Simply put, a legal contract is an agreement that is enforceable under contract laws. Most legal contracts are written and signed, although some jurisdictions do recognize oral agreements as legal contracts. However, it is generally best for a contract to be formalized in writing, especially for valuable subject matters or considerably complex arrangements.
Legal contracts can be used by both individuals as well as organizations, such as businesses and corporations. However, any legal contract must be entered into in a way that is fair for both parties involved, and free of any fraud, coercion, and/or misrepresentations.
In order for a contract to be legally valid, it must fulfill the requirements for a valid contract which are set forth by state and federal laws. A legal contract should generally meet the following requirements:
- Offer and Acceptance: One party must make an offer, and the other must accept the offer.
- Both the offer and acceptance must be done in such a way that is clear and unambiguous;
- Assent: Both parties must mutually assent to the terms of the contract. They should be clear as to the terms, words, and definitions that are used in the agreement in order to ensure actual agreement; and
- Consideration: Each party must exchange something of value. An example of this would be how one party is generally providing service or goods in exchange for monetary payment.
Some contracts must be in writing in order for it to be legal. Examples of these include:
- Contracts for the sale of real property; and
- Contracts for the sale of goods worth over a certain amount, generally over $500.
There are many reasons as to why a contract can be invalidated, mainly if one of the requirements that was listed above was not met. An example of this would be how if only one party assented to the agreement, the contract is not legally binding.
A court may declare a contract to be void, meaning that the contract is canceled as if it never existed. In such cases, the parties might then be released from their duties, while in other cases the court may declare the contract “voidable.” What this means is that the parties can cancel the contract at their own election. The difference between void versus voidable contracts is considerably technical, and may require the help of an attorney.
What Is A Breach Of Contract?
A breach of a legal contract is considered to be a legal violation and occurs when one party fails to fulfill their contractual duties. In such cases, a lawsuit will generally result between the two parties, with the non-breaching party typically suing the other party for any damages that were caused by the breach of contract.
Alternatively, the court may issue an injunction requiring the breaching party to fulfill their contract obligations. An example of this would be delivering a shipment of goods. The availability of remedies in a contract case can vary considerably, largely depending on the type of breach as well as the specific type of legal contract involved.
What Is An Invitation To Treat?
An invitation to treat is an action inviting other parties to make an offer in order to form a contract. These actions may sometimes appear to be offers themselves; as such, the difference can be difficult to determine. This distinction is important because accepting an offer creates a binding contract, while “accepting” an invitation to treat is actually making an offer.
The most common example of an invitation to treat would be advertisements. They allow sellers to refuse to sell products at prices that are mistakenly marked. Additionally, advertisements can be considered offers under specific circumstances.
An example of this would be how auctions are sometimes invitations to treat which allows the seller to accept bids, and choose which bids to accept. However, if the seller states that there is no reserve price, or if the reserve price has been met, the auction will be considered an offer accepted by the highest bidder.
An Invitation to treat can be anything that is displayed to a large number of people, and with an undefined way of choosing who can accept, while an offer will be directed at a specific person with specified terms. What this means is that if an item is displayed saying it will be sold to the highest bidder, or to the first buyer to accept the labeled price, it will be considered an offer. However, if an item is simply displayed in a store window, it will not be an offer.
What Else Should I Know About Business Law In General?
Business law, or commercial law, is an umbrella term for the body of laws that govern entities and commercial transactions. An example of this would be how if you wanted to start a clothing company, business law would dictate how to organize and register your company. Business law would also determine how you are to pay your employees, as well as how to legally ship your merchandise to customers overseas.
Business law applies to many different aspects of a business; additionally, business laws will vary based on:
- The type of business, such as private vs. public, for-profit vs. not-for-profit, etc.;
- Its structure, such as corporation vs. general partnership; and
- By jurisdiction.
To reiterate, there are many different types of business law that address various aspects of a business. An example of this would be how if a business must determine how to pay its employees, provide employee work benefits, or arrange employee work schedules, these tasks would be covered by the specific area of business law known as employment law.
If a business owner was just starting out and needed to register and set-up their business, this would involve business laws such as:
- State statutes governing business formation and structures;
- State tax laws; and
- The Federal Tax Code. Both federal and state laws will also apply if at this time, the business owner registers intellectual property such as copyrights or trademarks of the business.
A significant portion of business law addresses commercial and contract law, which govern everything from business deals to sales transactions and employee non-disclosure agreements. Because of the wide variety of aspects that contract laws regulate in business, this is considered to be the most important area of business law.
An example of this would be how whether a company:
- Wants to merge with another business;
- Is forming an agreement with a certain distributor to sell their products; or
- Is providing a service to its customers, contract law will regulate each one of these scenarios.
To simplify, some of the most common examples of different areas of business law that may apply to individual and entities include:
- Business formation and dissolution;
- Commercial law and contracts;
- Investing and securities law;
- Intellectual property law;
- Antitrust and white collar;
- Corporate law;
- Employment law;
- International business; and
- Tax law.
Within each of these categories are even smaller categories, and each state may have its own specific laws and statutes associated with specific business topics. Given the intricacies and wide varieties of such laws, it is important to consult with a local business lawyer for further advice or concerns.
Do I Need A Lawyer For Help With Issues Associated With Invitation To Treat?
Contract law is considerably complicated, and the applicable rules may vary between states. If you wish to ensure that you are not making an offer but are only inviting offers, or if you think that you have a valid contract and need to to enforce it, you should speak with a contracts attorney.
A qualified contract attorney can help you with proper drafting and protection if you enter into a contract. Additionally, an attorney will also be able to represent you in court, as needed, should you require legal representation.