Managing your Practice: 10 Pearls about Contracts from Whitney High, MD, JD, MEng

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  • Contracts are intended to memorialize a “meeting of the minds,” where goods and services are exchanged for considerations/benefits.
  • Contracts are all around you and they consist of an OFFER and ACCEPTANCE for a CONSIDERATION.
  • If you bought coffee this morning – coffee was OFFERED at X dollars, you ACCEPTED by placing your order, and the CONSIDERATION was money in exchange for the coffee.
  • Contract law is governed by state law. In many states, items purchased for greater than a certain dollar amount, should be placed in writing (Statute of Frauds).
  • Courts seek to identify the intent of the agreement. The most important document in ascertaining this intent is the contract itself. However, in many states outsides (parol) evidence may also be also considered.
  • You cannot ever contract for something that is illegal. Failure to honor terms of a contract is a BREACH of said contract (either minor or major/material).
  • The parties entering a contract must be mentally competent to do so, and the court would prefer that parties be negotiating from relatively equal strength.
  • A contract that is offered without any real choice, and that is offered from a party with strength to a vulnerable party is called an “adhesion contract” and may not be enforced by a court.
  • If a contract is ambiguous in some regard, then states will often turn to outside (parol) evidence to ascertain the “meeting of the minds,” and will hold parties to that interpretation.
  • There are various “canons of construction” that courts use to resolve contracts when a contract is ambiguous.
    • Ejusdem generis – general word following specific words not expansive
    • Expresio unius est exclusio alterus – express mention of one thing excludes others
    • Generalia specialibus non derogant – the general does not detract from the specifc
    • Noscitur a sociis – word is known by the company it keeps
    • Contra proferentum – if ambiguity cannot be resolved it is resolved against drafter