It can be easy to get sucked into the long sections and endless pages of a contract. Before signing on the dotted line, it’s important to review that document for key components that make the contract viable.

“I’ve been thinking about how fast and loose we’ve gotten in this digital era when we deal with contracts,” says Todd Janzen, partner at Janzen Schroeder Ag Law. “It’s become easy to get sloppy with our contracts.”

Contract basics

To avoid some of that sloppiness, Janzen goes back to the basics. A contract is composed of three basic elements:

All three of these components are required for a contract to be valid. Without one of them, you do not have a contract.

Her are three examples of purported contracts, both valid and invalid:

Example 1. A farmer offers to custom-bale his neighbor’s hay into large round bales at a rate of $15 per bale. The neighbor accepts that offer to have his hay baled into large round bales for $15 per bale.

Example 2. A farmer has 1,000 bushels of corn for sale at 14% moisture that he will sell for $4 per bushel. The buyer says she accepts that offer, but the corn must be at 13% moisture. The farmer delivers the corn.

Example 3. A farmer agrees to harvest his brother’s 40 acres of corn for a Butterfinger candy bar. The brother says he accepts the offer, and he hands over the Butterfinger.

Related:Don’t be sloppy with contracts

Which contract examples are valid?

Can you determine which of these examples reflect valid contracts? If you said the first and last examples, then you are correct.

The first example shows the offer in the form of baling the large round bales at a rate of $15 per bale. The acceptance takes place when the neighbor accepts that offer in its entirety. The consideration is shown in the cost per bale that the neighbor will pay the farmer.

The last example shows the offer in the form of harvesting 40 acres of corn for a Butterfinger. Acceptance takes place when the brother agrees to the offer as it stands and hands over the candy bar as payment. While the consideration may seem comical, courts would uphold this contract because there was some form of consideration when the contract was formed.

As for the second example, there is an offer in the form of selling 1,000 bushels of corn at 14% moisture for $4 per bushel. However, for there to be a valid contract, the acceptance must mirror the offer, which did not happen. What the buyer proposed was a counteroffer with a desire for 13% moisture, not an acceptance.

In some cases, an action that signifies acceptance without verbally accepting, such as purchasing the product, can be upheld as acceptance, according to Janzen. He adds that written contracts need some type of signature to be valid. This can come in the form of a pen-and-ink signature, an email, a text message or simply clicking a box to accept the terms of a contract.

To avoid misunderstandings, Janzen recommends avoiding ambiguity when writing contracts and agreeing to them, and he says to read contracts in their entirety.