By Philip E. Goss, Jr., Esq.
Ah, the standard contract! How many of you reading this column have used that term many times in the past, or believe that such a document exists? Frequently, clients call me seeking my review of a vendor contract or other written obligations, which is described by the client as a “standard contract.” Urban legend holds that there exists a document known as the “standard contract” that abides by with some form of legal standard consistent worldwide.
We can all agree that 12 inches equals one U.S. foot and that 2.2 pounds equals one international kilogram. But there is no document with terms and conditions that coalesce into a “standard contract.” While many contracts set forth similar language, none are ever the same.
Neither contracts nor written obligations need be complicated. But, to be enforceable, each must set forth the “parties” to the agreement, the “subject matter” of the agreement and what is the “consideration” to be paid or the quid pro quo between the parties.
Contracts can be oral, but if not reduced to written form are far more difficult to prove and, typically, have shorter statutes of limitation to seek enforcement. Oral and written contracts, if the essential terms are proven to the satisfaction of a tribunal, are equally enforceable.
Certain contracts must be in written form or they are considered void. A non-exhaustive list of such agreements that must be in written form to be valid include: agreements to pay the debts of another, any contract that cannot be completed in less than one year, a transaction for the sale of goods exceeding the value of $500 under the Uniform Commercial Code, or an agreement for the purchase of real estate.
Leases and service agreements are contracts. The credit card slip you sign to pay for lunch is a contract. Even when you purchase an item on the internet, you are entering an enforceable contract.
Written contracts have been found to be enforceable, even if just a handwritten agreement between two people.
There’s a popular story about a famous member of Baseball’s Hall of Fame who was required to sell his house at far below market value. It was based upon an agreement written on a cocktail napkin that contained sufficient terms to constitute a written contract.
While I cannot verify the story, the facts, if true, would support that result.
The sole constant in dealing with anything that you sign, is that you must read and understand everything about the document before you sign your name on the dotted line. Never sign anything that you are not willing to comply with. There are no “do-overs” in the world of contract law.
Utterly ridiculous and unfair terms and conditions can become part of a written agreement, absent fraud, or a violation of law or public policy. Agreement to such terms, even if the product of poor or impetuous decision-making, can be valid and legally binding on you – like that shiny new car with a promissory note payable over many years and at an interest rate far above what your FICO score should necessitate. Like the new smart phone payable in monthly installments that will ultimately cost three times the cash price!
Like a service agreement obligating you to use a pest control, landscaping or home security service exclusively and for multiple years. Like a copy machine lease that requires you to use the companies’ consumables, no matter that the ink toner and paper available at the local office store is one-half the price! Like the garbage service that can’t be terminated for multiple years.
All of the previous list are examples of goods and services my clients have obligated themselves to by signing “standard contracts” before seeking my advice.
As I have stated more than once over the 17-plus years I have had the privilege of penning this column, no one ever asks you to execute a written agreement, or, for that fact, to sign your name on any piece of paper, unless it is to their benefit and in their best interests.
Therefore, never autograph any piece of commercial paper, or anything, really, without completely understanding everything it reads.
Finally, every contract is negotiable, even if the final negotiation results that you walk away from the deal or agreement. Excepting the most limited of circumstances, no deal is preferable to a poor deal.
Attorney Phil Goss, Jr. welcomes any email comments or questions at [email protected] and will attempt to respond personally, time permitting.
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