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contract,
in the simplest definition, a promise enforceable by law.
The promise may be to do something or to refrain from
doing something. The making of a contract requires the mutual assent of two or
more persons, one of them ordinarily making an offer and another accepting. If
one of the parties fails to keep the promise, the other is entitled to legal
redress. The law of contracts considers such questions as whether a contract
exists, what the meaning of it is, whether a contract has been broken, and what
compensation is due the injured party.
The Roman
law of
contracts, as found in the Byzantine emperor Justinian’s law
books of
the 6th century CE,
reflected a long economic, social, and legal evolution. It recognized various
types of contracts and agreements, some of them enforceable, others not. A good
deal of legal history turns upon the classifications and distinctions of the
Roman law. Only at its final stage of development did Roman law enforce, in
general terms, informal executory contracts—that is, agreements to be carried
out after they were made. This stage of development was lost with the breakup of
the Western Empire. As western Europe declined from an urbanized commercial
society into a localized agrarian society, the Roman courts and
administrators were replaced by relatively weak and imperfect institutions
There
are large areas of economic life in which the parties to contracts have such
unequal bargaining positions that little real negotiation takes place. These
contracts are often known as contracts of adhesion. Familiar examples of adhesion
contracts are contracts for transportation or service concluded with public
carriers and utilities and contracts of large corporations with their suppliers,
dealers, and customers. In such circumstances a contract becomes a kind of
private legislation, in the sense that the stronger party to a large extent
assigns risks and allocates resources
by its fiat rather than through a reciprocal process
of bargaining. Enforcement of such standard contracts can be justified on the
ground that they are economically necessary. The question then becomes whether
these decisions are to be made by private
enterprise or
by other agencies of society—in particular, government—and to what extent
the interest of those who deal with such economic enterprises can be represented
and protected in the decision-making process.
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