Definition of a contract
A legally binding agreement
that means there must be some kind of
agreement between two parties.
However, not all agreements are contracts
because not all agreements are legally
legally enforceable means that a court will
say that an agreement is a contract.
Definition of a contract (cont.)
To decide if an agreement is legally
enforceable as a contract, a court will apply
the rules and principles of the law of
Therefore, knowing a little about these rules
can help businesspeople to create valid
What is a Contract?
Determining the Initial Step
Everything you wanted to know about contract law that we can
squeeze into 30 minutes.
What is a Contract?
A contract is an agreement between two parties that
creates an obligation to perform (or not perform) a
particular duty. A legally enforceable contract
1. An Offer (I’ll mow your lawn this weekend, if you pay
2. An Acceptance (You’ve got a deal).
3. Consideration (The value received and given – the
money and the lawn mowed).
There is no general rule in English law that
a contract must be in writing.
In fact, people do not realise that they are
making a contract in many situations.
Some contract can be made verbally or by
These are known as parol or simple
Simple Contracts (cont.)
Although there is no requirement for a
simple contract to be in writing, sometimes
the parties might record the contract in
This can be useful later if there is
disagreement about the contract.
If the contract is important or involves a lot
of money it might be wise to put it in
Contracts which must be in
Some contracts must be in writing but they
don’t have to be by deed.
Most of these requirements come from
bills of exchange
contracts for the sale of land
As we mentioned earlier, contracts are
agreements, but not all agreements are legally
In fact, the legal effect of agreements fall into 4
These are agreements which are completely
binding and enforceable.
Parties to valid contracts gain rights and
The courts will make sure that the parties
follow these rights and responsibilities if
there is any argument.
Why have a Law of Contract?
As we saw from the examples at the
beginning of the class, contracts arise in
simple, everyday situations.
Modern society operates by people and
companies exchanging goods and services.
The Law of Contract helps to give a
structure to this.
Why have a Law of Contract?
The Law of Contract is part of Private Law
so it is concerned with relationships
It helps us to decide what is a valid contract.
The Law of Contract is also part of Civil
Law so it is also concerned with remedies.
It helps us if the other party to a contract
does not keep to the agreement.
Business is an important part of modern
The Law of Contract tells us what is
necessary to make a valid contract.
It also gives us remedies where another
person does not follow the terms of the
Establishing Offer and Acceptance:
“A Meeting of the Minds”
A legally recognized offer and an acceptance creates
a “meeting of the minds’, or mutual assent, between
Mutual Assent requires the presence of the following
1. Both parties must exhibit a “contractual intent”
[words spoken in jest or frustration will lack the
2. The terms of the offer must be clear and definite;
3. The acceptance must be clearly communicated.
The Requirement for Clear and
Required Clarity: For terms to be legally
valid, a reasonable person must be capable of
readily understanding them.
Four primary areas in determining definite
1. the parties;
2. time for performance (term or service
3. the price; and
4. the subject matter or scope of service.
The Importance of the “Bargained Exchange.”
Consideration must be mutual. Both parties
must receive something of value.
Involvement of money is not required.
Contracts vs. Gifts.
What Authority Defines a Contract?
Sources of Contract Law
• Common Law – Court made case law governing
contracts (primary law for service contracts).
• Uniform Commercial Code (UCC) – Governs sales
of tangible goods and secured transactions.
• Specific Statutes in Peru: – http://www.sunarp.gob.pe
Types of University Contracts
Affiliation and International
(non- procurement in
Agreements (IAC) & Inter-
Museum and Exhibit
Prof. Service Agreements
(for individuals not
organized as a business)
Contracts and Sponsored
See Categorizing Contracts
Initial Contract Evaluation and
Determining the Need for an Agreement:
2. UT Determination: The risk of the project
may necessitate a formal agreement; or UT
Policies may require it.
Using Sample Agreements
Major Areas within Every Contract
Effective Date and Terms
Statement of Service (SOS)
Executing the Agreement -
Who can Sign?
Upon completion of negotiation, the Contracts
1. route the Agreement to obtain appropriate
2. distribute signed copies accordingly.
1. V.P. for Business Affairs
2. Associate V.P. for Administration
3. Associate V.P. for Financial Affairs