Texas Business Lawyer

Contracts Center - Overview

Contracts are simply agreements or promises between one or more parties. People often enter into contracts without even realizing it. Contract law is the area of the law that deals how agreements are to be enforced. Business owners need a comprehension of the basic concepts of contract law, but they should also be ready to seek the advice of a business attorney when conflicts over contracts reach the stage of legal action.

What is a Contract?

A contract is nothing more than an agreement that meets the legal requirements to be enforced. Provided that no affirmative defenses apply, the law will enforce a contract that comprises the following essential elements:

• Offer: one party offers something of value to another party.
• Acceptance: the offeree agrees to accept the offer.
• Consideration: the offeree gives something of value to the offeror.

Contracts can be made in a variety of ways. They can be written or simply oral. In most of the simpler contracts that we make in our daily lives, agreements and promises are implied by our conduct. For example, when you sit down at a restaurant and order food, you implicitly agree to pay for the food. Some contracts consist of each party promising something to other, called bilateral contracts. Others consists of an offer made by one party which is considered accepted when the offeree takes some kind of action, known as unilateral contracts.

Contract Law

The law that determines how contracts can be enforced comes mainly from two different sources: the common law and statutory law. The common law is judge made law, and it forms the basis for the legal consequences of promises. Volumes of judicial opinions dating back to medieval England set precedents that courts follow on specific issues regarding contracts. Various statutes also dictate how certain contracts are treated. Most of the general statutory provisions relating to contracts are found in the Uniform Commercial Code (UCC). The UCC is a uniform act that has been enacted, in close to the same form, in every state of the United States, except Louisiana. In Texas, the code is called the Texas Business and Commerce Code.

Breach of Contract

After a legally enforceable contract has been created, the parties are legally required to perform their respective duties under the contract. The failure to perform a contractual obligation is called a breach of contract. The law distinguishes material breaches from immaterial breaches. Material breaches are those that deprive a party of an important or substantial part of the benefit due under the contract. Immaterial breaches are those that are technically contractual defaults but that do not prevent the other party from enjoying essentially what he bargained for. A breach of contract is what triggers a cause of action to enforce the contract. Various remedies are available in breach of contract suits, depending on what the injured party suffered as a result of the breach. They include:

• Monetary damages in the amount of what the injured party would have received if the breach had not occurred
• Specific performance-that is, a court order that the breaching party perform whatever action was promised
• Cancellation and restitution to compensate for monetary loss or other damage suffered as a result of the breach

Defenses to Breach of Contract

There are many defenses available to Defendants in breach of contract suits. The defenses are categorized as whether they would make a contract voidable or completely unenforceable.

The most common reason that a contract would be unenforceable is that one or more of the parties lacked the capacity to enter into a contract because of his or her age, mental infirmity, or intoxicated state.

Some of the reasons that a contract would be voidable include:

• mistakes, that is misunderstandings between the parties at the time of formation, whether unilateral or mutual
• fraudulent misrepresentations by one or more parties at the time of formation
• lack of consideration-that is, nothing given by one party in exchange for the other party's promise
• illegal subject matter

Finally, the Statute of Frauds requires that certain types of contracts be made in writing in order to be enforceable. The Statute of Frauds covers the following types of contracts:

• contracts concerning real estate
• contracts that cannot be performed with one year
• contracts for the sale of goods of $500 or more
• promises to pay another person's debts
• promises by an administrator to personally pay debts of the estate
• promises in consideration of marriage

Summary

Business owners should know the basics of contract law in order to inform their decisions when negotiating and entering into contracts. If you have questions regarding how to draft, negotiate, enforce, or defend against enforcement of a contract, you should contact a knowledgeable Texas business lawyer.

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