The legal definition of a contract is a promise or set of promises between two parties, the performance of which the law regards as a duty and the breach of which gives rise to the right to sue for damages or specific enforcement. In general, the requirements for a legally enforceable contract are:
- The parties must be competent to contract (a mentally incompetent person is deemed incapable of entering into a contract).
- The parties must intend their mutual promises to be a contract.
- The parties must actually agree upon their mutual promises.
- The contract must be supported by mutual “consideration.” This means that each side must give up something or have some obligation under the contact. For example, one party may promise to paint a house, in exchange for which the other party promises to pay money.
- The contract must be for a legal purpose. For example, gambling contracts are illegal and cannot be enforced.
Although most people think of contracts as written documents, it is often possible to have a valid, legally enforceable oral contract. Under Missouri law, however, certain contracts are required to be in writing in order to be enforceable. Such contracts include:
- Contracts made by personal representatives of estates (executors or administrators).
- Contracts to guarantee payment of a debt owed by another person.
- Contracts made in consideration of marriage.
- Contracts made for the sale of land or an interest in land.
- Contracts which cannot be fully performed within one year.
- Contracts for the sale of goods for a price of $500 or more.
The primary difficulty with oral contracts is proving the terms of the agreement if a dispute arises and must be litigated. Proof of oral contracts is generally accomplished through sworn testimony by the contracting parties about the terms of their agreement. However, if their testimony conflicts, a credibility issue arises – that is, the judge or jury must decide which version of the agreement to believe – and this makes litigation over oral contracts unpredictable. Other evidence of oral contracts can consist of actions the parties took or payments they made in fulfillment of the contract.
Given the problems in establishing the terms of an oral contract, it is usually advisable to put a contract into writing.
There are many complex and technical rules governing contracts, so we recommend consulting with an attorney when seeking to enter into a contract or enforce a contract that has been breached. Scott Law Firm provides legal assistance in drafting and enforcing contracts.
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