18 January 2008

A contract is a meeting of minds between two persons. A meeting of the minds. It doesn’t have to be written down anywhere. It just happens when one person binds himself, with respect to the other, to give something or render some service. When two persons bind themselves to do something for each other, it’s called a reciprocal contract. In reciprocal contracts, each person has the implied power to withdraw from the agreement, in case the other one doesn’t comply with what he’s supposed to do. There are two common grounds for ending your contract. These are (1) a breach of the terms of the contract, or (2) a fortuitous event (things which are unexpected and cannot be avoided, like a natural disaster) happening. When those things happen, you can get out of the contract and no one can complain. Of course, sometimes neither happens. No calamity occurs. Party A did not breach the contract, but Party B suddenly decides to opt out, for a variety of reasons. Maybe Party B has issues. In which case, Party A has no choice. No court of law will force Party B to stay in a contract against his will. Party B will simply be liable for the damages he has caused Party A by moving out based on grounds which were not agreed upon. However, Party A can choose not to sue for damages. Party A can waive these and move on by agreeing to the termination. He can even negotiate a new agreement, i.e. the terms of how Party B will move out, what happens next, etc. In this situation, a new and even better contract can arise, now with different terms and obligations. If everyone abides by the new contract, then everybody’s happy. Sometimes it really is just that simple.

(Your problems really begin when you start employing all sorts of permutations like conditional obligations, aleatory contracts, solidarity, suspensive and resolutory conditions, fraud, and oh, third parties. These are the seeds of a dysfunctional life.) 


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