Business Contracts: Legal FAQ

What is a Sales Contract?

This is an important consideration in business. Under Article 2 of the U.C.C. , a contract need not be formed with any special formality. A contract may be formed in any manner sufficient to show agreement between the parties. This includes the conduct of the parties. To determine whether Article 2 applies to a transaction, you must first determine whether a contract exists.

A contract usually begins by one person making an offer to another. The other person accepting the offer completes the contract. If the contract is supported by consideration, a contract is formed. Consideration, in the context of a contract usually means, money paid, or a promise to do something.

For example, If Jack asks Jill if she would like to buy his car for one hundred dollars, an offer has been made. If Jill agrees to the deal, then Jill has accepted the offer. The one hundred dollars serves as the consideration. The transaction would create a legally enforceable contract under the Uniform Commercial Code. Since the contract involved a transaction involving the sale of a good (the automobile), the transaction is governed by Article 2 of the U.C.C. 

What are service contracts?

A service contract is an optional agreement for product service that customers sometimes buy. It provides additional protection beyond what the warranty offers on the product.

Service contracts are similar to warranties in that both concerns service for a product. However, there are differences between warranties and service contracts.

Warranties come with a product and are included in the purchase price. In the language of the Act, warranties are part of the basis of the bargain Service contracts, on the other hand, are agreements that are separate from the contract or sale of the product. They are separate either because they are made some time after the sale of the product, or because they cost the customer a fee beyond the purchase price of the product. The Act includes very broad provisions governing service contracts that are explained in the following sections.

Do I enter into a contract every time that I buy a product from the store?

Yes. The next time that you buy an apple from the market, you have entered into a contract. The store is making an offer buy placing the apple for sale. When you take the apple to the cashier and pay, you have accepted the store`s offer to purchase the apple.

How can I get out of my acting/recording/management contract?

It depends on the contract provisions and the nature of the contract itself. It is suggested you consult and/or retain an attorney to review the contract and advise you as to the effects, consequences and possibilities of contract termination, since each contract is unique and this area of the law is highly technical.

I want to manage a band. Do I need a contract?

It is always recommended that any agreement between parties be reduced to writing. While band management does not legally require a contract, it would be foolish to enter such a relationship without one, since you could end up paving the way for a band to be very successful and discarded by the band in the end without any recourse or financial compensation. You should consult an attorney as to any contractual negotiations involved.

The information on this page is meant to provide a general overview of the law. The laws in your state and/or city may deviate significantly from those described here. If you have specific questions related to your situation you should speak with a local attorney.

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