This article will provide an overview of contract law, including types of contracts and remedies. This article will also give a summary of any Illinois contract law changes for 2024 including Freelance Worker Protection Act, Child Extended Bereavement Leave Act (CEBL), Paid Leave for All Workers Act (PLFAW), and Legislation for Temporary Labor Service Agencies.
What is a Contract Under Illinois law?
A valid contract requires five elements under Illinois law.
- An offer;
- Acceptance;
- Consideration;
- Identifiable material terms; and
- An intent to be bound and mutual assent.
An offer under Illinois law is determined if the offer induces a reasonable belief in the offeree, the person receiving the offer, that he can, by accepting the offer, bind the offeror (the person that is offering). Illinois courts will look at the words and conduct of a party consisting of an offer to enter into a contract. Illinois courts have defined a contract as a display of willingness to enter into a bargain.
Acceptance under Illinois law is defined as occurring when the party agreed to the essential terms of the offer. An agreement can be construed through words, actions, conduct to determine if an acceptance occurred. Acceptance must also be unconditional and mirror the terms of the offer exactly. Under the “mirror image rule”, the acceptance must be identical to the offer, otherwise it is considered to be a counteroffer. A counteroffer rejects the first offer and terminates the offer.
Consideration under Illinois law is defined as the bargained for exchange of promises or performance. Illinois courts only consider whether consideration exists to back the formation of a contract.
Agreeable or ascertainable material terms of a contract are needed for the contract to be enforceable. The terms and conditions of the contract must be so that the court can understand the party's essential terms of the contract.
Intent to be bound and mutual assent must be present to enforce a contract. Under Illinois law, there must be a “meeting of the minds” by objective manifestation of the parties to demonstrate an agreement. The courts will look at the intent to be bound by the parties’ words and actions.
What Types of Contracts Need to be in Writing?
Contracts generally can be verbal, in writing, or by action. However, certain contracts in Illinois need to be in writing under the Statute of Frauds. The statute is designed to prevent fraud. Some things such as the sale and the contract of lands, generally any real estate transaction, contracts greater than $500.00 to name just a few.
What are the Different Types of Contracts in Illinois?
Illinois has the following type of contracts:
- Express;
- Implied-in-fact;
- Quasi-Contract;
- Written and Oral;
- Unilateral and bilateral.
An express contract is an agreement that is reached by the parties’ words, whether oral or written. It is resulting from an actual agreement, by the parties’ words or writings, not conduct.
An implied-in-fact contract is one formed upon the parties’ conduct. It is considered a promise, inferred in part or in whole by the parties’ conduct and not from their words alone. This differs from an express contract based on how the parties agreed to the contract.
Written and oral contracts are exactly as they sound. A written contract contains the essential terms of the contract memorialized to writing. Oral contracts represent an agreement that is an agreement that is not memorialized in writing. The statute of frauds in Illinois does require certain kinds of contracts to be written.
Unilateral and bilateral contracts differ on how a party is bound. In a unilateral contract, only one party is bound, while a bilateral contract binds both parties.
What is a Breach of Contract Under Illinois Law?
Illinois law requires a breach of contract claim to allege four elements. First, the existence of a valid and enforceable contract. The elements of an enforceable contract include: an offer, acceptance, consideration, and mutual agreement. Second, the plaintiff substantially performed the contract. Third, the defendant’s breach of contract, and finally, damages to the plaintiff resulting from defendants from the breach.
A defendant’s failure to follow a duty imposed by the contract is an actionable breach of contract under Illinois law. Any breach of contract is actionable and the severity of the breach will impact on the amount of plaintiff’s damages.
What are the Remedies for Breach of Contract Under Illinois Law?
Under Illinois law, there are several remedies available to a plaintiff in a breach of contract action.
Compensatory damages are to compensate the plaintiff for the same position it had been in had the defendant not breached the contract. General damages are a logical, natural consequence of the defendant’s breach. Consequential damages are the consequence of unusual circumstances when they are within the contemplation of the parties. This often happens when the plaintiff becomes liable to a third party because of the defendant’s breach of contract. Plaintiff must show that the alleged consequential damages were a foreseeable and probable result of any breach.
The contract may contain a liquidated damages clause. These clauses are contemplated in advance and anticipate the measure of damages if there was a breach of contract. Courts will enforce the liquidation damages clause under certain conditions, such as: the parties agreed to advance in to the number of damages the potential plaintiff could recover, the number of liquidated damages was reasonable at the time of the contract, and actual damages would be uncertain in amount and difficult to prove.
Liquidated damages clauses will be found unenforceable by an Illinois court under certain situations. The liquidation damages clause is unconscionable, the clause violates public policy, such as a penalty, and the amount of the liquidation damages clause is grossly disproportionate to the number of damages actually incurred. Courts will generally not enforce liquidation damages clauses as a penalty clause where the clauses list the same damages regardless of the severity of the breach.
What are the Remedies in Equity in Illinois?
There are remedies at law, which are money damages, to list an example. However, when a plaintiff cannot be made whole by money damages, equitable remedies are available. Such remedies include: injunctive relief, which a court will direct a party to do or not do something, recission, which is as if the contract never happened, reformation, which is to edit the contract as to the parties’ understanding of the contract, and specific performance, which the court will direct a party to do something.
What are the Illinois Contract Law Changes for 2024?
In 2024, Illinois will see several significant changes to its employment contract laws:
Freelance Worker Protection Act
Effective July 1, 2024, this act mandates that employers pay freelance workers (defined as independent contractors who provide products/services worth at least $500) all compensation due under a contract within 30 days of completing the contracted services.
Child Extended Bereavement Leave Act (CEBL)
Starting in 2024, employers with 50 or more full-time employees in Illinois are required to provide unpaid, job-protected leave to employees who experience the loss of a child by suicide or homicide.
Paid Leave for All Workers Act (PLFAW)
This act, effective from January 1, 2024, establishes a minimum paid leave standard for all workers in the state. It applies to all employers, except those covered by a city or county paid sick leave law and those currently covered by a collective bargaining agreement.
Legislation for Temporary Labor Service Agencies
Pending legislation, effective April 1, 2024, requires temporary labor service agencies to pay temporary workers assigned to a third-party client for more than 90 days wages and benefits (or the cash value of such benefits) equal to the lowest-paid comparable direct-hire employee at the third-party client
This article has covered the changes to Illinois contracts law for 2024, as well as an overview of Illinois contract law. If you have any further questions about contract law, please contact one of our experienced contract lawyers at 630-324-6666.
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