What is a contract?
It is commonly believed that a contract has to be made in writing to be legally binding. This is not true. A contract can be formed in a number of ways including in writing, verbally or by course of conduct. However, in the absence of a written document, the terms of a contract can be difficult to prove and evidence of both the terms and the intention to create a contract will need to be carefully considered. Similarly, the terms of a contract can be varied in a number of ways, meaning a signed contract may not be the only relevant document to consider.
A contractual dispute may arise when the parties disagree as to the existence of a contract; the terms of a contract; or because one party believes the other has committed a breach of contract.
Contractual disputes can end up in legal battles, leading to the damaging of reputations and commercial relationships.
Is the contract valid?
For a contract to be effective, all parties involved must understand and agree to the contract’s terms and conditions and know what is expected of them. Without a mutual understanding and agreement a contract could be contested.
To form a legally valid contract, an offer must be made and accepted between the parties and some form of consideration must be given (for example payment). All parties will agree to certain terms, such as payment and the provision of goods or services. The best way to avoid disagreements over the terms of a contract, particularly in the case of a commercial contract, is to have it drawn up or reviewed by a legal professional before it is entered.
Types of contractual disputes
Contractual disputes can vary in nature depending on whether they involve clients, staff or business partners.
Common examples of disputes include:
- Disputes as to the existence of a contract
- Disagreement as to the terms and / or conditions of a contract
- Failure to adhere to the terms of a contract
- Misunderstanding over the difference between an “invitation to treat” and an offer
- Ambiguity or errors within the contract’s terms
- Variation of the terms of a contract
- Fraud
If a party doesn’t uphold their duties as stated in a contract they will be in breach of contract and a legal remedy may be sought.
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