Best if printed in landscape.
segment of course will address contract law. We have already discussed
rights associated with property and the right everyone has to not be injured
and to not have their property damaged; i.e., torts.
of contracts is divided into four sections:
purpose, and examples of when contracts are used,
and implied terms of a contract, and
contractual obligations, remedying a breach of a contract, and concluding
thoughts about contracts.
can be described as self-imposed court-enforceable legal obligations that
are not contrary to public policy or law. That is, when entering
into a contract, the parties to the contract are agreeing that each party
has certain rights they can rely on the legal system to enforce.
- A contract is an
agreement wherein the parties to the contract are bound with an obligation
or legal duty to do a certain thing or to refrain from doing a certain
thing. See N.D.C.C.
as a result of entering into our contract, I have obligations to you
that our legal system will require me to fulfill. I entered into
this agreement voluntarily; I assumed or accepted these obligations
voluntarily. Our legal system did not force me to accept these obligations,
but now that I have accepted the obligations, the legal system will
require me to fulfill them. However, I entered into this agreement
knowing you entered into this agreement too; that is, you also have accepted
obligations to me that I can rely on the legal system to enforce. These mutual obligations to one another are a fundamental characteristic
of a contractual relationship.
law differs from property and tort law in that the persons entering
into a contractual agreement have considerable flexibility (but not
unlimited flexibility) to define the legal obligations they will impose
on themselves and the rights they will grant the other party. Restated,
contracts allow us to define enforceable legal rights relative to the
other person who has agreed to the arrangement.
the concept of a contract?
Contracts allow us to customize or individualize our legal obligations
and rights relative to the other contracting party, but our legal obligations
to those who are not part of the contract are not altered.
bring predictability to our interactions - both in terms of knowing
what each other will do based on our agreement and knowing what each
other will be required to do by the legal system if we do not fulfill
our agreed-upon obligations. Thus contracts allow us to take subsequent
actions knowing we have an agreement. Hopefully, these additional actions
will lead to further benefits.
Example - a landowner and farm operator enter into an agreement
wherein the operator will lease the land from the owner. Once the agreement
has been reached, each party can take additional actions confident that
the agreement will be enforced. The owner may invest in materials to
build a fence on the land knowing the operator will pay rent. The operator
is now willing to borrow from the bank and purchase inputs knowing that
the operator has permission (the right) to farm the land for the duration
of the lease. Both parties also know that if the other party backs out,
the legal system will require the breaching party to compensate the
non-breaching party. In this example, the operator would be required
to pay the rent at the agreed upon time and the owner would be required
to transfer possession of the land to the operator for the agreed upon
contract is a voluntary arrangement . You decide whether to
accept the legal obligations; no one can require you to assume a contractual
obligation (do not confuse "requiring" with motivating, encouraging,
or providing an incentive).
enter into contracts for a variety of purposes. In class, we will focus
on contracts businesses are likely to enter into; these generally pertain
to the temporary or permanent transfer of economic resources such as land,
labor, capital, information, and risk.
of transactions involving economic resources:
of land; leasing land;
an employee; hiring an independent contractor;
cash; investing cash in a busines; sale/purchase of inventory items
such as seed, feed, livestock, fuel, building materials, parts; sale/purchase
of capital assets such as equipment, machinery, vehicles; leasing
capital assets such as equipment, machinery, vehicles;
production information/technology; purchasing market information;
acquiring permission to use copyrighted materials or patented technology;
- managing risk through
insurance, indemnity clauses, or wavier of liability clauses.
of these business transactions involves a contractual relationship.
This course will not address all of these in detail but will use a variety
of these transactions to illustrate various legal concepts.
contracts involve more than one economic resource; e.g., sale and application
of fertilizer in which case the contract involves both purchasing personal
property (the product) and hiring the service of an independent contractor.
Increasingly, contracts in agriculture address use and control of information
and risk management, as well as sale or lease of assets or hiring a worker.
contracts are a one-time occurrence that is immediately executed/fulfilled
(e.g., purchase of gasoline at a convenience store), other contracts
are arrangements/obligations that extend over a long period of time
(e.g., a five-year lease agreement), while still other business arrangements
may be a series of short contracts.
- Some contracts
are primarily for the sale/purchase of property such as buying feed;
other contracts focus on the characteristics of the item being purchases
such as a commodity produced using organic practices versus GMO technology
versus traditional production technology. Some contracts focus
on performing a service (hiring a custom sprayer to apply a pesticide
or a harvestor to combine the crop); others focus on timely performance
such as delivery dates for feed.
- But do not overlook
that an important function of a contract is to manage risk, and increasingly,
to control access to information.
Summary of Key Points
- Contracts are voluntary arrangements whereby we define our relative legal rights and obligations but the agreement will be enforced through our legal system.
October 29, 2007