Written Contract
A written contract is an agreement done on a written paper or printed document signed by both participants. Written contracts are referred to oral contracts since they are easy to implement. In a written contract, one party agrees to provide the services or products, while the other party agrees to meet the payment terms. Written contracts differ due to different terms and conditions. Various elements should be considered when making a contract. The details of a written contract are significant aspects for consideration when making a contract in any managerial position.
Offer and Acceptance
Offer can be considered as a promise, while acceptance is consenting to the proposal. When a salesperson offers you a fridge for $600, and you agree to the offer that is considered offer and acceptance. But you can also counter his price and decide you are going to buy the fridge for only $550, during this period there is no offer and acceptance (Anderlini & Felli, 1994). The salesperson can decide whether to accept your offer or not; if he agrees, then you are considered to have reached offer and acceptance.
Consideration
To arrive at consideration, the parties involved must incur “legal benefits,” and “legal detriment.” Legal detriment is considered a promise to do something that is not legally obligated to do or to stop doing something that a person has a right to do (Anderlini & Felli, 1994). Legal detriment does not mean the promise will suffer any hardship. Legal detriment comes with benefits to the promisor. In the case of the fridge, you suffer legal detriment by agreeing to pay for the refrigerator, but if you say that you will only buy the fridge for $550, then it is considered there is no consideration, and therefore no contract.
Legal Capacity
Both parties are required by the law to have mental capacity, which is having enough mental ability to understanding the contract. Legal capacity mostly involves minors, mentally challenged people, or people whose psychic abilities have been affected by alcohol or drug abuse.
Legal Purpose
A valid contract must contain a lawful purpose to be lawfully enforced. Agreements that allow one party to break the law are considered illegal hence cannot be imposed (Anderlini & Felli, 1994). If you agree with the fridge seller that you will pay him $300 when he steals the fridge from his company and brings it to you, then the legal purpose is considered not reached hence there is no contract.
An agreement cannot be enforced if it is against public policy or it affects the interest of the community. When all this elements of contract are met, contracts are considered either express or implied-in-fact. In an express agreement, the terms of the contract are clearly stated by the party. In our fridge selling example, there is an express contract since both parties state the price required for the refrigerator (Bloss, 1989). Express contract can either be written or oral. Implied-in-fact contracts are also considered valid. When you request the fridge seller also to deliver a microwave, but you don’t ask the price, then there is an implied promise you will pay for the microwave.
Conclusion
For contact to be lawfully enforced, it has to follow the four elements of a contract. Parties involved must incur the legal benefits and legal detriment. An offer for an object is made, when accepted then it is considered to offer and acceptance. Contracts made also should breach the law, or be against the peace of the society. All participants of the contract should be mentally able to understand the contract. Mentally challenged people should be reconsidered.
References
Anderlini, L., & Felli, L. (1994). Incomplete written contracts: Undescribable states of nature. The Quarterly Journal of Economics, 109(4), 1085-1124.
Bloss, J. L. (1989). Getting it in writing: what managers need to know about contracts. Management Review, 78(11), 43-46.