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The Power of the Contract

Why The Lights Come On: The Power Of The Contract

For readers of our blog posts, the educational focus of our articles is not new: each blog is aimed at giving each and every reader a new insight into the wonder of the American legal system. While it is easy to hone in on its sometimes glaring shortfalls, we live in a free, safe, and thriving society where our money is safe in banks, most disputes are not settled by bloodshed, and our clan does not set our future.

The rule of law prevails because of our dedicated judges and attorneys. Listen to the daily world news and you will see how rare this is. Even with this system, and our lofty position as the freest place in the world, a good learning point is found in how we maintain this status — consider the lowly contract.

There are a number of forms it may take, such as oral or written, simple or complex, but each day, every day our way of life is governed and ensured by the contract. Ninety nine plus percent of the time we do not even think about it because that is the way it is supposed to work.

The lights come on and the wall outlet works so you can power your computer and read these words because of a contract, such as that between you individually or your employer and the power company.

It is only where there is a breach of this contract, such as with non-payment of the monthly electric bill and threats to turn the power off that it is even apparent that your contract with the power company to provide power in exchange for payment of the monthly bill that this comes to have meaning.

In short, every aspect of every day of American life occurs by a contract in some regard. For this reason, as advocates and educators, Ciyou & Dixon, P.C. attorneys believe it is important for everyone to have a little bit of understanding of the contract and contract law. This blog post aims to provide just that.

At the broadest level, a contract is a promise between two people or entities to provide X good or service in exchange for a certain amount of dollars. Because goods move more readily between states and are more or less uniform, they are governed by the Uniform Commercial Code. Services, such as power, are governed by ordinary state contract law.

Beyond this, assuming services are at issue, contracts may be short or very lengthy. Sometimes there is no apparent reason for the terms and conditions. However, for the most part contracts apportion risk between the parties and define how disputes will be resolved. For instance, a common provision in a services contact may be an indemnity clause.

Take the ordinary building elevator as an example. If the owner of the building has an elevator built and maintained in the facility, it is likely that the service provider or seller of the elevator will indemnity and hold harmless the building owner from claims of passengers if the elevator fails and falls. While unlikely, this means that if this occurs and a building tenant is injured, and he or she sues the building owner, this owner will claim indemnity for any liability for the elevator from the elevator company.

The elevator company will, in turn make a claim against his or her insurance to pay out sums thereunder, under the elevator company’s insurance policy with the insurer. That is the complex way contracts work on multiple levels for each and every thing we encounter in daily life.

If the insurance carrier is unable to pay any claim or judgment, and/or the carrier refuses to pay or files for bankruptcy, then the liability falls back to the elevator company. If the company cannot pay, then the building owner is on the hook.

All of this is even more reason to understand what a contract does and does not do and insure against foreseeable risk, understanding there is always other risk, a cost of doing business.

As advocates, we at Ciyou & Dixon, P.C. hope you find this post useful in assessing the acts of daily life that are controlled by contract law. This powerful tool governs life, apportions risk, and allows us to operate independently of the legal system for the most part, but where there is a breach of contract, obtain relief through the courts.

We hope you find this introductory blog post on contracts informative and applicable in daily life. If so, it is has met it goal. This blog post is written by Bryan L. Ciyou, an attorney at Ciyou & Dixon, P.C. Ciyou & Dixon, P.C. attorneys practice throughout the State of Indiana.


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Dixon & Moseley, P.C., is a law firm located in Indianapolis, Indiana. We serve clients in six core practice areas: family lawappellate practicefirearms lawgeneral practicepersonal injury and criminal law.

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