A contract is an attempt between two or more parties to formalize an agreement concerning a particular subject. Contracts can cover an extremely broad range of matters, ranging from the sale of goods or of real property, the terms of an agreement for employment , an agreement to design a website, the settlement of a dispute and many other issues. Contracts are typically written documents signed and executed by the parties in interest, though an oral contract may be enforceable under certain circumstances described below.

The Elements of a Contract

In order to be enforceable, a contract must contain the following elements:

1. A Meeting of the Minds;

2. An Offer and an Acceptance;

3. Consideration;

4. Performance or Delivery.

A "Meeting of the Minds" (Mutual Consent)

"Meeting of the minds" is exactly what it sounds like. The parties to the contract must have a mutual understanding of what the contract covers. For example, Seller wants to sell his property to Buyer. Seller and Buyer must come to a "meeting of the minds" regarding what property is the subject of the agreement, and what the purchase price will be. Absent a meeting of the minds, the contract will likely be held unenforceable.

Offer and Acceptance

A contract involves an offer from one party to another party, who accepts the offer. For example, in a contract for the sale of season tickets for the Pittsburgh Steelers upcoming season, the seller may offer the tickets to the buyer for the sum of $2,000.00. The buyer's acceptance of that offer is a necessary part of creating a binding contract for the sale of the season tickets.

Please note that a counter-offer is not an acceptance, and will typically be treated as a rejection of the offer.

For example, if the buyer counter-offers to purchase the Steelers season tickets for $1,500.00, that will technically be considered a rejection of the original offer. If the seller accepts the counter-offer, a contract may be completed. However, if the seller rejects the counter-offer, the buyer will not ordinarily be entitled to enforce the prior $2,000.00 price if the seller decides either to raise the price or to sell the tickets to somebody else.

Mutual Consideration (The mutual exchange of something of value)

In order for a contract to be valid, the parties must exchange something of value. The value does not have to be equal on the part of both parties, but there must be value. In the case of the sale of the Steelers season tickets, the buyer receives something of value in the form of the tickets, and the seller receives something of value (money). Absent mutual consideration, a contract does not exist.

Performance or Delivery

In order for a contract to be enforceable, the action contemplated by the contract must be completed. For example, if the purchaser of the season tickets pays the $2,000 purchase price, he can enforce the contract to require the delivery of the season tickets. However, unless the contract provides that delivery will occur before payment, the buyer may not be able to enforce the contract if he does not "perform" by paying the $2,000. Similarly, again depending upon the contract terms, the seller may not be able to enforce the contract without first delivering the season tickets.

In a typical "breach of contract" action, the party alleging the breach will set forth that it performed all of its duties and obligations under the contract, and that he did so in a proper and timely manner, and he will allege to the contrary that the other party failed to perform its duties or obligations.

Oral Contracts

Is there such a thing as an Oral Contract? Absolutely, and the terms of an oral contract are every bit as enforceable as one that is in writing. The difficulty in enforcement lies in the parties' ability to prove what the terms of the contract were. Absent proof of the terms of the contract, i.e. a writing or document, a party may be unable to enforce what it believes to be a firm contract. Evidence, such as witness testimony, prior dealing of the parties, course of conduct and credibility of the parties are some factors that may play into the enforcement of an oral contract. If evidence can be established that the parties orally entered into a contract, the terms of that contract will be enforced.

Our office has a great deal of experience in contract drafting and interpretation. Whether you need a buy/sell agreement, an employment contract, a non-compete agreement, a pre-nuptial agreement or any other type of contract, we can help.

To set up an initial consultation, contact my office at 412-823-8003 or send an email to Attorney Greg Artim