Contracts govern many aspects of our day-to-day lives—they are one of the fundamental ways that society is ordered. You likely engage in dozens of activities governed by contract every day, usually without considering the legal relationships you are entering into and engaging in.
At its most fundamental level, a contract is an agreement that will be enforced because it represents the communication of a commitment to engage in a reciprocal measured exchange – in other words, the exchange of valuable promises that in turn create obligations to do or not do something.
Communication and exchange are central to the formation of a contract. For a contract to be formed there must be offer and acceptance, and there must be consideration (something of value must be exchanged… contracts are not the same as gratuitous promises, where one of the parties receives no benefit of value).
While there are many more rules that relate to when and how contracts are formed this basic definition can help us understand when we might enter into a contract.
In this post we will discuss some everyday activities you likely engage in, and their contractual nature.
We can consider a few examples from my day today:
The first thing I did when I woke up was to check my phone and respond to emails. I have a contract with my phone company—in consideration for me paying a certain fee every month, they provided me with a phone, as well as with access to their cell towers. I accepted this offer when I signed my phone contract and began using their service.
When I checked my email account, I was in a contractual relationship with Google. When I send or receive content through a Google Service I give Google and its affiliates a worldwide license to use that content for certain purposes, per the Google Terms of Service. As consideration for those licences, Google provides me with access to its Services. Google offers these services publicly and I enter into a contract by creating an account and agreeing to the Google Terms of Service.
Dealing with email is hungry work, so I decided to grab breakfast at a campus coffee shop. I ordered a bagel and a large tea. The cashier told me that the total would be $5.05, which I paid in cash. Two minutes later I was handed a bagel and a large tea.
When I handed the cashier the money, I entered into a contract with the coffee shop. As consideration for a bagel and a large tea, I provided $5.05. I communicated my acceptance of their posted offer to provide tea and a bagel for $5.05 by ordering from the cashier and providing money. They fulfilled the terms of the contract by providing me with my food and beverage.
As you’ve seen, contracts have already been a part of just the very beginning of my day. Take a minute to think about your day so far: what have you done that has involved an offer, acceptance, and consideration? How many contracts have been involved with in the past hour? Can you think of one or more contracts that are allowing you to read these worlds right now?
Contracts are central to the ordering, not only of big businesses, but our everyday lives.
– Isabelle Crew