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Understanding contract law

Contract law is a branch of law that deals with making and enforcing agreements. A contract can also be described as a binding promise between two parties. A contract law involves agreements between businesses, people, companies, and groups. When one does not follow an agreement as stated in the contract, that is called a breach of contract, and the other parties involved in the contract can use a court of law to enforce the agreement. The work of contract law is to make transactions happen smoothly without fights or misunderstandings.

Principles of contract law

For a contract to be termed valid, the following principles must be met:
  • Agreement – For a contract to be in place, there must be an offer and understanding between the involved parties. In short, one of the parties must offer, and the other party must accept the offer.
  • Consideration – Consideration involves exchanging promises by the parties involved in the contract. A review can involve the payment of money, promise to offer a service or supply goods.
  • Intention – Every person entering the contract must have an intention to be bound by it. In a binding agreement, each party must create legal obligations and be ready to have legal consequences.
  • Capacity – Both parties in the contract must be of sound mind and must understand the contract very well. In contract law, young people, people of unsound minds, and people under drug influence lack the capacity to agree.
  • Consent – No one is forced to get into the contract. People agree to the contract at their own will. Genuine consent can be affected by undue influence, misrepresentation, and duress.
  • Legality - All the parts of the contract must be legal.

Australian Contract Law

Contract law in Australia is based on English law and not any statute law. The law gives freedom of contract, and the involved parties in contract law have the power to strike the bargain they opt for. There are no specific procedures required in Australian contract law, although parties are encouraged to strike deals in writing. However, the law in Australia also recognizes oral agreements. If there is a breach of contract in Australian law, parties are expected to agree on liquidated damage. The parties are allowed to come up with a method of calculating the damages resulting from the breach. If an agreement cannot be reached, an agreement can be achieved and a penalty imposed through a court.

Contract law in the United States

In the United States, contract law regulates the obligations established by a contract, whether implied or express. The law of contract in the US is diverse because it varies from one state to the other. However, there is a federal contract law that applies nationally. The national standardized contract law governs the sales of goods through the uniform commercial code.

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