Contracts
A contract is a promise or agreement made between two or more parties, which is enforceable by law. Contracts are formed when parties make an agreement to provide services, sell and purchase goods, or perform duties for something in return. To be legally binding, the contracts must be exchanged for mutual or adequate consideration and should define the rights and obligations of the parties involved.
Consideration to a contract is what one party will get from the other in return for performing the obligations set forth. If one party makes a promise and the other offers nothing in return, the promise may not be enforced for lack of consideration. Some states no longer require consideration for certain types of promises; however, promises made in the context of business relationships are usually made for mutual consideration.
Modern business could not exist without contracts and because they are enforceable by the courts, parties who enter into contracts can rely on them to structure their business relationships. Most business transactions involve commitments to furnish goods, services, or real property, and are assured in the form of contracts. Use of contracts in business affairs ensures, to some extent, the performance of an agreement.
The law provides remedies for breaches and recognizes performance of a contract as a duty. If one party meets its contractual obligations and the other party does not, the nonbreaching party is entitled to sue and receive relief through the courts. Recompense is generally provided in the form of monies, which the nonbreaching party would have enjoyed, had the cont ...