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A contract is a legally binding agreement that recognises and governs the rights and duties of the parties to the agreement. A contract is legally enforceable because it meets the requirements and approval of the law. An agreement typically involves the exchange of goods, services, money, or promises of any of those. In the event of breach of contract, the law awards the injured party access to legal remedies such as damages and cancellation.
In the Anglo-American common law, formation of a contract generally requires an offer, acceptance, consideration, and mutual intent to be bound. Each party must have the capacity to enter into the contract. Although most oral contracts are binding, some types of contracts may require formalities such as being in writing or by deed.
Each country recognised by private international law has its own national system of law to govern contracts. Although systems of contract law might have similarities, they may contain significant differences. Accordingly, many contracts contain a choice of law clause and a jurisdiction clause. These provisions set the laws of the country which will govern the contract, and the country or other forum in which disputes will be resolved, respectively. Failing express agreement on such matters in the contract itself, countries have rules to determine the law governing the contract and the jurisdiction for disputes. For example, European Member States apply Article 4 of the Rome I Regulation to decide the law governing the contract, and the Brussels I Regulation to decide jurisdiction.
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- In England, contracts of employment must be in writing (Employment Rights Act 1996), and contracts for the sale of land, and most leases, must be completed by deed (Law of Property Act 1925).
- This category of "obligations" is essentially a fusion of contract and tort, and while cases such as Junior Books Ltd v Veitchi Co Ltd promoted this idea, it has fallen out of favour in English legal circles.