Basics of Binding Contracts
In virtually every industry, contracts are the instruments which govern the relationship between two entities that wish to conduct business. As such, it is helpful to know the basics as to what constitutes a binding contract to provide materials or services.
In general, a contract is a legally enforceable agreement to do or not to do something. In order for a contract to exist, there must be a meeting of the minds between the parties to agree to do or not do something in the form of an offer by one party, consideration provided to one party to either do something or not do something, the existence of certain terms, and finally, an acceptance of the terms.
In order for there to be a meeting of the minds, both parties must understand and agree what they have chosen to do and not to do. An acceptance of an offer must be clear and unambiguous. Consideration can be a benefit for one party or loss of the benefit for another. Its actual value in monetary terms is not important. Finally, for the contract to be enforceable there must be a certainty to its terms.
Although Contracts are typically in writing, there is no requirement that a Contract be in writing. At times, the Contract can be undated, and even unsigned. In fact, it can be entirely oral, partly oral, or partly in writing. In order for a Contract to be enforceable, however, it must meet the foregoing items set forth above. Finally, a Contract can be made of several different documents if it is intended that the documents be incorporated into one binding agreement.
A Contract may be express, implied, or a mixture of the two. An express Contract is one by which the parties have shown their agreement by words. Express Contracts can be Contracts which are oral, or Contracts which have been place into writing. On the other hand, an implied Contract is one in which the parties share their agreement by conduct. For example, if somebody provides materials or services to another under circumstances that do not support that they were donated or free, the law implies an obligation to pay for the reasonable value for the materials or services. As such, an implied Contract is an agreement inferred from the parties’ conduct or the circumstances surrounding their relationship.
The aforementioned examples are merely a short summary as to what constitutes a binding Contract. The case law and the decisions of the Court are wide spread as to whether a valid agreement has been reached, whether it be oral, or writing. The main tenements with regard to a Contract, however, involve a meeting of the minds, an offer and acceptance, consideration, and a certainty of terms.