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 5 Things you need to know about a Contract
By James Jefferson, Jr.
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February, 2009
The purpose of a contract is to formalize an agreement between two or more parties. Contracts can cover many things, including the sale of goods and services, real property, and the terms of employment.
I. A contract must be enforceable. Usually a contract must contain the following elements to be enforceable : (Mutual Consent)-The parties to the contract must have a mutual understanding and consent as to what the contract covers. This is usually referred to as a “meeting of the minds”. For example, in a contract for the sale of a “cellular telephone”, the buyer thinks he will obtain a telephone and the seller believes he is contracting to sell a I Pod, there is no meeting of the minds and the contract will not be enforceable.
Offer and Acceptance- A contract contains an offer to another party or parties, who accepts the offer. For example, in a contract for the sale of a Laptop computer, the seller may offer the computer to the buyer for $3,500.00. The buyer’s acceptance of that offer is a necessary part of creating a binding contract for the sale of the computer.
II. Mutual Consideration-For the contract to be valid and enforceable the parties must exchange something of value. In the case of the sale of a computer, the buyer receives something of value in the form of the computer, and the seller receives money.
III.Performance-In order to be enforceable, the the terms of the contract must be executed. For example, if the purchaser of a computer pays the $3,500 purchase price, he can enforce the contract to require the delivery of the computer.
IV. Good Faith-Parties to the contract must act in good faith. For example, if the seller of a “cellular telephone” knows that the buyer thinks he is purchasing a computer, but secretly intends to sell the buyer a telephone, the seller is acting in bad faith and the contract will not be enforceable. To be enforceable, a contract cannot violate “public policy”. For example, if the subject matter of a contract is illegal, you cannot enforce the contract. A contract for the sale of sex, for example, violates public policy and is not enforceable.
V. Oral Contracts. Oral contracts are just as valid as written contracts, except for the exemptions contained in the Statue of Frauds. Mostly notable, is the real property exemption. All real property transfers must be in writing. The difficulty with oral contracts is proving that a oral contract existed. Absent proof of the terms of the contract, or the other parties admission that there was a oral contract, a party may be unable to enforce the contract or may be forced to settle for less than the original bargain. It is good practice to put something in writing, even when there is not an opportunity to draft a formal contract, signed by both parties, to memorialize the terms of an agreement.
Copyright © 2009 - 2013 James Jefferson, Jr. All rights reserved. No portion of this article may be reproduced without the express written permission of the copyright holder.Disclaimer-The information contained in this web site and the Healthy Referral International is provided as a public service. While the information on this site and the Healthy Referral International is about legal issues, it is not legal advice or legal representation and should not be relied upon as legal advice. Because of the rapidly changing nature of the law, we make no warranty or guarantee of the accuracy or reliability of the information contained here, or at other sites to which we may link. Legal advice must be tailored to the specific facts and circumstances of your case, information cannot substitute for the advice of competent legal counsel.
JAMES JEFFERSON, JR.-Business CONSULTANT-James Jefferson, Jr. opened offices for the practice of general business law and consultations in September 1986. This followed an association with a real estate company that spanned ten years during which Mr. Jefferson became vice president.
Mr. Jefferson is a graduate of Stanford University (BA., Economics), located near San Francisco, California and Northwestern University School of Law (Juris Doctor Degree), Chicago, Illinois, and his biography was featured in Who’s Who in American Law, 1988 - 1995.
The Offices of James Jefferson, Jr. provide wide ranging business services and consultations to a variety of business and professional clients in international business transactions, real estate, corporate, health care law and entertainment and communications law. Mr. Jefferson represents clients in emerging businesses and small and medium-sized closely held businesses. He also has experience in venture capital financing
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