Legal Implications of Contracts

Timing

• Once two parties have madeto a contract, both sides are obligated to perform certain behaviors or actions according to the time stipulated in the agreement. For example, a contract between a company and an independent contractor to provide money in exchange for delivery services may require that the contractor receive payment within one business day. The independent contractor may be required to perform his deliveries within 24 hours of being notified.
  
  

Conditions

• Some contracts may contain performance condition clauses. These clauses override a performance obligation by requiring that a certain condition must be met first. A common example of this occurrence is real estate purchase contracts. Some buyers may put a clause into a contract to purchase a new home. The clause might state that the buyer must sell his current home before closing on the new property. If the seller accepts the clause and the buyer is unable to sell his current property, the buyer is not liable to close on the seller's property.
  
  

Performance Standards

• Most contracts stipulate what constitutes acceptable performance and fulfillment of both parties' obligations. Payment might be withheld in the event of substandard performance. A breach of contract suit may be filed against one of the parties if obligations are not fulfilled. There are some types of contracts where adequate performance fulfillment is gray. For example, a construction contractor may promise to build a home with certain types of supplies. If for some reason the contractor is unable to locate those exact supplies, he may be able to substitute a comparable product and still receive payment. The payment may be reduced to account for the difference in quality or the owner may be able to receive damages.
  
  

Releases

• Individuals may be released or excused from contractual obligations if the contract's performance stipulations become impossible or impractical. An example of impossibility would be a real estate contract on a home that is destroyed by a tornado. The sale is no longer possible since the home does not exist. In this situation, the seller is released from his obligation to give the buyer the property. The buyer is released from his obligation to provide the seller money.