Business Law: What Is The Legal Definition Of “Contract?”

We all have a basic understanding of what the term “contract” means. But it’s more complicated when taken from a business law standpoint. It can act as an umbrella term for other elements such as violation of public policy, mutual consent, offers, acceptances, mutual consideration, performance, delivery, good faith, etc. How do all these elements make a contract? Keep reading to find out.

According to Cornell’s Legal Information Institute, the legal definition of the term “Contract” is: “An agreement between private parties creating mutual obligations enforceable by law. The basic elements required for the agreement to be a legally enforceable contract are: mutual assent, expressed by a valid offer and acceptance; adequate consideration; capacity; and legality. In some states, elements of consideration can be satisfied by a valid substitute. Possible remedies for breach of contract include general damages, consequential damages, reliance damages, and specific performance.”

Usually, people need to know the definition of the word “contract” for one of two reasons: one, they won’t be able to fulfill their legal obligations determined in the contract. Or two, they have decided it would be in their best interests to voluntarily break the terms described in the contract and would like to know the legal consequences.

Any business law attorney will explain to a client that the best option is to fulfill the terms of a contract once signed. The best way to avoid breaking a contract is to read the terms carefully and renegotiate any terms that might be difficult to fulfill. A business law attorney can help clients do this.

Of course, not all contracts are created equally. For example, the lease you sign with a landlord leaves you with contractual obligations. But the law providers renters with many options if they cannot meet the terms of the lease. Not sure if that applies to you? Find an attorney to find out for sure.

What is the legal definition of “breach of contract?” 

“Breach of contract law stipulates that a breach of contract happens when one of the parties to the contract fails to live up to his part of the agreement. A breach of contract varies in severity and can be partial, material, anticipatory, or fundamental.”

Before you can argue breach of contract in a court of law, several things must be proved first. These include: that both parties understood the contract was valid (and that it was), that the contract was breached, and that one party failed to meet contractual obligations. Also, the party that breached the contract must be contacted and informed that this occurred. 

There are several types of breach of contract. They include the “minor” or partial breach, the anticipatory breach, the material breach, and the fundamental breach. These represent different levels of contractual breach. Depending on the level, the damaged party might be able to more successfully sue in court. 

Regardless of which party you represent in the contract, it is beneficial to obtain the services of a business law attorney before proceeding — especially if you expect the case will wind up in court.