Contracts are legal instruments which are utilized to form binding agreements between interested parties. Before signing contracts, the parties will negotiate and determine the terms which they wish to include in their contract.
Among numerous other factors, contracts must be based upon consideration in order to be considered valid and legally enforceable. For example, cell phone carriers periodically bill cell phone users.
Cell phone users continue to pay these bills in exchange for the ability to use the services of the cell phone carrier. The money and the services in this example serve as forms of consideration, or something of value which is used to bind the agreement of the parties.
Consideration is closely tied to contract obligations. Contract obligations are those duties which are contained in a contract that each contracting party agrees to when they sign the contract.
Once the contract is signed, the parties are legally responsible for carrying it out. Using the cell phone bill example again, the cell phone user has an obligation to pay the cell phone bill carrier each month when they receive their bill.
The cell phone carrier then has an obligation to provide cell phone services to the paying user, so long as they continue making their payments. If either of the parties in this example fails to perform their contractual obligations in the manner which they agreed to under the contract, their actions, or lack thereof, will likely be considered a breach, or violation, of the contract.
A breach of contract is a legal claim which may result in the breaching party being required to pay the non-breaching party a sum of monetary damages which is intended to make up for losses the non-breaching party suffered as a result of the breach. Therefore, it is important for the contracting parties to refrain from breaking their promises as well as to try their best to fulfill their obligations under the contract.
If the parties do not fulfill their obligations, the legal ramifications may be costly. If an individual needs help drafting a contract agreement or if they do not understand their legal obligations under a contract, it is in their best interest to consult with a contract attorney who practices in the area.
What Are Some Examples of Contract Obligations?
As previously noted, contract obligations are those tasks which contracting parties are legally bound to complete or they will likely be required to pay monetary damages for breaching their contract. Generally, the types of contract obligations which a party will be required to perform will depend upon the subject matter of the contract as well as the agreed upon terms of the contract.
For example, a contract to purchase or to sell a home will likely have very different contract obligations than those which are required under a landlord-tenant agreement. In addition, contract obligations to purchase or sell a home may vary from contract to contract.
The majority of contract documents, however, typically share some similar types of contract obligations. Common examples of contract obligations which contracting parties can incorporate into their agreement include:
- Provisions on quality of goods;
- Delivery terms; and
- Payment clauses.
Contracts may contain provisions which describe the quality of goods as well as what warranties the seller guarantees regarding the quality of the items. For example, if the contract provides that a seller will deliver a new laptop but the buyer receives a laptop which was clearly used, it would constitute a breach of the contractual obligation of the seller to provide the quality of the goods which was agreed upon, brand new.
Merchant sellers are typically bound to provide:
- The terms of delivery, which include the location where the goods or services are to be delivered;
- The method used to transport the goods, such as by hand or by mail; and
- The date which the purchased items will be delivered.
Payment clauses obligate individuals to pay for the goods or services which they are retaining by entering into the contract agreement. Payment clauses will typically state the cost of the goods or services which were promised as well as the date that the payments for the items are due.
The parties may also agree to include provisions such as what the acceptable forms of payment are, check, cash, etc., and what will occur in the event that a buyer does not pay. The specific terms which will be included in a contract will vary.
In addition, each party will be bound by general contract principles and requirements. For example, contracting parties are prohibited from using force or coercion to convince other interested individuals to agree to the terms or to sign the contract.
What is Contract Delegation?
Contract delegations occur when parties to a contract transfer their duties of performance to an outside third party. The individual who transfers their duties is said to delegate their duties to the other party.
Delegation is similar to assignment, with the exception that in an assignment, the party who receives the performance transfers their benefits to another party. For example, suppose Tom is supposed to pay Bob for painting his fence.
If Bob is allowed, he may choose to delegate his duty to paint the fence to Billy. In this example, Bob and Billy may work out the details regarding payment.
However, Billy will ultimately be responsible for performing the painting duties.
When is Delegation not Allowed?
In general, delegation is permitted in most contractual arrangements. There are, however, certain situations in which duties cannot be assigned, including:
- The delegation would change the nature of the agreement. For example, if a painter was hired due to their particular or unique skill, they usually cannot delegate their duties to another painter, because the other painter would not have the same unique skill that is being requested in the contract;
- The delegation involves a promise to pay a financial debt;
- The parties have agreed in their original contract that delegation is not allowed; or
- The delegation involves or would result in a violation of any law.
Therefore, it is advisable for the parties to a contract addressing the assignment of rights and delegation of duties.
What Happens if Duties Are Delegated in the Wrong Way?
If an invalid delegation of contract duties occurs, it may result in a lawsuit based on a breach of contract. The remedy for this issue may depend upon the exact type of breach that occurred as well as the nature of the contract.
In certain cases, monetary damages may be ordered. In other cases, specific performance of the contract duties may be ordered. The remedy which is ordered by a court will depend upon the totality of the facts and circumstances of each unique case.
Should I Hire a Lawyer for Help with Contract Delegations?
It is essential to have the assistance of a contract lawyer for any issues, questions, or concerns you may have related to contract delegations. Delegating a contract duty should be done in the correct manner and according to state and federal contract laws.
Your lawyer can advise you regarding contract laws in your state, review your contract, and explain your responsibilities under the contract. If a lawsuit is filed related to your contract, your lawyer will be able to assist you with any negotiations and represent you when you are required to appear in court.
