A Contracts Primer

By Rob Witthauer & Rod Williams

In conducting the day-to-day business of your Jaycee organization, you will routinely enter into contracts for the purchase or sale of goods, services, or other rights. What may surprise you is how often you do this and, in particular, the number of times that you do not realize you are doing this.

One of the biggest misconceptions about contracts is that there must be some piece of paper that constitutes “the contract” and that the parties must sign that document. Except for certain limited situations (more on those below), nothing could be further from the truth. The vast majority of contracts are simple oral transactions. In fact, all that is usually required to have a valid and enforceable contract are the following: offer, acceptance, and consideration.

Offer and acceptance are just what they sound like. An offer is simply when someone proposes selling something to or buying something from someone else at a particular price. Acceptance is when that someone else, in response to the offer, says yes. When you go to the grocery store and the sign says “Apples 25 cents each”, the store is making an offer. When you agree to pay the store that price for one or more apples, you are accepting the offer.

"Consideration", on the other hand, may be a term you are not used to hearing in this context. It simply means that the contract must involve the parties exchanging something of value. In the apple example, you are exchanging quarters for apples. This is in contrast to a gift. If someone says that he will give you an apple, with no strings attached, there is no contract because you are not giving him anything of value in return. You cannot later force him to give you the apple.

So, when must there be something more than offer, acceptance, and consideration, namely a signed, written contract? There are different situations set out in the law, but the one your Jaycee organization is most likely to encounter is when the contract involves something that will take one or both of the parties more than a year to perform. Say your chapter sells Christmas trees and in October the company you buy them from says that it will sell you trees for this year and next, and you agree. Because the contract involves performance extending beyond 12 months, if you do not have a signed, written contract with the company, when next year rolls around and the company refuses to sell you the trees, you are out of luck. You cannot force them to sell you the trees and you cannot claim any damages. Other examples of contracts that typically must be in writing include contracts regarding real estate (such as leasing office space, or the right to use a building for an event) and contracts for the sale of goods valued at over $500 (such as buying shirts for a convention).

By the way, in order to enforce a contract that is required to be signed and in writing, only the party against whom enforcement is sought must have signed it. So, if you signed a contract and breach it, it is not a defense that the other side did not sign it. Also, you should be aware that, in our technologically advanced day and age, electronic communications may substitute for hard copy written documents. It is possible that an exchange of e-mail correspondence regarding a proposed transaction may constitute a contract and even a signed contract if a court determines that the parties intended for their emails to serve as documentation of their agreement. For this same reason, if someone sends an email to your chapter “confirming” terms that you don’t agree to, you should be sure to respond in an email or other writing clearly objecting to those terms.

This should give you a general overview of what you need to know. Remember, it is possible for you to legally commit your Jaycee organization to an obligation, even if there is no signed, written “contract.” So, be careful what you agree to, even if it is just done orally or in e-mail. Please keep in mind also, however, that what you have just read is an extremely brief summary of a topic about which many books have been written. The rules stated in this article are very general. They are many exceptions and they do not always apply in a straightforward manner in every situation. As always, if you have doubt in a particular situation, you should check with your own legal counsel.
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This article is intended for informational purposes only and does not constitute legal advice. There is no attorney-client relationship between the author(s) of this article and its readers. Readers should not act upon the information contained in this article without consulting with their own legal counsel.
©2005 by Roderick B. Williams and Robert T. Witthauer