The term “Personal Contract” can describe many different types of contracts. It can describe a contract that binds only a single individual as opposed to a group or company that the person represents. It can also refer to a contract that only binds the single person and not their heirs, successors, or assignees.
For example, many business corporations are actually separate legal entities apart from the members and stockholders of the company. If a member of the corporation wishes to enter into a contract apart from the corporation, they will enter into a personal contract, in order to prevent legal issues from overlapping with their involvement with the corporation.
In other usages, the term personal contract can be used to describe:
- Contracts for the sale, purchase, or exchange of personal property
- Contracts for real property that is being treated as personal property
- Certain royalty contracts (especially those covering oil, gas, and other natural resources)
- Various types of insurance-coverage policies for property
Thus, the term “personal contract” has many, many different usages and should not be confused with other types of contracts. Personal contracts need to follow all the basic requirements for a valid contract in order to be enforceable under law. These can include such terms as price, delivery dates, method of payment, etc.
The main reason why a personal contract should be used is to prevent confusion, especially when one or both of the parties serves as a representative or an agent for a business organization. When engaging in transactions outside of company business, it is highly important that the parties don’t use company documents or forms to conduct personal business.
A personal contract can also be used in somewhat informal situations, such as the sale of a vehicle between two good friends. Forming a personal contract in such situations helps provide a written account of the transaction. Rather than creating a sense of distrust between friends, a written personal contract can help encourage the parties to act in a professional and ethical manner when fulfilling their contractual duties.
Personal contract can be very helpful for providing legal enforcement of a transaction or agreement. You may wish to hire a qualified business lawyer in your area if you need help drafting, reviewing, editing, or negotiating a personal contract. Also, your attorney can help you seek legal remedies in the event of a breach of a personal contract.