Don’t Accidentally Contract for a Lamb!

I frequently talk with people who offer up a kind of an apology when they tell me that “I didn’t have a contract though”.  In fact, we form contracts all day long, although we don’t think of them that way.  We tend to think of contracts as only written agreements with signatures and formal legal terminology.  But these kinds of formal contracts are actually only a fraction of all contracts.

Through our actions and words we form a variety of contracts.  For example, if we order a meal at a restaurant, we agree to pay for it (as long as there is nothing odd that occurs to the food and the food is served in a reasonable period of time).  As you can see from just this example, the law supplies a lot of terms to round out our contracts.  No one would expect us to wait two hours for our food and if the server drops it on the floor and scoops it back on the plate just before it arrives at the table, we don’t have to pay for that either.

Only a small group of contracts are required to be written and these include contracts for the sale of real estate, the sale of goods more than $500 in value, contracts which take more than a year to complete, and contracts pertaining to things that have titles, such as cars and boats.  For obvious reasons, prenuptial agreements fall into this same category.  Of these contracts, the poorly named “statute of frauds” applies to require that they be written.

A separate but related doctrine requires that we honor our commitments where another person has been damaged based upon their justifiable reliance on what we had said.  For example, if an employer offers employment to someone currently employed and living in a different state, even though there is not a written contract of employment, certain aspects of this promise are enforceable.  If the employee has quit his or her job sold their home and moved their family, it is not reasonable for the employer to then respond with a “never mind”.  This is also known as promissory estoppel, and is sometimes called “quasi-contract”.

Our actions alone can form the basis for a contract.  A black jack player (where it is legal) who asks for another card must accept the consequences even if it puts him over 21 and here she cannot later reject the card to claim the pot.  A consumer who orders a special cake will not necessarily speak to the baker or even discuss the price but by his actions will have committed to payment of the cake which is decorated and ready for pick up.

You may know some gentlemen who carry handkerchiefs.  If you do, you may have noticed the tendency to pull them out of their pocket and extend them into the air to unfold.  I have a great uncle, a farmer, and a long-time attendee of the county fair.  He loves to tell a tale about the time that the ragweed was so bad he went to blow his nose at the livestock auction and accidentally bought a lamb. In that context, his action of raising his hand formed an acceptance of the offer to sell the lamb at the price quoted by the auctioneer.  So be careful that you don’t buy a lamb.