Close: Create a contract
Perspectives on contracts
- A contract is an agreement enforceable by law.
- Obtaining contracts is the main goal of a business.
Sources of contract laws
- Common law
- Originated in England
- Uses laws and prior judgements of the court.
- Contracts become larger as they need to cover wide variety of situations.
- Civil Law
- Originated in Europe.
- Uses code
- Does not rely much on the precedences.
- Contracts tend to be shorter as they can just reference the code.
What type of contract?
- Product/goods
- US Commercial code
- UN International sales of goods (81 countries).
- Real/property - follows law of the country (civil or common).
- Services - follows law of the country (civil or common).
The agreement
- Checklist
- Is there an agreement?
- Is there consideration?
- Is the agreement legal?
- Must the beal be in writing?
- Framework agreements
- Preprinted leases, memorandum of agreement etc.
- Consideration
- For a deal to be binding, both sides have to give something up.
- In civil law countries consideration is not mandatory.
- In common law countries consideration is mandatory.
- Is the agreement legal?
- Should not be against local laws.
- Does the contract need to be in writing?
- When you have a written agreement, law is confined to only enforce that, no extraneous promises made during negotiations.
- Always include parol evidence clause in the contract.
- Oral agreements are enforceable, with some exceptions.
- Real estate agreements must be in writing.
- Good idea to always have agreements in writing.
Business vs legal objectives in contracts.
- Legal objectives
- To create a binding contract which is enforceable.
- Results in lengthy process, increased cost, and may affect relationships between parties.
- Lean contracts
- Emphasize free market economics rather than legalities.
- Include - price, IP rights, terms implied by law but not written in the contract.
- Visual contracts - making contracts more readable.