Contract Law Essay

872 Words4 Pages
Every commercial enterprise in the US has to deal with contracts. A contract is legally enforceable agreement between two or more parties that creates an obligation to do or not do particular things. The term party can mean an individual person, a company, or corporation. Contracts are usually controlled and enforced by laws that vary depending upon the state it originates in. Many people will state its a contract or an agreement, but technically they are not the same thing. As a contract is a legally enforceable agreement in writing an agreement is what is consider to be a mutual understanding. A verbal contract can still have the legal force, but many have to be in the form of a written contract like long term contracts and contracts for marriage. The United States contract law regulates the obligations established by agreement between private parties in U.S. law. The law varies from state to state. There is no federal contract law but there are two types of state laws that govern contracts; The Common Law and The Uniform Commercial Code. The common law is what the majority of contracts fall under. Some examples are employment agreements, leases, and general business agreements. The UCC controls contracts that the common law does not. The UCC mainly covers the law of sales and other commercial contracts. Under the Federal Arbitration Act, which is an act of congress that provides for judicial facilitation of private dispute resolution through arbitration, contracts are covered under federal or state laws. These clauses are usually enforceable unless one of the parties can prove fraud. To be enforceable, most contracts should be in writing to provide proof and to prevent unethical behavior. There are many dif... ... middle of paper ... ...ithin the business community. You damage relationships with other businesses. A breach of contract can also lead to a lawsuit which can incur significant legal fees just to try and defend your business and its reputation. The courts can also issue specific performance obligations depending on the nature of the contract. If you fail to meet this order you can be held in contempt which can impose fines and/or imprisoned. The most common consequence would be compensatory and consequential damages most likely resulting in money to be paid. In breaching a contract you could end up losing all the way around. You could end up spending more time, money and effort attempting to resolve the breach which could of been prevented from the start. The most important thing to do to avoid a breach of contract is to consult with an attorney when your are drafting your contract.
Open Document