Contract

Introduction
The definition of a contract
Contract v. agreement
Requirements for a valid contract
Void and voidable contracts
Unenforceable contracts
Breach of contract

Contract
A legally binding agreement between two or more
parties which the court will enforce

Agreement an exchange of promises; not every
agreement is a contract

Contract a legally enforceable agreement the
agreement that generates rights and obligations that
may be enforced in the courts

Contract and agreement
The law does two things in transforming an
agreement into an enforceable contract:
1. It determines whether the contract meets all
the requirements of the law
2. The law, and not the contracting parties, has
the final say on whether there is a
contractual obligation and what the scope of
the obligation is
Express and implied terms
Express terms: what the parties said or wrote
Implied terms: terms that have not been
agreed by the parties, but the law makes
them part of the contract anyway
Requirements for a valid contract
1. The parties must possess legal capacity to enter contract
2. One party must have made a binding offer, and the other one
has to accept it
3. The contract must be supported by consideration
4. The resulting agreement must have been a genuine one
5. Some contracts must be made in a particular form
6. The object of the contract must not be disapproved of by the
law

Legal capacity
Parties must be competent
Natural persons: age of majority (consent),
mental capacity
Legal persons: properly registered
companies

Offer and acceptance
One party must have made a binding offer to
the other, and the offer must have been
accepted
Such an offer must be binding; parties must
accept legal consequences.
In legal terminology, an offer is a statement of
willingness by the offeror to enter into a
contract if the other party accepts all the
terms of the offer
Consideration
Every contract must be supported by
consideration (the court only enforces a
bargain, not a one-sided promise).
The doctrine of consideration: any promise
not supported by consideration is
unenforceable.
If the party that makes a promise gets
nothing in return, the contract is
unenforceable: each party must benefit.
Genuine agreement
The resulting agreement must have been a
genuine one
The contract must reflect the actual exchange
of promises, not a false one
Contracts in particular form
In certain exceptional cases, the contract must have
been made in a particular form
- Marriage
- Contracts which must be in writing: a transfer of
shares, an assignment of copyright, a contract to pay
someone elses debt...
- To enforce one of these contracts, a claimant must
produce a writing signed by the other party that
contains evidence of the contract
The object of the contract
The object of a contract must be approved of
by the law
- f.e. to take a contract on the rival is not a
contract in law
Such an agreement is not legally enforceable
Void contracts
Any contract that lacks one of essential
requirements
It does not give rise to any legal rights or
duties
It does not exist as far as the law is
concerned
Voidable contracts
Valid to start with, but may be avoided at the
option of one of the parties
A contract affected by a flaw (fraud, duress,
misrepresentation, undue influence)
F.e. The doctrine of duress allows a party to
get out of a contract when he was forced to
enter into contract by threats from the other
party
Unenforceable contracts
Contract that is valid in all respects, but
cannot be enforced by an action in law
because the party wishing to enforce it lacks
some kind of evidence (evidence in writing)
Breach of contract
Contract typically creates an obligation to do
or avoid doing something, or to pay a sum of
money
Breach of contract is the refusal or failure by
a party to a contract to perform an obligation
imposed on them under the contract
If one party does not do what they have
promised to do, they are in breach of
contract
The injured party is entitled to a legal remedy
Remedies for breach of contract
Equitable remedies:
quantum meruit, as much as he deserves
for partial performance;
Specific performance an order to make a
party perform his obligatons under the
contract
Injunction a court order to stop someone
breaching a term of the contract
Damages
The aim of damages in contract law is to put the
claimant in the position he would have been in if the
contract had been performed properly
Damages are designed to compensate for the loss
one has suffered
Expectation damages
Unliquidated damages the court decides how
much will be awarded in damages
Liquidated damages parties decide in advance
Vocabulary
Binding agreement obvezujui sporazum
Contracting parties ugovorne strane
Natural person fizika osoba
Legal person pravna osoba
Valid contract valjani ugovor
Void contract nitav (nitetan) ugovor
Voidable contract pobojan (ponitiv) ugovor
Copyright autorsko pravo
Breach of contract raskid ugovora

Vocabulary revision
Fill in the blanks with the most appropriate words from the list below:

consideration, sue, obligation, illegal, breach, fraud, mutual, capacity

A contract is an agreement that creates a binding
_________________ upon the parties. The essentials of a contract
are as follows: _________________ agreement, a legal
________________, which need not be financial; parties who have
legal ________________ to make a contract; absence of __________
or duress; and a subject matter that is not __________________ or
against public policy.
In case of a _____________ of contract, the injured party may go to
court to __________ for damages, for injunction, or for specific
performance if financial compensation would not compensate for the
breach.
Answer key
A contract is an agreement that creates a binding
obligation upon the parties. The essentials of a
contract are as follows: mutual agreement, a legal
consideration, which need not be financial; parties
who have legal capacity to make a contract; absence
of fraud or duress; and a subject matter that is not
illegal or against public policy.
In case of a breach of contract, the injured party may
go to court to sue for damages, for injunction, or for
specific performance if financial compensation would
not compensate for the breach.