What is a contract?

Summary

Charles Fried's script explores the ubiquity of contracts in everyday life, from parking garage stubs to restaurant checks, emphasizing their importance in daily transactions. He uses relatable examples, such as kids shoveling snow, to illustrate contract formation and its complexities. The goal is not to make viewers into lawyers but to enhance their understanding of contracts as part of their environment, akin to learning about a car engine's workings to make informed decisions.

Takeaways

• 📜 **Contracts are ubiquitous**: They are not limited to formal agreements between corporations but are a part of everyday life.
• 🅿️ **Parking garage stubs**: When you park your car, the stub you receive is a form of contract, promising you will pay for the service.
• 👔 **Dry cleaning receipts**: The receipt you get from the dry cleaner is also a contract, outlining the terms of service and payment.
• 🍽️ **Restaurant checks**: Ordering and paying for a meal at a restaurant is a contractual agreement.
• ❄️ **Shoveling snow**: Even casual agreements, like paying kids to shovel snow, are considered contracts.
• 🤔 **Unilateral contracts**: Situations where services are provided without prior agreement can be more complex in terms of contract law.
• 💼 **MOOC purpose**: The course aims to educate on contracts without turning participants into lawyers.
• 🔧 **Understanding the mechanism**: The course is designed to help participants understand the workings of contracts in their daily lives, similar to understanding a car's engine.
• 🏡 **Home services**: The script uses the example of snow shoveling to illustrate how contracts can form even in the absence of explicit agreement.
• 💡 **Practical application**: Knowledge of contracts can empower individuals to navigate service agreements and understand their rights and obligations.

Q & A

What is the primary purpose of discussing contracts in the script?

The primary purpose is to help individuals understand the concept of contracts in their daily lives, not to turn them into lawyers or teach them how to draft contracts.

Why are parking garage stubs considered contracts?

Parking garage stubs are considered contracts because they represent an agreement between you and the garage to look after your car in exchange for payment.

What role does a dry cleaner's receipt play in the context of contracts?

A dry cleaner's receipt serves as a contract, indicating the agreement for service where you will pay for the cleaning of your suit upon return.

Why is the expectation of payment for a meal at a restaurant considered a contract?

The expectation of payment is a contract because there is an implicit agreement that the restaurant will provide food, and you will pay for it.

What is an example of an informal contract mentioned in the script?

An example of an informal contract is when local kids shovel your driveway after a snowstorm, and you agree to pay them $20 for their service.

What is the potential issue with kids shoveling your driveway without your prior agreement?

The potential issue is whether a contract exists if you did not agree to the service beforehand, which may lead to a dispute over payment.

How does the script compare learning about contracts to learning about the internal combustion engine?

The script compares learning about contracts to understanding the internal combustion engine to give insight into how things work without necessarily teaching repair skills.

What is the intended outcome for participants after completing the MOOC on contracts?

The intended outcome is for participants to understand the nature of contracts in their environment, similar to knowing what a transmission is in a car.

What is the analogy used in the script to describe the complexity of contracts in everyday life?

The analogy used is comparing the complexity of contracts to a 'jungle' or 'forest', indicating that while it may not be hostile, it is something to navigate and understand.

How does the script suggest the importance of understanding contracts in daily life?

The script suggests that understanding contracts is important to navigate life effectively, much like knowing the parts of a car engine helps you understand what a mechanic is telling you.

What is the script's stance on teaching participants how to deal with legal disputes?

The script clearly states that it will not teach participants how to draft contracts or deal with legal disputes such as being sued.

Outlines

00:00

🤝 Contracts in Everyday Life

Charles Fried discusses how contracts are an integral part of daily life, not just in formal business settings but in everyday activities. He provides examples such as parking garages, dry cleaners, and restaurants, illustrating how contracts are formed through simple actions like receiving a parking stub, a dry-cleaning receipt, or paying for a meal. These examples highlight the ubiquitous nature of contracts and the mutual obligations they create between parties.

❄️ Informal Agreements: Snow Shoveling and Contracts

Fried elaborates on how contracts can also be informal, using the example of kids offering to shovel snow in New England. He explains that when they offer to shovel for $20 and complete the task, a contract is formed, obligating the homeowner to pay. However, complications arise in scenarios like the homeowner being out of town or when the amount of snow increases, leading to a higher fee. These examples illustrate the complexities and potential ambiguities in informal contracts.

📚 Why Study Contracts?

Fried addresses the importance of understanding contracts and why the subject warrants a MOOC (Massive Open Online Course). He clarifies that the course is not about turning students into lawyers or teaching them how to draft contracts. Instead, it's about providing them with the knowledge to navigate the 'forest' of contracts in everyday life. He compares this understanding to knowing how an internal combustion engine works—not to fix a car, but to grasp what happens under the hood and make informed decisions.

Keywords

💡Contracts

Contracts are legally binding agreements between two or more parties that create obligations to do or not do certain things. In the video's context, contracts are portrayed as ubiquitous in everyday life, not just in formal business settings. Examples from the script include a parking garage stub, a dry cleaner's receipt, and a restaurant check, all of which imply a contract for service and payment.

💡Parking Garage Stub

A parking garage stub is a physical token given to a driver when they enter a parking facility. It serves as a contract, indicating an agreement between the driver and the garage for the service of looking after the car in exchange for payment. The stub is a tangible representation of the contract discussed in the video.

💡Dry Cleaners Receipt

A dry cleaners receipt is a document provided when a customer drops off clothes for cleaning. It acts as a contract, confirming the service to be provided and the customer's obligation to pay upon collection. The script uses the receipt to illustrate how contracts are part of routine transactions.

💡Restaurant Check

A restaurant check is the bill presented to a customer after dining, outlining the items ordered and the total cost. It represents a contract where the restaurant agrees to provide food and the customer agrees to pay for it. The video uses this as an example of how contracts are implicit in common dining experiences.

💡Snow Shoveling

Snow shoveling in the script refers to a service provided by individuals who clear snow from driveways and walkways for a fee. This service arrangement is a type of informal contract where payment is expected for the work done, as illustrated by the kids offering to shovel for $20 in the video.

💡Formal Agreement

A formal agreement is a written contract that outlines the terms and conditions between parties, often used in business transactions. The video contrasts this with the more common, everyday contracts, emphasizing that contracts are not limited to formal documents but are a part of daily life.

💡Legal Binding

Legal binding refers to the enforceability of a contract under the law. While the video does not explicitly define this term, it implies that contracts, whether formal or informal, create obligations that can be legally pursued if not fulfilled, as in the case of the snow shoveling scenario.

💡Obligations

Obligations are duties or responsibilities that parties to a contract agree to fulfill. The video explains that contracts involve obligations such as providing a service or paying a fee, using examples like the parking garage and dry cleaning services.

💡Service Station

A service station, often used for vehicle maintenance, is mentioned in the script as a place where understanding contracts can help consumers make informed decisions. The analogy of knowing what a transmission is and whether a $1,500 repair cost is reasonable relates to the broader theme of the video about understanding contracts in everyday life.

💡Internal Combustion Engine

The internal combustion engine is used as an analogy in the video to explain the purpose of the MOOC on contracts. Just as learning about the engine helps one understand what happens under the hood of a car, understanding contracts helps one navigate the 'forest' of contractual agreements in life.

💡Transmission

The transmission in the script is part of the car analogy, referring to a component that can be costly to repair. It serves as an example of how knowledge about contracts can empower individuals to make sense of costs and services they encounter, such as in the context of car repairs.

Highlights

Contracts are a ubiquitous part of everyday life, not limited to formal agreements between large corporations.

Entering a parking garage and receiving a stub is an example of an informal contract.

A receipt from a dry cleaner is a contract that establishes an agreement for service and payment.

The expectation of payment for services like dry cleaning is a form of contract, even without a written receipt.

Dining at a restaurant and paying the check is a contractual agreement to pay for the food provided.

Contracts can be informal and verbal, as illustrated by the example of kids shoveling snow for payment.

The concept of a contract extends to situations where services are provided without prior agreement, such as shoveling snow while the homeowner is away.

Variations in the amount owed under a contract can arise, such as differing payment expectations for more extensive snow shoveling.

The MOOC aims to educate on the understanding of contracts rather than legal practice or contract drafting.

The goal is to provide insight into the nature of contracts as part of one's environment, similar to understanding the internal combustion engine.

Learning about contracts is akin to knowing the components of a car engine to make informed decisions when dealing with repairs.

The course is designed to demystify the 'jungle' of contracts and provide clarity on their function in daily life.

Charles Fried emphasizes that the course will not turn participants into lawyers but will enhance their understanding of contracts.

Understanding contracts is compared to knowing the workings of a car engine to better comprehend service station explanations and costs.

The course aims to empower individuals with knowledge about contracts to navigate their environment more effectively.

The transcript highlights the importance of recognizing and understanding the prevalence of contracts in various aspects of life.

The discussion on contracts is meant to provide a deeper understanding of their role in society, beyond just legal agreements.

Transcripts

[MUSIC PLAYING]

CHARLES FRIED: Contracts are everywhere--

not just some huge formal agreement between large corporations, where

one is going to buy the other, so on, although that's

what something like that looks like.

But, as a matter of fact, it's everywhere.

You go through them, I don't know how many times in the course of a day.

You go into a parking garage.

They give you a stub.

Now, that's a contract.

They're going to look after your car, more or less.

And you're going to pay them.

You walk in to your dry cleaners, and you drop off your suit.

And the person behind the desk gives you a receipt.

Well, that's important, because that's how they're

going to know which suit is yours.

But that receipt is also a contract.

And even if there wasn't a receipt, you're dropping it off there,

and coming back a couple of days later and picking up the suit.

Well, they expect to get paid, and you expect to pay them.

That's a contract.

You walk into a restaurant, you order the steak

and chips and everything else.

And then you get the check, and you pay it.

You can't just say, well, that's very nice.

Thank you very much for dinner.

See you tomorrow.

Understood between you was they're going to feed you

and you're going to pay them.

And so it goes.

But it gets even less formal than that.

I live in New England, and we have a lot of snow storms in the winter.

So what happens?

It snows, and a bunch of local kids come knock on your door and say,

sir, can we shovel out your driveway and your walkway and so on.

How much?

$20.

OK.

So they do it.

And then they knock on the door, and they have a contract with you.

You owe them $20.00.

They didn't do that as a favor.

Now it gets more complicated.

You're out of town, and it snows.

And while you're out of town, they come and they shovel out your driveway

and do all that.

And when you come back and they say $20, please-- well,

do you have a contract for that or not?

We'll find out later whether you do or not.

And what if it snows the way it did a couple of years ago-- 18 inches?

And they say, well, we had a lot of work to do, and they really did.

This time you owe us $30.

Do you owe them $30?

All that is something we're going to try to understand.

Now, you might ask, why do we have a MOOC on this?

Why am I asking you to join me for really quite a number of sessions

and quite a lot of work-- your work, my work on the subject of contracts?

One thing I'm going to tell you, I'm not going to turn you into lawyers.

I'm not going to teach you how to draft a contract or deal with a situation

where somebody sues you or claims.

That's not what I'm going to do.

What I'm going to do is for you to understand

what's going on as you go through your lives in a jungle,

or maybe not a jungle-- a forest.

It's not so unfriendly-- of contracts.

It's as if I were offering to teach you a course on the internal combustion

engine.

Now, this wouldn't be a course on how to fix your car when

it breaks down or doesn't break down, but to know

what's going on under the hood.

So if your service station then tells you it's the transmission

and that's going to cost you $1,500, you know what the transmission is

and you know whether it kind of makes sense for that to cost you $1,500.

In other words, what I'd like to do when you're through with

this is for you to understand this part of your environment.