Final answer:
A 'legal purpose' in contract law ensures that contracts are only valid for lawful activities, providing a basis for recourse through the legal system in instances of non-compliance.
Step-by-step explanation:
Legal purpose in contract law refers to the requirement that contracts must be for a legal activity. In other words, the contract is valid and enforceable only if the actions it involves and the terms it includes are lawful according to the relevant jurisdiction's legal system.
The idea of legal purpose is essential because contractual rights are often based on property rights, enabling individuals to create agreements with others regarding the use of their property with the legal system providing recourse in cases of non-compliance.
For instance, consider an employment agreement: a surgeon performs a surgery expecting to be paid for their services. If the patient fails to pay, this would be considered a theft of the surgeon's property – the services that were provided. With strong property and contractual rights in place, the surgeon has the ability to seek payment through the court system. Conversely, without a legal system that enforces contracts, individuals might hesitate to enter into agreements, fearing non-payment, thus hindering business transactions and economic growth.
In summary, a contract must have a legal purpose to ensure that it can be enforced through legal mechanisms, thereby supporting the stability and vitality of business and economic activities.