What is a Contract
Approximately 90% or more of the adult population are not aware that they enter into a contract every day, the purchase of fuel, food or clothing. The simple act of handing money over for a pencil or any product is a simple contract. Most people will understand a contract of employment, sale or lease, tenancy or a contract for your phone as a contractual relationship.
In commercial terms a contact is, “two or more parties entering into a voluntary, deliberate, and legally binding agreement where the two or more parties are considered to be competent”. Contracts between commercial parties are normally written, however, these can also be verbal (spoken) or can be implied by both parties’ in actions and or conduct. Although this may be the case it is always best to have a written contract where both parties are fully aware of the obligations and undertakings of those party to the signed contract.
The three main areas to consider if a relationship (contract) exists are;
- Is there an offer and is that offer acceptable to all parties?
- The acceptance of the offer by all parties
- Is it a valid (legal and valuable) consideration?
The legal definition of the above would be;
“Each party to a contract acquires rights and duties relative to the rights and duties of the other parties. However, while all parties may expect a fair benefit from the contract (otherwise courts may set it aside as inequitable) it does not follow that each party will benefit to an equal extent”.
Although there may seem to be a contractual relationship, this does not necessarily mean the contract is enforceable. In the main void or voidable contracts can only be determined by the courts. Contracts are normally enforceable whether or not they are in a verbal or written format, although a written contract protects all parties to it. Many contracts such as the sale property (land or house), instalment plans for car sales and telephones or household and car insurance policies must be in writing to be legally binding and enforceable.
The courts will consider, express terms, implied terms in contract and implied terms in law. This is a much larger understanding of a contract and would generally only be considered in a dispute by the courts.
Above we would hope gives you an understanding of the basic concept of a contract, should you require further assistance contact us at;
firstname.lastname@example.org , Author; Michael D Hempsey, 28th July 2019