Formalities and writing requirements - Contract

Formalities and writing requirements for some contracts

Main article: Statute of frauds

A contract is often evidenced in writing or by deed, the general rule is that a person who signs a contractual document will be bound by the terms in that document, this rule is referred to as the rule in L'Estrange v Graucob.^[41] This rule is approved by the High Court of Australia in Toll(FGCT) Pty Ltd v Alphapharm Pty Ltd.^[42] But a valid contract may (with some exceptions) be made orally or even by conduct.^[43] Remedies for breach of contract include damages (monetary compensation for loss)^[44] and, for serious breaches only, repudiation (i.e. cancellation).^[45] The equitable remedy of specific performance, enforceable through an injunction, may be available if damages are insufficient.

Typically, contracts are oral or written, but written contracts have typically been preferred in common law legal systems;^[46] in 1677 England passed the Statute of Frauds which influenced similar statute of frauds laws^[47] in the United States and other countries such as Australia.^[48] In general, the Uniform Commercial Code as adopted in the United States requires a written contract for tangible product sales in excess of $500, and real estate contracts are required to be written. If the contract is not required by law to be written, an oral contract is valid and therefore legally binding.^[49] The United Kingdom has since replaced the original Statute of Frauds, but written contracts are still required for various circumstances such as land (through the Law of Property Act 1925).

An oral contract may also be called a parol contract or a verbal contract, with "verbal" meaning "spoken" rather than "in words", an established usage in British English with regards to contracts and agreements,^[50] and common although somewhat deprecated as "loose" in American English.^[51]

If a contract is in a written form, and somebody signs it, then the signer is typically bound by its terms regardless of whether they have actually read it ^[41][42] provided the document is contractual in nature.^[52] However, affirmative defenses such as duress or unconscionability may enable the signer to avoid the obligation. Further, reasonable notice of a contract's terms must be given to the other party prior to their entry into the contract.^[53][54]

An unwritten, unspoken contract, also known as "a contract implied by the acts of the parties", which can be either an implied-in-fact contract or implied-in-law contract, may also be legally binding. Implied-in-fact contracts are real contracts under which the parties receive the "benefit of the bargain".^[55] However, contracts implied in law are also known as quasi-contracts, and the remedy is quantum meruit, the fair market value of goods or services rendered.