Contract Law

CONTRACT LAW
A contract is “a promise, or set of promises, for breach of which the law
gives a remedy, or the performance of which the law in some way recognizes as
a duty.”2 It is a mutually binding agreement. In order to form a contract there
must be mutual assent such as a valid offer and acceptance between parties.
The parties must have the legal capacity to enter a contract, and adequate
consideration must exist. Furthermore, the subject matter of the contract must
be legal.
The general rule is that minors and insane persons cannot enter contracts.
There are also occasions when intoxicated persons do not have the legal
capacity to enter contracts.
Consideration is defined as follows:
[T]he inducement to a contract, something of value given in return
for a performance or a promise of performance by another, for the
purpose of forming a contract; one element of a contract that is
generally required to make a promise binding and to make the
agreement of the parties enforceable as a contract. To find
consideration there must be a performance or return promise which
has been bargained for by the parties … Consideration represents
the element of bargaining to indicate that each party agrees to
surrender something in return for what it is to receive. It is
consideration which distinguishes a contract from a mere gift.3
Moral obligations and agreements to perform duties for which one has a preexisting
duty to perform do not constitute consideration.
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A contract may be unenforceable as a result of mistake, fraud, duress,
unconscionability or undue influence. Mutual mistake on the part of all parties
may invalidate a contract when it involves a material or major aspect of the
contract. Mistake regarding a trivial or insignificant matter, or mistake by one of
the parties, will not invalidate a contract. Fraud occurs when one of the parties
intentionally misrepresents a material fact with intent to defraud, and the other
party justifiably...