DROIT DES ETATS USA
RESTATEMENT OF CONTRACTS
RESTATEMENT (SECOND) OF CONTRACTS
UNIDROIT PRINCIPLES OF INTERNATIONAL COMMERCIAL CONTRACTS
Basic principles of contract law
A contract is a legally enforceable agreement between two or more parties.
A contractual agreement requires the intention
to create legal relations. The contract is the set of mutual
promises (covenants), the promises of one
of the party being the consideration for the promises of the other party.
The promises made by the parties define the rights and obligations of the
parties. The contract allows parties to define their relationship, it is the
means of structuring relationships . The fudamental principe of the
binding nature of contracts (pacta
sunt servanda) requires that the agreement be made at
Contract law is sometimes described as a system of
private law-making. Contract is the basis for business
relationships, it is the means of structuring commercial relationships. Businesses have a large range
of autonomy in setting the terms of their contracts. Contracts create the private law which will
govern the relationship between the parties, they create the individual norms.
The rights and
obligations of the parties are determined by the contract's terms to which there
has been mutual assent, subject to
limits imposed by relevant statutes.
contracts or terms are generally unenforceable.
A binding integrated agreement discharges prior agreements
to the extent that it is inconsistent with them (parol
evidence rule) .
Contracts being binding on the parties can be enforced by
them in the courts. If one party meets its contractual obligations and the
other party doesn't there is a "breach of the contract" and the nonbreaching party is entitled to receive relief through the courts.
Generally, the nonbreaching party's remedy for breach of contract is
the money damages that will put the nonbreaching party in the position it would
have enjoyed if the contract had been performed. Under special circumstances, a
court will order the breaching party to perform its contractual obligations.
ORAL CONTRACT - WRITING
A deal may be done verbally, on a handshake and many
contracts do not involve a writing. . Most contracts are enforceable whether they
are oral or written.
In business relationships a writing is
not required but is strongly advisable
for definiteness and thoroughness of the terms. Having to set out the
terms of the contrat forces the parties to think out the respective obligations
and signing the contract underscores the commitment taken.
Concluding the contract on the mere basis of discussions is likely to leave a
lot of conditions unresolved . This increases the potential difficulties of
agreement a a later date, at a time of difficulties of performance, which will
lead to deterioration of the relationship and dispute. In case of a litigation
to enforce the contract or sue for damages, a written contract will reduce the
dispute about the contract's terms.
Besides in an oral contact, the parties may have different recollections of
what they finally agreed as a result of the discussions. .
Some types of contracts must be in writing to be enforced. State law
requirements vary from state to state, but in most states, a contract for the
sale of goods for $500 or more must be in writing (statute
of frauds) .
POWER TO ENTER INTO A CONTRACT
All persons, who are not minors or mentally incompetent lack, have
the legal capacity to enter into contracts. In most states, the legal age
for entering into contracts is 18. The test for mental capacity is whether the
party understood the nature and consequences of the transaction in question.
Corporations have the power to enter into contracts., through the acts
of their agents, officers, and employees.
The corporation's president can bind the company. The power of a
particular employee of the corporation to enter into a contract is determined by
agency law or corporate law.
FORMATION OF THE CONTRACT - OFFER AND ACCEPTANCE
The formation of a contract requires a
bargain in which there is a manifestation of
mutual assent to the exchange.
A contract is formed when one party (the "offeror") makes an offer which is
accepted by the other party (the "offeree").
An offer is a proposal to form a contract . It can be verbal or in
An acceptance is the offeree's assent to the terms of the offer. It can
be tacit, by sign or conduct (including performance if inveted by the offer),
verbal or in writing. .
No contract is formed until the offeree accepts an offer which is not
expressed as "non binding". Consent is the basis for contractual liability
is based on consent.
In general, an offeror is free to revoke the offer at any time before
acceptance by the offeree. Until an offer is accepted, the offeror is free -
unless it has promised to hold the offer open - to revoke the offer.
An offer which has been terminated cannot be accepted.
Rather than accept the offeree may make a counter-offer and start negotiation.
A counter-offer, like an outright rejection, terminates the offeree's legal
power of acceptance. In complex deals the negociation is the core of
the bargaining which allows the meeting of the minds and the consent of a
balanced deal. . During the negociation the parties may sign non binding
agreements (Letters of intent, Memorandum of understanding, etc.).
One of the party may use standard conditions in its
offer or acceptance (such as general conditions of sales or of
purchase) . This may lead to "battle of form". Every day contracts
are generally adhesion contrats, where there cannot be a modification of
"Consideration" is a requirement of contract law. Consideration
is what one party to a contract will get from the other party in return for
performing contract obligations. There must be as consideration for both parties
("mutual consideration" ).
Gratuitous promises , where the promisor does not get any material
advantage in consideration for his promose, are said to be "unenforceable for
lack of consideration."
In some states, a gratuitous promise can be enforced if the party to whom the
promise was made relied on the promise. Other states no longer require
consideration for certain types of promises.
In particular because consideration requirements are rather formal , the
question of lack of consideration is rarely a concern in business
relationships. In most business contracts,
The lack of consideration problem can arise in the context of amendments to
contracts, however. Also, in some states, a promise to hold an offer open
is unenforceable unless the offeree gives the offeror consideration (pays the
offeror money) to keep the offer open.
TYPICAL CONTRACT PROVISIONS
Many contracts include special types of provisions.
Duties and Obligations
The duties and obligations section of a contract is a detailed description of
the duties and obligations of the parties and the deadlines for performance.
Representations and Warranties
A warranty is a legal promise that certain facts are true. Typical
representations or warranties in contracts concern such matters as ownership of
the contract's subject matter (for example, real estate, , warranties of
ownership of intellectual property rights and noninfringement of third parties'
intellectual property rights etc.)
For contracts involving the sale of goods, certain warranties are implied
under state law unless specifically disclaimed by the parties.
These clauses ensure that either or both parties have the right to terminate
the contract under certain circumstances. Generally, termination clauses
describe breach of contract events that trigger the right to terminate the
contract (for example, nonpayment of royalties). Termination clauses also
describe the methods of giving notice of exercise of the termination right, and
whether the breaching party must be given an opportunity to cure the breach
before the other party can terminate the contract.
These clauses state what rights the nonbreaching party has if the other party
breaches the contract. In contracts for the sale of goods, remedy clauses are
usually designed to limit the seller's liability for damages.
An arbitration clause states that disputes arising under the contract must be
settled through arbitration rather than through court litigation. Such clauses
generally include the name of the organization that will conduct the arbitration
(the American Arbitration Association, for example), the city in which the
arbitration will be held, and the method for selecting arbitrators.
Merger clauses state that the written document contains the entire
understanding of the parties (Four corner clauses) . The purpose of merger
clauses is to ensure that evidence outside the written document will not be
admissible in court to contradict or supplement the terms of the written
TYPES OF CONTRACT
The most common type of contract is the
sales contract. Other
frequent contracts are loan contracts, transportation contracts,
insurance contracts, etc.
Some contracts are linked to other contracts . This
is the case in particular for secured
contract arises in case of breach of performance of the contract.
Liability in contract is based upon the voluntary undertaking of
obligations by the individual and differs therefore from liability in
torts which is imposed by law and which is based on the activity of