Contracts are a regular part of daily life. From getting an estimate to fix your car to committing to a new job, knowing a few contract law basics in Arizona can help you protect your best interests in many circumstances.
Disclaimer: Please note that this article is not intended to be legal advice. Contract law is complex. You should always talk to an attorney who is skilled at business and contract law about your unique situation.
Start here: What’s a contract?
In Arizona, a contract is an agreement entered into between two parties under mutually agreeable conditions. Each party gets something from the contract, and each party gives something. Think of a house painter who gets paid, or a person who buys a car from a dealership. Each party gets something out of the contract.
What are the elements of a contract?
There are three basic elements of a contract: offer, acceptance, and consideration. Let’s look at these in more detail.
The offer is a verbal or written statement of what you and the other party are offering to do. This statement presents something for sale, barter, lease, trade, etc., or refers to something you are not going to do (as in the case of a non-disclosure agreement).
This is a statement that outlines the terms of the contract, whether it is wiring a house for a certain payment, buying a car with monthly payments, or hiring a weekly lawn care service at a set rate.
An acceptance is generally written. In some cases that are outlined below, acceptance can also be verbal or inferred by performance.
Consideration is the legal term for the item or service that will be sold or exchanged in a contract, whether it is money, time, services, physical property, in-kind services, donations, or something else. Each party gives something to get something back (for example: “I give you money, you fix my car.”)
Contracts are not enforceable unless there is consideration.
Other contract factors
Beyond an offer, acceptance, and consideration, there are often a few more factors that go into a legally-binding contract. For example, Arizona statute Title 44, sections 131-140 addresses who is able to enter into a contract.
Arizona contract law allows most people to do so, with the following exceptions: minor children and those ruled to be mentally incapacitated.
There may be other factors in play for your situation. It’s always important to talk to a contract law attorney for more information about your specific case.
Is a verbal agreement legally binding in Arizona?
Although some types of verbal agreements are considered legally binding, Arizona statute Title 44-101 outlines the types of contracts that must be in writing to be valid.
– Contracts for services that will not be rendered or completed within a year of the contract
– Goods for sale that are priced in excess of $500
– Contracts that include someone co-signing a debt for someone else
– Contracts for the purchase of real property (e.g. a house or land)
Even if verbal agreements are legally binding in some situations, a written contract is always the best way to protect your interests. Consulting with a law firm experienced in contract law can help you decide whether your unique situation requires a written contract.
Is a contract binding if it is not signed in Arizona?
Typically, a contract that meets the requirements of a legally-binding contract (as outlined above) is binding in Arizona even if signed somewhere other than Arizona.
The more complicated the situation, the more it becomes important to consult a lawyer who has experience in contract law. They can help you understand what you need in order to create (and enforce) a legally-binding contract both in and out of Arizona.
How does an Arizona breach of contract occur?
In Arizona, a breach of contract typically occurs when one party fails to meet their obligation in a contract. There are three common ways this occurs:
1. Material: Generally occurs when a core part of a contract is not fulfilled or one party fails to live up to their side of the agreement (i.e. one party doesn’t provide a necessary component, which may also forestall the other party from fulfilling their portion)
2. Immaterial: A contracting party doesn’t comply with all of the obligations of the contract, but fulfills the major components (i.e. a shipping company not agreed upon was used to deliver goods or one party didn’t carry enough insurance for the project)
3. Anticipatory: There is an overt action by one party that implies they will not fulfill their part of the contract
To prove that a contract has been breached, the party claiming the breach has to first show that the contract is valid. Then, they must show that they have performed their own part of the contract (to the extent they were able to under the circumstances) while proving that the other party has not. Finally, the party claiming the breach must calculate and prove the losses they have suffered as a result.
You can learn more about a breach of contract here.
What is the statute of limitations for written contracts in Arizona?
Arizona contract law provides different statutes of limitation for written contracts depending on the subject matter of the contract.
For example, a contract for a debt cannot be prosecuted as a breach of contract after six years (Title 12-548). What does this mean? If you loaned someone money that they didn’t pay back, you generally cannot file for breach of contract if six years have already passed.
If you are selling goods, you typically only have four years to enforce your contract.
Breach of contract claims that are related to employment usually have an even shorter timeline: just one year. This shortens further if the other party is the city, state, or federal government. Many contracts with city, state, or federal governments may have an even shorter applicable notice of claims period of just six months.
Eligible verbal contracts have a statute of limitations as well. Under Title 12-543, breach of contract for a verbal contract can only be pursued for up to three years.
Where can I learn more about Arizona contract law?
While these are good starting resources, contract law is complicated. Many people dedicate their careers to understanding its real-world applications and complexities. It can be confusing and challenging to navigate alone, especially without advanced experience or education on the topic. While the information in this post is a good starting place for understanding the basics, every case and every contract will differ.
ARTEMiS Law Firm is experienced in handling matters related to Arizona contract law. Whether you are just entering into a contract or are looking for help unraveling a breach of contract, we can help. Get in touch today.Contact Us