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What Is the Law of Obligations?

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  • Written By: Mary McMahon
  • Edited By: Nancy Fann-Im
  • Last Modified Date: 01 November 2016
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The law of obligations is the area of the law pertaining to the creation of responsibilities between two or more parties who enter a contract. The contract creates a legal relationship that includes certain obligations each party must meet. Should one fail to do so, another can take her to court, and may rely on the law of obligations to demonstrate that she is in the wrong. The specifics of the law vary between nations and typically include a large body of legislation and case law.

In a situation where two or more parties create a contract, it includes mutual obligations that all parties are bound to. For example, in a real estate sale, one party agrees to pay money to the other in exchange for the title to the property. The buyer has the obligation to make this payment, while the seller has an obligation to surrender the title. In addition, the contract may create other obligations such as a requirement to disclose known problems with the property.

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Under the law of obligations, contacts must clearly spell out duties and responsibilities to eliminate any confusion about what the parties should expect. These cannot be illegal in nature; a drug dealer, for example, cannot enter a contract requiring payment for his products and expect to be able to enforce it in court. All parties to the contract should have obligations and must receive due consideration under the terms of the contract. In addition to an obligation to pay, for example, there is a right to get what was paid for.

Duties under the law of obligations also include limits on unjust enrichment in legal relationships. An executor, for example, cannot remove profits from the estate for personal gain, just as a personal finance adviser cannot make recommendations that would harm a client's interests. If a party to a contract can prove that the other party engaged in unjust enrichment, this can be grounds for a suit to recover damages. The wronged party may request a repayment of the ill-gotten gains, and can also file for additional damages in some cases.

Approaches to the law of obligations vary by nation. With international contracts, it is important to read the document carefully, understand the jurisdiction it falls under, and get familiar with the laws of that jurisdiction. This can be important if there is a dispute, as one party may have an advantage in a situation where the other is not quite certain about how the law applies to the case.

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