Many clients ask, "When do I need a contract?" My answer is, "Always." In the good old days a hand shake was a person's bond, and many contracts from the simplest to the most complex were worked out on this basis. Today, such may still make a contract, but is extremely hard to prove. You enter into contracts every day. You go to the grocery or other retail store, you take your items to the check out counter, pay for them, and leave - - - this is a contract! You have made an offer to purchase for an agreed upon price, they have agreed to accept such price, you tender the money, and they tender the items you purchased. Another example is a neighborhood child asking you if you need your lawn cut, you agree on a price, he performs, and you pay the agreed price. This too is a contract.

There are two types of contracts: (1.) oral or verbal, and (2.) written. A majority of contracts are oral, and my situations above are examples of those oral contracts. An oral contract is every bit as valid and enforceable as a written contract. The major problem with oral contracts: they are hard to prove. The parties entering into the contract will have different interpretations of terms, lapses of memory, or may deny that any such agreement was made. This requires the parties to present evidence of the contract before a Court, and the Court must sometimes make its determination on little more than the demeanor and testimony of the parties involved. Though we enter into oral contracts every day, and though it is not practical to draft a written contract in every instance, a written contract is preferable and more easily enforced, as it contains all or most of the terms of the agreement and the Court can base its ruling on this written contract rather than the honesty and memory of the contracting parties.

There are several elements which make up a contract: 1) An Offer; 2) An Acceptance of the Offer; 3) Performance and Compliance with the offer and acceptance; and 4) Consideration, which can be monetary or in some other form. These four elements make up a basic contract, but there are other elements too numerous to mention here. Some include dates, times, deadlines, contingencies, forms of payment, just to mention a few. A contract can be a single page, or as thick as a phone book. Still, what it comes down to is the intent of the parties standing behind the contract. If the intent is proper and honest, a hand shake could be truly all that is needed.

A last word: Written contracts are most important when dealing with family and friends. This is true because these individuals, one side or the other, could take advantage of the friend or family relationship and fail to perform as required in the contract. The best way to lose a friend is to enter into an unwritten contract with one, and later try to enforce the same.