Imagine that you just opened your own business. In walks your very first customer. You offer him your product, and he accepts. And just like that, you entered into your very first contract, a legal agreement between two or more parties. In this article I will discuss the basics of a general contract.
The Offer
There is so much to learn about the makeup of an agreement, but to keep it simple, I will discuss the bare essentials. First, the parties, known as the offeror and offeree, must mutually agree to enter into a contract. The offeror, who initiates the proposition, needs to provide an offer with definite or material terms, such as the name of the parties, price, service or quantity of goods and duration of the contract. However, there are times when a court will provide reasonable terms to an agreement when they are absent.
The Acceptance
The offeror must communicate the offer to the offeree, as it can only be accepted by the party to whom it’s made. Depending on the type of contract, the offeree accepts the offer by agreeing to it or showing his acceptance through his actions. If the offeror prescribes a specific way to accept the proposition, then an offeree must act accordingly if he wishes to enter into an agreement.
The Consideration
In addition to an offer and acceptance, a contract must have consideration for validity. There is no agreement without it. Consideration is the bargain for exchange of something of value. It doesn’t have to be money; promises, property, services or almost anything else will suffice. The value of consideration can be big or small, as long as it has been bargained for.
Conclusion
As a business owner you enter into contracts on a regular basis. Although agreements are sometimes complex, the basics of a contract are an offer, acceptance and consideration.
