What is a Simple Contract?

A simple contract in legal terminology is an oral or written agreement made by two parties. This is never a legally recorded or officially sealed contract, but breeches are still often ruled on by a judge in court. A breech of contract means that one of the parties ignored one or more terms in the agreement — at least in the opinion of the other party. A judge rules whether the contract was indeed breeched and may award damages. Oral contracts are difficult to prove, however, since the judge may have only the contrasting testimony of the two parties and no other evidence on which to make a fair decision; for this reason, courts encourage a written simple contract.

It's advisable for everyone to always have a contract in writing for any type of agreement or promise. Otherwise, the other party may unintentionally or intentionally deny the specifics of the agreement in order not to have to adhere to the contract for whatever reason. Having the terms of the agreement written out clearly, with the date and the signatures of the two parties, makes up an effective simple contract.

If one of the parties doesn't act within the terms of the written agreement, the other may choose to sue for damages. If there has been a contract breech that resulted in some type of damage, the judge may reward those damages to the injured party. For example, if a children's party entertainer and a parent have a written simple contract stating specific activities that the performer will provide on a certain date, but the event is canceled by one party, the other may choose to sue for damages. Who actually wins the case, if either party does, will depend on local laws and the specific details that the judge will have to weigh in making his or her decision.

Employment simple contracts may be used by an employer in cases of client and trade secrets protection. Employers often want to ensure that, when an employee leaves the company, he or she will not take and use client lists or unique methods on behalf of a competitor or in the ex-employee's own business. A noncompete agreement is a legal written contract many employees are asked to sign to agree to not reveal or use client lists or other information. Employment contracts also specify the work the employee will do and at what salary; the grounds for employee termination may also be included in the simple contract.