12 Dic CONTRACTS: KEY VOCABULARY
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Contracts: Key Vocabulary
First of all, it is important to note that the nouns Agreement & Contract are used interchangeably in the English language.
The first thing we should consider when talking about contracts is contract formation itself. In common law countries all law students learn that a valid binding contract is formed when the following four elements have been satisfied: offer, acceptance, consideration, and the intention to enter into contractual relationship.
This will be best explained through an easy example. Imagine that I have bought tickets to a concert, however, for whatever reason, I change my mind and decide to sell my tickets to somebody else. I am therefore making an offer to sell the ticket and, as such, I am the offeror; the person interested in buying the ticket will be the offeree; if they agree to buy the tickets for the price I have offered then we can say that they have accepted my offer or that there has been acceptance.
Once they have paid me the price of the ticket and I have given the tickets to them then we can say that there has been an exchange of consideration, in other words the exchange of something of value: one-party has obtained a benefit in terms of the receipt of the money that represents the price of the ticket, and the other suffered a detriment, in terms of having to pay that price in order to obtain the ticket.
However, the other party may not like the price that I have offered and may suggest a different (normally lower) price. This means that they rejected my original offer and made a counter offer. My offer may also come to an end in two other ways: first of all, if I give the other party a specific period of time to either accept or reject the offer and that time expires we can talk about lapse of time and the offer is no longer valid. Similarly, I can also change my mind and decide that I do want to go to the concert; I would therefore revoke my original offer and as long as I do it before the other party accepts it, there has been no valid contract formed.
In Common Law just as in Civil Law, in order for a contract to be legally binding and therefore enforceable in a court of law, it must fulfill certain requirements. One of these requirements is that both parties to the contract must have the capacity to enter into it; this means that they must both be of the age of majority (adults) and they must both be of sound mind; secondly neither party can exert any duress (undue pressure) in the process of negotiating that contract (by, for example, threatening the other party with some specific action); thirdly the object of the contract (also sometimes referred to as the subject matter) cannot be illegal (for example you cannot enter into a contract for sale of illegal drugs or to intentionally harm someone in some way).
Once a valid contract has been entered into, meaning signed or executed, it must be performed or complied with; we can also talk about the performance or compliance with contractual terms. The word terms refer to the provisions or conditions included in the contract; if the terms are not clear, they may have to be construed at a later time by a Court. The word term in singular refers to the length or duration of the contract; if the contract is of specific duration, in other words it contains an expiry date, when it reaches the date we can say that the contract has been performed or discharged.
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