Understanding Contracts: Key Principles and Legal Remedies Explained (Full Transcript)

Speaker 1: Now let's say you have money and I have food. As it turns out, I want money and you want food. So that's great for the both of us. I say, hey do you want food for your money? And you reply with a hearty yes. And once you accept my offer, we have officially entered into an agreement. And the law calls this agreement a contract. Okay, so far so good. So why do we care? Let's say after we make this agreement, you pay me your money and then I say, suddenly I don't like you and I don't want to give you food anymore. You're probably like, wait you can't do that, that's not fair. And that's exactly what the law thinks as well. As long as a contract involves some exchange of value and we're both super serious about our promises, the law will make the contract happen. There's two ways it can do that. First of all, it could tell me, hey you promised to give him food, you should do that. That's the remedy of specific performance. Or more commonly, it could also tell me, since you broke your promise, how about you pay up the value of the food to make amends as if you had done your promise. That's the remedy of damages. Now you're probably thinking at this point, wow the law is really serious about contracts. And you'd be right about that. The law doesn't like destroying contracts at all. That's the principle of sanctity of contract. But of course, exceptional situations exist. Here's three of them. Let's say you pay me your money and all of a sudden my kitchen just explodes and I can't serve you the food anymore. Well that's just too bad for both of us and the law might say that our contract has been frustrated. Or I could tell you that I sell the best potatoes ever and then we enter into that contract between us on that basis. And then you realize I'm not even selling you potatoes. The law is not too happy with that and that's the doctrine of misrepresentation. Finally let's say I hold a knife to your neck and tell you, you better give me your money for my food or else. The law is going to be really unhappy and to that the law says that a contract made under duress is voidable. Of course these are just illustrations that barely scratch the surface of contract law but I hope it's given you a great idea or at least some idea of what the subject is about. If you're a law student watching this, don't forget to do your readings too. But to everyone, law students and non-law students alike, have a great day ahead.