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What is a "contract"?

03 Jun 2014

What is a contract? A contract is a promise made from one party to another to do something or to refrain from doing something in the future. A contract is formed when an offer is accepted and something of value is exchanged.

The law of contracts is complex and nuanced. However, one thing is clear: holding people to their promises is fundamental to a civilized and well-structured society. Consider a world where people would make preparations, spend substantial sums of money and commit themselves to a certain outcome only to be told by the party making the promise that it would no longer be fulfilling its end of the bargain. It is quite evident that such a society would collapse quickly into an unproductive and disorganized state.

Contrary to general public perception, while certain contracts have to be formed in writing, a contract can be formed either by way of an oral agreement or even by the implicit conduct of the parties involved. Generally speaking, only those parties whom the law regards as part of the agreement can demand its enforcement and insist on its terms. This exclusive right to the enforceability of contract terms is called “the privity of contract” doctrine. However, in certain circumstances, our law recognizes that exceptions are allowed.

It is impossible to describe the universe of contract law in a few paragraphs; however, one thing is clear: it is often the case that where contractual disputes arise there is always more than one side to the story.

The above article is for general information purposes only and does not constitute legal advice. If you are an employer or an employee and have concerns with regard to the foregoing issues, please make an appointment with one of our lawyers or a qualified legal practitioner elsewhere.