What constitutes a contract and when is a contract formed is a great question to consider. We look at a lot of contracts and issues for our clients surrounding contract questions. Many of our business clients have a great understanding of what a contract is and how it is formed. As we all continue to learn, some facts can change what appears to be a straightforward looking transaction.
The North Carolina Court of Appeals looked at contract analysis in Brian Kent Brown v. Between Dandelions, Inc. (2020). The following are a few take-aways from the case regarding contract law.
- For contract formation, the offer and acceptance are essential terms. The offer and acceptance form the agreement between the parties.
- The offer must be communicated, it must be complete and the offer must be accepted in its exact terms.
- Mutuality of agreement is a must. The parties to a contract must agree to the same thing inn the same sense.
The Court also looked at North Carolina case law that states “an acceptance is not effective unless it is (a) absolute and unconditional; (b) identical with the terms of the offer; (c) in the mode, at the place and within the time required by the offer.” Morrison vs. Parks (1913).
In this case, the parties had entered into promissory notes and later contracts. The Court concluded that the offer was not accepted by the other party and the transaction contemplated by the contract was not fulfilled.
So the moral of the case is this: be sure to make your contract terms clear. If the terms of the contract are not carried out between the parties exactly as spelled out, consider whether there needs to be a written agreement or communication to state why not. Clarity can often times help later. If you have any questions about this case or other business issues, please feel free to contact us.