In a typical person’s lifetime they will encounter many situations where they will enter into a contract with someone else. There are many different types of contracts that we may enter into, some knowingly and even some unconsciously. Buying a car with financing is a type of loan, entering into a new work place, and even getting a haircut is a type of contract.
Contracts to acquire goods, material, equipment or other tangible things Contracts for the acquisition of services Memorandum of Understanding, Memorandum of Agreement or Interagency Agreement Service Agreement
Kristin works for a distribution company. On a daily basis she assists the company in setting up numerous contracts. With many of the vendors her company has Net 30 terms. This means that the company has entered into a contract with their vendor that they will take ownership of the product, and pay the receipt for this bill in 30 days. The company then turns around and sells the products to retail stores with the terms set up for each individual customer. Some are Net 30, and some are pay on receipt. Pay on receipt means that the company will send out the products and the retail outlet is responsible for paying when the items reach the store. Both Kristin and Susan have entered into employment contracts with the companies that they are currently with. Susan’s employer has the right to terminate her position if she does not meet expectations or if her position is no longer needed.
Kristin’s employer can only terminate her position if she does not meet expectations. Included in Kristin’s contract were an expected employment period and the compensation of relocation costs. However, if Kristin terminated her own employment prior to the employment period, she is responsible for repaying the compensation. A promissory note is something that many people encounter in their lives. When you finance a car loan you agree to pay a specific amount in a specified time period, and with a percentage of interest. As students we have encountered a promissory note for our financial aid. We sign contracts that show we understand we are responsible for the repayment after graduation. A lesser known and yet still common contract that we may enter into daily is a haircut, or a service agreement with your car.
When you sit down to get a haircut you have entered into an agreement that you will pay this amount for this service. And breaking that contract could lead to an interesting talk with the local PD. When you get an oil change you enter into an agreement with the mechanic, much the same way as the haircut. Knowing and understanding the types of contracts that we may enter into is important. When in business being ignorant could cause issues with a customer, or a vendor which could lead to the result of a loss of revenue. In your personal life it could lead to that interesting chat with the local PD, either outcome is uncomfortable and completely avoidable.
http://cms.bsu.edu/about/administrativeoffices/contractsoffice/commontypesofcontracts http://smallbusiness.findlaw.com/business-contracts-forms/common-business-contracts.html Sean P. Melvin; the Legal Environment of Business. A Managerial Approach: Theory to Practice; Chapter 8: Contracts for the Sale of Goods; McGraw-Hill Company (2011)