A contract entails an actionable promise that can be legally binding and thus enforceable. In section 1 of the American Law Institute’s Restatement Second of the Law of Contracts, it was denoted that "a contact is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes a duty’’.
In the beginning of the 19th century, an intention alone did not suffice and for a contract to be regarded as lawful, it had to be proved that it was made after considering further legal consequences. A simple declaration of intention made in the heat of a moment will not establish a binding promise. An agreement between parties would only be considered an enforceable contract if it was in writing, stating that those parties had indeed intended to form a legally enforceable contract. It is important to specify that there are agreements made between specific parties which will not be treated as actual contracts under the precise area of law. Some agreements are just mere arrangements which will never be treated as contracts because of their ordinary nature. The conclusion of the abovementioned is that an intention to create legal relations is the key when it comes to the formation of a contract under Cypriot Law. Such agreements might be named as social or family arrangements, and of determining intention.
A basic principle of the formation of a binding contract is freedom of choice. The law assumes that the parties enjoy freedom of economic decision when entering into contracts. The concept of freedom of contract is two tailed. For instance, a party has the freedom to choose to enter into a contract setting any rules it assumes profitable, or reject to enter into any kind of agreement. This principle is evident throughout Lord Diplock’s observation that the parties have the advantage to determine which duties or responsibilities they are willing to accept. In other words, if an individual enters into a relationship without any sign of freedom of choice, then the contract will most likely not be considered binding by the Courts.
The formation of a contract indicates that the contract will be carried out accordingly. In the event that a party fails to meet its contractual obligations, the injured party will be protected by receiving compensation. For example, if a party was refused any payment by the other party then the first party will be compensated in a way that he/she will be brought in the same position he/she would have been in had the contract been carried out successfully, based on the terms of the contract. For the parties’ protection of expectation, any kind of damage occurred from non-performance will undoubtedly be recoverable. This interpretation is accepted and performed in every established legal system. Therefore, any damages suffered by the party which entered into a problematic contract will be compensated, and the party who did not act lawfully will suffer the corresponding loss. The aim of this ruling was to discourage any reckless behaviour and encourage parties that enter into transactions to be more conscious about the significance of a contract’s construction.
Amongst others, we handle contract law disputes related to: