Professional Documents
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CONTRACTS
CONTRACTS
What Is a Contract?
When looking for examples of contracts, it's important to know what a contract is used for in
the business world. Contracts are agreements between at least two entities or people,
which creates legal responsibilities or duties on each side.
Some of the entities that might enter into a contract could include:
• Organizations
• Individuals
• Corporations
• Companies
Every contract must meet certain conditions in order to be upheld in court. These specific
conditions make the contract enforceable and include:
Contracts must also have specific and defined terms that include all details of the
transaction and a clearly defined offer. This information is called the subject of the contract.
For example, if a buyer wanted to purchase a used car from a dealership, the sales
contract would typically include warranty information, the price of the vehicle, and how
ownership or title will be transferred. All parties involved must have valid cause when
entering into a contract. The consideration refers to the price, motive, reason, or other
objectives that require the use of a contract.
Legal capacity or competency means that all parties must be able to make legal decisions.
For example, minors wouldn't be able to enter into legal contracts until they reach the
majority age. A person with a severe mental disability cannot sign a contract, and if they did,
it would not be enforceable.
• Selling services or goods valued at $500 or more, such as buying a car or hiring a
professional to install a new roof on your house
• Selling or transferring real estate, such as leasing an apartment or office, or
purchasing land or a home
• Making an agreement for services that take at least one year to complete, such as a
one-year non-disclosure agreement or a 12-month maintenance service at your
office
An implied contract, on the other hand, is an agreement with assumed details. For example,
when you order a cappuccino at a coffeehouse, you entered into a verbal contract with the
barista. You didn't expressly explain or clearly verbalize that you would pay for the coffee.
Instead, your willingness to pay is implied.