Types of Contracts

Contracts take on many shapes and forms. Reading a contract and having a full understanding of its terms and conditions before signing is important. Failure to read a contract is not a legal defense.

Even though many businesses use standard, pre-printed contracts for the goods or services they provide, the buyer should still read and understand the document, including the fine print. Many states have "plain English" laws that require consumer contracts be written in simple language and not legalese. When in doubt, ask questions.

All terms and conditions of a contract, even a standardized one, are subject to individual negotiation. Whatever changes occur need to be put in writing and initialed by both parties. Any oral commitments by the salesperson should also be included in the written contract.

Leases and warranties are two common types of contracts. A lease may be a real estate lease for an apartment or an agreement for the use of office equipment or a car. Businesses often lease equipment or vehicles to have the right to use the equipment without having to buy it outright.  Warranties are obligations by the seller concerning the goods or services provided. Federal law outlines what must be included in written warranties. The consumer may read the warranty before purchasing a product.

The warranty must include such information as the name and address of the company making the warranty, the product or parts covered, whether it promises replacement, repair or refund and if the buyer must pay any expenses. The length of the warranty, damages that are not covered, and instructions if a problem with the product arises are among the other information requirements for written warranties.

A full warranty promises the company will repair or replace the product for free during the warranty period. A limited warranty usually covers only parts but not the labor costs in repairing the product.

Express warranties, stated either orally or in writing, are promises concerning product performance. Implied warranties are automatic and include promises that the product will perform for its intended purpose. Extended warranties usually cost the consumer extra, the benefits of which should be carefully weighed.

Keeping the product's sales receipt is the best way to protect warranty rights. When contacting the manufacturer about a problem, follow the instructions in the warranty, retain copies of all correspondence, and keep a record of everyone you speak with and when.