Teen Series: (Part 12 of 15) Dissecting & Understanding Basic Contracts

As your teen grows older and starts making more decisions on their own, they’ll likely encounter various types of contracts, whether it’s signing a lease for their first apartment or car, or committing to a new phone contract. Understanding the basics of contract law is crucial to protect your interests and avoid future complications, and often overlooked in the things-to-teach-my-kid list. I’ve got you, fam! 

In this quick and easy to understand guide (AKA if I can word it to where I understand it myself, I’m confident your teen will understand it, too! LOL), we’ll break down some essential concepts to help you navigate the world of wordy contracts with confidence! 

It can be super overwhelming when you’re given a stack of papers filled with tons of jargon you’re not familiar with and you’re expected to just trust the process! No one wants to blindly sign away their life, or be tricked into something they’re not ready for. So first things first, let’s dive in.

What is a contract?

At its core, a contract is a legally binding agreement between two or more parties. Contracts come in all shapes and sizes, from simple written agreements to complex legal documents. Here are some key elements of a contract:

1. Offer & Acceptance

A contract begins when one party makes an offer and the other party accepts it. This agreement can be verbal or in writing, but it’s usually better to have written proof to avoid misunderstandings.

2. Considerations

This refers to something of value exchanged between the parties. For example, in a phone contract, your consideration might be the monthly fee you pay for services.

3. Legality

A contract must be lawful and not involve illegal activities. For example, you can’t sign a contract to engage in illegal activities. Just.. don’t do it.

Speaking of illegal contracts.. IYKYK. 🤣

4. Capacity

Both parties must have the legal capacity to enter into the contract. In most cases, this means being of a certain age (often 18) and mentally competent. In other words, if anyone signing a contract is being coerced, or they have no idea what they’re signing, it is not considered a legal document.

5. Mutual Assent

Both parties must understand and agree to the terms of the contract. If there’s any confusion or pressure to sign, it might not be a valid contract.

Don't forget the Fine Print

Before signing any contract, it’s essential to read and understand every part of it, especially the fine print. Here are some key tips:

1. Define Key Terms

Make sure you understand the terminology used in the contract. If something is unclear, don’t hesitate to ask questions.

Here’s a little something I whipped up with some buzz words you might read while looking over a contract.

Consider it your contractual vocabulary words. 🤣

It’s two pages. Hope it’s helpful!

Click to download!

2. Rights & Obligations

Know your rights and responsibilities as well as those of the other party. This is especially crucial for both apartment leases and phone contracts.

Make sure your teen understands that while a contract keeps them protected, remember your teen has their end they have to hold up, also. Both parties are protected, so if rent is late and the contract states you have to pay by a certain date to avoid evictions, that’s not a suggestion. No amount of begging is going to overwrite a written contract. The real world might not give a few more days just because they’re nice. 

3. Payment Terms

Understand the payment schedule, including due dates, late fees, and any additional charges. See above. 

4. Termination & Penalties

Be aware of the conditions under which you can terminate the contract and any associated penalties. On both sides.

5. Renewals

If applicable, find out how the contract renews and whether you need to take any action to prevent automatic renewals. It’s easy to assume you’re on a month-to-month subscription of something, when you suddenly receive an automatic charge the following month for something you were unaware of, suddenly messing up your budget and balance sheet, and throwing everything off. Ask me how I know. 🙂 Don’t let your teen make that mistake!

If you’re ever unsure about the terms of a contract or feel pressured into signing, it’s a good idea to seek legal advice. A lawyer can help you understand the contract’s implications and whether it’s in your best interest to proceed.

Pro Adulting Tip: Always keep a copy of the signed contract for your records. This can be invaluable if any disputes arise in the future.

Understanding the basics of contract law is a crucial skill as your teenager begins their daunting journey to independence. Whether they’re signing a lease for their first apartment, committing to a phone contract, or entering into any other agreement, remember to have them read, understand, and ask questions before putting pen to paper.

Contracts can absolutely protect your interests, but only if you understand what you’re agreeing to. Good luck and sign wisely!

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