There have been a lot of efforts to make contracts simpler and enforceable, but these changes come with other costs. The goal should be finding the balance between simplicity and enforcement.
Unenforceable contracts are contracts that cannot be enforced by a court of law. Contracts with unenforceable clauses are often considered “simple” and are used to avoid costly litigation.
Legalese isn’t necessary or beneficial in most contracts; contractual agreements are best described in plain, ordinary English. Although many contracts include mind-boggling legalese, there’s no reason why this has to be the case. Legalese isn’t necessary or even beneficial in most contracts. The agreements you’ll want to include in a formal contract, on the other hand, are best conveyed in plain, common English.
The following two parts are all that are required for most contracts to be legally valid:
- All sides are on the same page (after an offer has been made by one party and accepted by the other)
- Something of worth has been traded for something else of value, such as cash, services, or products (or a promise to swap such an item).
A contract must be in writing in a few conditions to be valid. For some transactions, such as real estate sales or contracts that last longer than a year, state laws often demand written contracts. You’ll need to look up your state’s laws to see which contracts are required to be in writing. Of fact, since oral contracts are difficult or impossible to establish, most agreements should be written down, even if they are not legally necessary.
Let’s take a closer look at the two factors that make a contract valid: the parties’ agreement and the exchange of valuables.
1. A contract between two parties, often known as an offer and acceptance. Although it may seem self-evident, one of the most important aspects of a good contract is that both parties agree on all significant matters. There are many occasions in real life when the boundary between a complete agreement and a preliminary conversation about the likelihood of reaching an agreement is blurred. To assist explain these gray areas, the law has devised various standards that define whether a legally binding agreement exists.
A valid contract occurs when one party makes an offer and the other accepts it, according to the most fundamental norm of contract law. This may be done verbally or in writing for most kinds of contracts. Consider the case when you’re looking for a print shop to create brochures for your company. For $200, one printer claims (or faxes) he’ll print 5,000 two-color posters. This is the extent of his offer. You’ve accepted his offer if you tell him to go forward with the work. When you order the printer to go ahead, you’ve created a contract in the eyes of the law, which means you’re responsible for your end of the agreement (in this example, $200). However, if you tell the printer you’re not sure and want to look around (or if you don’t react at all), you’ve obviously rejected his offer and no agreement has been established. If you say his offer sounds wonderful except that you want the printer to use three colors instead of two, you haven’t signed a contract since you haven’t accepted all of the crucial elements of the offer – you’ve modified one term. (Depending on how you phrased it, you may have offered a counteroffer, which we’ll go into later.)
The apparently straightforward stages of offer and acceptance may, in fact, become extremely intricate in real-world, day-to-day business. When you make an offer, for example, it isn’t always immediately and absolutely accepted; the other person may wish to consider it more or attempt to negotiate a better bargain for himself. And you could change your mind and wish to withdraw or adjust your offer before he takes it. Delaying acceptance of an offer, cancelling an offer, and making a counteroffer are all regular occurrences in commercial transactions that often result in misunderstanding and dispute. Here are some basic guidelines you should know and follow to reduce the chances of a disagreement.
- How long an offer is valid. Unless an offer specifies an expiry date, it is valid for a “reasonable” period of time. Of course, what is reasonable might be interpreted differently based on the kind of company and the facts of the case. The ideal method to make an offer is to add an expiry date to leave no ambiguity as to when the other party must make a choice. If you wish to accept someone else’s offer, the best course of action is to do it as quickly as possible, while the offer is still available. Keep in mind that the person or corporation that made the offer — known as the offeror — has the right to cancel it until you accept it. The topic of revocation will be examined further down.
- Offers are being countered. When an offer is made, the typical reaction is to begin negotiating rather than accepting the conditions of the offer straight away. Of course, the most prevalent sort of negotiation that happens in commercial circumstances is price haggling. A “counteroffer” is a proposal that one party makes in response to an offer by suggesting something else. When a counteroffer is made, the original offeror assumes the legal obligation to accept, deny, or make another counteroffer. For example, if your printer (here, the initial offeror) offers to print 5,000 brochures for $300 and you react by offering $250, you have not accepted his offer (no contract has been established), but rather have made a counteroffer. If your printer accepts your counteroffer and agrees to complete the task precisely as you’ve requested for $250, you’ve struck a legal agreement. While it is true that a contract may only be created if the receiving party agrees to all of the offer’s major provisions, this does not indicate that minor discrepancies can be used to cancel a contract later. If you offer to purchase 100 chicken sandwiches on one-inch thick sourdough bread, and the other party responds with 100 emu fillets on rye bread, there is no contract. However, if he promises to make the chicken sandwiches on one-inch thick sourdough bread, you have a legitimate contract, and you can’t refuse to pay if the bread is a hair thicker or thinner than one inch.
- Refusing to accept an offer. As long as the offer hasn’t been accepted, the person who made it may cancel it. This implies you may rescind your initial offer if the other party claims she wants more time to think it over or offers a counteroffer with different parameters. However, once she agrees, you’ll have a legally binding arrangement. Before acceptance, revocation is required. If the parties agree that the offer will stay available for a certain amount of time, this rule does not apply. This form of contract is known as an option, and it typically does not come cheap. Let’s say someone offers you $10,000 for a forklift, and you want to consider the offer without worrying that the seller may back out or sell to someone else. You and the seller might agree to keep the offer open for a certain amount of time, say thirty days. However, the offeror will often urge you to pay for the 30-day option, which is logical given that he can’t sell to anybody else during that time. When an option agreement exists, the offeror cannot rescind the offer until the time period expires, whether payment is made or not.
2. The exchange of valuable items A contract isn’t valid unless both parties agree to the conditions and trade something of value in anticipation of the contract’s fulfilment. The “item of value” being traded — referred to as “consideration” by every law student who has ever lived — is almost always a promise to do something in the future, such as a pledge to do a certain work or to pay a fee for that job. Returning to the print job example, for example. There is a value transaction (consideration) after you and the printer agree on terms: the printer has agreed to print the 5,000 brochures and you have pledged to pay $250 for them.
The major reason for needing the exchange of objects of value is to distinguish a contract from generous words and one-sided pledges that are not legally enforceable. If a buddy provides you a gift, such as stopping by to help you move a pile of boulders without expecting anything in return, that agreement is not a contract since you did not give or promise him anything of value. You wouldn’t be able to enforce the other party’s guarantee if he never delivered on his promise. A contract exists, however, if you promise your buddy that you would assist him weed his vegetable garden on Sunday in return for helping you move boulders on Saturday.
Although most commercial transactions meet the exchange of value criterion by exchanging promises (“I’ll promise to pay money if you promise to paint my building next month”), actually doing the task may also satisfy the criteria. If you leave a voicemail telling your printer that you’ll pay an additional $100 if your brochures are cut and stapled when you pick them up, the printer may form a legally enforceable contract by actually cutting and stapling the brochures. And you won’t be able to back out of the transaction by saying you changed your mind after he does.
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A “voidable contract” is a type of contract that can be terminated by one or both parties before the end date. This allows for more flexibility in the event of unforeseen circumstances.
Frequently Asked Questions
What are enforceable contracts?
A: A contract is a legally enforceable agreement between parties that can be enforced by law. An enforceable contract consists of promises made and actions taken, as well as the consideration given (the trade). If one party breaches this contract, they will breach it in returning some form of compensation for the other partys time or effort spent on fulfilling their part of the bargain.
What are examples of simple contracts?
A: Here are some examples of simple contracts.
1) $10 for the first hour, then $2 per every additional half-hour; or
2) 3rd party agrees to pay a certain amount each month in return for their services.
What is a simple contract meaning?
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