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Contract Basics
Many pieces of our daily personal and business lives are touched in some way by a contract. We have: cell phone contracts, rental agreements, car loans, employment contracts, sales contracts, real estate sales or purchase contracts, and on and on. Almost everything that we do has a contract behind it somewhere or somehow. And rightly so. Ideally, when an agreement is clear, then both parties understand what they can expect. Contracts do not necessarily have to be in writing to be valid. And they do not even have to be written to be enforceable, despite that common misconception. An oral contract can certainly be enforced, but it is almost always more cumbersome to do so. And, since memories falter, the written word is always better.
Bargained for ExchangeThe basis of any contract is that it is an agreement for a fair exchange, a bargain. Each of the parties gives up something to receive something else. Most consumer contracts are consumers trading money for goods or services. The three main parts to any contract are: offer, acceptance, and consideration. If any of those is missing, the contract is not valid. In simplest terms, the offer and acceptance is the agreement. The consideration part of the contract may be the actual or representative part of the trade. The consideration is more likely to be a concrete action, than the agreement parts of the contract. Offer, acceptance, consideration. I place an ad to sell my car. Someone calls me on the phone and says that's exactly the vehicle he's been looking for and wants to buy it. Is that a contract? No. There is no consideration – therefore no contract. Consideration is often the point in the bargain where money changes hands. Besides the three basic parts of a contract, there are other basics that will help anyone better understand any contract. Here are a few points to remember: |
