Promises are made to be broken; unless they are noted down in a binding agreement. One way to ensure that the opposing party complies with your terms and arrangements is to put your agreement into writing in the form of a contract.
Contracts are legal documents designed to set the expectations of those involved in an agreement. Because of what they are intended to do, contracts must be written clearly and accurately for it to cater to your needs.
Listed below are the seven major elements of a contract:
1. Offer: An offer refers to a proposed arrangement made by one party to another. This is a promise to act or refrain from acting a certain way. The other party has the right to accept, reject, or amend the offer until both parties reach a mutual agreement.
2. Acceptance: Accepting an offer must be communicated with an obvious declaration. This may be done in writing, in person, or over the phone. You may also see business contract examples.
3. Consideration: This is something that is considered to have sufficient value in the exchange. For instance, one party can promise money in return for a property or service.
4. Competence: For a contract to be legally binding, those involved must have the legal capacity to enter into a contract. Some factors that measure one’s competence include their age and mental state. That’s because a person who is debilitated by a disease or disability, under the influence of drugs or alcohol, or below the age requirement may not fully understand the terms stated in the contract. You may also see writing contract examples.
5. Mutual Consent: Unless consent was obtained on the basis of pressure or extreme influence, it is assumed that a competent party freely agreed to the contract.
6. Legality: Apart from a mutual agreement and an exchange of goods or services, a contract is only enforceable if the proposed offer is a legal activity. So if it involves the execution of a criminal or illegal act, the contract is void.
7. Writing: While not all types of contracts need to be in writing, written contracts are required in certain transactions. This is particularly crucial in payment contracts, marriage contracts, employee contracts, and company contracts.
Contracts are legally binding agreements that help protect the resources of your company and your own interests. It plays a key role in running a business, which is why being able to manage your contracts and business relationships effectively is a skill to master. To help you embark on professional business ventures with investors and clients, follow these guidelines:
There are two elements required for a contract to be legally valid: a mutual agreement and a valuable exchange. In contract law, all parties must agree on an offer made by one party. The contract may only be valid if the opposing party accepts the offer given. This offer may include something of value to those involved, such as goods, cash, services, or a pledge to trade these items.
It isn’t illegal to write a contract without the presence of an attorney, but that does not make the contract enforceable, either. This is one of the reasons why building a written contract is highly encouraged. A real estate purchase contract, for instance, must be defined in a formal written agreement for it to hold up in a court of law.
Most business transactions take place after a formal exchange of promises. This is done to ensure that those involved have agreed to the terms set and are capable of meeting their obligations. So to professionally close an agreement, make sure to observe the proper guidelines in writing a contract.