In order for an agreement to legally be considered a contract, it must meet certain requirements. While each contract will be different depending on the party’s needs, a valid contract should embody the following:
- Mutual Assent: Each party should agree to the terms and definitions of the contract. These may include subjects such as payment price, delivery time, and refund options. Assent may be shown by either words or conduct.
- Offer/Acceptance: One party needs to make an offer on the contract, and the other needs to make a valid acceptance of the offer. The offer and acceptance should be unambiguous and clear for each respective party.
- Consideration: Each party needs to exchange something of value with the other. This usually takes the form of money paid for a product or services
There may also be other requirements for contracts, such as the requirement that some contracts be in writing (such as contracts for real property). Also, contract requirements can change depending on whether a party to the contract is considered a merchant of a specific type of good.
Contract requirements are laid out by the Uniform Commercial Code, as well as various state laws. These definitely need to be fulfilled if the contract is to be considered valid.
If contract requirements are not fulfilled, it can lead to the contract being considered void (i.e., cancelled). In that case, either party might not be able to recover damages if they experienced any losses in connection with the contract. Also, the parties may be released from their contract obligations if the requirements weren’t actually fulfilled.
On the other hand, a court may consider awarding damages if one party has already partially or substantially fulfilled their contract duties (such as when a party has already begun constructing a building, or producing items in a factory). This may depend on the circumstances of each case.
Contracts are generally final and binding on both parties once signed. Once the contract is finalized, the parties must perform their contract obligations as listed in the terms. However, under certain circumstances, modifying a contract is sometimes possible.
For instance, the parties may choose to include a clause in the contract that states under what circumstances the contract can be changed, or if the contract can be “subject to modification in the future”. Or, changes in the law may require the parties to adjust the terms in the contract, especially where new regulations have prohibited certain activities or conduct.
Changing an existing contract is a delicate matter and generally requires the assistance of a qualified lawyer. Making unauthorized changes to a contract can result in various legal consequences or penalties.
Contract requirements are very specific and need to be met with certainty. You may wish to hire an experienced business attorney if you need help drafting or reviewing a contract. Your lawyer can help ensure that you meet all the contract requirements. Also, your lawyer can represent you in the event that a lawsuit arises over the contract requirements.