November, 2004
It's a Deal!
Jake and Laura went out to a swank new nightclub called the Golden Kitty for an evening of dancing. As they were walking into the club, the following conversation ensued:
Laura: Please, please, please do not get drunk tonight.
Jake: 
Stop nagging me woman.
Stop nagging me woman.Laura:Every time we go out you get drunk and embarrass me.
Every time we go out you get drunk and embarrass me.Jake: I’m surprised you even noticed, you’re so busy flirting with everyone.
I’m surprised you even noticed, you’re so busy flirting with everyone.Laura:I wouldn’t have to flirt if you’d pay attention to me.
I wouldn’t have to flirt if you’d pay attention to me.Jake: I’d rather get drunk.
I’d rather get drunk.Laura:Please don’t get drunk.
Please don’t get drunk.Jake: Tell you what. I won’t drink tonight and you flirt with no one but me.
Tell you what. I won’t drink tonight and you flirt with no one but me.Laura:Okay. It’s a deal.
Okay. It’s a deal.It may be a deal, but is it a contract? What are the magic ingredients which turn an informal agreement into a binding contract? Surprisingly, in most cases it doesn’t have to be in writing. Written contracts are required for real estate deals and contracts that can’t be performed within a year’s time. Otherwise, an oral contract is fine as long as it contains the following three components:
1.Capacity - Both parties must have the capacity to enter into a contract. If one is
Capacity - Both parties must have the capacity to enter into a contract. If one is drunk, on drugs, mentally incompetent, or under 18 (in most cases) then there is nocontract. Since this deal was struck before Jake starting tipping we pass the firsthurdle.2.Consideration – Both sides have to give up something for a contract to exist.
Consideration – Both sides have to give up something for a contract to exist. (A unilateral promise is only a promise and is usually not enforceable). Consideration can come in the form of money, products, services, or, in our case,the relinquishment of legal rights: Jake’s legal right to get drunk and Laura’s legalright to flirt.3.Meeting of the Minds – Both sides have to agree to the material terms of the
Meeting of the Minds – Both sides have to agree to the material terms of thedeal. The “what for what”, “whens” and “wheres” need to be agreed on. In ourcase, enough of the key elements of a contract are present – For the duration ofthe evening, he doesn’t drink and she doesn’t flirt. What happens at 12:00 am? Technically it is a new day but both parties had a meeting of the minds that the term“tonight” meant for the entire time they were out.So the above key elements are met and we have a legally binding contract. If Jake orders a screwdriver, Laura can get a restraining order, if she’s quicker than the waitress is. If Laura tickles the bartender on the chin, Jake can sue for damages, if he can prove he has any. You can see that proving the existence of a contract and enforcing one are two different issues.
