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Business Law

Name

Course

Institution

Professor

Date
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Business Laws

The cornerstone of all transactions, including our everyday activities, is contract law.

Legal system builds its foundations on the principles which are crucial for the matter to be valid,

enforceable, and fair. Beyond the provisions, the statutes of fraud, parol evidence rule, and

assignability are the basis upon which contract law is built (Kubasek et al., 2020). The law of

statute for fraud acts as a protective measure against possible fraud and errors by requiring

certain types of contracts to be legally binding in written form. Also related, the parol evidence

rule, when combined with the statute of frauds, seeks to preserve the validity of the written

contract against the use of other documents that can erode the certainty and finality of the

contractual agreement (Kubasek et al. 2020). These rules help to execute contractual

assignments/delegations and the third parties that are appointed to receive benefits in accordance

with the contract. These laws are created to promote good faith, safeguard the parties’ rights and

duties and guaranteeing the stability and predictable character of commercial relationships that

are based on the existing contracts.

The contracts statute of frauds plays a central role in the contract law which is used to

avoid fraudulence claims and misunderstandings also it requires certain types of contracts to be

well drafted to be enforced. The main objective of the agreement is to confirm that there are

certain provisions that must be met by the parties (Kubasek et al., 2020). Hence, there are more

chances that agreements made orally will not lead to arguments in future. The statute of fraud

was born in the common law of England, and its core provisions taken over by local statutes in

different jurisdictions across the globe.

Some of the contracts that commonly are part of the Statute of Frauds include real estate

deals, deals that cannot be concluded within one year, agreements for paying somebody else's
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debt, contracts for selling goods over a certain monetary amount (under Uniform Commercial

Code), and deals made as a consequence of marriages. These documents or memorandums are

necessary for oral contracts to be enforceable. This doesn't imply, however, that they need to be

formatted like a formal contract (Kubasek et al., 2020). It can take the form of a memorandum,

email communication, text message, or any other written material that clearly outlines the

agreement terms. Along with identifying the types of contracts subject to writing, it is important

to know what writing contents are sufficient to meet the statute requirements. Basically, the

contract should contain the identities of the parties, the subject of the agreement, and the

principal terms and conditions. A form contract would however be ideal, but courts will enforce

even informal writings that are capable of proving the agreement's terms.

The parol evidence rule resembles the Statute of Frauds in that it prevents admission of

oral or written evidence that is contradictory or adds/varies to what is expressly written in the

already integrated piece of written agreement. The purpose of this rule is to make binding and

final those agreements which parties are prevented by it from introducing extrinsic evidence that

runs contra to the terms and conditions of the written contract (Kubasek et al, 2020). The

regulation limits its application only to those of fully integrated contracts which are nothing but

the memorandum of agreement between the parties that is comprehensive and final. A situation

when the parol evidence rule is not an exclusion is recognized as proof of fraud, mistake or

ambiguity in the written contract. If a given contract is considered as being ambiguous, the court

will have the right to provide additional evidence outside the contract in order to find out the

intentions of the parties (Kubasek et al., 2020). And in addition to the evidence of a prior written

contract or one that exists at the same time as that contract which does not contradict the written

contract may also be admitted to support or interpret the terms of the contract.
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Contracts very often comprise the delegation or the assignment of responsibilities and

powers of the third parties that are quite difficult to consider during the engagement of the

contracting parties and the rights of the third parties. Although parties hold the freedom of

assigning their obligations or delegating their rights under the agreement, there are exceptions

and restrictions to the rules (Kubasek et al., 2020). Some rights and duties in a contract are not

assignable or delegated. For instance, personal services contracts can only be delegated with the

other party's consent because the whole performance of the contract solely depends on the

personal skills and attributes of the contracting party. Such obligations can only be assigned with

the other party's consent if they change the assigner's duties materially or increase his

performance risk.

The third-party beneficiary contract is where the first party (the promisor) agrees to

perform a duty due to the second party (the beneficiary). There are three main types of

beneficiaries: donee beneficiaries, creditor beneficiaries, and inadvertent beneficiaries. Donee

beneficiaries are intended to take the benefit under the contract, which is usually in the form of a

donation or a gratuitous pledge (Kubasek et al., 2020). A creditor beneficiary is entitled to the

settlement of a claim, which the promisee is obliged to satisfy. Indirect beneficiaries, however,

are not able to enjoy the benefits of the contract but can still have their rights if the contract is

breached. It is very important to differentiate between these types of beneficiaries to elucidate

their rights and responsibilities under the contract. Beneficiaries that are donors enjoy

enforceable rights against the promisor, whereas creditors that are beneficiaries have enforceable

rights against both the promisor and the promisee. Incidental beneficiaries normally have no
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enforceable rights unless specified in the contracts or if the third parties can show prejudice and

reliance on the contract.

Agreements can be discharged in different ways, such as through performance,

agreement, impossibility of performance, operation of law, or breach. Performance is manifested

whenever parties discharge their contractual duties in line with the terms of the deal. The

termination by mutual consent or rescission happens when the parties concerned agree to stop the

contract. The impracticability of performance arises when performance becomes impossible as a

result of contingent circumstances not foreseen beforehand, namely, destruction of the subject

matter or death of the party.

If a party violates the contract terms by not complying with their obligations, the other

party may proceed to pursue the legal or equitable remedies available. Legal remedies for such

cases could include compensatory damages to cover the non-broken party’s losses, punitive ones

for the predictable damages stemming from the breach, and liquidated damages written down in

the deal (Kubasek et al., 2020). Indemnifying damages, which aim to restore the non-breaching

party to the position they would have been if the contract was performed to the provision of the

agreement, are intended to redress the breach of contract. Fair remedies involve specific

performance where the defaulter has to perform as per their contractual obligations, and

injunctive relief, which is used to stop the defaulter from engaging in any specific actions

(Kubasek et al. , 2020). With respect to the specific performance remedy, money damages should

be avoided where the non-defaulting party does not get a fair and just compensation for the

damages. The aim of injunctions may be ensuring that the destruction is not allowed to continue

or mandating complying with restrictive covenants or non-compete contracts.

Laws governing contracts such as the Statute of Frauds, the Parol Evidence Rule,

assignment and delegation rules as well as the remedies for breach of contract together act as

pillars used to maintain the integrity of our legal system and its functions. Laws establish clarity,

impartiality, and safety for those in contracts. So, their rights and obligations are articulated.

These laws of statute of fraud and parole evidence have a role in preventing parties from fraud

and identifying weaknesses in their evidence. The laws that cover assignments, delegations, and

third-party beneficiary contracts will determine the distribution of rights and obligations among

the parties and will also provide remedy to those who suffered from non-performance of the

obligations of the other parties. In short, these laws make justice, equality, and business conduct

in everyday life clearer and more understandable, which in turn gives the society the stability and

well-being. This impels the need for corporate, individual, and legal professionals to have an in-

depth knowledge of these rules in order for contractual transactions to run smoothly and to

ensure justice and fairness in society.

References

Kubasek, N. K., Browne, M. N., Dhooge, L. J., Herron, D. J., & Barkacs, L. L. (2020). Dynamic

business law (5th ed.). McGraw-Hill Education.