A simple contract is an agreement made by two parties. This agreement can be an oral or a written one. There must be an offer, a consideration and an acceptance to make it worth or valid. Even if the document is not legally drafted by a lawyer, it can still land you in court if there is a breach of contract. Judges encourage you to have a written simple contract rather than a verbal one, as it will be hard to provide evidence of its existence.

Offer and Acceptance: The offerer is the party who makes the offer and the offeree is the person that the offer is being made to. This contract can be made in the name of a business, a sole proprietor or a limited liability partnership.

Consideration: This is the value given by one party to another in exchange for the service or product. It can be money or another type of benefit. Without consideration people generally don’t enter into a simple contract.
.
Capacity to enter into a contract: Both parties should be capable of consent, otherwise the contract will be void. Parties to the contract must be 18 years old or over, of sound or stable mind, not under the influence of drugs or alcohol and not incarcerated. For example, an adult cannot enter into a contract with a minor or a person cannot make an agreement with a mentally ill or addicted individual.

Terms: It is highly recommended to do a written contract. So, in case of a breach of contract, you have a physical copy, and the suffering party will be protected. The simple contract must include the terms and condition that each party must abide by. It should include details regarding services, money, dates, time frame and all clauses. For example, an agreement between a tenant and a landlord, the tenant pays the landlord a certain amount of money over a fixed period of time while the landlord provides a property for the tenant to live in.

Breach of contract: This occurs when one party defaults on his/her part of the agreement. If one of the parties does not follow the terms then the other party may sue him/her for damages. A judge can reward a compensation to the injured party, if enough evidences are provided. For example, two people agree on a verbal simple contract that one person will remove the snow from the other’s drive way and curb and the second one agrees to pay for it. However, after snow removal the other party refuses to pay. They talk and argue with each other. Now the person who removed the snow sues the other party, but as it was an oral simple contract, it is much more difficult to prove it to a judge.

Contract Termination: A contract may be ended for many reasons.
a. Both parties perform their obligations.
b. Because of natural calamities.
c. By mutual consent from both parties.
d. By frustration: if one of the party dies or gets prolonged sickness and become unable to fulfill their end of the agreement.

For small matters, people don’t like to get tied up in legal contracts. But always try to get a dated, timed, signed and detailed written simple contract when it is beneficial to both parties.

 

U. Lakhia

DBPC Blog