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CONTRACT ATTORNEY CALIFORNIA BASIC CONTRACT LAW. Below are some of the
elementary basics of Contract law enforces
legally binding agreements. When one party violates a
contract, in most cases, damages are limited to recovery of what (or
approximately what) the breaching party agreed to perform. Generally, damages for
breach of contact must be reasonably foreseeable, that is, damages are normally
limited to that which was within the parties’ contemplation at the time they
entered into the agreement. IS THERE A CONTRACT? There is an enforceable
contract if: (1) the terms are clear enough for each party to understand what
each party was required to do; (2) Each party agrees to give the other party
something of value; (3) The parties agreed to the terms. FURTHER CONDITIONS FOR
AN ENFORCEABLE CONTRACT: 1. Neither party is a
minor (i.e., under 18 years old; 2. Neither party is of
unsound mind; 3. Neither party is being
deprived of their civil rights; 4. The contract must
involve a lawful matter. THE WAY A CONTRACT IS
COMMUNICATED Most contracts may be
oral, written, or partly oral and written. Certain contracts must be in
writing, however, to be enforced. A contract can even be
created without words, but solely by intentional conduct by both parties.
But to do so, each party must know, or reasonably should know, that the other
party will interpret their conduct as an agreement to enter into a contract. MODIFICATION Contracts can be modified
or changed at a later time as long as the parties agree to do so. The
parties can even cancel the first agreement and substitute a whole new
agreement (called a “novation”). BREACH (VIOLATION) OF
CONTRACT To prove that a party
(Party B) breached the contract, you must show: 1.
There was a contract; and 2.
That the party claiming the breach (Party A) did everything (or substantially
everything) he or she was supposed to do [or, alternatively, was excused from
having to do such things]; 3.
All conditions required to have occurred, did in fact occur before the Party B
had to perform; 4.
Party B did not do what the contract required he or she to do; and 5.
Party A suffered reasonably foreseeable harm due to Party B’s breach. BAD FAITH Further, every contract
contains an implied promise of “good faith and fair dealing.” This means
that each party must not interfere with the right of the other party to receive
the contract benefits. CONTRACT INTERPRETATION The contract terms are
interpreted by what the parties intended at the time they created the
contract. Normally, the language is interpreted by their usual and
ordinary meaning and by the surrounding circumstances when making the
contract. However, if the parties intended a word to have a special
meaning, then the special meaning applies. Words in a contract are
not interpreted in isolation, but in light of the context of the whole contract
and the surrounding text. If, using the general
rules of interpretation does not resolve the “meaning of the terms” dispute,
then the language is interpreted most strongly against the person who drafted
the uncertain language. If before the
disagreement arose, the parties’ actions indicated the words meant a certain
thing, then such actions will be a consideration of the meaning. If the contract does not
specify a time for performance, the law will imply a reasonable time. ASSIGNMENT In most contracts, a
party can assign (transfer) his or her contract benefit rights to another
person who was not an original party to the contract. DEFENSES Mistake: No contract
exists if one of the parties is mistaken (but not due to excessive
carelessness) about a fact or law if the other party knew about and took
advantage of the mistake, and the party would not have entered the contact had
he or she known about the mistake. No contract exists if
BOTH of the parties are mistaken about a fact or law the party (seeking to
avoid the contract) would not have entered the contact had he or she known
about the mistake. Duress, Menace,
Fraud:The Civil Code further provides that consent
(free moral agency) which is necessary in a contract is not
free when it is obtained through duress,
menace, or fraud. Example: Pressure, fear, or intimidation
caused a person to enter the contact which they would not have entered but for
such acts. Examples include detaining or confining or threatening
violence on someone until they sign the agreement. Even threatening
criminal prosecution is a defense. Fraudulent inducement is
a defense, i.e., the party knowing misrepresented a fact to persuade the other
party to enter into the contact, and the other party reasonably relied on the
misrepresentation, and the other party would not have entered into the contract
had he or she known the true facts. Waiver: Another defense
is where a party knowingly waives (gives up) his or her right to receive the
performance of the other party. The waiver can be written, oral words, or
by conduct (actions consistent with a waiver). STATUTE OF LIMITATIONS CONCLUSION Obviously, there are many
more laws, statutes, and case law concerning contracts. But this article
provides you with a thumbnail discussion of some of the basics. If you are in need of
legal counsel or representation, please feel free to contact my office. Copyright
2007, 2010.
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