Contract
A contract is an agreement that specifies certain legally enforceable rights and obligations pertaining to two or more parties. A contract typically involves the transfer of goods, services, money, or a promise to transfer any of those at a future date, and the activities and intentions of the parties entering into a contract may be referred to as contracting. In the event of a breach of contract, the injured party may seek judicial remedies such as damages or equitable remedies such as specific performance or rescission.[1] A binding agreement between actors in international law is known as a treaty.[2]
For other uses, see Contract (disambiguation).
Contract law, the field of the law of obligations concerned with contracts, is based on the principle that agreements must be honoured.[3] Like other areas of private law, contract law varies between jurisdictions. In general, contract law is exercised and governed either under common law jurisdictions, civil law jurisdictions, or mixed-law jurisdictions that combine elements of both common and civil law. Common law jurisdictions typically require contracts to include consideration in order to be valid, whereas civil and most mixed-law jurisdictions solely require a meeting of the minds between the parties.
Within the overarching category of civil law jurisdictions, there are several distinct varieties of contract law with their own distinct criteria: the German tradition is characterised by the unique doctrine of abstraction, systems based on the Napoleonic Code are characterised by their systematic distinction between different types of contracts, and Roman-Dutch law is largely based on the writings of renaissance-era Dutch jurists and case law applying general principles of Roman law prior to the Netherlands' adoption of the Napoleonic Code. The UNIDROIT Principles of International Commercial Contracts, published in 2016, aim to provide a general harmonised framework for international contracts, independent of the divergences between national laws, as well as a statement of common contractual principles for arbitrators and judges to apply where national laws are lacking. Notably, the Principles reject the doctrine of consideration, arguing that elimination of the doctrine "bring[s] about greater certainty and reduce litigation" in international trade.[4] The Principles also rejected the abstraction principle on the grounds that it and similar doctrines are "not easily compatible with modern business perceptions and practice".[4]
Contract law can be contrasted with tort law (also referred to in some jurisdictions as the law of delicts), the other major area of the law of obligations. While tort law generally deals with private duties and obligations that exist by operation of law, and provide remedies for civil wrongs committed between individuals not in a pre-existing legal relationship, contract law provides for the creation and enforcement of duties and obligations through a prior agreement between parties. The emergence of quasi-contracts, quasi-torts, and quasi-delicts renders the boundary between tort and contract law somewhat uncertain.[5]
Overview[edit]
Contracts are widely used in commercial law, and for the most part form the legal foundation for transactions across the world. Common examples include contracts for the sale of services and goods, construction contracts, contracts of carriage, software licenses, employment contracts, insurance policies, sales or leases of land, among others. A contractual term is a "provision forming part of a contract".[6] Each term gives rise to a contractual obligation, breach of which can give rise to litigation, although a contract may also state circumstances in which performance of an obligation may be excused. Not all terms are stated expressly, and terms carry different legal weight depending on how central they are to the objectives of the contract.[7]
Obligations created by contracts can generally be transferred, subject to requirements imposed by law. Laws regarding the modification of contracts or the assignment of rights under a contract are broadly similar across jurisdictions.[8] In most jurisdictions, a contract may be modified by a subsequent contract or agreement between the parties to modify the terms governing their obligations to each other. This is reflected in Article 3.1.2 of the Principles of International Commercial Contracts, which states that "a contract is concluded, modified or terminated by the mere agreement of the parties, without any further requirement".[4] Assignments are typically subject to statutory restrictions, particularly with regard to the consent of the other party to the contract.
Contract theory is a large body of legal theory that addresses normative and conceptual questions in contract law. One of the most important questions asked in contract theory is why contracts are enforced. One prominent answer to this question focuses on the economic benefits of enforcing bargains. Another approach, associated with Charles Fried in his book Contract as Promise, maintains that the general purpose of contract law is to enforce promises. Other approaches to contract theory are found in the writings of legal realists and critical legal studies theorists, which have propounded Marxist and feminist interpretations of contract. Attempts at understanding the overarching purpose and nature of contracting as a phenomenon have been made, notably relational contract theory. Additionally, certain academic conceptions of contracts focus on questions of transaction cost and 'efficient breach' theory.
Another important dimension of the theoretical debate in contract is its place within, and relationship to a wider law of obligations. Obligations have traditionally been divided into contracts, which are voluntarily undertaken and owed to a specific person or persons, and obligations in tort which are based on the wrongful infliction of harm to certain protected interests, primarily imposed by the law, and typically owed to a wider class of persons. Research in business and management has also paid attention to the influence of contracts on relationship development and performance.[9][10]
Private international law is rooted in the principle that every jurisdiction has its own distinct contract law shaped by differences in public policy, judicial tradition, and the practices of local businesses. Consequently, while all systems of contract law serve the same overarching purpose of enabling the creation of legally enforceable obligations, they may contain significant differences. Accordingly, many contracts contain a choice of law clause and a forum selection clause to determine the jurisdiction whose system of contract law will govern the contract and the court or other forum in which disputes will be resolved, respectively. Failing express agreement on such matters in the contract itself, countries have rules to determine the law governing the contract and the jurisdiction for disputes. For example, European Union Member States apply Article 4 of the Rome I Regulation to decide the law governing the contract, and the Brussels I Regulation to decide jurisdiction.
Contemporary developments in contracting[edit]
Visual contracting[edit]
Several attempts to present and record contractual agreements with more visual impact have been considered since around 2000, for example from a Scandinavian perspective, Helena Haapio et al in 2012 advocated "a visual turn in contracting" as a means of engaging those who read and work with contracts, improving understanding, easing implementation and avoiding disputes.[346] Adrian Keating and Camilla Baasch Andersen noted that in eastern and northern Europe, including Germany, visualisation of contracts has been seen as promising in eastern and northern Europe, including Germany, and argued that the benefits of such a step "would seem apparent".[347]
Fairer contracting and responsible contractual behaviour[edit]
Fairer standards of contracting and responsible contractual behaviour have been promoted by government bodies and civil society organisations,[348] encouraged or mandated for public sector contracting, set out in guidance for both public and provide sector contracting parties,[349] and endorsed as an aim of public policy.[350] The interdisciplinary Responsible Contracting Project sees "innovative contracting practice" as a means of improving the human rights of workers engaged in global supply chains.[348]
In 2005–6, the Care Services Improvement Partnership, an arms-length agency which operated in the UK from 2004 to 2008,[351] published a Guide to Fairer Contracting in two parts: part 1 covered the purchase of care placements and domiciliary care services in the UK social care market,[352] and aimed to "open up a debate about what constitutes a fair contract",[353] while part 2 covered writing specifications for fairer contracts.[354] These documents were concerned with improving the relationships between commissioners and providers of care services, where effective contracting is seen as a skill which contributes to securing the best outcomes for recipients of care,[355] and unfair contracting, especially unfair pricing, can increase the likelihood that the provider's business will fail and the service will be withdrawn.[353] Deborah Clogg noted that a contractual document with "terms that appear only to reflect the interests of the purchaser" will appear to contradict any other expressions of "partnership" being adopted, and warned that leaving the contracting process to corporate lawyers or contract officers without a background in social care can be unproductive.[353]
In construction, longer-term contracting and win-win contracting have been seen as desirable aims, and the offer of a "fair return" is seen as integral to effective contracting.[356]
A contract from the Tang dynasty that records the purchase of a 15-year-old slave for six bolts of plain silk and five Chinese coins
German marriage contract, 1521 between Gottfried Werner von Zimmern and Apollonia von Henneberg-Römhild
![German marriage contract, 1521 between Gottfried Werner von Zimmern [de] and Apollonia von Henneberg-Römhild](http://upload.wikimedia.org/wikipedia/commons/thumb/d/dc/Heiratsbrief_Gottfried_Werner_von_Zimmern_Apollonia_von_Henneberg_1521_img02.jpg/82px-Heiratsbrief_Gottfried_Werner_von_Zimmern_Apollonia_von_Henneberg_1521_img02.jpg)
