You put time and effort into carefully negotiating detailed contracts. Each term and timeline gets carefully thought out and considered until each party agrees. The result is a binding contractual agreement that outlines the duties and responsibilities of each party. Unfortunately, this is where most people stop paying attention to the details of the contract they sign. This is a mistake. This guide will explain the importance of follow-up on contract provisions and how failing to do so can result in an altered agreement and remedies. The lawyers at The Law Office of Jonathan Fleisher, Esq. at (732) 360-6409 can help you develop a contract follow-up and oversight plan to ensure the accurate enforcement of your contractual agreements.

Contract Formation Requirements

Not all agreements are legally enforceable. The New Jersey Superior Court acknowledges agreements that meet these four requirements as legally enforceable contracts:

  1. Offer and acceptance
  2. Meeting of the minds
  3. Valid consideration
  4. Clear and definite terms

As seen from the requirements, there is no stipulation that it must be in writing. However, it is significantly harder to overcome the legal burden of proving a valid contract existed without a written document. Contracts are also not static documents. The parties involved in a contract can change it with mutual agreement and typically involve additional consideration. Given that contracts do not need to be in writing, the contract’s modification does not need to be either.

What Is Contract Oversight?

Once the parties have formed a valid and enforceable contract, they should begin their own contract oversight. This is the practice of reviewing the completed contract and tracking the terms. This includes performing the terms as outlined in the contract. It also includes holding the other party responsible for performing their duty as per the terms of the contracts. This ensures that the original agreement remains in place.

If one party begins to falter from the original terms, then the other party can immediately address this divergence. This protects the party’s interest by performing the due diligence necessary to secure the original terms. The court can construe inaction as complacent acceptance of the new procedure. It also enables both parties to memorialize altered or additional terms in writing.

Quasi-Contract Formation

Sometimes, parties form a legally binding agreement without intending to create a contract. A quasi-contract is one that is retroactively arranged between parties that previously had no obligation of performance to each other. A judge establishes this type of contract by analyzing the circumstances surrounding the agreement. This leaves the contracting decisions up to the court, exemplifying the importance of follow-up on contract provisions. Do not give up control of your contracts by creating a situation where the court determines the party’s intentions and the new terms.

Equitable Remedies

The New Jersey courts understand that business dealings do not always neatly fall into the confines of the law. Sometimes, parties form an agreement with the right intent and actions but lack all of the legally required details. In this situation, the remedy would be an equitable one, not a legal one. The Law Office of Jonathan Fleisher, Esq. represents its clients in court to argue for an equitable remedy when their client suffers a contractual loss.

Promissory Estoppel

The remedy of promissory estoppel is similar to traditional contract formation. It just lacks the formal contract standard formation. The party arguing for contract formation needs to prove four elements.

  1. The other party made a clear promise.
  2. The promising party expected reliance.
  3. The “innocent” party relied on the promise
  4. The justifiable reliance resulted in an identifiable loss.

With this remedy, one party to the contract made additional promises beyond the terms of the contract. The other party relied on those additional promises, was justified in doing so, and suffered a loss as a result. Contract oversight ensures that these additional promises are either not created, or in case they are created, get documented in writing.

Quantum Meruit

Sometimes, parties have interaction and a relationship that is close enough to be a contractual relationship. The court will consider the parties’ intent over their actual actions to form a written contract. This type of remedy applies when parties to a contract have a close relationship. The parties may begin to operate outside of the original agreement. The court will apply a contractual relationship to the additional interactions.

  1. One party performed a service for the other in good faith
  2. The receiving party voluntarily accepted the service
  3. The first party reasonably expected payment
  4. The charges are reasonable

With this type of remedy, one party may have performed beyond the terms of the original contract. The receiving party accepted the additional performance. The performing party expects to get paid for the additional performance and charges a reasonable amount. The receiving party refuses to pay because the additional performance is not included in the original contract. The court will apply the principle of quantum meruit and require the benefiting party to pay the performing party according to the reasonable value of services.

Unjust Enrichment

This remedy is similar to quantum meruit but has a slightly different premise. The remedy of unjust enrichment uses the idea that we as a society have an interest in preventing wrongful benefits. If a party seeks this remedy, they must prove four elements:

  1. The other party benefited from the performance.
  2. It is unjust to let the party benefit without giving compensation.
  3. The performing party expected compensation.
  4. The benefiting party’s benefit unjustly enriched them beyond the contractual rights.

This situation arises when one party performs beyond the terms of the contract and expects compensation for the additional performance. While the benefiting party has not made any promises, it would be unjust to allow them to benefit so greatly without compensation. The goal is to prevent people from taking advantage of others and getting away with it.

Seek Legal Guidance For Your Contracts

Whether there are one or multiple contracts, the importance of follow-up on contract provisions applies. By closely monitoring the terms of each contract, the parties can ensure that both parties adhere to the terms in their original form. Otherwise, the parties create a quasi-contract that contains different terms from the original. This could result in the parties facing a legal requirement to fulfill the new, unintended agreement. Speaking with an experienced lawyer at The Law Office of Jonathan Fleisher, Esq. at (732) 360-6409 can provide you with guidance to oversee your contracts and memorialize changes to the original terms.