What is a Contract?
Contract is one of the most important types of legal procedures. Through a contract, parties set out the legal norm applicable to them as well as their own laws. In legal terms, a contract is both a legal procedure and a legal relationship.
Form in Contracts
The tool, outline and content used to express an intention is called form. In this sense, each contract, legal procedure or even declaration of intention has a form. There cannot be a declaration of intention without a form. Therefore, in case of a declaration of intention, legal procedure or contract that is not based on a form, this does not imply that they are formless but that the validity of the declaration of intention, legal procedure or contract is not subject to a certain form and they could be conducted in any one of the verbal, written or other official forms, which refers to freedom of form principle. On the other hand, the requirement as to form means that the legal procedure must definitely be conducted in the form stipulated by the law or the parties in order for it to be valid and bring about its consequences.
Benefit of Form in a Contract
Form brings certainty and clarity to a contract. The requirement as to form provides convenience in terms of proof and security as well as openness and trust.
Satisfying the Requirement as to Form
A contract not concluded in the form stipulated by the law will not be valid. In fact, if another provision has been drawn up about the scope and consequences of the form stipulated by the law in accordance with Article 11/2 of the Code of Obligations, the contract concluded without satisfying such requirement as to form will not be valid.
Causes invalidating a contract include impossibility, unlawfulness and immorality of the content of the contract, both parties’ or only one of the parties’ lack of discernment, and thus competency to contract, failure to satisfy the requirements of form, collusion, failure to ratify as required, or certain actions for nullity.
Collusion in Contracts
Collusion is a state of impropriety (prearrangement) that is willfully caused by two parties through their actual intentions and declarations. When determining the form and conditions of a contract, it is necessary to look for the real intentions of the two parties notwithstanding the names and expressions they use to conceal the real nature of the contract.
Undue Influence in Contracts
In case of an explicit imbalance between the mutual deeds (considerations) under a contract and if such disproportion is a result of abusing the financial difficulty or inconsideration or inexperience of the injured party, the injured party may claim back what it has given by giving notice of cancellation of the contract within one year.