In most instances, courts will rule that a contract exists only if the parties agree on certain "material" terms. Exactly what "material terms" means can vary, depending on the context. In the construction contracting context, a court is likely to consider the basic "material terms" to be: (1) Price; and (2) Scope of work. The "price" clause will most likely satisfy the legal doctrine know as "consideration."

Due to the potential complexity of that doctrine, it is not addressed in further depth in this overview. Suffice to say that, if money is being paid in exchange for services performed, just about every court will hold that there is sufficient consideration to create a binding contract.

The Residential Contract Checklist (link at left) is a handy tool for reviewing your contracts. Although it is specifically addressed to the Oregon requirements, many of the same issues should be considered no matter what state you are working in.