The staff at Benavidez Law Group, P.C., has decades of combined experience in dealing with contracts of all types, from simple sales agreements to complex commercial leases, from promissory notes to intergovernmental agreements between several government entities. If you are considering entering a contract with someone, we can review the contract for you and tell you if it will adequately protect you. Prices for reviewing a contract vary, depending on the length and complexity of the contract. Feel free to call for an appointment, so that we can discuss your situation.
People are often unsure about whether or not they have entered a valid contract. Below are some topics regarding contracts, as well as some commonly asked questions about contracts and basic answers to them. For more detailed or situation-specific advice, call for an appointment.
Hot Topics
- Types of contracts
- Formation of a contract
- Enforcement of a contract
- Breach of contract
- Remedies for breach of contract
Types of contracts
Bailment
A bailment is a type of contract where a party entrusts a piece of property to another person for a certain period of time. The person who holds the property is called the “bailee,”1 and the person who owns the property is called the “bailor.”2 The bailee is required to keep the property safe and in good condition until the end of the contract, or until the bailor asks for its return. Sometimes, the contract requires the bailee to make improvements to the property. If the bailor asks for return of the property, and the bailee does not return the property, or returns it in a damaged condition, then the bailee is liable to the bailor for breach of the bailment contract.
Lease
A lease is a type of contract where a party allows another party to take possession of a piece of property for a certain time. The person whom takes possession of the property is called the “lessee,”3 and the person who owns the property is called the “lessor.”4 When the leased property is land or some kind of habitable structure [NOTE: link to Landlord/Tenant page], the lessee may be called the “tenant,”5 and the lessor may be called the “landlord.”6 Generally, the lessee may use the property, and may exclude other people from using it. The lessor retains ownership of the property, and gets it back when the lease ends.
[ Landloard / Tenant Law ]
Transfer of property
People often create contracts to transfer property between them. These contracts may include documents reflecting the agreement between the parties as well as documents reflecting the ownership of the property. The former document usually is called a sales contract, while the latter is called a deed.7 While a deed is not truly a contract, it may be used as evidence that a contract exists.
Business partnership
Many business partners choose to create a business formation agreement that sets out their relative authorities and duties, as well as any other important features of their partnership. While such an agreement is not required to form a business, many
Service contract
A service contract is one where one party agrees to perform some service for the other party, in exchange for some form of payment. An employment agreement is a type of service contract. Another common service contracts is the subcontract, where a contractor hires another person to perform part of the work that the contractor was hired to perform.
Intergovernmental Agreement
An intergovernmental agreement is a special contract between two or more governments or government agencies. The agreement can allow the government entities to jointly exercise powers that they have in common (like law enforcement), or it can allow one government entity to perform a service for another government entity. The specific features of a particular intergovernmental agreement depend on the different governments or agencies involved, and may change depending on whether the federal or state government is a party, or if the agreement includes only county, city and town governments.
Promissory note/Loan
A promissory note8 is a special contract where one party promises to pay the other party a certain sum of money. A promissory note often is used as collateral9 for a loan, such as a student loan, a mortgage or a personal loan.
Formation of a contract
How do I know if I have entered a contract?
Generally, the existence of a contract requires three things: an offer10 for a contract, acceptance11 of that offer, and consideration.12 Without these three factors, a contract probably does not exist. Of course, there are many different interpretations of each of these factors, so you should seek legal advice regarding them before you decide whether or not any of these factors is present or absent. There are certain situations where a valid contract exists even in the absence of one or more of these factors, so you should seek legal advice before deciding that a contract has not been made. Feel free to call for an appointment, and we’ll be happy to examine your situation for you.
Are oral agreements binding?
n. a person, also called a custodian, with whom some article is left, usually pursuant to a contract (called a "contract of bailment"), who is responsible for the safe return of the article to the owner when the contract is fulfilled. These can include banks holding bonds, storage companies where furniture or files are deposited, a parking garage, or a kennel or horse ranch where an animal is boarded. Leaving goods in a sealed rented box, like a safe deposit box, is not a bailment, and the holder is not a bailee since he cannot handle or control the goods. [back]
n. a person whom leaves goods in the custody of another, usually under a "contract of bailment," in which the custodian ("bailee") is responsible for the safekeeping and return of the property. Sometimes the bailor is not the owner but a person who is a servant of the owner or a finder (say, of jewelry) who places the goods with the bailee until the owner is found. [back]
n. the person renting property under a written lease from the owner (lessor). He/she/it is the tenant and the lessor is the landlord. [back]
n. the owner of real property who rents it to a lessee pursuant to a written lease. Thus, he/she/it is the landlord and the lessee is the tenant. [back]
n. a person whom occupies real property owned by another based upon an agreement between the person and the landlord/owner, almost always for rental payments. [back]
n. a person whom owns real property and rents or leases it to another, called a "tenant." [back]
1) n. the written document which transfers title (ownership) or an interest in real property to another person. The deed must describe the real property, name the party transferring the property (grantor), the party receiving the property (grantee) and be signed by the grantor, who must then acknowledge before a notary public that he/she/it executed the deed. To complete the transfer (conveyance) the deed must be recorded in the office of the County Recorder or Recorder of Deeds. There are two basic types of deeds: a warranty deed, which guarantees that the grantor owns title, and the quitclaim deed, which transfers only that interest in the real property which the grantor actually has. The quitclaim is often used among family members or from one joint owner to the other when there is little question about existing ownership, or just to clear the title. This is not to be confused with a deed of trust, which is a form of mortgage. 2) v. to transfer title by a written deed. [back]
n. a written promise by a person (variously called maker, obligor, payor, promisor) to pay a specific amount of money (called "principal") to another (payee, obligee, promisee), usually to include a specified amount of interest on the unpaid principal amount (what he/she owes). The specified time of payment may be written as: a) whenever there is a demand, b) on a specific date, c) in installments with or without the interest included in each installment, d) installments with a final larger amount (balloon payment). A promissory note may contain other terms such as the right of the promisee to order payment be made to another person, penalties for late payments, a provision for attorney's fees and costs if there is a legal action to collect, the right to collect payment in full if the note is secured by real property and the property is sold ("due on sale" clause), and whether the note is secured by a mortgage or deed of trust or a financing statement (a filed security agreement for personal collateral called UCC-1). The promissory note is usually held by the party to whom the money is owed. There are legal limitations to the amount of interest which may be charged. Charging a rate in excess of the legal limit is called "usury," and this excess is legally uncollectible. When the amount due on the note, including interest and penalties (if any), is paid, the note must be cancelled and surrendered to the person(s) who signed it. A promissory note need only be signed and does not require an acknowledgement before a notary public to be valid. [back]
n. property pledged to secure a loan or debt, usually funds or personal property as distinguished from real property (but technically collateral can include real estate). [back]
n. a specific proposal to enter into an agreement with another. An offer is essential to the formation of an enforceable contract. An offer and acceptance of the offer creates the contract. [back]
n. 1) receiving something from another with the intent to keep it, and showing that this was based on a previous agreement. 2) agreeing verbally or in writing to the terms of a contract, which is one of the requirements to show there was a contract (an offer and an acceptance of that offer). A written offer can be accepted only in writing. 3) receiving goods with the intention of paying for them if a sale has been agreed upon. 4) agreement to pay a bill of exchange, which can be an "absolute acceptance" (to pay as the bill is written) or "conditional acceptance" (to pay only when some condition actually occurs such as the shipment or delivery of certain goods). "Acceptance" is most often used in the factual determination of if a contract was entered into. [back]
n. 1) payment or money. 2) a vital element in the law of contracts, consideration is a benefit which must be bargained for between the parties and is the essential reason for a party entering into a contract. Consideration must be of value (at least to the parties), and is exchanged for the performance or promise of performance by the other party (such performance itself is consideration). In a contract, one consideration (thing given) is exchanged for another consideration. Not doing an act (forbearance) can be consideration, such as "I will pay you $1,000 not to build a road next to my fence." Sometimes consideration is "nominal," meaning it is stated for form only, such as "$10 as consideration for conveyance of title," which is used to hide the true amount being paid. Contracts may become unenforceable or rescindable (undone by rescission) for "failure of consideration" when the intended consideration is found to be worth less than expected, is damaged or destroyed, or performance is not made properly (as when the mechanic does not make the car run properly). Acts which are illegal or so immoral that they are against established public policy cannot serve as consideration for enforceable contracts. Examples: prostitution, gambling where outlawed, hiring someone to break a skater's knee or inducing someone to breach an agreement (talk someone into backing out of a promise). [back]
