WHAT IS A CONTRACT
A contract is a legally enforceable agreement that does not necessarily require signing, sealing, or witnessing. It can be binding even without a written form. However, it must contain the following five elements:
- Offer and Acceptance: The offer, presented by the party making the offer, must have clearly defined terms. Acceptance, conveyed by the offeree, must be unambiguous and evident.
- Consideration: This refers to something of value exchanged between the parties in return for their contractual promises.
- Capacity: Both parties must possess the ability to understand the contract.
- Consent: Both parties must mutually agree to the terms of the agreement.
- Legality: The contract must not violate any laws or regulations.
WHAT MAKES A CONTRACT INVALID
- Minors can cancel or invalidate an existing contract or do so within a reasonable period after reaching adulthood.
- The contract involves enticing a party to commit a crime or engage in illegal activity.
- The contract was agreed upon through misleading or deceptive conduct, duress, undue influence, or unconscionable behavior.
- The contract lacks genuine consent due to misrepresentation of facts, mistakes, undue influence, or duress.
Encountering contracts in various situations, such as accepting employment offers, signing leases, purchasing goods, or partnering with other businesses, is common. Here is a link to a helpful contract checklist. Before signing a contract:
- Thoroughly read the entire contract, preferably more than once. Consider printing it out and using a pen or highlighter for clarity. Take your time to avoid overlooking details.
- Do not feel pressured to sign if you have any doubts.
- Ensure the written contract accurately reflects the verbally negotiated terms and conditions. Review all requirements from both parties in detail.
- Pay attention to common terms denoted by phrases like "shall mean" or "heretofore known as" as they can be confusing.
- Seek clarification or legal advice for anything you don't understand.
- Understand termination provisions.
- Anticipate potential issues and verify the presence of provisions to address them.
- Avoid leaving blank spaces; cross them out if not applicable to prevent later alterations.
- Communicate any changes to the contract with the other party.
- Check for external references mentioned in the contract and review them if applicable.
- Keep a copy of the signed contract for your records.