Essential Components of A Legally Binding Contract
July 2, 2020
Contracts are a crucial component of conducting business. Whether it is between you and your business partner(s), a customer, landlord or supplier, understanding the details and ramifications is essential. A mutually satisfying relationship can begin when both parties understand and accept the terms of the agreement. We often work with clients in negotiating contract settlements.
Cornell Law School, contracts are legally binding agreements between two or more parties. These agreements create mutual obligations among all parties involved. If breached, the law offers remedies to the wronged party.
There are four elements required for a binding contract. Each section has unique rules.
Initial Offer and Acceptance
The contract must provide a comprehensive explanation of the offer. It could be a promise to take action or refrain from taking action in exchange for another party to do the same. Acceptance means that you agree with the terms. It is valid under specific conditions:
You know the offer
You understand the conditions
Your acceptance is unconditional and unequivocal
Consideration and Legality
For a legal contract, both parties must give something of value, such as providing services for payment. Volunteering to provide a service for someone is not a consideration. There must be give and take on both sides of the contract. The final element requires that it is a legal bargain.
Contracts for illegal or immoral acts are unenforceable. Signing a contract due to physical or economic intimidation or under duress can invalidate an agreement. Fraud also nullifies a contract. Contract disputes are often settled out of court, which can save you time and money. However, if a settlement is not realistic, skilled litigators can help ensure a legal agreement in the courtroom if needed.