ContractLawJan.docVIP

THE LAW OF CONTRACT Learning objective: This section introduces students to ‘Contract Law’ and its role in the business arena. Students would have a general idea of when a contract is formed and the essential ingredients for its formation. The various types of contracts shall also be introduced to enable students to appreciate the instances which give rise to a contract. Contents Introduction What is a Contract? Essential Ingredients of a Contract Classifications of Contract THE LAW OF CONTRACT Introduction Contract Law is a foundation upon which is built many other areas of business law, such as corporations, agency, partnership, sales, employment, etc. When a promisor breaks his promise and refuses to act as agreed, the promisee may sue the promisor for failure to carry it out. The law shall then compel the promisor to carry out his promise. This may only be done when a promise is embodied in a valid contract. As the law is not in favour of self-help, the sanctions of enforcement are only allowed to be administered through the courts of law. The object of courts is to provide redress by way of either:- compensation (‘damages’); remedies such as -specific performance; -injunction; -rectification/reformation; -recission. The law of contract is a framework to ensure that lawful expectations are met or that remedies are provided. The principles of Contract Law were primarily developed through case law (common law equity). However today, state and federal statutes compliment the current common law and equitable principles on contract. Therefore, Australia’s Contract Law is mainly comprised of:- Common law Equitable principles Statute law: -Sale of Goods Act (State) -Fair Trading Act (State) -Contracts Review Act (State) -Trade Practices Act (Commonwealth) What is a Contract? A contract has been defined as a legally binding agreement between two or more persons that creates certain rights and duties that the law will enforce. Each