Contracts

Business law generally revolves about concepts involving contracts. By definition a contract is an agreement between two or more people, business entities or parties wherein individuals, businesses or parties obligate themselves to perform certain tasks. Contracts can be entered into orally or in writing. Certain agreements by law must be in writing as required by statute. The specific law that requires that certain agreements be evidenced by a writing is known as the "Statute of Frauds".

All contracts whether they are oral contracts or written contracts must contain three basic elements, they are the offer, acceptance and consideration. If any one of these elements are missing then there will not be a binding oral or written contract. Regardless of whether the above noted three basic elements are present a fourth requirement exists with respect to any contract, again whether the agreement (contract) is oral or written and this is the meeting of the minds. Conceptually this requires that both parties have an absolute common understanding of the terms of the agreement which is their contract.

Let us take a look at an example of an oral contract, one of the most common types, the sale of an automobile. We will see how all of the above mentioned elements come into play in this transaction.

A sign is seen on a car, on the internet or in classified advertisement which states "4 Sale 2014 Toyota Corolla, 75,000 miles, 11,500. Call (516)555-1234. This constitutes a contractual offer to sell the car.

Thereafter a telephone call is placed by the purchaser where the potential purchaser states "I will buy your car after I have my mechanic inspects the vehicle". This constitutes a contractual acceptance. Following the inspection the purchaser tells the seller I will only offer you $10,200 for the car. This is called acounter offer to purchase the vehicle.

The owner of the vehicle agrees to the purchase price of $10,200 informing the purchaser that the vehicle is sold "As Is". This is the final acceptance of the counteroffer. What is most important in this instance is that there has been a meeting of the minds.

The consideration in this particular instance is the $10,200 which will be exchanged in order to complete the contract.

The sale of the automobile as we have described it is a good example of an oral contract. We will now examine the written contract. In looking at the various types of written contracts we often forget that marital agreements are not thought of as a written contract, but indeed these are written contracts.

Marital agreements come in three types. There is the Ante Nuptual Agreement (sometimes called a Pre-Nup), the Post Nuptual Agreement and the Separation Agreement. Parties in a marriage will reach these agreements because they wish to avoid expensive and contentious divorce litigation and because the parties wish to be the masters of their own destinies.

The Ante Nuptual Agreement is an agreement in writing reached prior to the parties' marriage which sets forth the manner in which the parties' marital property will be distributed in the event that the marriage dissolves. Numerous matters can be resolved in advance of a couple's marriage should such an event occur.

The Post Nuptual Agreement is a written agreement which periodically updates the terms of the Ante Nuptual Agreement. The agreement likewise sets forth the distribution of marital property and other matters in the event of the termination of the parties' marriage.

The Separation Agreement sometimes called a Settlement Agreement is the written agreement which parties enter into in the event that the marriage irretrievably breaks down and is often incorporated into the divorce judgment. This agreement actually puts into effect the distribution of marital property and the terms of such items such as spousal maintenance, child support, custody and visitation.

Under the terms of the New York Domestic Relations Law, these marital agreements must be in writing and acknowledged (notarized) in the form of a deed to real property.

Marital agreements because of the nature of the marital relationship are subject to extreme scrutiny by the courts to make sure that they were entered into fairly. It is extremely important that the parties to these agreements are represented by counsel of their own choosing to make certain that there was no overreaching in achieving the marital agreement. There can be no collusion in reaching such an agreement and an attorney in such a situation can only represent one of the spouses. The marital agreement if challenged as to its validity must be shown to have been reached fairly with full financial disclosure from both spouses. We see in this a written agreement which is the result of the offer, acceptance and consideration. The validity of this and any other agreements is hinged upon the meeting of the minds.

Contracts which must be in writing are those agreements which are subject to the "Statute of Frauds" as defined in New York under the General Obligations Law.

The Statute of Frauds requires that certain types of contracts must be evidenced in writing. As such these agreements can under certain circumstances be partially evidenced in writing and otherwise be orally based. Agreements for the sale or transfer of real property are subject to the Statute of Frauds and are examples of of a contract which must be evidenced in writing. It should be noted that some aspects of such agreements may be oral in nature as well.

Finally the Statute of Frauds allows for infants in New York, defined as someone under the age of 18 to disaffirm a contract of any kind based upon the fact of infancy. It should be noted however that if a contract is entered into by an infant and then acknowledged and abided by after the infant turns 18, infancy will no longer be a defense to the enforcement of the agreement.

Question:

1. Has the advent of the internet created more potential fraud and overreaching in the creation of contracts? Provide your thoughts.

2. Write one to two page essay considering how the internet may have brought about changes in the way contracts are now created and enforced.