The purpose of a contract is to establish the agreement that the parties have made and to fix their rights and duties in accordance with that agreement. The courts must enforce a valid contract as it is made, unless there are grounds that bar its enforcement.
A contract is a voluntary, deliberate, and legally binding agreement between two or more competent parties. Contracts are usually written but may also be spoken or implied. The written contact solidly memorializes the understanding existing between the parties. When someone requires you to “sign on the dotted line”, it is most always a contract agreement that can be enforced against you in a court of law. Your written signature binds you to preform as agreed in that contract. Be very careful when you sign anything.
A contractual relationship is evidenced by (1) an offer, (2) acceptance of the offer, and a (3) valid (legal and valuable) consideration. Each party to a contract acquires rights and duties relative to the rights and duties of the other parties. However, while all parties may expect a fair benefit from the contract (otherwise courts may set it aside as inequitable) it does not follow that each party will benefit to an equal extent.
When someone requires you to “sign on the dotted line”, it is most always a contract agreement that can be enforced against you in the courts.
The existence of a written contractual-relationship does not necessarily mean the contract is enforceable, or that it is not void or voidable. Contracts are normally enforceable whether or not in a written form, although a written contract protects all parties to it.
Some contracts, (such as for sale of real property, installment plans, or insurance policies) must be in writing to be legally binding and enforceable. Other contracts are implied in fact contracts and implied in law contracts that are assumed in, and enforced by, law whether or not the involved parties desired to enter into a contract.
Statutes prescribe and restrict the terms of a contract where the general public is affected. The terms of an insurance contract that protect a common carrier are controlled by statute in order to safeguard the public by guaranteeing that there will be financial resources available in the event of an accident. You also have to be vigilant when dealing with utilities, government bodies (permits) and shipping as you don’t want a costly surprise. Its a matter of asking questions in the planning stage to make sure you have your costs covered.
The courts may not create or modify a contract for the parties. When the parties have no express or implied agreement on the essential terms of a contract, there is no contract. Courts are only empowered to enforce contracts, not to write them, for the parties. A contract, in order to be enforceable, must be valid. The function of the court is to enforce agreements only if they exist and not to create them through the imposition of such terms as the court considers reasonable. A very detailed explanation of contracts is covered in George Mercier’s excellent coverage of “INVISIBLE CONTRACTS.”
It is the policy of the law to encourage the formation of contracts between competent parties for lawful objectives. As a general rule, contracts by competent persons, equitably made, are valid and enforceable. Parties to a contract are bound by the terms to which they have agreed, usually even if the contract appears to be improvident or a bad bargain, as long as it did not result from Fraud, duress, or Undue Influence.
The binding force of a contract is based on the fact that it evinces a meeting of minds of two parties in Good Faith. A contract, once formed, does not contemplate a right of a party to reject it. Contracts that were mutually entered into between parties with the capacity to contract are binding obligations and may not be set aside due to the caprice of one party or the other unless a statute provides to the contrary.