Contract facts for kids
A contract is a special kind of agreement or promise between two or more people or groups. It describes what each person or group agrees to do. When you make a contract, you are promising to do something, and the other person is promising to do something in return. These promises are legally binding, which means they can be enforced by a court.
For a contract to be valid and legally binding, it usually needs to meet a few important rules:
Contents
What Makes a Contract Valid?
- Everyone Agrees: All people involved must understand and agree on what the contract is about. This is like having a "meeting of the minds." One person makes an offer, and the other person accepts it exactly as offered.
- Something of Value is Exchanged: Each person in the contract must give up something of value or promise to do something. This is called "consideration." For example, if you buy a toy, you give money (value) and the store gives you the toy (value).
- Ability to Understand: Everyone signing the contract must be old enough and able to understand what they are agreeing to. For example, young children usually cannot make contracts because they might not fully understand the promises they are making.
- Legal Purpose: The contract must be for something lawful. You cannot make a contract to do something illegal, like stealing something. A court will not enforce such a contract.
Different Kinds of Contracts
Contracts can be made in different ways.
Spoken vs. Written Contracts
You might think a contract has to be written down and signed, but that's not always true!
- A spoken contract (often called an "oral contract") is just as real as a written one, even if it's harder to prove.
- A written contract is put down on paper. This makes it easier to remember and prove what everyone agreed to.
Most places require certain important contracts, like those for buying a house, to be in writing. This rule is often called the Statute of Frauds.
When a Contract Isn't Valid
Sometimes, even if a contract is written, it might not be enforceable.
- If someone was forced to sign a contract, it might not be valid.
- If one person knew much more than the other and took unfair advantage, the contract might not be enforceable.
There are three main ways a contract might not be binding:
- A contract is void if it's for an illegal purpose or goes against public rules. It's like it never existed from the start.
- A contract is voidable if one of the people involved can choose to cancel it. Contracts with minors (people under a certain age) are often voidable by the minor.
- A contract is unenforceable if it doesn't follow certain rules, like needing to be in writing but only being spoken. For example, in some places, a spoken contract to sell something expensive (like a motorcycle for over $500) might not be enforceable.
One-Way vs. Two-Way Promises
Contracts can also be classified by how the promises are made:
- A bilateral contract is the most common type. It's an agreement where two people or groups each make a promise. For example, you promise to pay for a new video game, and the store promises to give you the game.
- A unilateral contract is a promise made only if someone performs a certain action. For example, if you offer a reward for finding a lost pet, you are promising to pay only if someone finds the pet. You don't expect them to promise to look for it.
Clear vs. Understood Contracts
Contracts can also be:
- An express contract is one where all the terms are clearly stated, either spoken out loud or written down.
- An implied contract is one where some terms are not clearly stated but are understood.
- An implied in fact contract means the terms are so obvious they don't need to be said. For example, if you go to a doctor for a check-up, it's understood you will pay for the service, even if you don't say "I agree to pay."
- An implied in law contract (also called a quasi-contract) isn't a true contract. It's a way for courts to make sure someone pays or does something when it's fair, even if there wasn't a clear agreement.
Contracts in the United States
In the United States, the Constitution helps protect the validity of contracts. Each state has its own rules for contracts, often based on a set of common laws called the Uniform Commercial Code (UCC). This helps make sure contract rules are similar across different states.
Related pages
Images for kids
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Fire insurance contract of 1796
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Thomas Boylston to Thomas Jefferson, May 1786, Maritime Insurance Premiums
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Bill of sale of a male slave and a building in Shuruppak, Sumerian tablet, circa 2600 BC
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A contract from the Tang dynasty that records the purchase of a 15-year-old slave for six bolts of plain silk and five Chinese coins
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German marriage contract, 1521 between Gottfried Werner von Zimmern and Apollonia von Henneberg-Römhild
See also
In Spanish: Contrato para niños
