Contracts

Do courts always enforce contracts as written, or are there circumstances when courts do not enforce contracts according to their terms?”Do courts always enforce contracts as written, or are there circumstances when courts do not enforce contracts according to their terms

According to Lunenburg, a contract is an agreement written by two people of sound mind so that they can be considered legally on a certain issues as required by the law. A contract defined in this manner is therefore composed of five elements. These are offer, acceptance, legal subject matter, consideration and proper form (1). A contract that does not satisfy these elements is considered to be invalid and not legally enforceable. Contract enforcement law provides for remedy in case of a breach and prevents businesses from violating its terms. In this regard, contracts are important for stability in business relationships, reducing the costs of transactions, and ensuring that parties involved are accountable. This memorandum is meant to determine whether courts always enforce contracts as written, and determine conditions under which courts may fail to enforce the contract terms.

In certain situation enforcement of a contract as per the written terms can lead to injustice. Courts must, therefore, listen to different facts presented and exercise flexibility in interpretation of the law to ensure fairness.

The first circumstance that can lead to failure to enforce a contract as written is provided under the doctrine of unconscionability. It provides flexibility in interpretation of law, if a contract is found to be oppressive, unfair or one-sided. The court in deciding the case of Jones v. Star Credit pegged its decision on Uniform Commercial Code 2-302 (1), which documents the doctrine of Unconscionability. The court argued that this legal provision allows it to avoid enforcing a contract that is found to be unconscionable, either in full or partially. Partial enforcement was interpreted as enforcement of a contract, with exemption of a clause that is unconscionable. The case in question involved a sales contract that gave one party unequal bargaining power in a credit transaction. The total amount that should have been paid was supposed to be $900. This differed with $600 from the retail price of the product. The court, therefore, ruled that the $600 payment, the plaintiff had already made, be considered as full payment (Miller 316).

Use of this doctrine has become so common following the higher increase of form contracts as compared to negotiated contracts. A form contract is composed of a written section together with a negotiated section. The written section specify the duration of the parties obligation to each other and the breadth of recovering damage in the event that a contract is breached. It also indicates the substantive body law under which the contract will be regulated. In these forms of contracts one party can be coerced to the contract by the other. Because, agreements in a contract are enforceable by law, one of the parties can create his own form of law to govern a transaction. As a result, a court will be obligated to enforce the law if the other party assents to a contract law by signing. This is regardless of whether such a party understood the terms. However, if the court finds a contract not to be unconscionable, then it has the discretion of negating from this obligation (Cicoria 6).

A court can also call upon the doctrine of substantial performance in justifying a decision not to enforce a contract as specified in the terms and conditions. This doctrine provides enforcement of a contract if one party performs substantially, in good faith, in fulfilling the contract terms. The key word in this doctrine is good faith. If one party fails to comply with the terms intentionally, then that amounts to breach of contract. The performance should also not deviate very much from what was promised. In addition, it should also provide similar benefits to those the contract promised (Cross 230).

The court is likely to rule that a contract has been substantially performed if the performance defect, omission or variance can be easily compensated or ignored as not important. The court therefore looks at all the facts presented in a case. However, the other party is entitled to compensation for damage caused for not fulfilling the complete performance.

Jacob & Young v Kent case is an example of a case that was ruled to have substantial performance. In this case, the defendant was accused of using the wrong pipe brands. Evidence presented indicated that inattention and oversight by the plaintiff subcontractor led to omission. This omission was, therefore, not intentional or fraudulent. The prescribed pipe differed from those that were used, by a manufacturer stamp that is fixed six to seven meter apart. Defendant architect is also in record to have inspected these pipes and never noted any discrepancies. The court used this evidence in judging that this defect was insignificant to the project. It also declared that an innocent, or trivial omission, is supposed to allow for compensation of the emerging damage and not necessarily to be interpreted as a breach of conditions (Cross 230).

A contract can also be avoided if the court finds that the agreement has genuine mistakes. For instance, California law of contract allows for rescission in the occurrence of a mutual mistake of law. However, such a mistake must be there during the period that a contract is drafted. It should also be substantial, mutual, and indicated with clear and persuading evidence. In addition, none of the party should be aware of the mistake before going into a contract (Miller 38). The case of Donovan v RRL Corporation provides an example of a mutual mistake of law. The law provided that an individual should sell motor vehicle at the price advertised. However, the court ruling for rescission found that the defendant not liable for the occurrence of mistake. Moreover, enforcement of the contract could have been unconscionable due to this mistake.

These arguments are not intended to convince the reader that a contract is not enforced as intended. Rather they give a scope of doctrines that a court can call upon in consideration of flexibility necessary to ensure fairness and justice to both parties. The presiding judge in the case of Jacob v Kent categorically stipulated things as they should be. Sangha & Moles quotes his words as, “the specifications of the contract become the law between the parties until voluntarily changed” (40). Therefore, any attempt to interpret the contract in different manner is illegal. The statute of fraud that can also be called upon in avoiding contract implementation has been challenged before. That it can be used by fraudsters in self protection. The courts of California are, therefore, in record to have called for its restricted use or total abolition (Miller 36). Therefore courts do not allow contract violation that would undermine achievement of a business environment that is devoid of uncertainty, unpredictability and lacking in reliability.

The case of Lucy v Zehmer is an example of a case in which court intervened to ensure full contract enforcement. The defendants, A.H. Zehmer and his wife Ida S. Zehmer, were required to meet the specific performance that amounts to contract enforcement. The court heard that the defendant willingly agreed to sell his piece of land to the plaintiff at $50,000. In his defense, A.H. Zehmer argued that he never intended to sell the farm but rather meant to joke that the complainant did not have such amount. Evidence presented in the court indicated that this contract had good faith offer, acceptance, and signed by both parties. Therefore, this ruling was pegged on those facts that were known and communicated between the two parties as opposed to defendant’s opinion (Carper et al. 392).

From these arguments we can deduce that a court is required to enforce contracts but not necessary as written if doing so would contravene the various doctrines discussed. However, for a court to accomplish this it must be evolutionary and malleable. In indicating this court obligation, Justice Obrien, while presiding the case of Dodson v. Shrader quoted Common law emanating from 1842 ruling of Justice Turley.

“The common law of a country will, therefore, never be entirely stationary, but will be modified, and extended by analogy, construction and custom, so as to embrace new relations, springing up from time to time, from an amelioration or change of society” (Bacon et al. 131)

Common laws are, therefore, supposed to help a society be a better place to live on. They must help to preserve justice, good order, harmony, and peace in a society (Bacon et al. 131). Therefore, to preserve these principles, courts exercise flexibility in contract enforcement to adapt to the specific conditions that prevails under a case.

Works Cited

Bacon, Charles W. & Morse Franklyn S. The Reasonableness of the Law. Beard Books. 2000

Carper, Donald L., McKinsey John A., & West Bill W. Understanding the Law, Ed.6. Mason, Ohio. Cengage Learning. 2011. Print

Ciciora, Cristiana. The Protection of the Weak Contractual Party in Italy vs. United States “Doctrine of Unconscionability” A Comparative Analysis. nd. Web.

Cross, Frank B. West’s legal environment of business: text and cases: ethical, regulatory, international, and e-commerce issues, Ed.6. Mason, Ohio, Cengage Learning. 2007. Print.

Cross, Frank B., Miller Roger LeRoy. The Legal Environment of Business: Text and Cases: Ethical, Regulatory, Global, and Corporate Issues, Ed. 8. Mason, Ohio, Cengage Learning. 2011. Print.

Lunenburg, Fred C. The Law of Contracts What Constitute a Contract? National Forum Journal 5 (1):1-5. 2011. Print.

Miller, Geoffrey P. Bargaining on the Red-eye: New Light on Contract Theory. New York University Law and Economics Working Papers. Paper 131: 1-60. 2008. Web.

Miller, Roger LeRoy & Jentz Gaylord A. Business Law Today: The Essentials, Ed.9, Mason, Ohio: Cengage Learning, 2010. Print.

Sangha, Bibi & Moles Bob. Can Contract Law Protect Individual Rights and Preferences? Bond Law Review, 10 (1): 39-57. 1998. Print.