Contract law baffles many people, which is understandable because contract law is confusing. What the general public doesn’t seem to realize is that any agreement between two people is a contract, and any promise that you make in writing is a contract. That is why you should never put anything in writing unless you are certain that can abide by what you say. Letters, e-mails and faxes can be saved and later used against you. This article will explain three contracts that you might not even realize you have made: employment offers, loan acknowledgements and contractor agreements.
Employment Offer Letters
Contract law bleeds into employment law when it comes to agreements made between a business owner (or representative) and an employee. What many employers don’t realize is that, when you make an offer for employment, you have essentially entered into a contract with that person. You have offered a position to the individual for a specified wage and with any other benefits you include. If you were to renege on that contract, you could be placing yourself in serious trouble.
This doesn’t really apply to employers in states where employment is “at-will”. While an employment offer is still considered a contract, the employer has the right to terminate that contract at any time, as long as the reason doesn’t violate discrimination laws. However, you could still find yourself in trouble if your employment offer letter includes a guarantee of employment for a specified period of time. For example, if you say, “We are extending an offer of employment to you for a period of three months, at which time we will evaluate your performance and decide whether or not to make the offer permanent.” A court will see that you have guaranteed the employee their job for three months, and might hold you responsible.
This is an issue brought up in small claims courts all the time because people don’t realize that they’ve entered into a contract. When you borrow money from someone, you have an obligation to pay that amount back (plus interest, if applicable). Many people, however, will later claim that the money was a gift and that they don’t owe the lender anything, which is where you run into problems. If you acknowledge the loan in writing – even through e-mail or in a text message – you have essentially entered into a contract to pay the lender back.
This means that, if you are the lender of money, you should always get it in writing in any way you can. If you are borrowing money, you should know that if you acknowledge the loan, you have created a contract that must be honored. If, however, you have been given money as a gift, you should never acknowledge it as a loan, or you will be in a position where you have to pay it back.
This is something that all freelancers and independent contractors should realize, as well as anyone who hires freelancers or independent contractors. While drawing up a contract between an employer and a contractor should always be required, it doesn’t always happen. Perhaps you know each other and don’t think a contract is necessary, or maybe you just didn’t think about it. However, even if a contract doesn’t exist, written communication can serve as a contract in court.
For example, let’s say that you’ve been hired to design a website for an employer in another state. Most of your correspondence is conducted through e-mail, but you don’t have a contract. You deliver the website that you have designed, but you don’t hear from the employer. He or she doesn’t pay you for your work. Now, even though you don’t have a contract, you might be able to claim your money through civil courts. If you can find an e-mail or letter that acknowledges your work and discusses the money you are owed, that person has entered into a contract with you.