Contract law may seem like a simple endeavor, but as it lies at the very heart of the entire system of law and creates a foundation upon which society is built, it is anything but simple. It is common. It is necessary, but it is not simple. Yet understanding contract law is vital for many who wish to succeed in both their personal and business transactions.
Contract law is what makes an agreement between two parties enforceable. This means that one party can seek compensation for damages from the second party if there is a breach of contract or if they break the agreement both parties agreed to abide by. Without contract law, all voluntary agreements would be impractical and impossibly undependable.
There are a number of different types of contracts that can be put in place. Depending upon which type of contract is put in place, there are also a variety of problems that can occur to disrupt the satisfaction of both parties involved. Contract law also involves enforcement and the process of obtaining recompense for a breach of contract. In California, we have what we call the "covenant of good faith and fair dealing" that is sometimes referred to simply as the principle of good faith. This is an element that is often overlooked.
What is a Contract? A contract is a voluntary, private agreement to exchange things of value. For instance, a real estate contract at its most rudimentary promises the exchange of a specific amount of money for an unencumbered title to a specific piece of property.
The Good Faith principle is central to contract law. It is what most exchanges are based on: the exchange of cash for a smoothie at the nearest café, the exchange of services (like painting, pest control, landscaping, etc.) for payment when it is completed, the exchange of money for groceries, etc. These exchanges are almost always conducted quickly, efficiently and easily without legal assistance. So the vast majority of our contractual agreements are completed on the good faith and honesty of the people involved. In California, every contract is said to include the implied good faith and fair dealing covenant binding both parties to act in good faith and deal fairly. This means that by coming to a contractual agreement in the first place, both parties are automatically bound by the implied agreement that neither is entering the agreement as a means of cheating the other out of the benefit of the bargain being made with the exchange or contract.
As mentioned previously, most exchanges of goods, services, promises, etc. are completed without incident, but there are times when the simplest of exchanges can get out of hand. There are inevitably going to be exchanges that go wrong.
If you have been involved in a contractual agreement that did not go according to plan and need assistance either enforcing the contract or obtaining recompense for damages as a result of the other party's failure to abide by contractual terms, please get in touch with the experienced business and real estate lawyers at The Law Office of Retz & Aldover LLP as soon as possible.