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Contracts in the Legal System

December 26th, 2008 · No Comments

Contracts are often a part of our lives in one form or another.  Between documents such as leases, mortgages, business agreements, most people have likely become a party to contract at least once in their lives.  Essentially a contract is a document which legally binds the relevant parties to certain acts or responsibilities.  Implementing a contractual agreement provides protection to the parties, and legal remedies if the contract is not fulfilled.

To create a legally binding contract between parties requires three ingredients.  Offer, acceptance of the offer, and consideration (an exchange of something of value).  The thing of value does not necessarily have to be an object, but it can include services or even just a promise for services or goods.  The contract between parties can generally be either written or oral. However, in most states, contracts concerning real estate or where an obligation extends beyond one year are usually required to be in writing.

Although there is not a writing requirement for all contracts, it is generally more practical to have a written agreement, especially to assure that your rights are protected. Even if the writing is very simple, it can at least provide evidence of the agreement. This becomes especially evident in situation where legal action is required concerning a contract.  If one party does not perform there obligations under a contract, this is called a breach of contract.  Where a breach of contract occurs, there are options that can be pursued in a court.

Breach of contract cases are civil cases and typically heard in a court of general jurisdiction.  In a court case, the plaintiff can sue for money to be paid, or for services to be rendered.  Where money damages are paid to an injured plaintiff, the court generally will pay damages based on an amount that will place the plaintiff in the financial position the expected to be in or to restore the plaintiff to the same financial position they were in before the agreement.  A court may also award the plaintiff damages to prevent the defendant from unjust enrichment.  This type of damage award is called restitution.

When awarding damages, one factor a court will consider, however, is whether the plaintiff mitigated their damages.  This means that they made an effort to limit the damage incurred from the breach.  For example, if Party A agreed to remodel Party B’s store, but halfway through the job, failed to complete the task, Party B could sue Party A for breach of contract, and may choose to ask the court to repay the cost of business lost due to securing a new contractor and delayed completion time.  However, to mitigate their damages, Party B may need to make a reasonable effort to find another contractor to complete the job at a reasonable price, and within a reasonable time.

The exact rules and requirements to prove a breach of contract will vary by case and jurisdiction.  So, if you are entering into a contract, or may be a party to a breach of contract situation, you may find it helpful to be informed on the rules in your jurisdiction.  To find access to resources on contract cases and other civil cases, CourtReference.com provides free links and contact information for legal research, online court records, and even attorney referral services.

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