What Is a Contract?

Think of a contract as a promise between two people, except that it holds a much higher significance compared to making pinkie promises or spitting and shaking hands. Contracts are made to signify a mutual understanding and deal between two or more entities to establish the rights and obligations of those involved. While verbal agreements are pretty common in certain cases, the best form of contract is written and signed on paper.

Why Use a Contract?

A handshake may seem like an easy way to close a deal, but it’s not exactly an advisable method to employ. Entrusting someone freely without boundaries is a dangerous move that would only make you vulnerable to a series of complications and inconveniences.

Rather than suffer through the hassle of unpaid workloads and unfinished projects, contract writing provides the opportunity for you to define the job scope and responsibilities of each party. A time frame is often given to ensure that these duties are performed and completed according to schedule. And if the relationship happens to falter over the course of the contract period due to a fault or breach by either party, the consequences and compensation conditions outlined in the contract will come to play in order to resolve the issue. That way, both parties may protect themselves from messy lawsuits and other potential threats in the system.

Contract Samples

Browse through the following samples to see what qualities make a good contract.

Seven Elements of an Enforceable Contract

Contracts generally differ in terms of their specific requirements and the purpose they are intended to serve. However, the basics of contract law emphasize the need for the following components to exist regardless of where or why the contract is devised.

1Offer: An offer expresses a party’s intent to be bound in a contract in exchange for a good or service. This can be conveyed in different ways, so long as it clearly communicates the offering party’s willingness to engage in a binding agreement with the accepting party. It’s important to keep the proposal specific and direct for a reader to comprehend without question. 2Acceptance: Keep in mind that you can only move forward with the contract if the opposite party accepts your offer. This is usually done in a manner that was requested or instructed by the offering party. If the accepting party wishes to change the terms of the offer to suit their personal preferences, the other party does have the liberty to accept or reject this counteroffer. 3Consideration: This refers to something that is of value in the exchange. As long as the court of law recognizes that each party’s consideration possesses sufficient value, the concerned parties may carry on with their contract. 4Competence: Before a party may enter into a contract, their legal capacity is first assessed. There are several factors that determine one’s competence, including a person’s age, mental health, and sobriety level. That’s because anyone who fails to meet the necessary requirements might not have the ability to understand and freely consent to the terms and conditions of the contract. 5Mutual Consent: If consent was obtained from a party after being forced or manipulated to agree to the contract, the court may rule out the agreement as involuntary for the contract to be void. 6Legality: Always remember that a contract can only be enforceable if the activity stated in its content is legal. Asking someone to commit murder, assault, or any other criminal act is illegal; therefore, making the contract unenforceable. 7Writing: Under the Statute of Frauds, there are certain types of contracts that need to be in writing in order for them to be enforceable. This includes contracts that involve business deals and other formal transactions between two or more parties.