Perhaps the most important feature of a contract is that one party makes an offer for a bargain and the other party accepts. In law, this is called a 'meeting of the minds' . For example, if a gardner approaches a homeowner and offers to cut the homeowner's grass each week for $100 a month, and the homeowner agrees, you clearly have an offer and an acceptance.
Offer and acceptance does not always need to be expressed orally or in writing. An implied contract is one in which some of the terms are not expressed in words. This can take two forms. A contract which is implied in fact is one in which the circumstances imply that parties have reached an agreement even though they have not done so expressly. For example, by going to a doctor for a checkup, a patient agrees that he will pay a fair price for the service. If he refuses to pay after being examined, he has breached a contract implied in fact. A contract which is implied in law is also called a quasi-contract, because it is not in fact a contract; rather, it is a means for the courts to remedy situations in which one party would be unjustly enriched were he or she not required to compensate the other. For example, say a plumber accidentally installs a sprinkler system in the lawn of the wrong house. The owner of the house had learned the previous day that his neighbor was getting new sprinklers. That morning, he sees the plumber installing them in his own lawn. Pleased at the mistake, he says nothing, and then refuses to pay when the plumber hands him the bill. Will the man be held liable for payment? Yes, if it could be proved that the man knew that the sprinklers were being installed mistakenly. The court would make him pay because of a quasi-contract.
Consideration is also needed to create a binding contract. The idea is that both parties to a contract must bring something to the bargain. This can be either conferring an advantage on the other party, or incurring some kind of detriment or inconvenience. In the gardening example, the payment of the $100 is the consideration.
Consideration must be sufficient, but need not be adequate. For instance, agreeing to buy a car for a penny may constitute a binding contract. While consideration need not be adequate, contracts in which the consideration of one party greatly exceeds that of another may nevertheless be held invalid for lack of sufficient consideration. In such cases, the fact that the consideration is exceedingly unequal can be evidence that there was no consideration at all.
Contrary to common wisdom, an oral informal exchange of promises can be as binding and as legally valid as a written contract. However, under certain circumstances, an oral contract cannot be used. for example, a contract involving the sale or transfer of real property must be in writing.
Orange County Business owners should pay very close attention to every contract they sign. Contracts can contain provisions concerning what law will be applied, whether a party can recover their attorney's fees and legal expenses if a dispute concerning the contract occurs, and even where a lawsuit will need to be filed if there is a dispute. A contract can even require that binding arbitration must be used to settle all disputes.
