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What Are Common Articles in Business Contracts?
A business contract is simply an agreement made up of promises exchanged between two or more parties that is legally enforceable. It can be created through writing, oral statements, or even simply through the conduct of the parties involved. The content of business contracts can vary greatly depending on the type of business and the needs of the parties. However, there are different rules regarding contracts depending on the subject matter.
There are two sources of law that govern contracts: The Uniform Commercial Code and Common Law. When a business contract is made between merchants for the sale of goods, the contract is governed by the Uniform Commercial Code (UCC). If the contract deals with providing services, real estate, employment, or the exchange of goods between non-merchants, the Common Law of the local state applies. Regardless of which legal standard applies to your situation, there are some basic elements that must always exist for a the agreement to be enforceable:
- Offer: An offer is made when a party shows through their words or actions that they are willing to enter into an agreement and that the agreement will be complete if the other party accepts.
- Acceptance: Unless the offer specifically requires a particular method of acceptance, an offer can be accepted through writing, oral statements, or beginning performance of the terms of agreement.
- Mutual Assent: Contracts require something often referred to as a “meeting of the minds.” In order for it to be valid, the parties must intend to be legally bound by the agreement and must agree on all of the essential terms.
- Consideration: Each party must exchange something of value. This can be almost anything from goods, to services, to even simply a promise to not do something.
- Legal Purpose: An agreement made for the purpose to violate the law cannot be valid (e.g. you cannot create a contract with someone to steal from your brother).
- Capable Parties: In order to enter into a legal agreement, a person must have both the mental capacity and maturity to understand the nature of their obligation. Generally, there is a presumption that minors and individuals suffering from mental illness do not have such a capacity.
- Agreement is in Writing: Most types of contracts do not have to be in writing to be valid. However, certain types, such as those dealing with real estate or ones that cannot be completed within a year, must be in writing and signed by all parties according to the Statute of Frauds.
What Happens if There is a Breach of Contract?
If someone fails to meet their obligations under a valid contract, then the contract is breached. When there is a breach, the party responsible for the breach will be liable for damages to the non-breaching party.
Are There Any Defenses to a Breach of Contract?
There are several possible defenses to a breach. Some of the more common examples include:
- Agreement is not in Writing
- It is not the Intended Agreement
- Lack of Capacity
- Duress or Undue Influence
- Frustration of Purpose
- Unilateral or Mutual Mistake
- Misrepresentation or Fraud
- It is Unconscionable
- Impossibility or Impracticability
Should I Get an Attorney to Help Me with My Contracts Issue?
Business contracts are extremely complicated by nature and the laws that govern them can be confusing. Consulting an experienced business attorney can aid you draft, negotiate, and if needed defend or contest portions of your business contracts.
Consult a Lawyer - Present Your Case Now!
Last Modified: 08-08-2017 04:42 PM PDT
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