Legal Definitions - simple-contract debt

A simple-contract debt refers to a financial obligation that arises from a "simple contract." A simple contract is a legally binding agreement, either written or oral, that does not require a formal seal or a specific legal instrument (like a deed) to be valid. Most everyday agreements and transactions fall into this category. Therefore, a simple-contract debt is money owed due to the terms of such an ordinary, informal agreement.

Here are some examples illustrating a simple-contract debt:

• Example 1: Unpaid Utility Bill
  Imagine a homeowner receives their monthly electricity bill. By using the electricity provided by the utility company, they have an implied or explicit agreement (a simple contract) to pay for the services consumed. If the homeowner fails to pay the bill by the due date, the outstanding amount becomes a simple-contract debt owed to the utility company.

  This illustrates a simple-contract debt because the obligation to pay arises from the ordinary, ongoing agreement for utility services, which is a simple contract not requiring any special formal document or seal.

• Example 2: Freelance Services
  A small business hires a freelance graphic designer to create a new logo. They agree via email on the scope of work, the deadline, and a fixed fee. After the designer delivers the completed logo, the business is obligated to pay the agreed-upon fee. If the business does not pay, the outstanding amount owed to the designer is a simple-contract debt.

  This demonstrates a simple-contract debt because the agreement for design services, formed through email correspondence, constitutes a simple contract. The debt is the monetary obligation stemming directly from this agreement.

• Example 3: Unreturned Library Book Fine
  When a person borrows a book from a public library, they implicitly agree to the library's terms and conditions, which include returning the book by a certain date or paying a fine. If the book is returned late, incurring a fine, that fine represents a simple-contract debt owed to the library.

  This is a simple-contract debt because the act of borrowing the book creates an implied simple contract between the borrower and the library, and the fine is a monetary obligation arising from a breach of that contract's terms.