Fundamentals of Contracts
The fundamentals of a legal contract involve several key elements: an offer, acceptance, consideration (something of value in the contract), mutual assent, and legal purpose. A contract may become unenforceable due to various reasons such as lack of capacity (e.g., age or mental state), undue influence or duress, fraud, or if the contract is for an illegal purpose. To enforce compliance with a contract, legal actions can include suing for breach of contract, where the court may order remedies like specific performance (carrying out the contract terms) or awarding damages for any losses incurred.
Creating a Valid Contract
As previously noted, a valid contract is one that satisfies all legal prerequisites and is enforceable by any party involved. To constitute such a contract, five essential elements must be present:
A. Agreement: Often described as a "meeting of the minds," an agreement necessitates that all parties concur on the significance of each crucial term. For instance, if Mr. A owns a white and a black horse and agrees to sell a horse to Mr. B without specifying which horse, and each party has a different horse in mind, this misunderstanding negates the formation of a valid agreement due to the absence of mutual consensus.
B. Offer and Acceptance: A contract requires one party to extend an offer and the other to accept this offer unequivocally.
C. Consideration: This element is pivotal for a contract's validity, embodying the exchange of "good and valuable consideration." The value of consideration is subjective, varying between individuals. It can manifest as an exchange of acts, promises, or a combination thereof.
D. Competent Parties: Also known as "sui juris" parties, this term implies that individuals must be legally competent, typically of legal age and mentally sound, to enter a contract. It's important to note that contracts involving minors or those mentally incapacitated at the time of agreement are generally voidable. An exception exists in the context of criminal defendants' bonds, where, as per Florida Statute 903.06, minors are permitted to contract for their release from detention similarly to adults.
E. Legality of Object: The purpose of the contract must be lawful. For example, if A agrees to compensate B for committing a crime against C, and B executes the act, the contract is unenforceable due to its illegal objective. Despite the actions taken, B cannot legally claim the agreed payment.
The Enforceability of Contracts
Contracts are categorized into three groups based on their enforceability:
A. Valid Contract: This is a contract that either party can enforce. B. Void Contract: This type of contract cannot be enforced by any party in a court of law. C. Voidable Contract: Here, one party may choose either to enforce the contract or to declare it void.
Factors Rendering a Contract Unenforceable
A. Fraud: Fraud, manifesting in various forms, is recognized in contracts primarily in two ways: Fraud in the Execution, where a party is misled into signing a different contract than intended, rendering the contract void; and Fraud in the Inducement, where false statements persuade another to enter the contract, making it voidable by the misled party. Fraud involves making a false statement known to be untrue by the issuer, intending the other party to rely on it, leading to the other party's detriment.
B. Misrepresentation: During contract negotiations, incorrect statements are termed "misrepresentations." These can make the contract voidable by the harmed party, whether they are intentional lies or unintentional errors. Nondisclosure, or failing to reveal critical information, can also render a contract unenforceable if disclosure was expected.
C. Concealment: Intentional non-disclosure of crucial facts by one party, which had they been known, would have prevented the other party from agreeing to the contract. It differs from fraud by omitting the truth rather than stating falsehoods, potentially making the contract voidable if intent is proven.
D. False Swearing: Committing perjury or making a sworn false statement can make a contract voidable and expose the individual to criminal charges, regardless of any resultant harm.
E. Waiver: Forfeiting a known right or leading the other party to believe certain contract terms will not be enforced can invalidate those contract terms, even if the rest of the contract remains valid.
F. Mistake: A contract may be unenforceable due to significant errors by one or both parties regarding a critical aspect of the contract, affecting the transaction significantly.
G. Undue Influence: Exploiting a significant or persuasive relationship to coerce someone into a contract may lead to its unenforceability due to undue influence.
H. Duress or Coercion: Threats or pressure exerted to force someone into a contract render it unenforceable.
Enforcing the Contract
A. Breach of Contract: This occurs when one party fails to fulfill an obligation they have agreed to under a contract. Such failure is termed as breaching the contract, relieving the other party from their obligations under the agreement. Furthermore, the party suffering from the breach may pursue compensation through a lawsuit for Breach of Contract, seeking monetary damages for the failure to perform.
B. Specific Performance: In instances where a party to a contract is unwilling to carry out a specific duty as agreed, and the aggrieved party prefers the continuation and fulfillment of the contract rather than its termination, they may request the court to mandate the non-compliant party to perform their contractual obligation. This legal action is known as a suit for Specific Performance. It represents an equitable remedy that focuses on the enforcement of the contract as agreed, rather than on financial compensation.