Importance of Contract Law
The system of contract law enables agreements between two or more individuals to be legally binding in a court of law. However, for the agreement to be enforceable in court, it must be consistent with the essential elements of a legally binding contract. State statutes govern contract law. Additionally, the American Law Institute publishes the Restatement of Contracts, which are the majority rules of contract law adopted by most courts.
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Essential Elements
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In contract law, a legally binding contract must meet the formation requirements of a contract. Therefore, a contract is formed when there is an offer by one party and an acceptance by the other party to the contract. For instance, if one individual desires another to paint his house for a certain amount of money, the other party must accept the offer. Also, courts will enforce the contract if it includes valid consideration. In contract law, consideration is essentially a bargained for exchange between two parties. When consideration is present, both parties to the contract make promises to each other in reliance on each other's promise to do something in return.
Benefits
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Contract law allows either party to a valid contract to utilize the courts to enforce the contract. For instance, if one individual paints a house in reliance on another individual's promise to pay for the work, then the court may enforce the other individual to pay for the work based upon the agreement. Also, in contract law, courts may utilize the doctrine of promissory estoppel to enforce a contract that may lack sufficient consideration. Courts have discretion to use this doctrine when one party to a contract has detrimentally relied on the other party's promise to do something.
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Society's Dependence
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Most exchanges and interactions in the marketplace rely on the theory of contract law. Because contract law provides remedies when one party fails to complete his promise to the other party, these legally binding agreements that occur in the marketplace create enforceable obligations on both parties. Therefore, it places an importance on enforceable agreements between individuals that would otherwise be insignificant. In other words, without contract law, people can enter into contracts with others and fail to complete their contract obligations without any consequences.
Capacity
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One important factor to a contract is the existence of the legal capacity of both parties to be able to enter into a contract. In most cases, minors and mentally incapacitated individuals may not be legally able to make a choice to enter into a valid contract. Therefore, even if the elements of a contract exist, legal incapacity of one party can invalidate the enforceability of the contract. This is an important aspect to contract law, because the law protects certain individuals from being manipulated into entering into contracts when these individuals fail to understand the effects of the agreement.
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References
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Comments
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I wana to know the importance of law contract with the vivid example.
