The Principle of Freedom of Contract

The principle of freedom of contract is a fundamental legal concept that allows for parties to enter into agreements without undue governmental interference. This principle is rooted in the belief that individuals should be allowed to make their own decisions regarding the terms of their contracts and that these decisions should be respected by the law.

Under the principle of freedom of contract, parties are free to negotiate and agree upon the terms of their contractual relationship. This means that they are not required to follow any particular form or structure when creating their agreement, and they are not limited in their ability to agree to any particular terms. The parties are also free to choose the other party with whom they wish to contract.

However, the principle of freedom of contract is not absolute. There are certain limitations and restrictions placed on the parties in order to ensure that the agreements they make are fair and reasonable. For example, contracts that are entered into under duress or coercion are not enforceable because they do not reflect a voluntary agreement by the parties. Similarly, contracts that violate the law or public policy are not enforceable.

One important limitation on the principle of freedom of contract is the requirement that contracts be in writing. Although oral contracts are generally enforceable, there are certain types of contracts, such as those involving the sale of real estate, that must be in writing in order to be enforceable.

Another important limitation on the principle of freedom of contract is the implied covenant of good faith and fair dealing. Under this covenant, parties are required to act in good faith and deal fairly with one another when negotiating and performing their contracts. This means that they are not allowed to engage in conduct that would undermine the agreed-upon terms of the contract or take advantage of the other party in an unfair or unreasonable manner.

Overall, the principle of freedom of contract is an essential component of the legal system. It allows parties to enter into contracts that reflect their own interests and needs, while still providing important protections for both parties. However, it is important to understand the limitations of this principle and to ensure that contracts are entered into and performed in good faith and with fairness to all parties involved.