Q: What is a contract?
A: A contract is “an agreement between two or more parties creating obligations that are enforceable or otherwise recognizable at law” (Black’s Law Dictionary, 7th Edition).
Q: Who can make a contract?
A: You can... when you’re 18 years old. And you’ll ﬁnd plenty of opportunities for such things as installment payments on large purchases or loans, apartment rentals, employment contracts, and insurance or medical payments. However, there are some important things to remember when considering signing a contract:
- Do not sign anything until you are sure you understand the agreement.
- Read the contract completely before you sign it.
- Talk to the other party about altering or removing provisions that you disagree with.
- Do not sign a contract with blank spaces — either ﬁll them in or cross them out.
- Be sure to keep a complete, signed copy of the contract.
But I didn’t know . . .
You failed to meet your part of the contract? That’s the very reason it’s important to read contracts carefully.
- You may work out an agreement to pay your debt over a period of time.
- You can be sued and be required to appear before a judge.
- If you lose your case, you may be required to pay the judgment plus interest.
- You may ﬁle bankruptcy, which allows you to dismiss your obligation to pay certain debts or to rearrange debts and work out a plan of payments with creditors. Bankruptcy allows you to make a fresh start but it can have a bad effect on your credit rating, making it harder for you to get a loan in the future.
Q: Do all contracts have to be in writing?
A: No. However, in certain cases, no court action can be brought unless the promise or agreement is in writing and signed by the party to be held to the contract. (A.R.S. §44-101).
- To charge an executor or administrator upon any promise to answer for any debt or damages due from his testator or intestate out of his own estate.
- A promise to answer for the debt, default or miscarriage of another person.
- Any agreement made upon consideration of marriage (prenuptial agreement)
- A contract to sell, or a sale of, goods in the value of $500 or more, unless the buyer actually receives and accepts part of the goods or gives something in part payment for them.
- An agreement which is not to be performed within one year.
- A lease agreement for a period longer than one year, or contract for the sale of real property or an interest in real property.
- An agreement authorizing or employing an agent or broker to purchase or sell real property for compensation or a commission.
- An agreement to bequeath any property, or to make provision for any person in a will.
- A promise to loan money or grant credit for an amount that exceeds $150,000 that isn’t for personal, family or household purposes.
Laws may have changed since the last time this article was updated. The current and most up-to-date laws can be accessed here.