In today's Freedom Friday blog and email newsletter, I want to talk again about a topic that comes up often with a lot of question, and that's contract. Again, I get a lot of questions about whether a contract is binding and/or enforceable in court, and so I wanted to go over some contract basics in today's Freedom Friday blog and email newsletter. In today's Freedom Friday blog and email newsletter, I'm answering the question, “How do I know I have a binding contract?”
In Oklahoma, contracts can be written or oral, but there are exceptions to enforcing an oral contract (i.e., the statute of frauds). However, in order to have a binding contract, especially if it's in writing, there are three elements: an offer, acceptance of that offer, and consideration. Let's take a deep dive into the three essential elements of any binding contract in Oklahoma:
The first essential element of a binding contract is an offer. An offer is a specific proposal to enter into an agreement with another person. Sometimes there is a question of the intent of an offer. An offering party's intent is determined by what is reasonable in the shoes of the other party who might accept the offer. Also, offers can be public, which could be in the form of a newspaper ad. If a newspaper ad puts out information that you can come in for a special sale and buy a product for $20.00, but you come into the store, and they are charging $50.00 for that same product, then that could be breach of contract and you could be entitled to a refund of $30.00.
The second essential element of a binding contract is acceptance. Acceptance is when the other party accepts the terms of the offer. Acceptance is only made when the exact terms of the offer are accepted. If changes are made to the terms of the offer, that is a rejection of the offer, and considered a counteroffer. Now the offeror must accept the new terms. This can go back and forth until the exact terms are accepted by both parties to the contract. Also, if acceptance of the terms is done through the mail (the postal service, not email or fax), the mailbox rule provides that the offer is accepted at the time the letter of acceptance is deposited in the mail. Acceptance can also be completed by performance of the contract's terms, and this is especially common in the construction industry.
The third essential element of a binding contract is consideration. Consideration is the value each party contributes to the contract, especially the party accepting the terms of the offer. The party who is receiving a promise must give up something of value, either monetary or nonmonetary. The party making the offer must make that offer in exchange for something of value, as well.
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