The Basics of a Contract.
A contract is a promise or set of promises enforceable by law. Contracts are as old as history. We trace our law of contracts primarily back to England.
As people tried to work together in England, they would have disagreements about their efforts to trade goods and services so they went to court. The courts made decisions to resolve the disputes (rulings). They kept a record of them and tried to apply the rulings the judges made the same (or as close to the same) from one dispute to another. This is called following precedent (the decision made before). After a while, there were lots of court-made rules. This is the English Common Law.
Here in America it didn't take long before we had lots of disputes and our U.S. common law grew larger. Today, common law is one of the two ways that laws about contracts are created. Remember that courts usually follow precedent (the same decision made by a judge before on the same or similar facts). The second way that laws about contracts are created are by statutes enacted by the states and the federal government.
A contract must have three essential parts: an offer, an acceptance and consideraton. The offer has two parts: a promise to do something and a statement of what the person making the promise wants in return. The acceptance occurs when the party to whom the offer was made agrees to give the other person what she asked for in return. The consideration is what each party gets and gives. Below are examples.
If Mary says to Bud, "I will mow your lawn tomorrow," it is not an offer. It is just a promise. But if Mary says to Bud, "I will mow your lawn tomorrow for $20," it is an offer because Mary has made a promise and also said what she wants in return for the promise.
If Bud says or does something that clearly shows he agrees to Mary's offer, then he has accepted the offer and a contract is made. When Mary mows the lawn and Bud pays her the $20 the contract is fulfilled.
Many disputes occur over the issue of whether an offer was accepted. When there is a dispute, a court will try to determine if the parties reached an agreement (sometimes referred to as "a meeting of the minds"). This is one reason why it is important that the terms of the contract (offer, acceptance and consideration) be expressed clearly. This is also why writing,signing and dating the contract is best for both parties.
By: R. Kurtz "Kurt" Holloway