Summary of the Proposed Study
This study establishes the impact of contract law on the economy of the country. The economy of a country is majorly composed of trade and employment. The two economic aspects, trade and employment, are greatly affected by laws of contract. For example, every kind of employment is regarded as a contract and all employees are expected to have employment contracts that can be enforced through the law. Purchases of goods and services are also supposed to be bound under contract law so that the parties involved in such transactions can be protected in case a party fails to honor the agreement. It is evident from this illustration that contract laws have a great impact on the country’s economy.
Purpose of the Study
This study intends to investigate the effects that contract law has on the economy of a country. Firstly, the study establishes the contract laws involved in the purchase of goods and services and how they affect the purchase agreement. Secondly, the study outlines the contract laws concerning the purchase of a property, such as a house, and how they affect the transactions involved in the acquisition. Lastly, the study investigates the contract laws that affect employment in the country.
Research Questions
To address all the major aspects of contract law and how they impact the economy of the country, several questions need to be formulated to guide how the study will be conducted. The following are the proposed questions:
- What is contract law?
- What are the major areas where contract law is applied in the country?
- How does contract law affect the country’s economy?
Research Methodology
This study will exclusively involve qualitative data; a literature review can be a sufficient methodology for data collection. As a result, it is proposed that the data required to answer the research questions be obtained through a review of relevant literature. To find the most valid and reliable information, the research proposes the exclusive use of academic sources, which include published books and peer-reviewed journal articles.
Relevant Background Literature
Contract law forms the core of the country’s system of law and provides the basis for the entire society. The economy of the country depends on, among other things, free exchange between buyers and sellers in the marketplace. The free exchange is made possible by contract laws, which ensure that every party involved in a transaction does not breach the agreement reached (Trebilcock and Leng 1537). Contract laws play a great role in the market as exchanges in the marketplace are carried out via voluntary agreements between individuals or organizations, which are considered legal persons by the law. Consequently, the voluntary agreement that forms the basis for a perfect market cannot be made possible without the force of the law of contract that is used to back it (Shiffrin 722).
The sets of enforceable rules that preside over the details, affiliations, and legality of deliberate agreements entered by two or more legal parties constitute the law of contract. These contracts include but are not limited to sales of property and goods, provision of services, ownership, and transfer of interests. In a marketplace, contract law is precisely defined as a set of promises and agreements that are recognized and enforced by the law (Collins 14). All these aspects are factors that directly affect the economy. This implies that contract law directly influences the status of the country’s economy both in the long run and in the short term (Shiffrin 724).
In a marketplace or free economy, there must be an offer proposed by a party and it must be accepted willingly by another party before it is treated as contract law. The offer can be expressed in writing, by way of conduct, or orally. However, the way an offer is made does not influence its enforceability under the law; it is the willingness of the person making the offer and the readiness of another person to accept it that count in its enforceability by law (Trebilcock and Leng 1537).
Before legal entities go into a pact, they normally engage in anticipatory discussions or an introductory consultation to ensure that offers and their approval are made and arrived at voluntarily. The issues discussed in the preliminary negotiations may not be included in the final contract. The offer is not regarded as an enforceable contract unless the price of the item under discussion is confirmed after it has been checked out. The acceptor, at this point, is expected to take the item and pay the total price as stipulated in the agreement. The agreement then becomes fully enforceable by law (Collins 35).
Apart from the aspects of offer and acceptance, another important requirement for a voluntary agreement to become an enforceable contract is a consideration. Consideration refers to the exchange of a valuable item, such as money, for goods, services, or property traded between the parties (Collins 58). Consideration is regarded as an essential factor under contract law because without it, the agreement is considered a mere promise. The item used as a consideration when reaching an agreement should have a monetary or economic value attached to it (Trebilcock and Leng 1547).
The last factor that is required to enable an agreement to become enforceable is the intention of both parties to create legal relations to bind their contract. This is mostly recommended in cases where transactions are made in a more relaxed and informal environment. In the case of a commercial transaction, it becomes obvious that the parties had the intention of creating legal relations; consequently, the transaction automatically becomes enforceable by law (Collins 67).
As evidenced by the above illustration, contract law applies almost everywhere in today’s life. The law of contract is applicable in a number of aspects that directly affect the economic growth in the country. The first instance where the law applies is in the employment sector. The law affects the way organisations employ individuals to work for them (Shiffrin 731). The law of contract compels every employee to ensure that his job is bound by an employment contract. An employment contract is a set of enforceable rules that protect the rights of an employee as well as those of the employer as far as job in question is concerned (Goldberg 238).
Another area where contract law is applied is in the marketplace where goods, services and property are exchanged. The exchange and sale of goods and services are the agreements that form the majority of the contracts that are enforceable by law. The law of contract that guards sale and purchase of goods and services should contain the relevant conditions and legislations that control the exchange. The contract should also contain the rights and obligations of the seller and buyer (Goldberg 239).
The mostly used laws of contract in case of the sale and purchase of goods include the Supply of Goods and Services Act and Sales of Goods Act. These laws mainly protect consumers against any kind of fraud. In many occasions, it is the consumers who fall victim to breach of contracts as most of them are ignorant of the sale contracts they enter into. The laws require that the sellers clearly mention the conditions and rights contained in an agreement of sale of a good or a service to ensure that consumers enter into an agreement that is fully known to them (Shiffrin 730).
The sale and purchase of property, such as a house, is another area where contract law applies. The contract involving the exchange of ownership of a property from the seller to the buyer is only considered complete when every party signs it to show that the agreement was done willingly. A contract for such exchange should contain the item whose ownership is being exchanged and its price, the terms of sales, and the date of completion among other relevant requirements (Shiffrin 737). After the money is paid and the exchange process completed, an attempt by any of the parties to disobey any item outlined in the contract is considered a breach of contract and is supposed to be dealt with by law (Goldberg 239).
Significance of the Research
This research offers an insight into how contract law impact businesses, which in turn affect the economic growth in the country. The study will explain the way a contract can affect business transactions. Business transactions involve two parties: one party makes the offer and the other one accepts it voluntarily. Once the transactions are complete and every party involved is satisfied, the agreement becomes an enforceable contract. This implies that contract law forms the basis for all business transactions and laws.
The study also explains the role played by contract law in acquiring property and starting business. A person planning to start a business must decide on the most appropriate form that it should take as each of them has different law requirements and imposable taxes. Acquisition of immovable property to be used in running the business is another area that is impacted by contract law. For that reason, the law of contract determines how a business is started and how the property used in running it is supposed to be acquired.
The findings of the research explain the way contract law is applied in resolving disputes that may result from agreements regarding sale of property or goods and services. Contracts that are entered during sales of property or goods are enforceable by law. This implies that any case of breach of contract is adequately addressed through the guidelines outlined in the law. As a result, contract law helps organisations settle disputes, which otherwise would adversely affect their businesses.
Anticipated Problems and Limitations
There are no major limitations that are expected to crop up during the study as the data required will be collected through literature review and there are a lot of academic sources that talk about the topic under study. The only problem that may be encountered is the difficulty in finding the pertinent sources as a lot of time is needed to find the books and journal articles with the most relevant information.
Works Cited
Collins, Hugh. The Law of Contract. London: LexisNexis Butterworths, 2005. Print.
Goldberg, Victor P. Framing Contract Law: An Economic Perspective. Cambridge, MA: Harvard University Press, 2006. Print.
Shiffrin, Seana Valentine. “The Divergence of Contract and Promise.” Harvard Law Review 120.3 (2007): 708-753. Print.
Trebilcock, Michael, and Jing Leng. “The Role of Formal Contract Law and Enforcement in Economic Development.” Virginia Law Review 92.7 (2006): 1517-1580. Print.