What is contract law?

Whether it’s a business arrangement or bringing in a new roommate, both parties want an agreement in place to protect them if something goes wrong. They usually turn to contracts — agreements that lay out terms and conditions that will govern the parties’ relationship.. If one party fails to hold up their end of the agreement, the other party may pursue legal action to enforce the terms of the contract.

Contract law is the legal area that covers drafting and enforcing contracts.

Attorneys often list contract law on their resumes and websites as a specialty, since contracts are involved in so many different types of transactions. In-house counsel for corporations, business lawyers, real estate lawyers, and other transactional attorneys (as opposed to litigators who primarily engage in court) specialize in contract law in one form or another. A real estate lawyer, for instance, may specialize in leases and purchase and sale agreements for real property.

In most states, contract law is governed by common law, which is based on court decisions. However, Louisiana relies on civil law, which means contracts are governed by laws on the books, not on court decisions that have interpreted provisions in the law.

Overall, most US states view contract law similarly, although some state courts have interpreted various elements of contracts differently. Most states have adopted the Uniform Commercial Code. The primary articles in the UCC that deal with contract law are Article 1, General Provisions, and Article 2, Sales.

The courts in the US tend to give credence to the terms of contracts in place between two parties, and judges don’t generally dictate what a contract should say. Where there is no such contract, the UCC may apply – it may dictate the terms of commercial agreements.

Because most contracts are governed by the law of a particular jurisdiction, they usually include a clause about which jurisdiction that is. For example, a contract between a party in New York and a party in Texas could specify that any disputes will be governed by Texas law and handled in a Texas court.

A goal of written contracts is to set forth what each party’s rights and obligations are, so that if something goes wrong and there’s a dispute, the parties know what the contract says. Most of this is self-regulatory and doesn’t require the courts to intervene when parties meet their obligations.

The courts rarely consider whether the contract is fair; for example, if your friend offers you $5 to create their website, and you do it, the the judge may only care that you agreed to create the website and performed the duties, not whether that was a fair deal.Of course, courts won’t enforce a contract where there has been clear unfairness, such as a minor signing the contract or the contract signature being procured by fraud.

Not every transaction requires a specific written contract to be valid.

For example, when you buy a coffee maker from the store, by taking your money, the manufacturer of the coffee maker and the store are agreeing that you can take the coffee maker home and that the coffee maker will work as advertised.

Oral agreements can be risky. For example, let’s say you verbally offer to pay a friend $200 to paint your living room. The friend completes the task. Since you made a verbal agreement, you’re obligated to pay your friend the $200. However, if there’s a disagreement as to how much was to be paid, or what was to be painted, there will be no written contract to refer to in order to see exactly what the agreement was. That’s why written contracts are far preferable to relying on verbal agreements.

Another example of a potentially enforceable contract is if you verbally offer to pay a friend $200 to paint your living room. The friend completes the task, and because you made a verbal agreement, you’re obligated to pay your friend the $200. However, it’s one party’s word against the other’s, which will make it difficult for your friend to prove that you owe them $200 if they take you to court. This is why many people prefer to get contracts in writing and signed by both parties before commencing work.

Contract law can be difficult to understand, and it’s not easy for non-lawyers to draft contracts, but in some cases it’s possible to find contract forms or templates that have been drafted by attorneys and that can be used as-is (with some blanks filled in) or modified for a particular use or situation.

Jotform has many form contract templates.

For more information, check out our complete guide on how to write a contract.

This article is originally published on Dec 05, 2019, and updated on Oct 14, 2021.

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