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    Definition and example of a contract. Oral contracts

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    You can tell by his mood, that you have irritated Boullebaker by a mistake you made in preparation for a contract case. He is not convinced that you know all the basics about contracts. Boullebaker says he won't allow you to touch another contract case until you have evidenced your knowledge by doing the following:

    Find an example of a written contract that you have entered into. It could be a purchase agreement for a home, car or furniture, a warranty agreement, or a contract for home repairs. Identify the features that make it a valid contract.

    Write a short contract to provide a service to someone. You may request monetary reimbursement or something else of equal value from the other party. As an example, you may write a contract with one of your children to provide a certain reward (such as a car or a vacation) if the child maintains an agreed upon grade point average at school. Make certain that your work satisfies the basic requirements of a contract.

    Next, Boullebaker tests you by asking your thoughts for the following scenario:
    You invite a painter over to your home to discuss some painting that needs to be done. You discuss what needs to be painted, the desired color scheme, and the final price. Nothing is written down. You agree on terms and the painter then performs the work, for which you pay him. Have you entered into a contract? If so, what type?

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    Solution Preview

    CPAs engaged in tax practice use an Engagement Letter which contains the basic elements of a contractual agreement:
    1. meeting of the minds
    2. offer and acceptance
    3. consideration
    4. performance
    5. good faith
    6. enforceable
    The engagement letter states the type of service to be performed as an offer which, when signed, is acceptance. The consideration is usually stated as 'standard fees at ...

    Solution Summary

    The solution defines the elements of a contract by using a example between a CPA firm and a client. Next is a short written contract using the BrainMass service as the subject of the contract. Oral contracts are discussed including their validity.