Contract Discussion Disclaimer: I'm not a lawyer, nor do I play one on TV. (Note to casting directors: I would love to play a lawyer on TV, though, so please feel free to get in contact with me.)
A contract is simply an agreement between two (or among three or more) parties. Sensible business people put their contracts in writing, at least those that they hope to be able to enforce if necessary.
If the word "contract" scares you, call it a Vendor Agreement. That should still get the job done. You want something that defines the terms of the relationship you hope to establish.
You want a written record so you can both refer to it later. That minimizes misunderstandings and the conveniently "forgotten" promises. Any time a vendor is willing to promise something, he or she should be willing to solidify it as part of the contract.
For a contract to be valid, it must meet the following criteria: This series gives you some basic knowledge of contracts. If you missed any of the other posts, here are the links: Who Needs A Contract? What is a Contract? Anatomy of a Contract - Part 1 Anatomy of a Contract - Part 2 Anatomy of a Contract - Part 3 Anatomy of a Contract - Part 4
Capacity - both parties must be legally able to enter the contract and must have the mental faculties to do so (Sorry, contracting with the 9-year old next door to mow your lawn for 50 cents won't work!)
Lawful Matter - subject of contracts must be legal (Sorry, no contacts about importing illegal prescription drugs, for example.)
Offer & Acceptance - one party must make an offer and the other must accept it clearly and precisely (Silence is usually not considered acceptance.)
Consideration - something of value much be exchanged (Usually money, but this could also mean property or rights to something valuable such as future royalties.)
In writing - certain subject such as real estate must be in writing (All vendor contracts should be in writing, in my opinion. What if your key contact left the company and her replacement knows nothing about your prior verbal agreement? How can you prove an undocumented verbal discussion?)
Many years ago when I was an engineering student I took a course in business law. The instructor, a retired lawyer (one of the first woman lawyers in my state) started one class by asking who had entered into a contract in the last couple of days. Few hands were raised. Then she asked about what we did for breakfast. Most of us had ordered breakfast at a local diner accross the street. She then went into a discussion of "what is a contract", particularly a sales contract.
That lesson stuck with all of us. Just because something isn't called a contract or printed on a fancy form, it may still be a legal, binding contract. Most, other than meals in resturants, should be in writing. But any agreement, whether at a diner breakfast counter or in an office, should be taken seriously and not entered into unless you are prepared to comply with your part of the agreement. Don't order breakfast if you don't have money. Those "end user agreements" on software (that nobody reads) do matter. When you have any special condition that must be included, put it in writing. And when somebody hands you a paper to sign, read it.
Posted by: John | February 23, 2006 8:45 AM | Permalink to Comment