Frequently Asked Questions

How do courts enforce contracts and what distinguishes valid contracts from invalid ones?

Courts enforce contracts by providing legal backing for agreements between contracting parties. This allows for legal redress in cases where a party breaches the terms of the contract. The focus of American contract law, derived from the common law and equity court system passed on from Great Britain, is to enforce contracts where enforcement is the most equitable course of action. However, courts may modify contracts if enforcement proves too harsh on one party. Contracts are divided into two categories for enforcement: valid and invalid. Valid contracts are enforceable, while invalid contracts are void. A valid contract must contain certain elements: agreement (offer and acceptance of terms), consideration, intention to uphold the terms, legal eligibility to be a party, formalization, and a legal purpose. If these elements are missing, the contract may be deemed invalid. The objective theory of contracts states that contracts can only be enforced if a reasonable observer during the contractual negotiations believes in the fairness of the terms of the agreement. This theory provides a benchmark for courts to compare the clauses in the agreement.