Edward, an artist, called the other day.Edward told me that he had purchased art
supplies and prepared original pieces of artwork to be used in a book written
by one of his friends.When Edward
delivered the artwork and asked to be paid, his friend refused.It turns out that Edward’s friend thought
Edward was donating the artwork.The
parties did not bother to write anything down.Edward now wants to know whether he had a binding contract.So what are the elements of a binding
contract?
An Offer - This includes identification
of the parties, a description of what the person making the offer is willing to
give, the time within which the contract must be performed and a description of
what is being given in return (often money).
Acceptance - Communication by
the offeree demonstrating a serious intent to be bound.Should the offeree propose different terms,
the proposal is considered a counteroffer.
Legal Purpose – The purpose of
the contract must be legal.Parties, for
example, cannot form a contract for the illegal distribution of drugs.
Mutuality of obligation –
Often referred to as a “meeting of the minds.”The parties must agree to the same thing, in the same sense at the same
time.Here it is crucial that the offer
be clear and definite just as there must be clear and definite acceptance of
all terms of the offer.
Consideration – Although
contracts are often supported by money, they do not have to be.Consideration may be some other valuable
tangible item (your big screen plasma TV) or giving up something you have a
legal right to do (watching basketball on your big screen plasma TV).
Competent Parties – Is this an
agreement by a minor? Does fraud, duress or undue influence exist? Is a party
authorized to enter into the contract or lack the mental capacity to
understand? If so, there may be no binding contract.
After investigating the particulars, Edward did not have a
contract.While he still may be paid for
his efforts based on other legal theories, having all elements of a binding
contract would have supported Edward’s claim to be paid.Are your contracts binding?
