PERSPECTIVES ON CONTRACT LAW

In essence, a contract is an agreement enforceable by law. We all enter into many agreements that are not legally enforceable. For example, you and I can strongly agree that a certain movie is the worst one we have ever seen but our agreement is not enforceable in court. Contract law provides a framework for determining which of our agreements are enforceable. Three perspectives are useful when thinking about contract law. First, there is a global perspective. In the global world of business, the rule of law is critically important when making business decisions. No legal rules are more important than contract law because contracts establish your rights and duties in business deals. Your first question when making investments in any country should be: Will my contract rights be respected and enforced in this country?Second, from a company perspective, contracts are the key to business success. All other company activities—accounting, marketing, finance, strategy, etc.—are for naught if your contracts are not profitable. Within companies, value is created during contract negotiations and companies fail when these negotiations do not produce successful results.Third, from a personal perspective, contracts (both written and unwritten) permeate our daily lives. Whether these contracts involve the simple purchase of a meal or more complex transactions such as buying a house, they represent an important aspect of our interactions with other humans.Because contracts are so common in our business and personal lives, in most cases we must act as our own lawyers when negotiating them. In other words, we cannot have a lawyer at our elbow throughout the day to advise us whenever we enter into a business or personal contract. As a result, we need a fundamental understanding of the sources of contract law and the four key elements that determine whether a contract has been formed. We now turn to these topics.

UNDERSTAND THE SOURCES OF CONTRACT LAWWhen you are involved in a negotiation and a contract law question arises, where can you (or an attorney) find the answer? Two key questions determine the source of contract law. First, are we in civil law or common law country? Second, what type of contract are we negotiating?

(Negotiating for Success: Essential Strategies and Skills By George Siedel, University of Michigan Copyright 2014 George Siedel Published by Van Rye Publishing, LLC at Smashwords page 62)