Why should the law give legally binding effect to those things as we know contracts?

Question

Much appreciation!

Answer 1

Because it promotes business. Businesses need to rely on the agreements and promises of those they do business with, in order to manage their risk.

Contracts are a way of defining the risks, and obligations, of each party. That's why they are voluntary, and why they can be set aside as unconscionable if the risks are deliberately hidden.

By enforceing contracts in civil court, the court provides a remedy (usally in the form of monetary damages) if someone broke their promise. Why? Because if businesses could not predict or depend on who would follow through, there would be no way to manage their risk of loss, and nobody would be held accountable for promise they make.

Without contracts, we'd be back to face-to-face barter and that doesn't work well for a complex society.

Answer 2

This is a legal question. First you have to determine if what you have is in fact a contract, by law (which varies from state to state).

To have a contract you have to have an offer, unconditional acceptance of that offer, and consideration for that offer. Without all three you do not have a contract.

The reason that we give them binding effect is so that people can rely on these contracts without putting themself in harm.

Example: I contract with a company to sell them 200 Computers and set them up for them for 1250 a computer. I then contract with Apple Computer to buy 200 Computers for 1000 a piece. If either falls through I am screwed.

Answer 3

Because contracts form the backbone of a society. The deals which take place in the money markets, the stock exchanges and the commodity markets of the world are based on contract. If dealers could not rely on contracts, then our whole economic structure would collapse. When you enter into a contract of employment, it is on the understanding that each side will honour its part of the agreement and it is in reliance on that that you slave away in the expectation, rather than hope, of being paid at the end of the month, while the employer can be confident that you will turn up each day and help oil the wheels of his business by your endeavours. When I let you take possession of a piece of property which I own, it is in reliance on the fact that you will pay me the agreed rent and treat my property in a correct manner, while you rely on me not to interfere in any way with your right to live there as agreed during the term of our agreement. And so it goes on. Most of life's transactions, big and small, will have some form of contractual basis. It is vital for the law to give effect to these agreements for the survival of civilisation as we know it.

Answer 4

fact is, alot of the time it doesn't!

for example a prenuptual agreement is a legally binding contract.

so let's say a wealthy man marries a poor woman but he's a smart guy, so him and his lawyers draft up a prenup that says anything he went into the marriage with is his and anything she went into the marriage with is hers. He gets everything, She gets nothing. They both sign it, It's a legal contract.

But in the state of new jersey law dictates that any profit made by either one of them is legally split between them 50-50 in the event of divorce, even if she had nothing to do with his buiseness had no job and signed a contract saying that this wouldn't be so!


in other words a contract is an agreement, but you hafta be careful when drafting one up, because there are alot of laws out there that people aren't aware of, and if your contract says anything that is contradicted by law, It won't hold water in court!

Answer 5

Consider what would happen if it didn't! It would be a step towards chaos.