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What are Terms and Conditions of a Contract?

man signing the terms and conditions of a contract

Americans enter into contracts with surprising frequency. Every time a parent signs a liability waiver so that a child can enjoy a relatively dangerous pursuit – like swimming in a public pool or jumping at a trampoline park – that individual enters into a contract. Every time a company hires an employee or makes an agreement in writing to purchase goods from a vendor, that company enters into a contract. Even when individuals are accessing seemingly innocuous and passive websites online, they are frequently asked to verify that they agree to the terms and conditions associated with using a specific website. Terms and conditions are a feature of every enforceable contract, no matter how basic and no matter how complex. Understanding the terms and conditions of any particular contract is key to understanding both your rights and obligations stemming from that agreement.

Contract Terms and Conditions – The Basics

There are many kinds of contracts. Marital contracts, business contracts, intellectual property contracts, liability waivers, real estate contracts, loan agreements and licensing agreements, just to name a few. Each of these contracts is subject to generally observed rules of contract law. For example, a contract must have an “offer,” an “acceptance” and “consideration” in order to be considered legally enforceable. Essentially, one party must make another party an offer and the other must accept that offer. Consideration is the benefit that makes up the reason why an agreement is being made between the parties. For example, a lemonade business enters into a contractual agreement with a lemon supplier. In the text of the contract, the lemon supplier offers to sell the lemonade company a certain amount of lemons each week (offer) in exchange for payment (consideration). In signing the supply contract, the lemonade company accepts that offer (acceptance).

The terms and conditions of a contract outline the rights and obligations each party has as a result of the agreement that has been struck. For example, the lemonade company may insist that the contract include a clause indicating that it can refuse to pay the lemon supplier if the lemons provided are rotten. Or perhaps the lemon supplier could insert language concerning the timeframe that the lemonade company has to pay the supplier before it has the right to hold the company liable for nonpayment. If one party does not honor the terms and conditions of the contract, the other party could potentially take legal action (or other action as outlined within the text of the contract) in order to enforce their own rights under the agreement.

Terms and Conditions – Contractual Considerations

Terms and conditions of a contract may be classified as “general” or “special.” General terms and conditions are those that are found in fairly standard contracts. Terms that spell out the minimum requirements of contract performance for either party may also be classified as general. By contrast, special terms and conditions apply uniquely to the agreement at hand. A specific start date for an employee, the particular price of lemons supplied and the name of a vendor that must be used for a noted purpose can all be considered special terms and conditions.

Reading contracts is tedious work. Particularly complex contracts may seem incomprehensible to even the smartest individuals if they have not spent years being trained to decipher their language. However, it is important for anyone signing a contract to read and understand its terms and conditions. Contracts are legally binding documents. Failure to understand your rights and responsibilities under a contract leave you legally, practically and often financially vulnerable. It is therefore generally a good idea to seek legal assistance when entering into new contracts, especially if they are unique to you or your business, as opposed to a standard user agreement or liability waiver. However, even seemingly standard legal agreements can limit your legal recourse or obligate you to behave in consequential ways. Taking terms and conditions of contracts seriously is therefore just good, solid common sense. It is also important to consult a legal professional if a party to an existing contract has breached its terms and conditions and you or your business is suffering as a result. You may be able to hold the party accountable for breaching agreed upon terms and conditions.

Legal Assistance Is Available

If you or your business could benefit from legal guidance related to contractual matters, please consider scheduling a consultation with LawTrades today. Our experienced contracts attorneys have helped thousands of individuals and businesses with drafting new agreements, enforcing existing agreements and general legal strategy concerning contract-related matters. Whether you represent a business interested in creating new employment contracts or you are an individual hoping to license emerging technology, our team’s efficient, thorough and cost-efficient approach to contracts will meet your individual needs or the needs of your company. We look forward to speaking with you.


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