Why do I need a contract?
A contract is a formal agreement between two or more parties for each party to perform certain acts. Contracts can cover an extremely broad range of matters, including the sale of goods or real property, the terms of employment or of an independent contractor relationship, the settlement of a dispute, and ownership of intellectual property.
At Pintar Albiston LLP, we provide a wide range of professional services for contracts, including contract review, contract drafting, contract revisions and breach of contract legal actions.
The Elements of a Contract
Typically, for a contract to be enforceable, there must be certain elements:
- Mutual understanding of what the contract covers.
- Involves an offer (or more than one offer) to another party, who accepts the offer
- Must be an exchange of something of value
A counter-offer is not an acceptance, and will typically be treated as a rejection of the offer.
Breach of Contract
A breach of contract occurs when one of the parties fails to perform its duties or obligations required by the contract. An action for breach of contract can provide the non-breaching party with damages. Damages are usually an award of money damages. When dealing with unique subject matter, specific performance may be ordered where one party is ordered to perform the terms of the contract.
There are several different types of damages. Compensatory damages are given to a non-breaching party to “compensate” them for the breach. Liquidated damages are an estimate of loss agreed to in the contract, with the amount usually agreed to by the parties. Punitive or exemplary damages, which are used to punish the party at fault, are usually not available unless certain circumstances exist.
Damages can include “expectation damages”, “reliance damages” or “restitution damages”. Expectation damages are intended to put a party in the same position as if the contract had been performed and not breached. Reliance damages cover expense that a party incurred because of the contract.
Mitigation of Damages
Once a party has breached a contract, the non-breaching party has a duty to mitigate damages. This means that the non-breaching party must do any reasonable act that will reduce the amount that may be awarded to him for the breach.
Other Contract Issues
Specific Performance – There may be circumstances in which it would be unjust to permit the defaulting party simply to buy out the injured party with damages. In this case, the non-breaching party may seek specific performance whereby the court orders that the breaching party performs his promise. Specific performance is appropriate for the sale of real estate or other unique items, such as art work.
Setting aside the contract – There can be four different ways in which contracts can be set aside. A contract may be deemed void, voidable or unenforceable. Voidness implies that a contract never existed. Voidability implies that one or both parties may declare a contract canceled. Unenforceability means that the terms of the contract render it impossible to
Misrepresentation – Misrepresentation means a false statement of fact made by one party to another party that induced that party to enter into the contract. It may allow for a remedy of rescission and possibly damages.
Mistake – A mistake is an incorrect understanding by one or more parties to a contract and may be used as grounds to invalidate the agreement.
Duress and undue influence – Duress is a threat or intimidation that compels a party to enter into a contract that he would not have otherwise done.
Undue influence is an involves one person taking advantage of a position of power over another person through a special relationship.
Incapacity – Certain persons, such as children or mentally incapacitated, do not have the capacity to enter into contracts and therefore, the contracts cannot be enforced against that party.
Illegal contracts – If a contract is based on an illegal purpose or contrary to public policy, the contract is void and unenforceable.
An oral contract can be as enforceable as a contract in writing. However, there are certain contracts that are void unless in writing, such as a lease for a year or longer. The difficulty in enforcing an oral contract is determining what the terms are if the parties have differing views.
If you are worried about your own will and prefer to use a method that suits you, the best solution is to talk to a family law attorney here in Nevada and discuss your options. You can make an appointment with the law firm of Pintar Albiston by ringing 702-685-5366.