# How conflicts with contracts work

An "executory contract" hasn't been fully performed or executed, and is usually where most disputes can arise.

Several possible reasons can form the basis of a bad contract.

1. The contract itself can't be [illegal](people-rules.md) or [unjust](morality-justice.md) ("unconscionability").
2. There mustn't be any "misrepresentation" or "mistake" between the facts and the contract's terms during the negotiation:
   - The relative experience of the parties.
   - How much a party proves they rely on what they say.
   - Reassurances given by a party.
   - [Customary norms](people-culture.md) of the trade itself.
   - The representation is actually making a secondary collateral contract.
3. There can't be any threats or unequal bargaining power (i.e., coercion or undue influence), and can't be acting in bad faith ("clean hands doctrine").
4. A signing party can escape performance of an agreement when it's fundamentally different from what they intended to sign ("non est factum").

If a party doesn't fulfill their duties to the effect that it denies the main benefit of a contract, it becomes a "breach of contract".

- While most breaches only terminate the contract partly, a "fundamental breach" can nullify an entire contract.
- An anticipatory breach/repudiation involves one party clearly showing intent to not perform in the future according to the contract.
- A breach of condition is a specific breach of a particular condition of a contract. Often, a "condition" may simply be a "warranty" or be an "innominate term".
- An efficient breach is a voluntary breach of contract and payment of damages by a party who concludes they'd incur greater economic loss by performing under the contract.
- A deviation is when the carrier of a contract of carriage takes an entirely different route than an agreed-upon path.
- In a lease, the lessor can deliver notice to pay or quit (in a failed payment) or a notice to cure or quit (to fix a problem).
- Debt evasion involves intentionally avoiding creditors' attempts to collect or pursue their debt.
  - However, there *are* scams, so a consumer has a right to challenge a debt or receive written verification of that debt from a debt collector.

A few clauses can indicate how a dispute arising under the contract will be determined:

- "Choice of law" - Determined by the law of a particular jurisdiction.
  - "Lemon laws" protect purchasers from low-quality products [marketed](marketing.md) as high-quality (typically [autos](autos.md)).
- "Forum selection" - Resolution will be within a specific forum, which classifies into 3 categories:
  1. Resolved with a dispute resolution process, which can include a hearing with a special referee or expert determination, mediation, or arbitration.
  2. Litigation in a mutually agreed-upon court, which *must* be indicated, or it'll create a conflict of law called "dépeçage".
  3. A combination of the two, with a dispute resolution process, and clarifying which jurisdiction's litigation if it fails.

Using an "arbitration" clause has pros and cons compared to a civil court case:

- An arbitration process is often faster and less expensive than court litigation, though the "discovery" process may be limited or nonexistent.
- Arbitration awards are generally harder to enforce than court decisions (i.e., seeking legal action to "confirm" the award), though they're also *easier* to enforce across nations ([New York Convention 1958](https://en.wikipedia.org/wiki/Convention_on_the_Recognition_and_Enforcement_of_Foreign_Arbitral_Awards)).
- The parties can choose their own tribunal, which may be very useful if the situation is [highly technical](jobs-specialization.md).
- Arbitration proceedings are generally non-public, and can be made confidential, though there are often *presumptions* of confidentiality among the parties that aren't honored.
- The parties can typically choose their arbitration language, while courts automatically apply formalized language according to that country's courts.
- Most legal systems give *very* limited avenues to appeal a decision compared to arbitration, but the arbitration language defines the constraints of an appeal.
- If the arbitration is mandatory and binding, the parties waive their rights to access the courts, with a judge and jury deciding the case.
- A judge generally has no reason to lean one way or another, but repeat business for the arbitrator gives them incentive to rule against the interests of the employee or consumer.

Ideally, "mediation" resolves the issue while [making all parties satisfied](people-conflicts.md):

- The very fact that parties are willing to mediate means they're willing to "move" on their position.
- Professional mediators are trained to work with difficult situations, and guide the parties through the process while assisting in finding [creative solutions](mind-creativity-how.md) for the conflict.
- Mediation is much more affordable than arbitration or civil suits, and can be resolved within a matter of hours with a competent attorney present.
- The entire arrangement is strictly confidential where many mediators destroy their notes once it's finished, to the point that many courts can't enforce a mediator to testify in court about the mediation with the possible exceptions of child abuse or criminal acts.
- All parties have tremendous control over a resolution.
- Since everyone is working together, people tend to comply with mediation rulings.

Either way, the results of a conflict will arrive with a few possible results:

- If you can avoid court entirely, you'll be able to reach a "settlement" in lieu of the full scope of damages.
- "Damages" are the simplest and most common form, with the payment coming from arbitrary calculations made by a judge. These "expectation damages" can range from concretely measurable (e.g., automotive repair) to emotional.
  - Damages are classified as "heads of loss", with each head defining a different scope of damages.
  - Most of the time, a buyer breaching contract by not purchasing can leave the seller at a loss (because they had to sell it to another buyer for less), but a seller who sells at the *same* price can still collect damages as a lost volume seller.
- "Specific performance" will be an order for a party to perform a specific act, which is typically only in the sale of land law because most other situations can involve paying out damages.
- If a buyer of goods has experienced an anticipatory breach and has to pay more for an alternative source of those goods, then can file a suit to collect damages on the difference ("cover").
- In the case of a partial situation that frustrates performance (e.g., an intervening "act of God"), there can be an assessment ("quantum meruit" for services and "quantum valebant" for goods) to determine "unjust enrichment".
- If a defendant refuses to pay what they were deemed to owe, they may have their income "garnished" later by a court.