IRISH BUSINESS LAW
Contract Basics
Contracts are legally binding agreements that are enforceable in a court of law. It is important to remember that not all agreements between two parties are legally binding contracts. There are certain requirements applied to contracts, such as an offer, acceptance, consideration and legality of purpose. An oral contract can be enforceable; however, the obvious problem is proof. There are some contracts, ie, real estate transactions, which must be in writing to be enforceable. This is a requirement of the Statute of Frauds, 1695.
An offer is plan to make a transaction, and must be made to another person and be held open until one of four things has happened: the tender is accepted, it is retracted, it is rejected, or it has expired. A counteroffer will close the original offer. Some terms in a contract must be specifically defined because they identify the basic obligations of the contract. These things can include a price, a quantity, or a description. An acceptance is when the other person acknowledges the offer and, subsequently, accepts the offer. The acceptance of the offer must comply with the terms outlined in the offer. Consideration is the bargaining process that defines the legal benefits of both parties and from one person or party to another. Consideration generally takes place in the form of monetary exchanges, property, or services.
Other requirements of a contract include competence, legality, and consent. Competence refers to the legal capacity of the parties to make a contract. This, in general, means that all parties involved in the contract are of sound mind and at least 18 years of age. Consent in a contract means that all parties involved in the contract agree to the contract's terms. It does not mean that you have to know what is said in the contract. Legality refers to the requirement that a contract must be legally enforceable.
The basis of contract law is the freedom citizens have to make contracts. This idea is the foundation of our legal system and of enterprise. It is through contracts that citizens are able to govern and control commercial relationships. Our freedom to make contracts allows us to construct contracts to our specific needs, and adapt contracts for the marketplace and the changes therein. A contract gives contracting parties an opportunity to reduce the risk of transactions.
Most contracts used in for-profit transactions have clauses that limit the responsibilities of a company. A general restriction might be the prohibiting of consequential damages. A clause like this limits the liability of a business if its service or product fails to meet conditions of the contract. If there is not a clause of this type, the financial liability of the company is, in theory, limitless.
Contracts can be difficult to understand and difficult to draft properly in order to protect your rights. it is always advised that you call our offices and arrange a consultation to go over your contracts.
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