Common law is a type of law that arises from judicial decisions, rather than statutes or regulations. It is an important source of law for contracts in many jurisdictions.
Under the common law, contracts are generally considered to be agreements between two or more parties that create legally binding obligations. These obligations may arise from promises to perform certain actions, or from agreements to refrain from certain activities.
One of the important principles of common law is the concept of “precedent.” This means that the decisions made by judges in earlier cases can be used as a guide for future cases. For contracts, this means that the decisions made by judges in previous contract cases can help determine how future contract disputes should be resolved.
For example, if two parties enter into a contract and one party fails to perform as promised, the court may look to previous cases to determine what remedies are available. If a similar case has been decided in the past, the judge may follow the same reasoning and award similar remedies.
Another important principle of common law is the concept of “good faith.” This means that parties to a contract are expected to act in a fair and honest manner, and to not take advantage of the other party.
For example, if one party to a contract learns that the other party is in financial distress, the first party may be obligated to renegotiate the terms of the contract to be more favorable to the other party. This is because the common law recognizes that contracts are not always entered into on equal terms, and that the parties may have unequal bargaining power.
Overall, common law is an important source of law for contracts. It provides a rich history of legal decisions that can help guide the resolution of disputes, and it emphasizes the importance of good faith and fair dealing between the parties. As such, anyone involved in contract negotiations or disputes should be familiar with the principles of common law and how they apply to contracts.