Contracts


Overview

Individuals and businesses make promises and enter into transactions expecting that their agreements will be enforced. The principles of contract law determine which of those agreements and promises the courts will recognize as valid and enforceable. Contracts are critical to business and commerce -- without the assurance that business agreements are legally enforceable, it would be difficult, if not impossible, to conduct commercial transactions domestically or abroad. Contracts are also used to allocate risk among the contracting parties and thus serve as a risk management tool to reduce legal and economic uncertainties.

Most contracts are governed by state law, with slight differences from state to state based on case law and statutes. Many states follow the Restatement (Second) of Contracts, which codified the common law of contracts and governs many agreements, e.g., employment and services contracts, sales and leases of real estate, and insurance contracts. Commercial transactions involving the sale of goods (moveable property) are governed by Article 2 of the Uniform Commercial Code, although the parties may elect to be governed by the Convention for the International Sales of Goods (CISG) for international transactions.

This module introduces you to common law and UCC contracts. It provides a very broad overview of the requirements for a valid and enforceable contract, some of the defenses the courts accept because they demonstrate that one or both parties didn’t enter into the agreement with voluntary assent, excuses for not performing a contract, and the common law remedies available when a party breaches the contract.