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What Is Contract Law?

Contract law is an area of law that makes and enforces legally binding agreements, called contracts. Agreements and contracts are a common part of daily life for most people. When you engage in certain business transactions, particularly those with price tags over $500, you'll often sign a contract with the company outlining the terms and conditions of the arrangement. A contract outlines the terms of an agreement in clear language. Agreements, meanwhile, are even more common. Anytime you and another person embark on a mutually beneficial project, you've made an agreement.

What Do Contract Lawyers Do?

Contract lawyers have two primary responsibilities: creating contracts and enforcing contracts. These attorneys help parties create fair, straightforward, and legally binding contracts for high-value or complex transactions. Should one of the parties breach the contract, or not hold up their end of the agreement, the contract attorney can mediate a solution, or litigate the matter in court.

Contract lawyers can work in a variety of professional environments. Some of them open private practices where they work independently or with a few other attorneys to provide contract services. Others work as in-house counsel for companies or corporations that enter into contracts often and need the oversight of a lawyer regularly. Finally, some work at large law firms that practice many different types of law and assist the firm's clients who need help to create or enforce a contract.

Contracts vs. Agreements

Occasionally, you'll hear the terms "contract" and "agreement" used interchangeably. Agreements are understandings or arrangements that are not necessarily legally binding. Contracts are a type of agreement that are, by their nature, legally binding. Both types of understandings have their benefits and disadvantages.

Agreements are often used for informal arrangements. The only necessary element to form an agreement is for the parties involved to mutually agree on the transaction, project, or outcome. Adherence to the agreement relies entirely on the honesty and integrity of the parties involved. Since agreements are often verbal and are not legally binding, there's no legal recourse to recover damages should a breach of the agreement occur.

Contracts, by contrast, are formalized legal documents . They require a specific set of elements and should be written and signed. In the case of a breach of contract, the wronged party has legal recourse and can sue their counterpart for damages in court.

Elements of a Contract

All contracts must include a few specific elements . Without these terms, the contract may be deemed invalid:

  • Offer: Every contract must contain a clear and detailed offer that explains the central transaction.
  • Acceptance: The contract must also include explicit acceptance of that offer by all parties.
  • Consideration: The consideration element details what the parties are exchanging. Often, this is a service in exchange for money, but it could be anything, so long as both parties offer something.
  • Mutual agreement: Finally, all parties must agree to the contract of their own free will without coercion.

Additionally, the contract must represent a legal activity. For example, a "contract" outlining the terms to sell illegal drugs would not be enforceable in court since it deals with a   criminal action. A final condition is the legal competency of all parties involved. Minors and those individuals deemed legally incompetent cannot enter into binding contracts since they might not understand the terms, expectations, and consequences of doing so.

Contract Considerations

Contracts can technically be verbal, but they are incredibly hard to enforce that way. It's almost always recommended that if you're entering into a contract, you do so in writing. This way, should there be a dispute or a breach of contract, your contract lawyer or the judge in court can review the specifics of the contract and provide a fair legal remedy.

Types of Contracts

Contracts come in a variety of forms depending on the parties involved, the terms of the transaction, the considerations, and the specifics of the situation. A few common types of contracts include:

  • Express contracts: Provide specific terms for the contract.
  • Conditional contracts: Fulfillment of the contract depends on the meeting of specific conditions.
  • Joint contracts: Multiple parties are involved in the contract.
  • Implied contracts: Often verbal, these contracts are situational rather than explicit.
  • Unconscionable contracts: One party has far more power than the other. These contracts are generally found to be unjust.
  • Adhesion contracts: One party has more leverage than the other.
  • Option contracts: These contracts give the option of entering into a different contract at a later date.
  • Fixed-price contracts: The parties agree on a set price for a project.

How Do You Form a Contract or Agreement?

If you'd like to form an agreement, all you need to do is come to a mutual understanding with the other parties involved in the transaction. Entering a formal and legally binding contract requires a bit more upfront work. If you'd like to write the contract yourself, first consult the laws that govern binding contracts in your state. Next, find a template or work from scratch to list all necessary elements of the contract. Finally, have all parties sign the contract and retain copies.

Another option is to hire a contract attorney to assist you. If you're creating a contract for a high-value transaction, a licensed contract lawyer can ensure that you and the other parties involved are adequately protected. Additionally, they'll know if your situation requires any additional terms and how to write the language of the contract clearly should it be disputed in court. Using a contract lawyer to create your contract could save you time and money in the long run should any of the parties involved dispute or breach the contract.

Breach of Contract

A breach of contract occurs when one or more of the parties does not uphold their agreed-upon terms in the contract. For example, if you hired a contractor to remodel your bathroom, and they did not finish every aspect of the project as outlined in the contract, they would be in breach of contract. Conversely, if they completed the project , but you did not compensate them according to the contract, you would be in breach of contract.

When breaches occur, you have two options — seek mediation from a contract lawyer or sue the party in breach of contract and take them to court. Most often, the remedy for breach of contract is compensatory damages. The party in violation of the contract must pay a specific amount decided upon by the attorney or judge. In cases of an egregious breach of contract, the party in the wrong might also have to pay punitive damages, or additional money to compensate for the pain and suffering of the wronged party.

Legally Binding

Most states have specific laws that outline the necessary elements and terms of legal contracts. To ensure your contract meets those specifications, it's important you review any relevant legislation or consult with a contract lawyer.

Contract law is a fascinating area of the legal profession. Lawyers who work to create or uphold contracts help businesses run smoothly and individuals protect themselves on a daily basis. If you need assistance creating a contract or suing a person or business for breach of contract, reach out to a contract lawyer today.


ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.


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