What should you be careful about when entering into a contract?
Look at the crucial elements of a contract and make sure that somebody would not invalidate your Contract.
What is a contract?
A contract, in the simplest of terms, is a promise. Though not every promise is legally enforceable, eg. a promise to attend your friend’s birthday party would not be legally enforceable, a contract is a promise that is legally binding and legally enforceable. Not all agreements are contracts, whereas all contracts are agreements. This would mean that in case of a breach of Contract by one party, the other party has a right to pursue the legal remedies arising from the breach of Contract.
A contract can be unilateral or bilateral;
- Unilateral – This is a contract made by a single party in exchange for some action against an unidentified person, such as declaring a reward to find a stolen item.
- Bilateral: Bilateral Contract, as the name suggests, is a contract entered into between two parties. These are the most usual forms of contracts.
Is an oral contract enforceable?
Yes, with some exceptions given under the Statute of Frauds, the Contract can either be oral or written. We enter into oral agreements almost every day, without even realizing it. Once such an example is when you place an order in a restaurant, you enter into an oral contract to pay the invoice for the ordered items. Realize that this agreement, even if oral, has the elements of a contract.
However, it is hard to prove the existence of an oral contract, and it is advisable to have a written agreement with all the elements of a contract for all the necessary transactions.
Statute of Frauds restricts the purview of oral contracts. It makes it mandatory to have a written and signed an agreement with all elements of Contract for the exchanges, actions, and contracts enlisted in the Statute of Frauds.
What are the elements of in Contract?
- Capacity – A person who enters into a contract must have a legal ability to enter the Contract. For natural persons to enter into a contract, a person must have attained the age of majority, which is 18 years in Canada. The person must also be of a sound mind while understanding all elements of a contract and entering into it. If a party to the Contract is an artificial person such as a company or an estate, the capacity to contract rests with the person who has the authority to bind the company, estate of any other artificial person.
- Offer – This is the manifestation of willingness to enter into a bargain with another party. This is usually the first step towards having a contract in place.
- Acceptance – When an offer is accepted, there results in a contract. Acceptance is an unconditional willingness to be bound by request. Acceptance mirrors the conditions of the offer. If there is any variation communicated from the party to which the offer was earlier made, the communication would not be an acceptance but a counter-offer. In the counter-offer case, the party who initially made the offer is to accept or decline the counteroffer.
- Consideration: There can be no contract without consideration. Consideration is something of value given in exchange for a promise. A contract would clearly state what is being sought, and for what consideration.
- Mutual Agreement: This is an essential element of a valid contract. For a contract to be valid and legally enforceable, the parties to the Contract must agree on the same terms in the same sense. If there is any confusion concerning any of the terms, article, or consideration, where the parties to the Contract interpret it in a different purpose, it could invalidate the Contract.
- Legality: For a contract to be valid and legally enforceable, the terms and elements of a contract should be legal in all aspects. The Contract should be for a legal objective, procured via legal means, and executed legally. Any illegality in the object, procurement, or execution might result in the Contract being void, which could not be legally enforced.
What if you did not intend to have a contract?
Not all agreements are intended to be legally binding. The court will consider the relationship between the parties to determine the intention to form a contract. It is advisable to consult a lawyer for an analysis of the purpose relating to the contracts.
On what other grounds can a contract be invalidated?
Some of the additional grounds where the Canada Court will not enforce the Contract are as under:
- Misrepresentation – Where one party intentionally misrepresents specific facts that are essential and material to the Contract.
- Mistake – Where there is a mistake, but unintentional. Suppose you believe something to be true when it is not, and that is no.
- Duress – When someone uses threats or violence to intimidate the other party to sign a contract.
- Undue Influence – When someone applies pressure on the other party to sign a contract.
- Frustration – Where the Contract cannot be performed for reasons beyond the control of the parties.
There may be some other grounds, which may depend on the facts of each case. A legal professional will be able to guide you better on all the bases—the essential elements of a contract and where the Contract can be invalidated if you need it.
What are your remedies in the case of breach of Contract?
As you know by now that the Contract can be legally enforceable, numerous remedies can be ordered by the court.
- Specific performance – The court can order the party to breach the Contract to perform their obligations as per the Contract.
- Monetary damages can be awarded to the innocent party.
- The court may order a party not to breach the Contract.
- The court may rescind the Contract and place the parties in a position as if there had been no contract. Rescission is a remedy often used where a contract is found to be voided, such as in cases of misrepresentation, mistake, duress, undue influence, or unconscionability.
If you need help to develop or review a contract, call Juzkiw Law Firm. We have expertise and knowledge about Canadian Law. We will help to include the correct elements of a Contract. Call us today – 416221-2221
Disclaimer – The information on this site is provided for informational purposes only and should not be construed as legal advice on any subject matter. It would help if you did not act or refrain from acting based on any content included in this site without seeking legal or other professional advice.