Contract Law 101
A contract is formed any time two parties mutually agree to exchange something of value. The legal term for this “something of value” is called “consideration”. The parties to a contract can be individuals, companies or other types of organizations.
At work, an employment contract is generally reached when an employee agrees to work in exchange for getting paid from their employer. In this scenario, both the employer and the employee are receiving something of value (i.e. consideration). The employer receives the benefit of the employee’s labour, and the employee receives compensation.
While a written employment contract will usually outline clear terms such as a start date, salary or hourly wage, benefits, hours of work and termination pay, an employment contract may also be made verbally. However, verbal terms may be vague or unclear, which can sometimes make enforcing this type of agreement difficult. If these fundamental terms of a contract aren’t agreed to before the employee’s first day of work, the employment contract may not be enforceable.
