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PART II: Contract Liability (cont'd)

About Contracts and Warranties

A "contract" is a legally binding agreement between two or more parties. It may be "express," but it need not be in writing, or it may be "implied" or "constructive." An express contract is the actual agreement of the parties. A written contract is an example of an express contract, and is easiest to prove because it is in writing. An oral contract is also an express contract and is just as binding as a written one, but is harder to prove. An implied or constructive contract is a legal fiction which the courts invent in circumstances where no express contract exists, but where it is just that one party should have a right and the other be subject to a liability, similar to the rights and liabilities in cases of express contracts. Examples of situations wherein a court would invent a contractual duty are where an engineer who has not agreed to perform services nevertheless accepts credit for them, where a client who has not agreed to purchase the services nevertheless accepts the benefit of them, or where an engineer permits his name to be used in such a way that the public is misled to believe that a contracting party is acting with the engineers authority.

A "warranty" is a promise that a fact is as represented. Warranties may also be either express or implied, and an express warranty may be written or oral. Implied warranties are derived from the nature of the transaction or the circumstances of the parties to the contract. One of the most common examples of an implied warranty is that a product or service is reasonably suitable for the general purpose for which it is sold. Another important example of an implied warranty is that a product which the parties know (or should know) will be used for a specific purpose is suitable for the intended use. Since most biomedical engineering services and medical devices are intended for a special purpose, implied warranties are important to biomedical engineers.

Damages arising from contract liability are usually calculated from the expectations raised by the contract. For example, if an engineer promises services of a specific quality, but is unable to provide them, the client's damages would include the additional cost of obtaining services of that quality elsewhere.

Next - Assignments and Licenses as Contracts and Warranties
Previous - About Assignments and Licenses

 


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