The Importance of Understanding a Contract

People enter into contracts all the time without fully understanding what they are signing. A contract is “a legally enforceable agreement” (Rogers, 2012). The five essential elements of an enforceable contract are offer, acceptance, consideration, capacity, and legality. All of these things were taken into consideration when Jeremy first entered into a contract with Verizon Wireless.

Verizon Wireless is a company that allows customers to purchase cell phones, house phones, as well as in home Wi-Fi services. Customers are able to purchase all of the products at a discounted price if they are willing to enter into a two year contract with Verizon Wireless. Jeremy decided to start off with one phone for his wife. He purchased her a new phone for the discounted price of $199.99 and agreed to keep services with Verizon Wireless for the next two years. At the time he signed the contract he had fifteen days to change his mind. If he decided he no longer wanted the services within those fifteen days he had the choice to return everything back to the store and get his money back as long as there was no damage that he caused to the equipment. He also had the choice of changing his phone to another one within those fifteen days. Once that fifteen days passed he was bound by the terms of the contract. There was a $350.00 early termination fee that would be charged if Jeremy decided to end the contract before the two years were over. Per the terms of the contract every month that Jeremy kept his services the early termination fee was decreased by fifteen dollars each month.

The first element of an enforceable contract is the offer. “An offer must contain an unequivocal promise to enter into a contract, must have reasonably certain terms, and must be communicated by the promisor to the promisee” (Rogers, 2012). Jeremy was offered a cell phone for $199.99 (regular price $699.00) if he agreed to enter into a two year contract with the cell phone company. Because the prices of each phone were listed by each phone Jeremy was very clear about which phone he was purchasing for $199.99. Jeremy also had the option of paying the full price of $699.00 for the phone and not entering into a contract at all. The offer that was made to Jeremy was very clear. He was aware of the terms if he decided to accept the offer.

Acceptance is the second element of an enforceable contract. “Acceptance occurs when the party answering the offer agrees to the offer by way of a statement or an act” (Fitzroy Legal Service, 2013). An offer can only be accepted by the person that was presented with the offer. When a person accepts the offer it has to be made in a way that is clear to both parties that the offer was in fact accepted. Once Jeremy decided to purchase the phone and keep it past the fifteen day grace period that let Verizon Wireless know that he was accepting their offer. Jeremy is also required to read over a contract