In today's world, hand-shake agreements do still exist, but as the risks for each party increase, written contracts are not only desired, but required. Whether you realize it or not, contracts pervade the lives of every citizen, not just business owners. If you have participated in any of the actions below, whether you knew it or not, you were agreeing to a contract!
- Residential Lease
- Cable/Internet Subscription
- Buying a Car
- Buying a House
- Getting a loan
- Opening a Credit Card
- Signing a receipt
- etc. (You get the picture)
Contracts are an essential part of life. We hate living with them because they can complicate a seemingly simple transaction, on the other hand, we can't live without them.
What are the Basics?
Every contract is effectively comprised of the following three elements:
Offer
While seeming obvious, an offer can sometimes be difficult to find. Generally speaking, one person or business is offering its products or services for a given price. The offer may come in the form of a written offer, but it more than likely to take place over the phone, in an email, or even in a text message. Advertisements are not always considered offers. An example of an offer would be: I offer to sell this bike to you for $50. If you agree, then you have "accepted the offer".
Acceptance
Much like offers, acceptance can come in many forms. Often times, acceptance is visualized as a handshake. Two parties are agreeing to a certain set of terms, and they commemorate their acceptance by shaking hands. While verbal contracts memorialized by a handshake are technically enforceable, the best form of acceptance (legally that is) comes in the form of a signature at the end of a written contract. Without acceptance, the contract is not valid. Even if the parties "Agree" a valid contract may not be present if consideration is not also present.
Consideration
Consideration has been termed in law books as "the benefit of the bargain". For example, you walk into a store selling widgets. You walk to the counter and inquire about the price. The shop-keep tells you that the price is $25 dollars. You promptly take $25 out of your wallet and hand it to the man or woman. The $$$ you paid is the consideration of your verbal contract. You agreed to pay $25 in exchange for the widget you desired to purchase.
An extreme example of a situation where consideration is not present would be something like the following. Someone walks up to you and says "I'd like you to sign this document that says you will pay me $50/mth to lease the car you already own from me. You will receive no additional benefits, other than the satisfaction of paying me $50/mth." For one reason or another, you sign the document. This contract would lack adequate consideration. Absent some additional facts, you already own the car you are driving. You aren't receiving any additional benefit for paying him the $50/month. This contract would thus be invalid.
Conclusion
At the end of the day, everyone deals with contracts. The more complex the contract, the more difficult it can be to pick out the three essential components. St. Augustine Law Group, PA reads contracts the way many people read the newspaper. We've seen good ones, and bad ones. If you ever need help with a contract for your business, personal life, rental property, or even your work, St. Augustine Law Group, PA would be happy to help you understand the terms and conditions you are agreeing to. We invite you to Contact Us to get a free consultation!