Generally speaking, a contract is a documented agreement between two or more parties that is legally enforceable. Contracts should be voluntary – if one party refuses to sign, then the agreement is not enforceable – and all parties involved should be competent to read, understand, and sign the document. The document creates “mutual obligation” when both parties “offer” and “accept” details of the contract by creating the document together, then signing it.
When To Use a Contract Template:
Contracts are used in a number of situations, from renting or owning a home, to accepting a job, to purchasing a vehicle, to finalizing a business merger. In general, contracts have to do with agreements that involve an exchange of money to specific goods or services – such as employment – along with details regarding how and when that money will be given in exchange.
Although many states allow verbal contracts, it is best to have a contract written so that all parties can read it, discuss details, and visibly sign the document. Oral agreements rarely hold up in court in the event of a disagreement, even if your local laws allow for these types of contracts. Our free contract template can help you get started with an outline of elements common to contracts.
Contracts can be as simple or complicated as the dead the parties make between themselves (which is referred to in legal terms as “a meeting of minds”). Short contracts between two parties often reflect a short-term relationship – for example, if you hire a friend to remodel your kitchen, and part of the deal involves you purchasing materials as well as paying for their time. This is a change in your friendship that you want to keep track of, not only because of the money involved, but for both of your taxes, and potential liability on the premises.
Complex contracts like employment contracts or house purchases involve large amounts of money exchanging hands, lists of deadlines, lists of expectations and/or demands, and reasons for terminating the contract.
Legal Issues Around Contracts
It is very important that you document serious, legally-binding agreements in writing. However, in some cases, a judge may rule that an implied contract exists between two parties. This involves all parties understanding the exchange of goods and/or services, agreeing to these terms by taking action, and being of sound mind at the time. An example of an implied contract is the relationship between a patient and a doctor: the patient agrees, by requesting the appointment and undergoing the examination or treatment, to accept the doctor’s services. These services come with the expectation of payment at the end of the visit, but if the patient refuses to pay, that is a breach of the implied contract. These relationship agreements are sometimes called “quasi-contracts.”
The difficulty involving oral or vague contracts proves that many of us need help when we first find we must write a contract. Our free contract template can help you get started on any kind of contract you wish to write. However, we recommend that questions about complicated business transactions go through an attorney, who can help clarify legal pitfalls.