Contract law has many purposes but the central one is to
support and control the millions of agreements that collectively make up the market economy, and hence operates in the context of dispute resolution mechanism. Besides it empowers the parties to make agreements that the law will enforce.The basic purpose of contract law is to
provide a framework within which individuals can freely contract. The contract can legally bind the contracting parties by the creation of laws which are applicable only to the very individuals that create the contract and its subsequent legally binding laws.
What is the purpose of a contract and why are contracts important?
- 1. Contracts serve as a record of rights, responsibilities, and obligations ...
- 2. Contracts make private promises legally enforceable ...
The
objective theory of
contracts holds that an agreement between parties is legally binding if, in the opinion of a reasonable person who is not a party to the
contract, an offer has been made and accepted. This legal concept has become the standard for determining the intent of parties in an agreement since the late 19th century.The law of contract
prohibits the enforcement of contracts that appear to be too good to be true. Business contract law serves to prevent outrageous claims from being enforced. This interpretation of the law of contracts is known as the Objective Theory of Contracts.
