Agree to Agree Contract Law: Everything You Need to Know
Agree to agree contract law exists when two or more people, or groups, exchange a promise and agree to do something or provide something for one another.3 min read
2. Parties to a Contract
Agree to agree contract law exists when two or more people, or groups, exchange a promise and agree to do something or provide something for one another. A contract exists on the condition that both these individuals or groups agree to the deal.
A contract is defined as an enforceable and legally binding agreement between two or more individuals or groups. It consists of one party offering goods or services to the other in exchange for value. This value could take the form of financial compensation, the maintenance of a relationship, or a commitment.
In order for a contract to be legally binding and enforceable, all parties involved must be in agreement. Everybody needs to fully understand what they are agreeing to and must be willing and able to freely enter into the agreement.
Different Forms of Legal Contracts
Legal contracts can take three forms:
In a written contract, the parties sign a document in which the terms and conditions are specified. The written contract will also cover issues related to payment, as well as any other provisions by which the parties are bound. This is the easiest type of contract to enforce.
For an oral contract to be legally binding, both parties have to verbally agree on a value exchange, including several fundamental aspects. There can often be a lack of evidence to prove nonperformance or wrongdoing related to a verbal contract, which makes them more difficult to enforce than written contracts.
An implied contract is not a written agreement. Rather, it is based on the parties' behavior in relation to an exchange. These contracts face a similar challenge to oral contracts when it comes to a lack of proof. While implied contracts are challenging to enforce, intent to complete an implied contract can be shown by looking at a history of the relevant behaviors of the parties.
In some states, contracts in which the duties and obligations of the parties will extend for longer than one year are required to be written. Examples of such contracts include commercial construction projects and real estate transactions.
A contract is a two-way street, and its essence can be found in the obligations that each party makes to one another at the moment they enter into that contract. After accepting the agreement and all its terms, each participant is legally required to fulfill his or her obligations in terms of the agreement.
If one of the parties in a contract wants to dissolve the agreement, there are ways in which he or she can do so. However, if one party fails to meet his or her commitments in terms of the contract, then he or she can be sued by the other party.
Every agreement is made up of two parts:
- An offer.
- Acceptance of that offer.
The person making that offer offers to make a promise, and at the moment when the other party accepts that promise, a contract is created. Simply discussing an offer or the idea of making a promise does not put a contract in place. There needs to be a firm offer and firm acceptance in order for a legally binding contract to be created.
In order for a contract to be valid, it needs to be proven that both parties shared the same vision at the time of the signing of the contract. That and the establishment of an exchange of value are required in every contractual relationship.
In certain circumstances, the terms of a contract may be challenged. This is particularly true if these terms prove to be unethical, illegal, or impossible to make good on. However, the contract will still be valid as long as mutual assent and an exchange of value can be proven.
Parties to a Contract
There is no upper limit to the number of parties that may be signatories in a contract. However, each party is required to abide by all the terms and conditions contained in the agreement — whether these are stated or implied.
There is also the possibility of nonsignatory third parties being involved. A classic example of this would be the beneficiary of a life insurance policy. However, his or her only legal action can be to receive a benefit that is a result of the contract between the two original parties. This third party would never be entitled to sue one of the signatory parties over the terms contained in the agreement.
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