The Importance of Contract LawWord格式.docx

1、Chapter 1 Nature and Terminology1.1 Introduction Contract law shows what promises or commitments our society believes should be legally binding. It shows what excuses our society will accept for the breaking of such promises. And it shows what kinds of promises will be considered as being against pu

2、blic policy and therefore legally void. A contract may be defined as a promise enforceable at law. A promise is an undertaking that something will or will not happen in the future. Thus, a contract may be formed when two or more parties each promise to perform or refrain from performing some act now

3、 or in the future. The promises need not be in writing to constitute a contract, although some contracts must be in writing to be enforceable. On the contracts breach （a breach of contract occurs when a contractual promises is not fulfilled）, the breaching party may be subject to sanctions. These sa

4、nctions may include a payment of money （damages） to the nonbreaching party for the failure to perform. Under such circumstances, the breaching party may be required to render the performance promised in the contract.A contractual relationship involves the giving of a promise in exchange for either a

5、n act or anther promise. All contractual relationships thus involve promises. All promises, however, do not establish contractual relationships. For example, if your friend promises to go to the movies with you and then decides not to go, you cannot sue your friend for breach of contract. Although p

6、romises were exchangedto go to the movies togetherthe legal system will not expend resources to enforce these promises. In essence, contract law reflects societys determination of the kinds of promises that should be legally enforced.The use of contract principles to govern the relationships of thos

7、e who make promises to one another dates back thousands of years. Early in history the importance of contracts was recognized and given legal effect. The following chapters will explain how contracts are formed, how they are discharged, and what happens when they are not performed. The rules relatin

8、g to the formation, discharge, and breach of enforceable promises are called the law of contract. Society as we know it today could not exist without the law of contracts. The foundation for almost all commercial activity is the contract. The purchase of goods, such as automobiles, is governed by a

9、sales contract; the hiring of people to work for us to make repairs, by service contracts; the sharing of risks on our property, by insurance contracts. In short, we could not order our daily activities without contracts. Contract law is based on the common law and governs all contracts except when

10、the common law of contracts has been modified or replaced by statutory law or administrative agency regulations. Contract relating to services, real estate, employment, insurance, and so on generally are governed by general contract law. All contracts for the sale of goods, however, are governed by

11、statutory law in the United States particularly the Uniform Commercial Code （UCC）to the extent that statutory law has modified or replaced general contract law. In the discussion of general contract law in this unit, we indicated the areas in which the UCC has significantly altered common law contra

12、ct principles.Contracts for the international sale of goods between firms or individuals located in different countries are governed by the United Nations Convention on Contract for the International Sale of Goods （CISG，联合国国际商品买卖公约）. Chinese law relating to the sale of goods are contained in Chapter

13、 2 （Contract for Sale of Goods） of Contract Law of the Peoples Republic of China（中华任命共和国合同法，第二章，买卖合同）.1.2 The Function of ContractContract law is necessary to ensure compliance with a promise or to entitle a nonbreaching party to some form of relief when a contract is breached. By providing procedur

14、es for enforcing private agreements, contract law provides an essential condition for the existence of a market economy. Without a legal framework within which to plan, businessmen would be able to rely only on the good faith of others. Duty and good faith are usually sufficient, and most contractua

15、l promises are kept simply because keeping them is in the mutual self-interest of the promiser and the promisee. But when price changes or adverse economic factors make it costly for one of the parties to comply with a promise, duty or good faith alone may not be enough.Contract law provides a major

16、 part of foundation on which more specialized areas of the law have been built. A basic understanding of the principles governing contracts facilitates an understanding of the sales of goods; in the transfer of funds by check, draft, note, or electronic means; in relations between debtors and credit

17、ors; in relations among employers, employees, and agents; in the creation, operation, and termination of partnerships and corporations; in the regulation of trade and monopolies; and in transfers of property other than goods or by means other than sales or between parties who are not merchants. 1.3

18、Freedom of Contract and Freedom from ContractAs a general rule, the law recognizes everyones ability to enter freely into contractual arrangements. This recognition is called freedom of contract. But as the character of institutions and society changes, the functions of contract law and its enforcem

19、ent must also change, and, in fact, the right to a person to enter into a contract in the United States is no different than the right under current Chinese law. Such changes in contract law can be perceived today in the fact that certain types of agreements are no longer considered valid. For examp

20、le, illegal bargains, between one party with a great amount of bargaining power and another with little power are generally not enforced. In addition, certain contracts with consumers, as well as certain clauses within those contracts, are not enforceable, because they have come to be considered inc

21、ompatible with public policy, fairness, and justice. The law of contracts is broadening to include new controls on the manner of contracting and on the allowable terms of agreements. These controls are meant to provide freedom from contract for certain members of society who heretofore may even have

22、 been forced into making contracts unfavorable to themselves. 1.4 Basic Requirements of a ContractThe many topics that will be discussed in this unit on contracts require an understanding of the basic requirements of a contract and the processes by which a contract is created. The following list bri

23、efly describes these requirements. They will be explained more fully in subsequent chapters.1. Agreement. An agreement includes a valid offer and a valid acceptance. One party must voluntarily offer to enter into a legal agreement, and another party must voluntarily accept the terms of the offer.2.

24、Consideration. Generally, consideration is the inducement （reason, cause, motive or price） to a contract. Any promises made by the parties must be supported by legally sufficient and bargained for consideration.3. Contractual Capacity. Both parties entering into the contract must have the contractua

25、l capacity to do so; they must be recognized by the law as possessing characteristics that qualify them as competent parties.4. Legality. The contract must be made to accomplish some goal that is legal and not against public policy.These four requirements constitute what are formally known as the el

26、ements of a contract. Also important are possible defenses （that is, reasons why a party should not be awarded what he seeks in an action or suit） to the formation or enforcement of a contract. These including the following: 1. Genuineness of Assent. Apparent consent of both parties must be genuine.

27、2. Form. The contract must be in whatever form the law requires such as in writingif any special form is required. 1.5 Objective Theory of ContractThe intent or apparent intent to enter into a contract is of prime importance in the formation of the contract. This intent is determined by what is called the objective theory of contracts, not by the personal or subjective intent, or belief, of a party. The theory is that a partys intention to enter into a contract is judged by outward, objective facts as they