Common law is a term used to describe the legal principles and rules that have been established and evolved over time through court decisions, rather than through statute or written law. In the context of contracts, common law refers to the body of legal principles that govern the formation, enforcement, and interpretation of contracts.
At its core, a contract is a legally binding agreement between two or more parties. A contract can be formed through the exchange of a promise or promises, or through the transfer of something of value. The terms of a contract can be express (i.e., explicitly stated) or implied (i.e., inferred from the parties` conduct or the surrounding circumstances).
Under common law, the formation of a contract requires three essential elements: an offer, acceptance, and consideration. An offer is a specific proposal made by one party to another, indicating a willingness to enter into a contract on certain terms. Acceptance is the unconditional agreement of the party receiving the offer to the terms of the agreement. Consideration refers to the exchange of something of value between the parties, such as money, goods, or services.
Common law also establishes rules governing the interpretation and construction of contracts. In cases of ambiguity or uncertainty, courts will examine the surrounding circumstances and use principles of interpretation to determine the parties` intentions. For example, if a contract contains conflicting terms or is silent on a particular issue, courts may look to the parties` past dealings, industry custom, or other extrinsic evidence to help clarify the parties` intentions.
Moreover, common law also establishes rules governing the enforcement of contracts. A breach of contract occurs when one party fails to perform its obligations under the agreement. In such cases, the non-breaching party may seek damages or specific performance (i.e., a court order compelling the breaching party to perform its obligations).
In conclusion, common law is an essential component of contract law that governs the formation, interpretation, and enforcement of contracts. Understanding the basic principles of common law can help individuals and businesses navigate the complex world of contracts and ensure that their agreements are legally enforceable.