Article by Leslee A. Ellenson

Paralegals must possess a working knowledge of contract law.  Whether you are reviewing contract documents in a litigation matter as part of the discovery effort, or assisting on a corporate or transactional business matter that involves contracts, it is assumed you are familiar with the law of contracts.  This article covers the basics of contract law.

A contract, whether it is verbal or in writing, is a legally binding agreement that is enforceable in a court of law, but the following elements must exist:

• Offer – An offer is some sort of a proposal to make a deal.  It must be communicated to someone and it should remain open and valid until it is retracted, rejected, accepted, or expired.  A subsequent counter-offer will close the original offer.
• Acceptance – Acceptance is an acknowledgment by the person to whom the offer was made that the offer is accepted.  The acceptance should comply with the terms of the offer.
• Consideration – Consideration is often referred to as “the bargained for exchange” between parties. It can be considered as a legal benefit received by one party and a legal detriment imposed on the other party.  Typically, consideration takes the form of money, property or services, but in some circumstances consideration may be a promise to do or not to do something.
• Competence – Competence to enter into a contract means that each party has the legal capacity to do so, which can vary from state to state.
• Consent – The parties must have entered into the agreement freely, and not under duress or undue influence.
• Legality of Performance – Legality means that the purpose of the agreement must not be illegal or contrary to public policy; for instance, it is illegal to make a contract whose purpose is a murder.

Contracts Required to be in Writing

While most contracts can be either written or oral, some must be in writing to be considered binding, such as:

• Real estate sales
• Agreements to pay someone else’s debts
• Contracts that take longer than one year to complete
• Real estate leases for longer than one year
• Individual State’s laws may specify others that must be in writing.

Express and Implied Contracts

A contract is either an Express Contract or an Implied Contract.  In an Express Contract, the terms and conditions are fully expressed, either orally or in writing.  Conversely, in an Implied Contract, the terms and conditions are not fully expressed.   An Implied Contract can be further broken down as implied in fact or implied in law.  Implied in Fact means that the circumstances imply that the parties have reached a clear agreement even though they have not done so expressly.  An example of an implied in fact contract is when you take your pet to the Veterinarian, it is implied you have agreed to pay a reasonable price for the services rendered.

A contract that is implied in law may also be called a quasi-contract because it is not actually a contract, rather, it is considered a way or a means for a court to remedy a situation in which one party would be unjustly enriched were he or she not required to compensate the other.  A typical example of a contract implied in law is when an unconscious patient is treated in an emergency room and is expected to pay for the services rendered.  Although the patient could not agree or request the services either expressly or by implication, the patient will be expected to make a fair compensation.

Parts of a Contract

As paralegals, often working on Discovery, we need to be aware of not only the elements of a contract, but what constitutes an entire contract.  By this I mean we need to know what all the parts of a contract actually are.  We must not, in our haste to complete a Discovery Request, assume that when we hit the signature portion of a contract that we have the whole contract in hand.  It is not uncommon for a contract to have the following:  Clauses or other documents ‘incorporated by reference’ (clauses or documents are listed but not specifically attached to the contract), Attachments, Exhibits, Appendices, Addendums, Amendments, Modifications, General Terms and Conditions, Special Terms and Conditions, Statement of Work (SOW), Exceptions, Service Quotes, etc.  It is an essential part of a Paralegal’s job to read through a contract and identify all of the contract documents.  In some cases you may need to do further research to find a key part of a contract, for instance, you may need to print out a particular Federal Acquisition Clause that was incorporated by reference in a Government Contract.

Conduct of the Parties

A typical contract dispute involves issues related to the conduct of the parties.  During Discovery you may need to sift through and analyze volumes of corporate emails, correspondence, memos, notes,  phone and meeting records to discern what a dispute is truly about, who knew what when, and what course of action was pursued based on known information.  This step in Discovery is where a paralegal can truly set themselves apart and shine.  The creation of a solid timeline or chronology backed by responsive contract documents can often make or break a case.

Think of a contract as a living, breathing document that often evolves over time just as the human and business relationships behind it evolve.  Always be aware of the big picture and ensure you have identified all of the relevant documents that make up a particular contract.

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An excellent career move for paralegals seeking advancement beyond law firms can be found in the field of Contract Law.  The US Federal Government offers many contract related fields, i.e., Contracting Specialist, Contracting Officer, Contracting Officers Representative (COR), Technical Contracting Officer (TCO), and Contracts Policy Analysts.  Companies that do business with the US Federal Government (commonly referred to as “Contractors”) also offer contract related fields, i.e., Contract Administrator, Contract Manager,  Chief Negotiator, etc.  For more career information consider contacting National Contract Management Association (NCMA) at www.ncmahq.org or call 800-344-8096.  NCMA offers local state Chapters that usually meet monthly, certification programs, workshops, networking, webinars, books and periodicals, and much more.