Contract Law: Basic Principles

There are many contracts made and broken daily that society uses to achieve common results over time. Contracts are part of many sales and purchases, labor law, the land code, health insurance, and more. A contract is the most common form used when both parties agree. Contract law governs the process of making, performing, and terminating contracts, and it is an instrument that supports each party by giving them legal protection.

Functions of Contract Law

Contract law is the area of law that defines the legal provisions regarding contracts. Contract law acts as a tool to regulate legal relationships that arise when two or more parties decide to agree with each other (Miller, 2022). It allows for the management of agreements and sets the stage for legal support for any potential conflict over the outcome of a contract. Contract law defines the boundaries of liability in which the parties must act and imposes duties on them to regulate the honesty and fairness of the contract made.

The functionality of contract law is enormous, as it is relevant at all stages of contract formation, performance, and termination. The law can significantly reduce the risks the parties have in the event of failure to perform a part of the agreement, and it facilitates the process of legal intervention. It sets the stage for finding the optimal degree of trust and, as a result, increases the chances of effective contract performance because each party has legal support (Randall, 2020). The conclusion of a contract requires all parties to the agreement to fulfill obligations, and the law allows the determination of whether claims are adequate and meritorious.

Subject Matter of Contract Law

A contract is an agreement between two or more parties that creates obligations required to be performed under the law. For an agreement to be enforceable, it must meet the following requirements. First, it must be accepted by mutual consent (oral or written), expressed in an offer and acceptance (“§ 2-206. Offer and Acceptance in Formation of Contract”, n.d.). Secondly, the agreement must be within the law’s limits, reviewed within certain time limits agreed upon by the parties, and have capacity (“North Carolina General Contract Terms & Conditions”, 2020). Capacity should be considered one of the essential features of contracts because it affects whether a decision will be accepted and on what grounds it will be executed.

Offer and Acceptance

Offer and acceptance are essential elements of a contract because it establishes the subject of the agreement and brings both parties to a compromise. Offer is a set of conditions the offeror is willing to accept to fulfill specific provisions (“§ 2-206. Offer and Acceptance in Formation of Contract”, n.d.). Offer can be expressed in different forms: enumerating rules and written requirements, verbal interviews, and behavioral patterns. The offer is a justification for the conclusion of the contract if it contains the main conditions of the agreement or the critical requirements of the party. It is necessary to indicate all conditions in advance because this will play a role in the case of difficulties in the execution of proposals.

Acceptance is the guarantee the other party gives to the proposal if it agrees to fulfill all the conditions and is ready to fulfill the requirements. In the process of acceptance, both parties must agree to the requirements, negotiate the terms, materials, and planned results of the transaction, and then seal their agreement (“North Carolina General Contract Terms & Conditions”, 2020). At the stage of mutual agreement with the terms, problems such as non-confirmation of the deal, breach of duties, inflated expectations, and unsatisfactory results can arise. To avoid this, it is the written statement where the parties sign off on the above that can be a guarantee that the requirements will be met. A contract cannot arise between parties who disagree on all the proposal’s points. This means that every point of the agreement must be respected and followed as agreed; otherwise, it is a breach of contract. The acceptance of the offer must be unconditional and reciprocal, and all parties must be notified of the existence of the transaction, which will take effect as soon as the contract is signed (Randall, 2020). The signing or agreement of a contract by persons who do not directly enter into a customer and contractor relationship is invalid. Subsequently, either party risks being without results under the contract.

If the parties to the agreement do not express their mutual acceptance of the proposal and make changes, the contract will be renegotiated until a decision is made on the new terms. If an offer is rejected, the other party usually draws up its offer, in which case it is up to the original applicant to agree to it or not (Miller, 2022). The final result of such proposals is negotiations, in which representatives of the parties discuss the positions of their companies/bosses and set out the requirements for each other. After discussion and agreement with the higher officials, the representatives form copies of a new statement based on the results of the negotiations, which the parties already decide whether to accept.

Dissolution of Contract

Terminating a contract is the act of terminating the contract in the event of conditions that are conducive to the termination. In addition, a condition for termination is the death of one of the parties, breach of contractual obligations, and all other cases stipulated in the agreement itself. By terminating a contract, the parties end their obligations to one another and restore their relationship before the agreement is made (Miller, 2022). The termination process can be lengthy because the parties do not always agree to the terms of termination. For this reason, termination may occur through a court application by one of the parties who will make new demands or a compensation campaign due to the other party’s breach of contract.

Breach of a Contract

Liability for breach or non-performance of a contract is a set of actions that directly or indirectly violate the basic requirements of the parties and the terms of the agreement or refuse to fulfill the obligations. Consequently, there is legal liability, which obligates the party who violated the agreement to pay compensation for the harm caused (“Eastern North Carolina Business Dispute Attorney for Breach of Contract”, n.d.). The value of the compensation to be paid is based on the amount of the injury or harm: for example, if it is a waiver, the court will order the total amount to be paid within a set time.

In some cases, the court sets the amount of compensation, at times the amount that the injured party could receive. This is because a breach of contract leads to consequences that are even more damaging in the potential future including damage to reputation, health, and unrecoverable breach (Randall, 2020). In this regard, when the case goes to court, there is a need to analyze the conditions in which the transaction was made, to assess the reality of the transaction as such (which indicated the conclusion of the contract), as well as the conditions in which one of the parties breached the agreement.

The Case Analysis

Breach of contract may involve disclosing corporate information, and security is one of the necessary conditions for a certain person to work for a company. In Elec. & Supply Co. v. Jacobsen, 2020 NCBC 64, there is a claim that William Jacobsen breached a contract by trade secrets. According to the plaintiffs, all employees sign a non-disclosure agreement regarding corporate information, so Jacobsen violated it because he disseminated information about the company’s trade practices (State of North Caroline, 2020). The company’s motion was partly granted according to a valid need to comply with the NDA’s data protection guidelines. However, the claim relates to intellectual property issues, which is not an issue of breach of contract. From this example, it can be seen that plaintiffs are required to follow a stricter order of organization of arguments when drafting a breach of contract claim, but in its absence, the decision will not favor the plaintiffs.

Conclusion and Recommendations

Thus, contract law implies a broad area of law that covers both civil and criminal liability depending on the terms of the formation and termination of the contract. Contract law facilitates contract formation and provides legal support to the parties in the event of a conflict. Although the terms of the offer and acceptance of contracts seem accessible, they are not always apparent to both parties, resulting in litigation upon termination. Studying the specifics of law enforcement imposes a responsibility on the judiciary to create an environment in which contracts become a stronger unit of human relations.

References

§ 2-206. Offer and Acceptance in Formation of Contract. (n.d.). Legal Information Institute. Web.

Eastern North Carolina Business Dispute Attorney for Breach of Contract. (n.d.). The Armstrong Law Firm. Web.

Miller, R. L. (2022). Business law today – the essentials: text & summarized cases. USA, Boston, NY: Cengage.

State of North Carolina. (2020). North Carolina General Contract Terms & Conditions. Web.

Randall, M. (2020). Fundamentals of business law. Denver: Community College of Denver. Web.

State of North Caroline, The General Court of Justice. (2020). Elec. & Supply Co. v. Jacobsen. County of Wake. Web.