Contract Law: Back 2 Basics, by Neil Bowyer

As I write this article, I cannot help but wonder at how many of us are guilty of ticking that ‘I have read and agreed to the terms and conditions’?box when we buy goods and/or services online without having actually read the terms and conditions to which we are agreeing.

In most cases, we understand when we have entered into a contract with someone – we tick a box or sign a document and everyone knows they have just entered into some sort of contract but as lawyers, we often hear “I didn’t sign anything” or “It was all verbal, I never received any documents” and this can, unfortunately lead to some confusion as to whether there is in fact an agreement in place and if so, whether parties can be deemed to be bound by that agreement and the options they have if things go wrong and they need to look at some kind of remedy.

The intention of this article is to strip some of the complexities of contract law back to basics and dispel some of the misunderstanding around verbal contracts.

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The Essential Elements

In order for us to determine whether a contract exists between parties, we need to look at whether the essential elements required for the formation of that contract are present.

These elements are:

• There must be an?agreement?between the parties – this is established by considering whether one party has made an offer to the other and whether that party has accepted the same.
• Each party must provide?consideration?to the other – this refers to each party giving something of value to the other and can most typically be seen in one party handing over money in exchange for the purchase of an item or service.
• The parties must?intend to create legal relations?with one another – this is essential as entering into a contract carries certain rights and obligations on each party and as such, each party must be aware of their duties under the contract prior to entering into it, as once the contract is formed, they are bound by its terms until such time as the contract is performed or otherwise terminated.

If any one or more of the above are missing, it can raise questions as to whether a contract exists between the parties. This, in turn, can lead to questions as to rights, obligations and remedies available to parties if there is some uncertainty as to whether they are in fact engaged in a contractual relationship or not.

It is generally advisable that, if you are considering entering into a contract with someone, you look to agree the terms of that contract and formalise the same by drawing up a written document. This provides certainty between the parties as to their contractual rights and obligations but also any remedies that may be available to them in the event of breach.

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Verbal Contracts

Whilst it is generally advisable to draw contracts up to provide certainty, this does not always happen. The question then becomes one of whether a contract exists at all and if so, what are the terms of that contract and can those terms be enforced and/or any form of remedy be sought in the event of breach.

Despite sometimes being portrayed to the contrary, verbal contracts can be valid contracts (as long as it can be established that the essential elements are satisfied). This means the terms of that verbal contract can be relied upon and enforced in the event of breach.

The drawback of verbal contracts is that, as there is nothing in writing upon which the parties can fall back on in the event of a dispute, it can often be unclear as to what was agreed, especially if a significant period of time has passed between the contract being entered into and the dispute coming about. This can present challenges to innocent parties, who may be unable to accurately recall what was agreed and/or may be unaware of the fact that they may be able to seek some kind of remedy against the other party.

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When It All Goes Wrong

Whilst parties to a contract (be it in writing or verbal) will usually do all they can to promote the success of the contract, the reality is disputes can arise. In such cases, parties should be aware of the various remedies available to them. Remedies can vary, depending upon the severity of the breach but most typically, you would be looking at a money claim for “damages”, being an award of monies designed to place the innocent party in the position they would have been in, had the contract been performed successfully.

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How We Can Help You

At Bradley Haynes Law, we understand the importance of successful contractual relationships, whether they be between consumers and the providers of goods and/or services or between businesses.

We also understand the impact contractual disputes can have upon parties – whether it be the emotional strain caused by the dispute or financial loss suffered as a result of breach.

Bradley Haynes Law is home to both a dedicated?Corporate?and?Commercial?Team and a specialist?Litigation and Dispute Resolution?Team. Thanks to this, the firm can assist on every stage of a contract’s lifetime – whether you are looking to negotiate and draw up a contract to promote certainty, so you know exactly where you stand through to representing you in the event of a dispute or breach.

So if you are thinking about entering into a contractual relationship with someone or are in need of support regarding a contractual dispute, get in touch with the team at Bradley Haynes Law today by calling us on?01905 900 949, or by emailing us via?[email protected].