contract

Home > Social Sciences and the Law > Law > Law

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 tort 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 instrument , insurance , and deed .

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 At any time prior to acceptance, the offer may be rescinded on notice unless the offering party is bound by a separate option contract not to withdraw.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 of ).

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 wife ); 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 consent ).

A contract must also be the uncoerced agreement of the parties; thus, if it is procured by duress or fraud 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 damages 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 injunction 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.

Bibliography

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).

Contract The Supreme Court has had little impact on contract law, a fact largely attributable to structures and attitudes within the federal system that seek to preserve the states as separate law‐making authorities (see Federalism). The Court has played a more significant role in other areas of commercial law, such as admiralty and bankruptcy, for which there are constitutional provisions assigning responsibility to the national government. There is no comparable provision for contracts. Thus, with few exceptions, contract law has been viewed as within the purview of the states.

Some parts of the Constitution do, however, relate tangentially to contract law. Here the Court has had a significant impact, but one that affects the structures of government rather than the substance of contract law. For example, because the Constitution and national laws are supreme (Art. VI, sec. 2), the Court is the final arbiter of disputes originating in procurement contracts to which the federal government is a party.

The other two relevant provisions of the Constitution are the Contracts Clause (Art. I, sec. 10, cl. 1) and the Due Process Clauses of the Fifth and Fourteenth Amendments. The Court early applied the Contracts Clause, which prohibits states from interfering with the obligation of contracts, in Fletcher v. Peck (1810) and Dartmouth College v. Woodward (1819). In both cases the Court declared state laws unconstitutional as interferences with the obligation of contracts. In the process, the Court gave such a broad definition to “contract” that for most of the nation's history private individuals have had great freedom to form their own contracts. Only under the pressures of the Great Depression did the Court retreat and allow states to modify contracts, and then only to declare a temporary moratorium on making mortgage payments in Home Building & Loan Association v. Blaisdell (1934).

In Lochner v. New York (1905) and Adkins v. Children's Hospital (1923), the Court also excepted important areas from state intervention when it used the Due Process Clauses to protect “freedom of contract” in striking down regulations of conditions of employment such as wages and hours (see Contract, Freedom of). But beyond ensuring a wide range for individual action in shaping contractual relations, the Court again had little to do with the doctrine of contract law.

The only significant exceptions to the Court's general inefficacy with respect to contract law occurred during the second half of the nineteenth century. The Court's influence on commercial law in general peaked in the half‐century following Swift v. Tyson (1842), a decision that held that federal courts could decide questions of commercial law in accord with general principles, without being restricted to the decisions of the state in which the case arose. Thus, for half a century or so, the Court's search for a uniform federal common law coincided with similar interests in uniformity that originated in the growing commercial economy. In the end, however, the Court proved unable to satisfy the calls for a uniform national law.

Even at the peak of its influence on contract law, the Court tended to hear major issues only occasionally—for the simple reason that the Supreme Court is a court of limited jurisdiction. State courts, by contrast, are courts of general jurisdiction, which can hear and decide any issue (see Judicial Power and Jurisdiction). By the end of the nineteenth century, therefore, a number of organizations began to look elsewhere for uniformity. In light of the contemporaneous view that Congress's powers over commerce were limited, the only path to uniformity was for each state legislature to adopt the same act. Moreover, the Court itself backed away from a federal common law when it reversed Swift in Erie Railroad v. Tompkins (1938). In the years since Erie the Court has regularly declined to hear contract cases, thereby continuing its minimal impact on the substantive law.

Walter F. Pratt, Jr.

con·tract • n. / ˈkänˌtrakt/ a written or spoken agreement, esp. one concerning employment, sales, or tenancy, that is intended to be enforceable by law. ∎  the branch of law concerned with the making and observation of such agreements. ∎ inf. an arrangement for someone to be killed by a hired assassin: smuggling bosses routinely put out contracts on witnesses. ∎  Bridge the declarer's undertaking to win the number of tricks bid with a stated suit as trump. ∎ dated a formal agreement to marry. • v. 1. / kənˈtrakt/ [intr.] decrease in size, number, or range. ∎  (of a muscle) become shorter or tighter in order to effect movement of part of the body: the heart is a muscle that contracts about seventy times a minute | [tr.] then contract your lower abdominal muscles. ∎  [tr.] shorten (a word or phrase) by combination or elision. 2. / ˈkänˌtrakt; kənˈtrakt/ [intr.] enter into a formal and legally binding agreement: the local authority will contract with a wide range of agencies to provide services. ∎  secure specified rights or undertake specified obligations in a formal and legally binding agreement: the paper had contracted to publish extracts from the diaries. ∎  impose an obligation on (someone) to do something by means of a formal agreement. ∎  [tr.] (contract something out) arrange for work to be done by another organization. ∎  [tr.] dated formally enter into (a marriage). ∎  [tr.] enter into (a friendship or other relationship). 3. / kənˈtrakt/ [tr.] catch or develop (a disease or infectious agent). 4. / kənˈtrakt/ [tr.] become liable to pay (a debt). DERIVATIVES: con·tract·ee / ˌkänˌtrakˈtē/ n. con·trac·tive / kənˈtraktiv; ˈkänˌtraktiv/ adj.

contract 2
A. agree upon, make a contract;

B. incur, be involved in;

C. reduce in compass or in limits. XVI. Based partly on earlier contract pp. (now used only of contracted grammatical forms) — OF. — L. contractus, pp. of contrahere, f. CON- + trahere draw.
So contraction XIV. contractor †contracting party XVI; undertaker of a work XVIII. — late L.; see -OR 1.

contract In law, an agreement between parties that can be legally enforced. A contract creates rights and obligations which can be enforced by law.

contract 1 sb. XIV. — OF. (mod. contrat) — L. contractus, f. pp. stem of contrahere; see next.

contract •abreact, abstract, act, attract, bract, compact, contract, counteract, diffract, enact, exact, extract, fact, humpbacked, hunchbacked, impact, interact, matter-of-fact, pact, protract, redact, refract, retroact, subcontract, subtract, tact, tract, transact, unbacked, underact, untracked •play-act • autodidact •artefact (US artifact) • cataract •contact •marked, unremarked •Wehrmacht •affect, bisect, bull-necked, collect, confect, connect, correct, defect, deflect, deject, detect, direct, effect, eject, elect, erect, expect, infect, inflect, inject, inspect, interconnect, interject, intersect, misdirect, neglect, object, perfect, project, prospect, protect, reflect, reject, respect, resurrect, sect, select, subject, suspect, transect, unchecked, Utrecht •prefect • abject • retroject • intellect •genuflect • idiolect • dialect • aspect •circumspect • retrospect • Dordrecht •vivisect • architect • unbaked •sun-baked