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Contract law

Contract law

Contract Law is a legally required exchange of promises or agreement between parties that the law will impose. Contract law is established on the Latin phrase pacta sunt servanda (pacts must be kept). Contract Law decides when promises are enforceable.

The primary conditions for forming a binding contract are an offer, acceptance, and consideration. To be enforceable, a contract must be structured by competent parties, who give their permission, to a legal agreement. A party may be excused from executing under a contract by proving a defense to breach of contract. Such defenses contain duress, fraud and falsification, mistake, lack of consideration, and the statute of frauds. Contract law can be classified, as is habitual in civil law systems, as part of a general law of obligations (along with tort, unjust enrichment or restitution).

A contract proposes to celebrate an agreement between two or more parties, in relation to a specific subject. Contracts can cover an exceptionally wide range of matters, including the sale of goods or real property, the requisites of employment or of an independent contractor relationship, the conclusion of a dispute, and ownership of intellectual property developed as part of a work for hire.

Uncertainty, incompleteness and severance

If the terms of the contract are vague or incomplete, the parties cannot have obtained an agreement in the eyes of the law. An agreement to agree does not establish a contract, and incapacity to agree on key issues, which may contain such things as price or safety, may reason the complete contract to fail. However, courts will effort to give effect to commercial contracts where probable, by building a reasonable structure of the contract.

If there are vague or deficient clauses in the contract and all alternatives in resolving its true significance have failed, it may be probable to sever and annulled just those affected clauses if the contract contains a severability clause. The test of whether a section is severable is an objective test - whether a reasonable person would see the contract standing even without the clauses.