Contracts are an essential part of conducting business. They establish clear expectations and obligations between two or more parties. While contracts can be complicated, there are some that are simple and only require the agreement of the parties involved.
These contracts are known as « contracts perfected by the mere agreement of the parties. » This type of contract is also referred to as a « simple contract » or « simple agreement. » In this article, we`ll explore what these contracts are and how they work.
What is a simple contract?
A simple contract is a legally binding agreement between two or more parties that is created by the mutual assent of the parties involved. It is called a « simple contract » because it requires no special formality or consideration, and it can be created by a verbal or written agreement.
Examples of simple contracts include:
– A lease agreement between a landlord and tenant
– A purchase agreement between a buyer and seller
– A service agreement between a service provider and client
How are simple contracts created?
As mentioned, simple contracts can be created either verbally or in writing. However, it is always recommended to have a written record of the agreement to avoid any misunderstandings or disputes later on.
Simple contracts can also be created through conduct or behavior. For example, if a person enters into a store and picks up a product, they are essentially agreeing to the terms of the sale without any written or verbal agreement. Their conduct by picking up the product signifies their agreement to the terms of purchase.
What are the essential elements of a simple contract?
To be legally binding, a simple contract should contain these essential elements:
1. Offer and acceptance: One party makes an offer to another, and the offer is accepted by the other party.
2. Consideration: The parties must exchange something of value, such as money or services.
3. Legal purpose: The contract must be for a lawful purpose and cannot violate any laws.
4. Competent parties: The parties involved in the contract must be of legal age, and mentally and physically capable of entering into an agreement.
What are the advantages of simple contracts?
One of the biggest advantages of simple contracts is that they are easy to create and do not require any special formalities or legal expertise. They can also be created quickly and efficiently, which saves time and money for all parties involved.
Simple contracts are also flexible and can be tailored to the specific needs of the parties involved. This allows for more personalized agreements that can be easily modified or terminated if necessary.
Simple contracts are a valuable tool for conducting business and can be a great way to establish clear expectations and obligations between parties. While they are not suitable for every situation, they are a cost-effective and efficient way to enter into legally binding agreements.
As always, it is recommended to have a legal professional review any contract before signing to ensure that all necessary elements are included and that the contract meets all legal requirements.