?What is a contract? A business contract is a legally binding agreement between two or more parties to do or not to do certain things. For example, a business contract could be for the sale of goods or supply of services at a certain price. There are many different types of contracts including: the sale and purchase of a business agreement; partnership agreements; leases of business premises; leases of plant and equipment; and employment agreements. The process for creating a contract generally includes information exchange, discussion, negotiation and employment agreements.
What are the essential elements of a contract? To be legally binding a contract must contain four essential elements. These four elements are: offer; acceptance; intention of legal consequences; and consideration. The four essential elements of a contract can be briefly explained as follows; a contract is formed when one party makes an offer and that offer is accepted by another party for an exchange of some benefit or something of value by the parties (this is the consideration element). The intention of the parties is that they are legally bound by the contract.
Can a contract be verbal or written? Contracts can be verbal or written, provided they contain the four essential elements of a contract. However, a verbal contract is much more difficult to prove. Some types of contract such as those for buying or selling real estate and credit must be in writing. A written agreement is recommended as it: becomes your proof of what was agreed upon; prevents ambiguity or misunderstanding; prevents either party forgetting or changing the terms later; and makes the parties focus on the essential issues and come to a definite agreement.
Unless you’re a lawyer nobody expects you to write your own contracts. However, as a business owner you’re expected to be able to read a contract and understand what it means. http://www. smallbusiness. wa. gov. au/business-contracts/#elements There are many different types of contracts. The type you use depends on what you need it for. One reason you may need a contract is when dealing with real estate. If you are purchasing a home it is always best to have a contract written up so that it is completely clear what the price is and what buyer and seller are both responsible for.
Another time to use a contract is when purchasing or selling a car. If you loan someone money you may want to write up a contract so that both parties are in agreement on repayment and time frame for repayment. When dealing with important things such as buying or selling a home or car it is always in everyone’s best interest to use a contract. Some people also like to use contracts when renting a home. These are sometimes called a lease. In this contract you should always state what the tenant is responsible to do to the property such as lawn maintenance or trash removal.
This should also state all tenants renting the property and the landlords requirements for terminating early and other things the parties may disagree on if it has to go to court. Having something in writing such as a contract or lease will always help a judge if needed. Another thing to remember is contracted should always be witnessed by an unbiased party and notarized. Most banks and libraries have notaries available for a small fee. http://www. reference. com/motif/business/different-types-of-contracts Types of contract face to face;
written; distance selling face to face Where the parties contract in a face to face transaction the law raises a presumption that the parties intend to deal with the person in front of them Phillips v Brooks (1919) Ingram v Little (1961) Lewis v Avery (1971) Distance selling The Distance Selling Regulations (DSRs) are the rules that apply if you are selling products or services to consumers without face-to-face contact, and where the consumer has not had an opportunity to examine the goods before buying or discuss the service in person
Examples: selling via the internet, text message, phone call, fax and interactive TV or mail order The DSRs do not apply to the following: business to business contracts contracts for the sale of land for the construction of a building contracts relating to financial services to consumers conditional sales and contracts for hire purchase You must give your consumers certain information before they agree to buy from you.
We refer to this as pre-contractual information which includes the following sufficient detail for the consumer to be able to identify the business they are dealing with a description of the main characteristics of the goods or services you are offering the price of the goods or services you are offering, including all taxes details of any delivery costs details of how payments can be made if payment is required in advance, you must supply your full geographic address the arrangements for delivery or performance of the service Information about your consumers’ right to cancel if consumers have to use a premium-rate phone number, you must specify the inclusive cost of the call how long the price or the offer remains valid According to Phillips v Brooks [1919].
2 KB 243 EXAMPLE FOR FACE TO FACE A rogue purchased some items from the claimant’s jewellers shop claiming to be Sir George Bullogh. He paid by cheque and persuaded the jewellers to allow him to take a ring immediately as he claimed it was his wive’s birthday the following day. He gave the address of Sir George Bullogh and the jewellers checked the name matched the address in a directory.
The rogue then pawned the ring at the defendant pawn brokers in the name of Mr. Firth and received ? 350. He then disappeared without a trace. The claimant brought an action based on unilateral mistake as to identity. Held: The contract was not void for mistake. Where the parties transact face to face the law presumes they intend to deal with the person in front of them not the person they claim to be. The jewellers were unable to demonstrate that they would only have sold the ring to Sir George Bullogh. http://www. e-lawresources. co. uk/Phillips-v-Brooks. php.