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contract,in law, a promise, enforceable by law, to perform or to refrain from performing some specified act. In a general sense, all civil obligations fall under torttort,
in law, the violation of some duty clearly set by law, not by a specific agreement between two parties, as in breach of contract. When such a duty is breached, the injured party has the right to institute suit for compensatory damages.
..... Click the link for more information. or contract law. Torts are usually characterized as violations of duties that are imposed on all persons and that have been established entirely by law. In contracts, on the other hand, the parties determine, at least in part, what their obligations to one another will be. Special types of contracts are given separate articles, e.g., negotiable instrumentnegotiable instrument,
bill of exchange, check, promissory note, or other written contract for payment that may serve as a substitute for money. It is simple in form and easy to transfer.
..... Click the link for more information. , insuranceinsurance
device for indemnifying or guaranteeing an individual against loss. Reimbursement is made from a fund to which many individuals exposed to the same risk have contributed certain specified amounts, called premiums.
..... Click the link for more information. , and deeddeed,
in law, written document that is signed and delivered by which one person conveys land or other realty (see property) to another. A deed may assure the extent of the conveying party's ownership or, if the party is uncertain of the precise extent, he issues a quitclaim (i.e.
..... Click the link for more information. .
Criteria for Enforcement
For a contract to be valid, both parties must indicate that they agree to its terms. This is accomplished when one party submits an offer that the other accepts within a reasonable time or a stipulated period. If the terms of the acceptance vary from those of the offer, that "acceptance" legally constitutes a counteroffer; the original offering party may then accept it or reject it. At any time prior to acceptance, the offer may be rescinded on notice unless the offering party is bound by a separate option contract not to withdraw. Only those terms expressed in the contract can be enforced; secret intentions are not recognized. For a contract to be binding, it must not have an immoral or a criminal purpose or be against public policy.
Other criteria for the enforcement of contracts have varied. In the earliest type of enforceable promises, it was the form of the contract (e.g., a sealed instrument) or the ceremony accompanying its execution that marked the essence of the transaction; contracts not sealed or not dignified by ceremonies held a lesser status, and were therefore not always enforceable. The importance of promises in commercial and industrial society produced a new criterion, and generally a promise is now enforceable only if it is made in exchange for consideration, i.e., a payment, for some action, or for another promise. In some jurisdictions, statutes have made certain promises enforceable without consideration, e.g., promises to pay debts barred by the statute of limitations. To be enforceable, most contracts must be in writing, to comply with the Statute of Frauds (see Frauds, Statute ofFrauds, Statute of,
basis of most modern laws requiring that certain promises must be in writing in order to be enforceable; it was passed by the English Parliament in 1677.
..... Click the link for more information. ).
Since a contract is an agreement, it may be made only by parties with the capacity to reach an understanding. Therefore, individuals suffering from severe mental illness are unable to make binding contracts. Until the late 19th cent., married women were also without contractual capacity, because at common law they were considered the creatures of their husbands and without wills of their own (see husband and wifehusband and wife,
the legal aspects of the married state (for the sociological aspects, see marriage). The Marriage Contract
Marriage is a contractual relationship between a man and a woman that vests the parties with a new legal status.
..... Click the link for more information. ); this disability has been removed by statute universally. Minors are not bound by their contracts, but they are responsible for the value of goods received in contracts made for necessities of life. Otherwise, a minor may denounce his contracts at any time and on attaining majority may elect whether to affirm or repudiate them (see age of consentage of consent,
the age at which, according to the law, persons are bound by their words and acts. There are different ages at which one acquires legal capacity to consent to marriage, to choose a guardian, to conclude a contract, and the like.
..... Click the link for more information. ).
A contract must also be the uncoerced agreement of the parties; thus, if it is procured by duressduress
, in law, actual or threatened violence or imprisonment, by reason of which a person is forced to enter into an agreement or to perform some other act against his will.
..... Click the link for more information. or fraudfraud,
in law, willful misrepresentation intended to deprive another of some right. The offense, generally only a tort, may also constitute the crime of false pretenses. Frauds are either actual or constructive.
..... Click the link for more information. it is void. A contract can be unenforceable if it is so one-sided as to be found unconscionable, where the terms are unreasonably favorable to one party; often the material that constitutes unconscionability is buried in fine print or expressed in obfuscatory jargon. Adhesion contracts, which afford no occasion for the weaker party to bargain over their terms, are often offered to purchasers of consumer goods and services, but are not necessarily unconscionable.
Termination of Contracts
While a contract is still wholly or partly unperformed it is termed executory; contracts may terminate, however, in ways other than by being fully executed. If the object of the contract becomes impossible or unlawful, if the parties make a novation (a new superseding agreement), or if the death of one party prevents that party from rendering personal services he or she had agreed to perform, the contract is terminated. The injured party may also treat the contract as a nullity if the other party refuses to perform. The law provides several remedies for breach of contract. The most usual is money damagesdamages,
money award that the judgment of a court requires the defendant in a suit to pay to the plaintiff as compensation for the loss or injury inflicted. Damages are the form of legal redress most commonly sought.
..... Click the link for more information. for the loss incurred. In cases where some action other than the payment of money was contracted for, a court may grant the plaintiff an injunctioninjunction,
in law, order of a court directing a party to perform a certain act or to refrain from an act or acts. The injunction, which developed as the main remedy in equity, is used especially where money damages would not satisfy a plaintiff's claim, or to protect personal
..... Click the link for more information. ordering specific performance. If one party is unjustly enriched by a contract that he or she then repudiates legally, restitution may be required. A typical example of this is ordering a minor who revokes a contract to restore the things of value that were obtained.
See studies by E. J. Murphy and R. E. Speidel (1984); H. Collins (1986); R. B. Summers and R. A. Hillman (1987); P. S. Atiyah (1988).
contractsee SOCIAL CONTRACT THEORY.
in civil law, an agreement between two or more persons (citizens or legal persons) to establish, change, or curtail civil rights and obligations. The word “contract” also often refers to the compulsory legal relationship arising from the contract and to the document in which the relationship is expressed. Depending on the number of parties to a contract, it is classified as bilateral or multilateral. If a contract grants nothing but rights for one party and nothing but obligations for the other it is unilateral, but if the contract results in rights and obligations for both parties it is called bilateral. A loan contract is an example of a unilateral contract. Examples of bilateral contracts are contracts for sale and purchase, delivery contracts, independent-work contracts, and shipping contracts.
In Soviet civil law the contract is one of the most important foundations on which compulsory legal relationships arise. It is a means of establishing and organizing economic relationships among socialist enterprises—state, cooperative (including kolkhozes), and public —and other organizations that participate in Soviet economic transactions. The contract is also the basic legal form for the disposal of the personal property of citizens of the USSR.
According to the principle of specific performance that has been adopted in Soviet civil law, the contract should be performed in physical fact (for example, the product should be transferred or the work performed). The contract usually includes conditions that are incentives to specific performance of the parties’ obligations as established in the contract (for example, property liability [sanctions] for nonperformance, compensation for losses, and payment of a penalty).
The conditions established by the parties in the contract are called its content. The conditions that are recognized as essential in law or necessary to a contract of a given type (for example, the object and price in a contract for sale and purchase) are considered to be substantial; that is, they are the conditions without which it is impossible to conclude the contract. Also considered substantial are those conditions on which, according to the statement of one of the parties, agreement must be reached (for example, the condition on delivering the commodity in a certain container or packing). A contract is considered concluded when agreement is reached between the parties on all substantial points in the form appropriate for the given instance.
Contracts are classified according to form as simple contracts and contracts verified by notaries. Some contracts must be registered at appropriate state agencies. For example, contracts for sale of a residential building must be verified by a notary and registered at the executive committee of the local soviet of working people’s deputies if even one of the parties to the contract is a citizen. Consent to conclude a contract by the party who initiated the process is called the proposal (offer), and consent by the party who responds to the offer is called acceptance. If only the parties’ reaching agreement on all substantial points is required for a contract obligation to arise, the contract is called consensual (from the Latin consensus, agreement). An example of a consensual contract is a contract for sale and purchase. If, in addition to agreement, an actual transfer of goods is required for a contract obligation to arise, the contract is called real. For example, a shipping contract is considered concluded when the freight is turned over to the shipper.
A specific type of contract is the contract in favor of a third person. This contract gives the right to demand performance either from the person who concluded the contract and the third party in whose favor the contract was concluded or from only the third party, who did not participate in the conclusion of the contract either directly or through a representative. For example, in the USSR the right to demand payment of the amount of insurance on a life insurance contract in case of the death of the insured resides only with the third party in whose favor the contract was concluded. The question of the possibility of changing contract conditions in favor of a third party without the consent of that party is resolved in different ways, depending on the type of contract. For example, when a deposit is made in a savings bank in the name of a third party, that party is considered to be the depositor, and the person who made the deposit does not have the right to change the conditions of the contract or to receive the deposit. With life insurance, the insured has the right at any time to change the party in whose favor the contract has been concluded.
If the third party has refused the right given to him by the contract, the person who concluded the contract may take advantage of this right if it does not conflict with the law, the sense of the contract, or the substance of the obligation.
In Soviet civil law the manner in which contracts are concluded is determined by the Basic Principles of Civil Legislation of the USSR and Union Republics of 1961 and the civil codes of the union republics (for example the Civil Code of the RSFSR, arts. 160-65). The manner in which contracts are concluded between socialist organizations is also regulated by special rules. In instances established by law, contracts between these organizations may be concluded by accepting an order for performance. Disagreements that arise between state, cooperative (excluding kolkhoz), and public organizations during the conclusion of a contract based on a plan assignment that is compulsory for both parties are resolved by arbitrators (arbitration tribunal) if the law does not provide otherwise. Disagreements that arise during the conclusion of a contract not based on a plan assignment that is compulsory for both parties are resolved in the same way, if this is specially provided for by the law or by agreement of the parties.
S. N. BRATUS’