What’s the deal… with contracts? Well, I’ve been translating a lot of them lately, and since it’s been a while since I’ve posted anything, I thought contracts would be a good topic. Thus, after some research, writing and procrastination, here’s my latest blog post.
So what is the deal with contracts? Actually, the contracts are the deal. Business depends on them to ensure that things get done. Without them, business would be chaotic. With contracts, a business or person can reasonably expect another business or person will provide the service or product in question. With this agreement not much would get done.
So what’s the purpose of this post? As a legal translator, my aim will be to show you the anatomy of a contract and point out some common terminology.
In order to avoid an incredibly long read, I will be dividing this post into 4 separate posts:
- Essential elements.
- The introduction.
- The body.
- The conclusion.
Contracts include eight essential elements:
- The parties
- The subject matter
- Offer and acceptance
- Mutuality of obligation
- Legal capacity
- The writing requirement
Without these elements, you really don’t have a legally binding, enforceable contract. A description of these elements appears below:
- Parties: The “parties” are the persons who enter into a legal arrangement, i.e. the contract. They can either be living persons or “legal persons,” e.g. a corporation. All parties to a contract must be clearly identified. Parties identified in a contract are typically listed with their registered business address and usually referred to as “party of the first part,” and “party of the second part.
- Subject matter: The “subject matter” are the goods or services that have been negotiated by and between the parties.
- Offer and acceptance: There is a contract when a party makes an offer and the other party accepts it. The terms and conditions of the offer must be clear so that a party considering it knows whether to accept it or not. If a party rejects the offer or makes a counter offer, there is no contract. If there is a counter offer, it is up to the other party to accept or reject it. Acceptance occurs when a party answers an offer by a statement or act. Acceptance must be unequivocal and communicated to the offeror.
- Mutuality: Parties entering into a contract must mutually agree to its term and conditions and must be mutually bound to fulfill the terms and conditions, either by performance or forbearance.
- Consideration: Consideration is the price paid by one party to the other in exchange for the agreed upon good or service. The consideration does not have to be money, but it must be something of value.
- Legal capacity: To enter into contract the parties must be legally capable. In the eyes of the law, certain persons or entities may not have this legal capacity, such as: minors of age, persons with mental impairments, prisoners or bankrupt persons or businesses.
- Consent: To enter a contract, the parties must do so of their own free will, and they must understand the nature of the contract. This is often referred to as “informed consent.” Contracts entered into based on a mistake, false statements (misrepresentations), duress or undue influence
- The writing requirement: The Statute of Frauds requires most agreements to be in writing in order to prevent proof of a nonexistent agreement through fraud or perjury in the event an alleged contract is somehow breached.
So there you have it: Eight elements. It may not seem like much, but this is the essence of a legally binding, enforceable contract. Hopefully, that wasn’t an overload. If you found this interesting, join me for part 2 of this post, where I’ll talk about the introduction section in contracts. Thanks for reading!