The legal obligations applicable to contracts may vary from land to state. When drafting contracts, always refer to state laws to ensure that it is legally binding. Under common law, it is not necessary to draft an agreement to make it legally binding. An informal agreement, as adopted orally, will be binding if it has all three components. An exception arises when advertising makes a unilateral promise, such as offering a reward, as decided in the famous case of Carlill v Carbolic Smoke Ball Co, in 19th century England. The company, a pharmaceutical manufacturer, proposed a smokeball that, if it sniffed “three times a day for two weeks,” would prevent users from catching the “flu.” If the smokeball does not prevent “the flu, the company promised that it would pay $100 to the user, adding that they deposited “$1000 in the Alliance bank to show our sincerity in the file.” When Ms. Carlill complained about the money, the company argued that the complaint should not be considered a serious and legally binding offer; instead, it was a “simple mess”; However, the Court of Appeal found that Carbolic had made a serious offer to a reasonable man and found that the reward was a contractual undertaking. Complex paragraph structures and words that are not used in everyday language. The use of words such as “so” and “below” may impress the stature of an agreement, but they do not make it more or less binding on the parties. The courts may find that the parties have entered into a binding contract, although certain conditions still need to be agreed upon.
However, in the absence of words, they must be able to be implied by the court – the court must be able to fill in the gaps. In some cases, the court may be able to infer a standard of adequacy, either on the basis of common law or status. In the event of good execution, a legally binding agreement is enforceable in the courts. Parties may claim damages if one of the parties does not meet the requirements of the treaty.