For some people, their basic understanding of a contract is a legal agreement that one gets into with another person or business. Although this is true, it is grossly understated. Contract law can be quite confusing, especially if you are not acutely aware of what goes into the drawing of a contract in the first place. Thus, it is advisable for everyone to know what they are signing off one before they put pen to paper. So what are a few of the things that you should be aware of if you are entering into your first contract?
There should be an offer and an acceptance
Before any contract is valid, there should be an offer on the table, which should be accepted by the second party. However, acceptance is not only showing an interest to get into the agreement. If the contract has to do with the purchasing of goods, acceptance can be in the form of filling in your order and outing down a deposit. On the other hand, if the contract has to do with work, you should show good faith in your part by determining the date that you will join the new workforce.
There should be intention to enter into an agreement
Another element that makes a contract valid is by both parties exhibiting the intention of getting into a legal agreement together. This aspect is important as some contracts can be binding even when they are not in writing. In the event of a deal gone sour, a court could determine the viability of the contract based on whether both parties had shown the intention of getting into the contract. For example, if you and a colleague decided to carpool together with the understanding that the workmate is to be paying you a specified amount of money to cover fuel costs, this can be considered intention to get into an agreement.
There should be a consideration
Consideration in the context of contract law refers to what is exchanged so that a promise is delivered. Typically, consideration is in the form of monetary value. Nevertheless, it can also be in the form of bartered goods or any other benefits that the two parties may agree on. It should be noted that the consideration agreed upon does not have to equal the value of what it is being exchanged for. Thus, a contract cannot be deemed void simply because one party later decides that what they got back in exchange was not sufficient for what they provided in return.
For more information, contact a commercial lawyer.