Bill: Proposed Modern Contracts Act

[multiman155]

Sponsor: Multi Man, MP
Type: Act of Parliament

A
BILL
TO
AMEND THE INTELLECTUAL PROPERTY ACT, FINANCIAL CONSUMER PROTECTION ACT, INACTIVE REQUISITION ACT, AND GOVERNMENT CONTRACTS ACT 2.0; REPLACE THE CONTRACT ESTABLISHMENT ACT; AND STATE THE GENERAL LAW OF CONTRACTS​

Preamble: Contracts should be enforceable without unnecessary formalities. This Act states the general rules for agreement, breach, remedies, and existing rights. It also protects ordinary citizens from predatory contractual clauses and preserves a right to action in the courts regarding contractual disputes.

1. Short Title and Enactment

(a) This Act may be cited as the "Modern Contracts Act".

(b) This Act takes effect immediately upon passage.

2. Application and definitions

(a) This Act governs contracts between private parties and contracts with the government.

(b) A "void" agreement or term is an agreement or term with no binding legal effect.

(c) A "voidable" agreement or term is an agreement or term that remains binding until the party entitled to void it gives the other parties notice of that decision.

(i) Any notice given to void a voidable agreement or term must identify the agreement or term and the grounds for voiding it. ​

(d) In the context of a contract, "the bargain" refers to the substance of the voluntary agreement between two or more parties in exchange for consideration.

3. Agreement

(a) A contract forms when an offer is accepted, consideration is present, and the parties intend a binding agreement.

(i) In bilateral contracts, consideration is present when each party gives or promises something in exchange to the other. In contracts involving more than two parties, consideration is present when each party is given or promised something by at least one other party and each party gives or promises something to at least one other party.​

(b) Acceptance may be spoken, written, or shown by conduct. Silence alone is not acceptance.

(i) An amendment requires the assent of each party whose rights or duties it changes. Assent may be spoken, written, or shown by conduct.​

(c) An agreement includes an implied reasonable term to fill in minor details when the parties intended to be bound without fixing those minor details.

(d) An agreement remains binding without an unenforceable term if it can operate without that term and preserve the essential bargain.

(e) A term that gives a private person or body the power to impose a binding decision in a contract dispute is void.

(i) A contract term that excludes courts from deciding a contract dispute is void.​

4. Defects in agreement

(a) An agreement is voidable by a party who agreed because of material deception or a threat to commit an independently unlawful act.

(b) Material deception means a knowingly or recklessly false statement about a material fact, or deliberate concealment of a material fact that a party was legally required to disclose.

(c) An agreement is voidable by a party if both parties were mistaken about a basic fact that existed when they agreed, the mistake materially changes the bargain, and that party did not accept the risk of mistake.

(d) An agreement is voidable by a party who made a material mistake about a basic fact that existed when the parties agreed, if the other party knew or clearly should have recognized the mistake.

(e) An unconscionable term is void. A term is unconscionable when it is unconscionable per se or per quod.

(i) A term that is unconscionable per quod is a term that creates a severe, unjust imbalance in the rights and obligations of the parties, especially when heavily favoring the side that drafted the agreement while exploiting or oppressing the other party.​

(ii) A term that is unconscionable per se shall include the following:​

(1) Terms that waive liability for gross negligence, recklessness, or intentional torts, or waive all liability;​

(2) Terms that require arbitration or mediation, whether binding or non-binding, before a party may file a lawsuit;​

(3) Terms that require one party to pay for all legal costs and damages when the agreement is not performed, while the party with greater bargaining power has no or only a minimal corresponding obligation;​

(4) Terms that bind a party to provide services or remain employed indefinitely without a reasonable way to end that duty;​

(5) Terms that waive in advance a statutory protection or constitutional right that applies to a party;​

(6) Terms that prohibit a party from joining a class in a civil lawsuit against a counterparty or third party;​

(7) Terms that require a party to give notice to prevent automatic renewal by a deadline that is unreasonably far before the renewal date;​

(8) Terms that permit one party to make changes to the product or service to be provided to the counterparty, where such changes may be made unilaterally and without a valid reason;​

(9) Terms that permit one party to increase the final price of goods or services on or shortly before delivery, without giving the counterparty the option of canceling the contract if the price is much higher than initially agreed;​

(10) Terms that prevent a party from ending affected future duties after the other party's material breach;​

(11) Terms whereby a party prohibit a counterparty from, penalizes a counterparty for, or functions to prevent a counterparty from:​

(A) seeking or accepting work from another individual or other entity where such work would begin after the conclusion of employment associated with the term's agreement; or​

(B) operating a business after the conclusion of the employment associated with the term's agreement.​

(iii) When a civil lawsuit is filed and a question of whether a term or agreement is void is posed, a court may equitably limit the term (rather than treating it as wholly void) only when the party that would be disadvantaged by the void clause's enforcement affirmatively seeks such a remedy. ​

(iv) Relief for unconscionability is limited declaring the term or agreement void, limiting the term, and restoring benefits under paragraph (g).​

(v) A party may settle an existing dispute over a statutory protection or constitutional right if they know the relevant facts, understand the right being released, and agree voluntarily.​

(f) An agreement is voidable by a party who did not understand the agreement's basic nature and consequences, when a counterparty knew or clearly should have known that the party lacked understanding of the basic nature and consequences of the agreement.

(g) When an agreement or term is void or voided under this section, each party must restore to the other the benefits received under that agreement or term where practicable.

(h) An advance waiver of protection against material deception, threats of independently unlawful acts, unconscionability, or known or apparent incapacity is void.

(j) A party loses the right to void a voidable agreement or term if that party knows the relevant facts, understands that they may void it on that ground, and voluntarily confirms to the other parties that they will remain bound by it.

5. Reliance on promises

(a) A person who reasonably relies on a clear promise is entitled to compensation from a second person who made it if the second person should reasonably have expected the first person to have relied upon that promise.

(b) Compensation covers proven losses caused by the reliance if those losses were reasonably foreseeable when the promise was made. The amount must account for benefits received through that reliance and exclude reasonably avoidable losses.

6. Breach and ending duties

(a) A party may end future duties affected by the other party's material breach.

(b) A breach is material when it substantially defeats the bargain. A clear refusal to perform before performance is due is an anticipatory breach when communicated.

(i) A party who substantially performs remains liable under section 7 for losses caused by defects or omissions.​

(c) When future duties end, the parties must account for work performed and payments received.

(d) If a later event makes performance impossible or unlawful, and the affected party neither caused the event nor accepted its risk:

(i) affected duties are suspended while the obstacle prevents performance; and​

(ii) a party may end affected future duties by notice if the obstacle is permanent or the delay substantially defeats the bargain.​

(e) Mere changes in costs or the occurrence of a party's insufficient funds do not make performance impossible for purposes of paragraph (d).

(f) A party may end affected future duties by notice if:

(i) a counterparty's inactivity has blocked performance for a period that materially affects the agreement; and​

(ii) reasonable attempts have been made to contact that party, or that party has legally died.​

(g) A party must return unearned advance payments for duties that end under paragraphs (d) or (f).

(h) A notice under paragraph (d) or (f) must identify the affected duties and the grounds for ending them.

(i) Notice takes effect when sent to the other parties through contact channels they have used or publicly provided.​

(ii) Notice for a party who has legally died takes effect when sent to their estate administrator, if one has been appointed, or otherwise through that party's contact channel.​

7. Remedies

(a) A party harmed by a breach is entitled to compensation that puts them in the position they would have been in if the contract had been properly performed.

(b) Compensation covers proven losses caused by the breach that were reasonably foreseeable when the agreement was made. The amount must account for performance and payments under the agreement and exclude reasonably avoidable losses.

(c) A term that sets the amount to be paid for a specified breach is void unless that amount was a reasonable estimate of the losses expected when the parties agreed to the term. An amount due under a valid term replaces compensation for actual losses. This amount due may be referred to as "liquidated damages".

(d) A term that limits liability for breach to a maximum amount is void, except for compensation under paragraph (c).

(e) A court may award punitive damages for intentional or reckless breach unless a valid term under paragraph (c) requires liquidated damages for that breach.

(f) Recklessness means consciously disregarding a substantial, unjustified risk of breach.

(g) A court may order a party to perform personal work. When monetary compensation would be inadequate, it may order the transfer of particular property. Compensation under paragraphs (a) and (b) covers losses such an order does not remedy.

(h) An order requiring personal work must identify the work, state how completion will be measured, and set a reasonable deadline.

(j) A court may award a small sum as nominal damages for a proven breach that caused no compensable loss.

(k) A court must not order personal work or a property transfer to enforce personal monetary liability that has been discharged in bankruptcy.

8. Time to file and existing agreements

(a) A claim arising from a material or minor breach must be filed within the statute of limitations specified under the Judiciary Act, with the clock beginning at the time of the breach. Any contractual term that shortens or extends this filing period is void.

(b) Each distinct breach shall have its own filing period. Continued failure to perform the same obligation after it becomes due is a single breach.

(c) Accumulated failures become a material breach when they first substantially defeat the bargain.

(d) A creditor seeking monetary relief satisfies paragraph (a) by filing a claim in a bankruptcy proceeding before a court within the applicable period. The claim must identify the agreement, the breach, and the monetary relief sought.

(e) This Act's breach remedies and filing deadlines apply to breaches after enactment. Breaches before enactment retain their previous remedies and filing deadlines.

(f) The parties must reaffirm a previously unenforceable informal agreement after enactment to make it enforceable under this Act.

9. Amendments

(a) The Intellectual Property Act is amended as follows:

(i) Section 2(f)(iii) is amended as follows:​

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(iii) Copyright in the new contribution does not authorize use of protected expression from the original work. That use requires the owner's written permission unless an exception in this Act applies, including freedom of panorama under section 4.​

(iii) Use of protected expression from the original work requires the owner's permission unless an exception under this Act applies.​

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(ii) Section 3(c) is amended as follows:​

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(c) Using protected expression in one of these ways without the owner's written permission infringes copyright. Independently creating a similar work does not infringe it. Permission to use a work does not by itself transfer ownership.​

(c) A person infringes copyright by using protected expression in one of these ways without the owner's permission.​

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(iii) Section 9(a) is amended as follows:​

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(a) A nondisclosure agreement, or NDA, is a contract to keep specified information confidential. It must identify the information, parties, and duration of the duty in clear, agreed terms. All parties must sign and date it. Written forms include electronic documents and in-game books.​

(a) A nondisclosure agreement, or NDA, is a written contract to keep specified information confidential. It must state, in clear, agreed terms, who the parties are, what information is protected, and how long the duty lasts. Recorded chat showing each party's assent meets the writing requirement.​

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(iv) Section 9(b) is struck:​

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(b) An NDA meeting these requirements is enforceable and may be challenged in court. A person harmed by its breach may sue for proven losses, punitive damages where justified, and legal fees. The general rules of the Contract Establishment Act, or successor acts governing contract law, also apply.​

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(v) Section 9(c) is amended as follows:​

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(c) An NDA requiring a person to hide a crime is unenforceable. No person is liable for breaching an NDA or contract by a good-faith disclosure made to protect the public or national security, including through journalism or a court inquiry.​

(c) A term requiring concealment of a crime is void. A person may make a good-faith disclosure to protect the public or national security without contractual liability.​

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(vi) Section 12(b) is amended as follows:​

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(b) A court may award all income gained from infringing use, compensation for proven harm, additional compensation for especially serious violations or harm whose direct financial value cannot be proved, and legal fees. The same loss must not be recovered twice. The Damages Reform Act governs legal costs.​

(b) A court may award all income gained from infringing use, compensation for proven harm, additional compensation for especially serious violations or harm whose direct financial value cannot be proved, and legal fees.​

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(vii) Section 12(e) is struck:​

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(e) Civil filing deadlines, court powers, and appeals are governed by the Court Reformation Act. This Act creates no criminal offense. Separate crimes still require proof of their own elements; copying alone is not proof of theft or fraud.​

(b) Financial Consumer Protection Act is amended by adding the following as Section 4(e):

(e) A court may enforce a proven loan despite noncompliance with this section's document or disclosure requirements.

(c) Amend the Inactive Requisition Act as follows:

(i) Section 5(h) is amended as follows:​

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(h) If a verified creditor exists, any remaining principal owed to the creditor will be taken out of the requisitioned balance and provided to them. Interest shall be removed from the calculation. If any funds are left over after this, they shall go to the government balance.​

(h) The agency must use the requisitioned balance to pay verified creditors the principal and lawful accrued interest they are owed, then transfer any surplus to the government balance.​

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(ii) Section 6(f) is amended as follows:​

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(f) If a verified creditor exists, any remaining principal owed to the creditor will be taken out of the requisitioned balance and provided to them. Interest shall be removed from the calculation. If any funds are left over after this, they shall go to the government balance.​

(f) The agency must use the requisitioned balance to pay verified creditors the principal and lawful accrued interest they are owed, then transfer any surplus to the government balance.​

(d) The Government Contracts Act 2.0 is amended as follows:

(i) Section 4(d) is added as follows:​

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(d) The government may accept a bid only after the tender or auction closes under this section.​

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(ii) Sections 5(g) and 5(h) are added as follows:​

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(g) The parties must agree on the terms required by paragraph (d) before approval.​

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(h) A direct agreement becomes binding once the approvals required by this section have been granted and the required waiting periods and votes have ended.​

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(iii) Section 6(b)(iii) is added as follows:​

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(iii) The payout in subparagraph (i) or (ii) is the government's full liability for cancellation under this paragraph.​

10. Repeals

(a) The Contract Establishment Act is repealed in full.