Contract Law Manual

Welcome to the Contract Law section of the Spartans Mean Business blog. The fact that you’re on this page leads us to believe that you wish to learn about contracts... either that, or you’re trying to get out of a bad Real Estate predicament. With any sort of field that involves experience, what one needs is not a shallow memorization of the jargon and rules that comes in the package, instead, one needs to fully understand the inner workings (especially if they wish to beat the system). While we cannot guarantee that we will give you a full understanding, this manual will hopefully provide you with the bare essentials necessary to start.

I. What is a Contract?

 

From the Dictionary

con·tract [kon-trakt]

noun

1. An agreement between two or more parties for the doing or not doing of something specified.

2. An agreement enforceable by law.

3. The written form of such an agreement.

4. The division of law dealing with contracts.

Contracts are not only essential trademarks of business, they are the main means by which people can guarantee results from their transactions. In essence, a contract is a written agreement between two parties (which can range from corporations to entire countries) that sets the guidelines and expectations of both involved. The principle of framing the contract is based on mutual benefits; both parties are attempting to benefit as much as possible from each other, while keeping costs to a minimum and satisfying everyone involved.

When it comes to actual contract-building, however, not everyone is as cooperative as they should be. The key word when making a contract is “benefit”, and human nature dictates that if you can rip someone off scott-free, you’re probably going to go through with it. Luckily for you, you don’t have to feel bad about it because the other side is probably trying to do the same thing. That is why, for the sake of diplomacy, it is important to understand the inner-workings of contracts and contract law. By gaining mastery and confidence in your contract building, you can avoid loopholes, ambiguities, and misinterpretations and, as a result, fully trust your fellow party while working out the kinks that might threaten your deal.

II. The “How to”

 

A typical contract follows a general format. Though wordings can come in many different flavors, how a person chooses to spice up their agreement is usually up to personal taste (though it’s always good to be careful with your wordings to avoid misinterpretation). What’s more important to understand is what needs to be included, content-wise, in the contract.

 

Some helpful tips

1. Contracts usually start out by naming the people, businesses, entities, and etc. involved. The contract itself must first be legal, meaning that all parties involved must have the capacity to sign legally and provide what they state they will.

2. Usually, the intro will also describe what each person does (their job and what business he or she is in) and the services, employment, or products being offered.

3. A contract will then lay out (in painstaking detail) the conditions of the agreement, including things such as how much both sides will be paid, how high the quality of the work will be, how long the contracting period will last, or how copyright or licensing rights will be distributed, among a number of other potential topics.

4. A part of the contract must be devoted to “representations and warrants”. In the “representations” part, the parties involved must certify that they represent their company, person, organization, etc. as well as what they are offering and their terms. With the “warrants” the parties guarantee that they will live up to the terms set in the contract.

5. Contracts must have provisions in the case that the product or service offered does not meet expectations. The rights to set off specifies what the affected party can do and what they will receive. A good contract will also have provisions in the case of Force Majeure, or happenings out of human control such as war or natural disasters.

6. Jurisdiction and bylaws. Essentially, if a dispute between the two parties is taken to court, this section of the contract will specify which state’s laws will apply and how the dispute will be resolved (Most contracts will resolve disputes via arbitration).

7. Finally, the two parties must sign the contract, finalizing the deal and legally binding them to their commitment.

 

III. Wordings, Loopholes, and Disputes

Though contracts have proven themselves to be more useful than not, despite the restrictiveness and painful formality, one of the aspects that continually proves to be the most irritating is wording. As clearly demonstrated by Michael Bloomberg, even the smallest wording mistakes could potentially be used as loopholes.

Ideally, a well written contract should not have any loopholes. As human efficiency would have it, most contracts are not. Grammatical errors in a contract could potentially be debilitating if the opposing side discovers them, however if one of the parties is too egregious or aggressive in pressing the issue of a minor error, chances are the judge will intervene to prevent the breaking of contract. Additionally, most contracts will have a provision at the end that exonerates simple faults.

There are two cases in which a fault can be enforceable. First of all, if an incorrect legal terms is used, be it in the wrong context or with the incorrect definition in mind, a misinterpretation can be pressed. For a glossary of legal terms, click here.

The place where most contracts are broken is under the “representations and warranties” section. If one of the parties does not follow through with their guarantees, the contract can be dissolved and the opposing side can pursue the breaking party for damages.

Some useful tips

IV. Real-Life Examples

Contracts are pretty much everywhere; any legitimate, enforceable interaction will probably use a contract whether it is written, implied, unilateral (one-way promise), bilateral (mutual benefit), or forced by law. Do you own a cell phone? Then you are under contract. Even small, everyday could be considered contracts in a way. If someone posts a reward for a missing object, they are obligated by a sort of implied contract to pay the person who finds their object.

Having trouble starting your contract? Never seen one before? Here are some different categories of contracts for you to look at to help you get started:

• Real Estate Agreements
• Leasing, Rentals, or Tenancy Certification
• Employment Agreements
• Credit Collection
• Loaning and Debt
• Sale (merchandise or services)
• Cohabitation, Marriage, and Divorce
• Wills
• Arbitration Agreements
• Non-Competition Agreements
• Affidavits
• Permission for Use of Copyright