Every successful commercial enterprise relies on solid, enforceable contracts in order to conduct business. Most contractual agreements are governed by state law, both by the common law of contracts — the law made by judges — and by state statutes enacted by legislatures. Many legislatively enacted contract laws are based on the Uniform Commercial Code (UCC), a comprehensive set of business laws adopted in some form by every state.
A skilled business attorney knowledgeable in contract law and experienced in commercial agreements can assist you with contract formation in your business dealings.
In very basic terms, a contract is an exchange of enforceable promises by two or more parties. A valid contract imposes legal duties upon the parties to perform their respective promises in the manner prescribed by the terms of the agreement. If a contractual duty is not performed, the breaching party may be liable for resulting damage to the nonbreaching party who relied on the broken promise to his or her detriment.
The traditional elements of a contract are:
A breach is material if the party to whom the duty is owed does not receive the substantial benefit of the bargain because of the other party's nonperformance. Consequences of a material breach are severe and may include discharge of any duty to counter perform.
On the other hand, a breach is immaterial if the party to whom the duty is owed has already received a substantial benefit of the bargain, despite partial or deficient performance of the other party. In this case, the injured party is probably not relieved of the duty to counter perform under the contract but may have a legal remedy for the minor breach.
Several defenses to breach of contract exist, including these common examples:
When there is no valid defense to breaching a contract, the breaching party normally becomes liable to the injured party. The main legal remedies for breach of contract are:
This article barely scratches the surface of contract law. Be sure to consult an experienced business lawyer to answer your contract questions and guide your contract negotiation, drafting, performance and enforcement.
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