by Perrie N. Heitler – Attorney at Law
2345 Rice Street, Suite 165 - St. Paul, MN 55113
1. Offer. One of the parties makes a promise to do or not do some specified action in the future.
2. Consideration. Something of value is promised in exchange for the specified action or non-action. This can take the form of a significant expenditure of money or effort, a promise to perform some service, an agreement not to do something, or reliance on the promise. Consideration is the value that induces the parties to enter into the contract. The existence of consideration distinguishes a contract from a gift. A gift is a voluntary and gratuitous transfer of property from one person to another, without something of value promised in return.
3. Acceptance. The offer is accepted unambiguously. Acceptance may be expressed through words, deeds or performance as called for in the contract. Generally, the acceptance must mirror the terms of the offer. If not, the acceptance is viewed as a rejection and counteroffer. If the contract involves a sale of goods (i.e. items that are movable) between merchants, then the acceptance does not have to mirror the terms of the offer for a valid contract to exist, unless:
(a) the terms of the acceptance significantly alter the original contract; or
(b) the offeror objects within a reasonable time.
4. Mutuality. The contracting parties had “a meeting of the minds” regarding the agreement. This means the parties understood and agreed to the basic substance and terms of the contract.
Other Contract Term Considerations:
1. Jurisdiction. It should always specifically be stated that in the event of a dispute, that the contract jurisdiction is the State of Minnesota (if that is where you are doing business). This is only a general guideline. The specifics of the contract may vary as to stating specific county and federal jurisdiction.
2. Attorney Fees and Costs. If you are concerned with obtaining attorney fees and costs in the event that a dispute arises, the only way a court can award attorneys fees is if a specific statute provides for an award of attorney fees or if a provision is added to contract providing for attorneys fees in the event of a default (again, this language will be contract specific). However, be aware that even if you can get a judgment against another party, including attorney fees, the collection of a judgment is another matter.
3. Warranty. Do you wish to limit warranties that might exist by statute and/or operation of law; if so, then these limitations of warranty must specifically be stated in the contract; an example would be limiting and disclaiming any representation or warranty as to merchantability or fitness for a particular purpose.
4. Statute of Frauds. Minnesota Statutes in general require a contract for the sale of goods for the price of $500.00 or more must have a sufficient writing to indicate that a contract for sale has been made between two parties and signed by the party against whom enforcement is sought (or signed by the party’s authorized agent or broker).
5. Sign in your Corporate Capacity. If you are incorporated, an LLC, etc., be sure to sign all of your Contracts and Agreements in the name of the corporation, to avoid personal liability, i.e., Jane Doe, President, ABC Corporation. If not, you may be opening yourself up to personal liability.
?? Don’t jump into anything.
?? Do your homework.
Analyze risks and benefits.
Know who you are dealing with.
?? If you are extending credit, obtain personal guarantees.
Important Things to Remember:
?? It is much less expensive to fix a problem before it happens, rather than after.
?? Put the agreement in writing even if it is a “simple” agreement.
?? If you win, the judgment may be uncollectable.
?? If you are sued, do not ignore the lawsuit!
The materials presented are for informational purposes only. They are not intended to constitute legal advice of any kind.