Contract Basics for Paralegals

The Paralegal Resource
June 10, 2013 — 2,720 views  
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In simple terms, a contract is a legally binding agreement between two parties. Contracts are an essential part of all business relationships. However, despite their importance and ubiquity, there is a fair amount of confusion concerning contract law and what exactly constitutes a contract. So, it is important to understand the basics of a contract law because it is vital for any business.

Essential Elements of a Contract

A contract must contain four essential elements. If one of these elements is absent, then the contract cannot be considered legally binding. The first element that a contract must have is a clear and definite offer to do something. An invitation to treat cannot be considered an offer because it is merely a show of willingness to enter into negotiations. An offer will last until it is withdrawn, or the time limit for acceptance expires.

The second element is the acceptance of an offer. The offer must be accepted exactly as it is without adding any conditions. Negotiations usually occur before an agreement between the parties is reached. The terms and conditions of the contract are established after proper negotiation.

The next element is an intention that the contract is legally binding. Contracts that are legally bound can be enforced by the law, and the party that violates the contract will face legal consequences. The final element of a contract is consideration, in which a party will agree to do something, and in return the other party will provide some valuable benefit.  

How Contracts are Made

In many formal circumstances, such as employment agreement, a contract is written and signed by both parties. However, a contract does not have to be written in order to be legally binding. In fact, many people enter into contracts everyday without even realizing it. Suppose you have purchased a ticket for a concert. This means you have entered into a legal agreement with the company hosting the concert. In return for your money, you will be allowed to attend.

So, both written and oral contracts are valid. A contract can even be made over the phone when both parties are miles apart. Automated booking services that allow customers to book over the phone are also considered legally binding contracts. Even bookings and purchase of services on the Internet is a legal contract between two parties.

While it is not essential for a contract to be written, it is still a good idea regardless. If you need to enforce the contract in a court of law, then having something concrete will really help your case.


Certain language, that has a definite meaning, is used quite frequently in legal document in the same context. This type of language is known as boilerplate language. At first glance, the familiar phrases appear to have the same set meaning. However, closer examination often reveals that boilerplate language contains hidden provisions that become apparent when the contract is put into effect.

So should all boilerplate language in a contract be read carefully? Well, it depends on the context – if the contract was written by one party, then the other party should definitely read every word, including the boilerplate language. If the language appears vague, then it needs to be re-written until both parties are happy with the provisions.

Writing contracts can be a tough job. Correcting provisions and finding language that both parties are happy with can take weeks or even months. However, in the long run a carefully drawn out contract provides security to both parties. It ensures that both parties understand what is expected of their business and commercial relationship.

The Paralegal Resource