A contract is a legally enforceable agreement between two or more parties. A contract consists of an offer, an acceptance, and consideration. An offer is a written or spoken statement by a party of their intentions to commit to an action upon acceptance of the offer. An offer must be definite and identify the subject matter, the parties, the price, and quantity as well as time for performance. In order to be effective, the offer must be accepted in a timely manner without a substantial change in the terms of the offer. Consideration is something of value given in exchange for a performance or a promise to perform.
Once facts establish a contract has been made, an analysis must be conducted as to whether there are any defenses to the contract. Some defenses make a contract void and of no effect, whereas others only allow an option to enforce the contract or walk away (voidable).
In order to be bound to a contract, both parties must be legally competent.
A mistake by both parties to a contract on a significant issue renders the contract void. However, a mistake by only one party does not necessarily effect the validity of the contract.
Duress is the use of physical force or other illegal pressure by one party to make the other party agree to the contract. It is a very difficult defense to prove.
Fraud is the intentional misrepresentation of an important fact of the contract. The person against whom the fraud was perpetrated has the option of voiding the contract.
The law requires some contracts to be in writing to be binding. Contracts involving the sale of real estate, the sale of goods over $500.00 in value, contracts that cannot be performed within one year, contracts to pay someone else’s debts, and leases for more than one year, by way of example, must be in writing to be enforceable.
A contract is breached when one party does not perform. A major breach that effects the subject matter of the contract potentially subjects the non-performing party to pay damages. Damages must be actual and foreseeable to be recovered. Unless there is a provision in the written contract or a statutory exception, attorney fees are usually not recoverable in a breach of contract action.