A simple contract includes three core elements: an offer, an acceptance, and consideration. The terms and conditions of the deal, if any, are an optional fourth element. The way that these elements must be presented varies depending on what, exactly, is being contracted, as well as local laws and contract rules. Written contracts must always name the parties, and must be dated. Original signatures, either written or electronic, must also attach.
Most contracts are written, but not all are. In fact, many of the very simplest contracts occur in daily life, sometimes without participants even realizing it. The three required simple contract elements are always present, though.
A customer who purchases a loaf of bread, for instance, enters into a contract with the grocer. The grocer lists a price on the bread, which is an offer. By bringing the bread to the register, the customer accepts that offer. When the customer pays, he offers consideration, or something of value, and the grocer does the same when giving the purchaser the bread. The store’s return policy and any freshness guarantees act as the terms and conditions governing the transaction.
Written contracts are usually a bit more complicated. The form and content for written agreements is usually stricter and more often than not must follow governing drafting laws and best practices. How the elements are presented in written contracts matters and in many ways dictates how the contracts will be enforced and how they can be broken.
The first section of a simple contract must name the parties and state their intent in drafting the contract. This can be as basic as “a contract for the sale of bread,” or as complex as a deal for recurring sales or services into the future. The agreement must also be dated.
Setting out the offer and acceptance is usually rather straightforward. The simple contract must identify which of the parties is making an offer and must describe that offer in detail. Then, it must name the party doing the accepting. Terms of the acceptance, including any conditions on the quality of goods or timing of services, must usually be prominently included. Final price must also be included, which is the consideration element.
Anything that the parties agree to must usually be memorialized in the simple contract and must be acknowledged with the parties’ signatures. Contracts that are not signed are not often enforceable. Similarly, terms that the parties agreed to outside of the four corners of the contract are often difficult to prove.
Contract drafting matters tremendously. Form contracts and legal templates are widely available online and through other public resources and can be very useful for getting a general sense of the language that contracts typically employ. Relying too heavily on form contracts can cause drafters to lose sight of the unique aspects of the contract at hand, however. Particularly when a lot of money is at stake, parties often seek the advice of contract attorneys and lawyers. Even a simple contract can quickly grow complex if non-performance leads to losses and if the contract terms are ever brought to court for enforcement.
