Contracts and Commercial Transactions
Formation and Terms
Formation requires offer, acceptance, intention to create legal relations, capacity, legality and sufficient certainty; common-law systems add consideration, while civil-law systems typically rely on cause or the parties' agreement instead. An invitation to treat is not an offer, a counteroffer kills the original offer, and acceptance can occur by conduct or performance.
Separate the building blocks, because remedies differ. Representations are pre-contract statements inducing the deal; warranties are contractual promises giving damages; indemnities are payment obligations that can bypass ordinary causation and mitigation rules; covenants are ongoing promises. A breach of a warranty sounds in damages; breach of an indemnity triggers a direct payment obligation. Read caps and exclusions carefully: a liability cap usually covers warranty claims but reaches indemnities only if expressly stated.
Other traps: liquidated damages are enforceable only if a genuine pre-estimate (or, in modern tests, not out of all proportion to legitimate interest); otherwise they are an unenforceable penalty. Force majeure depends entirely on the clause wording - "frustration" is the narrow default doctrine. Entire agreement and non-reliance clauses limit extra-contractual claims. Assignment transfers rights; novation replaces a party and needs all parties' consent. Third-party rights exist only where the law or the clause grants them.
Rule of thumb: before advising on breach, list the operative clauses in order - scope, conditions precedent, warranties, indemnities, limitation of liability, termination, governing law.