Contract law in Cyprus is one of the most significant areas of law as it is in the heart of all business dealings and it can involve various situations and complexities. Under common law and as codified by the Cyprus Contracts Law, Chapter 149, Contract law can be defined as the set of rules governing the relationship, the content and validity of an agreement between two or more persons, individuals or legal entities, as regards the sale of goods or the provision of services or the exchange of interests or ownership.
In a more classical and formal way contract law can be perceived as a set of promises which the law will recognize and enforce or as a set of power-conferring rules which enable the persons to enter into agreements of their own choice on their own terms.
Either definition contains the involvement of the law by way of enforcement, meaning that if there is a breach of the terms of the agreement then the injured party may seek remedies and compensations via the Courts.
Contract law in Cyprus has set the basic elements of any contract that it must contain to make the agreement enforceable in law. The most essential elements are the “offer” and “acceptance”. An “offer” is a statement by one person of a willingness to enter into a contract on stated terms and the “acceptance” is the unqualified expression of assent to the terms proposed by the offeror. This can be called a “concurrence of wills” or “meeting of the minds” of two or more persons.
Another significant element of a contract is the requirement of “a valuable consideration”. Consideration in its classical definition is that a promisee is not able to enforce a promise unless he has given or promised to give something in exchange for the promise or unless the promisor has obtained something in return. Consideration must be “valuable” meaning that it must be something capable of estimation in terms of economic or monetary value.
Also, with the agreement between two or more people containing an offer and acceptance and a valuable consideration there must still be the requisite “intention to create legal relations”. This is a very important feature of a contract in Cyprus because it can clarify in which cases we have domestic and social agreements where the parties did not want to create legal relations, and in which cases we have commercial and business agreements where is clear that the parties did intend to create legal relations.
Furthermore, another important element of a contract is the “contractual capacity” of the persons entering the agreement, meaning that if they are minors or mentally incapacitated they have limited contractual capacity and they are generally not bound by contracts because the contract law seeks to protect such persons of their own inability.
Moreover, the “legality of purpose and form of contract” acts as a general rule in contract law and it does not allow the courts to enforce a contract which is illegal because its formation is expressly or impliedly prohibited by statute or which is contrary to public policy.
Finally, if any person entered an agreement due to a misrepresentation about a fact or law which is material and which induces the contract or due to a fundamental mistaken assumption or if the person entered the agreement without his free consent due to duress or undue influence then the Courts can set aside the contract to protect the parties who have been misled or abused.
There are three ways in which contracts under Cyprus law can be set aside. A contract could be deemed as “void” meaning that it never came into existence or “voidable” meaning that one or more parties declared the contract ineffective at their wish or “unenforceable” implying that neither party can go to the Courts and ask for remedies.
In conclusion, from the definition and formation of contract law and of the contract itself as all have been described above it can be seen that contract law is the area of law that has the most serious impact in our everyday life since it deals with all kinds of matters like for example with the purchase and selling of goods and services or property, or with matters of employment, or even to social and recreational activities such as buying a drink in a club. Contracts are created all time around us.