August 2016

 

By: Sharice B. Marootian

Abdulaziz, Grossbart & Rudman

Let's focus on a legal issue that comes up for us attorneys many times - contracts, and particularly whether or not you have a binding contract with someone else. More and more, I get asked by friends, clients, family members about what they can do to collect money that is owed to them. My first question often times is, "well, do you have a contract with the person?" More often than not, the response is, "No, we didn't sign a contract." The misconception among the non-legal community is that a contract is only one that is in writing and that is signed. That's not the case. Although, ideally we want contracts to be by way of a signed document, a gentlemen's handshake can do just fine.

 

There are two general types of contracts that I would like to focus on in this article - written versus oral contracts. An important difference between these two types of contracts is the statute of limitations, or in other words, the amount of time you have to file a lawsuit on the contract. In California, one must file a lawsuit within two years of breach of an oral contract; whereas, a written contract carries a four-year statute of limitations. From the outset, you are in a better position if your contract is in writing because you have a longer period of time to try to settle the dispute or explore other avenues, short of litigation.

 

The question that often follows is: how will I prove I have an oral contract? The response is that in order to form a contract, we must be able to show two elements -mutual consent and consideration. Mutual consent is easiest defined as a meeting of the minds. One must be able to show that there was an offer by one party, and an acceptance by the other party. If the acceptance changes the terms of the offer in any material respect, it becomes a counteroffer, which now must be accepted by the first party.

 

For example, your neighbor's son may offer to wash your car and mow your lawn on a weekly basis in exchange for payment of $40.00 each week. You may consider his offer, and ask that he also water your rose bushes for that price. This is now a counteroffer. The ball is now in the neighbor boy's court to accept, reject, or counter your offer. If he accepts, you have mutual consent.

 

Consideration, the second element, is either a benefit conferred upon the promisor (the neighbor boy) or a detriment suffered by the promisee (you). In this example above, the consideration is the $40.00 per week you are agreeing to pay in exchange for the services. This forms a binding agreement between the parties, one that can be relied upon, enforced, and sued upon in a timely manner. The parties' actions following the agreement can be used to show a contract exists.

 

Do not forego your legal remedies because you feel you do not have a binding contract when all you have done is verbally agreed or sealed the deal with a handshake. Of course, putting the agreement in writing not only reduces any ambiguity regarding each party's responsibilities, but also buys you more time to file a lawsuit should a breach occur. Further, a written contract is required for certain types of agreements. Next time you are wondering if you have a case against someone who owes you, consult an experienced attorney and do so quickly.

TWO-YEAR OLD LOGIC

My two-year-old cousin scared us one summer by disappearing during our lakeside vacation. More than a dozen relatives searched the forest and shoreline, and everyone was relieved when we found Alex playing calmly in the woods. "Listen to me, Alex," his mother said sharply. "From now on when you want to go someplace, you tell Mommy first, okay?"

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A guy stopped at a local gas station, and after filling his tank, he paid the bill and bought a soft drink. He stood by his car to drink his cola and watched a couple of men working along the roadside. One man would dig a hole tow or three feet deep and then move on. The other man came along behind him and filled in the hole. While one was digging a new hole, the other was 25 feed behind filling in the hole. The men worked right past the guy with the soft drink and when on down the road.

"I can't stand this," said the man tossing the can into a trash container and headed down the road toward the men. "Hold it, hold it," he said to the men. "Can you tell me what's going on here with all this digging and refilling?"

Well, we work for the government and we're just doing our job," one of the men said.

"But one of you is digging a hole and the other fills it up. You're not accomplishing anything. Aren't you wasting the taxpayers' money?"

"You don't understand, mister," one of the men said, leaning on his shovel and wiping his brow. "normally, there's three of us: Me, Elmer and Fred. I dig the hole, Elmer sticks in the tree, and Fred here put the dirt back. You see with the government sequestering, they are not buying any more trees so Elmer's job's been cut... so now it's just me an' Fred."