The examples and perspective in this article deal primarily with common law and do not represent a worldwide view of the subject. Please improve this article and discuss the issue on the talk page. (December 2010)

A contract is an agreement entered into voluntarily by two parties or more with the intention of creating a legal obligation, which may have elements in writing, though contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific performance of the contract or an injunction. Both of these remedies award the party at loss the "benefit of the bargain" or expectation damages, which are greater than mere reliance damages, as in promissory estoppel. The parties may be natural persons or juristic persons. A contract is a legally enforceable promise or undertaking that something will or will not occur. The word promise can be used as a legal synonym for contract.^[1], although care is required as a promise may not have the full standing of a contract, as when it is an agreement without consideration.

Contract law varies greatly from one jurisdiction to another, including differences in common law compared to civil law, the impact of received law, particularly from England in common law countries, and of law codified in regional legislation. Regarding Australian Contract Law for example, there are 40 relevant acts which impact on the interpretation of contract at the Commonwealth (Federal / national) level, and an additional 26 acts at the level of the state of NSW. In addition there are 6 international instruments or conventions which are applicable for international dealings, such as the United Nations Convention on Contracts for the International Sale of Goods (Vienna Sales Convention)^[2]

Origin and scope[link]

Contract law is based on the principle expressed in the Latin phrase pacta sunt servanda, which is usually translated "agreements must be kept" but more literally means "pacts must be kept".^[3]

Contract law can be classified, as is habitual in civil law systems, as part of a general law of obligations, along with tort, unjust enrichment, and restitution.

As a means of economic ordering, contract relies on the notion of consensual exchange and has been extensively discussed in broader economic, sociological, and anthropological terms (see "Contractual theory" below). In American English, the term extends beyond the legal meaning to encompass a broader category of agreements.^[4]

This article mainly concerns the common law. Such jurisdictions usually retain a high degree of freedom of contract, with parties largely at liberty to set their own terms. This is in contrast to the civil law, which typically applies certain overarching principles to disputes arising out of contract, as in the French Civil Code.

However, contract is a form of economic ordering common throughout the world, and different rules apply in jurisdictions applying civil law (derived from Roman law principles), Islamic law, socialist legal systems, and customary or local law.

Elements[link]

At common law, the elements of a contract are offer, acceptance, intention to create legal relations, and consideration.

Mutual assent[link]

At common law, mutual assent is typically reached through offer and acceptance, that is, when an offer is met with an acceptance that is unqualified and that does not vary the offer's terms. The latter requirement is known as the "mirror image" rule. If a purported acceptance does vary the terms of an offer, it is not an acceptance but a counteroffer and, therefore, simultaneously a rejection of the original offer. The Uniform Commercial Code notably disposes of the mirror image rule in § 2-207, although the UCC only governs transactions in goods in the USA.

Offer and acceptance[link]

The most important feature of a contract is that one party makes an offer for an arrangement that another accepts. This can be called a concurrence of wills or consensus ad idem (meeting of the minds) of two or more parties. The concept is somewhat contested. The obvious objection is that a court cannot read minds and the existence or otherwise of agreement is judged objectively, with only limited room for questioning subjective intention: see Smith v. Hughes.^[5] Richard Austen-Baker has suggested that the perpetuation of the idea of 'meeting of minds' may come from a misunderstanding of the Latin term 'consensus ad idem', which actually means 'agreement to the [same] thing'.^[6] There must be evidence that the parties had each, from an objective perspective, engaged in conduct manifesting their assent, and a contract will be formed when the parties have met such a requirement.^[7] An objective perspective means that it is only necessary that somebody gives the impression of offering or accepting contractual terms in the eyes of a reasonable person, not that they actually did want to form a contract.

The case of Carlill v Carbolic Smoke Ball Company^[8] is an example of a 'unilateral contract'. The term unilateral contract is used in contract law although ultimately there is an offerer and an offeree and a consideration (which may be an act), and in Australian Mills v The Commonwealth^[9], the High Court of Australia considered the term "unscientific and misleading".^[10] Obligations are only imposed upon one party upon acceptance by performance of a condition. In the United States, the general rule is that in "case of doubt, an offer is interpreted as inviting the offeree to accept either by promising to perform what the offer requests or by rendering the performance, as the offeree chooses."^[11]

Offer and acceptance does not always need to be expressed orally or in writing. An implied contract is one in which some of the terms are not expressed in words. This can take two forms. A contract which is implied in fact is one in which the circumstances imply that parties have reached an agreement even though they have not done so expressly. For example, by going to a doctor for a checkup, a patient agrees that he will pay a fair price for the service. If one refuses to pay after being examined, the patient has breached a contract implied in fact. A contract which is implied in law is also called a quasi-contract, because it is not in fact a contract; rather, it is a means for the courts to remedy situations in which one party would be unjustly enriched were he or she not required to compensate the other. For example, a plumber accidentally installs a sprinkler system in the lawn of the wrong house. The owner of the house had learned the previous day that his neighbor was getting new sprinklers. That morning, he sees the plumber installing them in his lawn. Pleased at the mistake, he says nothing, and then refuses to pay when the plumber delivers the bill. Will the man be held liable for payment? Yes, if it could be proven that the man knew that the sprinklers were being installed mistakenly, the court would make him pay because of a quasi-contract. If that knowledge could not be proven, he would not be liable. Such a claim is also referred to as "quantum meruit".^[12]

Consideration[link]

Consideration is something of value given by a promissor to a promisee in exchange for something of value given by a promisee to a promissor. Typically, the thing of value is a payment, although it may be an act, or forbearance to act, when one is privileged to do so, such as an adult refraining from smoking.

Consideration consists of a legal detriment and a bargain. A legal detriment is a promise to do something or refrain from doing something that you have the legal right to do, or voluntarily doing or refraining from doing something, in the context of an agreement. A bargain is something the promisor (the party making promise or offer) wants, usually being one of the legal detriments. The legal detriment and bargain principles come together in consideration and create an exchange relationship, where both parties agree to exchange something that the other wishes to have.

The purpose of consideration is to ensure that there is a present bargain, that the promises of the parties are reciprocally induced. The classic theory of consideration required that a promise be of detriment to the promissor or benefit to the promisee. This is no longer the case in the USA; typically, courts will look to a bargained-for exchange, rather than making inquiries into whether an individual was subject to a detriment or not. The emphasis is on the bargaining process, not an inquiry into the relative value of consideration. This principle was articulated in Hamer v. Sidway. Yet in cases of ambiguity, courts will occasionally turn to the common law benefit/detriment analysis to aid in the determination of the enforceability of a contract.

Sufficiency[link]

Consideration must be sufficient, but courts will not weight the adequacy of consideration. For instance, agreeing to sell a car for a penny may constitute a binding contract.^[13] All that must be shown is that the seller actually wanted the penny. This is known as the peppercorn rule. Otherwise, the penny would constitute nominal consideration, which is insufficient. Parties may do this for tax purposes, attempting to disguise gift transactions as contracts.

Transfer of money is typically recognized as an example of sufficient consideration, but in some cases it will not suffice, for example, when one party agrees to make partial payment of a debt in exchange for being released from the full amount.^[14]

Past consideration is not sufficient. Indeed, it is an oxymoron. For instance, in Eastwood v. Kenyon,^[15] the guardian of a young girl obtained a loan to educate the girl and to improve her marriage prospects. After her marriage, her husband promised to pay off the loan. It was held that the guardian could not enforce the promise because taking out the loan to raise and educate the girl was past consideration—it was completed before the husband promised to repay it.

The insufficiency of past consideration is related to the preexisting duty rule. The classic instance is Stilk v. Myrick,^[16] in which a captain's promise to divide the wages of two deserters among the remaining crew if they would sail home from the Baltic short-handed, was found unenforceable on the grounds that the crew were already contracted to sail the ship through all perils of the sea.

The preexisting duty rule also extends beyond an underlying contract. It would not constitute sufficient consideration for a party to promise to refrain from committing a tort or crime, for example.^[17] However, a promise from A to do something for B if B will perform a contractual obligation B owes to C, will be enforceable - B is suffering a legal detriment by making his performance of his contract with A effectively enforceable by C as well as by A.^[18]

Consideration must move from the promisee. For instance, it is good consideration for person A to pay person C in return for services rendered by person B. If there are joint promisees, then consideration need only to move from one of the promisees.

Other jurisdictions[link]

Roman law-based systems^[19] (including Scotland) do not require consideration, and some commentators consider it unnecessary—the requirement of intent by both parties to create legal relations by both parties performs the same function under contract. The reason that both exist in common law jurisdictions is thought by leading scholars to be the result of the combining by 19th century judges of two distinct threads: first the consideration requirement was at the heart of the action of assumpsit, which had grown up in the Middle Ages and remained the normal action for breach of a simple contract in England & Wales until 1884, when the old forms of action were abolished; secondly, the notion of agreement between two or more parties as being the essential legal and moral foundation of contract in all legal systems, promoted by the 18th century French writer Pothier in his Traite des Obligations, much read (especially after translation into English in 1805) by English judges and jurists. The latter chimed well with the fashionable will theories of the time, especially John Stuart Mill's influential ideas on free will, and got grafted on to the traditional common law requirement for consideration to ground an action in assumpsit.^[20]

Civil law systems take the approach that an exchange of promises, or a concurrence of wills alone, rather than an exchange in valuable rights is the correct basis. So if you promised to give me a book, and I accepted your offer without giving anything in return, I would have a legal right to the book and you could not change your mind about giving me it as a gift. However, in common law systems the concept of culpa in contrahendo, a form of 'estoppel', is increasingly used to create obligations during pre-contractual negotiations.^[21] Estoppel is an equitable doctrine that provides for the creation of legal obligations if a party has given another an assurance and the other has relied on the assurance to his detriment. A number of commentators have suggested that consideration be abandoned, and estoppel be used to replace it as a basis for contracts.^[22] However, legislation, rather than judicial development, has been touted as the only way to remove this entrenched common law doctrine. Lord Justice Denning famously stated that "The doctrine of consideration is too firmly fixed to be overthrown by a side-wind."^[23]

Formation[link]

In addition to the elements of a contract:

• a party must have capacity to contract;
• the purpose of the contract must be lawful;
• the form of the contract must be legal;
• the parties must intend to create a legal relationship; and
• the parties must consent.

As a result, there are a variety of affirmative defenses that a party may assert to avoid his obligation.

Affirmative defenses[link]

Vitiating factors constituting defences to purported contract formation include:

• mistake;
• incapacity, including mental incompetence and infancy/minority;
• duress;
• undue influence;
• unconscionability;
• misrepresentation/fraud; and
• frustration of purpose.

Such defenses operate to determine whether a purported contract is either (1) void or (2) voidable. Void contracts cannot be ratified by either party. Voidable contracts can be ratified.

[edit] Freedom to contract and Hurley v. Eddingfield

In most systems of law, parties have freedom to choose whether or not they wish to enter into a contract, absent superseding duties. In American law, one early case exemplifying this proposition is Hurley v. Eddingfield (1901), in which the Supreme Court of Indiana ruled in favor of a physician who voluntarily decided not to help a patient whom the physician had treated on past occasions, despite the lack of other available medical assistance and the patient's subsequent death.^[24]

In addition, for some contracts formalities must be complied with under legislation sometimes called a statute of frauds (especially transactions in real property or for relatively large cash amounts).

Invitation to treat[link]

Where a product in large quantities is advertised in a newspaper or on a poster, it generally is not considered an offer but instead will be regarded as an invitation to treat, since there is no guarantee that the store can provide the item for everyone who might want one. This was the basis of the decision in Partridge v. Crittenden^[25] a criminal case in which the defendant was charged with "offering for sale" bramblefinch cocks and hens. The court held that the newspaper advertisement could only be an invitation to treat, since it could not have been intended as an offer to the world, so the defendant was not guilty of "offering" them for sale. Similarly, a display of goods in a shop window is an invitation to treat, as was held in Fisher v. Bell^[26] another criminal case which turned on the correct analysis of offers as against invitations to treat. In this instance the defendant was charged with "offering for sale" prohibited kinds of knife, which he had displayed in his shop window with prices attached. The court held that this was an invitation to treat, the offer would be made by a purchaser going into the shop and asking to buy a knife, with acceptance being by the shopkeeper, which he could withhold. (The law was later amended to "exposing for sale".) A display of goods on the shelves of a self-service shop is also an invitation to treat, with the offer being made by the purchaser at the checkout and being accepted by the shop assistant operating the checkout: Pharmaceutical Society of Great Britain v. Boots Cash Chemists (Southern) Ltd.^[27] If the person who is to buy the advertised product is of importance, for instance because of his personality, etc., when buying land, it is regarded merely as an invitation to treat. In Carbolic Smoke Ball, the major difference was that a reward was included in the advertisement, which is a general exception to the rule and is then treated as an offer.

The Carbolic Smoke Ball offer

One of the most famous cases on invitation to treat is Carlill v. Carbolic Smoke Ball Company,^[28] decided in nineteenth-century England. A medical firm advertised that its new wonder drug, a smoke ball, would, according to the instructions, prevent those who used it from catching the flu. If it did not work, buyers would receive £100 and the company said that they had deposited £1,000 in the bank to show their good faith. When sued, Carbolic argued the ad was not to be taken as a serious, legally binding offer. It was merely an invitation to treat, and a gimmick (a 'mere puff'). But the court of appeal held that it would appear to a reasonable man that Carbolic had made a serious offer, primarily because of the reference to the £1000 deposited into the bank. People had given good "consideration" for it by going to the "distinct inconvenience" of using a faulty product. "Read the advertisement how you will, and twist it about as you will," said Lindley LJ, "here is a distinct promise expressed in language which is perfectly unmistakable".

Most states consider persons under the age of 18 to be minors. They have the right to cancel the contract at any time before and even after reaching the age of 18. If, however, a minor cancels the contract, the benefits that he or she received must be returned.

Contracts entered into by a minor as one party and an adult as the other party are enforceable if the adult breaches the contract. The minor can enforce the contract and collect damages by the adult's breach. However, if the minor breaches the contract, the adult does not have the legal authority to enforce the contract and cannot collect damages under the bargain principle. Promissory estoppel or unjust enrichment may be available, but generally are not.

Intention to be legally bound[link]

There is a presumption for commercial agreements that parties intend to be legally bound (unless the parties expressly state that they do not want to be bound, like in heads of agreement). On the other hand, many kinds of domestic and social agreements are unenforceable on the basis of public policy, for instance between children and parents. One early example is found in Balfour v. Balfour.^[29] Using contract-like terms, Mr. Balfour had agreed to give his wife £30 a month as maintenance while he was living in Ceylon (Sri Lanka). Once he left, they separated and Mr. Balfour stopped payments. Mrs. Balfour brought an action to enforce the payments. At the Court of Appeal, the Court held that there was no enforceable agreement as there was not enough evidence to suggest that they were intending to be legally bound by the promise.

The case is often cited in conjunction with Merritt v Merritt.^[30] Here the court distinguished the case from Balfour v. Balfour because Mr. and Mrs. Merritt, although married again, were estranged at the time the agreement was made. Therefore any agreement between them was made with the intention to create legal relations.

Third parties[link]

The doctrine of privity of contract means that only those involved in striking a bargain would have standing to enforce it. In general this is still the case, only parties to a contract may sue for the breach of a contract, although in recent years the rule of privity has eroded somewhat and third party beneficiaries have been allowed to recover damages for breaches of contracts they were not party to^{[citation needed]}. In cases where facts involve third party beneficiaries or debtors to the original contracting party have been allowed to be considered parties for purposes of enforcement of the contract. A recent advance has been seen in the case law as well as statutory recognition to the dilution of the doctrine of privity of contract. The recent tests applied by courts have been^{[citation needed]}the test of benefit and the duty owed test. The duty owed test looks to see if the third party was agreeing to pay a debt for the original party[needs elaboration] and whereas the benefit test looks to see if circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance. Any defense allowed to parties of the original contract extend to third party beneficiaries.[74] A recent example is in England, where the Contracts (Rights of Third Parties) Act 1999 was introduced.

Formalities and writing[link]

An unwritten, unspoken contract, also known as "a contract implied by the acts of the parties," which can be either implied in fact or implied in law, may also be legally binding. Contracts implied in fact are "real" contracts, that is, of no different remedy than "benefit of the bargain," as mentioned above. However, contracts implied in law are also known as quasi-contracts, and the remedy is quantum meruit, the fair market value of goods or services rendered.

Oral contracts are ordinarily valid and therefore legally binding.^[31] However, in most jurisdictions, certain types of contracts must be reduced to writing to be enforceable. This is to prevent frauds and perjuries, hence the name statute of frauds. For example, an unwritten contract would be unenforceable if for the sale of land.

Contracts that do not meet the requirements of common law or statutory Statutes of frauds are unenforceable, but are not necessarily thereby void. However, a party unjustly enriched by an unenforceable contract may be required to provide restitution for unjust enrichment. Statutes of frauds are typically codified in state statutes covering specific types of contracts, such as contracts for the sale of real estate.

In Australia and many, if not all, jurisdictions which have adopted the common law of England, for contracts subject to legislation equivalent to the Statute of frauds,^[32] there is no requirement for the entire contract to be in writing. Although for property transactions there must be a note or memorandum evidencing the contract, which may come into existence after the contract has been formed. The note or memorandum must be signed in some way, and a series of documents may be used in place of a single note or memorandum. It must contain all material terms of the contract, the subject matter and the parties to the contract. In England and Wales, the common law Statute of frauds is only now in force for guarantees, which must be evidenced in writing, although the agreement may be made orally. Certain other kinds of contract must be in writing or they are void, for instance, for sale of land under s. 52, Law of Property Act 1925.

If a contract is in a written form, and somebody signs it, then the signer is typically bound by its terms regardless of whether he has actually read it,^[33] provided the document is contractual in nature.^[34] However, affirmative defenses such as duress or unconscionability may enable the signer to avoid his purported obligation. Furthermore, if a party wishes to use a document as the basis of a contract, reasonable notice of its terms must be given to the other party prior to their entry into the contract.^[35] This includes such things as tickets issued at parking stations.

Bilateral and unilateral contracts[link]

Contracts may be bilateral or unilateral. A bilateral contract is an agreement in which each of the parties to the contract makes a promise or set of promises to the other party or parties. For example, in a contract for the sale of a home, the buyer promises to pay the seller $200,000 in exchange for the seller's promise to deliver title to the property.

In a unilateral contract, only one party to the contract makes a promise. A typical example is the reward contract: A promises to pay a reward to B if B finds A's dog. B is not under an obligation to find A's dog, but A is under an obligation to pay the reward to B if B does find the dog. The consideration for the contract here is B's reliance on A's promise or B giving up his legal right to do whatever he wanted at the time he was engaged in the finding of the dog.

In this example, the finding of the dog is a condition precedent to A's obligation to pay, although it is not a legal condition precedent, because technically no contract here has arisen until the dog is found (because B has not accepted A's offer until he finds the dog, and a contract requires offer, acceptance, and consideration), and the term "condition precedent" is used in contract law to designate a condition of a promise in a contract. For example, if B promised to find A's dog, and A promised to pay B when the dog was found, A's promise would have a condition attached to it, and offer and acceptance would already have occurred. This is a situation in which a condition precedent is attached to a bilateral contract.

Condition precedents can also be attached to unilateral contracts, however. This would require A to require a further condition to be met before he pays B for finding his dog. So, for example, A could say "If anyone finds my dog, and the sky falls down, I will give that person $100." In this situation, even if the dog is found by B, he would not be entitled to the $100 until the sky falls down. Therefore the sky falling down is a condition precedent to A's duty being actualized, even though they are already in a contract, since A has made an offer and B has accepted.

An offer of a unilateral contract may often be made to many people (or 'to the world') by means of an advertisement. (The general rule is that advertisements are not offers.) In the situation where the unilateral offer is made to many people, acceptance will only occur on complete performance of the condition (in other words, by completing the performance that the offeror seeks, which is what the advertisement requests from the offerees - to actually find the dog). If the condition is something that only one party can perform, both the offeror and offeree are protected – the offeror is protected because he will only ever be contractually obliged to one of the many offerees, and the offeree is protected because if she does perform the condition, the offeror will be contractually obligated to pay her.

In unilateral contracts, the requirement that acceptance be communicated to the offeror is waived unless otherwise stated in the offer. The offeree accepts by performing the condition, and the offeree's performance is also treated as the price, or consideration, for the offeror's promise. The offeror is master of the offer; it is he who decides whether the contract will be unilateral or bilateral. In unilateral contracts, the offer is made to the public at large.

A bilateral contract is one in which there are duties on both sides, rights on both sides, and consideration on both sides. If an offeror makes an offer such as "If you promise to paint my house, I will give you $100," this is a bilateral contract once the offeree accepts. Each side has promised to do something, and each side will get something in return for what they have done.

Uncertainty, incompleteness and severance[link]

If the terms of the contract are uncertain or incomplete, the parties cannot have reached an agreement in the eyes of the law.^[36] An agreement to agree does not constitute a contract, and an inability to agree on key issues, which may include such things as price or safety, may cause the entire contract to fail. However, a court will attempt to give effect to commercial contracts where possible, by construing a reasonable construction of the contract.^[37]

Courts may also look to external standards, which are either mentioned explicitly in the contract^[38] or implied by common practice in a certain field.^[39] In addition, the court may also imply a term; if price is excluded, the court may imply a reasonable price, with the exception of land, and second-hand goods, which are unique.

If there are uncertain or incomplete clauses in the contract, and all options in resolving its true meaning have failed, it may be possible to sever and void just those affected clauses if the contract includes a severability clause. The test of whether a clause is severable is an objective test—whether a reasonable person would see the contract standing even without the clauses.

Contractual terms[link]

A contractual term is "an[y] provision forming part of a contract".^[40] Each term gives rise to a contractual obligation, breach of which can give rise to litigation. Not all terms are stated expressly and some terms carry less legal weight as they are peripheral to the objectives of the contract.

Boilerplate[link]

As discussed in Tina L. Stark's Negotiating and Drafting Contract Boilerplate, when lawyers refer to a "boilerplate" provision, they are referring to any standardized, "one size fits all" contract provision. But lawyers also use the term in a more narrow context to refer to certain provisions that appear at the end of the contract. Typically, these provisions tell the parties how to govern their relationship and administer the contract. Although often thought to be of secondary importance, these provisions have significant business and legal consequences.^[41] Common provisions include the governing law provision, venue, assignment and delegation provisions, waiver of jury trial provisions, notice provisions, and force majeure provisions.^[42]

Classification of term[link]

• Condition or warranty.^[43] Conditions are terms which go to the very root of a contract. Breach of these terms repudiates the contract, allowing the other party to discharge the contract. A warranty is not so imperative so the contract will subsist after a warranty breach. Breach of either will give rise to damages.

It is an objective matter of fact whether a term goes to the root of a contract. By way of illustration, an actress' obligation to perform the opening night of a theatrical production is a condition,^[44] whereas a singer's obligation to perform during the first three days of rehearsal is a warranty.^[45]

Statute may also declare a term or nature of term to be a condition or warranty; for example the Sale of Goods Act 1979 s15A^[46] provides that terms as to title, description, quality and sample (as described in the Act) are conditions save in certain defined circumstances.

• Innominate term. Lord Diplock, in Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd,^[47] created the concept of an innominate term, breach of which may or not go to the root of the contract depending upon the nature of the breach. Breach of these terms, as with all terms, will give rise to damages. Whether or not it repudiates the contract depends upon whether legal benefit of the contract has been removed from the innocent party. Megaw LJ, in 1970, preferred the legal certainty of using the classic categories of condition or warranty.^[48] This was interpreted by the House of Lords as merely restricting its application in Reardon Smith Line Ltd. v Hansen-Tangen.^[49]

Status as a term[link]

Status as a term is important as a party can only take legal action for the non fulfillment of a term as opposed to representations or mere puffery. Legally speaking, only statements that amount to a term create contractual obligations. There are various factor that a court may take into account in determining the nature of a statement. In particular, the importance apparently placed on the statement by the parties at the time the contract is made is likely to be significant. In Bannerman v. White^[50] it was held a term of a contract for sale and purchase of hops that they had not been treated with sulphur, since the buyer made very explicit his unwillingness to accept hops so treated, saying that he had no use for them. The relative knowledge of the parties may also be a factor, as in Bissett v. Wilkinson^[51] in which a statement that farmland being sold would carry 2000 sheep if worked by one team was held merely a representation (it was also only an opinion and therefore not actionable as misrepresentation). The reason this was not a term was that the seller had no basis for making the statement, as the buyer knew, and the buyer was prepared to rely on his own and his son's knowledge of farming.

Implied terms[link]

A term may either be express or implied. An express term is stated by the parties during negotiation or written in a contractual document. Implied terms are not stated but nevertheless form a provision of the contract.

Terms implied in fact[link]

Terms may be implied due to the facts of the proceedings by which the contract was formed. In the Australian case of BP Refinery Westernport v. Shire of Hastings^[52] the UK Privy Council proposed a five stage test to determine situations where the facts of a case may imply terms (this only applies to formal contracts in Australia).^[53] However, the English Court of Appeal sounded a note of caution with regard to the BP case in Philips Electronique Grand Public SA v. British Sky Broadcasting Ltd^[54] in which the Master of the Rolls described the test as "almost misleading" in its simplicity.^[55] The classic tests have been the "business efficacy test" and the "officious bystander test". The first of these was proposed by Lord Justice Bowen in The Moorcock.^[56] This test requires that a term can only be implied if it is necessary to give business efficacy to the contract to avoid such a failure of consideration that the parties cannot as reasonable businessmen have intended. But only the most limited term should then be implied - the bare minimum to achieve this goal. The officious bystander test derives its name from the judgment of Lord Justice Mackinnon in Shirlaw v. Southern Foundries (1926) Ltd^[57] but the test actually originates in the judgment of Lord Justice Scrutton in Reigate v. Union Manufacturing Co (Ramsbottom) Ltd^[58] This test is that a term can only be implied in fact if it is such a term that had an "officious bystander" listening to the contract negotiations suggested that they should include this term the parties would "dismiss him with a common 'Oh of course!'". It is at least questionable whether this is truly a separate test or just a description of how one might go about arriving at a decision on the basis of the business efficacy test.

Some jurisdictions, notably Australia, Israel and India, imply a term of good faith into contracts. A final way in which terms may be implied due to fact is through a previous course of dealing or common trade practice. The Uniform Commercial Code of the United States also imposes an implied covenant of good faith and fair dealing in performance and enforcement of contracts covered by the Code, which cannot be derogated from.

Terms implied in law[link]

Implied terms also a contract

These are terms that have been implied into standardized relationships. Instances of this are quite numerous, especially in employment contracts and shipping contracts.

Common law[link]

• Liverpool City Council v. Irwin^[59] established a term to be implied into all contracts between tenant and landlord in multi-storey blocks that the landlord is obliged to take reasonable care to keep the common areas in a reasonable state of repair.

These terms will be implied into all contracts of the same nature as a matter of law.

Statute law[link]

The rules by which many contracts are governed are provided in specialized statutes that deal with particular subjects. Most countries, for example, have statutes which deal directly with sale of goods, lease transactions, and trade practices. For example, most American states have adopted Article 2 of the Uniform Commercial Code, which regulates contracts for the sale of goods. The most important legislation implying terms under United Kingdom law are the Sale of Goods Act 1979, the Consumer Protection (Distance Selling) Regulations 2000 and the Supply of Goods and Services Act 1982 which imply terms into all contracts whereby goods are sold or services provided.

Coercive vs. voluntary contractive exchanges[link]

There are a few ways of determining whether a contract has been coerced or is voluntary:

• Moral consideration: Objective consideration of right or wrong outside of the objective cause, or the perceived cause. Example: X (event) occurs every day at 5 pm. X is wrong. Anything that avoids X is good; allowing X, even if all parties agree, is bad.
• Phenomenological consideration - what models did the participants have which influenced the perception of what was to occur or what had occurred. Example: I observe X, Y (events) every day at 5 pm. I contract against X. Today I did / did not see Y occur.
• Statistical consideration - did the participants have a statistical prediction, likelihood of an event occurring which is covered by the contract. Example: X (event) happens every day at 5 pm, I enter a contract to avoid X. X does or does not occur.

Setting aside the contract[link]

There can be four different ways in which contracts can be set aside. A contract may be deemed 'void', 'voidable', 'unenforceable'or 'ineffective'. Voidness implies that a contract never came into existence. Voidability implies that one or both parties may declare a contract ineffective at their wish. Unenforceability implies that neither party may have recourse to a court for a remedy. Ineffectiveness implies that the contract terminates by order of a court where a public body has failed to satisfy public procurement law. To rescind is to set aside or unmake a contract.

Misrepresentation[link]

Misrepresentation means a false statement of fact made by one party to another party and has the effect of inducing that party into the contract. For example, under certain circumstances, false statements or promises made by a seller of goods regarding the quality or nature of the product that the seller has may constitute misrepresentation. A finding of misrepresentation allows for a remedy of rescission and sometimes damages depending on the type of misrepresentation.

There are two types of misrepresentation in contract law, fraud in the factum and fraud in inducement. Fraud in the factum focuses on whether the party in question knew they were creating a contract. If the party did not know that they were entering into a contract, there is no meeting of the minds, and the contract is void. Fraud in inducement focuses on misrepresentation attempting to get the party to enter into the contract. Misrepresentation of a material fact (if the party knew the truth, that party would not have entered into the contract) makes a contract voidable.

According to Gordon v Selico^[60] it is possible to make a misrepresentation either by words or by conduct, although not everything said or done is capable of constituting a misrepresentation. Generally, statements of opinion or intention are not statements of fact in the context of misrepresentation.

Both an order for specific performance and an injunction are discretionary remedies, originating for the most part in equity. Neither is available as of right and in most jurisdictions and most circumstances a court will not normally order specific performance. A contract for the sale of real property is a notable exception. In most jurisdictions, the sale of real property is enforceable by specific performance. Even in this case the defenses to an action in equity (such as laches, the bona fide purchaser rule, or unclean hands) may act as a bar to specific performance.

Related to orders for specific performance, an injunction may be requested when the contract prohibits a certain action. Action for injunction would prohibit the person from performing the act specified in the contract.

Procedure[link]

In the United States, in order to obtain damages for breach of contract or to obtain specific performance or other equitable relief, the aggrieved injured party may file a civil (non-criminal) lawsuit in state court (unless there is diversity of citizenship giving rise to federal jurisdiction). If the contract contains a valid arbitration clause, the aggrieved party must submit an arbitration claim in accordance with the procedures set forth in the clause.

Many contracts provide that all disputes arising thereunder will be resolved by arbitration, rather than litigated in courts. Customer claims against securities brokers and dealers are almost always resolved by arbitration because securities dealers are required, under the terms of their membership in self-regulatory organizations such as the Financial Industry Regulatory Authority (formerly the NASD) or NYSE to arbitrate disputes with their customers. The firms then began including arbitration agreements in their customer agreements, requiring their customers to arbitrate disputes.^[61] On the other hand, certain claims have been held to be non-arbitrable if they implicate a public interest that goes beyond the narrow interests of the parties to the agreement (i.e., claims that a party violated a contract by engaging in illegal anti-competitive conduct or civil rights violations). Arbitration judgments may generally be enforced in the same manner as ordinary court judgments. However, arbitral decisions are generally immune from appeal in the United States unless there is a showing that the arbitrator's decision was irrational or tainted by fraud. Virtually all states have adopted the Uniform Arbitration Act to facilitate the enforcement of arbitrated judgments. Notably, New York State, where a sizable portion of major commercial agreements are executed and performed, has not adopted the Uniform Arbitration Act.^[62]

In England and Wales, a contract may be enforced by use of a claim, or in urgent cases by applying for an interim injunction to prevent a breach. Likewise, in the United States, an aggrieved party may apply for injunctive relief to prevent a threatened breach of contract, where such breach would result in irreparable harm that could not be adequately remedied by money damages.

Other contract[link]

Online contracts, which are easily made, are usually valid on a smaller scale for a period of one to three months, while on a larger scale can last about five years. As with all things legal, especially in regards to the ever-evolving Internet, general rules like length of validity have many exceptions. All cases are evaluated on their own merits, and those merits are defined by the facts presented in each instance. It is up to the owner of the site to do what it can to guarantee enforceability of its contracts. Though most people sign online contracts before reading the content^{[citation needed]}, E-signature laws have made the electronic contract and signature as legally valid as a paper contract. It has been estimated that roughly one hundred and ten electronic contracts are signed every second.

Contract theory[link]

Contract theory is the body of legal theory that addresses normative and conceptual questions in contract law. One of the most important questions asked in contract theory is why contracts are enforced. One prominent answer to this question focuses on the economic benefits of enforcing bargains. Another approach, associated with Charles Fried, maintains that the purpose of contract law is to enforce promises. This theory is developed in Fried's book, Contract as Promise. Other approaches to contract theory are found in the writings of legal realists and critical legal studies theorists.

More generally, writers have propounded Marxist and feminist interpretations of contract. Attempts at overarching understandings of the purpose and nature of contract as a phenomenon have been made, notably 'relational contract theory' originally developed by U.S. contracts scholars Ian Roderick Macneil and Stewart Macaulay, building at least in part on the contract theory work of U.S. scholar Lon L. Fuller, while U.S. scholars have been at the forefront of developing economic theories of contract focussing on questions of transaction cost and so-called 'efficient breach' theory.

Another dimension of the theoretical debate in contract is its place within, and relationship to a wider law of obligations. Obligations have traditionally been divided into contracts, which are voluntarily undertaken and owed to a specific person or persons, and obligations in tort which are based on the wrongful infliction of harm to certain protected interests, primarily imposed by the law, and typically owed to a wider class of persons.

Recently it has been accepted that there is a third category, restitutionary obligations, based on the unjust enrichment of the defendant at the plaintiff's expense. Contractual liability, reflecting the constitutive function of contract, is generally for failing to make things better (by not rendering the expected performance), liability in tort is generally for action (as opposed to omission) making things worse, and liability in restitution is for unjustly taking or retaining the benefit of the plaintiff's money or work.^[63]

The common law describes the circumstances under which the law will recognise the existence of rights, privilege or power arising out of a promise.

See also[link]

By country[link]

• Australian contract law
• English contract law
• German contract law
• Indian contract law
• South African contract law

Notes[link]

References[link]

• Ewan McKendrick, Contract Law - Text, Cases and Materials (2005) Oxford University Press ISBN 0-19-927480-0
• P.S. Atiyah, The Rise and Fall of Freedom of Contract (1979) Clarendon Press ISBN 0-19-825342-7
• Randy E. Barnett, Contracts (2003) Aspen Publishers ISBN 0-7355-6525-2
• Scott Fruehwald, "Reciprocal Altruism as the Basis for Contract," 47 University of Louisville Law Review 489 (2009).

External links[link]

Look up contract in Wiktionary, the free dictionary.

Wikiquote has a collection of quotations related to: Contract

Wikimedia Commons has media related to: Contracts

• Australian Contract Law
• Uniform Commercial Code (United States Contract Law)
• Behavioral Contracting in the Classroom
• Contract Law Lessons & Materials by Max Young
• Cornell Law School contracts: an overview
• Principles of European Contract Law
• United Nations Convention on Contracts for the International Sale of Goods, Vienna, 11 April 1980
• Md. Azim Ferdous. [1]. www.scribd.com

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John Cena
John Cena, 2008
Ring name(s)	John Cena[1]
Billed height	6 ft 1 in (1.85 m)[2]
Billed weight	251 lb (114 kg)[2]
Born	(1977-04-23) April 23, 1977 (age 35)[3] West Newbury, Massachusetts[2]
Resides	Tampa, Florida[4]
Billed from	Classified (UPW)[5] West Newbury, Massachusetts (WWE)[2]
Trained by	Ultimate Pro Wrestling[5] Ohio Valley Wrestling[6]
Debut	2001[6]

John Felix Anthony Cena^[7] (/ˈsiːnə/; born April 23, 1977)^[3] is an American professional wrestler and actor. He is currently signed to WWE as a member of its Raw brand.^[8]

In WWE, Cena has won 19 championships in total, including 12 world titles (having won the WWE Championship a record 10 times^[9] and the World Heavyweight Championship twice). In addition, Cena has also won the WWE United States Championship three times,^[10] and is a four-time Tag Team Champion, having held the World Tag Team Championship twice (once each with Shawn Michaels and Batista),^[11] and the WWE Tag Team Championship twice (once each with David Otunga and The Miz). Cena also won the 2008 Royal Rumble match, and is a two-time Superstar of the Year Slammy Award winner (2009 and 2010).^[12] He also has the fourth highest number of combined days as WWE Champion behind Bob Backlund, Hulk Hogan and Bruno Sammartino.

Cena started his professional wrestling career in 2000, wrestling for Ultimate Pro Wrestling, where he held the UPW Heavyweight Championship. In 2001, Cena signed a contract with the World Wrestling Federation (WWF) and was sent to Ohio Valley Wrestling (OVW) where he held the OVW Heavyweight Championship and the OVW Southern Tag Team Championship (with Rico Constantino).

Outside of wrestling, Cena has released the rap album You Can't See Me, which debuted at No.15 on the US Billboard 200 chart, and starred in the feature films The Marine (2006), 12 Rounds (2009), and Legendary (2010).^[13] Cena has also made appearances on television shows including Manhunt, Deal or No Deal, MADtv, Saturday Night Live, Punk'd, and Psych. Cena was also a contestant on Fast Cars and Superstars: The Gillette Young Guns Celebrity Race, where he made it to the final round before being eliminated, placing third in the overall competition.

Early life[link]

John Cena was born April 23, 1977, in West Newbury, Massachusetts,^[3] the son of Carol and John Cena, Sr.^[14] He is the second eldest of five brothers – Dan, Matt, Steve, and Sean.^[15] After graduating from Cushing Academy, Cena attended Springfield College in Springfield, Massachusetts.^[16] In college he was a Division III All-American center on the college football team,^[17] wearing the number 54,^[16] which is still used on some of his WWE merchandise.^[18][19] He graduated from Springfield in 1998 with a degree in exercise physiology,^[20] after which he pursued a career in bodybuilding,^[21][22] and also worked as a chauffeur for a limousine company.^[23]

Professional wrestling career[link]

Training (2000–2001)[link]

UPW[link]

Cena started training to become a professional wrestler in 2000 at the California-based "Ultimate University" operated by Ultimate Pro Wrestling. Once he was placed into an in-ring role, Cena began using a semi-robotic character known as The Prototype.^[24][25] Some of this period of his career was documented in the Discovery Channel program Inside Pro Wrestling School.^[26] While in UPW, Cena held the UPW Heavyweight Championship for just shy of a month in April 2000.^[27]

OVW[link]

In 2001, he signed a developmental contract with the World Wrestling Federation (WWF) and was assigned to its developmental territory Ohio Valley Wrestling (OVW).^[28] During his time there, Cena wrestled as both The Prototype and Mr. P, and held the OVW Heavyweight Championship for three months and the OVW Southern Tag Team Championship (with Rico Constantino) for two months.^[29][30][31]

World Wrestling Entertainment[link]

Debut (2002–2004)[link]

Cena performing an FU (now "Attitude Adjustment") to Kurt Angle.

Cena made his television debut answering an open challenge by Kurt Angle on June 27, 2002.^[32] Inspired by a speech given by WWE Chairman Vince McMahon to the rising stars of the company, exhorting them to show "ruthless aggression" to earn a place among the legends, Cena took advantage of the opportunity to face Angle. Cena managed to counter the Angle Slam and the ankle lock submission hold,^[33] but ultimately lost to a hard amateur wrestling-style pin.^[33] Following the near-win, Cena became a fan favorite and started feuding with Chris Jericho, defeating Jericho at Vengeance.^[32] In October, Cena and Billy Kidman took part in a tag team tournament to crown the first WWE Tag Team Champions of the SmackDown! brand, losing in the first round.^[34] The next week, Cena turned on and attacked Kidman, blaming him for their loss, becoming a villain.^[32]

Shortly after the Kidman attack, on a Halloween themed episode of SmackDown, Cena dressed as Vanilla Ice performing a freestyle rap.^[32] The next week, Cena received a new character: a rapper who cut promos while rhyming.^[32] As the gimmick grew, Cena began adopting a variant of the 1980s WWF logo – dropping the "F" – as his "signature symbol", along with the slogan "Word Life".^[35] Moreover, he was joined by an enforcer, Bull Buchanan, who was rechristened B-2 (also written B² and pronounced "B-Squared").^[32] Buchanan was later replaced by Red Dogg,^[32] until he was sent to the Raw brand in February.

For the first half of 2003, Cena sought the WWE Championship and chased the reigning champion, Brock Lesnar, performing weekly "freestyles" challenging him to matches.^[36][37][38] During the feud, Cena unveiled a new finishing maneuver: the FU, a Fireman's carry powerslam, named to Brock Lesnar's F-5, with his first victim being Rikishi.^[39] Cena won a number one contenders tournament against Lesnar at Backlash. However, Cena was defeated by Lesnar. At Vengeance Cena lost a singles match against The Undertaker.^[32][40] At the end of the year, Cena became a fan favorite again when he joined Kurt Angle as a member of his team at Survivor Series.^[41][42]

United States and WWE Champion (2004–2005)[link]

Cena, wearing his customized U.S. Championship belt

In early 2004, Cena participated in the Royal Rumble match at the 2004 Royal Rumble,^[43] making it to the final six before being eliminated by Big Show and the Match being won by Chris Benoit.^[44] The Royal Rumble elimination led to a feud with Big Show,^[45][46] which Cena won the United States Championship from Big Show at WrestleMania XX.^[47] During his reign, Cena came into contention with SmackDown General Manager Kurt Angle over issues arising with René Duprée and Torrie Wilson.^[48] The reign ended almost four months later, when he was stripped of the belt on July 8 by Angle after he accidentally knocked him over, thus attacking an official.^[49] Cena won the championship back defeating Booker T in a best of five series that culminated at No Mercy,^[50] only to lose it to the debuting Carlito Caribbean Cool the next week.^[51] After the loss to Carlito, the duo began a feud, which Cena was stabbed in the kidney while at a Boston-area nightclub by Carlito's bodyguard, Jesús.^[52][53] This worked injury was used to keep Cena out of action for a month, while Cena was filming The Marine.^[30] Immediately on his return in November, Cena won the United States Championship back from Carlito debuting a "custom made" spinner-style championship belt.^[54][55]

Cena took part in the 2005 Royal Rumble match, making it to the final two. Cena and Raw brand wrestler Batista went over the top rope at the same time, ostensibly ending the match. Vince McMahon, however, appeared on stage and re-started the match in sudden death rules, with Batista eventually eliminating Cena.^[56] The next month, Cena defeated Kurt Angle to earn a spot in the SmackDown brand's WrestleMania 21 main event match,^[57] beginning a feud with WWE Champion John "Bradshaw" Layfield (JBL) and his Cabinet in the process. In the early stages of the feud, Cena lost his US belt to Cabinet member Orlando Jordan,^[58] who proceeded to "blow up" the spinner championship with JBL and returning a more traditional style belt.^[59] Cena defeated JBL at WrestleMania winning the WWE Championship, giving Cena his first world championship.^[60] Cena then had a spinner WWE Championship belt made,^[61] while JBL took the original belt and claimed to still be WWE Champion,^[61] until Cena reclaimed the original belt in an "I Quit" match at Judgment Day.^[62]

Cena was drafted to the Raw brand on the June 6, 2005, becoming the first wrestler selected by General Manager Eric Bischoff in the annual draft lottery.^[63] Cena immediately entered a feud with Bischoff, after refusing to participate in the "war" against the Extreme Championship Wrestling (ECW) roster at One Night Stand.^[64] With Bischoff vowing to make Cena's stint on Raw difficult, he hand picked Jericho to take Cena's championship from him.^[65] During their feud, even though Cena was portrayed as the fan favorite and Jericho as the villain, a vocal section of live crowds, nonetheless, were booing Cena during their matches.^[66] More crowds followed suit during Cena's next feud with Kurt Angle,^[67] who took over as Bischoff's hand-picked number-one contender after Cena defeated Jericho in a You're Fired match on the August 22 Raw.^[68] As the feud continued and the dissenters grew more vocal, sometimes seeming to outnumber fans by wide margins,^[69] the announce team was forced to acknowledge the booing on television and began calling Cena a "controversial champion", claiming some people disliking him on account of his "in-ring style" and his chosen fashion.^[70] Despite the mixed and negative reactions, Cena held on to his championship through his feud with Angle, losing to him by disqualification^[71] – which titles do not change hands in WWE – at Unforgiven and pinning him at Survivor Series.^[72] The feud with Angle also saw Cena add a secondary, submission based, finishing maneuver – the STFU (a Stepover Toehold Sleeper, though named for a Stepover Toehold Facelock) – when he was put into a Triple Threat Submissions Only match on the November 28 Raw.^[73]

WWE Championship feuds and injury (2006–2007)[link]

Cena facing off against Edge at a WWE house show.

Cena lost the WWE Championship at New Year's Revolution, but not in the Elimination Chamber match that he had been advertised to participate in beforehand. Instead, immediately after winning the Elimination Chamber, he was forced into a match against Edge, who cashed in his Money in the Bank contract – a "guaranteed title match for the WWE Champion at a time and place of the owners choosing." After two quick spears pinned Cena, winning the championship.^[74] Three weeks later, Cena won the championship back at the Royal Rumble.^[74] After winning the championship, Cena began feuding with Triple H, which the crowd began booing Cena and cheering the intended villain, Triple H.^[75][76] Cena beat Triple H at Wrestlemania 22 to retain his WWE Title.^[6] The negative reaction towards Cena intensified when facing Rob Van Dam at One Night Stand. Taking place in front of a crowd of mostly "old school" ECW fans at the Hammerstein Ballroom, Cena was met with raucous jeering and chants of "Fuck you, Cena", "You can't wrestle", and "Same old shit". When he began performing different moves into the match, the fans began chanting "You still suck". Cena lost the WWE Championship at One Night Stand, with Van Dam pinning Cena after interference from Edge.^[77]

Cena, addressing fans at a Raw show

In July, after Edge won the championship from Van Dam in a Triple Threat match that also involved Cena,^[78] re-ignited the feud between him and Cena from earlier in the year. After Edge went about retaining the title by dubious means – getting himself disqualified^[79] (for which Championships do not change hands) and using brass knuckles^[77] – he introduced his own version of Cena's "custom" belt, this one with his logo placed on the spinner.^[80] Cena eventually won the championship back in a Tables, Ladders, and Chairs match at Unforgiven. The match had an added stipulation that had Cena lost he would leave the Raw brand and go to SmackDown.^[81][82] Cena returned his version of the spinner belt on the next night's Raw.^[83]

On the heels of his feud with Edge, Cena was placed in an inter-brand angle to determine the "Champion of Champions" – or which was the most dominant champion in WWE's three brands. Cena, the World Heavyweight Champion King Booker, and the ECW World Champion The Big Show engaged in a mini-feud leading to a Triple Threat match at Cyber Sunday, with the viewers voting on which of the three championships would be placed on the line.^[84] At the same time, Cena became involved in a storyline with non-wrestler Kevin Federline, when he began appearing on Raw with Johnny Nitro and Melina. After getting into a worked physical altercation with Federline on Raw,^[84] Federline appeared at Cyber Sunday to hit Cena with the World Heavyweight Championship during the match, helping King Booker retain his championship.^[77] 2006 ended with Cena beginning a feud with the undefeated Umaga over the WWE Championship,^[85] while 2007 began with the end of his storyline with Kevin Federline. On the first Raw of the new year, Cena was pinned by Federline with an assist from Umaga, although later in the night he was able to get his hands on Federline performing an FU on him.^[86]