Monday, July 13, 2020

An Intro to Contracts

I remember my Obligations and Contracts 101 subject during my first year in college where I learned a lot from my professor. Obligations and Contracts is the first thing an individual should need to learn first about the law because eventually you will get into one whether it’d be a marriage contract, lease contract, agency contract, etc.

What is a Contract?

So first of all, what is a contract? According to Upcounsel,a contract is an agreement that is legally binding upon the parties. Contractual rights and obligations are enforceable in the court of law. A court may either order specific performance of the obligations or award damages for the financial loss caused due to breach of contract.

Most of the contracts contain some common forms of contract obligations:
Payment: In a contract to buy or sell a product or a service, the buying party usually has a legal obligation to pay the seller for the said product or service. The contract may specify the terms of payment, such as the amount, form, and time of payment.
Delivery: The selling party is usually under an obligation to deliver the sold product or service. The contract may specify the terms of delivery, such as the date and method of delivery.
Quality of Goods: Most of the sales contracts require the seller to provide goods that meet a certain level of quality. A contract may specifically describe the required quality standards.

Contract Examples

The first contract I remember that I’ve gotten into is a loan agreement. The contract simply states that I will borrow 20,000 pesos from a bank and then I agree to pay its monthly payment of P1,800 through automatic bank deduction. I needed to open a checking account from another bank and construct post-dated checks and then submit it to my loan agent. I remember how grueling it was for me to pay the monthly payments especially after I resigned from work 3 months later. It was really a terrible decision to make. I was confident that depositing  3 months worth of payment in advance is enough for me to resign, but I realized that it wasn’t. I should have deposited at least 6 months payment in advance to give me enough time to look for another job. I even asked if I won't be able to pay, what happens? Will I be needing a criminal defense attorney or anything similar? They said no. An agency will simply contact me and ask me why I did not pay and when I intend to pay.  

Another example of a contract, one of which  my professor used to tell us, his students, and one of the most common contracts around is the lease contract. We were asked, “If you are a renter, the one who rents an apartment for example, and let’s say your water pipe broke, are you the one who needs to fix it and pay for damages?” I wasn’t able to read the book in advance, so I answered yes. My professor said, “No. You do not have to pay for it. Damage expenses  incurred in your apartment especially utility damages should be shouldered by your monthly rental fee.” I was actually shocked to know this, but I’m glad I did get to learn it before I enter into such contract.

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