Most people know that a contract requires an offer and acceptance of that offer, but do you know the third element to a contract which is consideration.
Most people understand what an offer is and what acceptance of that offer is. What is consideration though? Consideration is what someone exchanges for in a contract.
For example, you want to build a new pool, so you have to hire someone (lets call him Joe) to dig the hole for the pool. Joe tells he wilI dig the hole for $5,000. Joe just made you an offer, if you say yes, you have officially accepted the offer. Joe digs the pool, then comes to you and says I dug the hole. You then pay Joe $5,000 in consideration for the work it took for him to dig the hole. The $5,000 is the consideration there.
Certain Agreements Have to be Put in Writing
Why is this? For those interested in history, the Statute of Frauds originated in England by Charles II in 1677. The statute of frauds was to prevent fraud in certain agreements that the statute required to be in writing. The United States’ legal system is strongly based off of England’s legal system. Most states including Ohio have their own form of Statute of Frauds.
So should contracts be put in writing? Well, depending on the type of contract, so agreements or contracts can be made orally or under Ohio law, certain agreements/contracts have to be put in writing. (Not all contracts have to be put in writing and check your jurisdiction) Ohio has a law which is called the statute of frauds.
Certain agreements or contracts have to be put in writing under the Statute of Frauds. For example, under the statute of frauds “No lease, estate, or interest…shall be assigned or granted except by deed or note in writing, signed by the party assigning or granting it, or his agent thereunto lawfully authorized, by writing, or by act and operation of law.” The legal language sounds confusing but it basically means that the sale or assignment of real property (aka land aka your house) must be put in writing in the form of a contract or deed for the sale to be lawful. The Statute of Frauds doesn’t just cover the sale of real property, but it also conveys various other fields that must be put into writing. We may discuss those other instances another time.