What Is a Contract?
A contract is a legally enforceable agreement between parties to do something (or to not do something).
Any legal contract must contain certain elements. First, it must contain an offer. The offer is what someone is going to do, such as lease you a tractor, sell you a guitar, paint your house, or simply pay you.
Second, the offer must be accepted. Acceptance means that you agree to what is offered, without any changes. (If you make changes to the offer, it is typically considered a “counter-offer.” which must itself be accepted)
Third, it must represent the intent of both parties to enter into a legally binding agreement. In other words, both parties have to be aware that the agreement could be enforced by law.
Finally, it must contain consideration. “Consideration” means something of value, which is usually money, bargained for in exchange for the product or service that is being offered.
The parties have to be competent to enter into this agreement and they have to have entered into it voluntarily. These agreements can be oral, but naturally their enforceability increases if they are written. If the agreement is oral, it is still enforceable, but first you have to prove that it existed, which can sometimes be hard to do.
Other Important Components of a Contract
Any contract will contain what’s called provisions or terms. These are the details of the agreement, including the specifics of who, what, how much, and when.
As mentioned above, a person has to have the capacity to enter into a contract, which means both maturity and mental ability. A person is allowed to act on someone else’s behalf (agency) in entering into a contract, but only with their permission.
The Finer PointsIn addition to these basics of contract law, there are many more fine points involved. At On Rocket Lawyer, you can create contracts for products or services, as well as other service-related resources. If you are facing a complex transaction, or a contract involving a large amount of money, you may want to find a lawyer to help protect your interests.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.