Do You Know the Essentials of a Legal Contract?

This post is in: Business

2-14-1If you’ve ever been in court, chances are there has been a contract involved. Contract law is perhaps THE most litigated issue in the United States. So, understanding how to read and write a contract may be one of the most important business lessons you’ll ever learn.

Contract fights are typically over one of 3 things:

  1. Enforcing a Contract
  2. Interpreting a Contract
  3. Voiding a Contract

To win an enforcement battle, your first line of defense is having a legal contract in the first place. That means it needs to be written properly, and contain the 10 essential elements:

  • Offer
  • Acceptance
  • Consideration
  • Date
  • Signatures
  • Correct Names
  • Authorized Signers
  • Clarity
  • Completeness
  • Jurisdiction

We go through each of these essential elements in our product, 10 Things You Must Know to Write a Legal Contract. Without them, your contract likely won’t withstand a challenge. And, while all 10 factors are important, the first 5 are super-critical. For example, a contract that doesn’t have a clear start date, will likely not be upheld. And, unless consideration (something of value) passes between the parties, it’s not going to make the cut, legally.

The next dispute area is over interpretation. This sounds simple: What does the contract say? But as so many of us know, what we say and what we mean are not always the same thing. What seems crystal clear to you may be interpreted in a completely different way by someone else, and vice-versa.

With contracts, clarity is king. To make a contract legally enforceable, it has to say exactly what it means. Assumptions, or unwritten obligations are absolute no-nos in writing an enforceable, legal agreement.

The third leg of contract law disputes centers around voiding a contract. It really goes hand-in-hand with enforcement, except in this case, the party suing is trying to get out of an agreement.

This is where a good knowledge of contracts can help you. Sometimes, your problem isn’t forcing another party to uphold their side of a bargain. Sometimes, your problem is getting out of a deal that either isn’t what you thought it was, just isn’t possible to complete. In this case, finding a defect in the contract could be your way out, without expensive litigation and legal fees.

Contracts are an essential piece of business life. Make sure you know what you’re getting into before you sign on the dotted line.

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