Contracte

1.Contracts: an overview

The great gifts of law are social order and predictability. If you had no idea whether a person who promises to sell you a home would actually turn it over to you, and if you had to fear that even after the seller had handed you the key he might return some day and move back in, saying that he'd decided the house was worth more than you paid, your life would be made miserable by unpredictability.

The same if someone promised to pay you for doing some work, or if you were told that a merchant would buy your cloth if you travelled to India to obtain it, or if someone says that he will carry your possessions to another state and deliver them for you: What if you had no way of knowing whether those agreements would be fulfilled...and if they were not, your only recourse would be to try to find the culprit and punish him with violence and perhaps tear away from him the value of what you had lost?

To avoid such uncertainty, every civilization has developed some variations of the concept of contract, some means of making reasonably certain that the rules of making enforceable promises are clear, that the content of agreements is mutually understood, and that the power of government stands by to enforce the promises at least by seeing that the one who breaks the promise pays the other adequate compensation.

(The law has always had problems, both pragmatic and theoretical, with consistently forcing people to perform promises which involve doing more than just paying money...such as painting a house properly, or singing in an opera. Sometimes courts will order "specific performance", but it is often more practical to make the person who breaks the promise simply pay money damages to the disappointed party. Court-ordered specific performance is rare and occurs when the subject-matter of the contract is unique, and money damages would be no substitute for actual performance.)

2.How a Contract is Formed

Contracts are legally binding agreements. Attorneys often use the terms "contract" and "agreement" interchangeably, but not just any agreement is a legally binding contract.

A contract is formed by a meeting of the minds of at least two parties, a mutual assent resulting from the expression of an offer by one and an acceptance of precisely that offer by the other.

The offer has no effect if the other person does not accept it. A mere discussion of the offer does not constitute acceptance. Negotiation often leads people to believe that they can expect other people to commit themselves to certain things, but until there has been an actual offer and a clear acceptance, there has not been the necessary "meeting of minds" to form a contract.

A person making an offer may revoke it (cancel it completely) at any time before it is accepted. If you wish to revoke your offer, however, you must communicate that fact to the person(s) who might accept your offer. The revocation becomes effective upon delivery to the other person...for example when the letter revoking the offer arrives at his residence or place of business.

If a person or thing essential to the performance of a contract dies or is destroyed before the offer is accepted, the offer is ended automatically. To avoid possible problems, the fact that the offer has terminated should be communicated to those who are considering accepting it.

An offer by mail or telegram may be accepted by mail or 4 telegram unless the person making the offer specifies otherwise, and the acceptance is effective (the contract comes into existence) at the moment the acceptance is put into the mail box or given to the telegraph office. Unlike the revocation of an offer, an acceptance does not wait for delivery.

Many business communications such as advertisements and catalogues are construed not as offers, but as invitations to others to make offers. Generally, invitations to make bids (as for construction contracts) are not considered offers. That is why at an auction sale the bidder, not the seller of the property who is standing in the background watching the auctioneer, is generally considered the person making the offer, so that the seller is not bound by bids and may withdraw his property from sale without accepting an offer if the bidding is too low.

An apparent acceptance of an offer which suggests a change in the original offer is not an acceptance and does not create a contract. It is a counter offer.

A counteroffer is a rejection of an offer. It has no effect except to propose a new and different contract. You should assume that a supposed acceptance which suggests any change at all in an offer or counteroffer is not an acceptance.

For example, if party A offers a written printing contract to party B, and B signs it but crosses out a sentence, it is not yet a contract; it will not become a contract until A accepts the changed agreement (in this case probably by saying so and writing his initials by the deleted portion).

Many disputes arise because one party claims that a contract was made, while the other party says that the process was still in the offer and counteroffer stage. This is a particular danger when a contract is oral (spoken) rather than written...a good argument for putting agreements in writing even if it is not legally necessary.Conversations full of words and phrases like "if" and "would you be willing?" and "I would consider" are almost certainly negotiation. To avoid problems: (1) Be sure that both parties fully understand the content of the agreement (there is a meeting of minds), and (2) Be sure that the acceptance makes no change in the offer.

If there are any conditions, make them a part of the contract. For example, you say "I'll pay you $200 to paint my house by Wednesday." Painter: "Okay, as long as it doesn't rain." The painter has made a counteroffer, not completed a contract.

You say, "All right, I'll pay you $200 to paint my house 6 by Wednesday unless it rains before then; if rain keeps you from finishing it by Wednesday, you have to finish it as soon as the rain stops." You have accepted the painter's terms, but you have also added a kind of deadline, so you are now making a counteroffer. If the painter says, "Okay," you have a contract -- a rather loose one, in which there might, for example, be an argument over the nature and quality of the painting, or over how soon "as soon as" is, but a contract nevertheless.