In business, contracts are unavoidable. In fact, you might be entering into a contract more times than you realize. Any time you take an action concerning your company, say making a payment, for example, then you are entering into a contract. You will regularly find that legally enforceable contracts are a part-and-parcel of business. When you hire an employee, make a sale or purchase, etc. you will find yourself in need of a contract.
A contract is when an obligation to do or not do something is legally enforced between two parties through an agreement. The party can be a person, company, or any other legal entity.
No matter who you are, you can be considered a party if there is a mutual agreement between you and another party, and both are competent enough to enter into a contract. All parties must mutually agree to uphold any and all terms listed in the contract. Each party on signing the contract is legally entitled to act according to the promises they have agreed upon. If either of the parties is found to be incompetent when the contract is made, then the contract cannot hold. For example, a person with mental disabilities is not of sound mind, and therefore, cannot make a contract. Contracts made under the influence of intoxicating substances also need not be upheld, although this may differ from case to case.
Verbal and Written Contracts
A contract could be verbal if it is made without a written agreement. Only some agreements made verbally can be legally enforceable. However, it is advisable to always make a written contract, as a verbal contract is difficult to prove in case any dispute should arise. Some agreements have to be in writing in order to be enforceable, but this varies from state to state. A written contract becomes proof of the agreement and all the terms it contains, and therefore it becomes evidence in case any dispute arises.
Breaching a Contract
In business especially, disputes arise all the time. Sometimes, you may not receive the payment you are supposed to, or you might not get the full range of services another business has promised you. In cases like these, it can be said that the other party has ‘breached your contract’. When a breach of contract occurs, the contract can be enforced by law, on the terms of the party who has suffered from the breach. They may even be entitled to extra allowances to recover from financial or other harms that have resulted from the breach.
The Importance of Contract Law
Contract law exists to make sure that contracts are legally enforced. It safeguards businesses from the harm they may face through disputes. In case informal resolution methods fail, you can hire a contract lawyer and turn to contract law for aid in solving your issue!
This article is only for informational purposes. With a Ward K Johnson lawyer, you can have your iron-clad contract signed, sealed, and delivered! Visit our offices for expert legal advice on contract law.