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What is a Contract?
Posted Friday, Mar 30, 2012 by Allen B. Ury
Put simply, a contract is an agreement between two parties for an exchange of goods, services or actions. The “parties” can be individuals or groups of individuals, such as companies. Contracts can be written or oral (spoken). They carry the force of law, meaning the courts can be called in if any of the contract’s parties believe the other(s) has not carried out his/her obligations.
To be valid, a contract must contain these five elements:
• Offer and Assent — This means that one party offers to do something (such as sell a car) and another party agrees to the offer (such as buy the car). If one party makes an offer the other does not accept, there is no contract. Likewise, you can’t accept an offer that has not been made. For example, you can’t force someone to buy your car, nor can you force someone to sell you one.
• Consideration — An agreement is only a contract if things of value are exchanged. This is called consideration. Consideration can be money (e.g., you agree to sell a car for $10,000), services/actions (e.g., you agree to give your car to a doctor in exchange for medical services) or for a promise to not do something the other party is otherwise legally permitted to do (e.g., you agree to give your neighbor the title to your car in exchange for his promise to never paint his house pink).
• Sufficiency — To be enforceable, the things of value exchanged need to be balanced in the eyes of the court. This is where things can get tricky. For example, it’s perfectly legal to enter into a contract in which you sell a car for $1. This kind of seemingly lopsided exchange will be deemed enforceable if it can be proved that the parties involved believed the exchange was fair. (Maybe the car was in such bad shape that it actually had a negative value, or the person selling the car just really, really wanted that dollar.)
• Legality — To be enforceable, the agreement can’t require either party to break the law. For example, offering a hit man $10,000 to kill someone does not constitute an enforceable contract.
• Agreement — Finally, both parties must actually agree on what is being exchanged and how that exchange will be made. In the case of written contracts, this usually means “signing on the dotted line.” As for oral (spoken) contracts where there is no record of what was promised, the actions of the parties involved can be used as evidence of an agreement. For example, if you give your car to someone who then gives you $10,000, the courts may assume a verbal contract exists.
Learn About Contracts in Everest University Online’s Paralegal Programs
Contract law is just one of the many subjects covered in the Paralegal career education programs at Everest University Online, a division of Everest University. Designed to prepare you to work under the direction of a licensed attorney in a law firm, corporate law department or government agency, these programs allow you earn an associate or bachelor’s degree in two or four years, respectively.
Because these programs are online, you can earn your degree on your own schedule and at your own pace. It’s the perfect solution if you want to earn a degree while still holding down a full- or part-time job, or while taking care of your family.
Financial aid is available for those who qualify.
For more information about our graduation rates, the median debt of students who completed the program and other important information, please visit our website at www.everestonline.edu/disclosures.