Acceptance
Nettie is truly concerned about her uncle and is considering the move. In order to accept the offer, Nettie needs the terms of the proposed agreement with her Uncle Horace to be clearly documented. She is concerned about her moving expenses, completion of her education, compensation for managing the ranch and household, and what will ultimately happen to the ranch when her uncle dies. In order to agree to move from Alaska to Arizona to live with Horace and manage his ranch, Nettie wishes to draw up a legal contract to document the terms and conditions by which she will be willing to accept the offer. To formalize the acceptance of this offer, a valid and enforceable contract is created between Horace and Nettie to document their mutually agreed upon promises.
Consideration
The promises between Horace and Nettie must show incentive and value to each party. The legal mechanism used to evaluate the existence of incentive is consideration. In order for promises to be legally binding there must be an incentive for both parties. Consideration is an element in determining the validity and enforceability of a contract. There must indeed be clear incentive behind the promises the uncle and niece make to each other in their contract. For example, Horace should agree to pay Nettie a fixed amount in salary to manage the household and operations of his ranch. In turn, Nettie must agree to carry out those duties in order to receive her salary. The contract between Nettie and Horace will specifically list the payoff or outcome of the promises they have made. The legally binding promises are the consideration.
Capacities of Parties to Contract
To be bound to the contract, Nettie and Horace must be of sound mind. Traditionally, lack of capacity to be bound to a contractual promise includes: underage, intoxicated and mentally incompetent people. Although Horace’s physical condition since the horsing accident has deteriorated, his mental condition is healthy and sound. Nettie is in her late twenties and excelling in graduate school, clearly indicating her mental state is stable and she is of legal age to enter into a contract with her uncle. Both Nettie and Horace are capable of entering into this agreement and understand fully the nature and purpose of the contract.
Legal Purpose
Valid contracts must be lawful in abiding by laws and pubic policy. An elderly uncle entering into a contract with his niece, since he is in need of help to manage his household and ranch, appears to be a lawful transaction. There is no indication of any unlawfulness or actions against public policy in the proposed arrangement between Nettie and Horace. Both parties seem to be law abiding and are merely entering into a contract to protect and legally support the promises they have made to each other.
The Contract
The five elements to a valid contract have been reviewed. Not all contracts need to be in writing. However, in this particular case, Nettie and Horace must validate their contract in writing, since based on their ongoing verbal agreements,
- Nettie may hold an interest in and eventually inherit the ranch and land
- May eventually pay the debt of Horace after his death
- May be binding in excess of one year and in fact last several years for the contract to run its full course.
A draft of the proposed contract between Horace Grump and Nettie Samaritan is attached as Amendment 1 to this paper for review and analysis of legal validity.
Conclusion
Promises between family members are often sealed with a hug or a handshake. Although it may seem uncomfortable or unnecessary to legally document promises via a contract with a family member, it is recommended and required in some instances. For Nettie to feel secure in her decision to relocate to help her uncle, she needs the promises they verbally agreed on legally documented. It is in both their best interests to have a binding legal agreement to support the promises they have exchanged with each other. In fact, it is a requirement due to the potential length of duration of the contract and the eventual acquisition of land at the end of the contract. A legal and valid contract will help Nettie and Horace keep their promises and at the same time offer peace of mind for both individuals.
Contract Exercise
Amendment 1
Contract
This Contract dated November 20, 2003 made in the City of Bisbee, Arizona in the United States of America, is between Mr. Horace Grump residing in Bisbee, Arizona and Ms. Nettie Samaritan residing in Fairbanks, Alaska both being of sound mind and capacity now hereby agree to the following terms and conditions to support the relocation of Ms. Nettie Samaritan from Fairbanks, Alaska to Bisbee, Arizona to reside at the ranch of Mr. Horace Grump as caretaker and manager of his ranch and property located at 123 Horace Ranch Road, Bisbee, Arizona 98765:
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Moving Expenses. Horace Grump agrees to pay in full the relocation expenses incurred by Nettie Samaritan to move to the Horace Ranch in Bisbee, Arizona.
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Salary, Room and Board. Horace Grump agrees to pay Nettie Samaritan a yearly salary of $50,000 (fifty thousand dollars) beginning January 1, 2004. This amount will be paid in bi-monthly installments of $2,083.34 (two thousand and eighty three dollars and thirty four cents) before taxes. Every twelve months after January 1, 2004, Horace Grump agrees to pay Nettie Samaritan a 5% (five percent) increase in yearly salary. Horace Grump agrees to provide Nettie Samaritan with free room and board in the guest house located on the property of Horace Ranch.
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Vehicle Allowance. Horace Grump agrees to provide Nettie Samaritan with a new motor vehicle every four years with all associated expenses paid for by Horace Grump.
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Health Care. Horace Grump agrees to provide full medical, dental, and vision health care insurance for Nettie Samaritan at no cost to her.
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Vacation. Horace Grump agrees to allow Nettie Samaritan to take three weeks vacation time off with full pay per each calendar year.
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Tuition. Horace Grump agrees to pay full tuition reimbursement to Nettie Samaritan to support the completion of her graduate degree in nursing.
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Ranch Property Ownership. Horace Grump agrees that at the time of his death, Nettie Samaritan will be entitled in full to the Horace Ranch property.
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Employment Services. Nettie Samaritan agrees to manage the Horace Grump household and Horace Ranch operations and all associated and related issues to the care and well being of Horace Grump until his death.
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Hours of Service. Nettie Samaritan agrees to be available on the Horace Ranch premises to manage daily operations Monday – Friday from 6:00 am – 3:00 pm.
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Medical Support. Nettie Samaritan agrees to coordinate and manage all health care and associated services needed for Horace Grump 24 hours a day, seven days a week, and 365 days a year.
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Termination of Contract. Each party agrees to provide 180 days notice to terminate all conditions of this contract.
_____________________________________ ___________________________________
Horace Grump Nettie Samaritan
Date: ________________________________ Date: ______________________________
Witness:________________________________ Date: _______________________________
Works Cited
Reed, O. Lee, Peter J. Shedd, Jere W. Morehead and Robert N. Corley. The Legal and
Regulatory Environment of Business. New York. McGraw-Hill. 2002.
