Introduction
A contract is made when two or more parties come into an agreement on whether to undertake something, abstain from doing it or pledge to do something for one another. A contract can either be verbal, on paper, indirect or direct and they can either be lawfully enforceable or not.
Verbal contracts are considered weak since there is no written evidence. We often engage in verbal contracts, in fact, almost every day one makes an oral contract. An example of an oral contract is when a father tells a child that if he does well in school, he will give him a certain gift and the child accepts. This is an oral contract and it is not lawfully binding.
Contracts can also be direct or indirect in that the whole contract or some of the terms can be direct or indirect. An example of a direct/ express contract is in the case of a financial loan one commits himself to pay a certain monthly installment at a set interest rate till he completely pays off the loan. This is put on paper as an express contract.
An indirect/implied contract is a verbal contract a good example is when one orders a drink in a restaurant one does not state the offer and acceptance.
Basics of a contract
There are six basic requirements that are involved in a contract.
Concepts of offer
The simple definition of an offer is what is presented to a party in exchange for that person’s promise (Elliott and Quinn, 2007). There are no specific words that are supposed to be used in a contract. However, one of the parties must give an offer and the other party may or not accept the offer depending on its terms. An offer can either be verbal or on paper unless the law requires a written one.
An agreement is very vital in a contract in that without the meeting of two minds to come to a consensus then there is no contract. There must also be intended to get into a lawfully binding contract. A court can not read people’s minds hence there must be sufficient proof that the parties came to an agreement.
Acceptance of the offer
The acceptance of an offer made by one party is what constitutes a contract. The acceptance cannot be withdrawn nor can the terms be changed nor amended (Elliott and Quinn, 2007). Changing the terms makes the contract a counter-offer. A counteroffer comes about when the terms are changed and the parties negotiate and settle for a contract on an agreement.
Though this offer varies in different states the decree is that there should be no conditional acceptances (Adams and Brownsword, 2007). The fact is that by making conditional acceptance one is actually declining the offer. An acceptance to an offer is made within the time frame because most of the offers have a time limit hence, they expire. When an offer expires it can only be accepted if the one offering it renews it. The requirement of the law is that an offer should be left open for a reasonable time frame. A contract comprises a bargain that is the good deal the parties agree on. The approval of the offer is the consideration that binds the contract.
Consideration of offer
Consideration is the value of a promise and is a requirement by the common law. A contract is made legal only if there is consideration of worth or value (Adams and Brownsword, 2007). The law stipulates that the bargain should be sufficient, something valuable must be given out in a way that both parties gain. The law enforces that a contract must have consideration and a judge has the right to discard an agreement he suspects fraud. Consideration must be satisfactory to be recognized by law and it should not be a promise to do something that the general law obligates you to do.
The ability of the parties to contract
According to the law, all people have the capacity to get into a contract. If anyone evades a contract that is being enforced on him, he must then appeal his incapacity to contract. A contract may be invalid in cases of insanity, capital felonies, minors and corporations.
Intent of participation
In a contract, both the parties must enter an agreement with an aim of obligating themselves to the conditions of the contract (Chen-Wishart, 2008). This works best for written contracts to prove that both parties agreed to enter into a contract.
The legality of the Contract
All the contents of a contract must be lawful. A contract can only be enforced if all its terms are legal. In case a contract has illegal aspects, it is not enforced. A contract must not involve other parties outside the contract. The courts protect people from breaches when one party does not live to the end of the deal hence legal action is taken against them.
Conclusion
It is always advisable to examine the contents of a contract before signing anything. If you doubt the contents of the contract then you can consult an attorney who is specialized in contract law for advice.
References
Adams, J. N., & Brownsword, R. (2007). Understanding contract law. London: Sweet & Maxwell.
Chen-Wishart, M. (2008). Contract law. Oxford: Oxford University Press.
Elliott, C., & Quinn, F. (2007). Contract law. Harlow, Essex: Pearson Longman.