Contracts are concluded when an obligation arises from a commitment made by either party. To be legally binding as a treaty, an undertaking must be exchanged for an appropriate counterpart. There are two different theories or definitions of reflection: Bargain Theory of Consideration and Benefit-Detriment Theory of Consideration. The detailed statement of contractual terms provides the Tribunal with a guide to deciding the case when a party alleges an infringement. This helps the Tribunal to rule on the merits of the complaint and to determine the appropriate remedy in the event of a party`s non-compliance with its obligations. An exchange of goods or services for “consideration”, which is usually money but can be valuable, is necessary for the agreement to be legally binding. The parties may be sued for non-compliance with the obligations arising from the contract. There may also be restrictions in the treaty. Imagine that you have entered into an employment contract with a company to work for $55,000 a year, plus benefits and for a period of two years.
You might be quite happy about that. But if, a month later, another company offered you the same position in their company, but for a salary of $65,000 a year, plus benefits. The best offer does not invalidate your first contract. In this case, your first contract would likely include a non-compete clause that would prohibit you from working in a similar function for a certain period of time and a given geographical area. Therefore, even if you decide to violate your first contract to enter into the second, the non-competition clause would prohibit you from doing so. A simple contract – oral, written or implied – that is not marked with a seal requires consideration to be legally binding. This means that each party has to trade in something valuable. Under customary law, all contracts, as well as an offer and an agreement, must be subject to consideration to be valid. Each contract must include a specific offer and acceptance of that specific offer.
Both parties must accept their free will. Neither party may be coerced or compelled to sign the contract and both parties must agree to the same terms. These three conditions imply the intention of the parties to conclude a binding agreement. There are many types of commercial contracts, including sales contracts, service contracts, distribution agreements, licensing agreements, manufacturing and supply agreements, employment contracts, trade credit agreements, leasing agreements, and contracts for the sale and sale of real estate or capital. . . .