General Contracts Overview
For detailed information, please see our Contracts 101 Manual.
What is a contract?
A contract is a promise that the law will enforce. The law provides remedies if a promise is breached or recognizes the performance of a promise as a duty. Contracts arise when a duty comes into existence, because a promise is made by one of the parties. To be legally binding as a contract, a promise must be exchanged for adequate consideration. Adequate consideration is a benefit or detriment which a party receives which reasonably and fairly induces them to make the promise/contract. Generally, the law of contract involves commercial transactions where money or goods are changing hands. The law looks for two things:
- Offer and Acceptance
Offer and Acceptance - The question of offer and acceptance determines whether the parties to a contract were ever "of one mind" as to the terms of the contract. There must be a moment when one party makes an offer and the other says "Yes." Not, "Yes, but...." Just a plain, simple, clear, unequivocal "Yes." Anything else is a refusal or a counter offer.
Consideration - Consideration is the value that must flow each way for a contract to be enforceable. For example, if I promise to give you my car without your promise of payment or some other thing of value, the law will not force me to follow through on my promise. There must be something of value flowing each way.
That value can be cash on the spot, a promise to pay at some time in the future, the car, the promise to deliver the car to you next week, or the like. In other words, the value can be immediate or postponed. The law does not care particularly about the timing.
Without clear offer and acceptance, and the mutual flow of value, there is no contract, that is, there is no promise that the law will enforce. Of course, there are wrinkles in the way in which the law will infer those elements. Why else would contracts be a year long course in law school? But, for practical purposes, as long as you make sure that your contracts have clear, unequivocal offer, acceptance and consideration, your contracts should be good to go.
|Contracts 101 Manual (Guidelines)||769.42 KB|