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What is the difference between a promise and a contract?

As a California business owner, you are probably already aware that a contract may be enforceable even when it is not written down, but by making a thoughtless or ill-conceived statement or promise, could you unwittingly be entering into a contract? 

A promise is not legally binding, but a contract is. While people of honor and strong moral character strive to keep promises whenever possible, there are no legal repercussions for breaking one the way there are for breaching a contract.

So how does a promise become a contract? According to FindLaw, only under very particular circumstances. The person to whom you made the promise must take reasonably foreseeable action to his or her detriment on the basis of the promise that you made, and the person's reliance on your promise must cause him or her a financial injury. 

If you make an offer to an employee or business associate who accepts, whether verbally or silently, and you then renege on the offer later, the court may consider your original offer to be a legally enforceable contract. 

On the other hand, if the person to whom you make a promise makes a baseless assumption outside the realm of what you originally offered, you have not breached a contract. No one can hold you responsible for not meeting terms that you and the other party never agreed upon.

For example, if you hired an employee who lives out of town, and the employee sells his car because he assumed you would be providing him transportation to and from work, that does not represent a breach of contract if you never offered such an arrangement. On the other hand, if you verbally offered to compensate an employee for gas or mileage upon hiring her and she agreed, she has grounds to bring a suit for breach of contract if you fail to live up to your promise.

 The information in this article is not intended as legal advice but provided for educational purposes only.

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