What is a contract?A contract is an agreement with specific terms between two or more persons or entities in which there is a promise to do something in return for a valuable benefit known as consideration. Contracts can be either written or oral, but oral contracts are more difficult to prove. Common examples of contracts are leases, promissory notes and rental agreements.
Can you enter into any type of contract once you reach age 18?Generally, yes. However, you cannot make a contract over something that is illegal. For example, you cannot contract to do a criminal act or civil wrong or to do something against the public good.
Do contracts have to be in writing to be enforceable?Only when the law requires it. Contracts that generally MUST be in writing include:
- Contracts which cannot be completed in less than one year.
- Contracts which promise to pay the debt of someone else.
- Contracts involving real estate.
- Contracts for the sale of more than $500 in goods (though there are many exceptions to this limitation).
Why should you prefer a contract in writing?You will have a better understanding of the terms and conditions of the contract and what you are required to do. A written contract will help prove the exact terms and conditions of the contract if you have to go to court to enforce it.
When can you cancel a contract you entered?You may be able to cancel a contract for a short period of time after you sign it but only in certain circumstances. For example, you may be able to cancel a contract you were forced into making or if someone told you something that was not true to get you to enter the contract. You also may be able to cancel a contract if someone tricked you into it, if you were not legally competent to contract, or if both parties entered the contract based on a mistake of fact that was an important part of the agreement. You should normally give written notice when canceling a contract.
How can you protect your rights when asked to sign a contract?If you sign a contract, you are saying that you have read it and that you understand what it says. If there is any part of the contract you do not understand, DO NOT SIGN IT.
Here are other suggestions:
- Never sign a contract with blanks or open spaces. These should be filled in with the correct terms before you sign.
- The parties can change or remove terms by agreement. Be sure to make any changes on all copies of the contract.
- Both parties should initial any change to the contract on all copies.
- Make sure all verbal (or oral) promises are written into the contract before you sign it. Otherwise, evidence of an oral agreement might not be admissible at trial.
- Make sure all the terms of your agreement are clearly spelled out in the contract. Do not assume that a court would uphold what you believed your contract was if the contract does not mention it.
- Make sure the contract is dated.
- Seek legal advice from an attorney.
If someone comes to your home to sell you something and you sign a contract, you have the right to cancel the contract before midnight of the third business day after the contract was signed. If you fall prey to a high-pressure salesperson in your home, you can get out of this contract if you properly mail a notice within that period. Some sales people may try to hurry you into signing a sales contract. DO NOT LET THEM. It is your responsibility to read the contract thoroughly before signing it. Make sure all promises made by a salesperson are written into the sales contract and that you do not rely on promises made verbally that conflict with the written terms of the contract.
NOTE: Once you turn 18, many people or businesses may ask you to sign a contract (tanning salon, cell phone companies, health clubs, etc.). If you sign the contract, you will be bound to its terms and will have to pay the amount stated for the entire length of the contract! You cannot change your mind later (for example, because you move to another town) and get out of your contract.
Agreeing to buy something over the Internet can be a form of contract. It may be enforceable in a state you have never visited. It may be difficult for you to enforce the agreement and obtain the goods you ordered. It is advisable to make purchases over the Internet only from businesses that you can independently verify as trustworthy.
What rights do you have if the other party breaches (or breaks) the contract?If someone does not do what he or she was supposed to do according to the contract, the person has broken the contract. You can do several things if this happens. First, try to work the problem out. If that does not work, you can go to court and:
- Ask for your money back.
- Ask that you be put in the same position you were in before you entered into the contract.
- Ask that the contract be cancelled and refuse to perform your part of the contract.
- Ask the court to make the other person do what he or she contracted to do.
What is a warranty?A warranty is a promise made by a seller of a product. The warranty guarantees that the thing you bought will work as promised for a specified period of time. Warranties give you important rights, and you should know what the warranty says before buying the item.
Express warranties are written or oral statements made by the person selling the item as to its quality or performance. Implied warranties do not have to be stated. For example, an implied warranty on the sale of a hair dryer would be that it would blow hot air.