Every business regardless of whether it be a brick and mortar type business or on the internet is going to be dealing with multiple different contracts throughout the course of its existence. Thus, a fundamental knowledge of ‘contracts basics’ is KEY.
The intent of the within presentation/ article is to simply familiarize business owners with the most basic of contract terms and concepts.
I. What is a contract?
An agreement between two or more people;
II. The Most Basic Elements of Any Contract:
1- The parties to the contract
2- The subject matter of the contract (what it is about)
3- The term of the contract (number of years over which contract exists)
4- The bargained for ‘CONSIDERATION’ (a promise in exchange for a promise) ;- sometimes called the quid pro quo;
Once you have the four above items, then the COMPONENT PARTS OF ANY CONTRACT ARE AS FOLLOWS:
OFFER; ACCEPTANCE; AND CONSIDERATION.
CONSIDERATION- in its simplest term means ‘something of value’
If I offer to do something for you-services/ make a product/ etc. I do so in exchange for your promise to pay me my hourly rate of $395 per hour times the number of hours it takes me to provide the service or make the product.
METHODS OF FORMING CONTRACTS
Generally speaking contracts are established orally or by way of some form of written agreement.
The prerable approach to entering into any type of contract would be to have it in writing.
Often times you will be involved in a transaction where one or both parties will state they just want a one page contract; most of the time such a one page document is a ‘pipe-dream’ and not a reality if the parties want to have a document that has any real value to the same.
ORAL CONTRACTS—contracts don’t have to be in writing to be enforceable;
The contract is always best approached by way of a written agreement , if for no other reason than the written agreement will itself be evidence of what the parties agreed upon.
As the reader/listener can (see/hear) the subject area of contracts, even at a very fundamental stage can very easily become an entangled web.
In the study of contracts in law school , there are chapters of law books on contracts which set out hundreds of pages of analysis of the theory as well as the case law analysis to each one of these very basic elements and idea we have discussed above.
The rule to be learned from all of this is that contracts are all around us, and thus it is best to read all contracts carefully before entering into the same. And, if you don’t know what your are being asked to sign and don’t understand the same, then DON’T SIGN THE DOCUMENT, as a failure to understand in the face of having signed the document anyway, is not a defense to the enforcement of the contract.
To find out how the Law Office of Steven H. Wilhelm can help you with all of your business law needs go to http://stevenhwilhelm.com/index.html or call us at 1-800-959-0687