until all parties fully understand and agree to it.
The Most Common Contract Disputes and How to Settle Them
Contracts that aren’t fulfilled as promised can lead to significant financial and emotional stress. Especially when the other party refuses to take responsibility or acknowledges a shortcoming in their part of the transaction. If you find yourself facing a contractual dispute, the first step should be to catalogue all the facts of the situation as you understand them. This will help you get a clear understanding of where the weaknesses are in your defence of the situation as well as the strengths. With that knowledge in hand you can then make an informed decision as to how you should proceed to resolve the dispute.
There is a myriad of reasons why contractual disputes arise, including:
· Breach – When one party to the contract fails to fulfil their obligations as agreed upon; Hoosier New Energy v Paladin Freight (2013), was a case in which the BC Court of Appeal set out the key elements of breach of contract:
- A valid and legally binding offer and acceptance exists;
- The agreement represents either trade or commerce; and
- The party alleging the breach has identified a concrete way in which the agreement has not been fulfilled.
· Construction Issues – A construction defect can include anything from a building sagging to the hallway of a home being 1 inch wider than the bedroom. Whether a person is hiring a general contractor to build a house or they are sub contract workers hired to perform a specific task – there is always a risk that some construction issue will become apparent after the construction tasked has been completed. In Turner Lane Holdings v Trentwood Construction (2011) the Ontario Superior Court of Justice awarded nearly $1 million dollars to a purchaser who claimed there is substantial and glaring differences between the homes as advertised and what was received.
The homeowner had made several purchases with Trentwood Construction following Trentwood’s advertising for self-sufficient fully. Nonetheless , issues arose during the completion of various components of the homes which would go on to lead to this lawsuit. Essentially, these construction issues were costly and left an unappealing appearance to the homes in spite of the fact that the homes had high-end appointments.
· Misrepresentation – Misrepresentation comes in many forms:
· Undue Influence – An unfairly persuasive agreement where one party was persuaded in a manner that gives them undue authority or deception. It is possible for a contract to be invalidated because of the power imbalance in what is essentially an abusive or unfair agreement between parties. One example of undue influence is in the case of Elder Abuse; in such a case a judge may presume undue influence has occurred. Where there is an obvious vulnerability present undue influence can be demonstrated with minimal evidence.
Deciding on the Best Contract Law Services Provider
A crucial step in navigating the complexity of contracts is selecting the right contract law service provider. When it comes to retaining the services of a contract lawyer, there are several important criteria to keep in mind whether for business or for personal matters.
Experience is paramount; you want to know that the firm or individual you select has a history of proven expertise in the area of contract law that you require. A long-standing track record of success provides peace of mind and assurance that you are working with a reputable practitioner. Often, firms will publish their case history or outline their history of successful outcomes with comparable clients.
The specialization of the lawyer or firm is another key indicator of a good contract law service provider. If your legal matter is particularly complex and concerns commercial or business law, for example, do you really want someone who does not specifically focus in this area? The level of specialization is not necessarily an indication of limitation, but rather the commitment of the firm to remain at the top of their respective field.
Looking at client testimonials can also help in the selection process. You do not need to be told that a law firm is successful, you can read what others have to say about them. Many legal clients publish reviews online, but you may also consider asking your prospective contract lawyer for previously satisfied client referrals.
With contract law issues, accuracy is paramount and even small errors may lead to devastating consequences. Regret is completely avoidable by taking time to select the right contract law service provider for your needs.
Contract Law Services: What’s Next
As technology continues to impact the legal sector, contract law services are doing both sides a favor by streamlining the bargaining and transaction processes. Smart contracts, digital contracts and other automated contract services are becoming the norm to seek legal representation for drafting, negotiating and reviewing contracts to avoid the time-consuming task of these processes.
Below are some of the most recent developments and how it has changed the landscape of contract law:
Automation
Contract-related services have benefited from automation and implementation of artificial intelligence. With the use of software both parties can easily draft a contract, review it and request edits. The same goes with amendments once the contract is signed, though it is not clear whether parties can be legally bound to an amended contract without signing a new contract.
Automation can reduce the time to draft and edit a contract from hours down to minutes. It is also much cheaper than going through the traditional route of hiring a contract lawyer to negotiate terms and amend the contract .
Document Management
Using contract management systems (CMS) or document management systems (DMS) is not a new concept in the legal sphere, but its use has gained traction due to the convenience it provides for keeping records. With a rise of paperless agreements, there is better organization and security when contracts and agreements are stored in a digital format. A DMS/CMS is being adopted by more companies because it allows easy revision requests, categorizing and signing features. It also keeps track of amendments made and which version of the contract is binding.
Analytical Software
One of the biggest challenges in contract law is understanding complex language and how it may affect future negotiations and business dealings. This is becoming less of an issue with analytical software which makes it easier to search throughout all types of documents or contracts for specific words or phrases. Sophisticated analytical software can also make relevant suggestions on which clauses may be red flags to avoid future conflicts.
