In previous posts, we discussed the concept of “legal relationships.” Please go back and review those important discussions. Yet, understanding many legal relationships requires an understanding of at least basic contract law.

Officially, there are four basic terms to the definition of a contract:

  1. Capacity
  2. Offer
  3. Acceptance
  4. Consideration

Well Mr. Attorney that is all well and good, but what does this mean to me?


Before you commit resources of time and money to an endeavor, learn to know with whom you are dealing. Does the person or company have the basic capacity to understand what is going on in the situation? Does the person or company have its necessary ability to perform to your expectations?

If the company is not lawfully incorporated; bankrupt or if the person is severely intoxicated or suffering mental illness, they may not meet the legal definition of “capacity” and you may eventually not be able to enforce your rights as you had intended

Offer and Acceptance.

These two concepts may seem straight forward… but not always.

Was the person truly “offering” something of value to you? Was he merely “puffing”, “bragging”, or merely expressing a “wish” or vague idea? Of course, you need to put the shoe on the other foot if you are concerned that someone is taking you seriously about an “offer.”

Did you actually intend to “accept?” What did you “accept?” A better question is What all did you accept? An even better question is what did the other side believe you to accept?


Traditionally, before we have a binding contract, each side must give and receive something. You give the grocery store money, and you receive food. The grocery store gives you food and receives money. The lawyer provides services and (sometimes) receives money. The client gives money to the lawyer and receives services. Straight forward every time? Right?

Obviously not or we would not have so much trial/litigation/ legal fights over basic agreements.

Okay Mr. Lawyer, so what? A lesson here is that we should all take the time to reflect and think about what contractual situation we are trying to accomplish. What do I want to receive? What do I intend to give up to receive what I want? What does the other side believe they intend to give/receive?

Naturally, if you are unsure about any aspect of your situation, it is better and cheaper to call your hated lawyer before rather than find yourself in a legal dispute!