Preparing an enforceable contract
When drafting a legal business contract the amount of information that must be present can sometimes become overwhelming. It is important to know the five elements that must be present in a legal business contract so that term are upfront and defined, as well as your assets protected. In order to prepare such a document the five essential elements are: offer, acceptance, consideration, capacity, and legality.
An offer is a voluntary promise that one makes to allow another to know that they are opened to bargain. This opens the doors to an agreement being made on both parties to reach a reasonable solution on both ends. Agreement upon these terms begins to bond these two parties into a binding contract. Most offers do come with an expiration date often 30 days or less from the time offered.
Acceptance happens when an offer is agreed upon. This could be agreeing to enter into the first offer made or acceptance by the original party offering a counter offer. This is when the official binding contract begins. Acceptance can start a verbal contract immediately, or if a contract is draw with ‘subject to contract’, legal binding only begins once an official contract has been created.
In consideration one of both parties agrees to perform a desired act, or refrain from one. In terms of the law, this could be anything from interest on a bank loan. In most terms consideration can ben bilateral or lateral. In bilateral contracts equal things are being exchanged. An example of this would be if I bought my friend Tyler lunch on Monday and Wednesday, while Tyler bought my lunch on Tuesday and Thursday. A
2 lateral contract would be if I bought Tyler lunch Monday through Thursday and in exchange Tyler gave me $40 dollars every Friday.
Capacity comes into play on a few different levels. Capacity could relate to age, maturity, or mental ability. When it comes to a contract, it is not legally binding when entered into with a minor. Any contract that is conducted as so will be void and considered invalid. Also entering into a legal contract with someone who is known or unknown to have the lack of mental capacity to be able to understand the contract, or moral hold their end of the contract will result in a void of contract. This means if one was to enter a contract with someone with a known mental disorder without the proper support to evaluate if this person is capable to fulfill their promises would result in a void.
Lastly, is legality, this for the most part is the straightest forward of them all. This simply states that a contract cannot be created, or a created contract will be considered void, if the actions within the contract are illegal. This means that a contract cannot be drafted for the sale of illegal drugs or the promise of murder. Anything that is considered illegal in the eyes of the law cannot because a valid contract. Besides legality, contracts may also be broken or becomes invalid because of breach of contract or statues of fraud.
Breach of contracts as well as statues of fraud may also allow contracts to becomes invalid or allow them to be broken. A breach of contract is one of the most common reasons for lawsuits. This occurs when a party does not hold their side of the 3 agreement. This could be failing to pay the amount agreed upon, failing to provide all the goods promised, not being able to finish a job within the contract, or being late on payments without notice or approval. Any of these things listed alter a contract and if a new contract is not drafted and agreed upon on new terms makes the contract not fully fulfilled and leaves room for error on the side of the negligent party. A