A contract by definition is an agreement between two or more parties, which if it contains the elements of a valid legal agreement, is enforceable by law or a binding arbitration. A contract is also an exchange of promises with specific legal remedies for breach. A breach of contract can include compensatory remedy if one of the parties within the contract defaults.
An oral agreement between two parties can constitute a legal binding contract as much as a written. The limitation is that with a written agreement, parties have material evidence to prove the terms.
Contract law is classified as a general law of obligations. The contract defines the obligations between two or more parties.
The eight key requirements for the creation of a contract are:
* Agreement (Offer and Acceptance)
* Capacity to contract
* Consideration
* Legal purpose
* Legality of form
* Intention to create legal relations
* Consent to contract
* Vitiating factors: Mistates, undue influence, misrepresentation, duress
A contract is also an offer and acceptance. One party makes an offer and the other accepts. This is also called a concurrence of wills or ad idem. There are also unilateral contracts whereupon obligations are imposed upon one party upon acceptance by performance of a condition. With this type of contract, offer and acceptance, it does not always need to be expressed orally or in writing. It can also be considered an implied contract. An implied contract can take two forms. The first, a contract which is implied in fact. This means, the circumstances imply that parties have reached an agreement even thought they have not done so expressly. An example would be if a person goes to a doctor for a checkup and agrees to pay a fair price for the service. If that person refuses to pay, he or she has breached a contract implied in fact. If one refuses to pay after being examined, they have breached a contract implied in fact.
A contract that is implied in law is also called a quasi-contract due to it not truly being a contract but rather a means for the courts to remedy situations in which one party would be unjustly enriched we he or she not required to compensate the other.
Other contracts that are not written include verbal exchanges, which again can be either implied in fact or implied in law and are legally binding. Some jurisdictions have rules or statues that may render valid oral contracts unenforceable. This is typically the case in oral contracts involving large amounts of money or real estate. Such oral contracts violate the common law statue of frauds which state statues require certain contracts to be in writing. For example, if a person agrees to buy a car for $9,000 in a jurisdiction which requires a contract for the sale of goods over US $500 to be in writing to be enforceable.
Contracts that do not meet the requirements of common law or statutory Statutes of frauds are unenforceable but are not necessarily thereby void.
Getting a contract in writing, even though it may qualify as a verbal agreement, can reinforce both parties stance and help them stay out of courts in cases of disagreements. Most contracts should cover a few key points that include: if a contract for the purchase or sale of goods, terms involved such as time and place of delivery, time and method of payment, product description and unit price. Contracts should also outline clearly who is doing what and when, what parties are not going to do, how much is being charged and when payment is due.
You may also detail what the parties will do should something unexpected occur. For example, under what circumstances may a party cancel the contract? Who bears the risk of damage or loss during shipping? How will disputes be resolved?
Steven Medvin is the Executive Director of SMP Advance Funding, LLC, which provides lawsuit funding to individuals who need a lawsuit loan for pending lawsuits. For more information please visit: https://www.smpadvance.com
